The Pathologisation of Muslims in Europe

By Farish A. Noor

‘No we are not racist. It is just that we need to preserve and protect our German identity and culture, and our Judeo-Christian heritage. The more Turkish Muslims come here, the less we know who and what we are. We cannot allow our identity and culture to be confused like that…’

How many times have I been fed such pedestrian drivel, and how long have I been trying to play the role of bridge-builder between communities, only to find my efforts reduced to naught thanks to the asinine and facile platitidues that spill forth time and again? The gem quoted above was the comment made by a rather ordinary German at a public debate on Islam and the Rule of Law in Berlin; and just one week after an equally gruelling series of public talks in Amsterdam I could not help but feel as if Europe’s slide to the right is accelerating faster than ever.

That a public forum on Islam and the rule of law could degenerate into a senseless round of Turk-bashing speaks volumes about the shallowness of public debate in some parts of Europe these days. That the debate took place in Berlin, the much-hyped cosmopolitan capital of Germany was itself a less than startling revelation: Judging by some of the comments uttered it might as well have been a local talk in some village tavern in the deepest recesses of the Black Forest. The only things that were missing were the leather shorts and bust of the Kaiser on the mantlepiece… for those present had reduced themselves to caricatural stereotypes of the worst order.

What was most alarming, however, was the manner in which a host of complex issues and dilemmas were reduced and pathologised to a single problem: The Muslims and their non-Western culture and belief system. That some of the commentators were right-wing politicians was bad enough, worse still was the evident lack of self-critique, irony and objective distance to the things that were meant to be discussed in the first place.

The list of complaints were many: One man in the audience produced a fatwa — with a stamp no less – calling for the punishment of a non-Muslim in Egypt; and then proceeded to ask the Muslims present what they thought of the death penalty. Oblivious to the fact that most of the Muslims he was addressing were second generation migrants to Germany who were probably as rooted and as German as he was, he seemed to be assuming that Muslims in Europe were still undecided over the choice between democracy or the fabled Caliphate. Yet how many times has the random Catholic been picked out in the street and asked if he or she agreed with the latest ruling of the Pope from the Vatican?

This was the first essentist misunderstanding that sadly coloured the entire debate, and by extension most debates about Islam and Muslims in Europe today. It is still assumed that Muslims are a homogenous bloc; that they are defined primarily and solely by their religion; and that they are unable to take objective distance from their creed, culture and history. Yet does Islam decide which football team Muslim kids support in the inner cities? Is it Islam that tells them which musicians to listen to, which novel to read, which movie to watch?

Taking a further step back from the sordid goings-on in the debating hall, I reflected on the times I had heard the same sort of nonsense from Muslims in the Muslim countries I have visited and lived in. The cornucopia of racist essentialisms came thick and fast I recall: ‘The West has no religion, no ethics; Westerners are decadent drug addicts with no morals; Western women are loose and Western men are promiscuous’ etc. The list of racist bile directed to the West is as long as Western complaints about Muslims. On both sides there is no attempt to understand or communicate with the Other; on both sides the framing of the stereotype of the Other suffices for the semblance of a non-dialogue to take place; and on both side the values of self-reflection, auto-critique and introspection are totally absent.

Yet surely the root of the problem is this: Both the Western and Muslim worlds are facing unprecedented changes thanks to the ravaging effects of unrestrained global capital, that has radically altered social relations, overturned social hierarchies, exposed long-held misperceptions and misconceptions that have been around too long; and is now totally changing the way we live, think and see ourselves in the world.

In the face of such challenges, it is all too easy to demonise minorities in our midst and reconstruct the other in dialectical terms. The debate in Western Europe has framed Muslims as the root cause for all that is wrong with multiculturalism and pluralism in Europe today, and posited the idea that Muslims are the ones who cannot assimilate, integrate and adapt to the realities of Europe. Related to this is the idea that the presence of Muslims in Europe threatens the continents sense of self-identity and self-representation, leading to caricatural accounts of an Islamic takeover of the West and the proliferation of mosques and minarets all over the European continent.

But look around the capitals of Europe and we will see that the colonisation of the continent has already happened. A short walk down Kudamm, the main street of Berlin, will show that contemporary German popular culture comprises of MacDonalds and Kentucky Fried Chicken, Coca Cola, Pizza Hut and Starbucks. What is more it wasnt the dreaded Turks who imported all this American junk pop culture to Germany or Europe, but the Europeans themselves.

The fact is that the world is indeed shrinking and becoming more homogeneous and uniform at an alarming rate. From the ‘Hiltonisation’ of urban life to the less than subtle exchange of Cafe Latte for drinking water, we are all plugged into global consumerism more than ever before. Failure to accept our complicity in the spread and hegemonisation of global capital has led us instead to search for scapegoats to blame for all that is wrong in our countries, from rising unemployment to the loss of job security and educational opportunities. The stigmatisation of Turks and other Muslims in Europe today is just the tip of the iceberg, reminiscent of the campaigns against the Jews and other cosmopolitans in Europe in the past.

How do we escape from this blind impasse of our own making? Perhaps the first step involves the recognition of our own role in the mess we have created around us; and to begin to re-forge the common links of universal human solidarity across class, gender and communal boundaries that may inject some meaning into the concept of Society again. In the long run, apart from a minority of trouble-makers who have hijacked some of the mosques of Europe, the overwhelming majority of European Muslims want to be part of Europe and accepted as such. What needs to happen next is the development of genuine bridging capital between all these communities to counter the dislocating effects of globalisation that has really damaged the world we live in, be it in the East or West.

                This entry was posted on Tuesday, 11 September 2007, 7:06 am and is filed under
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Challenges of globalisation

Globalisation brings both new threats and opportunities for the Malaysian economy.  Should we rest on our laurels and continue to believe that we can be sheltered by the proverbial coconut shell, it will only result in irreparable damage to the economy.  However, if we were to instil in our economy the spirit of resilience as well as the ethics of competition, hard work and innovation, Malaysia will be able to achieve its full potential via the vast opportunities provided by globalisation.

Today, capital, enterprise and talent are flowing to countries where government can be trusted, where the workforce is well-educated and skilled, and where the quality of life is high.  These are key pillars of our economy and our country which we must build in order to reap the full benefits of globalisation.

Malaysia used to attract some of the biggest technological giants such as Intel, Motorola and Dell to develop and manufacture their latest technologies in the country.  However, in the past decade, we have clearly fallen behind in terms of advancement in manufacturing technology.  For example, Malaysia’s current leading semi-conductor wafer-fabricator, SilTerra Malaysia Sdn Bhd offers major foundry compatible CMOS logic, high-voltage and mixed-signal/RF technologies down to 130 nanometer feature size. SilTerra’s wafer fab has a design capacity of 40,000 eight-inch wafers per month.

However, semi-conductor technology has advanced significantly with state-of-the-art 90-nm technology on 300-mm wafers, and 65-nm production.  In fact, 45-nm process technology is now under aggressive development.  Our neighbours, Singapore, for example, is attracting more of the ‘first-of-its-kind’ investments such as the chip used in the latest PlayStation3 and Xbox.  A French semiconductor company, Soitec, is investing $700 million to set up in Singapore its first offshore facility to make the wafer for this chip.  It is high precision, high technology.  The wafers have alternating layers of silicon and insulator, unlike conventional wafers which use silicon throughout. Singapore became the only country in Asia that it trusts well enough to set up its first manufacturing campus outside of France.  Hence, it is key for Malaysia, in the age of globalisation, to bring back global investments in leading age technologies.

