As data traffic surges, Malaysian telcos opt to watch costs instead of improving service

Malaysian Insider, 10 December 2013

Mobile operators are looking to reduce their cost structure rather than improve services as network congestion occurs due to Malaysia’s high mobile data demand, said Frost & Sullivan in a report yesterday.

The report by the global consulting firm revealed that demand for internet access surged with 3G subscriptions surpassing 14.5 million in 2012, charting an annual growth of 41%. Subscriptions for 2013 are expected to reach 18.4 million by the end of this month.

“However, the increased data demand and spikes in geographies are leading to network congestion/outage,” said the report.

“To cope with increasing diverging cost and revenue market realities due to surging data traffic, service providers are focusing predominately at reducing cost structure rather than top line improvements,” it added.

Malaysia’s mobile penetration rate reached 146% in the third quarter of 2013, with 3G subscriptions amounting to more than 17.4 million of the total of 43.6 million mobile subscriptions. In 2012, there were only 14.5 million 3G subscriptions out of 41.3 million subscriptions.

Mobile operators are dealing with the surge by sharing facilities, thus cutting operational costs to handle the massive flow of data.

“For example, take Maxis and REDtone’s arrangement to share its 4G (LTE) infrastructure. Infrastructure sharing allows defrayment of cost, risk sharing… enabling parties to meet regulatory obligations with reduced financial burden,” said Ajay Sunder, senior director of telecoms, Frost & Sullivan Asia Pacific.

However, Sunder noted the current mechanism employed by operators is not sustainable when they are forced to consider “lowering the overall cost of network and maintain a scalable network”.

Judging by the rapid growth of mobile subscriptions that is expected to hit 50 million in two years, operators would expect an annual growth rate of 6% even as the market reaches saturation.

The increase is attributed to the current trend of consumers owning a second device, be it a smartphone or a tablet. Another factor is the government’s Youth Communication Package (YCP), a plan that offers a RM200 rebate to those aged 21-30 with a monthly income of RM3,000 and below.

The increasing demand for smart devices in Malaysia saw shipments shoot up to 49.6% out of the total mobile phone shipments made in the first half of 2013, according to International Data Corporation (IDC) Asia/Pacific Quarterly Phone Tracker. The jump was only 31.8% for the same period last year.

IDC credited the increase to vendors bringing in low-cost smartphones that encouraged sales to grow.

“The rebates brought about a surge in shipments of low-cost smartphones during the first half of 2013 as vendors launched more than 25 new sub-RM600 models in Malaysia,” said Ryan Lai of IDC Asia/Pacific in an article by Digital News Asia. 

M'sia CPI seen rising 3% following electricity tariff increase

STAR, 4 December 2013

KUALA LUMPUR: Businesses and households can expect costs to go up, as inflation trends higher in the wake of the new electricity tariffs effective Jan 1 for the peninsula as well as Sabah and Labuan.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said an early estimate showed that there could be a 0.4% increase in the consumer price index (CPI), which measures headline inflation, including volatile food and energy costs, when the new electricity rates become effective.

Sarawak is not affected by the hike as its power supply and distribution are managed by state-owned Sarawak Energy Bhd. The state has a separate enacment on electricity production.

Economists expect inflation to rise above 3% next year after picking up pace in recent months, as the Government consolidates spending with cuts in subsidies such as fuel, where the RON95 petrol and diesel prices were raised by 20 sen each on Sept 2 to RM2.10 and RM2 per litre, respectively.

Data from the Statistics Department showed the CPI rose to 2.8% year-on-year in October from 2.6% in September and 1.9% in August.

“Right now, it would be in the region of 3%, but we don’t know what other adjustments are to take place,” Zeti told reporters at the Leadership Energy Summit Asia 2013.

However, she said the tariff hike’s impact on prices would only be temporary based on the central bank’s assessment of the trend.

“This is something that needs to be done because it is not sustainable when the market price changes, and therefore, it is important that Malaysia makes such adjustments,” said Zeti.

The rise in tariffs, announced by Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili on Monday, would see those in the peninsula paying an average of 14.89% or 4.99 sen more per kilowatt-hour (kWh) to 38.53 sen, while for Sabah and Labuan, the average tariff would rise 16.9% or five sen per kWh to 34.52 sen.

For industry users, the average tariff will be raised by 16.85% to 36.15 sen per kWh, while commercial users will pay 47.92 sen, up from 41.01 sen.

Citigroup Inc economist Kit Wei Zheng said in a report that Bank Negara might not be in a hurry to raise benchmark interest rates, which stands at 3%, as there were few signs of demand-pull inflation or second-round effects after the September fuel price hike.

He pointed out that recent comments from Zeti suggested that the central bank might be prepared to tolerate what it viewed as a “temporary” rise in inflation (of up to 3.3% in the first quarter of next year) due to supply-side cost-push factors, while the growth outlook remains uncertain.

Kit said hikes in the benchmark interest rates had become increasingly contingent over the growth outlook firming up.

He expected a 25-basis point rate hike in May, with another 25-basis point hike in July in anticipation of inflation hitting 3.8% to 3.9% from June/August.

He said considerations that the central bank would have to take into account included the ability of households to service debt, as well as the direct and second-round inflationary impact of the 6% goods and services tax effective April 2015.

“Going forward, our base case is for five sen to 10 sen per litre fuel price hike by year-end and for 20 sen per litre hike before July 1, 2014. As we had argued in our assessment of Budget 2014, we suspect policymakers would probably opt for gradual but somewhat more frequent and frontloaded hikes.

“With the kick up from the tobacco excise hike, inflation may hit Bank Negara’s implicit tolerance threshold of 3% by year-end, with a decisive breach coming in the first-half of 2014,” he noted.

Meanwhile, CIMB Investment Bank Bhd economic research head Lee Heng Guie said the second-round impact of higher power rates depended on the degree of pass-through to end-users.

