MB Khalid to list out all of Selangor's water assets

Malaysian Insider, 9 February 2011

Khalid Ibrahim said today that Selangor will publish a full report of all water assets in the state by March to ensure that Selangor’s takeover of the state water industry from four water concessionaires is done in a “fair manner.”

The state government had made an offer of RM9 billion for the assets of the concessionaires last month but they had rejected it, calling the offer “ambiguous.”

The move to detail all water assets in the state appears to be a bid to pressure the concessionaires to accept what Mentri Besar Khalid has said is his final offer.

Khalid said that the current deal was “an opportunity for concessionaires to reap high profits. Even in the agreement document, concessionaires are allowed to use the assets without any charge.”

The state government will conduct fixed asset sightings on water treatment plants, pipe supplies and water reservoirs before publishing the report.

The report, which will list down the location as well as individual and collective value of each asset, will also take into account technical details concerning water treatment and management of water in the state.

The state government said last month that it was willing to pay up to RM9 billion for the assets of all four water concessionaires in the state before selling all assets to the federal government.

The national water industry restructuring scheme has been delayed by a dispute over the price of the privatised assets in Selangor, which also provides water to the federal territories of Kuala Lumpur and Putrajaya.

Selangor made the RM9 billion combined offer to the four water concessionaires in Selangor — Puncak Niaga (M) Sdn Bhd (PNSB), Bekalan Air Selangor Sdn Bhd (Syabas), Konsortium Abass Sdn Bhd (ABASS) and Syarikat Pengeluar Air Selangor Sdn Bhd (SPLASH).

Khalid has said that the total water assets in Selangor were currently worth more than RM10 billion, which the previous state administration had never taken into account when agreeing to the privatisation of the water industry in Selangor.

Under the new offer, water concessionaires could bring up any dispute to an international arbitration court.
Selangor, which already owns 80 per cent of the state’s water supply assets, is preparing to take over the remaining assets after Putrajaya said it did not object to direct negotiations between the state government and concessionaires.

Selangor intends to retain management of the water assets, which also cover the federal territories of Kuala Lumpur and Putrajaya. A project to get water from Pahang has also been delayed because of the issue.

The state government has made two previous offers for the water assets. The first offer, RM5.7 billion for assets and equity, was turned down by all four players, while the second RM9.4 billion offer — this time including liabilities — was rejected by Syabas and sister company PNSB.

Both Syabas and PNSB are controlled by Puncak Niaga Holdings Bhd (PNHB) which belongs to executive chairman Tan Sri Rozali Ismail, who is Selangor Umno treasurer and the 31st richest man in Malaysia, according to Forbes.

The two-year water-restructuring saga has been characterised by finger-pointing by the water authorities as well as federal and state governments keen on deflecting blame for the deadlock.

The impasse began soon after parties that formed the Pakatan Rakyat (PR) unexpectedly took control of Selangor, Malaysia’s richest state, in the last general election.

Since then, privatisation plans for the water industry have been put in deep freeze as the federal and state governments engage in what industry watchers have called “excessive politicking”.

Control of Selangor’s water assets is important to PR so it can set tariffs and fulfil its campaign promise of free water for all residents in the state.

- Malaysian Insider

Garbage deal refused

STAR, 7 February 2011
BUKIT MERTAJAM: There is no need for Penang to privatise solid waste management if the two municipal councils are competent enough to undertake the task.

State Local Government and Traffic Management Committee chairman Chow Kon Yeow said the state had informed the National Committee on Solid Waste Management last year that it wanted the two councils to continue handling solid waste.

“The committee has yet to get back to us on this,” he said when contacted here yesterday.

It was reported that the Federal Government had appointed E-Idaman Sdn Bhd to take over garbage collection and cleaning services in the northern region.

The company took over the services in Perlis and Kedah last year but not in Penang as the state government had reservations about the privatisation model.

Seberang Prai Municipal Council (MPSP) president Mokhtar Mohd Jait had said the council’s workers were carrying out garbage collection in 265 housing schemes or 43% of the total housing schemes in Seberang Prai.
He said the rest of the areas had been privatised to local contractors.

