Khamis, 11 Oktober 2012

Philosophy Politics Economics

Philosophy Politics Economics

Budget 2013: KR1M Gets RM386 Million!

Posted: 02 Oct 2012 09:13 AM PDT

Why is the Federal Government helping Mydin make astronomical profit to set up 57 Kedai Rakyat 1Malaysia (KR1M) in Sabah and Sarawak with RM386 million?

The Prime Minister proudly announced that the Federal Government will allocate RM386 million to set up 57 Kedai Rakyat 1Malaysia (KR1M) next year to "ensure the prices of essential goods in Sabah and Sarawak as well as in Labuan are sold at lower prices".

We are in complete support of any measure by the Government to reduce the prices of goods and services in East Malaysia, especially over the longer term to ease the burden of Malaysians living in these states.

However, the approach taken by Datuk Seri Najib Razak is clearly designed to profit only Mydin Mohamed Holdings Bhd as the allocation goes direct to the company to set up these stores.

Based on 57 proposed new outlets in Sabah and Sarawak with a budget of RM386 million, each retail shop will average a whopping cost of RM6.77 million!

This is manifold higher than what was announced in the 2012 Budget where RM40 million was allocated to subsidise Mydin to set up 85 stores, where each store will average RM471,000.  Why is there a difference of RM6.3 million for each store set up between 2012 and 2013, especially since the Government claims that the rate of inflation is only 1.9%?

If the amount of money allocated is expected to also "bear the cost of delivering products from Peninsular Malaysia to Sabah, Sarawak and Labuan including the interior areas" then why is it that this benefit will not be extended to all other shops in Sabah and Sarawak offering these "basic necessities"?

In fact, since the RM386 million grant or subsidy is given only to Mydin, the Government is in effect killing off all of Mydin's competitors – from big hypermarkets to small mom-and-pop shops.  Mydin will have the monopolistic right to sell certain products at substantially cheaper prices than its competitors due to the exclusive RM386 million from the Federal Government.

What is worse is that because there is no transparency in the subsidies provided to Mydin, and no "competition" in the exercise. Malaysians will not be able to ascertain if we are getting our value for money from Mydin, or whether a significant chunk of this subsidy will be siphoned by the company, instead of being passed on to consumers.

We call upon the Government to make available the RM386 million all small retail outlets already in existence throughout Sabah and Sarawak to ensure that the maximum number of retailers and consumers will benefit from the programme to sell basic necessities at lower prices.  There is absolutely no need for the Government to sponsor its crony to open up new shops in these areas to compete unfairly and kill of local shop-owners.

We are in fact rather disgusted by the fact that even in a programme ostensibly designed to lower the cost of living of the poor, the Barisan Nasional Government chosen a mechanism to profit its cronies at the expense of the man-on-the-street.

Why Isn't Khairy Investigated by Companies Commission?

Posted: 01 Oct 2012 09:08 AM PDT

Pakatan Rakyat demands that Companies Commission of Malaysia act without fear or favour and charge all company directors who fail to have their company accounts submitted on a timely basis

The Companies Commission of Malaysia (CCM) and the Registrar of Societies (ROS) have become tools of the Barisan Nasional (BN) government to find fault with Suara Initiatif Sdn Bhd (SUARAM) using whatever means, ethical or otherwise possible.  The motive cannot be more obvious, that is an attempt to halt the current on-going court case in France where the BN leaders, including the Prime Minister himself, are implicated for corruption in the Scorpene submarines acquisition exercise.

The Minister of Domestic Trade, Cooperatives and Consumerism Datuk Ismail Sabri had the cheek to announce on 18th September 2012 that SUARAM will be charged in 2 days.  He said "e are initiating legal action based on the company's reporting of its accounts, which is confusing… All kinds of things. It is misleading" without providing an iota of evidence.  The attempt was however rejected by the Attorney-General's office the very next day for being "incomplete".

Pakatan Rakyat has no problems with the authorities for going after companies who have broken the law.  However, it cannot be any clearer that in SUARAM's case, the agencies, now even with the involvement of the police, are going on fishing expeditions to harrass the officers of the company in order to find some unknown fault with the company's operations.

For the amount of effort and tax-payers' resources put into the case, we would like to highlight 5 companies which have clearly run foul of the Companies Act 1965 for the longest time, and yet no action has been taken against them by CCM.

1. YGP Holdings Sdn Bhd has failed to file their audited accounts since 31 December 2006.  The company directors are UMNO Youth Chief and Member of Parliament for Rembau, Khairy Jamaluddin, Member of Parliament for Kota Belud, Datuk Abdul Rahman Dahlan.  The company shareholders include Minister of Defence, Dato' Seri Zahid Hamidi.

2. National Aerospace and Defence Industries Sdn Bhd has failed to file their audited accounts since 31 December 2007, and yet the Government of Malaysia has last month granted their subsidiary a license to operate an airline in Malaysia launched by none other than the Prime Minister, Dato' Seri Najib Razak himself.  The Chairman of the company is Tan Sri Gen (Rtd) Mohd Hashim bin Mohd Ali.

3. National Feedlot Corporation Sdn Bhd has failed to file their audited accounts since 31 December 2009, while Real Food Company Sdn Bhd and National Meat & Livestock Company Sdn Bhd have failed to file their since 30 June 2007.  The Directors of the company are family members of UMNO Wanita Chief and former Minister of Women, Family and Community Development – husband, Datuk Dr Mohd Salleh bin Ismail, as well as children, Wan Shahinur Izmir Mohd Salleh, Wan Shahinur Izran Mohd Salleh and Wan Izzana Fatimah Zabedah Mohd Salleh.

The directors of all these companies have hence run afoul of the Companies Act 1965 by failing to hold the company's Annual General Meetings, file its Annual Returns to the Registrar of Companies together with their Audited Financial Report.

