Cityliner calls it quits after 10 years of losses

STAR, 18 November 2011

GEORGE TOWN: After 10 years of losses, Konsortium Transnasional Bhd (KTB) is also throwing in the towel in the mainland.

KTB gave the state government a 10-day notice that its Cityliner buses would cease to operate from Nov 21.

“Among the reason given was that most of the routes are not profitable because of competition from other operators,” said Local Government and Traffic Management Committee chairman Chow Kon Yeow yesterday.

“The company is also expecting to post a loss of RM4mil from its mainland operations alone,” he said.

Chow said KTB had proposed that it be appointed a sub-contractor to Rapid Penang and be paid a fixed per kilometre sum in exchange for all collected fares which would be forwarded to Rapid Penang.

“The KTB management also proposed that the state government take over the routes and contract it back to them, also on a fixed per kilometre sum.”

In ALOR SETAR, state Environment, Chinese Community Affairs and Transport Committee chairman Tan Joo Long @ Tan Chow Kang said he had received a letter from a bus company stating its intention to cease operations.

“I am in the midst of the state assembly sitting and have yet to study the contents of the letter. I will only issue a statement next week after finding out more,” he said.

In IPOH, the Perak Government plans to extend its subsidies to more bus operators in various districts to avoid any disruption to bus services.

State executive councillor Datuk Dr Mah Hang Soon said the state government would be holding dialogues with bus operators in Kerian, Larut Matang and Selama, and Kuala Kangsar to find out how it could help the operators.

“I understand that the public transportation industry is running at a loss daily.

“It is a long-standing problem faced by the operators and we are trying our best to help them,” Dr Mah told The Star yesterday.

The state government, he revealed, was currently subsidising about RM72,000 monthly to maintain bus operations in Manjung.

KTB: We cannot subsidise Negri services any more

STAR, 18 November 2011

SEREMBAN: Konsortium Transna­sional Bhd (KTB), the country’s largest bus operator, stopped its stage bus services in Negri Sembilan as its express bus operations could no longer subsidise them.

KTB executive director Tengku Hasmadi Tengku Hashim said the consortium, which owns 1,500 buses, had over the years been providing “social service” subsidised by its profitable express bus operations.

“But the Government’s move to issue express bus permits to many new players covering lucrative routes, particularly over the past five years, affected our revenue from express bus operations.

“Our group has been registering continued losses because our express bus operations were not making enough to subsidise our stage bus business.”

No more business as usual: A handful of people walking around the Terminal 1 bus station yesterday. KTB stopped its stage bus service in Negri Sembilan on Wednesday. — UU BAN / The Star

 

“Since the new operators are not obliged to provide stage bus services, they have not been badly affected like us,” he told The Star.

KTB has stopped servicing all but a few of its routes in the state, including the Seremban-Kuala Pilah-Bahau, Seremban-Port Dickson and Seremban-Kuala Lumpur expressways.

Tengku Hasmadi, who met Land Public Transport Commission officers yesterday, said he had written to the Kedah, Kelantan, Pahang, Selangor, Penang and Negri Sembilan governments early this year on the company’s predicament.

“We told them that we cannot continue with the stage bus service any more as our operating expenditure had increased significantly while the fares are controlled by the Government,” he said.

Two million TNB consumers to pay 1% levy from Dec 1

STAR, 22 November 2011

PUTRAJAYA: An estimated two million (25%) of Tenaga Nasional Berhad (TNB) consumers in Peninsular Malaysia will pay a levy of 1% out of their total electricity bills starting Dec 1.

This will follow the launch of the Government's Feed-in Tariff (FiT) system for the development of renewable energy next month.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin said Tuesday that electricity consumers will contribute 1% of their total electricity tariff bills issued by TNB to the Renewable Energy Fund if they use more than 300kWh of electricity per month.

"Nonetheless, 75% of TNB's customers who consume less than 300kWh per month will be exempted from contributing to this fund," Chin told a press conference here.

The FiT system is a funding mechanism under the Renewable Energy Act (REA) 2011 and Sustainable Energy Development Authority (SEDA) Act 2011 designed to encourage the development of renewable energy via cost-sharing among electricity consumers.

It was originally set to be launched in September but was postponed to wait for legal mechanisms under the REA to be in place.

Woodlands move a drain on KTMB

The Woodlands train station is registering a sharp fall in passenger volume after KTM Berhad moved its operations there from Tanjung Pagar in July. 

 

 

New Straits Times, 29 October 2011

 

JOHOR BARU: The shifting of KTM Berhad's railway operations to Woodlands in July following the closure of the Tanjung Pagar railway station has taken its toll on the revenue of the rail company.

Checks showed the company has incurred an average monthly loss of RM1.8 million since July as a result of a decline of between 20 and 30 per cent of passengers using train services to the republic.

KTMB believes most of its customers are instead opting to travel to the republic by express buses, and some by planes, as the Woodlands station is not quite convenient for travellers.

There are seven train services to Singapore daily, and all services stop at the Woodlands checkpoint.
All the trains will make a brief stop at JB Sentral before moving towards Woodlands, which is about one kilometre away.

Industry sources said it is economically not viable to have two stations located too near to each other, more so when both are located near the border of two different countries using different currencies.

In the case of Woodlands, alighting passengers who turned to other modes of transport to reach their destination will have to pay for their fare in Singapore dollars.

For those who travel to the republic by express bus, the problem does not arise.

KTMB president Dr Aminuddin Adnan told the New Sunday Times that there are no plans to stop all seven trips to Woodlands despite the losses.

"It is too early to conclude the whole picture. We will wait and see before planning the next course of action.

"Our customers are basically from the middle-income bracket. We believe those who have abandoned our service are those who do not want any inconvenience throughout their journey, especially when they reach Singapore."

The Tanjong Pagar station became part of KTMB's history following the departure of the last train piloted by the Sultan of Johor at 11.03pm on June 30.

Dr Aminuddin said KTMB is trying to offset the losses by capitalising on the Johor Baru market.

It plans to introduce an additional train service from Tumpat to Johor Baru from next January.

Called the Malayan Tiger, the 14-coach service is believed to be an impetus for the tourism industry in Johor in view that more tourism products are coming up in Iskandar Malaysia.

Meanwhile, Dr Aminuddin said the stripping of the 23km railway track from Tanjong Pagar to Woodlands had been completed.

He said the track weighed a total of about 2,500 tonnes, of which about 70 per cent had been transported back to Malaysia.

The rest, which was still being placed at a temporary storage area in Kranji, will be sent back to the country by the middle of next month.

"We are now demolishing all the locomotive shades and depots and we hope to complete the work by Dec 22," he added.

It was reported that part of the track would be showcased in KTMB museums as a historical exhibit while others would be kept for future use on KTMB tracks throughout the country.

The first museum to display part of the track is the former Johor Baru railway station, which will be turned into a museum soon.

Outcome-based funding for ministries, agencies

New Straits Times, 29 October 2011

The amount of funding allocated to ministries and government agencies in the 2013 Budget will be measured by their performance next year.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said ministries and government agencies found to be involved in irregularities or discrepancies in the next Auditor-General's Report will receive lesser funding allocations.

He said the 2012 Budget announced on Oct 7, would be implemented based on an "outcome concept", which linked the performance of each ministry or government agency to the amount of funds allocated in the next annual budget.

"Instead of looking only at the amount of funds spent, an outcome-based budget will scrutinise the benefits, development or profit gained through each ministry or agency's expenditure.

"Any discrepancy or irregularity is bound to show up in the end performance which will directly affect the funding allocated to the ministry or agency in the next budget," he said after launching a 1Malaysia computer centre at Kampung Jelapang Jaya here yesterday.

