Not easy housing Malaysians

Posted on August 25, 2012 by Tricia

Not easy housing Malaysians

Photograph: Ong Ee Lynn

One of the most controversial subjects in Malaysia is the issue of home ownership. How are Malaysians earning low wages to afford a house of their own? How is the government at any level to solve this serious problem? 

By Tricia Yeoh

(First published in Penang Monthly’s August 2012 issue).

Prime Minister Najib Razak recently called for feedback in advance of the government’s unveiling of the National Budget 2013. The top of the wish list for those who responded is that of affordable housing for the middle income group. Most respondents cited the rising price of property in various urban cities across the country as a problem. This has likewise struck home within the two states of Penang and Selangor, and as a growing concern, will surely be an election issue.

In fact, the dispute has already begun. Penang Institute’s CEO Zairil Khir Johari wrote an extended piece on housing in Penang, stating among other things that there is a shortage of 70,052 units for the group of newly-wed professionals and young middle class families. In a separate statement, he responded to MCA’s president Chua Soi Lek who had accused the Penang state government of not providing low cost housing, by citing the Chief Minister Lim Guan Eng’s earlier remarks that the state government has, in fact, approved 3,806 low and low-medium cost homes.

Selangor has not been spared the housing controversy either, where most recently PKR local councillor Latheefa Koya has resigned from her position in the Petaling Jaya City Council, purportedly because of her disagreement with the Selangor Menteri Besar on the issue of housing for the urban poor and squatters. Specifically, residents of Matang Pagar in Rawang have been disappointed as they were not given the land previously promised to them.

The right to ownership, housing and property seems rather bleak in such times, affecting a wide spread of society from the poor to the middle class. Property prices in Penang and Kuala Lumpur rose by up to 40% in 2010. The average price of a residential property in Kuala Lumpur is nine times the average urban household annual income, whilst the Demographia International Housing Affordability Survey rates markets where property prices are 5.1 times the median income or more as “severely unaffordable” (National House Buyers Association, 2011). Whose responsibility is it to solve the problem of those wanting affordable property?

First, you have the Ministry of Housing and Local Government, which is the result of a merger between the previous Ministry of Housing and Rural Development and the Department of Local Government (previously part of the Ministry of Local Government and the Federal Territory). On its list of objectives is the one to “ensure adequate balanced housing development and provide affordable housing for those who qualify” as well as “regulate aspects of housing development”. In a sense, they act as regulators of the industry.

There is also Syarikat Perumahan Nasional Berhad (SPNB), a wholly-owned subsidiary of the Ministry of Finance, with the objective of “providing quality affordable homes for every family in Malaysia in accordance with the National Housing Objective”. It is assumed that the Ministry works closely with SPNB in ensuring there is a steady supply of affordable housing. I had previously written on low cost housing, listing the categories under SPNB: Low Cost Housing with house prices of below RM42,000 and targeting those with a monthly income of below RM1,500; Low-Medium Cost with house prices from RM42,001 to RM60,000 and targeting those earning between RM1,500 and RM2,500; Medium Cost with house prices from RM60,001 to RM100,000, and High Cost of any houses above RM100,001, the latter two categories of which do not have a specific target income group.

And then of course there is the role of the largest players of housing in the market – the private sector. The Real Estate and Housing Developers’ Association of Malaysia (Rehda) is the voice of developers in the country, an extremely powerful stakeholder in our national economy. It has over 800 members who are responsible for 80% of the total real estate built (this includes shopping malls, commercial complexes and hospitals, among others). Operating on profit as any business entity does, its social contribution comes in the form of allocating a portion of their housing units as low cost units, following the national housing policy.

If the federal government (through SPNB) and the private sector (through its allocated proportions to low cost housing) are already providing affordable housing, why is there a continued gap, and what, then, is the role of state governments in providing a solution?

Photograph: Ong Ee Lynn

The low cost housing quota imposed on private developers may not be feasible even today, being a proportion that has not been revised to suit the current population and the urban demands of our states. In his article, Zairil goes further to say that developers cut corners to protect their bottom line. Rehda has in the past complained during a Selangor dialogue that the quota is unsuitable for their projects as it means having to physically place low cost housing in a vicinity close to their luxurious high-end projects, the former thus affecting the marketability and image (and therefore, pricing capability) of the latter.

Whilst such negotiations between the public and private sectors will continue, it is clear a more detailed socioeconomic study on housing, given increasing urbanisation, must be conducted to come to an ideal compromise on the roles and responsibilities of either party.

There continues to be a series of housing schemes introduced by different stakeholders in an attempt at addressing this problem. But not all of them are sound.

The federal government in 2011 launched its Skim Rumah Pertamaku, or My First Home Scheme, to assist young adults who have just joined the workforce earning RM3,000 a month or less, to own their first home. The scheme is meant to allow young adults to obtain 100% financing from financial institutions, without the need for a 10% down payment, whilst the maximum property value is RM400,000. Although this is attractive to young adults, it has also received criticism; it was announced that RM1.5bil of the Employee Provident Fund (EPF) would be channelled to finance funding schemes for houses in public housing programmes in Kuala Lumpur. Government assets are supposedly used to secure the loan, and such collateral would be dangerous in the case of loan defaults by the buyers themselves.

The point here is that in the attempt to solve housing woes, governments (either federal or state) must be equally cognizant of what the consequences may be. It is clear that any solution cannot in fact burden the same Malaysians it is meant to help.

In the meantime, state governments have also taken up the responsibility of looking into housing and development. Both Penang and Selangor have their state-owned corporations that delve into housing, the Penang Development Corporation (PDC) and Perbadanan Kemajuan Negeri Selangor or Selangor Development Corporation (PKNS) respectively. Each of these bodies aims at providing quality products, keeping in mind sustainable socioeconomic development as its objective.

PKNS, for example, has launched more affordable housing schemes of late, the latest of which are housing projects in Bandar Baru Bangi and Sungai Long, Kajang. The response is usually overwhelming, with application forms being snapped up quickly.

