Archive for September 13th, 2007

Challenge to ACA – disclose how many persons had been arrested/prosecuted for corruption from previous Auditor-General reports

In China, a senior official at the Agricultural Bank of China was executed for corruption following years of ordering suppliers to pay him kickbacks. Wen Mengjie, 50, former head of information technology at one of the bank’s Beijing branches, was executed Tuesday for embezzling and taking bribes worth 15 million yuan (USD1.97 million).

In the Philippinnes, former president Joseph Estrada was sentenced to jail in prison after he was found guilty of massive corruption and plundering the country of tens of millions of dollars in tax kickbacks and bribes.

In Japan, Prime Minister Shinzo Abe announced he would resign after being dogged by a string of damaging scandals that hampered his reform agenda.

What do we have in Malaysia? Another year of shocking revelations of corruption, criminal breach of trust, overspending and mismanagement of funds by the Auditor-General, Tan Sri Amrin Buang — with the apt headline of the the New Straits Times yesterday “Same old story year in year out” — while the culture of impunity reigns on without anyone in high office having to bear responsibility for corruption and abuse of power. Read the rest of this entry »


Low-Income and the “FairWage” Initiative

The EPF is a social security institution formed according to the Laws of Malaysia, Employees Provident Fund Act 1991 (Act 452) which provides retirement benefits for members through management of their savings in an efficient and reliable manner. With rising costs of living, extended life expectancy and more expensive medical treatments, it is critical that Malaysians save as much as possible to ensure sufficient funds for retirement. It is also important for as many Malaysians as possible to be included in the system.

However, as studies have shown, low-income Malaysians are facing significant difficulties in saving enough via EPF. As a result, the Government must act to assist this group of Malaysians who face various challenges in the face of globalisation, particularly with a stagnant or declining real wages. This is clearly reflected in the 9th Malaysia Plan Gini co-efficient statistics where by income disparity among Malaysians has widened substantially. Malaysia ranked highest in terms of income inequality in Southeast Asia.

To assist low and medium-waged workers, DAP proposes raising the Employer EPF Contribution Rate from the current 12% of total wages to 15%, representing a 25% increase. This will in turn raise the total contribution from the employer and employee to the fund to a total of 26%.

At the same time, in view of the increase in cost for the employers, which may in turn affect the competitiveness of Malaysian companies, it is proposed that a limit of RM8,000 per month or RM96,000 per annum be set to Employer contributions to the EPF. That means that for employees earning above the limit, their EPF contributions will continue to be calculated at the limit level.

However, for middle-age workers who are earning below RM1,400 per month , it is clear that they will continue to face severe challenges despite the increase in employer’s EPF contribution. Whilst younger workers may be learning the ropes and learn new skills to upgrade their income level, older workers will face difficulties in our fast-changing economic environment and are in the greatest need of assistance from the state to make ends meet.

With the oil and gas sector contributing handsomely to the state coffers, it only makes social sense to share part of these gains with the less fortunate and lower income tiers within our society. However, at the same time, we still need to continue to incentivise these workers to secure employment to avoid over-dependence on the state. Hence, DAP proposes “FairWage” as an integral component of a new national policy in promoting social justice. FairWage has a 3-prong strategy for implementation: Read the rest of this entry »


National Broadband Plan

Based on statistics made available by the Minister of Energy, Water and Communication as at 2006, broadband penetration rates for Malaysia is less than 3%, compared to more than 60% for South Koreans.

The BN Government’s National Broadband Plan target of 25% household penetration by 2006 and 50% by 2008, has clearly failed miserably.

In the larger national interest of achieving the above targets, and its importance towards building a generation of enterprising and innovative Malaysians, DAP proposes that the broadband market be liberalised to allow for foreign competition.

To promote the building of high quality and reliable broadband network, DAP proposes favourable tax treatment for telecommunication firms undertaking broadband investments:

* New broadband operators are allowed to deduct financing costs from their taxable income.

* Investors are exempted from paying taxes on interest income from bonds specifically ear-marked to finance these investments.

* Exemption from import duties for specific state of the art telecommunications equipment required for broadband infrastructures.

