Malaysia health reform socio-economics (Part 3)

— David Quek

The Malaysian Insider

Feb 09, 2012

FEB 9 —
Ability-to-pay model in healthcare financing

Ability-to-pay encompasses the concept that people or households would choose an economic activity or service according to their capacity to afford such an activity based on their perceived hierarchy of needs, and also what goods or services to give up or sacrifice.

If healthcare or medical services are priced too high and are perceived as too unaffordable, health care considerations might be placed under such a low hierarchy of needs that it could be sacrificed for more urgent day-to-day needs and essentials.

That is why most countries around the world, if not all, offer a basic basket of health services (safe clean water supply and sanitation, childhood vaccinations, preventive child-maternal health services, etc), which are not taxed and are freely accessible to all, without the need to consider affordability or ability-to-pay. Thus, there is no question of having to consider these basic health services as an economic sacrifice for all income groups. The question arises as to how big or wide a basket of such health services, any country can afford to provide, without the need to impose co-payment mechanisms or additional taxes.

The ability-to-pay (ATP) in relation to health care costs may be measured using public finance assessment tools. A health payment model is considered progressive (or regressive) if it accounts for an increasing (or decreasing) proportion of people whose ability to pay, increases proportionally, and vice-versa. In other words if more people can afford or are able to pay for their healthcare costs and continues to do so despite increases in costs, then this is a progressive (hence ‘fair and good’) form of health payment model.

A progressive system means that individuals or households with greater ability-to-pay (ATP) are paying more proportionally in financing health care, and vice versa. Economically, this is considered as equitable. This of course, implies that those who cannot afford to pay more are equitably or adequately subsidised by some form of assisted mechanisms, i.e. usually government allocated taxes (also known as general government revenue, GGR), which provide the bulk of the costs subsidised.

There is, of course, a limit as to how much this GGR can cross-subsidise the poor and how sustainable the allowable basket of health services provided or demanded can go on. Conversely too, for the better-off, the question arises as to how high the ability-to-pay can continue to rise, before the risk of impoverishment or medical bankruptcy sets in.

Using these economic models of computation, Chai Ping Yu and others have found that Malaysia’s predominantly tax-financed system was overall progressive with a Kakwani progressivity index of +0.217 (range -2 being most regressive to +1 being most progressive) and concluded that “Malaysia’s two-tier health system, of a heavily subsidised public sector and a user charged private sector, has produced a progressive health financing system.”

What is interesting is that our own Health Ministry’s Health Economic Study in 1998/99 also points to an overall fairness of financial contribution index of 0.982, which is close to 1 of perfect equality, indicating that in Malaysia, health financial contribution is fairly and equitably distributed!

Thus, it is arguable if the current scenario has changed so much that these indices reflect an untenable position of unfairness in financing options when it refers to Malaysia’s health expenditure. Aside from Health Ministry planning division projections of healthcare costs, based on current trends and trajectory, where is the economic evidence to push us in another direction for such aggressive health reform plans?

For the poor, this does not make much more sense. Although arguably imperfect, we already have a reasonably progressive and equitable tax-based total health financing system, which is pro-poor, with our richer citizens paying taxes and more, for their own private healthcare of their own choice.

Public health system can be improved

It is true that for the poor, healthcare access can be improved and made more seamless and equitable. Among health officials, there is mounting acknowledgement and expectations that the public sector could do much more to match the competency and efficiency believed to exist in the private sector. Our health authorities fear that the chasm of public-private sector healthcare services would continue to widen, so much so that inequity of access could become serious bones of contention and attract adverse public opinion.

As more people become more knowledge empowered and demanding, more and more too among the perceived disenfranchised would find the congested public sector services increasingly unacceptable and unsatisfactory. So there is a great need for the public sector to modernise and improve.

While we recognise the fact that the clogged-up public sector services are bursting at the seams and are harried by long queues and wait times, and occasional long delays in elective surgeries or therapies, there is no reason why such services cannot be made more efficient or cost-effective and productive. Revamping the public sector may be the more prudent way forward, by tightening up all the leakages and strengthening its service quality and safety, perhaps by greater injection of allocated government taxes and revenues.

Although there’s increasing talk that subsidies for health care would be cut and that the public is expected to help contribute more to help defray the rising costs, this has not gone down well with our citizens. It appears that the government is ready to impose more cost-sharing initiatives. It does not mean however, that many people are agreeable to contributing more toward helping to finance this improvement.

This is especially so, if this obligatory co-payment or tax of sorts could also reduce disposable incomes even more disproportionately for the poor or even the middle-income public. For the poor, the additional burden of any extra deduction for health taxes could prove to be extremely burdensome. Ironically, a recent 2007 World Bank Report also found that our current public health sector subsidy is both inequality-reducing and pro-poor.

Social scientists studying our health system and its financing mechanisms at local and foreign universities have also argued that the private sector does serve as a systematic safety valve for those who can find the resources to tap into this sector and access modestly-priced private medical services, thereby affording much relief from the public sector congestion. There have been studies which show that the private sector caters to a different segment of patients or cohort of people, who are able to afford the current prices of private care, and that the system appears robust and functioning well.

Is our out-of-pocket (OOP) spending on health too high?

Remember that one of the major concerns of the government is that Malaysians are paying too much out-of-pocket for healthcare, i.e. around 40.7 per cent, which is being targeted to be reduced to a manageable 25 per cent or less. But we are aware that our entire total expenditure on health (TEH) forms 4.8 per cent of the GDP.

In 2009, the national health accounts data estimated our nation’s TEH to be around RM35 billion, some RM14.6 billion from the government coffers and RM18.0 billion from private spending and other third party payer (TPP)/insurance options. Insurance and third party payment (TPP) contribute about 14.4 per cent of the private sector health expenditure, or around 6 to 7 per cent of the TEH.

With the proposed imposition of social health insurance by 2018, the health reform plan is supposed to be able to expand its coverage while reducing the government subsidy for healthcare, while mandating that the public contribute towards this compulsory health insurance.

But this is a grandiose plan, which might not be implementable so soon so fast, because of technical and practical requirements that are often not foreseeable in the planning stages. There are in fact, grave doubts that private spending (including out-of-pocket payments) can be so drastically reduced so precipitously within the next few years or so!

Increase government budget allocation to health, not another tax like SHI

Let’s return to the problem at hand. Have we indeed spent enough for our health system to function well? Or can more be done from the point of view of the government through its general tax offerings? Instead of pushing forward this implementation of a new public contribution towards another form of taxes (SHI), could the government in fact contribute more to strengthen the public sector so that health services could be made more reachable and seamless, which the public (whether rich or poor) can access without any constraining co-payment?

In fact all through the recent years, the government’s contribution from general tax allocation is a paltry 2.0 to 2.2 per cent of the GDP, although it does form around 44 per cent of the total expenditure on health, TEH. Imagine if this can be increased or doubled, then clearly the proportion of out-of-pocket, OOP payments would be very much different and lower, e.g. if the government were to allocate higher tax revenues toward healthcare to, say, 4 per cent of our GDP (to around RM30 billion per annum), then our OOP would fall to around 25 to 28 per cent of the TEH, which is an acceptable number.

What is interesting to note, is that since 1995 to 2006, the out-of-pocket, OOP spending for Malaysians has been hovering consistently around 73 to 75 per cent of the total private health sector expenditure (around RM12 billion to RM14 billion; the other remaining private sector component is by insurance or third party payers). Despite official projections, it has not shown any trends of increasing, although of course this cannot be predicted to remain so in the future. In fact, a recent in-depth analysis by health economists have shown that Malaysia, despite having a relatively high 40 per cent OOP expenditure on health, is one of the Asian countries which have thrived well, and which has not unduly increased the risk of impoverishment for its citizens.

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A Critique of the ETP: Part 3 (iii) – Execution (iii)- Doubtful EPPs; doubtful achievements and due diligence

By
Dr. Ong Kian Ming BSc (LSE), MPhil (Cantab), PhD (Duke)

Teh Chi-Chang, CFA, BSc (Warwick), MBA (Cantab)

Refsa

Some PEMANDU ‘achievements’ are doubtful.
 The Karambunai Integrated Resort and Tanjong Agas Oil and Gas Park do not appear viable and their private sector developers are financially weak. These two EPPs alone account for 7% of the total investments trumpeted by PEMANDU during the first year of the ETP. Their inclusion weakens the credibility of the headline investments, national income and job accretion that PEMANDU claims to have achieved.

Karambunai IR – expensive and crowded?
 The investment cost for this project in rural Sabah soared from RM3 billion to nearly RM10 billion in the six short months from its first mention before the ETP was launched to its final incarnation as an EPP. At this price, we estimate it needs 2.8 million visitors per year to break-even – more than all the passengers arriving at Kota Kinabalu airport!

Aghast at Tanjong Agas.
 The massive investment and construction work in this fishing village will result in infrastructure that duplicates the thriving towns of Kertih and Gebeng, which are the stated focus areas for oil and gas activities in the Eastern Corridor Economic Region. PEMANDU will no doubt deny that the infrastructure is redundant, and maintain that the transformation of this village is unrelated to its location in Pekan, the parliamentary constituency of Prime Minister Datuk Seri Najib.

“D’ for execution – where is the due diligence?
 Karambunai in its current form is clearly unviable. Tanjong Agas is contrary to the government’s own Eastern Corridor master plan. Taxpayer funding for Karambunai soared 6-fold in 6 months, from RM100 million to RM600 million. The single largest investor in Tanjong Agas is reportedly contributing barely any equity funding. Straight answers from PEMANDU would be appreciated.

The execution process at PEMANDU troubles REFSA

Success of the ETP (Economic Transformation Programme)
1
 boils down to execution of the individual EPPs (Entry Point Projects). All the EPPs collectively add investments, national income and jobs to the ultimate goal of taking Malaysia to high-income status by 2020.