In Selangor, a new land policy has been drawn up which requires developers who build affordable homes to sell these at a fixed price. For instance, a low cost house is RM42,000 in local council areas, RM35,000 in local district areas and RM30,000 in other areas. For any development of over 10 acres of land in the Klang Valley, the developer will be required to build according to quota, with 20% of the development set aside for low cost houses, 20% for low-medium cost houses and 10% for medium cost houses. For areas beyond the Klang Valley, the allocations would be 20%, 10% and 10% respectively. A total of 3,317 low cost houses is under construction; while another 18,917 are either being rehabilitated from abandoned status or have just received approval. The affordable housing scheme targets households with a monthly income range of between RM2,500 and RM5,000, while a low cost house is prepared for those who earn RM2,500 and below.

In Penang, developers are compelled to contribute 30% to low cost housing, but instead of just forcing developers to comply with the quota, financial contribution is also now being allowed in lieu. Zairil stated that, “By collecting money instead of forcing developers to build low cost units, the state will then have revenue to channel towards more pressing housing needs.” There will also be stiffer foreign ownership laws to stem foreign speculation, which involves a minimum value of RM1mil for foreign property purchases (RM2mil for landed property) on the island.

As both the states of Penang and Selangor experience a rise in their population, affordable housing for low and medium income groups will continue to be a major issue to deal with. Without slowing down the runaway prices of property in urban areas, we face the possibility of an entire generation of young Malaysians unable to own a place of their own, which will undoubtedly have severe consequences on family and social development at a later stage.

Posted in Economics, Public Administration | Leave a comment

Dark look at the country’s financial situation

Posted on August 18, 2012 by Tricia

Dark look at the country’s financial situation

(First published in Selangor Times, on 17th August 2012).

In the lead up to the 13th General Election, economic issues will inevitably be hotly debated by all sides of the political divide. It is within this context that a book of great relevance to Malaysian readers and voters has been recently published.

“UMNO-nomics: The Dark Side of the Budget” is a concise analysis by Teh Chi-Chang on the national budget and the various issues facing the country’s public finances. Illustrated by Johnny Ong, it also provides for entertaining reference through accompanying cartoons.

I personally read the book in a single sitting, because it touched on subjects I am particularly interested in. Although many scandals and controversies are reported in Malaysia, rarely are they examined in light of the bigger picture: the country’s dire financial situation and public administration.

These sometimes complex issues are written in a style that is easy to read and understand, making sense of terms such as revenues, expenditures, debt, subsidies, disposable income and resource management – that eventually connect the dots to present the whole of what is often perceived as a fragmented story. And it is this whole that is the most worrying of all – what ran through my mind whilst reading it was, is this truly the situation our country faces?

For example, the author brings us through the reality of the national debt, using well-referenced figures to show that if we were to include contingent liabilites in the calculation, our real national debt is actually as high as RM573 billion, or “nearly RM20,000 for each and every one of us”, which would constitute 67% of our GDP. This far surpasses the 55% federal government loan limit as defined by our national laws.

Second, some disturbing figures are also revealed, where only 1.7 million Malaysians pay taxes, which contributes only RM20 billion, or 11% of total government revenue. Teh argues that if the government were more prudent and efficient, it may be able to save even more than the total income taxes currently contributed by Malaysians.

His central argument is therefore that the country has been inefficient in its expenditures through a number of ways (blanket subsidies, centralised government, over-reliance of oil revenues). Of course, given such a bleak analysis, surely urgent solutions must be equally sought to resolve this, one imagines. Without going into too much detail, some policy proposals include raising household incomes, implementing open tenders, cutting the cost of living and streamlining the civil service.

The book makes no attempt at hiding its agenda – it very clearly presents alternative solutions by the opposition coalition Pakatan Rakyat. Given this, readers might easily dismiss its contents as being biased and shadowed by an entirely political flavour. And it is true, there are sections which promote the two Pakatan-led states of Penang and Selangor based on case studies that succeeded there. Further, it is published by Research for Social Advancement (REFSA) that is now known for its series of hard-hitting pieces against the government organisation, the Performance Management and Delivery Unit (PEMANDU).

Nevertheless, read with an open and analytical mind, a reasonable Malaysian would grow increasingly concerned at the government’s structural problems. The book reminds us that if we are concerned about the future of the country, along with the next generations to follow, serious planning and systemic reform needs to be done.

Great thought, for example, must be given to addressing long-term policies of subsidies, minimum wage, oil and gas, procurement, and the centralisation of government. One immediate proposed change is that the Prime Minister (akin to a company’s Chief Executive Officer) should not assume the same position as that of Minister of Finance (akin to a company’s Chief Financial Officer). In a corporation, the separation of functions and responsibilities of the CEO and CFO ensure good governance, and stringent checks and balances.

Finally, it challenges us to consider the economic model that is currently being pursued by the government. The huge government presence in the economy through government-linked companies (GLCs) has slowly driven out ordinary small businesses, resulting in “massive shrinkage of private investments in Malaysia”. This is a startling admission that despite government’s efforts to promote the private sector, it contradicts itself by allowing government-owned companies to compete with the private sector.

These teasers provoke us to pause and consider the tremendous amount of public sector reform that will be needed in the immediate future. Political polemics aside, leaders from both Barisan Nasional and Pakatan Rakyat would do well to make this book bedtime reading. Sometimes, an acute awareness of present problems is needed, to present the answers that are now so desperately needed by ordinary citizens.

Posted in Economics | Leave a comment

Time Malaysians Moved On

Posted on August 11, 2012 by Tricia

Time Malaysians Moved On

(A version of this was first published in theSun on 10th August 2012).

The country was glued to their television and computer screens on Sunday night, where cheers of excitement and hope resounded across the streets. Some have congratulated Dato’ Lee Chong Wei for doing what no other Malaysian has been able to do, without having to say anything at all – unite our fragmented nation.

The badminton men’s singles was certainly reason to hope – we were that close to having won our very first Olympic gold medal. Despite some unsavoury tweets that criticised Chong Wei’s performance in comparison with China’s star player Lin Dan, suffice to say Malaysians were proud with the silver medal he returned with.

But the support he has – as with all other Malaysian badminton players when faced with any foreign opponent – is an analysis we continue to be fascinated with. The question we asked ourselves as children was, “Would you support Malaysia or China if they were playing each other?”, or “Malaysia or Indonesia?”, depending on our respective races. The fact that we are amazed by our unity is in itself something curious, since by now we should all have been sitting comfortably in our Malaysian shoes.

What does this say about our appetite for common ground? Quite a bit, but not quite enough.