Read the rest of this entry »


Towards a More Equitable Highway Toll System

In January this year, the Government raised the toll fare for 5 privatised highways in the Klang Valley. The Bentong and Gombak toll on the Karak Highway was raised by 20% and 25% respectively. The 3 KESAS Highway toll was raised by 47%, while the Batu 9 and Batu 11 toll along the Grand Saga Highway was raised by 43% and 50% respectively. The highest increment however, was at the tolls along the Lebuhraya Damansara-Puchong (LDP), by 60%.

These 5 highways were constructed at a cost of RM4.13 billion. The toll rates have been raised excessively despite the fact that the Government has paid RM2.28 billion in compensation to date, as well as an additional RM2.59 billion over the next 5 years, or a combined total of RM4.86 billion. The compensation promised to date has already exceeded the construction cost of the highways by 18% or RM734 million.

As a further example, the total capital cost of construction of the LDP is estimated at RM1.327 billion inclusive of capitalised interest of RM142.3 million. However, the projected profit after tax (PAT) over 30 year concession period has been estimated at RM18.865 billion based on the agreement with the Barisan Nasional-led Government. The projected profit represents a 1,400% return on capital, which is excessive by any reasonable standards.

With the impending increase in toll rates for the North-South Highway, and in the light of the clear cut inequity in the concessionaire agreements, as well as in the overwhelming interest of the Malaysian public, the DAP proposes the renegotiation of all toll concessionaire contracts for Malaysian highways. Read the rest of this entry »


Nathaniel Tan’s reply to the Prime Minister

Nathaniel Tan has emailed me his response to the Parliament reply of the Prime Minister, Datuk Seri Abdullah Ahmad on Tuesday claiming that the actions against Nat and Raja Petra Kamarudin were not the “beginning of a clampdown on bloggers” but were normal actions taken against individuals who “break the law”.

Abdullah said the government will not restrict the free flow of information on the Internet but warned that the government will not hesitate to act against bloggers who flout the law.

He said Nat’s arrest and the police report against Raja Petra were usual procedures followed by the police and that such actions do not mean that the government is stifling dissent.

This is the response from Nat, who was detained and investigated for alleged breach of Section 8 of the Official Secrets Act 1972 relating to a comment left on his blog linking Deputy Internal Security Minister Mohd Johari Baharum to a corruption allegation.

Is Kidnapping Standard Police Procedure?

I am terribly saddened by the fact that Prime Minister Abdullah Badawi would claim that the police actions taken against me could be considered the “normal process of law” and “standard procedure.”

What he seems to be saying is that standard procedure includes: Read the rest of this entry »


Financial strenth, economic resilience

Maintaining Islamic Finance Leadership

As highlighted in the previous years’ budget, Malaysia has progressed significantly in the development of Islamic financial services, especially in terms of the size of investments and an increase in the number of institutions. Malaysia was the first to issue a global sukuk in 2002, as well as the first country where supranationals have issued ringgit-denominated Islamic bonds, namely the International Finance Corporation with an issuance of RM500 million and the World Bank, RM2 billion. In 2006, Malaysia was the largest issuer of Islamic bonds in the global capital market, accounting for USD30 billion, which is more than 70% of the overall global issuance of USD41 billion.

With the continued growth of importance in Islamic finance, we want to encourage more of this business to come to Malaysia. There is approximately US$500 billion of funds within the Islamic finance system, growing at around 15% annually. In the Gulf and Asia, Standard & Poor’s estimates that 20 per cent of banking customers would now spontaneously choose an Islamic financial product over a conventional one with a similar risk-return profile.

However the market’s growth in importance has also attracted some of the largest capital markets in the world such as the United Kingdom and Singapore to develop financial services and products to capture this market, which will result in a loss of market share for Malaysia. For example, one of the largest sukuk to date issued by Dubai Ports was written out of the London office of Barclays Capital in January 2006. And in August 2006, the first billion dollar sukuk to be listed on the London Stock Exchange raised £2.5 billion (US$5 billion). In addition, ambitious plans have been announced to make London the western capital of Islamic finance as the government announced tax relief for sukuk in March this year.

Nearer home, Singapore is increasingly serving as a bridge between the Middle East and Asia. More Middle Eastern banks are setting up in Singapore, which is experiencing double-digit growth in funds originating from the Middle East, for investment in Asian capital markets and real estate. Given Singapore’s lead in the Over-The-Counter (OTC) derivative market as the fourth-largest foreign exchange trading centre in the world, they will certain provide stiff competition for Malaysia. Read the rest of this entry »