Husni said the move was being introduced to increase accountability and curb irregularities as revealed in last year's Auditor General's Report.

He pointed out that ministries or agencies found to be involved in misuse of funds or showing disregard for financial procedures would face strict consequences under the Financial Procedure Act 1957.

He also stated that starting next January, under-performing civil servants would be axed.

"We plan to introduce a new scheme whereby slacking is not tolerated and promotions will be tied to each staff's performance record.

"This is meant to create higher credibility and integrity among staff and hopefully the overall quality of the civil service will improve."

He also revealed that a review of the Auditor-General's report in 2009 and last year would be conducted for a comparison.

"We want to see if the measures introduced so far have been effective."

Meanwhile, Husni also announced that the government had agreed to back up SME Bank's acquisition of bonds worth RM3billion to help fund the country's Small and Medium Enterprises (SME) for a period of three years from now until 2013.

He said the government was confident with the bank's new management which succeeded in reducing the non-performing loan ratio for new loans to a minimum level.

AirAsia X slams Malaysia Airports

Star, 30 October 2011

PUTRAJAYA: AirAsia X, the long-haul budget airline subsidiary of Tune Group, has fired one salvo after another at Malaysia Airports Holdings Berhad (MAHB).

Its chief executive officer Azran Osman-Rani aired his grievances against the airport operator via Twitter yesterday.

What irked him most was the delay in the construction of the new budget terminal at the KL International Airport, KLIA 2, and the recent hike in airport fees imposed by MAHB.

“Would be interesting to sponsor (Powerman Malaysia Duathlon) if 2012 edition held at KLIA. But too bad MAHB will miss construction deadline for KLIA2.

“If the Government allowed AirAsia/Sime Darby to build new low-cost carrier terminal at Labu, it would have been ready by now, no public funds used, and lower charges,” he said, revisiting the old controversy of the Government's earlier nod for AirAsia to build their own terminal in Labu before U-turning in 2009 and ordering MAHB to build the terminal instead.

“MAHB promised the prime minister they could deliver the same.

“Now, delayed construction, public funds cost overruns, and they're hiking fees! Way to go, GLC,” he said.
MAHB had recently announced the International Passenger Service Charge (PSC) and Aircraft Landing and Parking Charges.

The PSC has been raised by 28% from RM25 to RM32 for international passengers departing from LCCT-KLIA and the Terminal 2 Kota Kinabalu.

This has been lambasted by Azran in his series of hard-hitting tweets, saying that there was no consultation in MAHB's decision.

“The critical failure of this knee-jerk policy decision to reinstate airport fee monopolistic increase, is that there is no consultation or analysis.

“We keep taking two steps forward, and get dragged two steps backward. Macam mana nak maju? (How do we progress?)” he asked.

Asked by one of his Twitter followers what he thought was the reason behind the fee increase, Azran had only one word in response: “Tamak! (Greed!)”

When contacted by The Star yesterday, MAHB declined to comment.

RM454mil Q4 loss for TNB

STAR, 29 October 2011
KUALA LUMPUR: Tenaga Nasional Bhd (TNB) posted a net loss of RM453.9mil for the fourth quarter ended Aug 31 due to higher fuel costs, its second consecutive quarter of losses as widely expected by analysts.

The company reported a net profit of RM555.2mil in the same corresponding period a year ago. Loss per share was 8.33 sen compared with earnings per share of 10.22 sen.

Revenue, however, was 13% higher at RM9.12bil in the fourth quarter from RM8.07bil previously.
For the financial year ended Aug 31, 2011 (FY11), TNB's net profit plunged to RM499.5mil from RM3.2bil in FY10. Revenue for the year was higher at RM32.2bil versus RM30.3mil.

The utility giant's cash has also fallen due to the higher cost incurred. As at Aug 31, TNB's cash and cash equivalents stood at RM3.25bil from RM8.01bil a year ago.

In the second half, TNB reported a 31.4% increase in operating expenses mainly from independent power producer (IPP) energy payment and fuel costs due to higher consumption of oil and distillate and higher coal price and consumption. The IPP energy payment and fuel costs for the second half of FY11 increased by RM3.2bil, or 50.5%, from the first half.

It also made a foreign exchange translation loss of RM227mil for the whole of FY11, compared with a gain of RM632.6mil last year.

TNB president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said the losses were mainly due to continued gas shortage resulting in an additional fuel cost of RM2.1bil from oil and distillate.

“TNB has to burn an additional 1.1 tonnes of coal amounting to RM400mil to supplement the lower gas volume,” he said at a briefing to announce its financial performance.

Che Khalib said its additional fuel cost did not factor in the extra coal it had to burn. “It we were to calculate it, the additional fuel cost would be about RM2.5bil.”

“We started FY11 with high coal prices but it was still manageable as the existing tariff structure allows TNB to partially recover the coal cost. However, in the second half of the financial year, TNB was hit by severe gas curtailment resulting in higher utilisation of distillate and oil.

“The cost of generation using these alternative fuels is five times more expensive compared to the cost of using gas,” he said.

To a question, he said TNB was currently in discussion with Petroliam Nasional Bhd (Petronas) to seek some compensation concerning its huge losses due to severe gas curtailment. However, he said no decision had been reached as talks were ongoing. “Some form of compensation is required,” said Che Khalib.

Concurrently, Che Khalib said TNB was also in discussing with its stakeholders, Petronas, the Governemnt and IPPs to resolve the shortfall in gas supply.

“We don't think the industry can go on longer (with the severe gas curtailment). We are having many discussion at the moment.

He was quoted as saying recently that, on average, TNB was getting about 900 million std cu ft per day (mmscfd), far from the usual rate of 1,250 mmscfd.

Che Khalib said it was unlikely for Petronas to fully restore its gas supply. “I think they have their own challenges as well,” he said.

He added that TNB's first quarter results may be “similar” to that of the fourth quarter and expected FY12 to be challenging. “Profitability is still too early for us.”

Separately, Che Khalib said the fuel cost pass-through mechanism had been formulated but there was no indication when it would be implemented.

He expected electricity demand to grow 4% next year. For FY11, electricity demand in the peninsula recorded a growth of 3.1%, driven by the commercial sector.

Kenneth Eswaran behind new pay-TV venture

By Jahabar Sadiq
Malaysian Insider, 28 October 2011

 

KUALA LUMPUR, Oct 28 — Businessman Datuk K.K. Eswaran, who has close ties with Datuk Seri Najib Razak’s family, is behind the new cable television venture Nilamas Corporation Sdn Bhd, which is to start service as early as the first half of next year, say industry sources.
The Malaysian Insider understands that the company, which expects to spend RM2 billion to challenge satellite TV operator Astro for a share of the local market, has now been renamed Asian Broadcasting Network Sdn Bhd. The new brand will be launched next month.

“Datuk Kenneth Eswaran (picture) is behind this venture and his ties with the first family have ensured he got fast approval for the required licences,” an industry source told The Malaysian Insider, referring to the Indian businessman’s preferred name.

Those close to the venture confirmed Eswaran’s interest, pointing out that Nilamas shares two common directors with the businessman’s main corporate vehicle, Pinehill Pacific Berhad. The two are former top civil servants Tan Sri Mohamad Noor Abdul Rahim and Datuk Nik Mohd Amin Nik Abu Bakar.

“Eswaran is politically connected. It’s no surprise he got quick approvals but he now has to launch it,” another industry source said, confirming the new brand name launch is slated for next month.

Eswaran is the deputy executive chairman of Pinehill Pacific, where he is a substantial shareholder. The company has made a few name changes from its original Benta Plantations to Best World Land Bhd in 1995, a year after Eswaran came in, and then renamed Multi Vest Resources Bhd in 2000. It took its present name last January.