The recent online debate about an upcoming film, Tanda Putera, is a case in point. Although not yet released to the public, already it has generated discussion on a subject few Malaysians have had the opportunity to read or study about. The 13th May 1969 riots were not covered within our history textbooks, and one had to learn about this through urban myths and whatever little literature there is out there.

For instance, I have only read Tunku Abdul Rahman’s book, “May 13 – Before and After”,  as well as Kua Kia Soong’s “13 May: Declassified Documents on the Malaysian Riots of 1969”, where both give varying accounts of what transpired on that fateful week leading up to the actual violence on the streets. There are official government records, and there are also documents parked within the Public Records Office in London.

The controversies surrounding the new film (which is directed by Shuhaimi Baba, of 1957: Hati Malaya acclaim) centre on the trailer, which has been made public on Youtube. One scene in the trailer shows a Chinese mob chanting anti-Malay slogans in the prelude to the riots. The film also purportedly depicts the Democratic Action Party (DAP) in a negative and unpatriotic light.

Without going into the details of the movie, as it is only slated for national release in September, this once again begs the question of interethnic unity. Researchers have long discussed methods of measuring such unity. A team at Universiti Kebangsaan Malaysia’s Centre for Ethnic Research (KITA) developed an ethnic diversity index (EDI), for example, that would examine social cohesion and the social and economic value of ethnic diversity. Whilst at the Centre for Public Policy Studies, I embarked on a study to also look at how perception of interethnic unity (and religious harmony) influenced young Malaysians’ evaluation of national unity.

Certainly, Malaysia’s ethnic diversity is its greatest strength as it provides for flexibility and the ability to adapt easily to multiple environments. But it can equally act as a weakness if tackled irresponsibly.

The incidents of May 13th 1969 have never really been publicly discussed. There are two ways of dealing with the matter, if the film Tanda Putera is really to be screened in cinemas around the country.

The first option is to avoid the issue altogether without further discussion, letting ghosts of the past rest. This may be ideal since the incident happened so long ago, and only concentrated in certain cities of Peninsular Malaysia. But this is not very feasible, since the movie has already stimulated discussion online, and it would be futile to sweep what has been raised under the carpet – people will talk anyway.

The second option is to use this as an opportunity to have a calm and rational discussion of what happened in the past, approaching it with great seriousness in memory of the tragedy. South Africa in dealing with its wretched past set up a Truth and Reconciliation Commission (a court-like restorative justice body) after the abolition of apartheid. Malaysia may not need something as extensive as this, but certainly a measured and unbiased discussion on what happened may help heal some wounds.

However, in the final analysis, it is my hope that Malaysians of present and future generations will move on. It is no longer relevant to raise the past as warning signals. Rallying behind Lee Chong Wei, or national cyclist Azizulhasni Awang who also made it to the finals – or whichever national hero we choose regardless of race – ought to be testament to that. I’d much rather we cultivate the spirit of being Malaysian than return to the annoying reference of which race is more patriotic than the other. And with this firm philosophy in place, policies would then follow, which reflect this.

Posted in Ethno-Religious Politics, General Politics | Leave a comment

Money Better Spent

Posted on July 28, 2012 by Tricia

Money Better Spent

(A version of this was published in theSun on 27th July 2012).

‘Inside Job’ is a brilliant and incisive documentary that dissects the American financial industry for what it was: one huge scam, and a system that eventually collapsed in 2008. It reveals damning evidence of the complicity between the private sector and upper echelons in the government. Top executives walked away with millions – even billions – of dollars, whilst companies collapsed leaving thousands unemployed around the world.

I wonder if we are not facing a similar situation locally.

Fellow columnist Azman Ujang in his piece “When experts know best” earlier this week stated that consumers should trust Syabas’ technical services executive director that there is an impending water crisis in Selangor because he is an expert.

He proceeds to say that Selangor froze Syabas’ capital expenditure (capex), making it “impossible for the company to perform its task to reduce the non-revenue (NRW) water as targeted in the concession agreement”; that the responsibility of providing sufficient infrastructure to process water lies with the Selangor government, and finally cites one reason for the crisis, that is “the shortfall in treated water to meet increasing demand”. (theSun, 23rd July 2012).

Failure to comply 

With all due respect, this deviates slightly from the reality, which is that the Selangor government froze Syabas’ capex because it had failed to comply with its task of reducing non-revenue water as required under the concession agreement. Further, the state has said Syabas had already breached its ceiling for capex and operating expenditure (opex) works that the agreement allowed for.

This is akin to a parent grounding a child for not cleaning up his room, and the child blaming his parent by saying his room is not cleaned up because he is grounded.

What is also not pointed out is that Syabas has not demonstrated stellar performance, in any case. An audit report is said to have revealed a discrepancy of more than RM525 million between the summary of contracts awarded in 2005, 2006 and 2007, and Syabas’ review document. It also reportedly showed more than 72 percent of contracts worth a total of RM600 million were awarded to selected companies through direct negotiations and only 25 percent through competitive open tender.

And in 2005, the government even threatened to terminate Syabas’ concession as it allegedly violated the agreement and Treasury regulations by procuring pipes from Indonesia for its pipe replacement programme instead of sourcing them locally.

No, not the state government, but the federal government themselves, through Energy, Water and Communications Minister Dr. Lim Keng Yaik. The Indonesian companies were reported to have belonged to the Syabas’ executive chairman.

Righting the wrongs

These problems were recognised early on by the federal government and hence the Water Services Industry Act 2006 was passed in Parliament to solve this messy picture. The Act would restructure the water services industry in all states including Selangor.

It is the failed negotiations between the state and federal governments, and water companies such as Syabas, that has led to this current dispute. Under the new scheme, in fact, the responsibility for providing capex for water treatment facilities would come under the federal government’s new Water Asset Management body, or Pengurusan Aset Air Berhad (PAAB).

But because Syabas and Puncak Niaga Sdn Bhd (which owns 70 percent of Syabas) were not happy with the Selangor government’s buyback offer price, the industry is caught in a deadlock situation.

Money better spent

Deputy Prime Minister Muhyiddin Yassin said that while water reservoirs are filled to the brim, five raw water treatment plants are working at over-capacity at 24 hours a day, and are at risk of a breakdown.