“If previous episodes of tariff hikes are any guide, then the impact on inflation could be rather muted. Thus, we maintain our CPI growth estimates of 2.2% for this year and 3% for 2014, which continue to factor in some administered price adjustments, especially for fuel,” he said.

Electricity tariff up by average 15% from Jan 1

STAR, 2 December 2013

KUALA LUMPUR: The electricity tariff will be increased by an average of about 14.89% for Peninsular Malaysia, and by about 17% for Sabah and Labuan from next year, said Energy, Green Technology and Water Minister Datuk Dr Maximus Johnity Ongkili.

"The average electricity tariff in Peninsular Malaysia will be up 4.99 sen per kWh or 14.89% from the current average rate of 33.54 sen/kWh to 38.53 sen/kWh.

"For Sabah and Labuan, the average tariff will be up 5.0 sen per kWh or 16.9% from current average rate of 29.52 sen per kWh to 34.52 sen per kWh," he told reporters at a press conference in Parliament on Monday.

Rates in Sarawak will not be affected because the electricity supply in the state is operated by state-run company, Sarawak Energy.

The new rates will take effect from Jan 1, 2014, he added.

However, Dr Ongkili noted that 70.67% of consumers in Peninsular Malaysia and 62% of consumers in Sabah and Labuan will not be affected by the tariff hike.

"There will be no tariff increase imposed on the consumers who use electricity at a rate of, or lower than, 300kWh a month.

"This amounts to 4.56 million consumers in the peninsula and 260,000 consumers in Sabah and Labuan," he said. The group most likely to be affected are those whose electricity usage is between 301 to 400 kWh and 401 to 600 kWh.

The table on implications of the revised rate on domestic users.

The first group (about 720,000 consumers) will be billed between RM77.52 and RM128.60, an increase ranging from 12 cents to RM11.60 per month. (Not including 1.6% feed in tariff).

The second group (about 670,000 consumers) will be billed between RM129.12 to RM231.80, an increase of between RM11.71 to RM33 per month. (not including 1.6% feed in tariff).

Meanwhile in a statement to Bursa Malaysia, Tenaga Nasional said for domestic consumer (with a monthly consumption of up to 200kWh) the tariff would be maintained at a subsidised rate of 21.8 sen/kWh (i.e. no tariff increase).

This rate has not been reviewed during several tariff reviews since 1997.

Also consumers using 300kWh per month and below will not experience any tariff increase, the rate is maintained at 33.4 sen/kWh. Hence, there is no tariff increase to 70.7% of the household consumers (4.6 million consumers).

The domestic tariff band is reduced from current 8 bands to 5 bands for better understanding of tariff structure.

Commercial consumers will experience an average increase of 16.85% (ranging from 1.2% to about 18%). Industrial consumers will experience an average increase of 16.85% (ranging from 0.9% to about 17%). Special Industrial Tariff (“SIT”) consumers will experience an increase of about 19%.

This is in line with the Government’s effort to gradually reduce subsidies to industries. Even with this increase, SIT consumers will continue to enjoy discounted tariff rates, as compared to the rates for normal Industrial consumers.

The 10% discount on electricity bills currently enjoyed by Government schools, Government institutions of higher learning, places of worship and welfare homes registered with the Government and educational institutions partly-funded by the Government is maintained. The 10% discount will also be extended to the Universities teaching hospital under Ministry of Education (USM, UKM, UM).

Special Industrial Tariff (“SIT”) for water and sewerage operators will be given automatically and the electricity rebate by the Government for domestic consumers with a monthly bill of RM20 or lower will be maintained.

PAC to probe Khazanah’s role in KLIA2, MAS-AirAsia fiasco

Malaysian Insider, 21 September 2013

The Public Accounts Committee (PAC) will look into Khazanah Nasional Bhd's role in delays and rising costs of the KLIA2 project and the Malaysia Airlines-AirAsia share swap that led to a RM20 million anti-trust fine, says its chairman Datuk Nur Jazlan Mohamed (pic).

He said PAC will probe the roles of consultants and merchant bankers in these deals although both MAS and MAHB are public listed companies with state asset manager Khazanah as the main shareholder.

“Khazanah should not rely solely on consultants for advice,” Nur Jazlan told The Malaysian Insider in Kuala Lumpur, adding the consultants were only motivated by profit and at times overlooked the laws governing a transaction.

“The deal should not have happened in the first place to avoid these losses. In fact, the Auditor-General, for the first time, is already doing audit on Khazanah, even before PAC brought this issue up,” said the accountant by training.

The KLIA2 project was initially budgeted at RM1.6 billion but has now grown into a RM4-billion project after several amendments. It was initially slated to open in September 2011 but has been delayed five times and is now expected to be ready by April 2014.

Media reports say MAHB has received a staggering 230 non-compliance reports for the budget terminal, including cracks in the buildings as well as ceilings that were built too low, requiring them to be torn down and rebuilt.

In the case of the airlines, the Malaysian Competition Commission (MyCC) imposed a fine of RM10 million each on national carrier MAS and Asia's largest budget airline, AirAsia, for monopolising four routes during their short-lived eight-month pact.

Both airlines have up to October to appeal the fines.

Nur Jazlan pointed out the Auditor-General has the powers to probe Khazanah although most of its companies are listed and are under the Securities Commission.

He also emphasised that PAC was not questioning government policy, but was merely looking at the way projects were being implemented. Only he and PAC deputy chairman, Kepong MP Tan Seng Giaw, have been appointed to the committee. Others are to be named after parliament resumes next week.

The three-term Pulai MP said it was timely for the Auditor-General to look into the corporate governance of Khazanah as "custodians to public invested funds" as his past experience as a Telekom Malaysia Bhd director showed the need for oversight beyond just financial procedures.

Saying he was made a board member based on his credentials as a chartered accountant and council member of the Malaysian Institute of Accountants, Nur Jazlan said, "In 2005, TM wanted to launch the 3G service and the management wanted Alcatel Telecom which did not have commercially deployed 3G equipment while other companies like Ericson and Hua Wei already had.