The businessman was elected president of the Malaysian Associated Indian Chambers of Commerce and Industry (MAICCI) in June 2008 and was linked to Najib’s family by popular blogger Raja Petra Kamarudin, who edits the Malaysia-Today news portal.

The Star daily reported last week that Nilamas had secured all the requisite licences to offer digital cable TV in the country, and will compete in the pay-TV space with Astro All Asia Networks plc (Astro) and several IPTV providers including Telekom Malaysia Bhd (TM).

The set-up cost for the cable network offering is expected to be more than RM2 billion over a five-year period and Nilamas, according to sources, is looking at a 40:60 equity-debt combination to fund its venture.
Retired navy chief and former armed forces chief Admiral (Ret) Tan Sri Mohd Anwar Mohd Nor is one of the directors of the company, which has invested in a building in Puchong for its broadcasting centre.

The newspaper also said the new station plans to offer entertainment and educational programmes with an interactive focus.

Nilamas secured the requisite licences to offer subscription broadcasting in the country from the industry regulator, Malaysian Communication and Multimedia Commission, on August 11 and with this licence it is allowed to offer broadcasting services for a fee.

The company also has network facilities licences that will allow it to build up a network and also a network service provider licence. The licences are valid for five years.

It has begin hiring people and already has a chief executive officer, television industry veteran Sreedhar Subramaniam, who had served as chief financial officer in NTV7 and also as chief executive of The Malaysian Insider.

The Star quoted sources as saying the company now has 20 people and is looking to expand to 800 by the time of its launch.

Sources also said the company was in talks with numerous content providers but added that it might find it difficult to secure content already sold to competitors such as Astro and TM.

Astro began service in 1996 with 22 channels and took a decade to break even. It currently broadcasts some 125 pay-TV channels in four major languages including eight channels in high definition across Malaysia and Brunei to more than 2.93 million households.

Sources told The Malaysian Insider that the new venture would use fibre for its backhaul which will be leased from fibre operators such as TM, Time dotCom Bhd, Tenaga Nasional Bhd, Fiberail and Fibercom.

Level playing field a long way off

Written by R B Bhattacharjee

Friday, 09 September 2011

Constituency development funding is in the spotlight again following the recent report in Sin Chew Daily that the Barisan Nasional (BN) coalition is funnelling millions of ringgit in extra allocations to its Members of Parliament (MPs) in seats that it is confident of winning. The report alleged that in seats where the BN feels it has no chance of winning, the so-called “black” seats, no allocation would be given. On the other hand, seats that are seen to favour BN (“white”) can get up to RM2.5 million per constituency, DAP MP for Bukit Bendera Liew Chin Tong said in a statement. “Grey” seats, where the BN stand some chance would get RM1 million-RM2 million. Liew called on the prime minister to answer Sin Chew Daily’s allegation and make public the spending under the special category in the budget of the Implementation Coordination Unit (ICU) of the PM’s Department, which has a total budget of RM513.96 million for 2011. The DAP leader further alleged that it has been a long standing practice of the BN to exclude elected representatives from opposition parties from access to constituency development funds held in custody by the ICU. In most instances where the parliamentary constituency is held by the opposition, Liew said, the funds are handled by the local Umno division chairmen instead. The PM has been silent so far on the matter, but BN lawmakers contacted by online news site Malaysiakini said extra funds were “normal”, although they brushed aside the suggestion that allocations were increased due to word of an impending general election. If the allegations are untrue, it would be fairly simple for the PM to debunk them by releasing the information about disbursements of constituency development funds to all MPs, whether government, opposition or independent. In the absence of that disclosure, the public must rely on other sources to draw their own conclusions. In this context, it is noteworthy that last October, Sungai Siput MP Dr Michael Jeyakumar Devaraj sued the federal government for withholding funds from the Federal Budget 2010 for his constituency. In his affidavit, the lawmaker from Parti Sosialis Malaysia said he had been deprived of funding for three years of his term, while BN MPs had received funding. Jeyakumar is seeking a writ against the director-general of the ICU and others, to show cause of their authority to exercise discretion to approve and disburse funds from the Federal Consolidated Funds in the Federal Budget. Jeyakumar also wants a declaration that the Special Constituency Allocation must be provided fairly to all members of parliament in accordance with Article 8(1) of the Federal Constitution. Perhaps the strongest reaction to date to the allegations in the Sin Chew report has come from Bersih 2.0, the coalition for free and fair elections, which ignited a mass protest against electoral irregularities with a rally on July 9. In a statement, Bersih 2.0 called the alleged discrimination in parliamentary allocations a “crime against democracy”. It stressed that all Malaysians, regardless of political affiliation or socio-cultural background, should have fair access to constituency fund. “Treating constituency funds as an election tool to induce support is a shameless and corrupt act of misusing public funds, it is an insult to the celebration of Merdeka, as voters should not be effectively forced to vote for a particular party to gain access to this funding,” the statement said. More significantly, the coalition called upon the federal and all state governments — from both BN and Pakatan Rakyat (PR) — to respect democracy and stop the current practices of giving constituency development funds to only their party representatives. To date, neither BN nor PR has come forward to deny or disprove this statement. Nor have civil society groups or the public in general expressed the level of disquiet that would signal that a majority of voters are prepared to hold their elected governments to account on such fundamental principles underlying democratic choice. Although it may be hard for diehard defenders of justice to accept, the democratic process provides ample opportunities for people in power to skew the game in their favour, such as by the selective use of resources to encourage voters to return them to office. The advantages of incumbency are considerable, and can only be mitigated by the vigilant enforcement of the rules of fair play. It is in this vein perhaps that the Bersih 2.0 statement highlighted the need for legislation to prohibit and criminalise all misconduct that blurs the boundary between party and state or which abuses state resources for partisan purposes. In order for the democratic system to remain fairly functional, the concept of a level playing field has to be carefully nurtured at every stage of governance, and not just in the run up to the election. For this to happen, the role of activist groups like Bersih 2.0 in safeguarding the core principles of democracy are clearly catalytic. However, it is a long road that must be patiently travelled before the people at large become sufficiently conscientised about the importance of upholding such principles as accountability, fairness and separation of powers for them to stand up against the unfair distribution of resources. It is certain that the public will have to live with a stage-managed electoral process until they choose to defend the democratic system against the erosion of its fundamental tenets. Indeed, although the winds of change may look like they have been gaining strength from outside the government’s ranks, they may well be calmed somewhat when they meet the mountains of cash that will surely be splurged on projects for the rakyat before the next ballot.