PEMANDU
2
, based on its updates, is showing a crisp pace of execution
3
. But below the surface gloss, REFSA sees deeper issues surrounding the execution of the ETP – The ‘E’ in the DEEDs framework with which we are evaluating PEMANDU and the ETP.

Part 3 (i) PEMANDU strengthens the know-who cancer:

Suggested that some of the quick pace of implementation was due to PEMANDU taking credit for projects already under way which were subsequently named as EPPs; and

Pointed out that PEMANDU is institutionalising the role of middleman if it cuts red tape on a case-by-case basis for EPPs. This reinforces the ‘know-who’ culture that is killing Malaysian innovation, creativity and productivity. It does not matter how good your product or idea is, or how efficiently you can make it, it depends on who you know to get it through the system.

Part 3 (ii) The hothouse labs probably killed innovation examined the NKEA lab process. We highlighted:

The high-pressure NKEA lab process was more conducive to incumbent companies with pre-existing business plans rather than start-ups with genuinely transformative ideas; and

The private sector participants would be championing their own interests first and national transformation second. A glaring example is the missing automotive sector. It is not one of the NKEAs, despite the huge sums of taxpayer and Petronas money that have gone into supporting our national cars.

In this third and final part of our evaluation we use the examples of two massive but economically tenuous EPPs to illustrate potential shortcomings in the due diligence process while selecting EPPs.

Some EPPs are questionable

We see possible ‘dud’ projects – projects with very little hope of success – among the EPPs announced. We shall illustrate by spotlighting the Karambunai Integrated Resort City EPP under the Tourism NKEA and the Tanjong Agas Oil and Gas Logistics and Industrial Park EPP under the Oil, Gas and Energy NKEA.

Our concerns:

Start with the financial feasibility of these EPPs;

Extend to the qualifications, experience and track record or lack thereof of the private sector partners; and

Widen to the reliability of the investment, GNI and job creation figures associated with these EPPs

Karambunai – how to triple your investment in 6 months!

Perhaps the most serious example of a possible dud EPP is the RM9.6 billion Karambunai Integrated Resort City (Karambunai IR) announced in the 5th ETP Update on 19 Apr 2011.

Karambunai IR is actually an example of a pre-ETP project that was subsumed as an EPP. It received its first major mention in early Oct 2010, by no less than the prime minister himself:

At that time, during the Budget speech, it was presented as a RM3 billion project to develop an integrated eco-nature resort in Karambunai
4
;

A few weeks later, in mid-Oct, Karambunai IR was presented as an EPP in the ETP Roadmap Report with a projected RM6.7 billion investment value
5
;

6 months later, when announced as an EPP in the 5th ETP Update in Apr 2011, the investment cost had jumped to RM9.6 billion
6!

All in, the project investment cost had more than tripled in the span of just ½ a year from RM3 billion in Oct 2010 to nearly RM10 billion by Apr 2011.  This massive escalation in the project cost has never been explained, which is particularly astonishing given the huge sum involved.

It may be asserted that the inflated investment between the time of the prime minister’s budget speech and its inclusion in the ETP Roadmap Report a fortnight later was due to value-enhancing activities by PEMANDU.

That might indeed be the case. But under PEMANDU’s watch, in the short six-month period from Oct 2010 when the ETP Roadmap was launched to Apr 2011 when Karambunai IR was highlighted in the 5th ETP Update:

The investment numbers ballooned from RM6.7 billion to RM9.6 billion;

The expected GNI (gross national income) contribution soared  13-fold from RM707 million to RM9.3 billion
7
;

The jobs created were inflated from 7,700 to 11,000.

It beggars belief how the Karambunai IR’s business model could have been restructured to add so much more value, income and jobs in such a short span of time:

Either the initial model was deeply flawed and left too much low-hanging fruit to reap, or the new plans are way too optimistic.

Neither explanation reflects well on PEMANDU’s due diligence process for selecting EPPs and verifying the expected contributions to GNI and job creation.

In fact, investment analysts and market observers were already querying the viability of the initial RM3 billion project, particularly doubting the ability of project developer Karambunai Corp Berhad. The Star reported the following in Oct 2010:

Still, scepticism abounds on Karambunai’s ability to execute this grand plan, not least because of its weak financial status. The company has been in the red for the past three financial years…. In addition, it has piled on huge debts with short-term borrowings of RM192.07mil and long-term borrowings of RM283.77mil
8
.

It was widely perceived that such a massive investment in rural Sabah would be financially viable only if the project included a licence to operate a casino.  In Karambunai IR’s case, such conjectures gained further credence from:

The ‘integrated resort’ terminology used to describe this project. ‘Integrated resort’ was the less-emotive term used by the Singapore government to help persuade its citizens that tourism resorts incorporating casinos were in the best long-term interests of the country;

Three of the four integrated resorts named as examples in the ETP Roadmap Report have significant casino operations – Marina Bay Sands and Resorts World Sentosa in Singapore and the Atlantis in the Bahamas
9
. The third – Palm Resort in Dubai – is backed by a government that had to be rescued by its neighbour Abu Dhabi during the 2008/09 financial crisis;

The majority shareholder of Karambunai Corp Berhad, Tan Sri Chen Lip Keong, also controls Nagacorp, which operates a casino in Cambodia
10
; and

The fact that the project appears financially unviable without a casino.

Both Karambunai and PEMANDU have denied that Karambunai IR would include a casino. Malaysians may well be sceptical of such denials. The case of Ascott Sports comes to mind; the government initially denied a sports-betting licence had been issued, then admitted a ‘conditional’ licence had been given and subsequently withdrew the licence following public opprobrium.

There is also another interesting denial. Petaling Tin, which owns some of the land involved, denied signing ‘any agreement with any parties pertaining to the resort project, and there are no corporate developments that warrant future disclosures to the stock exchange at this juncture
11
. This announcement was made on 19 Apr 2011, the day of the 5th ETP Update in which Karambunai IR was announced.

But taking the denials at face value, it is startling that PEMANDU accepted this project as an EPP. Even a cursory examination suggests the project is unviable without the boost from a lucrative casino licence.

Our analysis shows that Karambunai IR would have to attract an exceptionally large crowd spending extraordinary amounts of money on lodging, entertainment and food and beverage to be viable.

Table 1: Karambunai IR has to attract more visitors than all the passenger arrivals at Kota Kinabalu airport to be viable

Total investment

RM9.6 billion

It was RM3.0 billion in early Oct 2010, rising to RM6.7 billion a few weeks later and then RM9.6 billion by Apr 2011.

Assume 50% borrowings

RM4.8 billion

Assume 50% is financed by bankers, and 50% by investors.

Annual loan repayments

RM240 million

Assume borrowings are repaid over 20 years.

Annual interest payments

RM384 million

Assume 8% per year interest rate. We acknowledge this is simplified – interest payments will be reduced as the loan is repaid, but this does not significantly affect our argument.

Return required by investors

RM480 million

Assume investors would be satisfied with a modest 10% per year net return, after tax. In reality, returns in excess of 15% will likely be demanded.

Corporate tax paid

RM160 million

Assume 25% tax rate

Total annual EBITDA required

RM1,264 million

EBITDA = earnings before interest, tax, depreciation and amortisation. It is from EBITDA that a company repays borrowings and pays interest charges and corporate taxes, with the balance going to investors.

Revenue needed per year

RM4.2 billion

RM11.95 million per day. This assumes a high 30% EBITDA margin. The Walt Disney Company has an EBITDA margin of just 23%.

Average capacity required (number of visitors per day)

23,000

This is nearly as much as the 25,000 visitors per day capacity at Universal Studios Singapore.  Note that Karambunai IR should be more ‘exclusive’ and cater to fewer people (Our calculation assumes each visitor spends RM500 per day).

No. of visitors per year required

2.8 million

Assume each visitor stays an average 3 days. Kota Kinabalu airport welcomed just 2.5 million arrivals in 2011.

Source: REFSA. Note that this calculation does not include costs for maintenance capital expenditure and upgrading work. The revenue per visitor and visitors needed would be even higher to cover this.

Even after giving Karambunai IR the benefit of the doubt by assuming it manages to attract very big spenders and earns high profit margins, Karambunai IR would have to entertain over 2.8 million visitors per year just to cover its basic costs. This is more than the 2.5 million passengers arriving at Kota Kinabalu airport every year
12
!

It is mind-boggling that PEMANDU accepted this project as an EPP given the obvious doubts about its financial viability. It is astounding that PEMANDU has committed at least RM600 million of government funds to this project
13
. And we wonder about the veracity of the rapidly increasing investment, gross income contribution and job creation numbers.

Tanjong Agas – or Tanjong Tanpa-gas?

The issues surrounding the Tanjong Agas Oil and Gas and Logistics Industrial Park in Pahang announced in the 2nd ETP Update are similar to those afflicting the Karambunai IR.

Firstly, like Karambunai IR, this is a ‘recycled’ project. It was originally launched in Feb 2009, but featured in Oct 2010 as an EPP during the launch of the ETP Roadmap.

Secondly, like Karambunai, it is likely that this project will require taxpayers’ money from the Facilitation Fund:

At its launch in 2009, it was said that RM8 billion would be invested to equip the park with shipyards, fabrication yards, supply-based fabrication for repairs and lay-ups, liquefied natural gas and petroleum terminals, dredger yards, liquid-bulk terminals and dockyards;

Under the ETP Update, the initial investment listed for this EPP was RM3 billion from 2011 to 2012. Of this amount, RM300 million will come from the Facilitation Fund from the 10th Malaysian Plan
14
.