"As TM's audit committee chairman, I suspected irregularities in the procurement process and wanted the board to investigate it.

“And I quit as the audit committee chairman after the irregularities were not investigated.”

Two years after Nur Jazlan quit the board, the United States Justice Department indicted Alcatel for bribery and giving kickbacks to Telekom executives.

“So I took a huge risk. I resigned, but two years later, it proved my decision was right,” he said.

The no-nonsense politician, now dubbed ‘PAC man’, said he wants to create the idea of the ‘fear of being audited’ as previously no one feared being audited as they would not be held accountable.

“PAC and Auditor-General’s Department work hand in hand. The AG is trying to change their method from a value for money audit to performance audit.

“Currently, government officers who had committed offences were not afraid as nothing is being done to them. There is no accountability. So what the Auditor-General’s Department is doing is to go with performance audit with the aim to change that culture,” Nur Jazlan added.

He also said besides fraud and corruption, most of the expenditure wastage was due to poor planning.

"For example, when a department wants to starts a highway project, but the company has yet to acquire all the lands along the route. Hence, where there is a delay, it would eventually be a liability to the government. It is poor planning and execution,” he said. -September 21, 2013

MyCC imposes proposed interim measures to Pan-Malaysia Lorry Owners Association

New Straits Times, 20 September 2013

KUALA LUMPUR: The Malaysia Competition Commission ('MyCC’) today issued a proposed Interim Measures under Section 35(4) of the Competition Act 2010 against the Pan-Malaysia Lorry Owners Association ('PMLOA’), its members and related lorry enterprises on a probable infringement of Section 4(2)(a) of the Competition Act 2010 ('the Act’) by agreeing to fix an increase of transportation charges by 15 percent.

"This follows the warning given earlier by the MyCC to associations not to facilitate anti-competitive behavior, especially price fixing,” said MyCC CEO,Shila Dorai Raj.

“It serves to further reinforce the fact that the MyCC is seriously looking at evidence of anti-competitive behavior in the rampant price hikes following the recent rationalisation of fuel subsidy.”

"The Commission considers that it is necessary for it to impose such measures under Section 35(4) of the Act to prevent serious and irreparable economic damage and to protect public interest.

"The MyCC has issued the notices to PMLOA, and 40 other parties comprising members of the PMLOA and lorry enterprises.

The proposed Interim Measures states the following:
(a) PMLOA, members of PMLOA and the relevant lorry enterprises are directed to suspend the effect of, and desist from acting in accordance with,the decision made by the PMLOA during its 3rd Central Committee Meeting dated 7th September 2013 whereby it was decided that transportation charges are to be adjusted by a maximum of 15% ('transportation charge’).

MyCC has reasonable ground that the decision has infringed or is likely to infringe section 4(2)(a)of the Competition Act 2010; and

(b) PMLOA is hereby directed to refrain from deciding on any further increment or fixation, whether directly or indirectly, the transportation charge.

As for the 11 members of PMLOA, they are directed to refrain from implementing the PMLOA’s decision on behalf of its members.

As for the relevant lorry enterprises, they are directed to refrain from implementing the abovementioned decision by the PMLOA and its member enterprises as to any further increment or fixation, whether directly or indirectly, of thet ransportation charge.

The PMLOA, members of PMLOA and the relevant lorry enterprises were given 7 working days to submit written representations from the date the notices were served against them.

Earlier on, the PMLOA had issued a statement that was published in the local papers on 11th September 2013 stating that PMLOA was unanimous in its decision to raise transportation charges by 15 percent.

RM10 million fine each for MAS, AirAsia in anti-trust case

Malaysian Insider, 6 September 2013

Flag carrier Malaysia Airlines (MAS) and AirAsia have been fined RM10 million each for their short-lived share swap which was found to have distorted the domestic aviation service.

The Malaysia Competition Commission (MyCC) said both airlines had infringed Section 4(2)(b) of the Competition Act 2010 by sharing their markets in their eight-month pact.

“Market sharing is considered a serious infringement under the Act as it is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods and services,” said MyCC chairman Tan Sri Siti Norma Yaakob in a statement released in Kuala Lumpur today.

“When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers,” she said.

Monopolies are not illegal in Malaysia per se, but anti-competitive behaviour is an offence under the Competition Act 2010. MyCC deals with allegations of firms partaking in deals that restrict, prevent or distort competition in any market involving goods or services.

The statement said the financial penalties imposed on the two airlines were based on the turnover earned between January 1, 2012 and April 30, 2012 for the Kuala Lumpur-Kuching, Kuala Lumpur-Kota Kinabalu, Kuala Lumpur-Sandakan and Kuala Lumpur-Sibu routes.

"The MyCC concludes that in respect of the infringement of Section 4(2)(b) of the Act, the MyCC will impose a financial penalty of RM10 million on MAS and AirAsia respectively," she said.

The financial penalties are less than 10% of their respective worldwide turnovers between January and April 2012, MyCC said.

The two airlines have 30 days from today to respond to the commission’s decision.

On August 9, 2011, MAS, AirAsia and AirAsia X Sdn. Bhd. entered into a Comprehensive Collaboration Framework with the declared aim to sharpen the focus of core competencies, deliver better product and choice for customers and ultimately create greater value for all stakeholders.

The agreement also witnessed Khazanah Nasional Berhad and Tune Air Sdn Bhd entering into a share swap arrangement which resulted in cross-holding of shares between the two companies.

Tune Air Sdn. Bhd obtained a 20.5% stake in MAS and Khazanah Nasional Berhad obtained a 10% shareholding in AirAsia under the share swap.

It was also agreed between the parties that MAS was to be only a full-service premium carrier, while AirAsia and AAX will be regional low-cost and medium-to-long haul low-cost carriers respectively.