Malaysia’s ‘Big Government’ economy a dampener

Written by Chua Sue-Ann

Edge, 12 October 2011

KUALA LUMPUR: As the government forges ahead to attract foreign investors and spur domestic private sector activity, independent think- tank Institute for Democracy and Economic Affairs (Ideas) has reiterated warnings that the country’s “Big Government” approach could dampen investor confidence. Ideas chief executive Wan Saiful Wan Jan yesterday noted ongoing concern that the government’s pervasive presence in the economy, including via government-linked companies (GLCs), as well as government dominance in the provision of services would be detrimental to Malaysia’s economic vibrancy in the long run. Wan Saiful said the economy should ideally be driven by entrepreneurs, although in reality GLCs will likely continue to play a role in the economy in the next two to three decades. “There are two elements at play here. First, the government does not trust market forces completely, and second, they think they know best. “It is difficult to see the government [letting] go of control on the economy but its role can be progressively limited,” Wan Saiful told The Edge Financial Daily on the sidelines of the Economic Freedom Network Asia 2011 Conference yesterday. In addition, government policy and implementation must also be consistent for Malaysia to be seen as an attractive destination for investors, be it domestic or foreign players, Wan Saiful added. Indeed, the government has recognised the need to overhaul the present system with a view to making Malaysia into an advanced, high-income nation. Saiful: It is difficult to see the government letting go of control on the economy. Among other policy proposals, the National Economic Advisory Council’s (NEAC) New Economic Model (NEM) proposed a shift from the old approach of dominant state participation in selected economic sectors towards private sector-led growth. To that end, the government is looking to promote competition across and within sectors to revive private investment and market dynamism, the NEAC said. The NEM also argued for the need to re-engineer public institutions to prevent duplication of functions that can be better provided by the private sector, with public institutions being limited to the role of the facilitator. “While this approach (public investment and GLC initiatives) may have served the country well in the past, it is unlikely to provide the dynamism needed to spur the country to developed country status. That will come from new ventures, fresh products and emerging niche markets,” the NEM noted. The NEM’s policy proposals to create an ecosystem for entrepreneurship and innovation include reducing direct state participation in the economy, divesting GLCs in industries where the private sector is operating effectively and ensuring GLCs operate on a strict commercial basis free of government interference. This comes amid longstanding concerns that the size and presence of GLCs could crowd out the private sector. In a frank assessment of the present situation, the NEM noted that the government — in playing the role of business owner and regulator of industries — faces conflicts of interest which can result in GLCs gaining an unfair advantage over private firms. “This in effect discourages new private investment in market segments where GLCs are strong. Such market segments could well be the ones which could attract private investment in high value added products and services,” the NEM stated. Nevertheless, the NEM pointed out that there is still room for GLCs to partner more effectively with the private sector. These collaborations could take advantage of economies of scale, networking and ventures abroad. Earlier at the Economic Freedom Network Asia 2011 Conference yesterday, Prof Dr Jurgen Morlok of the Friedrich Naumann Foundation for Freedom (FNF) argued that the state’s role should be restricted to the regulation of the economy to the extent that it allows for fair competition to take place. “The state should set the rules and act as a referee, no more, no less. When the state becomes the referee and player at the same time, competition becomes unfair,” said Morlok, who chairs the FNF board of trustees. Earlier reports by the Vancouver-based Fraser Institute’s Economic Freedom of the World, meanwhile, show that Malaysia’s ranking on the Economic Freedom Index has been slipping over the past few years. Malaysia has gone from occupying 53rd position in 2006 to 78th place in 2009, with a summary rating of 6.68 out of 10. At the top of the 2009 Economic Freedom Rankings were Hong Kong, Singapore and New Zealand, while countries at the bottom were Venezuela, Myanmar and Zimbabwe. The Economic Freedom of the World report, which ranks 141 nations, measures the degree to which a country’s policies and institutions are supportive of economic freedom. A comparison of Malaysia’s summary ratings for 2005 and 2008 show that Malaysia had recorded slight improvements in the regulation of credit, labour and business and, access to sound money. Malaysia’s summary ratings however declined from 2005 to 2008 in the areas of government size, legal structure and property rights and freedom to trade internationally. The Economic Freedom of the World 2011 report is scheduled to be released today.

Government in a bind over GST implementation

by Syarina Hyzah Zakaria
Edge, 19 October 2011
KUALA LUMPUR: The government has again delayed the implementation of the goods and services tax (GST) as it wants to have greater acceptability and enough time to educate the people on what the GST really is, said Veerinderjit Singh, managing director of independent tax advisory firm Taxand Malaysia Sdn Bhd. In a seminar on Budget 2012 yesterday, Veerinderjit said the timing of the GST has always been a crucial point but in light of the global economic uncertainties and high prices of commodities, the acceptability among the rakyat becomes a sensitive issue. “Perhaps it (the GST) should have come earlier (before the current economic uncertainties). We may have missed the boat in a sense,” he added. Veerinderjit said once a law is passed on the implementation of the GST, there would be a 12- to 18-month period to allow businesses to change and make the necessary adaptations to the new tax system. He stressed the importance of the preparation period as it provides a window to further educate the public. In the past few years, the business sector had already been made aware of what the GST entails; the main issue now lies in educating the lower-income group which Veerinderjit sees is more resistant of the GST. “The government is probably having a difficult time grappling with the issue largely because of the large number of the low-income group,” said Kang Beng Hoe, executive director of Taxand Malaysia. He said only two million of the 14 million workforce in Malaysia pay taxes. At present, due to the structure of the economy, there are a number of people in the labour force who are falling out of the tax net as their income levels are too low to be taxed, Veerinderjit said. The mentality is “if I don’t pay income tax, then when I pay the GST later, I’m now paying a new tax”, he said. He said the assistance given to help the lower-income group had resulted in a subsidy mentality where the tendency is to depend on the government. The government has made it its priority to change this mindset, he added. “Introducing something which is considered new by the lower-income group is an issue,” he said. Another issue is the large subsidies it has to pay to support the lower-income group. Kang said the government has clearly stated that over time, they want to claw back the subsidies but the question is, which should come first? “So you have two things pushing in opposite directions, should you be clawing back subsidies first or should you be implementing the GST?” he said. The government has to find a way to reduce the deficit, achieve a balanced budget, as well as grapple with the issue of how to slowly take away subsidies and introduce the broad-based GST, Kang said. Veerinderjit and Kang both cited lessons from the success Singapore has had in implementing the GST. The initial GST rate was set at 3% and is currently 7%. Singapore’s corporate tax was previously around 25% but after the implementation of the GST, it was subsequently brought down to 18%. They added that Singapore is at present classified as a tax haven due to their tax structure, and this proved that Malaysia too could have successful implementation of the GST.

Elizabeth: Non-Revenue-Water may hit 40% due to SYABAS incompetence

by Maria Begum,
 
Malaysia Chronicle, 28 October 2011

The Selangor state government is worried about the level of Non-Revenue Water (NRW) and the failure of water concessionaire SYABAS to resolve the problem, despite years of trying but to no avail.

Elizabeth Wong, the executive councilor for Tourism, Consumer Affairs and Environment, slammed SYABAS for failing in its duty to manage the water piping system, through which most of the leakage occurred.

According to Elizabeth, who is also the Bukit Lanjan assemblywoman, SYABAS had a duty to fix the problem swiftly and well under the terms of the privatization agreement inked with the state government.

“If SYABAS cannot afford to reduce NRW to a more acceptable level, it will create a direct impact on the supply of clean water to consumers,” Elizabeth said in a statement.

NRW to exceed 40% due to SYABAS' failure to resolve piping problems

She warned that a report by National Water Services Commission had stated that SYABAS was still struggling to bring the NRW below the 30% target.

The National Water Services Commission now predicts that NRW will shoot beyond 40% until 2020, an alarming trend given the already tight water supply situation in the state.

Although the NRW level in Selangor has been reduced to 32.8% in 2009 compared to 38.43% in 2005, the rate increased again in 2010 and 2011.

Elizabeth added that without enough clean water supply, it is possible that the much-feared water crisis in the Klang Valley will take place as predicted by the federal government although the seven dams in Selangor actually have enough capacity to accommodate all consumers in the state.

Stop trying to force Sungai Langat on us

She took to task Puncak Niaga, a sister firm of SYABAS which is controlled by Selangor Umno's Rozali Ismail, for failing to maintain and keep in good condition two water treatment plants.

“A report by Ranhill found two water treatment plants – Kalumpang and Sungai Sireh – require a big rehabilitation whereas 18 other water plants require smaller scale of rehabilitation,” said Elizabeth.

Thus, she added, it was not a surprise that the plants were functioning below capacity although they could produce enough clean water if they were managed well.

She accused the federal government of taking advantage of these issues to play up the need to build a new water treatment plant in Sungai Langat for its own purposes.

Pundits had said this was a blatant abuse of power and reeked of possible corruption as the firm that would get the contract was alleged to have links with Umno.