But here is the rub. First, all water treatment plants are designed for 24 hours’ operation, 7 days a week, 365 days a year. All critical equipment in the plants are designed with standby units so they can be operated non-stop.

Second, it is argued that for this reason, the Pahang-Selangor Water Transfer Project which includes the Langat 2 treatment plant is urgently needed. I have written previously that the total cost of this huge project could go up to as high as RM9 billion.

This money could in fact be better spent in reducing non-revenue water (NRW) through pipe replacements. NRW refers to the amount of water wasted due to inefficiencies. The NRW in Selangor stands at 32 percent currently, which means one third of treated water literally goes down the drain, lost.

It is interesting that an Energy, Green Technology and Water Ministry senior official has said it would cost RM7.2 billion to reduce 32.3 percent to 20.8 percent, when in fact Selangor’s NRW reduction programme was estimated to cost only RM2.89 billion over 30 years starting 2005 (Affin Securities, 7th June 2005). Even with inflation, could the costs increase by RM5 billion within a seven year period?

Tax-payers would appreciate the more sensible option of embarking on an immediate NRW reduction programme, because the more water you pump into an already leaking pipeline, the more you would lose. Good management would therefore dictate that efficiency and minimisation of water losses should be first addressed before increasing capacity via the massive water transfer project.

In addition, even if the water treatment plants were being overworked, could not such additional funds be used to upgrade them instead?

Solutions ahead 

The federal government has formed a special Cabinet Committee on water, which strangely enough does not include any Selangor government representative. One would imagine the state concerned ought to be present in such urgent talks.

The Selangor government has at the same time formed a Syabas Supervisory Committee to monitor daily the effectiveness and efficiency of Syabas’ services and water supply situation for consumers, including on-site monitoring of the water supply shortage as claimed by Syabas.

It is unfortunate that two separate and concurrent committees exist but are not in communication with the other. Both sides accuse the other of politicising the issue. And although it is a political matter indeed, those knowledgeable of the facts and figures should put aside their differences to draw out long-term plans for the future of sustainable and clean water supply in Selangor, Kuala Lumpur and Putrajaya.

The ‘Inside Job’ ends on a bleak note, showing how those responsible for the duping of millions of people are actually back in power. We can only hope that on home ground, we will have a different story ending.

Posted in Corruption, Selangor, Water | Leave a comment

Penang Port in peril?

Posted on July 23, 2012 by Tricia

Penang Port in peril?

Photograph: Ong Ee Lynn

The social costs involved in privatisation of public goods have been obvious since this lazy man’s method of nation building became the fashion in the 1980s. In Malaysia, despite huge losses to the public, privatisation continues, and under dubious and less-than-transparent conditions. Penang Port is up next. 

By Tricia Yeoh

(First published in Penang Monthly in the July 2012 issue).

The present controversy about Penang Port Sdn Bhd (Penang Port) saw for once members from both sides of the political divide come together in agreement. Penang Port is 100% owned by the Ministry of Finance, but the federal government Cabinet has recently made the decision to privatise it fully to Seaport Terminal, one of many logistical companies owned by the billionaire Syed Mokhtar Al-Bukhary.

The Penang state government has opposed this move, warning that businessman Syed Mokhtar would strip the port of its assets, including its seven cranes for shipment, to his Tanjung Pelepas Port (PTP) in Johor. This would in effect make the profitable Penang Port a feeder port to PTP. At the same time, Penang Barisan Nasional spokesperson Teng Chang Yeow has also cautioned against the move, urging the Cabinet to reconsider this option, whilst Member of Parliament Bung Mokhtar also condemned the plans (although he insinuated that he, too, would be the welcome recipient of such friendly contractual arrangements).

This disagreement to privatise the port is an interesting development, for several reasons. First, it highlights the growing awareness among the public of the failed privatisation processes in the country. Second, the issue brings into question the role that tycoon Syed Mokhtar has and continues to play in the Malaysian economy, through his private as well as public (government-linked) entities.

Let us first explore the issue of privatisation. In a market-driven economy, it is clear that the private sector contributes hugely to the economy through the growth of healthy businesses, the multiplier effects of foreign direct investment which have a direct impact on local job creation and industry development.

However, the government needs to ensure that the private sector exists under conditions that allow for a level playing field and healthy competition. Malaysia has now enacted a Competition Act, and established the Malaysian Competition Commission to enforce this in 2010. But this is a fairly recent affair, and there are also limitations within the Act itself. As a result, when the federal government talks incessantly about the importance of promoting the private sector, one must distinguish the difference between an environment for free and fair competition versus one in which only select key players are allowed to operate.

Malaysia has a great number of government-linked companies (GLCs), all of which are involved in major public sectors. In fact, Pemandu announced last year that plans were underway for the government to divest its shares in 33 GLCs, the proceeds of which would be channelled to an account meant to “service the country’s deficit, invest in existing funds and facilitate the government’s involvement in certain businesses”, although the latter reason given effectively renders the entire exercise futile.

The unfettered nexus between government and business that continues to flourish in Malaysia means that the government has deep links with the so-called free-moving “private sector” such that these private companies are basically operating with the government’s interests in mind.

The criticism of the privatisation model in Malaysia is therefore that it has in reality not conformed to the ideals of privatisation at all, but has grown to resemble an economy based on monopolies and oligopolies, in which small and medium enterprises have little say in the economy.

Some relevant examples come to mind immediately, for instance the water privatisation fiasco in Selangor (which my past columns in this magazine have elaborated on at length) in which public utilities are privatised to a concession holder under a lucrative contract for many years, oftentimes the actual cause of inefficient delivery and eventual bailout, pressuring the country’s fiscal position even further.

 

Photograph: Yam Phui Yee

This begs the second question then, on the concentration of national wealth to a select set of individuals. Syed Mokhtar controls a number of large public utilities such as power, water, ports, rail and toll businesses, as well as Proton. Listed as the seventh richest man in Malaysia, and 459th in the Forbes list of billionaires, he controls DRB-Hicom, the Malaysian Mining Corporation (MMC) and Tradewinds Malaysia Berhad, under which many other subsidiary companies operate. 

His interests are equally widespread within the state of Selangor. He has been reported to show an interest in acquiring a Yayasan Selangor building as part of the redevelopment in Jalan Bukit Bintang, and also owns a large stake in MMC-Gamuda, the joint venture company undertaking the first phase of the MRT project under a tunnel contract for the 51km Sungai Buloh-Kajang line.