However, the swap agreement was rescinded in May 2012 due to difference of opinions between the parties and complaints were made to MyCC that the share swap would create a monopoly in domestic routes and raise fares.

According to MyCC, the body tasked with probing complaints of anti-competitive behaviour in local and foreign firms operating in Malaysia, it has received 40 complaints in total since it came into force in January 2012. - September 6, 2013.

Eateries allowed to increase food prices by only 0.1%

STAR, 4 September 2013

PETALING JAYA: Eateries which increase food prices after the fuel price hike will face stern action, says Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek.

He said that unfair price increases were defined by sudden hikes and prices that were not in line with the market norm.

“If your neighbourhood mamak restaurant is selling roti canai at RM1.50 when a week ago it was RM1, you should call the ministry. Another suspicious sign is when shops refuse to exhibit price tags.

“Consumers must report in with the exact facts so we can act immediately. Anything more than a 0.1% hike in prices will be looked into,” he said yesterday.

Hasan urged consumers who encountered unfair profiteering to call the ministry hotline at 1-800-886-800, or email in to e-aduan@kpdnkk.gov.my.

He said those found to have in­­creased prices without permission could be charged under the Price Control and Anti-Profiteering Act 2010.

Separately, the Land Public Trans­port Commission (SPAD) warned taxi drivers against raising fares.

SPAD chairman Tan Sri Syed Hamid Albar advised taxi firms to wait for the commission’s impact study on the fuel price hikes before it issues its recommendations.

On how soon the price review for public transport would be implemented, Syed Hamid said: “Don’t ask me for an exact date but we are working hard on it.”

He said requests for increase in fares by public transport companies were justifiable.

“But SPAD has to look into the quantum and how it would affect the public.”

RON95 petrol, diesel up 20 sen from midnight

STAR, 2 September 2013

PUTRAJAYA: Price for RON95 petrol and diesel will be raised by 20 sen per liter from midnight.

The move is aimed at reducing the fiscal deficit, thus saving RM1.1bil per year for the Government, said Prime Minister Datuk Seri Najib Tun Razak.

Najib said despite the increase, the government would still be subsidising 63 sen for RON 95 petrol.

"The subsidy rationalisation will be carried out in many stages. The first is that the price of RON95 and diesel will be increased by 20 sen per litre from 12.01am Tuesday," Najib told a press conference after chairing a meeting of the Fiscal Policy Committee (FPC) on Monday.

The new prices for RON95 will be RM2.10 per litre and RM2.00 for diesel.

To address the burden on low-income and vulnerable groups in the fuel subsidy rationalization, Najib said the quantum for the 1Malaysia People's Aid (BR1M) will be increased in the upcoming national budget announcement.

 Najib also promised that a comprehensive "social safety net" and further fiscal measures would be introduced in the 2014 Budget.

He said the FPC has reaffirmed the Government's commitment to achieve a fiscal deficit target of about 3% of gross domestic product by 2015 and to attain a balanced budget by 2020.

"The moderation in the current account of the balance of payments (BOP), coupled with continued fiscal deficits pose medium-term risks to the economy.

"Currently, our subsidy system benefits everyone, including the higher income group and foreigners.

"Thus, we need to move to a more targeted subsidy system that caters to vulnerable groups," Najib said.

Other measures announced by Najib include giving priority to public sector projects with low-import content and high-multiplier effects.

"Projects with high import components will be sequenced accordingly, so as not to adversely impact the BOP position.

"However, the Mass Rapid Transport (MRT) Lines 1, 2, and 3 will proceed as planned.

"The Southern Corridor High-Speed Rail project is still under negotiations," he said.

Over the medium to longer term, Najib said the Government will diversify the country's export markets and tourism would be given greater focus in the upcoming Visit Malaysia Year 2014.

Govt yet to decide on power tariff review

STAR, 12 July 2013

KUALA LUMPUR: The Government has yet to decide on the electricity tariff review.

Energy, Green Technology and Water Minister Datuk Seri DrMaximus Johnity Ongkili said there was a need to look at the cost of fuel, gas and other inputs which have been increasing. “There is also a need to look at how Tenaga Nasional Bhd and Petroliam Nasional Bhd can absorb the increase,” he told a media briefing here yesterday.

He said there should be a mechanism for fuel price increases, not only when one party had to bear the cost, be it the Government, utility companies or consumers.

On the water issue in Selangor, Ongkili said what was available in the state was insufficient for its own use, as well as that of the Federal Territory and Putrajaya.

Ongkili said there was a need to work together with the Selangor state government to resolve the issue. — Bernama

Rise in chicken price, a case of foul play?

Malaysian Insider, 13 July 2013

The Agriculture and Agro-based Industry Ministry has not ruled out that the sharp rise in poultry prices was due to price manipulation by retailers as the farm price remains unchanged at RM5 per kg while the supply is adequate.

Its minister Datuk Seri Ismail Sabri Yaakob said the retail prices shot up to between RM8.50 and RM9 per kg although the ministry has fixed the ceiling price at RM7.80 per kg.

He said the demand for chicken was normally 1.2 million birds a day but increased to 2.2 million to 2.4 million a day nationwide during Ramadan through Aidilfitri.

The government has opened applications for chicken import permits to address the problem and theoretically dumping will reduce the price of goods, he told a news conference to announce Tekun Nasional winning the Best Innovation in Financial Services award in Karlsruhe, Germany.

He was commenting on a report that chicken prices have risen dramatically in many states for the past two weeks. He said there was an increase in demand for local chicken two months ago as China stopped exporting poultry following the H7N9 outbreak, but it has lifted the ban as the situation has returned to normal.

Meanwhile, the Domestic Trade, Cooperatives and Consumerism Ministry has urged all quarters not to make any speculation or claim that chicken prices have soared without any concrete evidence.

Its minister Datuk Hasan Malek said the ceiling prices of chicken at the farm, wholesale and retail levels were subject to the Price Control and Anti-Profiteering Act 2011, which must be abided by retailers.