“We are in a dilemma of not being able to appoint new contractors to collect garbage while awaiting the state government’s deliberation with the federal authorities on the privatisation of solid waste management.

“The Federal Government had earlier advised all local authorities not to sign long-term contracts with new contractors pending the privatisation,” he told a full council meeting at the council headquarters in Bandar Perda here.

Chow said all state governments were given an option to accept or reject the privatisation of solid waste management under the Solid Waste and Public Cleansing Management Corpo­ration Act 2007.

He hoped the Federal Go­v­ernment would allow local authorities to sign long-term contracts with new contractors as well as employ new general workers to replace those who have retired.

He advised MPSP to negotiate with existing contractors to widen its areas of coverage to include housing schemes without contractors.

Kuala Dimensi gets PKA suit struck out

STAR, 7 February 2011

SHAH ALAM: The Shah Alam High Court has struck out the Port Klang Authority's (PKA) suit against Kuala Dimensi Sdn Bhd (KDSB) to rectify a sales and purchase agreement (S&P) for 1,000 acres (404.68ha) of land worth RM1.88bil for the Port Klang Free Zone (PKFZ) project signed in 2002.

Justice Datuk Zaleha Yusof, after hearing submissions of both parties in her chambers, ruled that she agreed with arguments put forward by KDSB that there were no mutual mistakes in the terms of agreement entered by both parties (PKA and KDSB) as contended by the plaintiff.

KDSB's counsel Indran Navaratnam said the defendant (KDSB) had submitted that one of the clauses in the agreement had clearly stated that the agreement superceded all the previous negotiations between both parties.

He said the plaintiff also had argued that there was no evidence that a letter by the Government evaluater over evaluation of each square feet of the said land (1,000 acres) was given to KDSB as contended by the plaintiff.

In the suit filed in Sept 2009, besides seeking rectification of the agreement, the plaintiff also wanted a refund on interest already paid to KDSB.

PKA contended that mistakes and fraud were involved in the agreement and that the value of each square feet of the land should be at RM21 and not RM25.

PKA also claimed the purchase price was already inclusive of interest as stated in the agreement and that it would be paid over 15 years.

PKA counsel Cindy Khaw, when contacted, said the plaintiff would appeal against the court's ruling and wanted the matter to go for full trial.

On Sept 25, 2009, PKA had also filed a RM920mil suit against KDSB, the turnkey contractor for PKFZ, and the project consultant, BTA Architect, in connection with key development and supplemental agreements signed between February 2003 and November 2006.

The suit filed for relief, including for rescission of all the development agreements, and a declaration that KDSB was only entitled to be paid the reasonable value of work properly done.

PKA is also seeking a declaration that KDSB is not entitled to, and PKA is not obliged to pay KDSB, claims totalling RM836,758,459.92 which KDSB had made for the monsoon drain and water supply works, preliminaries, professional fees and variation works respectively under the development agreements.

KDSB was appointed by PKA in 2003 to develop the PKFZ on a 405ha site adjacent to the North Port in Klang. - Bernama

It's all about choice for consumers, firms

A wider range of products and services at better prices is in store when the new Competition Act is enforced, experts tell SANTHA OORJITHAM


New Straits Times, 6 February 2011



TRAVEL agencies in Malaysia have been told to charge a consultation fee when asked for a quotation or proposed tour package, starting last month.

The Malaysian Association of Travel and Tour Agents (Matta) has announced a fee structure which it says is a guideline, and which travel agents are free to adjust according to the service provided.

But Datuk Pardip Kumar Kukreja wonders if this would infringe the Competition Act 2010.
"What are the implications?" asks the executive chairman of the Paradise group of companies, which includes hotels and travel agencies.

"Can Matta impose that or not?"

The Act was gazetted in June last year but will not be enforced until January next year. Meanwhile, the Competition Commission will be appointed within the first quarter of this year and will produce guidelines by the end of the year.

After that, there will be a "transition period" of about six months for businesses and groups to comply, says Shila Dorai Raj, head of the Interim Competition Unit at the Ministry of Domestic Trade, Co-operatives and Consumerism.

"The impact will be huge," predicts Shila, who was on a roadshow to all the states.