At the same time, with increased exposure to globalisation, we are clearly facing a worsening of our income distribution.  In particular, there has been slow or no growth in wages at the lower end.  The income share of the bottom 40 per cent of households decreased from 14.0% in 1999 to 13.5% in 2004 while that of the top 20% of households increased from 50.5% to 51.2%. Consequently, the Gini coefficient worsened from 0.452 in 1999 to 0.462 in 2004. All ethnic groups recorded an increase in the Gini coefficient during the period. The inequality among Bumiputera was the highest compared with the Chinese and Indians.  Income inequality in Malaysia has been ranked the worst in Southeast Asia.

Globalisation, corresponding with a drastic increase in competition for skilled labour and global talents, has resulted in widening income gaps between the skilled and the low-skilled, between the young and old, between those who are nimble enough to adapt quickly to the market and those who aren’t.

Therefore our approach to globalisation is twin-pronged.  Firstly, we must embrace globalisation, particularly in terms of open economic competition so that Malaysia, as a whole can grow to its full potential.  However, we must at the same time carefully manage the negative impact of globalisation, particularly on the less educated and lower income group in the country.

To face up to the opportunities provided by globalisation, it is critical that we build capacity and capabilities, with the greatest emphasis on education and human capital development for the future.  At the same time, we must attract new investments, grow new businesses, and create new and better paying jobs to replace old ones.

To bring the economy forward, it is hence critical that we develop a new national policy  to fully exploit the strengths and talents of all Malaysians to contribute towards the growth of the country, which will replace the outdated New Economic Plan (NEP) with a distinct shift in focus from a race-based economic agenda to one which serves to promote efficiency, competitiveness and equality of opportunity for all Malaysians.

The  new policy will promote a productivity driven and private sector-led economy that requires comprehensive reforms to education, as well as the private and public sectors. The reforms should increase the incentives of people to acquire and make the full use of human capital and for companies to invest and innovate to be stay ahead of competition.  Earlier policies within the NEP which is incompatible with private incentives that causes the outflow of talented people and businesses to other countries that offer a better deal for their endeavours must be reversed.

An integral element of such a new policy  is to ensure that business contracts tendered in the private sector, including Government-linked companies (GLCs) shall be based on the quality and price of the proposal, and not based on racial composition requirements.  At the same time, to ensure a smooth transition from the NEP system, Government contracts shall be migrated to a open, transparent and competitive tender system based on quality and price over a 5 year period.  The tender process for all government projects above the value of RM10 million shall immediately be migrated to the new system, and all such projects must be tendered openly and competitively.

Such a new policy will ensure that there will be minimal wastage of economic resources we have observed in recent years due to government bailouts of large projects.  The poor delivery system has resulted in catastrophes, such as the Middle Ring Road II increase in cost from RM120 million to RM190 million and the MATRADE Building from RM167 million to RM287 million .  It will also eliminate poor workmanship seen recently, such as the renovation works for the Parliament, the construction of the mega Jalan Duta Court Complex as well as the government buildings in Putrajaya.

However, as we grow the economy, we must ensure that no one is left behind, irrespective of race, religion or creed.  All Malaysians have the opportunity to succeed. we must ensure that all social subsidy programmes target the deserving groups, particularly those from rural areas as well as lower-income families.  Subsidies and grants shall be focused strictly on  lower-income groups, instead of being abused and wasted on the wealthy.

There should be an allocation of RM9.3 billion in 2008 as grants and income supplements for the lower income groups.  The key objectives of these grants and income supplements should  serve the dual function of easing the financial burden of the needy as well as incentivising and improving their abilities to secure better opportunities.  This programme is a major cornerstone for the Government to share the country’s wealth derived from the oil and gas sector with the rakyat.

(Speech 6 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Wednesday, 12 September 2007, 10:20 am and is filed under
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Economic Prospects — Dangerous Times ahead

The budget offers the rosy view that the Malaysian economy will continue to be resilient, with a projected growth of between six and 6.5 percent in 2008.

The economic prospects  need to be placed in perspective. First and foremost, the external economic environment has sharply deteriorated and the international agencies and governments of the developed countries have turned bearish on global economic growth prospects in the wake of the US sub-prime crisis.  Some analysts have even gone so far as predicting a recession.

Malaysia, as an open economy, is not immune from these adverse developments. History indicates that a global slowdown impacts on Malaysia in a magnified manner — lower exports linked to weak demand and lower commodity prices; lowered inflows of capital and through multiplier effects contributing to lower domestic economic activity, lower domestic investment, and lower government revenues which in turn force the government to increase borrowing with the inevitable growth in the deficit.

Thus, the over-optimistic assumptions and forecasts lack credibility. The prognosis for 2008 must thus be viewed at best as one of increased uncertainty and heightened risk.

A more realistic assessment would be that Malaysia may face an economic crisis and will need to change course to withstand the looming economic storm. It cannot continue on the present path. It is deeply troubling that the Government does not appear to have recognized the perilous circumstances that are now unfolding.

The Prime Minister offered in the latest budget more incentives and concessions to the private sector and yet again exhorted the private sector to take a lead in investing and promoting growth. What the Prime Minister failed to acknowledge was the stark fact that implementation of the NEP was the single most important impediment that affected the private sector and its ability to play a fuller and more robust role. He offered no indication of policy changes or attempts to allay the fears and frustrations of the private sector concerning the NEP.

 The private sector can be broadly sub-divided into three major components:

	 The GLCs

	The foreign owned corporations or corporations in which there foreign participation

	The Small and Medium sized Enterprises

It is appropriate to briefly review the current scene in respect of each of these groups.

The GLCs constitute the largest and most important segment of the private sector and operate as monopolies facing little or no competition. Many of these entities are ill-managed and record humongous losses or at best low returns on capital. Proton is but one example.

There is little evidence that the various tax and other incentives offered via successive budgets have influenced their investment or other business decisions. The corporate culture in many of these entities differs from that prevailing in the multinational corporations.

The foreign owned multinationals have for the most part located themselves in Malaysia in past decades for the most part because of the attractions offered by a low wage labor market coupled with the tax holidays.

New investments have been affected by the disappearance of the low wage factor, the over-regulation by the government, the high cost of doing business and the increasing political uncertainties. These entities are unlikely to expand irrespective of the changes in the so-called incentive packages.

New investors of this genre are unlikely to locate themselves in Malaysia as alternative investment destinations gain ground, e.g. Vietnam, China, India etc. Furthermore, the growing negative factors in terms of the cost of doing business, corruption, and lack of transparency, over-regulation and the political risk factors outweigh the benefits of investment incentives that are offered.

Malaysia’s Small and Medium-sized Enterprises contribute some one-third of its GDP of RM340 billion. An estimated 90 per cent of SMEs are Chinese-owned. It is these that bear the full brunt of the NEP.

According to a recent survey conducted by the Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM) these enterprises  had a rough ride in the first half of the year and are pessimistic about second-half year prospects. The survey revealed that domestic competition, rising raw material prices and operating costs, as well as opaque government policies were the three factors which most adversely affected the business performance of these businesses.

The survey indicated that despite the slew of ongoing government initiatives to ensure the sustainability of the local economy, the community appears less optimistic about economic prospects in H2.

A more robust ringgit had affected nearly a third of its 28,000 members who are export-oriented. Only 20 percent of ACCCIM members who participated in the survey anticipate a rise in export sales, compared with 37 per cent in 2006. The pessimism also extends to local sales. Only 17 per cent believe domestic sales will increase. The survey also indicated that inflationary pressures are expected to continue to have an impact on sales, with 64 per cent believing rising inflation will affect consumer sentiment and sales.

A more stark survey finding was that the Chinese owned SMEs do not expect to benefit from additional government spending on a number of massive development initiatives to ensure the sustainability of the local economy in the years ahead. This is in part because they do not believe they would be on the list of beneficiaries of these projects, and they anticipate bureaucratic red tape will continue to act as a stranglehold.