"Provide us with the proof and we will act on it. Action will be taken against unscrupulous traders if the claim is true," he told reporters after visiting a Ramadan bazaar in Presint 2 in Putrajaya yesterday.

Hasan said the price control scheme for the Hari Raya festive season will be enforced early next month.

Meanwhile, the Muslim Consumers Association of Malaysia (PPIM) has urged a boycott on chicken until the prices drop below the ceiling price.

Its chief activist Datuk Nadzim Johan said a boycott would push down the prices as suppliers and retailers would have to lower prices if demand plummeted.

A survey around Kuala Lumpur and Selangor found that supermarkets were selling chicken at about RM7.50 per kg, but the prices in farmers' markets shot up to between RM8.50 and RM9 per kg.

Housewife Siti Rohani Yaakob, 47, expressed hope that the government will take action to protect the welfare of the lower income group against errant traders who took advantage of the festive season to raise prices of goods, including chicken.

Rogayah Ahmad, 64, a mother of eight, said although the price hike was a norm during Ramadan and other festive seasons, she has no choice but to still buy these goods to cater for her family.

Police pensioner Abdul Aziz Yusuf, 64, said he realised chicken prices have soared since April, but did not expect them to reach RM9 per kg during Ramadan. - Bernama, July 13, 2013.

Higher electricity tariff next year?

The Edge Financial Daily, 9 July 2013

KUALA LUMPUR: Malaysians may have to pay more for electricity as Tenaga Nasional Bhd (TNB) is set to resume the fuel cost pass-through (FCPT) mechanism next year.

Deputy Energy, Green Technology and Water Minister Datuk Seri Mahdzir Khalid told Parliament yesterday that TNB will start implementing the mechanism next year to more efficiently regulate the electricity tariff for users.

The FCPT mechanism allows any changes in fuel cost to be channelled to users through tariff rates implemented by the government. Any additional fuel cost incurred due to higher fuel prices will be reflected by a higher electricity tariff and any reduction or savings will be returned to consumers.

FCPT has been adopted by utilities in many countries such as Singapore, Thailand, the Philippines, Japan, the US and Europe. It will be assessed every six months in tandem with the six-monthly natural gas price revision and taking into account the prevailing market coal and oil prices.

“With the implementation of FCPT, users will be given an incentive if power is used economically and a penalty would incur if power wastage is detected. “This programme will be implemented based on the country’s economic performance. Users’ cost of living will also be taken into account,” Mahdzir said in Parliament in reply to a question from Liang Teck Meng (BN-Simpang Renggam).

Mahdzir said the FCPT mechanism is a component in the incentive base regulation (IBR) programme. Although the mechanism was first introduced in mid-2011 and was supposed to be reviewed every six months to reflect movements in fuel prices, TNB has only revised its power tariff once.

The last adjustment in 2011 reflected the increase in gas price, which jumped from RM10.70 per million British thermal units (mmBTU) to RM13.70 per mmBTU, while the coal price is still assumed at US$85 (RM234) per tonne. The rates were revised to partly cover for the increase in electricity cost of supply since the last base tariff review in June 2006.

The last round of adjustments saw an average tariff increase of 7.12% following the 28% upward revision of the natural gas price. There was also an average 2% increase to partly cover the increase of electricity cost of supply since June 2006. Industrial and commercial consumers saw an average increase of 8.35%.

Domestic or residential consumers whose monthly consumption falls within the “lifeline band” of up to 200 kWhsaw no tariff increase as rates remained unchanged at a highly subsidised rate of 21.8 sen per kWh or approximately RM44 per month. The last tariff review of the lifeline band was done in 1997.

Consumers using 300kWh per month and below saw tariffs maintained at 33.4 sen per kWh. Those who use more than 300kWh per month will have to pay a rate of at least 40 sen per kWh.

According to TNB, about 75% of the household consumers, or 4.4 million people, use less than 300 kWh so they were not affected by the tariff increase.

Additionally, Mahdzir said consumers who use below 200kwh a month are subsidised, while payment from those with usage below RM20 is waived.

In April 2011, a 1% charge was imposed as feed-in-tariff for the renewal energy fund.

TNB is still paying RM13.70 per mmBTU for natural gas, which has been unchanged since June 2011. Gas remains the largest component of TNB’s fuel generation mix followed by coal and oil.

Recently, the power sector was badly hit by a gas shortage. TNB, in particular, saw an additional RM3.07 billion in fuel costs to burn distillates as an alternative fuel from Jan 1, 2010 to Oct 31, 2011.

SPAD slams bus fare move

STAR, 16 June 2013

KUALA LUMPUR: The fare for express buses should just have a surcharge of not more than 10% during the Hari Raya season and tickets should be up for sale from July 1, said Land Public Transport Commission (SPAD).

Its chief executive officer Mohd Nur Kamal said the usual 10% surcharge would not be exclusive to additional buses sourced out by bus operators but also applicable to the existing fleet as well.

He was responding to Pan Malaysian Bus Operators Association's (PMBOA) request seeking a 30% increase in bus fares and its reluctance to sell advance tickets for July and August until they received the Government's confirmation over the rate hike.

He chided the association for taking advantage of the Hari Raya season “to put a gun to our head with public interest at ransom, forcing us to decide on the fare review in a matter of weeks”.

“I think this seemed somewhat orchestrated to create panic among the public and put pressure on us,” he said in an interview.

He said PMBOA had raised the issue of the rate increase via a letter dated May 28 to SPAD.

Mohd Nur said SPAD spoke to several industry players and they were not on board with the increase as not all industry players were members of PMBOA.

“In fact, they are ready to sell the tickets as normal. We also found out that there was communication in the form of phone calls and text messages from certain parties to these other companies not to sell the tickets,” he said.