Thirdly, like Karambunai, the investment requires fund-raising which seems beyond the ability of the companies involved in the project:

The concessionaire to develop the park, Tanjong Agas Supply Base and Marine Services Sdn Bhd (TASBMS), 30%-owned by the Pahang State Development Corporation (PKNP), is to invest RM2 billion;

The balance RM6 billion is to come from 7 private companies
15
.

TASBMS itself reportedly aims to borrow the entire RM2 billion needed from KAF Investment Bank and ‘hoped the federal government would financially support the state’s growth’
16
. Is it furnishing any equity at all?

Next, one wonders how 7 unknown private companies can hope to raise RM6 billion, particularly when details of the park are poorly publicised
17
.

Taking a step back, why Tanjong Agas in the first place? Tanjong Agas does not feature in the Eastern Corridor Economic Region (ECER). Kertih and Gebeng were identified as the two focus areas for oil, gas and petrochemical clusters
18
.

Gebeng already houses major oil and gas industry names including BP Chemicals and BASF Petronas Chemicals. It is also well connected, with direct pipelines and a railway line to Kuantan Port, a mere 5 kilometres away, with centralised tankage facilities and container and bulk liquid port services
19
.

Tanjong Agas is a greenfield requiring massive investment. One cannot help but wonder who will be the beneficiaries of the contracts to conduct land reclamation, deepen the harbour, construct the port facilities and build the roads leading to this new industrial park.

Would our readers be aghast to learn that Tanjong Agas is located in Pekan, which also happens to be the parliamentary constituency of Prime Minister Najib?  Perhaps we are being too cynical. Perhaps the massive development of this particular fishing village, instead of others, is completely unrelated to its illustrious parliamentary representative.

With all these questions surrounding this Tanjong Agas project, it is not surprising that some have drawn parallels between this project and the Port Klang Free Zone fiasco
20
. Would the taxpayer once again be left to pick up the bill if this project fails to take off?

“D” for execution – whereis the due diligence?

PEMANDU rates poorly on the entire value chain from conceptualisation to execution of EPPs:

Firstly, the financial viability of at least some projects is dubious. This brings to mind the practice of ‘recycling’ – the naming of existing projects as EPPs. Cynics would ask why these projects would need the shot in the arm of being declared EPPs if they were already viable in the first place. And we have pointed out that PEMANDU stepping in to give its ‘seal of approval’ even for good projects reinforces the know-who rather than know-how culture;

Secondly, the qualifications, expertise and track record of some investors and project owners are weak. Besides the owners of the Karambunai IR and Tanjong Agas projects highlighted here, another example is the widely disparaged 1Malaysia email ETP for which financially-distressed Tricubes Berhad
21
 was selected as the private sector partner;

Thirdly, this leads us to regard with scepticism the attainability of the vital statistics of these projects that are included in the ETP progress updates – the investment values, gross national income (GNI) contributions and jobs created;

Which then leads to doubts about the veracity of the astounding achievements touted at each ETP update. The two possible ‘dud’ projects highlighted here have investments that total RM12.6 billion or 7% of the projected RM177 billion of total investments committed during the first year of the ETP;

What if these are just the tip of the iceberg? How many other potential ‘duds’ are there among the 113 EPPs announced so far?

It might be suggested that the highly-paid team at PEMANDU and its expensive consultants
22
 are not in a position to question the investment value, GNI contribution and jobs created by private stakeholders involved in any EPP. But this would be irresponsible for three reasons:

Some of these projects involve the spending of taxpayers’ money. For example, the government will contribute at least RM600 million to the Karambunai IR project
23
;

The amount of public money involved is tied to the expected investment value of the project. This is a very important point.  There is an incentive for the private stakeholders to inflate the expected cost of their projects in order to increase the amount of Facilitation Funds which they can apply for from the Public Private Partnership Unit (UKAS)
24
;

Continuing with the Karambunai IR example, it is unclear if the public funding requirement has also increased with the subsequent ballooning of the project cost from RM6.7 billion to RM10 billion;

These figures contribute to the overall investment, GNI contribution and jobs created targets which are trumpeted by PEMANDU in its ETP updates and press releases. If the basis of these numbers is suspect, then the validity of PEMANDU’s claimed progress in taking us to the end goal of a high income nation is questionable.

What should Pemandu do?

Doing the following will bolster credence of PEMANDU’s claimed progress and lead to more confidence in the economic viability as well as the numbers and figures associated with EPPs:

Back up the impressive headline numbers in each ETP update with a detailed progress update on each EPP including the amount of public and private investment already spent
25
;

Work with the potential EPP owners to make sure that the figures of interest are economically and financially sound;

Be willing to oust EPPs from the ETP if subsequent analysis or events render them economically unsound. On this matter, PEMANDU should:

Avoid projects such as 1Malaysia Email which explicitly seek the government or government agencies as a core customer;

Be especially careful with projects backed by the politically influential. These projects must be able to pass exceptional scrutiny; and

Avoid ‘recap’ projects, especially those which have been in existence before the ETP such as Karambunai IR
26
; and

Be ready to exclude investment, incremental GNI and job figures from individual EPPs which have been announced but cannot be executed.

________

1
 The ETP calls for 131 entry point projects (EPPs) within 12 National Key Economic Areas (NKEAs), which will pour RM1.4 trillion worth of investment into the economy and create 3.3 million new jobs by 2020.

2
 The acronym that the Performance Management and Delivery Unit within the prime minister‟s department is better known by. PEMANDU is the government agency that created and is now steering the ETP.

3
 In the short period of just over a year since the launch of the ETP in Sept 2010, PEMANDU announced a total 113 EPPs worth RM177 billion and with the potential to create nearly 390,000 jobs.

4
 Item 36, pg.14, of the 2011 Budget Speech. Prime Minister Najib said the government would allocate RM100 million for this project.

5
 EPP 5: Developing an Eco-nature Integrated Resort in Sabah, pg.330 ETP Roadmap Report.

6
 Announcements – 19 Apr 2011: Karabunai Integrated Resort City. Available at http://etp.pemandu.gov.my/Progress_Update-@-Karambunai_Integrated_Resort_City.aspx. Retrieved on 9 Jan 2012.

7
 Interestingly, Karambunai Corp‟s own announcement indicates RM1.3 billion GNI from this project – http://www.karambunaicorp.com/Announcement/KIRCFactSheet.pdf. Is the RM9.3 billion figure a typo?

8
 Karambunai in the limelight after Budget. Tee Lin Say, the Star, 20 Oct 2010. Available at http://biz.thestar.com.my/news/story.asp?file=/2010/10/20/business/7249320. Retrieved on 9 Jan 2012.

9
 EPP 5: Developing an Eco-nature Integrated Resort in Sabah. Pg 330 ETP Roadmap Report. One also has to remember that these integrated resorts were backed by listed companies with deep pockets and long experience.

10
 He is the single-largest shareholder in Karambunai with a 44% stake; Petaling Tin has 34%. Tan Sri Chen is also the founder of NagaCorp, of which he holds 63%, and is its CEO and Executive Director. Reported in Chen-led consortium to invest RM9.6 billion in Karambunai resort. Chua Sue-Ann, 20 Apr 2011, The Edge. Available at http://www.theedgemalaysia.com/in-the-financial-daily/185355-chen-led-consortium-to-invest-rm96b-in-karambunai-resort.html . Retrieved on 17 Jan 2012.

11
 Chen-led consortium to invest RM9.6b in Karambunai resort. Chua Sue-Ann, The Edge Malaysia 20 Apr 2011. Available at www.theedgemalaysia.com/in-the-financial-daily/185355-chen-led-consortium-to-invest-rm96b-in-karambunai-resort.html. Retrieved 17 Jan 2012.

12
 Significant increase in passenger traffic at airports. Bernama, 28 Jul 2011. The report says Kota Kinabalu airport handled 2.5 million passengers in the six months ended June 2011. This covers both arriving and departing passengers. Taking a 50:50 split, 2.5 million passenger arrivals would be expected for the whole year.

13
 This RM600 million amount was based on the RM6.7 billion investment value cited in the ETP Roadmap Report in Oct 2010. It was not disclosed if the amount was subsequently raised to match the RM9.6 billion value cited in the 5th ETP Update in Apr 2011.

14
 Presumably the federal government contribution will be from the RM300m facilitation fund under the Tenth Malaysia Plan. Reported in „RM300m more for Tanjung Agas Park‟. Available at http://www.tgagas.com/index.php?option=com_content&view=article&id=48:rm300m-more-for-tanjong-agas-park-&catid=1:latest-news. Retrieved 10 Jan 2012.

15
 Vantech Dockyard (M) Sdn Bhd, Tec-Steel Manufacturing Sdn Bhd, Usatech Marine (M) Sdn Bhd, Bitari Abadi Sdn Bhd, Core Competence Sdn Bhd, Competent Selection Sdn Bhd and Damini Corp Sdn Bhd.

16
 Tanjung Agas mega project to kick off soon. Danny Yap, the Star , 23 Feb 2009. Available at http://thestar.com.my/maritime/story.asp?file=/2009/2/23/maritime/3298307&sec=maritime. Retrieved 9 Jan 2012.

17
 A cursory examination of the TASBMS website www.tgagas.com would cast doubts on its ability to attract over RM30 billion in investments over the next 10 years. For example, there is no master plan of the park nor an outline of the phases of development needed to develop and grow the park.

18
 http://www.ecerdc.com.my/ecerdc/oil.htm

19
 http://www.investinpahang.gov.my/index.php?ch=en_opportunities&pg=en_chemical. Retrieved 9 Jan 2012.