The ACCCIM once again called for improving the delivery system. In their view government policies need to be more transparent and liberal.

The ACCIM expressed deep concern about the policy guidelines on distributive trade which the Domestic Trade & Consumer Affairs Ministry has tried to introduce to the ire of many. These guidelines stipulate businesses which are owned 15 per cent and above by foreigners should be restructured in a way which allows bumiputras  to hold at least 30 per cent equity. The paid-up capital of the businesses also has to be raised to a minimum of RM1 million and the composition of the directors and employees must reflect the racial composition of the country.

It is these and similar issues which are matters of concern. These remain unaddressed. Thus, granting more incentives as the present budget does is not a solution. What is indeed devastating is the lack of consistency. Whilst much is made of the incentives, the budget takes contradictory positions.

One section in the budget – tucked under the Corporate Social Responsibility section — is likely to further alarm the private sector. The budget proposes from next year, that all public-listed companies will have to disclose their employment composition by race and gender, and list program to develop local and Malay partners. This surprising section is only one sentence long, but it will reinforce the idea of a stronger Malay, rather than a national agenda. It is actions such as these that bring into question the seriousness with which the Government approaches the issue of improving the business climate.

The budget for 2008 continues to pay lip service about improving the nation’s competitive position and a few rhetorical sound bites are offered. There is however a total disregard of the fact that improving competitiveness will demand drastic and vigorously implemented measures to:

	Pursue relentlessly the elimination of corruption

	Greater accountability and transparency concerning the use of public resources

	Deregulation and a change in the licensing and permit regimes which feed into the culture of rent seeking and corruption

	Improve the productivity of the million plus public servants

	Effective use of the nation’s reservoir of human resources via policies that give scope for merit and talent

	Elimination of counter-productive policies and procedures associated with  aspects of the NEP

It is noteworthy that the Budget speech, the most important and key policy statement in the national calendar, contained no references to any of these issues. Nor did the speech acknowledge, let alone offer solutions or steps in facing up to the greatest and most dangerous challenge posed by the acceleration in race polarization. The most telling message delivered by the Budget is that these challenges are not to be met; the nation will instead continue to rely upon short term feel good populist policies.

(Speech 5 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Wednesday, 12 September 2007, 8:52 am and is filed under
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Optimising Human Capital

The economic contribution from natural resources, especially in oil and gas is expected to decline over the next 20 years as our reserves runs dry.  As revenue from oil and gas constitutes more than 40% of the overall Government budget, there is a serious challenge in sourcing alternative sources of revenue to sustain Government expenditure at current levels.

The direct source of replacement contribution towards greater economic productivity in the light of the above will be by substantially raising human capital.  With the right quality of human capital, many countries around the world which are not as blessed with natural resources have recorded significant growth above and beyond what we have achieved.

In light of the above, the DAP proposes legislating that at least 50% of our windfall revenues from the oil and gas sector shall be allocated to building human capacity, particularly in Education and Training, above and beyond their normal allocation. This will ensure that our windfall revenues will be productively invested in our most important assets, in particular, the young Malaysians.

We will give every child access to a first-rate education.  In every school, the focus will now be on quality.  More teachers will be deployed to ensure that there will be more time to plan for quality and innovation in teaching.  Our schools must encourage creation of new ideas and creative thinking via different types of classrooms, different styles and different methods, but all with a strong emphasis in quality.

Building World Class Tertiary Institutions

The focus of higher education must be  on the quality of the existing tertiary institutions instead of creating new universities for Malaysia.  At this point of time, Malaysia has more than double the ratio of university to population compared to countries with better quality education system such as Singapore.  As a result, further expansion of tertiary students intake at public universities, expected to reach 294,000 by 2010 will be absorbed into existing universities.  To cope with this expansion, an allocation of RM1.2 billion will be provided to upgrade and improve facilities in existing universities.

Universiti Sains Malaysia, Universiti Malaya, Universiti Putra Malaysia and Universiti Kebangsaan Malaysia have been granted “research university” status.  These leading Malaysian universities should  be allocated RM200 million each to conduct research activities.  In addition, to promote the universities’ self-sufficiency and fund-raising capabilities, every additional ringgit up to RM200 million which the universities, including all other local public universities are able to raise from the corporate sector or their alumni for research purposes, the Government will back the fund with an additional ringgit.

On top of the above, the DAP proposes that university academics and lecturers will have their pay de-linked from the civil service pay scale and structure.  For a start, university academics shall enjoy an immediate 20% increase in pay.  In addition, allowance for academics critical faculties which competes with the private sector will be raised by 300% from the current levels between RM200 to RM300.

A further study will be conducted to revise the remuneration packages for them to ensure that our universities are able to attract the best academics from around the world to teach and research at our universities.  Without these global talents, whether Malaysians or foreigners to lead our academia, it will be difficult for our universities to excel in the increasingly globalised and competitive world.

To promote quality and competitiveness between the local public universities, for the 2008 university intake, each university should  be able to evaluate their selection of students on the basis of the students’ own preferences.  Only if the students are unable to secure a place based on their preferences, will they be allocated a place by a central clearing agency at the Ministry of Higher Education.  This change in university placement will result in greater university autonomy in forming the character as well as managing the quality of their own institutions.  In the longer run, it will result in much higher quality institutions of higher learning.

To promote access to university education, in particular, those from poorer financial circumstances, student loans should be  made available to any and all student who qualifies for tertiary education.  However, to ensure efficiency and transparency, as well as to minimise the risk of default, the education loan fund should  be managed and administered by all the local commercial banks in Malaysia at preferred interest rates subsidized by the Government.  This move will ensure that all deserving students shall have speedy access to funds, preventing unnecessary anxiety caused by delays.  At the same time, it will reduce the administrative cost borne by the Government as well as the high percentage of defaults faced currently due to poor and weak enforcement by Government agencies.

Investing in Research and Development

In order to build up a world class economy, the nation needs to invest in the research and development of core technology and products.  This will reduce our reliance on foreign expertise as well as increase the competitiveness of our country.  Our expenditure on Research & Development has historically been low, but we should  boost R & D spending to 2% by 2012, and 3% by 2015 of the country’s GDP annually.  For the 2008 Budget, we should have allocated RM3.2 billion which represents approximately 0.5% of Malaysia GDP in  contrast to  the RM1,370 million allocated by the government  for various biotechnology and ICT funds and projects.

The reason for the gradual increase in R&D funding is for the simple reason that it will take time to attract and grow the necessary talents to and in Malaysia to lead Malaysia’s infant R&D industries.  The nation’s R&D thrust goes hand-in-hand with our policy in building human capital, for without the necessary levels of skills and intelligence, no amount of money will deliver the necessary results from our R&D ventures.

Malaysia’s primary focus to date has been to construct buildings and infrastructure but we have often failed miserably in the areas of attracting the right quality of expertise and knowledge.  Hence, for our R&D thrust to be successful, Malaysia must also invest not only in producing our own R&D scientists but also attract global R&D experts to pursue their research career in Malaysia.  Many of these will be Malaysian researchers currently pursuing their careers overseas.  It is only with a sufficient critical mass of top global researchers transplanted to the country, that the R&D movement within Malaysia will blossom.  However, this means paying the right amount of money for the right quality of talent to set up their operations in the country.

Over the next decade, we should strive to reach  this critical mass of top-rate researchers in Malaysia, who will create new intellectual property in our research institutes, universities and hospitals, and will bring in new, technology-driven activities which will spin off benefits to the rest of the economy.  This way, Malaysia’s economy can truly move up the value-chain ahead of the fierce competition from our neighbours such as Vietnam, Thailand and even China.