Member of Parliament Tony Pua recently unveiled that despite his large empire, Syed Mokhtar’s group of companies has a combined debt of RM34.3bil or more than 10% of all local corporate bonds as of 2011 with only RM7.8bil cash as of May 2012. Two major problems arise – first, such a large concentration of wealth in the hands of one individual corroborates the growing income gap between the rich and the poor in the country. Eighty per cent of Malaysians earn an average of RM2,500 a month, and 60% of Malaysian households earn less than RM6,000 monthly.

The second issue is the risk posed on the Malaysian economy by the large debt accumulated by his businesses, a figure that would surely grow if and when this particular port deal actuates.

The anecdotes surrounding the present issue at hand, Penang Port, as well as other historical case studies where losses have been incurred such as Telekom Malaysia, DRB-Hicom, Star and Putra LRT, Tenaga Nasional, and Syabas in Selangor, amongst others, only lead Malaysians to ask questions about the bigger picture – how is the national economy being run, and for whose benefit?

It is as yet unclear whether the Cabinet will go ahead with the privatisation of Penang Port. In the meantime, however, other factors need to be considered. The Penang Chief Minister has stated that portions of land in the port actually belong to the state, led by the Pakatan Rakyat coalition. The Penang Port Commission on the other hand is led by Malaysian Chinese Association (MCA) president Datuk Seri Dr Chua Soi Lek.

There are bound to be disagreements as to how the port is to be treated in the near future. One issue is that of port dredging, which will increase the port’s effectiveness and efficiency, the responsibility for which is being pushed around and is at present not stated as a requirement under a contractual agreement with Seaport Terminal.

Criticisms against such a privatisation model are not new. It is unfortunate that this has to be repeated – the risk is undoubtedly high that when public entities are privatised, profits are privatised and costs are socialised. Any individual’s private debt should not in any way be translated into public debt, as this would be detrimental the welfare of future generations. In this instance, we can but hope that wise minds will prevail.

Posted in Economics, Federalism, General Politics | Leave a comment

Walking the narrow path

Posted on July 21, 2012 by Tricia

Walking the narrow path

(This was first published in Selangor Times, on the 20th July 2012).

I had the privilege of speaking to a group of young interns under the Otak-Otak Internship Programme this week. Otak-Otak recruits and places 50 interns in a range of corporations, think tanks, political parties and non-governmental organisations with the aim at building an alumni of young Malaysians who interact across sectors and are exposed to a range of experiences and training. It was, as usual, refreshing to speak to young minds ready to take on the world to explore avenues to create change in society.

This particular session was held at the headquarters of Parti Keadilan Rakyat, with other colleagues YB Nik Nazmi and YB Hannah Yeoh, where all three of us shared about our respective journeys into the field of politics and policymaking. What is unique about this platform is that we were all in our twenties when we were propelled relatively quickly into the serious and sometimes risky world of politics.

Throughout the evening’s dialogue, however, one question raised from the floor piqued my interest and I have continued to ponder over this issue. The person asking the question is currently employed by Pemandu, the arm under the Prime Minister’s Department tackling key areas of crime, corruption, education and so on.

The issue is this: that there are good people who genuinely want to work for change, but because of the way things are structured in the country, even positive efforts are often shot down in the ‘politicking’ of it all. One assumes she refers to the neutral officers within government who are regularly accused by the opposition of certain wrongdoings or agendas, and vice versa.

Let’s face it. It has become increasingly difficult to adopt a non-partisan approach to anything. Whatever position you take on an issue, be it book-banning or education reform, you are immediately compartmentalised into either being a pro- or anti-government supporter.

This has largely to do with the fact that politics has encroached into every corner of life as we know it. Every interaction an individual has on a daily basis – on the roads with poor traffic conditions, selecting the school of choice for your child, and so on – has a definite connection to a political motive that the decision-maker of that policy has chosen to push. Just think about our history textbooks, the Biro Tata Negara indoctrination course, the lucrative contracts of the toll concessionaires, and so on, and you’ll get the idea.

So, we have established that it is realistically impossible to escape the clutches of a political environment in Malaysia. But what of individuals who genuinely want to make a difference? What route can they take? What assurances can be made that they, too, will not be sucked into the very same ugly and mudslinging-type world they detested in the first place?

It is important to firstly establish that the system is structured such that any individuals being absorbed into it would unlikely be able to change things significantly unless they are privileged enough to be key decision makers. Unless you change the system, you continue to dance to the same tune as that set out for you.

So the next question is, how does one change the system and what is the most effective route of doing so? The easiest answer is political will. But then, are we saying that none of our current leaders have such political will? Or is it because the system is so structured that by its very nature it self-implodes whenever a leader initiates reform? For example, perhaps, the current Prime Minister’s inability to win over the hearts of his own party members in his reasonable attempts at correcting the lethargy of his administration?

Having read several pieces on transition in government, I am convinced that whenever there is new leadership, the changes must come about quickly and effectively for it to be taken seriously by all levels of government – right up to the rank and file civil service.

But back to the question of those individuals really pushing for change in whichever positions they occupy – be it within government or civil service or NGOs or as professionals – is it possible to perform their duties without becoming disillusioned by the backlash received?

First, any job taken up will have its risks and rewards. One must evaluate one against the other and calculate if it is worth the time. Second, the real challenge is getting systems to change, and so every effort must be made to initiate true reform such as passing laws that ensure the independence of the institutions that are meant to protect the safety and sanctity of citizens in a fair and just manner.

Finally, it takes great strength to put aside one’s differences in approaching an issue on a bi-partisan stand. Much respect is owed to politicians within both Barisan Nasional and Pakatan Rakyat who admit the flaws of their own coalition and are willing to reach across the divide to work on issues of common concern such as electoral reform, education policy and crime.

It is hoped that more Malaysians, young and old, will not shy away from challenging careers that may place them in positions of possible criticism. This comes with the job. And any real, meaningful vocation that has the potential to spark change in society must after all be accompanied by its equivalent obstacles. This should not be reason to give up one’s ideals – no, despite the setbacks, young Malaysians should always strive forward and occupy that space that is increasingly narrow. Cynicism is the worst possible enemy in such times.