20
 PKNP and its industrial park in Tajung Aga, Pekan and Taman industri gas, minyak dan maritim Tanjung Agas, Pekan. Available at http://sakmongkol.blogspot.com/2009/02/taman-industri-gas-minyak-dan-maritim.html and http://sakmongkol.blogspot.com/2009/02/pknp-and-its-industrial-park-in-tajung.html. Retrieved 9 Jan 2012.

21
 Tricubes CEO Khairun Zainal had admitted that the project was a „financial lifeline‟ for the company. This company had also made „typo errors‟ in its 2011 annual report. The „typos‟ showed the company lost just RM7.3 million in the financial year ended 31 Mar 2011, whereas the actual loss was RM17.2 million. Source: Tricubes says losses higher last year, blames typos. Yow Hong Chieh, Malaysian Insider, 29 Dec 2011.

22
 Its eight directors reportedly pocket RM39,000 each per month; while consultants McKinsey were paid RM36 million to set up PEMANDU. Covered in Part 1: Introducing DEEDS.

23
 EPP 5: Developing an Eco-nature Integrated Resort in Sabah, pg.330 ETP Roadmap Report.

24
 This Fund is to be “utilised to finance the development of basic infrastructure of a project such as access road, bridges, utilities as well as land acquisition for highway projects .. Generally the funding limit … is capped at 10% of the total project cost”. Facilitation Fund Guidelines retrieved 17 Jan 2012 from www.ukas.gov.my/html/themes/miu/images/miu/Guideline%20FF%20in%20English.pdf.

25
 Our discussions with PEMANDU indicate that this will be included in the ETP‟s Annual Report.

26
 Avoiding these projects also has the additional benefit of avoiding the criticism that PEMANDU is desperate and is simply “recycling‟ old projects instead of seeking new projects that are genuinely transformational and add new incremental GNI.

********

About this series

Critics of PEMANDU and the ETP thus far have tended to focus on the expensive costs incurred by PEMANDU and its consultants, accusations of style prevailing over substance, the execution of specific projects (such as the MRT and 1 Malaysia email) and its apparently lofty, unrealistic targets.

We think these issues can be further debated, but these questions ultimately boil down to PEMANDU’s raison d’être.  PEMANDU is already a fait accompli. Debating its existence serves no useful purpose at this point.

Instead, we evaluate PEMANDU and the ETP on its own terms by looking at the goals, plans and targets outlined in the ETP Roadmap document. Doing so facilitates constructive debate as it uses the same framework which PEMANDU has chosen to work within.

In that vein, and in keeping with the spirit of the alphabet soup of NKEAs, NKRAs, SRIs, EPPs, GNI surrounding the entire GTP, we evaluate PEMANDU and the ETP on its DEEDS:

Data transparency – the ease with which an independent analyst can evaluate the figures relevant to the ETP and its targets;

Execution – the progress, or lack thereof, of announced EPPs (Entry Point Projects);

Enterprise – whether the target of stimulating private investment is being achieved. The ETP aims for a 92:8 split between private and public investments;

Distribution – the distribution of EPPs across the NKEAs (National Key Economic Areas), which shows whether a healthy balance of projects is being maintained; and

Socio-economic impact – an evaluation of the main beneficiaries of the economic activities generated by the EPPs.

The story so far

Part 1,
Let’s evaluate PEMANDU on its DEEDS
, introduced our evaluation framework.

Part 2,
We won’t really be twice as rich in 2020
, found us declaring “It does not compute!” PEMANDU’s  target is to double nominal income per capita to RM48,000 by 2020. But using its forecasts for income and population growth, and inflation, the target should be RM54,145, not RM48,000. Can this ‘roadmap to transformation’ be trusted when the highly-paid PEMANDU team and its costly consultants cannot even get the basic math right?

Part 3(i),
PEMANDU strengthens the ‘know-who’ cancer
, focuses on the practice of taking credit for pre-existing projects and PEMANDU’s role in cutting red tape.  PEMANDU is institutionalising the role of middleman if it cuts red tape only for EPPs. If long-term policy changes are not made, Malaysian innovation, creativity and productivity will continue to lag. It does not matter how good your product or idea is, or how efficiently you can make it, it depends on who you know to get it through the system.

Part 3(ii),
The hothouse labs probably killed innovation
 highlights that the tight timeframe of the lab process incentivised lab participants to favour incumbent companies with pre-existing business plans rather than start-ups with genuinely transformative ideas. Also, the labs would be dominated by incumbents striving to maintain their dominance. Start-ups would not have been able to afford to release staff just to attend the labs for 8 weeks.

Note on PEMANDU’s response

Upon hearing that we were writing an evaluation of the ETP, the communications team at PEMANDU kindly arranged interviews with a Director from the Minister’s Office who is also the Director of the Oil, Gas and Energy & Financial Services NKEAs, the Director of the Wholesale and Retail (W&R) NKEA and the Assistant Director of the Tourism NKEA. We are grateful for these interviews and will include clarification points from these interviews in our evaluation. These interviews were recorded by the ETP communications team and we hope that they would be made available online for public access.

About the authors

Visiting contributor Dr Ong Kian Ming holds a PhD in Political Science from Duke University and Economics degrees from the University of Cambridge and the London School of Economics. He is attached to UCSI University, which has been named as the project owner of two Entry Point Projects (EPPs). To avoid any potential conflict of interest, he will not make references to or analyse these two EPPs. He can be reached at
[email protected]
.

REFSA (Research for Social Advancement) Executive Director Teh Chi-Chang holds a first class degree in Accounting & Financial Analysis from the University of Warwick, an MBA from the University of Cambridge and the CFA (Chartered Financial Analyst) charter. Prior to joining REFSA, he headed highly-regarded investment research teams covering Malaysia, and was himself highly-ranked as an analyst. He can be reached at
[email protected]
.

Help REFSA do more!

REFSA is a not-for-profit research institute that provides relevant and reliable information on social, economic and political issues affecting Malaysians. We aim to promote open and constructive discussions that result in effective policies to address these issues.

REFSA depends primarily on donations to fund its operations. Research such as this consumes much time, expertise and effort. Please contribute if you share our vision for a better Malaysia and support our commitment to impartial, constructive analysis. Donations can be:

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REFSA allows authorship of derivative works and other transformations of this publication for personal, non-profit/non-commercial use, subject to the inclusion of proper and appropriate credit to “REFSA – Research for Social Advancement”. REFSA expressly prohibits the use of the whole or any part of this publication for defamatory or criminal purposes.

Other Information

The information in this report has been obtained from and is based upon sources that are believed to be reliable but no guarantee is made as to accuracy and completeness.

                This entry was posted on Friday, 10 February 2012, 5:10 pm and is filed under
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A tale of two classes: Inequalities in Malaysia

— S.M. Mohamed Idris

The Malaysian Insider

Feb 10, 2012

FEB 10 — The government’s aim is to achieve a high-income economy by 2020 must equally benefit all Malaysians. We cannot have a society where one small elite group is living in luxury, while one big part of the society is struggling to survive.

The income inequality gap

According to Dr Muhammed Abdul Khalid, a research fellow with University Kebangsaan Malaysia, although Malaysia has made great strides in reducing poverty and inequality (especially between ethnic groups) from 1970 to 1990, the inequality remains high post-1990.

It has remained almost at the same level for the past 20 years; in fact, the inequality in Malaysia is among the highest in the region.

Before the 1990s, the inequality improved tremendously, due to commendable government policies that include the promotion of export-oriented industrialisation, education, and training, and the restructuring of equity ownership and assistance in asset accumulation.

However, post-1990s, there is little change in inequality due to the difference in the growth rates of incomes of the rural and urban areas, return on assets against wages, inflows of migrant workers, and impediments to the process of internal migration.

Although there was huge improvement in the rural-urban gap, it also has stopped improving since the ‘90s, the income gap ratio between urban and rural in 2009 is almost at the same level as in the year 1989. But in absolute terms, the income gap has in fact widen considerably, it has jumped three times during the same period. The gap between the rich and the poor also remains wide and equally high across all ethnic groups in absolute terms.

Of course, the socio-economic conditions of the rural population and the poor have improved substantially, but despite the huge resources allocated by the government towards rural development and for the poor, the income ratio between the rich and the poor, and of the rural population and their urban counterparts, has not changed much post-1990s. Unless corrective measures are taken, inequality will widen in the future.

Narrowing the gap

Below are the two areas, namely taxation and subsidies, where changes have to be implemented in order to narrow the income inequality gap:

a) Taxation

i) Capital and property gains tax

In Malaysia, all sources of earnings are not treated equally — most notably, net asset incomes (e.g. financial capital and property gains) get more favourable treatment than salaried income. In other words, capitalists are favoured over the working class in this country.

For many working Malaysians, the top marginal tax rate of 26 per cent is applied to their hard-earned wages and salaries, while for the small group of wealthy Malaysian whose income are earned from the capital gains derived from the stock market and financial transactions, the tax rate applied is zero. In comparison, the United States imposes a top rate of 15 per cent on the capital gain.

The Real Property Gains Tax (RPGT) as announced in the 2012 budget is 10 per cent for the first and second years, 5 per cent for third, fourth and fifth years. However, the 10 per cent rate is not high enough to act as a deterrent to speculation by the rich and will continue to widen the income gap between the two classes.

We may need to consider introducing a similar tax for financial capital gains in Malaysia and perhaps at the same time increase the RPGT for the first five years.

ii) Income tax

The top marginal tax rate is set at a quite low bracket, for instance, a hard-working middle-class household that earns a taxable income of RM100,000 annually is taxed at the same rate of those who earns millions, both are taxed at the marginal top rate of 26 per cent.