As the areas of research in engineering, biotechnology, ICT as well as other fields is vast and endless, it is also critical that Malaysia’s investment is allocated to a smaller area where the likelihood of success is higher, based on our own competitive advantages. Any lack of focus in the areas of research will result in too little money spent on too many projects leading to negligible results.  In addition, it is important that we recognise that we will never be able to spend a similar quantum of funds in R&D as compared to highly developed nations.

However, the sheer complexity as well as depth of knowledge and experience required to decide on sensible and viable policies render our local governmental agencies highly ill-suited to the task.  Hence, the DAP proposes the set up of a Research & Development International Action Team (RADIANT), an executive council of internationally renown academics from the scientific community to steer the R&D direction, innovation and entrepreneurship focus for Malaysia.

(Speech 8 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Wednesday, 12 September 2007, 1:29 pm and is filed under
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PM should  immediately respond to urgent issues raised in 2008 budget debate like PKFZ scandal and e-kesihatan and not wait until early Nov

I call on the Prime Minister, Datuk Seri Abdullah Ahmad Badawi, who is also the Finance Minister, to respond to urgent issues raised in the first three days of the 2008 Budget and not to delay for some two months until early November — particularly on pressing public interest issues like the RM4.6 billion Port Klang Free Zone bailout scandal and the outcry over the new rip-off of the e-kesihatan monopoly concession awarded to Supremme Systems Sdn. Bhd without tender.

The Dewan Rakyat will adjourn for a 39-day break over the fasting month and Hari Raya  holidays, resuming on October 22.  This would mean that the 13-day general debate for the 2008 Budget before the ministerial reply would be broken up into two parts, three days this week and 10 days from 22nd October to 6th November, with Ministers beginning their reply on November 7, 2007.

There is something very wrong with the whole notion  that issues raised in Parliament during the first three days of the 2008 Budget this week are only answered by Ministers two months later — especially with regard to pressing public interest issues demanding immediate response and action, particularly urgent matters like the RM4.6 billion Port Klang Free Zone  (PFKZ) bailout scandal and the outcry over the new rip-off of the e-kesihatan monopoly concession awarded to Supremme Systems Sdn. Bhd without tender.

Accountability, transparency, integrity and good governance principles demand instant end of the government’s denial syndrome both in and outside Parliament about the RM4.6 billion PKFZ bailout scandal — particularly at a time when the Prime Minister and Cabinet Ministers are trying to assure Malaysians that they meant business and would not brook any hanky-panky following the shocking exposes of the pervasive culture of impunity, corruption, waste and mismanagement of public funds in the 2006 Auditor-General’s Report.

Abdullah said in
Kuching
 yesterday that he had directed all Cabinet ministers to go through the Auditor-General’s report in detail and to fully explain anything that is questionable.

He said
: “During the last cabinet meeting, before I left for the APEC (Asia-Pacific Economic Co-operation) meeting, I had directed all ministers to check matters pertaining to their respective ministries and report to the cabinet.  Ministers must ensure that each matter raised in the Auditor-General’s report is studied and explained in detail.”

Several questions immediately come to mind. From Abdullah’s own revelation, the first time that the Auditor-General’s Report was discussed in the Cabinet was last Wednesday (Sept. 5) before he left for the APEC meeting in Melbourne.

But why had  the Prime Minister and the Cabinet “slept” for over two months on  the 2006 Auditor-General’s report when the Auditor-General’s Report into the 2006 Federal Government accounts were completed on 28th June 2007 and would have been submitted to the government shortly after.

Secondly, were the Ministers unaware and not responsible for the responses which had been given by the various Ministries and departments to the Auditor-General’s Report, which had been tabled in Parliament last week in the form of a Treasury memorandum together with the 2006 Auditor-General’s Report —  many of which had been found to be very unsatisfactory and even unacceptable?

Thirdly, although the 2006 Auditor-General’s Report unveiled a catalogue of horror stories of pervasive waste and mismanagement of public funds, like the payment of RM224 for a RM32 set of screwdrivers,  paying RM1,146 for a set of pens costing RM160, paying RM5,700 for a car jack worth RM50, the National Higher Education Fund Corporation (PTPTN) paying RM5.59 million in advance to 4,183 students who did not apply for a loan, or the escalation of costs because of mismanagement and delays in the construction of six high-tech offshore patrol vessels (OPVs) by a whopping RM1.4 billion, they are either chicken-feed or comparatively minor when compared to a mega scandal like the RM4.6 billion PKFZ bailout scandal.

This is why I had asked in Parliament yesterday that if the Prime Minister and Cabinet could condone mega-scandals like the RM4.6 billion PKFZ bailout scandal, how could it be taken seriously that action would be taken against comparatively minor offences by public servants as highlighted by the 2006 Auditor-Genera’s Report although the abuse and mismanagement of public funds are still in millions or tens of millions of ringgit?

This is  why if Abdullah really wants to send a clear message that he would not condone any further  hanky-panky with public funds in government, then an example must be made against Cabinet Ministers, past and present, who had abused their powers and acted unlawfully, forcing the government to bail out the RM4.6 billion Port Klang Free Zone project when firm assurances had been given that the project would not need a  single ringgit of public funds.

Otherwise, the assurance given by the Prime Minister  yesterday at the Forbes  Global CEO Conference in Singapore that his government would not bailout privately funded mega infrastructure projects that have failed would have no meaning whatsoever — as it would have been proved false by the RM4.6 billion PKFZ bailout scandal.

                This entry was posted on Wednesday, 12 September 2007, 1:01 pm and is filed under
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Reliance on Oil & Gas

Malaysia is a country blessed with abundant natural resources.  In particular, we are thankful that the country is rich in oil and gas, which created Malaysia’s sole representative in the Fortune 500, Petroliam Nasional Berhad (Petronas).

In the most recent financial year ending March 2007, Petronas achieved record profits before tax of RM76.3 billion thanks to record high crude oil prices which increased from under US$25 per barrel to above US$70 all within four years.

Of greatest importance, was the fact that Petronas contributed RM53.7 billion to our national coffers in taxes, royalties, dividends and export duties last year.

Contribution from Petronas and other oil and gas companies operating in Malaysia was budgeted to make up some 46.8% of the government revenue for 2007.

This represents a steep increase from approximately 30% in 2006 and 25% in 2004.  These statistics marks Malaysia’s heavy reliance on oil and gas industry today.

Malaysia’s abundance of oil & gas resources is akin to striking lottery.  It is a once-off affair, and at some point of time, our reserves will run dry.

According to Oil & Gas Journal, Malaysia held proven oil reserves of 3.0 billion barrels as of January 2007, down from a peak of 4.6 billion barrels in 1996. These reserves will last us for only another 20 years or so.

In addition, Malaysia is expected to become a net oil importer by 2010 assuming a conservative growth of 4% in petroleum products consumption.  Our trade current account surplus has also been boosted significantly by oil and gas related products which constitutes more than 11% of our exports.

The frightful acceleration of dependence on our limited oil and gas resources places the country’s economy at great risks.

Malaysia must not fall into the trap of what economists call the “resource curse”, that is countries devoid of natural resources fare better than countries better endowed.  Countries such as  Hong Kong, Singapore and Switzerland contrasted against the oil-rich but poorly developed Middle East countries immediately come to mind.  This appears to be closely related to the phenomenon known as the Dutch disease. The Netherlands in the 1960s, after its discovery and depletion of oil and gas in the North Sea, was plagued with unemployment and an unproductive manufacturing sector due to the negative side effects of such a discovery.