“This is against the Competition Act 2010 that came into force early last year. This has become a major problem and we are in communication with Malaysia Competition Commission (MyCC) to make a report and get to the bottom of this.

“If this is going to be the first landmark case so be it. SPAD is not here to make sure some companies maintain their profit level but we are here to protect public interest,” he said.

Mohd Nur said SPAD had been cooperative in engaging with the industry for improvement.

“We are actually in the midst of reviewing all land public transport operations that include light rail transit, stage buses, taxis and chartered vehicles in the aspects of efficiency, asset utilisation, productivity, competition as well as fares, but it's not a simple process that can be decided in a matter of weeks.” he said.

Five states yet to join national water asset body

January 31, 2013

SEREMBAN, Jan 31 — Five states have yet to join Pengurusan Aset Air Berhad (PAAB), said its chairman Tan Sri Mohd Tajol Rosli Ghazali. 

They are Pahang, Kelantan, Terengganu, Selangor and Kedah. 

“Information and briefing on the advantages of joining PAAB, which manages the development of water for state governments, have been presented to all state governments. But until now, these states are still reluctant to sign up with PAAB. 

“PAAB is prepared to implement all water development, including infrastructure in the state as long as PAAB gets full support from state governments,” he told reporters after the signing of an agreement on the handing over of water asset rights by the Negri Sembilan government to PAAB here yesterday.

Also present were Negri Sembilan Mentri Besar Datuk Seri Mohamad Hasan and PAAB chief executive officer Datuk Ahmad Faizal Abdul Rahman. — Bernama

Minister tells Selangor to go ahead with water concession takeover

Malaysian Insider, January 31, 2013

KUALA LUMPUR, Jan 31 – Selangor can buy out the water concession if the private utility companies contracted to supply it are agreeable, Datuk Seri Peter Chin Fah Kui said today, adding that the federal government will not block the deal.

“To me, this is an ordinary commercial offer which requires consent from the buyer and seller,” the energy, green technology and water minister (picture) told a news conference in Putrajaya.

“If there is an agreement, just let SPAN and myself know,” he added, referring to water company regulator, National Water Services Commission.

Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim had yesterday announced his Pakatan Rakyat (PR) government will go ahead to take over the state’s water concession within 14 days, and added he had written to Chin’s ministry to inform the latter.

But Chin said today he only knew of Selangor’s plan through news reports.

He said he would reply to the state government once he received the black-and-white.

Selangor has steadfastly opposed the federal government’s Langat 2 project, citing the high costs involved that would force the state to increase the tariffs for water and renege on its pledge to provide the utility cheaply, a policy PR had introduced after winning power in Election 2008.

To facilitate the process, Selangor had first mooted the takeover in 2009, offering to buy Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS at RM5.7 billion. The offer was rejected.

We are holding on to the word of Tan Sri Muhyiddin Yassin… in Sabak Bernam recently that the federal government will not stop the Selangor government from taking over the state’s water services, says Khalid Ibrahim

Last year, Khalid was reported to have increased the offer to more than RM9 billion to take over all assets and liabilities of the companies, including their bonds.

The tussle for control of treated water supply in the country’s most developed state has become major vote fodder in the run-up to Election 2013 after Syabas raised the alarm last year of a possible crisis in the near future due to near-zero reserves at the state’s water treatment plants.

In recent weeks, Selangor and Syabas again locked horns when each blamed the other for the Klang Valley water crisis.

The blame game between the private company and Khalid’s government has been going on for months and took a new turn earlier this month when the mentri besar mooted a media drive relating their version of events plus a weekly update of the water problem, alleging that the latest disruption was due to Syabas’s poor upkeep leading to faulty pumps in urban Wangsa Maju and Pudu Hulu Baru.

Syabas, in retaliation, placed full-page advertisements in several major newspapers to rebut Selangor’s claims.

The protracted battle for control of water resources Selangor has thrown a spotlight on how much money is at stake in the strategic industry and is potentially another example of Mahathir-era privatisation gone wrong.

It could also tilt the balance in the battle for both Selangor and Kuala Lumpur, depending on who voters ultimately blame for cuts to their water supply. PR parties rule Selangor and control 10 out of 11 parliamentary seats in the Federal Territory.

Selangor says to take over water concession in 14 days

Malaysian Insider

SHAH ALAM, Jan 30 — The Selangor Pakatan Rakyat (PR) government will proceed to take over the state’s water concession within 14 days, Mentri Besar Tan Sri Abdul Khalid Ibrahim said today.

“We have written to the Energy, Green Technology and Water Minister Datuk Seri Peter Chin Kah Fui to notify him that we will take over the state’s water services from the concessionaires within 14 days,” Khalid (picture) told reporters after chairing the state’s executive council meeting here. 

“We are holding on to the word of Deputy Prime Minister Tan Sri Muhyiddin Yassin, who is the chairman of the Cabinet Committee on Water, in Sabak Bernam recently that the federal government will not stop the Selangor government from taking over the state’s water services,” added the PKR leader.

Muhyiddin had reportedly stated as such four days ago when he reiterated that the Langat 2 water treatment plant project will commence despite Selangor’s opposition.

The state has steadfastly opposed the federal government’s Langat 2 project, citing the high costs involved that would force the state to increase the tariffs for water and renege on its pledge to provide the utility cheaply, a policy PR had introduced after winning power in Election 2008.

To facilitate the process, Selangor had first mooted the takeover in 2009, offering to buy Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS at RM5.7 billion. The offer was rejected.

Last year, Khalid was reported to have increased the offer to more than RM9 billion to take over all assets and liabilities of the companies, including their bonds.

The tussle for control of treated water supply in the country’s most developed state has become major vote fodder in the run-up to Election 2013 after Syabas raised the alarm last year of a possible crisis in the near future due to near-zero reserves at the state’s water treatment plants.

In recent weeks, Selangor and Syabas again locked horns when each blamed the other for the Klang Valley water crisis.