Perhaps the income tax brackets can be increased so that the millionaires do not end up paying the same tax as those who earn RM100,000.

iii) Inheritance tax

The absence of an inheritance or estate tax has also contributed in widening the wealth disparity gap between generations. Such a tax is not new — Malaysia used to have it until it was repealed in 1991

Maybe we can reintroduce the inheritance tax.

iv) Luxury goods

Taxes that affect the high-income groups such as taxes on luxury goods have been abolished or reduced.

Reinstate the taxes on luxury items.

b) Subsidies

Another way to reduce the inequalities is to revamp the subsidies regime so that only the target groups reap its benefits. “Blanket” subsidies (given irrespective of the household income level) are unlikely to improve inequality. For instance, the rich person driving a luxurious car reaps more subsidy benefit in absolute amount than a motorcyclist.

A study by IMF has shown that poor households benefit least from subsidies; in Malaysia, only 25 per cent of social assistance goes to the poorest 20 per cent.

However, social subsidies (e.g. for health, welfare, education) will have to be continued as there is need to ensure that they reach the targeted group. Subsidies for fuel should be phased out, and its withdrawal will raise government revenue that can be used to provide social safety net to the vulnerable groups

The government should remain focus on reducing inequality because concentrating on growth alone is not enough: how it is distributed is equally important. Importantly, wide inequalities, if left unchecked, can not only harm long-term growth and impede social mobility, but will also breed social resentment and generate political instability, which will also fuel populist policies. Last year’s Arab Spring and the current discontent with Wall Street are partly due to the unequal distribution of economic growth. It is better if Malaysia can learn and remember these lessons, rather than experience it.

* S.M. Mohamed Idris is president of the Consumers Association of Penang. (The above is based on Dr Muhammed’s paper that was presented at CAP on February 9, 2012.)

                This entry was posted on Friday, 10 February 2012, 11:27 am and is filed under
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Azmi should step down as PAC Chairman if he is not prepared to convene emergency PAC meeting to investigate into propriety of RM250 million government loan to NFCorp so as to be able to report to Parliament next month

My statement on January 24 calling on Datuk Seri Azmi Khalid to resign as Parliamentary Public Accounts Committee (PAC) Chairman if he is not prepared to convene an emergency PAC meeting to investigate into the RM330 million National Feedlot Centre/National Feedlot Corporation (NFC/NFCorp) “cattle condo” scandal so as to be able to report to Parliament next month has been vindcated by none other than the NFCorp chief executive officer Wan Shahinur Izmir Salleh.

Wan Shahinur Izran came out with a most shocking assertion yesterday when he said in a statement:

“The issue of NFC managing its loan monies amounting to RM250 million is the company’s responsibility to administer and utilise. NFC retains the prerogative to invest the funds in the best interests of the company.”

Can this shocking claim be true, that NFCorp has been given a completely blank cheque to do what it likes with the RM250 million loan from the Finance Ministry although completely unrelated to the “high impact” NFC economic project to promote beef self-sufficiency in the country?

If true, then the “political masters” responsible for this decision at the relevant time, whether Tun Abdullah,  who was the Prime Minister when the project and loan was approved, Datuk Seri Najib Razak, the Chairman of the Cabinet Committee on “High Impact Projects” or Tan Sri Muhyiddin Yasin the Minister for Agriculture and Agro-Based Industries should be hauled up before the PAC for the whole truth to be told.

If untrue, it is the responsibility of PAC to get to the bottom of the matter and report to Parliament when it reconvenes on March 12.

An emergency meeting of PAC is all the more  imperative now as PAC member and MP for PJ Utara, Tony Pua in his statement today  said PAC at its meeting in November had been told by the Finance Ministry  that there was no provision that permits the NFCorp to use its federal loan to purchase property.

As a senior Ministry of Finance official had been “very specific” informing the PAC that the NFC loan could not be used for purposes other than what had been specified,  that the purpose of each drawdown must be clearly stated and that the ministry had never received an application from NFCorp to purchase property, PAC must be convened to have sight and verify of the RM250 million loan agreement and the relevant documentation so as to be able  to submit an accurate and satisfactory report on the issue to Parliament by March 12.

Azmi should decide whether he is going to discharge his duty as PAC Chairman to conduct a proper investigation into the RM330 million “cattle condo” scandal so that a PAC report on the issue could be presented to all MPs to assist in the parliamentary debate on the matter, or whether he would step down as PAC Chairman to allow the PAC Deputy Chairman, Dr. Tan Seng Giaw (MP for Kepong) to carry on the investigations affecting the Minister for Women, Family and Community Development, Datuk Seri Shahrizat Abdul Jalil and her family without any impediment.

There may be reasons why Wan Shahinur Ismir is so courageous in claiming that it is the “prerogative” of NFCorp to “invest the funds in the best interests of the company” to the extent that NFCorp  posted this claim  on my twitter  last night – the first day NFCorp went on an “offensive” on the social media.

I had responded on my twitter to NFCorp last night with Five Questions on the RM330 million “cattle condo” scandal, viz:

1. Do you  admit  to public responsibility? Make public loan agreement  to prove you can do what you  like with NFC loan.

2. You deny Shahrizat family members paid princely sum of RM215k monthly. Specify actual salaries/perks drawn by each member monthly.

3. What is your response to each one of allegations re luxury condos, land, family holidays expenses and  credit card payments. Why evade?

4. Do you agree you have plunged Najib govt to 2new credibility crisis? Would you fully support a Royal Commission of Inquiry into NFC?

5. Does  “prerogative to invest in e best interests of the company” include the right  to trample on public/national interests?

I believe all Malaysians, and not just myself, are waiting for answers from NFCorp to these five questions on the “cattle condo” scandal.

If the NFCorp continuse to evade these five questions, then let the PAC provide some answers when Parliament reconvenes on March 12.

 Lim Kit Siang

                This entry was posted on Friday, 10 February 2012, 12:48 pm and is filed under
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Malaysian health reform socio-economics: Part 4

— David KL Quek

The Malaysian Insider

Feb 10, 2012

FEB 10 —
Out-of-Pocket and Catastrophic Payments

So what is so terrible about out-of-pocket (OOP) payments for healthcare? Why are health economists and policymakers so enamoured with this unsavoury OOP payment that this healthcare financing mechanism has been universally targeted to be eradicated, or at least reduced?

Many health authorities from the WHO and World Bank have analysed this in great detail, taking into account especially poor countries around the world, including those in Asia, Africa, Central and South America. Malaysia too has been included in many multi-country analyses to ascertain if common themes and determinants are shared within the disparate health systems in the regions.

When one looks at poverty levels and unequal economic systems, the health determinant as a function of economic underdevelopment and social aberration unfortunately looms large in some really poor nations. While poverty per se cannot all be attributed to just ill health or the lack of access to proper health care, impoverishment as a result of quests for healthcare has been a classic example of what poor countries are doing wrong.

Since many if not most of the world’s poorest countries also have the worst vital and health indices, it is not surprising that they have been studied the most intently and comprehensively. The lack of universal or affordable access to health care remains one of the predominant determinants of poverty in these countries. Sadly, out-of-pocket payments are the usual if not the only manner of health financing in these countries, where there is little or no social or financial protection or safety nets.

What has been found is as follows: out-of-pocket health payments can drive individuals and households into poverty, but standard poverty measures do not adequately account for health needs, and cannot explain all the nuances of impoverishment which can follow catastrophic ailments.

Health economists believe that OOP payments and poverty levels although usually intimately linked may not necessarily be causative, one for the other, or vice versa. Many health analysts use mathematical and statistical measures to assess poverty on the basis of household resources net of OOP payments, but this is justified only if OOP payments are in response to basic needs not reflected in the poverty line. Diversity and unpredictability of health needs makes it difficult to adjust poverty lines for some of these households. Also not all OOP payments are non-discretionary especially for middle-income households, which may be voluntary based on perceived demand or need, so subtracting them from household resources would overestimate poverty. But conversely, leaving OOP payments as part of resources, could also underestimate poverty.

Van Doorslaer and others, in a 2007 paper in the Health Economist, actually analysed in detail how out-of-pocket payments influence healthcare payments and in particular catastrophic ailments and possible household impoverishment in Asia. Their data and analysis are worth perusing in detail.

WHO researchers have defined and set the threshold at 40 per cent of capacity to spend as non-subsistence effective (disposable) income. This is household expenditure net of the estimated cost of subsistence food needs. “Households are considered to suffer financial catastrophe if they spend more than 40 per cent of their disposable income — the income remaining after meeting basic food expenditure — on health services.”  Once this threshold is exceeded then households are forced to reduce spending on other essential items such as housing, clothing and education, in order to pay for health services.

This is sometimes also known as subsistence spending. Subsistence spending on food is defined as the average food expenditure of households in the 45th to 50th percentile of food budget share distribution. This threshold is useful because it helps to assess the disruptive effect of out-of-pocket, OOP payments on the living standards of the poor.

Out-of-pocket payments take several forms, which include fee for services, whether as outpatient or in-hospital care (imposed by private and/or public sector providers), co-payments where insurance does not cover the full cost of care, and direct spending for self-treatment (for drugs and pharmaceuticals, including traditional/complementary-alternative therapies).

Thus, it would appear that having a prepayment mechanism or system of healthcare financing might be the better way to avoid such capricious and uncertain out-of-pocket costs and spending for health. But the solutions towards developing such a prepayment system are complex and depend largely on differing countries’ socioeconomic and political contexts, including the nature and speed of socio-economic as well as human capital development.

For Malaysia, the out-of-pocket payments are utilised for the following services, the bulk being for inpatient care, ambulatory care and medicines:

● Public sector care (7.17 per cent)

● Inpatient care (24.82 per cent)

● Ambulatory care (45.41 per cent)

● Medicines (24.66 per cent)

● Traditional/home/other (5.11 per cent)

It can be seen that the bulk of the OOP spending is on ambulatory care and medicines. But this statistic must be examined from the perspective of household spending and consumption patterns. From the above discussion, it would be clear that OOP payments for health care should be viewed and analysed more contextually, as a percentage of household consumption/spending.