Posted in General Politics, Personal, Reflections | Leave a comment

In the face of Injustice

Posted on July 14, 2012 by Tricia

In the face of Injustice

(A version of this was published in theSun on 13th July 2012).

Sometime last week, I attempted to get out of my lane whilst driving, turned on my indicator and stuck my nose out to move to the lane beside mine. The car behind braked suddenly, and the car behind crashed into him. Conventional traffic laws would state it is the fault of the car committing the accident as he was unable to stop in time and ought to have kept a safe distance anyway. However, after a two-hour negotiation, the last car demanded I pay RM1000 for his damages; I wanted to make a report at the police station which he refused to agree to.

I eventually paid a lower amount of RM400, as the person became more and more verbally aggressive, began hitting his car, and threatened to bang my car (in order to get my car insurance to pay for his damage), as well as get someone to “find” me if I did not pay up.

Throughout the negotiation, I felt intimidated and weak. At some point I felt guilty and that perhaps I should help contribute to the poor man’s repairs, perhaps due to his accusatory words. Upon reflection, it should have been brought to the police – this was a case of mild injustice that perhaps this institution could have helped address.

But surely any number of us would experience something similar on a daily basis, and feel angered whenever justice is not provided under those circumstances.

The 16th of July 2012 will mark the third death anniversary of the late Teoh Beng Hock, former political aide to the current Selangor government state executive councillor, Ean Yong. Interrogated as a witness at the Malaysian Anti-Corruption Commission’s (MACC) Selangor headquarters, his body was found on the roof of the 5th floor the day after, whilst he was in the care and custody of the MACC.

After a coroner’s inquest, and a subsequent Royal Commission of Inquiry, the case has come nowhere close to being resolved. On the government’s part at least, it is considered “case closed”, since the RCI concluded that he was driven to suicide as a result of “relentless, oppressive and unscrupulous” questioning by the MACC officers.

However, the three officers accused of having caused such trauma have not been charged under the Penal Code, and have instead been sent back to the MACC’s internal complaints committee to decide on some disciplinary action. (One of them has actually been promoted to head the MACC Negeri Sembilan office).

Over the last week or so, many events have taken place in commemoration of Teoh’s death anniversary, including and most uniquely, a play conducted completely in Malay by a group of young actors, Rumah Anak Teater. Held in the atmospheric settings of Kuala Lumpur Performing Arts Centre in Sentul, the play attracted a multi-ethnic group of young and old.

The play attracted a younger crowd that may not have been entirely familiar with the Teoh Beng Hock case previously. It also drove the point home that this was not necessarily a “Chinese” issue, but one that was relevant to all Malaysians, regardless of race, age or socio-economic disposition.

The riveting scene in which he falls from a height was done superbly in the play. I was particularly curious to see how the director would depict the moment of the “fall” – whether it would concur with the RCI’s findings of a suicide, or otherwise.

This scene presents three MACC officers crowding around the person acting as the persona of Teoh, and amidst some rough-handling and scuffling, he falls to his death. There were three possible options for Teoh’s death from the window of the 14th floor: suicide, intentional pushing, or an accidental ‘letting go’. The play does an excellent job of leaving the conclusion up to the audience to determine for themselves what truly happened at the end.

There are injustices that surround us constantly, and we scream righteous anger when we are wronged – in our personal and professional lives. But things change dramatically when a life – or worse, a death – is involved. Where in my car situation, I wanted desperately to turn to the higher authority of the police, in this case Teoh was already under the care of a higher authority that ought have exercised its due care and responsibility over him.

Numerous financial scandals have been brought to light this year. Making accusations for political mileage is to be expected, but should not be the real reason the rest of us must care and be concerned. Neither should we feel disgruntled in order that we, too, should get a share of the cake. In the final analysis, Malaysians should expect conditions, laws, and institutions that provide for a fair and just society, not a system that intimidates and acts as aggressor. If these institutions fail us too, then it is time for some serious reform.

Posted in Human Rights, Personal, Reflections | Leave a comment

Better Police Deployment

Posted on June 30, 2012 by Tricia

Better Police Deployment

(A version of this was published in theSun on 29th June 2012).

My previous column on the increasing crime rate proposed that the management of crime should be decentralised. The Royal Malaysian Police responded to this piece with an eight-page letter. This is the sort of discourse with public officials and institutions that the Malaysian public have long been waiting for. It is hoped that such interaction and meaningful exchange of ideas will continue, especially given last week’s incident in which a woman was robbed and slashed at a shopping centre carpark.

In his reply, the Assistant Head of Bukit Aman’s Public Relations IGP Secretariat listed the efforts that have been implemented to curb crime. He also stated that the crime rate has actually been decreasing, implying it is only a matter of perception. In this regard, it would be useful for the police and Pemandu to release not just national or state crime figures, but broken down by districts as well, and tracked over a period of time. This would help citizens to get involved in crime prevention in their own localities.

But crime statistics can only get you so far, because not all crimes are reported. This is partly to do with the lack of trust in a system they believe no longer works.

A more useful issue to tackle is that of deployment. The Royal Commission to Enhance the Operation and Management of the Royal Malaysian Police in 2005 recommended a total of 17,902 police officers should be redeployed to the front line, whereas a Parliamentary reply in October 2011 stated that only 7402 such police have been deployed.

In their reply to me, the police stated that it is not accurate to take only those in the CID division as being involved in combating crime, and that in fact more than 90 percent of personnel within Management and Logistics, Internal Security and Public Order, Narcotics and Commercial Crime Departments amongst others are also involved in crime prevention.

However, these officers may not necessarily have been given the appropriate police training for crime prevention and investigation skills. Under their respective departments, a traffic police would receive training on traffic regulations, whilst a commercial investigating officer would receive business, administration and cyber operations training.

Whilst it is encouraging to note that other officers are being redirected to tackle crime, one wonders if their duties and capabilities are being appropriately matched. The sort of crime that citizens are fearful of is crime on the streets, and so it would only be meaningful if they are reassigned as criminal investigating officers to best tackle such crimes.

This also begs the question of the disproportionate number of police officers within departments such as the Special Branch, Management and Logistics Departments, as well as the Pasukan Gerakan Am, the latter arm of which is used when controlling street demonstrations. The Special Branch, for example, has almost the same budget allocated for personnel as the CID does, 7.44 percent and 7.64 percent respectively. In addition, over a third of police funding goes to Internal Security. Are police resources being appropriately allocated to the divisions that actually tackle crime?