The blame game between the private company and Khalid’s government has been going on for months and took a new turn earlier this month when the mentri besar mooted a media drive relating their version of events plus a weekly update of the water problem, alleging that the latest disruption was due to Syabas’s poor upkeep leading to faulty pumps in urban Wangsa Maju and Pudu Hulu Baru.

Syabas, in retaliation, placed full-page advertisements in several major newspapers to rebut Selangor’s claims. 

The protracted battle for control of water resources Selangor has thrown a spotlight on how much money is at stake in the strategic industry and is potentially another example of Mahathir-era privatisation gone wrong.

It could also tilt the balance in the battle for both Selangor and Kuala Lumpur, depending on who voters ultimately blame for cuts to their water supply. PR parties rule Selangor and control 10 out of 11 parliamentary seats in the Federal Territory.

Noh Omar takes Selangor govt to task for freezing Syabas' capex

STAR, 24 January 2013

TANJONG KARANG: Selangor Barisan Nasional (BN) deputy chairman Datuk Seri Noh Omar has taken the Selangor government to task for freezing Syarikat Bekalan Air Selangor's (Syabas) capital expenditure (Capex).

Noh said the state government should try and solve the water problem rather than taking an action that was politically inclined.

"The people must evaluate the government's action and its unrealistic decision to freeze Syabas' Capex," he told reporters on Thursday.

Noh said the Federal government had allocated RM606 million for the water mitigation programme, replacement of pipes and to build additional treatment plants.

The Federal Government had also provided loans to the Selangor government to carry out water mitigation programmes to resolve the water problems faced by the people of Selangor, he said.

"Mentri Besar Tan Sri Abdul Khalid Ibrahim knows the loan amount, I am not saying how much, but we want him to tell how the money was spent. The Mentri Besar must answer," he said.

Noh said the Federal Government had also set up a special committee to overcome the water issue in Selangor and the committee had agreed with the water restructure plan proposed by the state government.

Selangor turns tap off on Syabas' capital expenditure

Malaysiakini, 24 January 2013

Water concessionaire Syabas' capital expenditure (capex) has been frozen by the Selangor government to prevent the people from being burdened by its "wasteful expenditure", Selangor Menteri Besar Abdul Khalid Ibrahim said.

"This is because every sen spent by Syabas will be reflected in the tariffs paid by the rakyat in their monthly bill.

"Therefore, the Selangor government must defend and prioritise the consumers' interests and value for money. They should not be burdened with increased tariffs from wasteful expenses," Khalid said in a statement issued yesterday.

He reiterated that Selangor's water issues could only be resolved if restructuring was done in accordance with the Water Services Industry Act 2006.

Khalid added that he was still waiting for the federal government's go-ahead to do so.

Projects awarded without open tender

Syabas' capex has been frozen since May 2008, except for emergency works, a move that Syabas and BN say has caused the state to suffer a high proportion of non-revenue water,overworked pumps and other problems.

Although Khalid did not cite any instance of "wasteful expenditure" in his statement, Selangor Times had previously quoted him as saying that it was due to Syabas' practice of awarding projects through direct negotiations.

"The state has procedures. The projects should be awarded based on open tender, not through negotiation," the weekly quoted him as saying on Jan 18.

Kelantan applies for injunction against Petronas

January 22, 2013

KUALA LUMPUR, Jan 22 – The Kelantan state government today applied for an interlocutory injunction to prevent Petroliam Nasional Berhad (Petronas) from paying oil royalties to the Government of Malaysia.

They are seeking to prevent Petronas from paying the five per cent oil royalty on the oil obtained from the state’s coast and sold by the company or its agents, pending the state government’s suit against the national petroleum corporation in 2010.

The application was filed through Messrs Tommy Thomas at the High Court registrars office, naming Petronas and the Government of Malaysia as defendants.

The Kelantan government also applied for an injunction to order Petronas to deposit the oil royalties into a profit earning syariah-compliant account, pending its suit against the company in 2010.

The Kelantan government sued Petronas for breach of contract, on Aug 30, 2010.

In its statement of claim, the state government claimed that the Kelantan Petroleum Agreement, signed on May 9, 1975, clearly stated that Petronas must pay five per cent of its oil revenue from on and off shore explorations.

It further claimed the agreement also stated that the payment must be paid in cash bi-annually.

The Jan 31 hearing at the High Court was postponed pending the application to appeal at the Federal Court. – Bernama

A-G admits to weaknesses in AES

Malaysian Insider, 13 January 2013

KUALA LUMPUR, Jan 13 — Attorney-General Tan Sri Abdul Gani Patail has admitted there are weaknesses in the controversial Automated Enforcement System (AES) to nab traffic offenders, but said his office was still in discussions over how to resolve the matter.

In a report today by Mingguan Malaysia, the country’s top lawyer said the decision over the fate of the thousands of summonses issued so far under the system could not revealed yet as it involves the cooperation of numerous agencies.

“I will release a statement to the media once everything is ready,” he was quoted as saying in the daily.

Abdul Gani (picture), however, said the summonses were still valid but admitted that the problematic issue was centred on the legal aspects of the speeding tickets.

The Attorney-General’s Chambers (AGC) and the federal government came under fire last month for freezing the prosecution of traffic offenders under the AES yet allowing the system to continue operating.

The freeze was ordered following an outcry after the system issued nearly 300,000 summonses since it kicked off on September 23.

But shortly after the freeze, Transport Minister Datuk Seri Kong Cho Ha said the AES would still operate as usual and summonses would continue to be issued, drawing more criticisms from those opposing the system.

“The government will not stop AES summons as it is already been decided in the last cabinet meeting,” Kong had said on December 26, referring to the approval of his ministry’s estimated expenditure under Budget 2013.

Kong also appeared to admit that there are legal issues related to the AES summonses themselves, and that the ministry was in the process of resolving the complication.

“It is almost done... I think this problem will be solved by the ministry soon,” he pointed out.