Interestingly among the 14 nations studied, Malaysia had the lowest levels of out-of-pocket, OOP spending as a percentage of total household (HH) spending, even if this were to exclude food consumption expenditure.

For Malaysia, the so-called Catastrophic payment Headcount was found to be among the lowest in the entire 14-country cohort analysis. Some 0.36 per cent had to spend in excess of 25 per cent of their total household expenditure as OOP payments; 0.98 per cent more than 15 per cent; 2.01 per cent more than 10 per cent; and 6.62 per cent more than 5 per cent of total household expenditure as OOP payments. When non-food expenditure is considered, the numbers were even smaller with some 0.21 per cent more than 40 per cent, 0.78 per cent more than 25 per cent, and 2.48 per cent more than 15 per cent of OOP payments as shares of non-food expenditure, respectively.

This contrasts sharply with, for example Bangladesh, where 28 per cent of its households spent in excess of 5 per cent of the total household expenditure on health care and a substantial 4.5 per cent spent in excess of a quarter of the budget for healthcare! The figures for China are also dismal, i.e. 28.4 per cent spending in excess of 5 per cent of total household expenses, while another 2.8 per cent spending in excess of 25 per cent of their household budget. These are numbers, which clearly can impoverish some among the poor. The data for Indonesia and the Philippines are nearly similar, with some 9.5 to 9.2 per cent OOP spending in excess of 5 per cent and 1.13 and 1.14 per cent in excess of 25 per cent of household budget, respectively. Even Hong Kong had more than twice the percentage of catastrophic spending than Malaysia!

For Malaysia thus far, it would appear that our OOP spending on healthcare, including health catastrophes, is nowhere near the threshold or danger levels of concern! We are way off the marker of 40 per cent of household spending needed to push households into impoverishment. But this is not to say that we do not have any such healthcare-induced bankruptcies, but these are still in the sustainable (possibly) sub-unity or <1 per cent) level as can be adduced and seen in the available data.

What is interesting is that this paper summarised and concluded that: “Sri Lanka, Thailand and Malaysia stand out as low to middle income countries that have constrained both the OOP share of health financing and the catastrophic impact of direct payments.”

So what are the practical issues and impacts of out-of-pocket payments for health? Undoubtedly the most serious problem with paying out of pocket is the uncertainty and unexpectedness of ill health and medical costs. Unexpected and fortuitous medical cost has that way of eating into household expenditures, especially when these have not been budgeted for or factored in adequately.

For many, but especially for the marginal and indigent, households confronting a serious illness might have to sell limited assets, borrow, and/or cut back on expendable items of consumption, just to be able to pay for such usually urgent services. This sometimes-unavoidable economic shock can lead to rapid depletion of savings and/or assets, causing households to spiral down into indebtedness; many ending up being trapped in long-term debt and becoming pushed into poverty.

The opportunity cost to escape poverty from savings, investments or meagre assets could easily be exhausted when OOP payments come out of the blue. In direst straits, some would have to make that difficult choice between diverting disproportionately large portions of household resources to cover the costs of treatment. And if these were insufficient, they would sometimes even have to forego or delay treatment at the expense of health.

However, Malaysia has about the lowest statistics for poverty headcounts due to health OOP in Asia, even when we calculate according to two thresholds of poverty lines (US$1.08 and US$2.15 per day). Malaysia’s adjusted poverty gaps also remain lowest and insignificantly changed at the two baseline poverty levels.

Thus, although severity of poverty in some underdeveloped countries can sometimes lead to predicaments in prioritisation of subsistence needs versus medical choices, the extent to which this occurs differs from country to country. Sudden and unpredictable illness shocks can lead to severe disruption to material living standards and welfare, especially for those so impoverished! Hence, disruptive and catastrophic healthcare spending can have huge economic consequences not only to the individual but also to entire households and families. This however, appears to be a very small experience for Malaysia at this current point in time, at least where we have data for.

Therefore, while it is understandable that we make serious attempts to work towards health equity and access for all around the world, we also have to consider local, regional or even national peculiarities and context.

In principle, we recognise that WHO and the World Bank are right to emphasise the threat of spiralling OOP catastrophic payments. The danger of catastrophic health payments causing impoverishment, disruption of household living standards, and entrenching the already poor, has been substantiated repeatedly in many underdeveloped countries. WHO has been at the forefront at advocating fairness of health financing and ensuring protection against such catastrophic medical expenses, while at the same time encouraging governments to provide universal access for as broad a berth of basket of healthcare services as possible.

                This entry was posted on Friday, 10 February 2012, 11:01 am and is filed under
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Pemimpin-pemimpin dan rakyat wajar melalui kursus sivik kenegaraan

— Aspan Alias

The Malaysian Insider

Feb 10, 2012

10 FEB — Kita nampaknya mesti kembali kepada “basic” penubuhan negara kita. Itu sahaja caranya bagi kita untuk melihat negara kita kembali kepada asas penubuhannya dan cara pengendalian negara yang sebaik-baiknya. Sejak beberapa lama kita telah melihat negara kita dikendalikan dengan cara yang sudah asing dari apa yang sepatutnya kita lihat.

Kerajaan atau pada siapa yang bertanggungjawab, elok kembali kepada asas dan diadakan peruntukan khas bagi memberi rakyat kursus-kursus sivik semula. Kita wajar memberitahu yang negara kita ini adalah sebuah negara Persekutuan (Federation). Perjanjian Persekutuan ini dibuat pada bulan Februari 1948 dan pada masa itu ada sembilan negeri-negeri Bersekutu dan tidak Bersekutu telah menandatangani Perjanjian Persekutuan itu.

Selain dari itu dua buah negeri, iaitu Melaka dan Pulau Pinang, juga turut menyertai perjanjian itu untuk mewujudkan sebuah negara yang dinamakan Persekutuan Tanah Melayu. Rakyat harus diberitahu yang Persekutuan Tanah Melayu itu merupakan gantian kepada Malayan Union, anjuran Britain, yang cuba untuk menubuhkan sebuah kerajaan “unitary” yang tidak mempunyai kerajaan-kerajaan negeri dan menjadikan Kuala Lumpur sebagai Pusat Pentadbirannya dan kerajaan itu dinamakan Kerajaan Pusat.

Oleh kerana negara kita ini adalah sebuah Negara Persekutuan, pusat pentadbiran di Putrajaya itu adalah pusat pentadbiran Kerajaan Persekutuan, bukannya pusat pentadbiran Kerajaan Pusat. Diantara Kuala Lumpur dan Bangkok serta Jakarta ada perbezaannya. Kedua-dua Bangkok dan Jakarta misalnya, kedua-dua bandaraya itu menempatkan kerajaan Pusat kerana Thailand dan Indonesia itu adalah negara “unitary” yang tidak mempunyai negeri-negeri yang berdaulat didalamnya. Malaysia adalah seperti Amerika Syarikat dan Australia; iaitu berkerajaan Persekutuan dalam mana ada kerajaan-kerajaan negeri didalamnya.

Perkara ini penting diketahui kerana dengan memahaminya maka kita akan tahu dimana salah dan silapnya pemimpin bermain politik dan mentadbir sebuah negara seperti kita ini. Oleh kerana sistem demokrasi adalah pilihan kita, maka kita boleh memperbaikinya dengan memilih siapa yang sebenarnya layak untuk mentadbir negara kita sebagai sebuah negara Persekutuan itu. Jika pimpinan kita tidak mentadbir negara secara dan kehendak sebuah negara Persekutuan, maka ia patut ditukar dan dianjak.

Saya suka menyebut isu ini berulang kali kerana kita telah melihat dalam banyak perkara pimpinan telah tidak menghormati Perjanjian Persekutuan dan menerima semangat persekutuan itu dengan baik. Itulah sebabnya dalam banyak perkara kita telah bersalah-salahan di antara kerajaan Persekutuan dengan kerajaan negeri yang disebabkan oleh tidak faham atau tidak menghormati keputusan rakyat sesebuah negeri yang berdaulat dan merdeka itu.

Contohnya, Kerajaan Persekutuan telah mengenakan tekanan kepada Kerajaan Negeri Kelantan dengan tidak menghormati “vestine deeds” yang ditandatangani diantara Petronas dengan rakyat negeri Kelantan pada 27hb Mei 1975 yang lalu. Pimpinan Persekutuan telah mengambil tindakan tidak menghormati perjanjian itu semata-mata rakyat Kelantan telah memilih untuk memberi mandat kepada PAS dan PR untuk mentadbir negeri itu.

Perjanjian itu adalah perjanjian di antara Petronas dan rakyat negeri Kelantan yang diwakili oleh Menteri Besarnya ketika itu, iaitu Datuk Mohammad Nasir, Menteri Besar PAS. Petronas diwakili oleh YBM Tengku Razaleigh Hamzah. Perjanjian ini dibuat dengan semua kerajaan-kerajaan negeri, tidak kira samada negeri itu ditadbir oleh PAS atau pun Umno.

Mengikut perjanjian itu Petronas mesti membayar secara tunai kepada Kelantan dua kali setahun, iaitu pada setiap 1hbMac dan 1hb September setiap tahun, mengikut harga FOB penjualan itu. Jumlahnya mengikut perjanjian itu ialah 5 peratus dari harga jualan sebagai royalti kerana rakyat Kelantan telah memberikan hak selagi ada bulan dan bintang kepada Kerajaan Persekutuan melalui Petronas segala pengeluaran minyak dalam perairan negeri Kelantan.