This brings me to the issue of decentralisation. The police’s response to me stated that centralisation is the best way to tackle “terrorism and other threats to internal security”. One traces the historical roots of this emphasis to the days of fighting communism and guerrilas in the jungle. But such counter-insurgency efforts are no longer a primary concern. The divisions dealing with these could be better deployed to crime prevention.

In fact, the police states that our current force is “effectively decentralised at state level, and into district and station levels”. This is not the sort of decentralisation I referred to. What I meant was more empowered state and local governments that can determine the best crime-prevention methods which are most effective in their areas, and given the jurisdiction to do so instead of relying on directives from a singular authority. What works in Gombak may not work in Bandar Utama.

They also cited other countries like the UK and US that have adopted decentralised police forces, which still maintain a centralised force. This is precisely my point – nobody is saying the centralised police unit need be dismantled – but that crime prevention can be better and more efficiently managed with the additional personnel at ground level.

The argument that they make on easier logistical co-ordination of a centralised police force is irrelevant. If the current system is not proving sufficiently worthy, any amount of logistical headaches are worth the effort for the sake of improving people’s lives. Secondly, the Home Ministry has been successful in raising nearly 3 million RELA (People’s Volunteer Corps) members and co-ordinating them.

Finally, it is noted that the police currently targets crime hotspots, which it also uses to measure its success rates. However, it may be more useful to identify white, grey and black areas in crime, a method used in combating the communist insurgency. In the long run, this would require decentralising crime management in order to make it work.

More and more Malaysians – those who can afford it, that is – are choosing to live in gated communities or condominiums, where they pay monthly charges for private security. Citizens should not have to pay for private security if the police forces are able to provide them the security they require.

We have to ultimately go back to the question of political responsibility and accountability. As long as there is disproportionate police financing, with greater weight given to, say, political monitoring as opposed to combating street crime, this does the police force a disfavour. It is hoped that this proposal of evaluating police allocation of financial resources, as well as police deployment, will be so noted by the policymakers.

Posted in Crime, Public Administration | Leave a comment

A tale of two water supply systems

Posted on June 28, 2012 by Tricia

A tale of two water supply systems

The Teluk Bahang Dam in Penang.
Photograph: Daniel Lim

By Tricia Yeoh 

(First published in Penang Monthly in the June 2012 issue).

In the days before the world’s governments went mad about privatisation, supplying utilities such as water or electricity was the main raison d’être for government and for government taxation. Those simple days are gone, and especially in Selangor, people certainly wish they would come back. But there is no way back.

The issue of water has re-emerged in the state of Selangor. Peter Chin, Minister of Energy, Green Technology and Water, recently issued a statement saying his hands are tied and there is nothing the federal government can do to expedite the restructuring of the water industry in Selangor, which has reached a stalemate after more than three years of negotiations. This crisis has in the past been contrasted to the Penang state government’s successful water deal. Prime Minister Najib Razak had at the time called on other Pakatan Rakyat (Pakatan) state governments to follow Penang’s example.

It is worth examining the two states’ water industries when making such a comparison. Suffice to say at the outset that both states are very different in their respective water industries’ formation and current situation. Making generalised comparisons therefore makes little sense.

In the Penang water deal, the government transferred RM655.2mil worth of water-related assets (or 50% of the total) to Pengurusan Aset Air Bhd (Paab) in exchange for a restructuring of the state’s outstanding loans into a grant. Under the arrangement, the assets would be leased back to the state for 45 years for an annual fee of RM14.56mil. The Penang government would retain control over any future revision in water tariffs in the state, whilst the state would be given a further grant of RM1.2bil for the expansion project of the Mengkuang Dam. All in all, the arrangement seemed to benefit the Penang government and there would have been no reason to disagree.

Now, the Penang water industry, even before the restructuring took place, was already in the hands of a very capable corporatised body, the Perbadanan Bekalan Air Pulau Pinang (PBAPP). Note that this one body was – and still is – operating the industry in a holistic manner, conceptualising the entire water chain from upstream to downstream; from treating raw water all the way to distributing water to consumers. This is a key point to note. One particular indicator of its achievements is its having been able to maintain non-revenue water (NRW) rates at one of the lowest in the country, as low as 16% at one point.

The water restructuring deal was easier to manage and negotiate, since there was only, after all, one body to hold discussions with. The Selangor situation was a completely different kettle of fish, as the following paragraphs serve to tell.

The Selangor water services were originally run by Jabatan Bekalan Air Selangor (JBAS). This changed when the treatment portion of water was privatised to three companies: Puncak Niaga Sdn Bhd (Puncak Niaga), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Abass Sdn Bhd (Abass). The loss-making arm of water distribution was corporatised into Perbadanan Urus Air Selangor (Puas). But because it continued to make tremendous losses, it was privatised into Syarikat Bekalan Air Selangor (Syabas) in 2005 to ensure a sustainable water industry.

In 2009, when the water restructuring exercise began, the Selangor water industry was operated by four separate private concession holders. This was a very fractured situation to begin with, and consolidating the four companies was an uphill task to say the least.

The restructuring in Selangor began with the same intention as that in Penang, namely for the water-related state assets to be transferred to Paab and leased back to the entity that would operate these assets at a reasonably low rate. This new entity was initially planned to be a state government-run body, operating water as a complete service from treatment to distribution, exactly in the way PBABB manages water in Penang.

 

Photograph: Kwong Wah Yit Poh

What is important to note is that Selangor had to undergo the first step of buying over the four companies, and then form a holistic state-run entity (either entirely state-owned or corporatised), for it to even arrive at the status PBABB was at prior to the latter’s restructuring. And it has struggled over the past three years and more to do just that. 

In fact, there have been multiple offers made by the Selangor government (first, jointly with the federal government and then independently thereafter) to buy over the assets and equity of the four concession companies (Puncak Niaga, Abass, Splash and Syabas) but to little avail. Half of them claimed the offers were not lucrative enough.

Although it is true that such private contracts should typically not be reneged upon (their concessions last up to 25 or 30 years) – where one argument was that terminating contracts would reflect poorly on the rule of law in the country and recognition of all other private contracts – this instance should be considered an exception. First, the exercise was started by the federal government’s enactment of the Water Services Industry Act 2006 (WSIA) in the very first place, after the then-Minister of Water Lim Keng Yaik recognised the gross inefficiencies of the privatised arrangement.