If we manage, we can reduce NRW to 10%

Elizabeth accused the federal government of delaying tactics in order to pressure the state government into a deal to benefit an Umno crony. The sooner the federal government allowed Selangor to manage its own water assets, the quicker it could resolve the problems, she said.

“If the state government takes over the management of water, we are convinced that NRW issue will be reduced to around 10% and there will be no problem in supplying water that already saw an increase in demand by up to 10% every year,” said the Bukit Lanjan state assemblyperson.

She pointed to the recent water shortage at an area near to the Subang Airport caused by broken pipes as an example of the mishandling and inability of SYABAS to fix problems swiftly.

While the residents suffered inconvenience and shortage of water, the leakage had caused great wastage of good clean water - exacerbating the NRW problem.

“The company has failed to use green technology like water treatment in containers which is far easier to do, cheap and fast compared to building said Elizabeth.

MCMC’s new chairman faces many challenging issues

by B.K. Sidhu

STAR, 21 October 2011

DATUK Mohamed Sharil Tarmizi has got himself onto a “hot seat”.

The task at hand is arduous as there are a lot of issues that need sorting out.

Despite that, there were many others vying for the hot seat. Perhaps it is the power that comes with the position that attracts so much interest.

Sharil is the new chairman of the Malaysian Communications and Multimedia Commission (MCMC) and his appointment is effective Sunday. He takes over from Tan Sri Khalid Ramli, who during his two-year term, was well known for helping to widen the reach of Internet to the interiors of the country.

Sharil is akin to a homegrown candidate as he has been with the commission for nearly a decade, although he left after his first six-year stint but came back in 2008 to become chief operating officer.

Globally, he has worked on various projects with the International Communications Union. So his appointment as MCMC chairman came as no surprise to the industry.

But the job that awaits him may surprise him as there are loads of issues and the journey could be arduous.
The biggest issue is transparency and he needs to address that, be it from the way the Universal Service Provider funds are used to how the 2.6G spectrum is being allocated to nine players, the deafening silence over the 700MHz spectrum and the long-overdue tender bid for terrestrial digital TV, among others.

The way he handles them would be closely watched both locally and globally as foreign investors want to know how sound the policies are for them to invest, or whether the would be flip-flops.

This becomes more pressing since the Government has said in the Budget 2012 proposals that 17 services sub-sectors, including telecoms, would be liberalised and the idea behind that is to attract foreign direct investments (FDIs). The country needs FDIs and the area of content and services can do with some foreign players.

Looking from the licensing regime, it took a new format and course when the vertical type of licensing that is based on technology type of services was changed to a horizontal type of services, thereby creating different categories of players such as network facilities providers (NFPs), network service providers (NSPs), application service providers (ASPs) and content application services providers (CASPs).

As someone put it: “It is meant to be an inverted pyramid with smaller numbers of NFPs, a bit more NSPs, and open basket of ASPs and CASPs. The rationale was to have more NSPs and ASPs so that there will be competition and choices but along the way, we may have given too many NFPs and this has resulted in a lot of investments going into network infrastructure building, thereby creating duplication of networks.''

There are also lessons to be learnt from the second round of 3G spectrum award. One company that deserved the spectrum did not get it but two others were given. One of the two did not roll out the services and eventually sold the spectrum to the deserving company, but at a high premium. So, future award of spectrum has to be done with thorough evaluations.

Malaysia was one of the first countries to introduce convergence but it is hard to benchmark the achievements because along the way, the theme of convergence somehow has got diluted.

Whatever has been done up to now has served a specific purpose although the glaring issue over clarity remains. We need the better of it.

Perhaps the first thing that Sharil can do is to take stock and do some soul searching to set things straight for the better of consumers, the industry and the nation. But time is a factor and he knows that too well.

My bet is that the dynamics of change is apparent at the commission. So, stay tuned.

Energy Commission justifies early bidding for Tanjung Bin project

STAR, 22 October 2011

KUALA LUMPUR: The Energy Commission has clarified that the bidding process for the Tanjung Bin power station project was conducted five years before it begins operations in 2016 because construction of such a large-scale power plant would require at least five years on a brownfield site.

The project in Johor, which is to develop and operate the 1,000 MW coal-fired power plant, was awarded to Transpool Sdn Bhd, a subsidiary of Malakoff Corp Bhd, via a competitive restricted bidding process conducted by the commission from Nov 15, 2010 to April 15, 2011.

The project is needed to meet the projected demand in 2016 following the cancellation of the proposed submarine cable from the Bakun Hydroelectric Project.

“Greenfield development will require a longer period to undertake the Environmental Impact Assessment (EIA), detailed site identification and assessment.

“Based on the projected economic growth, failure to award such a project on time to achieve commercial operation in early 2016 will result in potential brownouts in the country,” the commission said in a statement yesterday.

It was responding to a recent statement by Petaling Jaya Utara MP Tony Pua.

The commission said the brownfield site option was chosen for the bidding process.

“Following an assessment by the Energy Commission, there are only two suitable brownfield sites that can meet the timeline requirement, and they were therefore short-listed for the bidding process.

“The evaluation of the bid proposals was conducted by a team consisting of officers of the Energy Commission as well as reputable financial, legal and technical international consultants appointed by the Energy Commission,” it said.

It said the tariff and concession period had already been determined through the competitive bidding process, adding that the final tariff submitted by the winning bidder and approved by the Government was very competitive compared with similar projects in the region. – Bernama

Railway revamp

STAR,  27 October 2011

KTM Bhd (KTMB) will undergo a two-year corporate restructuring programme to turn around the ailing national rail operator and a consultant will be hired to manage this, according to the Treasury, in its reply to the Auditor-General's (A-G) report.

The A-G's report had stated that KTMB posted a loss of RM92.6mil in 2009 compared with RM84.6mil loss in the previous year.

The Treasury said that apart from high operational costs, the losses were also due to a decline in cargo transportation earnings by 50% in 2009.

One of the reasons for this was insufficient train capacity of the State Railway of Thailand to support KTMB's cross-border services.

Insufficient capacity: KTMB does not have enough electric multiple sets to support its commuter train services.

KTMB also did not have enough electric multiple sets to support its commuter train services.

KTMB's associate company KL Sentral Sdn Bhd also saw a 70% decline in revenue during the year under review. KTMB also suffered an asset depreciation charge of RM265mil in 2009.

According to the Treasury, the Finance Ministry has directed KTMB to present its financial and non-financial reports to the Government on a quarterly basis.

The A-G's report also stated that KTMB must tackle its problem of having a high number of outstanding debtors in order to achieve healthy cash flows.

As of end-2008, KTMB had failed to collect debts amounting to RM40.7mil and RM3.8mil more was owed to its subsidiary.

The A-G's report also found that KTMB had not charged any interest on overdue credit extended to its customers.

The report suggested that KTMB institute legal actions against companies or individuals who failed to settle their debt.

However, it acknowledged that part of the problems with KTMB's debt collection was due to its failure to renew its land lease with the Federal Land Commissioner.

It added that the land lease contract had expired and because of this, KTMB was unable to collect debt, rent or take legal actions.

The A-G's report noted that the Transport Ministry, had on April 8 2010, decided that Perbadanan Aset Keretapi (PAK) would become the custodian of all land belonging to KTMB under the Railway Act 1991.
PAK would manage all land matters relating to KTMB, including land rental.

KTMB was also in the process of drafting a new credit agreement (cargo) that will include a clause on interest charges.

The report added that KTMB had begun legal proceedings against some cargo debtors.

Government spent RM1.2b keeping IWK afloat

By Shannon Teoh

Malaysian Insider, 5 October, 2011

 

KUALA LUMPUR, Oct 5 — Putrajaya said today it had spent RM1.2 billion to sustain Indah Water Konsortium’s (IWK) operations since nationalising the national sewerage company in 2000.