"When we went to Sarawak in September last year, people were shocked. They said the Act would outlaw what they had been doing."

But the end result should benefit both businesses and individuals, since the Act aims to protect both the competition process and consumer interests.

The New Economic Model, announced last year, stressed private sector-led growth and promised that the government would not use its regulatory powers to protect Government-Linked Companies (GLCs) from competition.

"GLCs are subject to the law too, so they will not be able to hide behind the skirts of the government," points out Shila, although there will be exemptions for "services of general economic interest" such as postal services and water.

The Act will apply to all commercial activity -- including by government companies and public authorities. Shila notes that in 2009, the Malaysian Fisheries Development Board ordered fish importers, exporters and wholesalers to use insulated containers from one supplier.

If they didn't, they were liable to a fine of RM15,000 and/or two years' jail. That was eventually dropped and under the Act, such a practice would be an offence.

The law prohibits two kinds of anti-competitive practices -- anti-competitive agreements and abuse of dominant position. And if the commission determines there is an infringement, the financial penalty can be up to ten per cent of worldwide turnover of the enterprise during the period in which it happened.

Agreements include contracts and understandings, whether they are legally enforceable or not, and even the decisions of associations. For example, when Singapore bus operators discussed fixing the price on trunk routes to Kuala Lumpur and implemented it, the Competition Commission of Singapore prosecuted 16 of them and their Express Bus Agency Association and fined them S$1.69 million (RM4.03 million) for price fixing.

"If you don't agree to what your organisation is discussing when it is about issues relating to price fixing, don't attend," warns Shila.

Abuses of dominant position include predatory pricing (dropping the price below cost to wipe out competition and then increasing the price afterward) and tying or bundling -- such as a developer insisting that buyers get a mortgage or loan from their panel of banks.

"The consumer has to be given a choice, the chance to shop around and get a deal," says Shila.

There have been demands for Malaysia to address competition issues during negotiations for Free Trade Agreements, says Darren Kor, a lawyer who helped draft the Communications and Multimedia Act, which includes anti-competitive provisions.

With the Competition Act, he says, "Malaysia will gain more 'points' as an investment destination. Foreign investors do not want local enterprises to muscle them out. And locals, especially Small and Medium Enterprises (SMEs), also want the same protection."

With the Act, SMEs have an avenue to tackle anti-competitive practices, says Tan Sri Yong Poh Kon, immediate past-president of the Federation of Malaysian Manufacturers (FMM) and co-chair of the Special Task Force to Facilitate Business (Pemudah).

It will help to create "a business environment where monopolies and restricted oligopolies (control of a product or service by a few companies, influencing its price) are not created artificially through excessive government protection and interference with market forces."

"The Act will allow SMEs to operate more freely," says Pardip, who is an adviser to the Malaysian-Indian Business Association and whose group is an SME.

"If there is no control upstream they will have a much better negotiating base to get better pricing from suppliers. And people will be more open to entering various industries if there are no barriers."

As for consumers, they can take a civil case to court for loss or damage directly as a result of an anti-competitive practice prohibited under the Act. And the Federation of Malaysian Consumers Associations will be able to file a case with the commission, says its chief executive officer, Datuk Paul Selva Raj.

"The commission will deliberate and tell us their findings. We want that process to be transparent and to give their reasons. And we want investigation and enforcement to be strong."

By all accounts, the process of drafting the Act was open and transparent. The ministry set up a consultative group of 25 in 2007 with representatives from 10 ministries, 10 private sector organisations (including FMM) and five non-governmental organisations (including Fomca) to go through the declassified draft.

The Act includes "elements of good governance", notes Dr Cassey Lee Hong Kim at the School of Economics in the University of Wollongong, New South Wales. The commission is to publish its decisions, investigation results and market reviews.

FMM's Yong hopes the guidelines will be published in time for the private sector to "study, understand and provide feedback on any concerns or impractical applications regarding the proposed implementation of the Act".

In the meantime, businesses should begin to examine their own practices and systems and correct any which could be anti-competitive, he advises.

They could look at the guidelines used by some of Malaysia's major trading partners as the provisions are likely to be similar. Singapore, Thailand, Indonesia and Vietnam already have competition laws.