Second, the concession agreement signed with Syabas was poorly designed, to the detriment of consumer interests, where tariff rates were allowed to be increased by up to 37% in 2009, a further 25% in 2012, 20% in 2015, 10% in 2018 and five per cent every three years until 2030. During the many negotiations, one concession holder, Splash, even counter-offered a deal to take over the entire industry and claimed to be able to sustain the industry and still reduce water tariffs by five per cent immediately.

Finally, the WSIA is an extremely powerful piece of legislation which does allow for the Minister of Energy, Green Technology and Water to make certain policy decisions he deems appropriate and in the national interest. There are occasions in which policymakers with the authority to exercise their decisions must be called upon, and this is the time to do so – especially given the fact that any further delay causes increasing damage to the current situation.

Various quarters have in fact sidetracked the issue by accusing the Selangor government of politicising another water-related project altogether, namely the construction of the Langat 2 treatment plant, which is part of the Pahang-Selangor Raw Water Transfer Project.

It is important that the stakeholders fix their eyes on the top priority, which is to ensure the water industry restructuring is settled once and for all, and according to the original objectives of the Parliament-sanctioned WSIA.

Finally, to compare the water situation in Selangor and Penang is good insofar as seeing Penang’s PBABB as an ideal to copy. However, this has not been possible given that Selangor is still one huge step behind—the four private companies have not been able to agree on a fair price. It seems likely that all parties are merely waiting for the 13th General Election to take place, before they seriously act to solve the problems.

Posted in Corruption, Economics, General Politics, Selangor, Water | Leave a comment

Decentralisation the way forward?

Posted on June 16, 2012 by Tricia

Decentralisation the way forward?

(First published in Selangor Times, on 15th June 2012).

At the launch of my book, “States of Reform: Governing Selangor and Penang” last Saturday, three esteemed panelists YB Liew Chin Tong (Member of Parliament, Bukit Bendera), YB Nik Nazmi (State assemblyman, Seri Setia) and Dr. Ooi Kee Beng (Deputy Director, Institute of Southeast Asian Studies, Singapore) took on the increasingly popular but also controversial subject of decentralisation of government in Malaysia. The session was graciously moderated by Fuad Rahmat, Research Fellow at the Islamic Renaissance Front. It was an honour to have each of them present at the launch.

After the event, I asked friends, relatives and colleagues who attended how they felt about the forum’s discussion. Those present were either highly enthusiastic over the contents of the session, stating it was an honest reflection of the current state of politics in the country, whilst others felt speakers were too technical and spoke in jargon not easily understood. Perhaps it is true those within the public policy circle tend to use a language, accompanied with specific terms, that many are not familiar with.

This does not mean the issues themselves should not be spoken of, or discussed. On the converse, those with the advantage of access to information, and sufficient time to interpret and decipher such information, are armed with the responsibility of translating these messages to peers and colleagues.

Take decentralisation for example, which in the context of today’s government and politics, simply refers to the act of releasing control from the central government, and passing this on to the lower levels of government. There are three tiers of government in the country, namely the central, or federal government; state governments; and local government. In Malaysia, people are elected into government only within the first and second layers, whereas those in the third layer are appointed.

In a time when policy and political competition is at its peak, just prior to the 13th General Election, it is almost impossible to make comparisons between the two political coalitions the Barisan Nasional (Barisan) and Pakatan Rakyat (Pakatan), precisely because of the nature of a centralised government in the country. In South Africa, for example, state governments have control over education policy within their respective states. This then allows citizens within that particular state to make comparisons with the previous state government on things that matter, and are real to them on a daily basis.

The recent move by the Higher Education Minister, for example, for initially attempting to withdraw all PTPTN (higher education student fund) loans from students at Universiti Selangor (Unisel), is a perfect example of how a highly centralised government currently makes decisions all on its own for students living, and studying in, a state university. Although they eventually backtracked, this example goes to show the magnitude of power concentrated in a single entity, which then governs all states across the country.

In an ideal world, decentralisation would therefore allow us as voters to pick and choose from a host of different political parties based on their accomplishments in their different state, or local governments. Just as how libertarians take pride in their utopian world where there is perfect choice in a free market system, likewise such market-based policies would allow for perfect competition amongst voters who are armed with perfect knowledge of the options available to them.

Or so in theory. Despite my personal advocacy for decentralisation, I recognise the challenges that would be faced were this system to be adopted without simultaneous measures being executed. This is what one of the panelists, Liew, referred to when his condition for decentralisation was that democratisation should take place concurrently.

Meaning that there ought to be full efforts made towards ensuring a free and fair society – a free and independent media, a strong civil society, an independent civil service, and the many other fundamental freedoms many have pushed for in the past. Without these institutions being put into place, it would be fairly difficult to ensure a level playing field despite a more equal distribution of powers between federal and state governments.

One of the interesting questions from the floor was to what extent should we push for decentralisation? Which are the areas which ought to be devolved from the central administration, and distributed to the lower tiers of government? One could possibly begin with the areas which were formerly of the states to begin with, such as water treatment and distribution, and solid waste management. The reason the federal govenrment has given for “centralising” these functions is that they can be better and more efficiently managed given financial support comes from them.

The real reason, however, in these two instances, is that these functions have been privatised under lucrative concessions to private companies. Thus, when centralisation of power takes place, it is only inevitable that there exists a centralisation of decision-making (and contract-selecting) as well. Although decentralisation may also incur a ‘decentralisation of corruption’, with the emergence of new local warlords, these problems might just be easier to solve than dealing with large corporations given mega-projects of contracts to handle, which is presently the case.

We are a long way indeed from anywhere near a decentralised government. But we were not always this centralised. And we are, on paper at least, a federalism. Other federated countries like Australia would be a good case study to learn from, in terms of financial and operational separation of functions. In all of this, however, it requires political will from both sides, where right now there is insufficient incentive from the incumbent Barisan coalition to want to give up anything, least of all power and control.

Tricia Yeoh is author of “States of Reform: Governing Selangor and Penang”. The book is available at bookstores nationwide, at RM28. 

Posted in Federalism, General Politics, Public Administration | Leave a comment