Tuesday, June 22, 2010

Promoting Competition

STAR, 12 June 2010

THE Competition Bill 2010, which was passed last month and expected to be implemented by mid- or end of 2011, is aimed at creating a better business environment and to check against anti-competitive practices.

The bill, once gazetted, will be known as the Competition Act 2010.

The bill describes the “process of competition” as encouraging efficiency, innovation and entrepreneurship, which promotes competitive prices, improvement in the quality of products and services and wider choices for consumers.

“In order to achieve these benefits, it is the purpose of this legislation to prohibit anti-competitive conduct,” it says in the bill.

In a newspaper report last month, Faizah Jamaludin, a partner at the law firm Skrine & Co, wrote: “The implementation of the Competition Act 2010 will bring Malaysia in line with over 100 jurisdictions worldwide, including its Asean neighbours Indonesia, Singapore, Thailand and Vietnam.

“The Competition Act seeks to promote and protect the process of competition by changing the behaviour of businesses. It will regulate not just monopolies and cartels, but all types of businesses from multinationals to the small and medium enterprises and “mom and pop” shops.

“Hypermarkets, airlines, newspapers, banks, insurance companies, private hospitals, accounting, engineering and legal firms, to name a few, will all be governed by the Act. Government-linked companies (GLCs) are not exempted and are similarly subject to the provisions of the Act,” she wrote.

The bill seeks to introduce prohibitions on anti-competitive conduct and practices.

“The object of the Act is to promote economic development by protecting the process of competition, and thereby protecting the interest of consumers,” the bill states.

The Act makes provision for the introduction of competition law by introducing two main prohibitions. The first is in respect of agreements or concerted practices between enterprises or association of enterprises, which have the effect of significantly preventing, restricting or distorting competition in Malaysia.

The second is the prohibition of the abuse by an enterprise or enterprises of a dominant position in Malaysia.

It defines the term “dominant position” as a situation where “one or more enterprises possess such significant power in a market to adjust prices or outputs or trading terms, without effective constraint from competitors or potential competitors.”

Here, the Act considers a parent company and its subsidiaries as a single enterprise where, despite their legal separation, they form a single economic unit within which subsidiaries do not enjoy real autonomy in determining their actions in the market.

The act will apply to any commercial activity, both within and outside Malaysia. In relation to the application of the act outside Malaysia, it applies to any commercial activity transacted outside the country which has an effect on competition in any market in the country.

The Act will be enforced in Malaysia by the Malaysian Competition Commission (MCC), which has been given considerable powers of investigation and enforcement, such as entering and searching premises and require the production of all documents and information including computerised data.

Interference with the MCC’s powers and investigations is an offence which carries a fine of up to RM5mil for the first offence and RM10mil for the second and subsequent offences.

Faizah also wrote that directors, CEOs, COOs and managers would be personally liable for their company’s offences unless they proved that the offence was committed without their knowledge, consent or connivance, and that they had taken all reasonable precautions and exercised due diligence to prevent the commission of such offences.

“They will also be liable for the offences of their employees, agents and agent’s employees committed in the course of employment,” she was quoted in the news report.

Competition Commission Bill

The Competition Commission Bill has also been passed to provide for the creation of a commission to control monopoly activities and will be the authority to take action against the companies involved in the activities.

According to reports, the Competition Commission Bill 2010 seeks to provide for the establishment of the Competition Commission and to provide for its functions and powers.

Once approved, it will impose a duty on the commission to furnish certain returns, reports, accounts and information to the minister or any public authority.

The commission will consist of a chairman, four members representing the government, and between three and five other members with experience related to business, industry, commerce, law, economics, public administration and consumer protection.

Its functions include advising the minister or any public or regulatory body on matters concerning competition.

In a news report in April, Domestic Trade, Co-operatives and Consumerism Minister Datuk Ismail Sabri Yaakob said both the Competition Bill 2010 and Competition Commission Bill 2010 was passed to show that the Government was serious in creating a healthy business environment.

“Before, there was no control over monopolies and cartels, but now there are laws for such things,’’ he was quoted as saying.