What is perhaps most worrying for Malaysia, with the reliance on natural resource overshadowing the other productive sectors of the economy, is the resulting “rent-seeking economy” where influential parties within the government together with external parties focus their efforts in securing a larger share of the economic pie, instead of creating a bigger pie.

Therefore the DAP proposes that the Government legislate that 50% of our windfall from oil and gas is kept under lock and key, with the sole purpose for investment in human capital as well as research & development, over and beyond our typical expenditure on education and training.

In addition, 25% shall be legislated for use in our social security system while the balance may be used for development expenditure of the national budget.

This way, the funds will be prevented from being expensed to an unproductive and wasteful rent-driven economy.  All unutilised allocation from revenue derived from the oil and gas sector shall be maintained in a stabilisation fund for future investments in the legislated segments.

To quote Economics Nobel Prize winner, Joseph Stiglitz, “abundant natural resources can and should be a blessing, not a curse. We know what must be done. What is missing is the political will to make it so.”

(Speech 7 on 2008 Budget in Parliament on Monday, September 10, 2007)

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Why the RM8.1 billion difference between Abdullah’s 2008 Budget speech and Treasury 2007/2008 Economic Report?

In his 2008 Budget speech in Parliament last Friday, Prime Minister-cum-Finance Minister Datuk Seri Abdullah Ahmad Badawi announced an appropriation of RM176.9 billion comprising RM128.8 billion for Operating Expenditure and RM48.1 billion for Development Expenditure.

This was backed up by the Ministry of Finance Statement of the 2008 Federal Expenditure Estimates tabled in the House during the budget presentation (Command Paper 12 of 2007).

However, in another Ministry of Finance document,
the Economic Report 2007/2008, (Command paper 2 of 2007),
which was also tabled in Parliament at the same time, a completely different set of figures was provided.

Chapter 4 of the Economic Report 2007/2008 on
“Public Sector Finance”
, in its section on “Outlook for 2008”, states: “This Budget will allocate a total of RM168,799 million, an increase of 2.5% over 2007.  Of this, RM128,799 million is for operating expenditure and the balance of RM40,000 million for development expenditure”. (p 96)

These  different set of figures were backed up the Table 4.1 on
“Federal Government Financial  Position 2006-2008”
 (p 77).

How could there be such a huge difference of RM8.1 billion for the 2008 Development Estimates between  Abdullah’s budget presentation and Finance Ministry Statement on the one hand and the Finance Ministry’s Economic Report 2007/2008, all presented to Parliament on the same day last Friday?

There can be no justification for such a huge difference  in the two sets of figures as the Finance Ministry’s Economic Report 2007/2008 was signed off by Abdullah as Finance Minister in a preface dated 7th September 2007 (the very same day as the budget presentation).

A difference of RM8.1 billion would have sent the whole budgetary estimates awry, with the estimated budget deficit for 2008  estimated at 3.1 per cent of the GDP shooting up to 4.6 per cent — a most unfortunate reflection on the professionalism and competence of government budgetary expertise which could only undermine public confidence in the Abdullah administration.

I raised this issue in Parliament this evening (the third day of the 2008 Budget debate before adjourning for 39 days until October 22) when the Barisan Nasional MP for Muar, Razali Ibrahim was speaking but no BN MP seemed to be the least bit concerned about the “RM8.1 billion scandal of the 2008 Budget”.

On the floor of Parliament, I had called on Abdullah to give instant explanation for the RM8.1 billion difference of 2008 development estimates, as this matter cannot wait for two months until the Ministerial winding-up in the second week of November, without doing untold harm to national and international  confidence in the financial professionalism, capability and responsibility of the government.

                This entry was posted on Wednesday, 12 September 2007, 9:20 pm and is filed under
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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.

This year the Anti-Corruption Agency (ACA) has taken a more proactive publicity stance, declaring that  it is scrutinizing the Auditor-General’s Report 2006 on spending by the federal and state governments to see if any of the transactions of projects involved corruption.

ACA director-general Datuk Ahmad Said Hamdan said on Tuesday  that if there is any hint of corruption, the ACA will haul up the officials concerned, including ministers, for questioning.

Minister in the Prime Minister’s Department, Datuk Seri Nazri Aziz, who was also present, said the Prime Minister had instructed all the ministers to look into the AG’s report seriously and to correct whatever that was wrong, and if there were elements of abuse of power and corrupt practice, there was nothing to stop the ACA from investigating and taking action.

These were all empty words utterly lacking in credibility as corruption has worsened in the past four years, as reflected by national and international perceptions, whether by Malaysians (including the former Prime Minister, Tun Dr. Mahathir Mohamad) or by international organizations like the Transparency International in its annual Corruption Perception Index.

Public confidence in the ACA in its independence, capability, professionalism and integrity to fight corruption and to bring the  corrupt to book is at  an all-time low in the four-year premiership of Datuk Seri Abdullah Ahmad Badawi, which was why even the officially-endorsed  National Integrity Convention held a day before the 2008 Budget presentation last week adopted a resolution unanimously calling  for the Anti-Corruption Agency to be made an independent body.

In my speech during the budget debate  in Parliament on Monday, I noted a conspicuous omission in the 2008 Budget speech — the  total absence of any reference to the scourge of corruption which added to the cost of doing business in Malaysia and a major obstacle to economic efficiency although Datuk Seri Abdullah Ahmad Badawi had pledged when he became Prime Minister in October 2003 that eradicating corruption would be his top priority.

In the exchange in Parliament  with Barisan Nasional MPs, who claimed that the government was serious in wanting to eradicate corruption, none of them dared to stand up to contradict my prediction despite repeated challenge that Malaysia’s ranking in the Transparency International Corruption Perception Index 2007, which is expected to be released in a month’s time, is  likely to be even worse than the lowest ranking of No. 44 last year and would be approaching No. 50 on the occasion of the nation’s 50th Merdeka anniversary!

When I read that the corrupt banker  who was executed in China, Wen Mengjie, had bought three houses in Beijing with the bribes he received, I was reminded of what the former Inspector-General of Police, Tun Hanif Omar had written in his Sunday Star column, that  he had been informed by a high-level ACA officer when he was deputy chairman of the Royal Police Commission that  40% of senior police officers could be arrested for corruption without further investigations strictly on the basis of their lifestyles.

It is most deplorable that Barisan Nasional MPs were more interested in “shooting the messenger” instead of focusing on the message when I referred to Hanif’s revelation in Parliament on Monday — with the most irresponsible BN MPs launching a most disgraceful personal attack on Hanif.

I challenge the ACA to prove that it is not a “toothless tiger” and call on the ACA director-general to disclose  how many persons had been arrested and prosecuted for corruption and criminal breach of trust from previous Auditor-General’s Reports.

                This entry was posted on Thursday, 13 September 2007, 12:53 pm and is filed under
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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.

Hence, it is proposed that a joint working committee be set up by the Malaysia International Islamic Finance Centre (MIIFC) top officials from the key relevant Ministries, Government departments and agencies, financial and market regulators and representatives from the banking and takaful sectors.  The main objective of this committee, shall be to help member companies of both organizations to establish key contacts and to find potential partners and clients.

As the practice of Islamic corporate securitisation increases, so must there by a corresponding improvement in trade and liquidity.   While Malaysian Islamic banks have brought together a sizeable amount of financial deals based on Islamic instruments, the lack of liquidity and trade of these tools on a exchange will result in loss of deals in the future as clients move to markets which provides exchange liquidity, such as the London Stock Exchange.  A committee comprising of investment bankers, BNM, Bursa Malaysia, Securities Commission and key broking institution discussing financial mechanism for increasing liquidity and trade of the financial instrument.

