Philosophy Politics Economics

Khamis, 1 Mac 2012

Philosophy Politics Economics

Posted: 01 Mar 2012 06:58 PM PST

In a statement today, NFCorp Chairman, Datuk Seri Muhammad Salleh "explained that the publicly-funded cattle-rearing firm was building up the market in Singapore" to justify the setting up of a Farmhouse Supermarket in Singapore soon.

PKR Strategic Director Rafizi Ramli had first exposed the fact that NFCorp may be using public funds to expand into the supermarket business in Singapore which are owned directly by the directors of NFCorp and not by NFCorp itself.

Rafizi has today responded by questioning NFCorp on the basis of expansion overseas when it was the objective of the NFCorp to fulfill 40% of the local beef demand. At the moment NFCorp is barely scratching 1% of the local market demands, hence any investments for overseas exports is not only premature, but also contrary of the objectives set out in the government's RM250 million loan agreement to the company.

I would further add the fact that opening a "supermarket" is a completely different business from that of "exporting" beef, even if such exports were indeed justified. Sale of beef and beef products in such a supermarket would only contribute a miniscule percentage of overall product sales and will do very little towards increasing the demand for beef from Malaysia in Singapore.

If promoting beef from NFCorp is indeed the overriding objective in setting up the Farmhouse Supermarket, then Datuk Seri Muhammed Salleh either completely lacks business sense or is lying through his teeth to justify the use of public funds.

What is perhaps most damning, is that a check with the Agri-Food and Veterinary Authority (AVA) of Singapore has shown that there is no approval to import raw beef from Malaysia. At this point of time, only "processed beef" such as sausages, patties, meatballs, smoked meat etc., are approved for selected companies. Even so, only 5 companies are approved and they are Mac Food Sdn Bhd, Nestle Manufacturing Sdn Bhd, PAP Cashnet Sdn Bhd, Unilever Bestfoods Sdn Bhd and Lucky Food Processing Sdn Bhd.

NFCorp has not been given any approval to export its beef or processed meat to Singapore. Hence how can Muhammed Salleh claim that the setting up of Farmhouse Supermarket, which is already about to open for business, be in the interest of promoting NFCorp's "Gemas Gold"? Is this not a clear case of putting the cart before the cows?

Most importantly, the allegation that part of the RM250 million loan to NFCorp was utilized to set up Farmhouse Supermarket, which is directly owned by the family of Minister of Women and Family Development, Datuk Sharizat Abd Jalil has yet been answered by NFCorp. Such diversion of funds from the NFCorp is clearly in breach of the Loan Agreement and the Companies Act 1965.

Datuk Seri Muhammed Salleh should not be distracted from the core issue of criminal breach of trust and must be held accountable to the tax-payers who are funding the operations of NFCorp.

Attorney-General Objected to West Coast Expressway Contract?

Posted: 01 Mar 2012 03:02 AM PST

The Malay Mail cover an exclusive story on the fact that the Attorney-General "is of the opinion the terms of agreement for the project, which has seen its cost balloon, are not in the public interest" on Monday, 27 February 2012.

According to the report, "Government sources tell The Malay Mail Abdul Gani had expressed reservations over the terms, which seem to heavily favour the highway concessionaire, WCE Sdn Bhd, a 64.2 per cent subsidiary of Kumpulan Europlus Bhd… Abdul Gani has put the Economic Planning Unit (EPU) and the relevant agencies and ministries such as the Malaysian Highway Authority, the Finance Ministry and the Works Ministry on notice over his reservations on the 316km-long highway that will link Banting in Selangor to Taiping, Perak, where 224km will be tolled."

Allegedly, according to their source, 'despite immense pressure to sign the legal documents, the A-G has informed the stakeholders he wants to review the terms of the agreement."

Assuming that the Malay Mail front-page report is spot on, then the Prime Minister must immediately answer as to why the Government is insistent on awarding the new WCE concession to Kumpulan Europlus via direct negotiation which has seen the cost of the project inflate excessively.

The cost of the expressway was RM3.0 billion when it was first awarded without tender in 2007 but further "negotiations" between the Government and the concessionaire has increased the cost to RM7.1 billion when it was re-awarded last month. In addition, the concession period has been increased from 33 years originally to 60 years, a record for highway privatisation projects in Malaysia.

What is perhaps unacceptable is the fact that despite such attractive terms, the Government still have to provide RM2.24 billion of soft loans to the concessionaire, as well as up to 3% interest-subsidy for commercial loans secured. The Government will also bear the cost of all land-acquisition, estimated at RM1 billion.

If the Malay Mail report is indeed true, then we call upon the A-G to do all necessary within his powers to ensure that the Government receives a fair bargain, and to avoid a repeat of many costly mistakes made by the Government in privatisation projects such as the RM12.5 billion Port Klang Free Zone scandal, toll highways which generates astronomical profits for the concessionaires such as the RM5.9 billion PLUS and the RM1.3 billion LDP.

What is shocking is the fact that the project is being awarded to a company with very poor financial record over the past few years. Kumpulan Europlus earned revenues of RM50 million and RM28 million in the last 2 financial years of 2010 and 2011 respective. Besides the small revenue base compared with the RM7.1 billion project, the company also made losses of RM35 million and RM46 million in the past 2 years.

Dato' Seri Najib Razak must walk the talk of "economic transformation" by implementing all the reforms on transparency and accountability that his administration has been preaching over the past 3 years. He must not "over-rule" the opinions of the A-G to ensure that the people's interest comes first and the tax-payers' are not excessively burdened. Instead, the Prime Minister must disclose in full the basis of the award of WCE to Kumpulan Europlus, as well as the financial justifications for the soft-loan, interest-subsidy, 4.1 billion increase in the cost of the highway as well as the 27-year extension of the concession. Most importantly, the Government, in the interest of transparency, must disclose the proposed toll rates which will be imposed on motorists to justify such lucrative terms to the concessionaire.

Otherwise, all the talk of "economic transformation" which Najib has been "selling" to both local and foreign investors will be seen as just political rhetoric, and the Prime Minister will soon be branded by businessmen all over the world as the one who just could not deliver the promised changes.

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Khamis, 1 Mac 2012