Sekarang ini apa yang dilakukan oleh Kerajaan Persekutuan ialah dengan mencuri segala pengeluaran minyak dari dua telaga dalam perairan Kelantan dengan menyalurkan semua minyak yang digali itu melalui “pipe” terus ke Kerteh yang jauhnya 260 kilometer ke Kerteh. Ia merupakan usaha untuk mengelakkan hasil minyak itu dimendarat di negeri Kelantan (Bachok).

Ini merupakan tindakan Persekutuan yang tidak menghormati kedaulatan rakyat Kelantan. Lagak kerajaan Persekutuan itu seolah-olah kita sedang ditadbir oleh sebuah Kerajaan Persekutuan yang ala Malayan Union yang ditolak rakyat negara ini pada tahun 1946 dahulu. Persekutuan Tanah Melayu wujud kerana penolakan rakyat terhadap Malayan Union, tetapi semangat Malayan Union ini nampaknya bertambah subur kian lama kian Umno baru ini memerintah kita.

Lebih malang lagi bagi rakyat Kelantan apabila pemimpin mereka yang mewakili rakyat Kelantan tidak bersama rakyat Kelantan untuk mendapatkan semua apa yang telah dijanjikan dalam perjanjian di antara Petronas dengan rakyat Kelantan itu. Nama-nama seperti Mustapa Mohamad dan Awang Adek sebaliknya menyebelahai Kerajaan Pusat untuk menekan rakyat Kelantan.

Sikap mereka amat mengaibkan. Nampaknya hanya satu sahaja cara bagi rakyat mendapatkan kembali hak dari hasil minyak mereka; iaitu dengan berusaha memberikan mandat, sebesar-besar mandat kepada kerajaan gantian dalam pilihanraya yang akan tiba tidak lama lagi.

Seperti yang dilakukan oleh rakyat pada tahun 1946 dahulu, setiap elemen yang menyuburkan sikap Malayan Union, Kerajaan Persekutuan wajar ditolak habis-habisan kali ini. — aspanaliasnet.blogspot.com

                This entry was posted on Friday, 10 February 2012, 3:38 pm and is filed under
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Say ‘no’ to Ibrahim Ali-style politics, Chua

— Francis Loh

The Malaysian Insider

Feb 10, 2012

FEB 10 — Since he is MCA chief, it is expected that Datuk Seri Dr Chua Soi Lek would criticise and exchange barbs with his political opponents in the DAP and the other Pakatan Rakyat parties. Nothing wrong with that, even welcomed. But he should not patronise us the rakyat with the usual simplistic and ethnicised arguments, like Ibrahim Ali is prone to do.

For instance, it was reported (The Star, February 3, 2012) that he had resorted to that age-old boring refrain: that the DAP has been misleading the Chinese into believing that a vote for the party would help realise their hopes of getting fair treatment and a top Chinese leader. In fact, for Chua, “Chinese voters did not understand that a vote for the DAP would only help PAS realise its objective of forming an Islamic state and implementing its brand of hudud”.

Chua made these remarks even when the PAS leadership had just sacked the extremist Dr Hasan Ali from the party and got him removed from the Selangor state exco for expressing views and acting in opposition to PR policies and positions that had been agreed upon and adopted.

Earlier, Chua had criticised the PR government in Selangor for not delivering on its electoral promises: “95 per cent of pledges not honoured in Selangor” (The Star, January 16, 2012).

I am not bothered about his criticism of the PR government; nor about how he calculated that it was 95 per cent and not, say, 85 per cent or 25 per cent of pledges that had not been honoured. Rather, I am concerned about how Chua tried to ethnicise the issue by focusing attention on how the Selangor PR government had yet to build a single Chinese school in the state whereas his MCA had succeeded in persuading the federal government to make available land and funds to build several Chinese schools, fought for scholarships for Chinese students, and won them entrance into particular courses in the universities. Kudos to the MCA for achieving these things.

But is the PR government in Selangor all about Chinese schools?

More recently (The Star, February 6, 2012), Chua called upon Penang CM Lim Guan Eng to refrain from being a political “street fighter” and instead focus his attention on resolving woes faced by Penangites like a true statesman.

On closer scrutiny, it is Chua himself who appears to be the street fighter. Do criticise the PR governments for their weaknesses and failures. But don’t patronise the rakyat with silly arguments!

As well, stop spinning the age-old record of old-fashioned ethnic politics. For we are now in a global digital era of building a new politics wherein the rakyat , especially the young, are more concerned about issues of deepening democracy, reforming the economy, and joining hands with people of other races to build a new Malaysia. Say “no” to the Ibrahim Ali-style of politics! — aliran.com

* Dr Francis Loh is president of Aliran.

                This entry was posted on Friday, 10 February 2012, 3:55 pm and is filed under
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36 Hours: Penang, Malaysia

By
ROBYN ECKHARDT

Published: February 9, 2012

The New York Times

A fishing boat near Telok Pahang.
More Photos »

PENANG is on a roll. Thanks to an influx of private and public investment and creative energy — precipitated in part by Unesco’s 2008 listing of Penang’s capital city, George Town, as a World Heritage site — the Malaysian island is padding out its list of attractions. To the region’s best street food add smart restaurants and bars. And a lively street culture anchored in religious festivals has now been joined by shows at the recently opened Performing Arts Center, and events like the Penang World Music Festival (March 30 to April 1;
penangworldmusic.com
), as well as the annual George Town Festival (June 15 to July 15;
georgetownfestival.com
), a month of exhibitions, performances and readings by local and international artists and writers. Your stay will very likely be more comfortable than it would have been a few years ago, with new boutique hotels opening in recently renovated pre-World War II shop houses and mansions.

Friday

3 p.m.

1. VIEWS FROM THE PEAK

Get your bearings with a stellar view atop 2,750-foot Penang Hill. The easiest way up is by funicular. The slightly white-knuckle ride in new Swiss-made air-conditioned coaches takes five minutes or less. Up top, the air is fresh and cool, and the vistas unparalleled: to the south, George Town’s neat rows of clay tile roofs; to the north, undulating hills backed by a turquoise sea. If you’d rather walk down (two to three hours) than ride, a little-used jeep trail ends at the Penang Botanical Gardens at the foot of Penang Hill, a 30-minute taxi ride back to George Town.

5:30 p.m.

2. ESPLANADE SUNSET

As the day’s heat begins to fade, runners, dog walkers and idlers converge on Padang Kota Lama, a grass pitch sandwiched between Penang’s stately town hall and 18th-century Fort Cornwallis. Poke around inside the fort (entrance, 1 Malaysian ringgit, or 33 cents, at 3 ringgit to the dollar), then cross the street to the esplanade overlooking the Strait of Malacca. Buy a bag of kacang rebus (boiled chickpeas seasoned with turmeric, 3 ringgit) from one of the parked white trucks and head to the unpretentious (and nameless) cafe at the esplanade’s terminus, where you can watch the sky turn orange over a beer.

8 p.m.

3. CHINA HOUSE

Among George Town’s recent flurry of openings in refurbished structures, China House (153-155 Beach Street and 183b Victoria Street; 60-4-263-7299) is the most stunning: over 10,000 square feet of food, drink, and retail and arts outlets in three interconnected shop houses in the city’s warehouse district. The décor leans to heritage chic, with exposed beams, weathered timber and cement floors, an eclectic mix of Chinois, mid-20th century and contemporary furnishings and splashy textiles. Start with dinner at the intimate BTB+Restaurant (dinner for two, 190 ringgit), where the menu runs to Western dishes with Asian and Middle Eastern influences, then climb the stairs to Galleries I and II to view works by Malaysian and international artists. The best place to wind up the evening is at the stylish Canteen+Bar (drinks for two, 80 ringgit), where arty types mingle with (upscale) backpackers and the after-work crowd around a sheet metal-clad bar; local musicians perform on weekends.

Saturday

7:30 a.m.

4. MALAY SECRETS

Book ahead for a spot at Nazlina Spice Station (71 Stewart Lane; 60-12-453-8167;
pickles-and-spices.com
; 135 ringgit for a class), where the bubbly former electrical engineer Nazlina Hussin imparts the secrets of Malay dishes like chicken rendang and ikan masak lemak (fish cooked with spices and coconut milk). Hands-on classes start with a tour of a local market, where you’ll taste pickles made from local nutmeg fruit, and end with a communal meal. Or greet the morning with the old-timers at the dim sum institution Aik Hoe (6 Carnarvon Street; breakfast for two, 30 ringgit) and follow with a walking tour of the city’s architectural highlights led by a member of the Penang Heritage Trust (60-4-264-2631;
pht.org.my
; 180 ringgit for up to three people; book several days ahead). Finally, have lunch at the International Hotel (92 Transfer Road; 40 ringgit for two), where a Sumatran-run hawker stall in a Chinese-owned coffee shop serves a selection of Malay, Indonesian and Indian- and Chinese-influenced curries, vegetable dishes and sambals.

2 p.m.

5. OVERVIEW

Housed in a former school built in the late 1800s, the Penang State Museum (Lebuh Light; 60-4-261-3144;
www.penangmuseum.gov.my
; 1 ringgit) presents an engrossing overview of the island’s history, architecture and multi-ethnic population over two floors of exhibitions in Malay and English. Plenty of space is devoted to kitchen culture, local specialties and even the history of Penang’s kopitiam (coffee shops).

3:30 p.m.