With greater global acceptance and maturity of Islamic financial instruments, it now becomes critical for Malaysian Islamic financial institutions to expand their business to global cities which attracts the greatest amount of financial deals.  Of greatest importance is for Malaysia to make its presence felt in New York, London and Hong Kong, for otherwise, we will be destined to lose out to other financial institutions set up in these cities.  Therefore, the DAP proposes that Malaysian Islamic banks and other related institutions be granted a double tax deduction on expenses incurred for setting up and promoting their operations in foreign financial districts.

Liberalisation, Competition & Growth of Financial Services

In part to reduce our extraordinarily high dependence on commodities and in the face of strong competitive pressures in the manufacturing sector from lower cost developing countries, it is highly important that we develop an advanced and mature  financial services sector to move Malaysia up the value chain.  A successful development of the Malaysian financial services sector will certainly compensate for losses in revenue due to decline in commodity prices or the depletion of natural resources in the future.  Unlike commodities and natural resources, the sector is dependent only on a pro-active and accommodating government as well as its human resources to create value for the economy.  The two key complementary pillars of a sound and forward-looking financial institutions as well as a broad and deep capital market are necessary to create a vibrant and dynamic Malaysian financial hub for the region.

In the light of globalisation, it has become imperative that Malaysia continues to liberalise, progressively but decisively, the financial services sector in order to regain Malaysia’s position as a leading country in Asia Pacific for the sector.  Ultimately, we want to establish a vibrant and dynamic global financial hub.

Capital Markets

While our stock and debt markets have performed credibly in the past year, it has not outperformed the bourses in the region, including Singapore and Hong Kong.  It is critical that we acknowledge that our domestic markets alone will not sustain the depth, breadth and resilience needed by liquid capital markets.  In fact, in terms of market capitalisation, Malaysia has declined substantially since the heydays of 1996 when we were ranked 2nd in the Asia-Pacific ex-Japan, and has since dropped in terms of ranking to a dismal 10th today.

It is thus critical for us to develop the equity and debt markets to help service Asian needs, and be linked up with global markets.  We need to build up a critical mass of players and activity in our capital markets and to do that we must provide incentives and a conducive environment for foreign fund managers to carry out their transactions in Malaysia. Refining the rules, developing liquid capital markets and promoting the asset management industry will provide the basis for attracting this critical mass.

As one of the key policies, the Malaysian capital and foreign exchange controls will be further liberalised to remove obstacles from attracting and retaining foreign funds and investments.  A more progressive and vibrant environment will enable foreign companies to list on Bursa Malaysia, or to issue bonds in the country.  To do that Malaysia must prove that we possess the necessary competitive advantages in the region.  These companies would want to raise capital at the lowest cost, and find liquidity and support for their securities in the secondary market.

Hence there must be two  set of reforms.  Firstly, reforms must remove non-financial and performance related conditions such as the 30% bumiputera equity requirement for listing on Bursa Malaysia.  Few globally successful foreign companies will subject themselves to this tenuous condition in the light of competition from other countries which do not impose such restrictions.  The government will then lead Bursa Malaysia to promote its bourse in the regional developing markets to encourage high quality companies to list themselves in Bursa.  Only with a greater and more diverse portfolio of quality companies, will foreign investors be more attracted to the bourse.

Secondly, reforms are required to incentivise more asset and fund managers to locate their investment in Malaysia.  Only a successful implementation of such a strategy will globally successful regional companies display a keen interest in listing on Bursa Malaysia.  To this end, it is proposed that the Government implement a new scheme to grant tax exemption to a fund approved by Bank Negara Malaysia over the next 5 years, for specific income from approved investments for the life of the fund.  In addition, it is proposed that investment banks be qualified for a 10% income tax rate for fees derived from providing investment advisory services to foreign investors or funds.  This incentive should encourage more local financial advisors to seek and attract foreign funds to complete their capital and debt market requirements in Malaysia.

Harnessing Talent in the Financial Services Sector

The financial industry is a global industry driven by technology, innovation and competition. The pace of change is unrelenting. What is most critical to the industry is not just attractive financial incentives and progressive financial reforms.  Instead, what the industry lacks critically today is insufficient and dwindling talent.

It is a well known fact that in the past 12 months, the number of professionals in the financial services industry that has been headhunted to the other more advanced capital and debt markets such as Hong Kong and Singapore have increased manifold. In order for Malaysia to even keep abreast of the financial developments and challenges in the region and the world,  Malaysia must have a pool of highly skilled professionals who are at the forefront of their respective specialist areas. Therefore, it is imperative for the country to enhance our own local financial sector talent and redouble our efforts to attract and retain top international financial talent into the country.

As part of the plan to encourage greater interests in the financial services sector, the DAP will urge our local commercial and investment banks to offer bonded scholarships to top Malaysian students to pursue degree programmes at the top universities in the United Kingdom and the United States, home of the world’s largest financial districts.  To encourage these crucial long term moves, it is proposed that the Government will match the scholarship funds raised by the financial institutions on a RM1 to RM1 basis.

It is also proposed that the Government offers up to 10 scholarships a year for students contemplating postgraduate programmes in economics, financial engineering and other related courses to create “rocket scientists” in the financial services industry with the only condition being their return to the country to contribute to the financial services sector.  These scholarships shall only granted to programmes conducted in the top 10 global universities of the respective fields, which will likely cost us up to RM1.5 million per annum.  At the same time, up to 50 RM8,000 fee-grants shall be awarded to students seeking to pursue these courses in local universities per annum.

Local universities and colleges shall also be encourage to devise degree and postgraduate programmes which are not only more relevant to the fast changing financial services sector, but also improve the rigour of their courses.  As experts in these fields are difficult to attract to our local academia, often due to obscene differential between the income of a practitioner and an academic, a supplementary grant fund shall be established to reduce the differential to ensure that our students will receive adequate and quality training, teaching and mentorship from successful practitioners.

The above measures should hopefully assist Malaysia in building up a critical pool of specialists proficient in sophisticated financial instruments such as financial modelling, structured derivatives, quantitative research methods, risk management and specialised insurance activities. At the same time, other related ancillary services such as legal support and financial advisory work will require the necessary support to ensure that Malaysia remain relevant in the rapidly changing industry.

In the short to medium term however, it is critical for local financial firms to increase their efforts to retain both young and experienced talent in Malaysia or all the Government’s efforts in developing and strengthening the financial services industry will be wasted.  In addition, it is important for Malaysian firms to scour globally for talent to lead our financial services industry.  Just as how Hong Kong and Singapore are developing their highly successful and respected markets, we expect an infusion of foreign talent in this sector will lead to greater cross-fertilization of ideas and increased innovation amongst industry players. This will not only provide the cutting edge for our competitiveness, but also possibly assist in retaining our own local talent from moving on to greener pastures.

(Speech 9 on 2008 Budget in Parliament on Monday, September 10, 2007)

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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:

1.	To increase that take-home pay, workers will contribute a lower rate to the EPF.  For with pay below RM900 per month, employee contribution to the fund will be waived while for those with income of not more than RM1,400 per month, the employee’s contribution to EPF shall be reduced from the current 11% to 5%.

2.	To make them more employable, employers will reduce their rate of contribution to the EPF.  For workers above the age of 35 to 55, earning between RM900 to RM1,400 per month, the employer contribution shall remain at the current 12%.  For those earning less than RM900 per month in the same age group, the employer contribution shall decline to 10%.

3.	To compensate for the above, the Government will give workers FairWage income supplements to achieve a higher level of income.  For workers aged 45 and above, receiving monthly income below RM900 per month, they will receive an annual income supplement of RM2,400.  For those workers above the age of 35 earning less than RM1,400 per month will receive RM1,600 per annum.  Of the supplement, a quarter shall be in cash form, while the balance will be channelled into the EPF accounts.  By channelling a larger portion into the EPF, it will help the workers save for their future needs. An additional 10% on top of the income supplement shall be applied to those who live in the Klang Valley, Johor Bahru as well as on the Penang Island to cope with the higher cost of living.

