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Najib's "Impulsive" Administration Makes A Perfect Flip-Flop Government Posted: 18 Mar 2012 06:52 PM PDT Eight months ago, the Najib administration sanctioned and defended the MAS-AirAsia share swap exercise which saw AirAsia owners take a 20% stake in MAS, while Khazanah Nasional took a 10% stake in AirAsia.  The deal was presented as the only means to rescue MAS which was not only bleeding heavily but was seeing absolutely no light at the end of the tunnel. Their defense of the share swap exercise was in spite of the obvious anti-competitive elements contained and arising from the "Comprehensive Collaboration Framework" which will reduce flights and increase the price of air tickets. However, the financial results of MAS for December 2011, just 4 months into the swap exercise showing a RM1.28 billion loss for the final quarter of the year, and a RM2.52 billion loss for the full financial year shocked the Administration and had many leaders in Barisan Nasional (BN) baying for blood. The staggering losses according to the BN critics proved the failure of the restructuring and rescue exercise and the pressure was applied on the Prime Minister to unwind the swap deal.  It is now widely reported that Datuk Seri Najib Razak is seriously contemplating rolling back the August 2011 agreements. According to The Malaysian Insider, "Putrajaya is considering a special entity to take loss-making Malaysia Airlines (MAS) off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier's worker unions to unravel an unpopular eight-month-old share swap." The ease and absolutely lack of proper evaluation in the way the Najib administration makes decision is even more shocking than the losses incurred by MAS. Was Najib seriously expecting the new management team brought in and started serious work perhaps only in September 2011 to work miracles and create surprisingly profitable results within 3 months? In reality, out of the RM1.28 billion of losses incurred for the 4th quarter of 2011, RM1.09 billion were financial provisions made for items such as stock obsolescence and impairment of freighters.  These provisions were the "legacy" left behind by the previous management which should be best dealt with at the earliest possible instance.  There can be no "new start" for MAS if the rotten could not be rid of from its books. Najib's contemplation of changing course less than 8 months into the deal is akin to doe-eyed Premier League football club owners who hire and fire managers at will following a string of bad runs, as if the new managers will always be able to perform miracles with the same set of players and set up. The fact is that MAS has been in a state of malaise which it has never reversed ever since Mahathir decided to privatise the airline to Tan Sri Tajuddin Ramli.  If Najib was seriously expecting the turnaround flight to be any less turbulent, then he must seriously take a peek out of his first-class cabin. The sudden decision to execute the share swap in August 2011 and now the serious contemplation to unwind the exercise before the management is even able to impose its will and direction epitomises Najib's impulse-driven decision-making.  Such hare-brained impulsiveness has characterised Najib's administration with multiple U-turns in his policies, including but not limited to the much-hyped eradication of racial quotas in the "New Economic Model", the reversal of the "Malaysian First" definition and the promise of "open tenders". As a result, many local and foreign investors have lost faith in his ability to make substantive reforms and effect changes in our political and economic system.  They now perceives Najib as probably the most fickle-minded Prime Minister in Malaysia's history.

Nong Chik Says Low-Cost Home Dwellers Can Afford 6.5% Interest Posted: 18 Mar 2012 02:05 AM PDT Pakatan asks if RM1.5b EPF loan is to unlock DBKL assets By Shazwan Mustafa Kamal Mar 17, 2012 KUALA LUMPUR, March 17 — Pakatan Rakyat (PR) lawmakers are questioning the rationale behind using RM1.5 billion from Malaysia's largest pension fund to finance Kuala Lumpur City Hall's (DBKL) low-cost housing schemes, and whether it is to liquidate the capital city's assets. Noting that Putrajaya has yet to clarify the matter, they also flayed Federal Territories and Urban Well-being Minister Raja Datuk Nong Chik Raja Zainal Abidin for saying that prospective buyers who did not qualify for bank loans would have no problems repaying loans from the Employees Provident Fund (EPF) at a 6.5 per cent interest rate. "My fear is that EPF is being used as a last resort, as the government's personal piggy bank.  There is concern ... that the EPF funds are being used as a source to finance new projects and this scheme will be used to unlock illiquid assets," PKR vice-president Nurul Izzah Anwar told The Malaysian Insider. [...] DAP publicity secretary Tony Pua stressed that the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money. "Why must the taxpayers' retirement funds be tapped? What has happened to the taxes we have paid to the government? Is the federal government so bankrupt now that they can't afford to build low-cost homes without tapping into our retirement savings?' he asked The Malaysian Insider. The EPF is providing the first tranche of RM300 million to a special purpose vehicle (SPV) undertaking the financing for those buying some 24,000 low-cost flats in the capital city. Raja Nong Chik  said on Thursday DBKL "did not ask [for] money from the government" as it wanted to "avoid politics" in the scheme described as a "liquidation exercise."  The minister had told reporters that DBKL had decided against making direct loans to up to 35,000 city dwellers who are still renting and unable to borrow from banks as it needs funds for "future projects." Raja Nong Chik had earlier told Parliament that under the current rate of 6.5 per cent, a loan of RM36,100 over 25 years would incur a monthly repayment of RM243, or 50 per cent more than would be applicable with a 2.5 per cent interest rate. "If we reduce it to 2.5 per cent, it will be RM161. It is only RM82 difference. This is just political posturing by the opposition," the senator had said, and that the RM36,100 figure was for the newest and most expensive low-cost homes; the rest would be sold for less. This did not sit well with PR MPs, who accused the Umno minister of being "insensitive" to rising costs of living among the poor in the city. "RM82 is a large amount for the majority of the people, it is slightly more than 10 per cent of a standard household disposable income. This shows the minister does not understand the realities of urban living costs which are increasing due to government policies. "There should not be any discrimination towards low-income earners seeing as independent power producers (IPPs) and the National Feedlot Corporation (NFCorp) received lower soft loan interest rates," Nurul Izzah said. [...] "Raja Nong Chik is unfit to be the minister of urban well-being when he completely failed to understand and empathise with the poor man on the street.  He has the cheek to dismiss a RM82 instalment difference as a 'small amount' when these low-cost housing dwellers earn less than RM1,000 per month," DAP's Pua said. Pua said the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money. [...] For the full article in The Malaysian Insider, click here.

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