The finance ministry said in a reply to a parliamentary question from Anthony Loke (DAP-Rasah) that IWK has liabilities amounting to RM2 billion, while its assets were valued at about RM1.2 billion.

“The government has spent about RM1.2 billion to cover IWK’s operational deficit due to low sewerage tariffs as compared to the true cost of operations.

“IWK’s total liability up to June 2011, most of which are government support loans, is RM1.98 billion,” it said in a written reply.

The finance ministry also said that there are no plans to privatise IWK but the Energy, Green Technology and Water Ministry would be restructuring the sewerage industry, reviewing sewerage tariffs and guaranteeing future capital expenditure.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said on September 10 that IWK would be merged with a government unit, confirming a report by The Malaysian Insider.

Ahmad Husni said that the merger process was already underway but declined to disclose the name of the government subsidiary, except to say that IWK would continue to be government-owned after the merger.

The Malaysian Insider reported on September 8 that IWK would be privatised into a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners.

Finance Ministry sources told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak.

However, it is understood that some ministry officials are still scrutinising the deal amid concerns about its feasibility and worries over whether the government could once again be forced to bail out the company if the latest plan fails.

Under the proposed deal, the 1MDB consortium will acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry.

The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term.

Bumis ‘typically’ sold government contracts for cars, houses, leaked study reveals

Malaysian Insider, 20 September, 2011

KUALA LUMPUR, Sept 20 — An unpublished Works Ministry study found that Bumiputera contractors as a rule sold their government contracts to buy luxury cars and houses apart from misusing payments received from the Treasury, according to a leaked US diplomatic cable.

The cable, revealed by whistleblower website WikiLeaks, comes just after Putrajaya agreed to allocate RM8 billion worth of contracts in the country’s most expensive infrastructure project, the Klang Valley Mass Rapid Transit (MRT), which initially set strict rules for its contractors.

The US diplomatic cable quoted a Works Ministry source as saying the “Study on Bumiputera Contractor Leakage” was the result of feedback from various industry sources on failed and successful projects. The report was used by then-Prime Minister Tun Abdullah Ahmad Badawi (picture) to castigate failing Bumiputera businessmen in February 2007.

“The current system of awarding lucrative government contracts to Bumis provides them with a strong economic incentive to simply act as agents, turning over as many projects as possible and taking a cut before handing each one off to a competent non-Bumi implementer.

“This ‘Bumi agent’ system is firmly entrenched in Malaysia. Any effort to make reforms is likely to be resisted not only by well-established Bumis, but also by the non-Bumi implementers who have built up a network of well-oiled agent partnership,” the US Embassy concluded in the report published by the Malaysia-Today news portal.

The US and European Union have called for more transparency and equality in government procurement by Malaysia as part of the free trade agreement talks which have yet to be concluded.

In the leaked cable, the US embassy reported: “The source said the study, which has not been released to the public, revealed that many Bumi contractors typically sold off their tenders for quick money, often to finance expensive cars and houses. The report also found Bumiputera contractors had misused payments received from the government to pay off creditors and that they often sought additional government tenders prior to completing the ones already awarded to them.”

“The official said contractors were irresponsible and had abused the trust given to them by the government which was meant to help Bumiputeras progress,” it added.

The US cable noted that then-Finance Ministry secretary-general Tan Sri Izzudin Dali had disclosed new regulations that Bumiputera contractors seeking government tenders will soon be required to sign an official declaration promising not to sell or subcontract their tender to other races.

“Violators will have their contracts and registrations terminated. Izzudin added that under the new rules contractors undertaking public infrastructure contracts will now be awarded only one project at a time and that projects will be distributed evenly among contractors in the same area or district,” the cable said, quoting Izzudin’s speech on February 16, 2007.

Incidentally, Izzudin recently completed one term as chairman of Syarikat Prasarana Negara Bhd (Prasarana), the original project owners of the MRT which is now owned by a new Finance Ministry unit called MRT Co. Sources said his strictness in selecting successful contractors had delayed the massive infrastructure project.

The cable also quoted then-executive chairman Datuk Moehamad Izat Emir of the Malay Entrepreneurs and Merchants Association as saying payment was the main issue facing the contractors.

“He said that while Abdullah had directed the disbursing agency to pay the contractors within two weeks after completing the work, this often does not happen,” the cable reported, saying Moehamad suggested Bumiputera contractors be trained to upgrade their skills and suggested government-linked companies (GLCs) be required to support these contractors.

It noted that Roslan Awang Chik, of the Malay Contractors Association, shared Moehamad’s view that “competency comes from exposure”.

“He is puzzled why many well-known and qualified Bumiputera contractors were not being awarded government contracts while several unknown ones were. He suggested the government blacklist any contractors found to be selling their tenders,” the cable said, quoting Roslan as saying “they can be considered traitors.”

The US cable was sent to Washington after Abdullah had publicly expressed frustration and disappointment over findings from a recently released Works Ministry report showing 85 per cent of government contracts awarded to Bumiputera contractors.

“They (Bumiputera) do not want to work, do not want to learn, and give little importance to the opportunities provided by the government...

“This approach will only make us hope and wait for aid and subsidies. Such a mentality thrives among the people, including Bumiputera petty traders and contractors,” the report quoted Abdullah as making the comments at a dinner speech on February 13, 2007.

Put phone tax on hold, telcos told

STAR, 11 September 2011

PUTRAJAYA: The Information, Communications and Culture Ministry has “blocked” plans by the telcos to impose a 6% service tax on prepaid mobile phone services.

“I have intimated to the telcos to stop the implementation of the service charge at this untimely hour,” said minister Datuk Seri Dr Rais Yatim.

“I will raise the issue with the Cabinet on Wednesday,” he said yesterday.

“My ministry does not support the move.”

Dr Rais said the Malaysian Communications and Multimedia Commission (MCMC) has also been directed to study the mobile operators' licensing regulations on service tax.

“We will see what the regulations state,” he added.

Dr Rais advised the telcos to think about their subscribers, saying that some of the firms had been reaping profits of between RM800mil and RM1.2bil annually.

“They have been earning attractive profits, notwithstanding paying the levy on behalf of subscribers since 1998,” he said.

Meanwhile, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob also planned to bring the issue up at the Cabinet meeting.

He said there had been numerous calls for the telcos to upgrade their services “which had not been taken seriously”.

“Yet, they now want to impose service tax on customers,” he said.

Prime Minister Datuk Seri Najib Tun Razak had on Friday said the plan to impose the service tax from Thursday was not approved by the Finance Ministry, adding that the people were already being burdened by the rising cost of living

Move by telcos to impose 6% tax on prepaid lines comes under fire

STAR, 10 September 2011

KUALA LUMPUR: Calling it difficult to accept, the Prime Minister has joined in the chorus of people against the move by telcos to impose 6% service tax on prepaid mobile phone users.

Datuk Seri Najib Tun Razak said the move comes at a time when the Government was trying to ease the burden of the rakyat’s who are already hit by the rise in living costs.

He added the move was not approved by the Finance Ministry as the decision to impose taxes was taken by the telcos themselves.

“I have received many reactions and feedback from the people,” he told reporters yesterday after launching Maybank’s new corporate logo.

“The move to impose the service tax on consumers is very unpopular and difficult to accept.”

MCA Youth chief Datuk Dr Wee Ka Siong said the service tax was a huge burden to the people.He added mobile phones were an essential item to consumers and played a major role in the daily life with most of the prepaid users coming from the lower-income group.