As an example, a 48 year old worker in Muar earning RM800 per month used to take home RM712, will find his take-home pay increased by 19.4% or RM138 (RM88 + RM50) to RM850.  At the same time, despite a reduction in employer contribution to 10%, the overall contribution to the EPF account will increase from RM184 to RM230, representing a 25% increment.  His total monthly income will hence be RM1,080, an increment of 19.5% from before.

As a separate example, a 42 year old worker in Kuala Terengganu earning RM1,200 per month will find his take-home pay increased by 9.9% or RM105.33 (RM72 + RM33.33) from RM1,068 to RM1,173.  At the same time, the overall contribution to the EPF account will increase from RM276 to RM316 monthly, representing a 14.5% increment.  His total monthly income will hence be RM1,489, an increment of 10.8% from before.

“FairWage” is not an original idea but an adaptation of best practices successfully implemented in other advanced countries.  For example, in the United States, “Earned Income Tax Credit” acts like a negative income tax for low-wage workers, supplementing their earned income.   Similarly, the UK has implemented a “Working Tax Credit” which has helped to reduce poverty and encourage work.  While most recently, Singapore has introduced “Workfare” which supplements the income of older low-wage workers.

In addition to assisting current workers registered with the EPF, FairWage will also provide incentives for more workers, particularly odd-job or ad hoc labourers to insist on registration with the EPF by their employers due to higher pay.  As a result, the overall system will be more inclusive for Malaysians, particularly those from lower income groups.

On top of that, DAP proposes a “Malaysia Bonus” which will vary in accordance to the performance of the economy whereby poorer Malaysians will be able to share the fruits of the country’s wealth.  For 2oo8, the Malaysia Bonus shall be paid to those who have worked at least 6 months in 2007 based on their last drawn pay in December 2007.  The Malaysia Bonus shall be channelled directly into the worker’s EPF account and shall be available for immediate withdrawal.

1.	Those earning less than RM3,000 per month but at least RM2,400 will receive RM300

2.	Those earning less than RM2,400 per month but at least RM1,800 will receive RM600

3.	Those earning less than RM1,800 per month but at least RM1,200 will receive RM900

4.	Those earning less than RM1,200 per month will receive RM1,200

The FairWage scheme is expected to assist up to 2 million low-income Malaysian workers costing RM3.5 billion per annum while the Malaysia Bonus scheme will cost RM4.5 billion in 2008 benefiting more than 5 million Malaysians.  We will review the above schemes annually to determine the best mechanisms to achieve a better living quality for all Malaysians without detrimental effects to a person’s incentive to seek work.  The above policies will ensure that all Malaysians in need are taken cared of by the Government, the country’s wealth is shared equitably and no community will be left behind.

Taking Care of the Elderly

As a responsible Malaysian and a considerate Government, it is very important for us to remember the contribution of our elderly population towards nation building.  As a party that preaches filial piety as a value in our multi-cultural and multi-religious society, many of the senior citizens above the age of 60 in this country are finding it difficult to make ends meet.

The number of senior citizens in Malaysia almost doubled over the twenty years from 1970-1991 from 546 thousand persons in 1970 to 1.03 million persons. The numbers have increased by another 35 per cent over the last 10 years to 1.4 million persons or 6.3 per cent of the total population in 2000. Based on population projections, the number of elderly Malaysians will reach 2.13 million by 2010 or 7.4% of the total population.

Therefore, in conjunction with the Malaysia Bonus, DAP proposes  the Senior Malaysian Bonus.  For a start, this shall be a two-tier programme for Malaysians aged above 60.

1.	Those with not more than RM18,000 in annual assessable income and do not own a property valued above RM80,000 will be entitled to a RM1,000 bonus.

2.	Those who has more than RM18,000, but less than RM36,000  in annual assessable income or do not own a property valued above RM150,000 shall be entitled to RM600 bonus.

The Senior Malaysian Bonus will cost the Government RM1.28 billion to administer.  The bonus shall be credited into their respective EPF accounts, and made available for withdrawal immediately.  This exercise will also serve to encourage more Malaysians to maintain an EPF account, irrespective of whether they are wage earners or self-employed.

(Speech 12 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Thursday, 13 September 2007, 9:32 am and is filed under
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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:

1. Sloppy investigative work

No individual or institution with even the slightest understanding regarding the workings of the Internet and blogs would suspect me of being the author of the accusations against Johari Baharum.

2. Kidnapping

I was arrested by a group of 5-6 policemen in a darkened basement carpark with no one else around at 5pm. The police did not inform a single person as to my whereabouts until continued demands by my friends and family finally forced the police to reveal my location just before 11pm.

3. Denying arrestees access to legal counsel.

My lawyers were not informed of the time and place of my remand hearing. My repeated requests to have someone call my lawyers were all ignored. It is only by luck that human rights lawyer P Uthayakumar happened to be present at the magistrate’s court for another hearing that my lawyers were notified of the hearing. Furthermore, after my lawyers arrived, the police were relentless in their astoundingly unsophisticated attempts to deprive me of my constitutional right to consult with my legal counsel in confidence.

If these are indeed “normal processes” and “standard procedures,” then incidents like such occured in Pantai Batu Buruk in Terengganu merely confirm the fact that Abdullah Badawi and the government are turning Malaysia into a police state where intimidation and brutality are the order of the day.

Nathaniel Tan

                This entry was posted on Thursday, 13 September 2007, 8:27 am and is filed under
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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.

In addition, there should be direct grants to fund, valid for new connections signed up before 31st December 2008:

*The cost of installation of the broadband connection between the business premises and the appropriate exchange for the amount not exceeding RM100 per connection.

*First-time installation charges for connection to broadband services faced by all new residential subscribers for the amount not exceeding RM50 per connection per household.

*First-time installation charges not exceeding RM100 per connection and monthly charges not exceeding RM50 per month, for broadband services faced by registered charitable organizations and community centres.

The lack of competition in the broadband industry creates disincentives for businesses and consumers to adopt ICT.  A monopoly telecommunication service provider would be induced to charge a higher price at all levels of service quality than in an otherwise competitive environment, thus slowing broadband adoption in the economy.

Hence, fiscal transfer schemes via favorable tax treatment on telecommunication companies and grants cannot serve as catalysts for ICT development by themselves. The National Broadband Policy needs to promote both facilities-based and intra-platform competition.

Facilities-based competition, or inter-platform competition, would bring about competition between providers of the same or similar services, but where the services are delivered via different or proprietary means or networks. For instance, a new cable TV network may compete with a BPL (broadband over power lines) to provide broadband services.

Intra-platform competition requires the incumbent telecommunication monopoly to share their physical network with other broadband ISPs, who may wish to access the facilities of the incumbent telecommunications provider.  This will prevent duplication of network infrastructure as well as eliminate the natural barrier to competition in the industry.

While the current limited local loop unbundling (LLU) policy in place already permit such sharing of facilities, it is understood based on the feedback from the industry that the incumbent monopoly still possesses undue influence over LLU and hence retarding the liberalisation of the broadband sector.

Therefore, the industry regulator, Malaysian Communications and Multimedia Commission (MCMC) shall be given more enforcement powers to prevent anti-competitive and negative collusion behaviour by incumbent telecommunication companies.  Heavier penalties shall be imposed, particularly for price and non-price anti-competitive behaviours such as delays in processing of applications, unreasonable terms and conditions as well as other forms of anti-competitive manipulations.