Consumer Protection (Amendment) Bill

According to the parliament website, the Consumer Protection (Amendment) Bill 2010 is scheduled to be tabled for its second and third reading.

This bill has several changes and seeks to amend its predecessor, the Consumer Protection Act 1999.

Monday, June 21, 2010

SPAD Expected to Be Implemented in September

KUALA LUMPUR, June 21 (Bernama)

The Land Public Transport Authority (SPAD) is expected to be implemented in September, once the Land Public Transport bill is approved in Parliament.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said the Land Public Transport Bill will rationalise the entire sector and bring the regulation of most aspects of public transport under a single regulator.

"The land public transport sector is among very important sectors to the government. Without a good public transport system, the people's confidence in the government will erode," he said when speaking at Keretapi Tanah Melayu's (KTM) 125th anniversary celebrations here Monday.

Muhyiddin said the government, having realised the importance of the public transport system, has drawn out six policies to revamp the system and provide efficient service to the people.

He said the six aspects given priority are passenger safety, service efficiency, network, integrated transport system, monitoring and planning.

"From the development point of view for rail transport, the government will ensure rail transport become the backbone for the integrated public transport system," he said.

Muhyiddin said SPAD would be responsible for the Mass Rapid Transit (MRT) project for public transport that would be integrated with other rail transport providers, apart from KTM.

He added that the plan to be carried out at an overall cost of RM36 billion would be implemented in the early stages of the 10th Malaysia Plan (10MP).

Muhyiddin said KTM Berhad had contributed immensely, not only in areas of providing transport but in the development of land owned, like the Kuala Lumpur Sentral and Johor Baharu Sentral developments.

"Such assets will not only propel the progress of public transport system but development of the country as well," he said.

He said apart from historic corporate buildings at the Kuala Lumpur Railway Station and Ipoh Railway Station, KTM Berhad can also be proud of modern infrastructure which has replaced many stations with the implementation of the double-tracking project.

In addition to the Rawang-Ipoh, Ipoh-Padang Besar and Seremban-Gemas double-tracking projects carried out, another feasible study was being carried out for the double-tracking project from Gemas to Johor Baharu, he said.

In conjunction with KTM Berhad's 125th anniversary, Pos Malaysia and Bank Negara Malaysia would also issue commemorative stamps and coins.-- BERNAMA

Tuesday, June 8, 2010

Treasury Disputes Idris Jala's Data

By Asrul Hadi Abdullah Sani
Malaysian Insider, June 08, 2010

KUALA LUMPUR, June 8 — The Ministry of Finance disputed today findings made by Datuk Idris Jala and his Performance Management and Delivery Unit (Pemandu) in his argument for immediate subsidy cuts, in a major embarrassment for the minister charged with overseeing the administration’s key performance indicators (KPIs).

Treasury officers briefed Barisan Nasional (BN) backbenchers in Parliament today and indicated Idris (picture), the former Malaysia Airlines boss hailed as a hero for turning around the national carrier, had overstated his case for subsidy cuts with flawed statistics.

Using Pemandu findings Idris had predicted Malaysia could be bankrupt by 2019 if it did not begin to cut subsidies for petrol, electricity, food and other staples, which he said cost the country RM74 billion last year.

Prime Minister Datuk Seri Najib Razak also moved today to quell fears raised by Idris that Malaysia would one day go the way of Greece and Iceland and become a bankrupt nation by pointing out the government was taking steps to ensure that the country’s debts would be reduced.

In a briefing for the BN Backbenchers Club (BNBBC), Treasury officers said the country’s total subsidy bill was only RM18.6 billion, and not RM74 billion as stated by Idris, for 2009.

According to Pemandu figures, the country’s total subsidy was RM74 billion, which is equivalent to RM12,900 per household.

Pemandu said the government subsidises RM23.5 billion for fuel, RM4.6 billion for infrastructure, RM3.1 billion for food and RM41.8 billion for social welfare (health, education and higher education).

But the Finance Ministry said today the country’s total subsidy was RM18.6 billion or equivalent to RM3,246 per household.