Clause 169(1) of the Companies Act says that "the directors of every company shall, at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year at intervals of not more than fifteen months, lay before the company at its annual general meeting a profit and loss account for the period since the preceding account (or in the case of the first account, since the incorporation of the company) made up to a date not more than six months before the date of the meeting.

Under Clause 171(1), the Act dictates imprisonment for 5 years or RM30,000 "if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company with the foregoing provisions of this Division or has by his own wilful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act."

Why is it that CCM has failed to act against these companies related to top UMNO personalities? Given the CCM's sudden assertiveness in exercising their authority by going on fishing expeditions against entities which are fighting for the rights of all Malaysians, we demand that CCM take immediate action against all of the companies listed above and bring all of their directors to Court.

If the CCM fails to act without fear or favour, then we will submit a motion to deduct RM10 from the salaries of the Minister of Domestic Trade, Cooperatives and Consumerism as well as the Companies Commission of Malaysia (CCM) chief executive officer Mohd Naim Daruwish in the current 2013 Budget sitting.

Budget 2013: 2012 Deficit Would Have Been 6.7%

Posted: 30 Sep 2012 04:28 AM PDT

Budget deficit would have been 6.7%; 2015 2.5% deficit target a lost cause

Based on the Economic Report, the Government was able to keep its deficit below 5% at 4.7% for 2012 only because of an unbudgeted increase in revenue by RM21 billion for the year.  If not for the above, based on the Government's expenditure in 2012, our deficit would have increased to 6.7%.

The Government has announced its plan in the 2013 budget to keep the deficit at 4.0%.  However, it has become clear that the Government's original target as late as 2011 to reduce our deficit to 2.5% by 2015 is no longer achievable.  The steep decline of growth in the government's revenue will make the task seemingly impossible.

No political will

The budget demonstrates no political will on the part of the Federal Government to make the necessary structural changes to the way we manage our budget.  We see a decline in the proportion of funds spent on development expenditure. We also do not see a serious effort to tackle federal government debt, both "official" and "hidden".

The 2013 Budget reads like a repeat of prior year budgets, using the same formula without taking into consideration the changing circumstances and increasing economic challenges we face today.

Budget 2013: Federal Government Debt RM502 billion

Posted: 29 Sep 2012 04:26 AM PDT

Our Federal Government debt has increased rapidly from RM242 billion in 2004 to RM363 billion in 2009 and RM456 billion in 2011.  For 2012, it is projected that our debt will hit RM502 billion. That represents a marked 107.4% increase in debt over the past 8 years.

More worryingly, the debts have increased our structural debt service commitments significantly.   The rate at which our debt servicing commitments are growing will severely constrict our future operational and development expenditure.  This together with a much slower rate of growth in government revenue as shown in the budget for 2013 will have a major impact to our economy, given its current heavy reliance on public spending and investments.

From 2003 to 2008, our debt servicing obligations increased by 21.9% from RM10.5 billion to RM12.8 billion.  However, in the next 5 years from 2008 to 2013, the annual commitment has increased by a whopping 73.4%!

The official federal government debt is also expected to increase as a proportion of our GDP from 51.8% to 53.7%, staying marginally below the 55% legal federal government debt limit.  However, even the 53.7% is an artificial figure as it fails to take into consideration the Government's contingent liabilities and hidden debts which amounted to RM117 billion as at Dec 2011.

What is frightening is, the Government's contingent liability is expected to increase exponentially in 2013 due to the expenditure for the RM53 billion MRT project as well as other mega-infrastructure projects.  These debt driven expenses are completely off-balance sheet or not considered part of the official Federal Government debt, despite it ultimately being Federal Government funded.

In Europe, Spain is facing major financial crisis which requires hundreds of billions of Euro bailout, has an "official" debt to GDP ratio of 68.5%.  But due to various contingent liability and bank bailouts, the "real" ratio which is significantly higher has caused a near collapse of the economy, in a crisis that is still evolving.

We must not allow ourselves to get entangled in a similar crisis.

Budget 2013: Slowing Revenues, Declining Development Expenditure

Posted: 28 Sep 2012 04:24 AM PDT

Budget 2013 signals the end of an era of record budgets with a slow down in Government revenues.

Over the past few years, the Government has been able to increase its budget tremendously to achieve record expenditures annually. This has allowed the Government to prop up the economy as we faced challenges in attracting private investments, as well as a drop in our trade contributions.

However, the Budget has projected an increase of only 0.7% (2012: 11.8%; 2011: 16.1%) in projected revenues from RM207.2 billion to RM208.6 billion in 2013.  This is the slowest projected increase in the tabled budget since 1999, barring the global financial crisis in 2009.

Consequently the Government is forced to table a smaller budget than the prior year. The proposed operating expenditure has been reduced by 0.3% from RM202.6 billion to RM201.9 billion, while the development expenditure is also reduced from RM46.9 billion to RM46.7 billion or 0.4%.

The marked decline in revenue growth will have a very significant impact on the Government's ability to impact growth in the Malaysian economy through fiscal means.  The fact that we have not been able to reduce our budget deficit below 4% over the past few years reflects the years of wasted opportunities, where we have failed to curb our expenditure through reduced wastages, abuses and corruption.

Consistent Decline in Development Expenditure

Of concern is also how the Government has consistently reduced its emphasis on Development Expenditure which will create greater multiplier effects on our economy.

The proportion of the budget expenditure dedicated to Development Expenditure has reduced from 31.5% in 2003 to 27.1% in 2007 to 21.3% in 2012.  The worrying trend continues in 2013 where the proportion is reduced further to only 18.6%, a record low in Malaysia's history.

This represents lower investment by the Government with its current revenue, which will result only in lower returns to the economy in future years.
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