Stimulus for Local MSC Companies

To promote the growth of ICT industry in Malaysia, as well as the success of the Multimedia Super Corridor (MSC) which was initiated in 1996, all MSC status companies shall be immediately qualified to bid and tender for all Government-related ICT projects.  In the past, only companies registered and approved by the Ministry of Finance are qualified to tender for these projects.

By allowing additional competition in the provision of services to the Government, the Government can expect additional savings in terms of cost of implementing ICT projects as well as an increase in quality of services provided.  At the same time, it will serve as a timely boost to MSC-status companies, particularly local ones with the expanded market as the Government represents one of the largest consumers of ICT products and services in the country.  The stronger domestic presence of the MSC-status companies shall result in improved ability and credibility for these companies to compete in overseas markets.

In addition, as the entire concept of ICT is based on its ability to transcend physical boundaries, particularly with the advent of broadband and mobile technologies, the geographical requirements for MSC-Status companies to be located at specific sites shall be phased out accordingly.

This requirement has been most heavily criticised by those employed in the industry, and the DAP is receptive to the voice of those affected by the current policies.  Without geographical limitations, we expect Malaysian MSC-Status companies to continue to grow exponentially in terms of numbers and profitability, as their ability to service customers, attract global top talents as well as reduce operating cost will be enhanced substantially.

Increasing computer ownership

1.	Household computer ownership in Malaysia continues to remain low at 21.9%.  In order expedite the increase computer literacy as well as ownership, particularly among the lower income group who currently don’t pay any taxes, all Malaysians above the age of 21 shall be entitled to computer purchase vouchers based on their income levels.  Those with income RM1,200 and below per month shall be entitled to RM200, while those with income above RM1,200 and below RM2,500 will be entitled to RM100.  Assuming a 10% take-up rate by those who are eligible, this exercise will cost the Government approximately, RM300 million.

2.	To encourage the use of internet technology in Malaysia, DAP proposes an allocation of RM250 million for a nationwide WiFi plan to create ease of connectivity to promote learning and innovation.  The project will pilot in Klang Valley, Penang and Johor Bahru for 2008 and for all other secondary cities in Malaysia by 2010.

3.	At the same time, the current RM3,000 tax relief policy for computers purchased every 3 years should l be abolished as it benefits wealthier Malaysians disproportionately, and does not benefit lower income groups who do not have to pay taxes.

(Speech 11 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Thursday, 13 September 2007, 9:01 am and is filed under
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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.

It is  proposed that the toll rates shall be decided in an open and transparent formula which takes into consideration a reasonable rate of return commensurate with the risk undertaken by the concessionaire.  If for example, the traffic volume has been guaranteed by the Government, then clearly, there is little risk in the venture.

Future increase in toll rates shall in turn, be decided via a open, verifiable and transparent formula which takes into account inflation rates, global cost of building materials, traffic volume, maintenance as well as the operating efficiency of the toll companies.

By using this formula, toll rate increases shall not be decided in an arbitrary manner by either the Government or the concessionaire, which often results in failure to take into account of public interests.

In the event that no amicable settlement can be arrived at with the toll concessionaires by June 2008, it will be proposed that the Government acquire the toll and highway assets of the concessionaires at a small premium to their book values.

Renegotiation of contracts or acquisition of assets is not unique in either the developing or developed world when conducted to serve overwhelming public interest.  Just a month ago, the Irish Government has announced plans to acquire the copper network infrastructure from Eircom, Ireland’s largest telecommunication provider.  In 1983, the Spanish Government went to the extent of expropriating Rumasa, owned by Jose Maria Ruiz Mateos, which owned 700 businesses with 65,000 employees.

The Indian Government has been acquiring private banks as late as 1980 which gave the Government 91% control of the banking sector.  Both Venezuela and Bolivia has successfully taken concrete steps to regain control of their country’s natural resources such as oil & gas, as well as other minerals this year with most exploration and mining companies agreeing to renegotiated terms.

Should the highway assets be acquired, private companies shall be invited to an open, transparent and competitive tender to manage and maintain these highways.  Profits to the Government arising from the operations of these highways shall be designated to Fund for Malaysian Public Transportation System or Dana Sistem Pengangkutan Awam Malaysia (DASPAM).  This fund shall be managed by a Public Transportation Council, represented by the Government, the industry and the civil society to monitor the cost, efficiency and effectiveness of our public transportation system.

(Speech 10  on 2008 Budget in Parliament on Monday, September 10, 2007)

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A Healthy Population, a Prosperous Nation

The increased privatization of the health sector has resulted in the shift of health-related expenditures and risks from the society at large to that of the individual level. While it may be argued that it is proper for any person to bear a fair share of her medical expenditures, the shift in the sharing of such costs and risks has resulted in inequitable access of adequate healthcare to certain groups within the society.

The paradox arises when those who can best afford healthcare are ones who need healthcare the least; it is the poor who can least afford to live in a healthy environment (e.g. lack of proper sanitation) and a healthy lifestyle (e.g. good nutrition).

There should be increased  public funding and investment in improving the standard of the public health sector by increasing the RM10.7 billion allocation in 2008 Budget or 8.3% of total estimates to at least 10% or RM12.8 billion.

One of the key mechanisms to keep medical inflation in check is to “right-site” healthcare. Thus, there needs to be a major paradigm shift from a near absolute focus on provision of medical care to one which minimises the need for costly medical interventions.

Good health requires more than just access to quality and affordable medical care. Research has convincingly shown that medical care has played a less important role than other factors in improving health in countries like the UK.  Healthy lifestyles play a bigger role than medical care in achieving good health.

The Ministry of Health should do this by enhancing health promotion and education as well as disease prevention capabilities, carrying out  health education and promotion initiatives like  a National Healthy Lifestyle Programme, National “No to Smoking” Campaign, Nutrition Programme and a School Health Programme.

In line with the special salary readjustment for the police force on top of the revision of the civil service pay recently, the DAP proposes a 20% additional increment for all doctors serving in government service, and an additional 10% increment for all support stuff such as nurses and pharmacists.

This forms a necessary step to incentivise doctors who are currently in service and attract more young doctors to service in government hospitals, at least for the initial years.

The medical profession in Malaysia are certainly one of the most poorly paid medical professionals in the region, resulting in many qualified Malaysian doctors seeking greener pastures overseas where they are in demand.  At the same time, low wages compromises our healthcare system with sub-standard doctors recruited from many Third World countries.

To strengthen the medical practice in Malaysia which has been in decline in recent years, there is a need to combine the strengths of academic and clinical practice via the creation of academic medical centres of excellence in UM and UKM campuses.

The strong clinical research component within these centres would focus on the major diseases affecting the populace and would play an important role in the formation of national health and disease control policies.

To ensure that the above targets are achieved it is necessary that the entry requirements for medical courses at these universities be uncompromising in terms of standards.  There should be a separate entrance examination for medical-related degree programmes be conducted to ensure that there isn’t a disparity in standards between the various entrance examinations.

A team of independent academicians should be set up to evaluate the cost effectiveness of the privatisation exercises involving the public health sector. The findings, after making comparisons of the strengths and weaknesses in the systems of various countries, should be made available to the Malaysian public so that we can make an informed decision whether we wish to have any further privatisation of the health services in this country.

Until the above study is released to the public, there will be a strict moratorium on all further privatization of components of the public health care sector.

Finally, a National Health Financing Oversight Committee,  under the direct purview of the Parliament,  should be set up to ensure that the funds allocated to health care are properly utilised and prevent waste via corruption or leakages.

(Speech 13 on 2008 Budget in Parliament on Monday, September 10, 2007)

                This entry was posted on Friday, 14 September 2007, 8:08 am and is filed under
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