It was reported that from Sept 15 onwards, prepaid users and those purchasing starter kits would need to pay an extra 6% as telcos agreed they would no longer absorb the service tax, which was introduced in 1998.
Umno Youth chief Khairy Jamaluddin described the decision as “unreasonable”.

“Boss @NajibRazak, the decision to impose tax on prepaid users is unreasonable and it would burden the rakyat. I oppose it. Please review it,” he tweeted.

PKR vice-president Tian Chua said the Government must intervene immediately to help low-income earners.
He also noted that prepaid plans were unfair to users by design as users paid for their usage up front.

Consumer groups were also up in arms over the increase, which they have lambasted as unfair.

Consumers Association of Penang president S.M. Mohamed Idris called on the Malaysian Communications and Multimedia Commission to stall the move.

He added mobile phone prepaid users faced the brunt of unfair terms and conditions imposed on them, especially when the balance in their account was forfeited when they did not reload within the validity period.

He suggested that a prepaid number should have lifetime validity and be activated at the customers convenience.

Muslim Consumers Association Malaysia activist Datuk Nadzim Johan said the increase was unfair and ill-timed when consumers were tightening their belts over the increasing cost of other essential goods.

Fomca secretary-general Muhammad Sha’ani Abdullah said the telcos were already pocketing extra from their customers with their “call block” formula.

“If a telco charges RM0.30 per minute with 30 seconds per block, this means that you pay RM0.15 whether you use the phone for only 10 seconds or 30 seconds,” he said.

“This means the telcos are already making money from the unused seconds. Consumers have already been over-paying for years.”

Husni now says IWK to merge with government unit

Malaysian Insider, 10 September 2011

IPOH, Sept 10 — Putrajaya will merge national sewerage company, Indah Water Konsortium, (IWK) with a government unit, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said today, confirming a report by The Malaysian Insider.

Ahmad Husni said the decision was made recently by the National Economic Council.

“The move is an effort to strengthen both entities which are owned by the government. The biggest asset owned by IWK can be redeveloped to benefit the merged entity,” he told reporters after distributing Jalur Gemilang flags to Chemor residents here.

Saying that the merger process had begun, Ahmad Husni, however, declined to disclose the name of the government subsidiary, except to say that IWK would continue to be government-owned after the merger.
IWK is currently wholly-owned by the Ministry of Finance Incorporated.

The Malaysian Insider reported on Thursday that IWK would be privatised into a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners.

Finance Ministry sources told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak.

However, it is understood that some ministry officials are still scrutinising the deal amidst concerns about its feasibility and worries over whether the government could once again be forced to bail out the company if the latest plan fails.

Under the proposed deal, the 1MDB consortium will acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry.

The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term.

IWK to be privatised to 1MDB

By Leslie Lau
Malaysian Insider, 8 September 2011

 

KUALA LUMPUR, Sept 8 — Indah Water Konsortium (IWK) is expected to be privatised soon to a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners, according to sources in the Finance Ministry.
The sources told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak.

However, it is understood that some ministry officials are still scrutinising the deal because of concerns about its feasibility and worries that the government could once again be forced to bail out the company if the latest plan fails.

Under the proposed deal, the 1MDB consortium will acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry.

The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term.

It also has plans to link sewerage charges to water usage.

The plan could spark a new round of controversy because of the lack of transparency surrounding negotiations, with consumers still wary about deals involving IWK.

From Day One, IWK has had problems convincing a sceptical public to pay for separate sewerage charges which had previously been part of the water bill.

In 2000, Tun Dr Mahathir Mohamad’s administration paid nearly RM200 million to nationalise IWK to “safeguard public interest and to avoid service disruptions.”

The nationalisation of IWK was to tackle the company’s debt then of nearly RM700 million.

IWK’s bailout in 2000 exemplified the pitfalls of Dr Mahathir’s privatisation policy in which government-owned assets or resources were allocated or sold to private investors in the hopes of generating profits.

The IWK story began in 1993 when businessman Tan Sri Vincent Tan convinced the government to let a consortium of private interests led by him to take over the ownership, operation and maintenance of more than 2,800 state-owned sewage-treatment plants nationwide.

But IWK subsequently found that many of the treatment plants it inherited from the government were not functioning and costs began escalating.

A nationwide furore also ensued, with many consumers and businesses complaining bitterly about IWK.
Maintaining the plants and staying profitable proved impossible for IWK.

Under pressure, the government also forced the company to reduce its charges.


By 2000 Dr Mahathir’s government then decided to nationalise IWK.

The Najib government’s new plan could attract similar criticisms because it involves 1MDB and Puncak Niaga, a company that is seen as politically connected to Putrajaya.

Prasarana reserves ‘at least’ 30pc of MRT for Bumi contractors

By Boo Su-Lyn

Malaysian Insider, 23 August 2011

KUALA LUMPUR, Aug 23 — Syarikat Prasarana Negara Bhd will reserve at least 30 per cent of the Klang Valley Mass Rapid Transit (KVMRT) construction packages for Bumiputera contractors.

Abdul Malik Azman, Prasarana’s head of MRT Procurement Management Department, told The Malaysian Insider today that the quota for Bumiputera contractors was part of the government’s “national agenda.”

“We have this Bumiputera agenda approved by the MOF (Finance Ministry).

“At least 30 per cent of packages should be allocated for Bumis. This is the national agenda,” he told The Malaysian Insider after a briefing for pre-qualified contractors at Prasarana’s office here today.

In May, Prasarana had caved in to pressure from Malay rights groups when it revised pre-qualification criteria for several construction packages.

The project owner had said then that contractors who wanted to tender for elevated civil works, stations and depots work construction packages would be allowed to form joint ventures (JV) or consortiums among local companies.

Twenty-eight firms including heavyweights such as Sunway, IJM and MRCB have been shortlisted for the construction of the first phase of the KVMRT project

The works packages were divided into two categories: Open and Bumiputera.

The value for contracts under the Bumiputera category is about RM250 million per package, based on the last briefing to contractors by Prasarana in May.

Abdul Malik said today that there were 18 work packages, comprising eight packages for elevated civil works, eight packages for stations and two packages for depots.

He said six out of the 16 packages for elevated civil works and stations, as well as the Kajang depot work package, were reserved for Bumiputeras.

“A few Bumis here can (also) bid in the Open category. (They can go) fishing in the pond and ocean. They have more chances,” said Abdul Malik.

He pointed out that Trans Resources Corporation Sdn Bhd, Ahmad Zaki Sdn Bhd and MTD Construction Sdn Bhd could bid for all eight elevated civil works packages.

Trans Resources Corporation and Naim Engineering Sdn Bhd could bid for all eight stations and both Sg Buloh and Kajang depot work packages, he added.

Abdul Malik told a press conference earlier today that winning contractors would be picked based on their financial capabilities, their equipment and “realistic” offers.

The Prasarana official, however, refused to specify what he meant by a “realistic” price, saying: “If we say, we might not get a competitive price.”

He added that the first two elevated civil works packages, which are a 5.2km viaduct from Taman Bukit Ria to Phoenix Plaza in Cheras and another 5.4km viaduct from Phoenix Plaza to Bandar Tun Hussein Onn, would be awarded in January or February next year, and construction of the multi-billion ringgit rail project would start.

Najib: Tajuddin intervention ‘off-site’ solution, not settlement

By Shazwan Mustafa Kamal

Malaysian Insider, 12 August 2011

 

Najib said his administration’s decision to step in on Tajuddin’s cases should not be “misconstrued”. — File pic

 

KUALA LUMPUR, Aug 12 — Datuk Seri Najib Razak defended his administration’s intervention in Tan Sri Tajuddin Ramli’s civil cases, saying today that the move should be seen as an “off-site” solution. The prime minister said that Putrajaya’s letter to all government-linked companies seeking for them to withdraw their suits against the former Malaysia Airlines (MAS) chairman should not be “misconstrued” as an out-of-court settlement.