It said that RM7.1 billion was spent for fuel, RM0.8 billion for infrastructure, RM2.9 billion for food and RM7.8 billion for social welfare.

A copy of the briefing notes was made available to The Malaysian Insider.

The Treasury briefing is set to further alienate Idris as Najib has distanced himself from the former corporate captain’s warning and said that his estimations were merely based on Pemandu’s studies.

Former premier Tun Dr Mahathir Mohamad has also ridiculed the minister in the Prime Minister’s Department, saying that Idris was exaggerating.

The Malaysian Insider understands that Idris has come under fire from Cabinet colleagues because his remarks had undermined Najib’s government.

Pemandu is also holding a briefing for the BNBBC tonight after many BN leaders had expressed dismay over Idris’s bankruptcy remarks.

The briefing is aimed at explaining its findings and receiving feedback from members of the BNBBC.

Lawmakers from both BN and Pakatan Rakyat (PR) have agreed that an immediate implementation of any subsidy cuts would spell political suicide for the Najib administration with the next general election within the next 34 months.

Najib has also stressed that the public would have the final say on whether expensive subsidies would be cut.

Tuesday, June 1, 2010

RM50b toll takeover plan for Cabinet to view

June 01, 2010
Malaysian Insider

KUALA LUMPUR, June 1 — Asas Serba Sdn Bhd is hoping to present their plans to acquire the nation’s toll concessions before the Cabinet tomorrow to get the government’s backing, sources say.

Asas Serba is proposing to take all of the nation’s 23 toll road concessions private for RM50 billion and in exchange is promising to give a 20 per cent discount on toll rates as well as no further rate increases.

But the unsolicited proposal has not seen much traction within the Najib administration, government sources say.

When contacted, Asas Serba director Ibrahim Bidin didn’t deny that it aims to present their case before the Cabinet at its weekly Wednesday meeting. Such papers are normally submitted through the Finance Ministry or the Economic Planning Unit within the Prime Minister’s Department.

“No confirmation yet,” he told The Malaysian Insider.

In contrast to Asas Serba’s RM50 billion bid, government think tank Pemandu, as part of its subsidy rationalisation exercise, estimated that it will cost the government RM383 billion to nationalise the 23 toll concessions.

Asked about the difference between Pemandu and Asas Serba estimates, Bidin said that Pemandu’s figure appeared high but declined to elaborate as he hadn’t seen how it was derived.

Ibrahim said that Asas Serba has yet to appoint a financial advisor but has engaged a strategic consultant.

“The moment the government says that they want to see the final proposal then we will appoint a merchant banker,” he said. “I heard that the government is favourable to us.”

Local research house OSK Research said in a report that the Asas Serba bid to acquire toll concessions from a combination of public and private sector entities is complex and gaining approval from shareholders will be “daunting”.

Asas Serba has not approached the toll concessionaires directly but Ibrahim said that they will do so if the government gives them the “green light”.

For now, the company has focused its attention on government-controlled PLUS Highways which rakes in 61 per cent of the toll road revenue in the country.

Critics of Asas Serba’s bid, however, have questioned the company’s capability to raise RM50 billion in funds via dividend bonds, given that it is a little known entity, although some of its executives have experience in the toll concession business.

There has also been concern that Asas Serba’s proposal could potentially become a repeat of the Malaysia Airlines saga when a controlling stake in the national carrier was sold to businessman Tan Sri Tajuddin Ramli who later had to be bailed out by the government.

Ibrahim denied that the Asas Serba’s bid risks going the way of Malaysia Airlines.

“These are not new expressways but have known revenue streams,” he said, without explaining the difference with the flag carrier.

He stressed that under the Asas Serba proposal which promises no further toll rate increases, the government stands to save as much as RM114 billion in subsidies between 2010 until 2038 while consumers collectively stood to save as much as RM20 billion from the lower toll charges.

The government currently spends hundreds of millions in subsidies to compensate toll concessionaires for not raising toll rates as per their concession agreements.

Pemandu as part of its subsidy rationalistion proposal is recommending that rates be allowed to rise for toll roads that do not have alternatives in order to save the government as much as RM3.7 billion in subsidies over the next five years.