6. HISTORY AND ART

The two-block stretch of Armenian Street, named after an immigrant community of businessmen that included the Sarkies brothers of Eastern & Oriental and Raffles hotels fame, is rich with history and consumer diversions. In addition to Sun Yat-sen’s Penang base (120 Armenian Street; 60-4-262-0123), where the architect of the Republican China plotted the downfall of the Qing dynasty, four Hokkien clan associations reside here. With its opulent temple and small but fine museum, Khoo Kongsi (18 Cannon Square; 60-4-261-4609;
khookongsi.com.my
; 10 ringgit) is most definitely worth a look. Gallery hop from Studio at Straits (86 Armenian Street; 60-4-262-7299;
straitscollection.com.my
), showing mostly Malaysian works, to Galerie Seni Mutiara (118 Armenian Street; 60-4-262-0167;
galerisenimutiara.com
), exhibiting international artists on the ground floor and, upstairs, a permanent collection of paintings by Malaysia’s early post-independence artists. Handblown glass is sold at Fuan Wong Gallery (88 Armenian Street; 60-4-262-9079). China Joe’s, below Studio at Straits, sells women’s wear and contemporary Asian housewares and furniture, while the “antiques” shop Chin Seng Leong (55 Armenian Street), a dusty hole in the wall, is for serious treasure hunters.

7 p.m.

7. LOCAL DELICACIES

When it moved, almost two years ago, from a glorified lean-to in a nearby alley to a spiffed-up shop house, Tek Sen (18-20 Carnarvon Street; 60-12-493-9424; 100 ringgit for two) tripled its seating capacity. That hasn’t diminished the family-owned restaurant’s charm, or its ability to turn out flawlessly executed dishes that have been drawing locals for over 45 years. The extensive menu includes Teochew and Malaysian dishes, each of them memorable. Highlights: stir-fried roast pork with chiles; whole pomfret steamed with ginger, tomatoes, pickled mustard and sour plums; and gulai tumis, stingray in tamarind-soured spicy gravy.

8:30 p.m.

8. NIGHTCAP

That Little Wine Bar (54 Jalan Chow Thye; 60-4-226-8182;
thatlittlewinebar.com
), a snug social spot frequented by expats and Malaysian residents, pours vintages by the glass (20 to 28 ringgit) and by the bottle. A youngish crowd gravitates to Behind Fifty Love Lane (Muntri Street at Love Lane), a cafe and bar in a low-slung cubbyhole; the owners have been known to organize patrons into teams for games of charades.

Sunday

8 a.m.

9. JUNGLE AND BEACH

Pack a towel and hire a taxi (30 ringgit per hour) to Taman Negara Pulau Pinang (Telok Bahang; 60-4-881-3530;
wildlife.gov.my/tnpp/biindex.htm
; no charge), a 3,100-acre smidgen of beach-fringed jungle in the northwestern corner of the island, about 11 miles from George Town. After registering at the park office, hire a longtail boat for the short ride to Monkey Beach (40 ringgit, one way for two people), where you can swim and laze on the sand before tackling the moderately challenging 1.8-mile trail back. The hike, traversing a combination of paved and dirt trails and passing a few secluded coves, takes about 90 minutes.

Noon

10. NOODLE SOUP

It would be a mistake to leave Penang without sampling its most iconic dish: asam laksa, a sour, sweet and spicy fish-based rice noodle soup garnished with mint, cucumber and shreds of peppery torch ginger bud. On the way back to George Town, stop at Miami Beach (Jalan Batu Ferringghi) and make for the food court, where a female vendor named Ita serves an exceptional version, thick with bits of sardine (3 ringgit). Eaten accompanied by coconut water (2 ringgit) sipped through a straw, it’s a fitting end to an island interlude.

IF YOU GO

Modeled on European boutique hotels,
Campbell House
 (106 Lebuh Campbell Street, Georgetown; 60-4-261-8290;
campbellhousepenang.com
) delivers warmth and top-notch service. Each of the 10 individually designed suites has an iPod docking station, minibar and espresso machine. Rates, starting at 400 ringgit ($134), include breakfast, in-room refreshments and Wi-Fi.

After an 18-month restoration, the Oasis Hotel, formerly a hostel, has re-emerged as a bijou boutique hotel named after its street address,
23 Love Lane
 (Georgetown; 60-4-262-1323). Housed in four 19th-century structures set around a walled garden, the hotel’s 10 rooms (including a duplex), from $150, are furnished with antiques and contemporary artworks by Malaysian and Southeast Asian artists from the owner’s private collection.

                This entry was posted on Saturday, 11 February 2012, 11:17 am and is filed under
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Even after Anwar’s acquittal, politics will likely stay dirty

— Bridget Welsh

The Malaysian Insider

Feb 10, 2012

FEB 10 — Malaysia recently hit the headlines after opposition leader Anwar Ibrahim was acquitted of sodomy charges, although the prosecution has already filed an appeal.

The case is entirely political and reflects the government’s willingness to use the judiciary for political ends. Malaysia is set for the most competitive elections it has ever had, likely before June or else pushed off until 2013, and each side has a fighting chance to win.

Malaysian politics is dirty. Murder, sodomy, secret trysts, sex videos and conspiracy are all commonplace, and corruption scandals occur regularly. Both sides wallow in this political gutter, each trying to darken the reputation of the other and not fully appreciating how much the system as a whole has been damaged. Anwar’s acquittal gave the government an opportunity to take the high road and move away from this negative approach. Instead, it opted to appeal, despite the shabby evidence.

Concerns are now focused on the integrity of the electoral process. The government is mooting reforms but the problems are vast, from administrative neutrality to vote buying. As the system becomes more competitive, political institutions involved in anticorruption and law have been compromised, with the government pressuring institutions such as the civil service to toe the line.

The upcoming election will revolve around Anwar and Prime Minister Najib Razak tapping into their own popularity bases, as politics in Malaysia is highly personalised. Both men have been damaged by character assassinations and will need to work hard to win support. The test now is whether either candidate will move beyond a largely self-centred campaign and articulate the solutions that his leadership can offer.

The country’s problems are well known — including the need for economic reform and improved race relations, coupled with growing inequality — but sadly, the policy options each side promises to pursue are unclear.

Anwar’s strength has been his charisma, and he has succeeded in consolidating his support base through martyr politics. Nevertheless, his reputation suffered during the trial and he has a long road ahead to win new supporters, especially in rural areas, where the government media dominates.

On the other hand, Najib faces a trust deficit, which seems to be growing at the same rate as inconsistencies in his reform policies. It is still unclear what he stands for, and his reliance on handouts to woo voters reflects weakness, not strength.

Malaysian politics is also highly polarised. Both sides can expect support from about 35 per cent of the electorate, with the remaining third in the middle. But in satisfying their primary support bases, Malaysia’s leaders have alienated the centre. To win the upcoming election, both leaders will need to meet the expectations of their support bases while reaching out to those who are ambivalent, tired of over-politicking, and eager for more than negativity.

Najib in particular faces the challenge of preserving the loyalty of his base, many of whom have resisted change and adopted reactionary racial positions. They expect him to protect their interests and have shown that they will remove any leader who fails their expectations.

His attempts to reach the middle ground, both in areas of political reform and ethnic relations, compromise his base’s support. He now has limited political space, and the result has been inconsistency. In contrast, Anwar can more easily reach out to the middle because his support base wants change, although even he must manage the growing anger of his supporters.

In this complicated terrain, ethnic politics is alive and well. Malaysia has three linked interethnic dynamics. The first involves race relations between Malays and non-Malay minorities. Then there is the issue of religious relations, especially between Muslims and other religious groups. Finally, there is the issue of moderate views and more extreme views of race and religion in the Malay community.

These dynamics have become more difficult to manage since the 2008 elections when Najib’s National Front lost its two-thirds hold on seats; in some instances, they have even led to violence, such as the church bombings in 2010.

Navigating these divisions is not easy, and the contenders for power ultimately need to include all Malaysians. For Najib, the challenge is to reach out to non-Malays. For Anwar, the challenge is to show that his coalition can represent the positions of different ethnic groups, while also incorporating the country’s Islamists.

Especially challenging for both is how to accommodate more extreme perspectives in a moderate framework, in a bid to move Malaysian politics from negativity toward inclusion and hope. — Jakarta Globe

* Bridget Welsh is an associate professor of political science at Singapore Management University.

                This entry was posted on Saturday, 11 February 2012, 5:53 am and is filed under
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Is Khazanah Nasional a bumi fund?

— Spencer Gan

The Malaysian Insider

Feb 11, 2012

FEB 11 — Dear Mr Prime Minister,

I need clarification. Two days ago, you announced that PNB and Khazanah Nasional will be divesting some of its businesses to bumiputera firms.

There was also the usual talk of open tenders and how qualified bumi firms will be considered. I am not going to bother about this talk of open tenders because it will snow in Malaysia before there is a level playing field in business.

What concerns me is this drive to ask Khazanah Nasional to divest its stake in non-core businesses to bumi firms. I thought Khazanah was the sovereign wealth fund of the NATION. And I thought that meant that Khazanah is the custodian of wealth belonging to ALL Malaysians.

If that is the case, then Khazanah Nasional should be divesting its non-core businesses to qualified Malaysian businesses.

I understand that this being the election year, there is a need to placate powerful Malay business interests but please don’t use funds or hijack the interests of all Malaysians for narrow political gains.

All this talk of economic liberalisation will not amount to much if the administration keeps not matching its words with deeds.

I share the concerns expressed by MPs that there is a return to the Mahathir days when plum contracts and projects was given to certain Malay business figures. Well, we know what happened to them: they are all personally filthy rich but their business entities crashed.

If the government is taking the position that wealth and assets belonging to all Malaysians are going to be hijacked for narrow Malay interests, then my belief is that we have a legitimate reason to stop paying taxes and other payments. Alternatively, we should boycott all entities owned by Khazanah Nasional.

Yes, to spreading economic wealth to all. No, to making a few Malay cronies and their political patrons rich.

                This entry was posted on Saturday, 11 February 2012, 10:22 am and is filed under
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