In the aftermath, PAS vice-president Datuk Mahfuz Omar declared the ongoing row over the traffic system a “political game”, and dared the government to suspend its implementation.

The opposition lawmaker accused Putrajaya of being less than transparent in the deal with the two firms operating the system — Beta Tegap Sdn Bhd and ATES Sdn Bhd, which were both contracted to install and run the speed-trap camera system that has sparked much public anger over what is seen to be a privatisation of traffic law enforcement.

The Malaysian Insider had also reported last month that Putrajaya was considering holding off the implementation of the system as it appeared to duplicate police speed traps along the highways.

The privatised RM700 million project began in September with a pilot phase of 14 cameras but the Road Transport Department has pledged to roll out a total of 831 cameras by end-2013 to catch speeding motorists and prevent more road deaths.

The police, who enforce the speeding laws, have said they will continue enforcement and put up mobile speed traps near the AES cameras, raising the prospect of dual fines for errant motorists.

Culling to reduce egg production could be anti-competition, says group

STAR, 1 November 2012

KUALA LUMPUR: The Malaysia Competition Commission (MyCC) is looking into the culling of 5 million layer chickens by farmers for any anti-competitive elements.

The culling has resulted in a shortage of egg supply and an immediate price increase of between 2 to 5 sen per egg.

"The Competition Act 2010 prohibits enterprises operating at the same level in the production chain to collusively agree to limit or control production of goods and services.

"This is deemed to have the object of significantly preventing, restricting or distorting competition in any market for goods or services," said MyCCchief executive officer Shila Dorai Raj.

The Star recently reported the Federation of Livestock Farmers Association of Malaysia's (FLFAM) layer unit chairman Yap Hoong Chaias saying that farmers typically cull about 10% of their older layer hens from each cycle (of one to three months, depending on the farm size) to make room for younger, more productive hens.

He added that however farmers have recently been culling up to 10% more hens to reduce production costs.

Dorai Raj said unilateral decision by a farmer to reduce his production for purposes of prudent costs management may not be an anti-competitive conduct.

"However, if it is done in agreement with other farmers, then this may be an infringement under the Competition Act 2010," she added.

Under the Act, if the farmers are found to have infringed the law, they may be imposed a penalty of not more than 10% of their worldwide turnover besides other remedial orders.

The MyCC, established in June 2011, is an independent body responsible for enforcing the Competition Act 2010, which was implemented to create healthy competition which would in turn stimulate productivity and innovation, thus creating wider choices of products for consumers with better quality and reasonable prices.

The Act applies to all commercial activities undertaken within and outside Malaysia that affects competition in the Malaysian market.

It provides a regulatory framework including powers to investigate, adjudicate and impose penalties on the perpetrators of the competition laws.

For more information on the Act and MyCC activities, log on towww.mycc.gov.my. - Bernama

Probe warranted if cement makers have pact to raise prices

STAR, 3 August 2012

PETALING JAYA: The slew of price hikes by cement manufacturers do not at this juncture warrant a formal investigation by the Malaysian Competition Commission (MyCC), unlike the situation with the Cameron Highlands Floriculturist Association (CHFA), said MyCC chief executive officer Shila Dorai Raj.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation.

“In the case of CHFA, it had publicly declared its intention to raise prices by 10% in a news article in March whereas for the cement industry the announcement that came from the manufacturer was made unilaterally but seemed to be followed suit by other manufacturers,” she told StarBiz.

The commission has yet to receive any formal complaint on the higher prices charged by cement producers.

However, it has put the cement industry on its watchlist.

While not tantamount to a probe or official investigation, MyCC will keep a close eye on any developments that might be in breach of the Competition Act 2010.

StarBiz reported yesterday that all cement manufacturers had decided to raise prices of the building material following an earlier move by the country's largest producer, Lafarge Malayan Cement Bhd.

This was widely expected by industry players after Lafarge hiked up its prices by 6% on Wednesday.

There are six cement producers in Malaysia, namely YTL Cement Bhd,Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd. Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

When contacted, MBAM secretary-general Chuan Yeong Ming said if the industry body received any evidence of collusion among cement makers, it would be brought to the attention of the MyCC.

The Cement and Concrete Association of Malaysia, which represents the interests of the cement industry, said on Wednesday it was not in any way involved in the setting of prices by its members as that would count as an infringement of competition laws.

It was earlier reported that MyCC had made a “proposed decision” on CHFA, which was a notice to the affected party listing out the facts and penalties that could be imposed.

A proposed decision is final unless refuted by the affected party.

Under the Act, it is a violation when enterprises in the same level of production or supply chain agree to fix the price of their goods or services.

Tasek shares finished three sen, or 0.3%, higher to RM9.87, gaining 30.5% for the year.

Lafarge, meanwhile, was up 33 sen, or 4%, to RM8.50 yesterday and 21.8% year-to-date on the back of upgrades from three research firms this week.

Hwang DBS Vickers Research yesterday upgraded the stock to “hold” from “fully valued”, saying cement players were poised to ride on Malaysia's infrastructure boom and the existing oligopoly market structure.

It added Lafarge has a controlling 40% market share and the largest spare capacity among its peers, with 30% of production for export.

“The cement price hike is a positive note for Lafarge as the previous hike in May 2011 did not fully compensate for the increase in energy and fuel costs, due to Tenaga Nasional Bhd's 7% average electricity tariff hike and removal of diesel fuel subsidies which increased diesel prices by 22% or 32 sen per litre,” the brokerage said.

Lafarge on Wednesday raised prices by RM1 per 50kg bag and RM20 per tonne for bulk cement from RM16.75 and RM320 currently. The last time prices were higher was in March 2011, also by 6%.

Cement makers were accused of colluding with each other after MBAM received a tip-off from its members last week that a “major” manufacturer planned to raise the list price of cement in the Klang Valley.

It then urged MyCC to investigate whether there had been an abuse of dominant position by the cement firm.