“It can’t be misconstrued as a settlement out of court… this is a discussion to find positive solution off- site,” he told reporters today. He did not, however, elaborate on what he meant by the phrase.
Najib also stressed that the matter was not finalised and was still in the “process of discussion.”

“We are aware of our position and we hope are hoping for positive outcome,” the PM added.
Minister in the Prime Minister’s Department Datuk Seri Nazri Aziz has insisted that the government’s intervention in Tajuddin’s cases could save the government billions in legal claims.

The letter to the GLCs, said Nazri, was not an order set in stone and did not outline any commitment on behalf of the companies stipulating that Tajuddin would walk away scot-free.

Nazri had told The Malaysian Insider yesterday that he had written to GLCs earlier this month seeking for them to withdraw their suits, worth at least RM2 billion, to buy time for all concerned parties to reach a “win-win” agreement and put an end to the prolonged financial saga involving Tajuddin.

The Padang Rengas MP had listed the three main parties involved in suits against Tajuddin — MAS, Telekom Malaysia and Prokhas Sdn Bhd — and said the government-linked entities can still choose to proceed with their suits if they felt they had a strong case against him.

Tajuddin was a protégé of Tun Daim Zainuddin, a close friend of former prime minister Tun Dr Mahathir Mohamad and an ex-finance minister who was the architect of the now-discredited policy of nurturing a class of Malay corporate captains on government largesse.

Individuals such as Tajuddin, Tan Sri Halim Saad and others flew high in the 1990s but their true mettle was tested during the Asian financial crisis. Nearly all of them fared poorly.

The Najib government’s move to settle all outstanding claims against Tajuddin appears to be an attempt to wipe the slate clean in a financial saga that goes back decades to the height of Dr Mahathir’s administration.
MAS had first lodged a police report against Tajuddin in 2002 for allegedly causing the flag carrier to suffer losses in excess of RM8 billion. Tajuddin was the executive chairman of the airline from 1994 to 2001.

Nazri says Tajuddin intervention could save Putrajaya billions

By Clara Chooi

12 August 2011

 

Nazri insists that the letter was not an order for the firms to let Tajuddin off the hook. — File pic

 

KUALA LUMPUR, Aug 12 — Datuk Seri Mohamed Nazri Aziz has rebuked those who have questioned his authority in intervening in the Tan Sri Tajuddin Ramli’s civil cases, insisting today that the move could save the government billions in legal claims. 

 

The minister in the Prime Minister’s Department disagreed that he had overstepped boundaries with a letter earlier this month telling all government-linked companies to withdraw their suits against the former Malaysia Airlines (MAS) chairman, claiming he had done so in his role as a “facilitator” for the government.

Nazri also told detractors to check their facts before spewing insult against him, saying, “I know what I am doing.”

He accused DAP publicity chief Tony Pua of practising double standards for saying the minister should be placed under the Emergency Ordinance for issuing the letter, asking the leader why he had not urged the same when other Pakatan Rakyat (PR) leaders attempted to intrude on government affairs.

“I want to ask him (Pua): When (PAS president Datuk Seri Abdul) Hadi Awang asked the Damansara Utama Methodist Church (DUMC) and Jais (Selangor Islamic Religious Department) to see him and explain the recent church raid, why did he not rebuke Hadi?

“Because what power does Hadi have in doing so? He is not the mentri besar of Selangor and neither is he the minister for religious affairs. So why the double standards, Tony?” Nazri told The Malaysian Insider.
Similarly in the controversy over the Kedah government’s ban on entertainment outlets during Ramadan, Nazri said DAP chairman Karpal Singh had no business ordering the businesses to stay open.

“On my part, I spoke to the second finance minister and he told me why don’t I explore this issue and that I may be the facilitator to urge these GLCs to sit down with Tajuddin to come up with an amicable solution. So what power did I abuse?” he asked.

Nazri said that to defend himself, Tajuddin, who is facing millions in legal claims for allegedly causing MAS to suffer losses in excess of RM8 billion during his tenure, had made a whopping RM13 billion counter-claim.
“Our total claims by the companies against Tajuddin are only half a billion ringgit. That is why, we said we should sit down and talk,” he said.

The letter to the GLCs, said Nazri, was not an order set in stone and did not outline any commitment on behalf of the companies stipulating that Tajuddin would walk away scot-free.

“It’s different if I went and spoke to some parties and then went claiming as if the government has agreed to settle all claims and let him go,” he said.

Nazri also disputed law professor Abdul Aziz Bari’s claim that, notwithstanding his explanation that the letter only constituted advice, he could not absolve the Najib administration of responsibility by attempting to settle the outstanding claims against Tajuddin.

“It is my letter so I should know better whether or not I made an order or advice. I asked them (GLCs) to speak with Tajuddin’s people. He (Aziz) is shallow in his thinking,” he said.

Nazri had told The Malaysian Insider yesterday that he had written to GLCs earlier this month seeking for them to withdraw their suits, worth at least RM2 billion, to buy time for all concerned parties to reach a “win-win” agreement and put an end to the prolonged financial saga involving Tajuddin.

The Padang Rengas MP had listed the three main parties involved in suits against Tajuddin — MAS, Telekom Malaysia and Prokhas Sdn Bhd — and said the government-linked entities can still choose to proceed with their suits if they felt they had a strong case against him.

Pua: Investigate Nazri for power abuse in Tajuddin Ramli’s cases

By Debra Chong

Malaysian Insider, 12 August 2011

KUALA LUMPUR, Aug 12 — The DAP’s Tony Pua has accused Datuk Seri Nazri Aziz of abusing his authority by meddling in lawsuits involving Tan Sri Tajuddin Ramli, and today called for the de facto law minister to be investigated.

The DAP publicity chief described as “unprecedented” Nazri’s recent directive to several government-linked companies (GLCs) to withdraw their ongoing suits against Tajuddin and settle the matter out-of-court, saying the minister in the Prime Minister’s Department could be investigated under the Emergency Ordinance.

Pua said the directive was ‘unprecedented’. — File pic

“Nazri can be investigated under section 2(1) of the Emergency (Essential Powers) Ordinance No. 22/1970 where ‘Any member of the Administration, Parliament or State Legislative Assembly or any public officer who commits a corrupt practice shall be liable to a term of imprisonment of 14 years or a fine of RM 20,000 or both’,” the Petaling Jaya Utara MP pointed out in a statement.
“Such an instruction from a minister’s office, especially one with no authority over the various GLCs including Malaysian Airlines System (MAS), Telekom Malaysia and Prokhas (formerly Danaharta), must be at the very least highly improper, and at worst an illegal and corrupt practice to allow Tan Sri Tajuddin Ramli to get away with billions of ringgit in debt,” Pua said.

He stressed that the companies are listed on Bursa Malaysia and have their own board of directors to decide the interest of their respective companies and that Nazri had no business giving any kind of instruction as the latter did not sit on any of the boards.

“His directive to these GLCs made a complete mockery of corporate governance in these companies and will only turn away local and foreign investors who will not tolerate blatant interference from the government on business and financial decisions,” Pua said.

He slammed Nazri’s “attempt” to explain yesterday, saying the directive “is clearly designed to provide the [Tajuddin] breathing space and a desperate attempt to bail him out of billions of ringgit in debt to the government agencies and companies, as well as to excuse him from causing billions of ringgit in losses to our flagship carrier MAS”.

Yesterday, Nazri said his directive was merely to buy time for all concerned parties to reach a “win-win” agreement and put an end to the prolonged financial saga involving Tajuddin in a massive debt bailout for the former MAS chairman.

The minister denied it was a bailout.