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Sakmongkol ak 47

ariff.sabri@gmail.com

Thursday, 10 June 2010

Subsidies and deficits


 

It said it also wished to clarify that the country's national debt stood at RM234bil, which is defined as external debt and inclusive of both public and private debt.

"Our government debt stands at RM362bil, comprising domestic debt (96%) and foreign debt (4%)."


 

I am not going to be drawn into semantics. Jala says one thing. MOF which is headed by the PM says another thing. So one of them must be lying or both are lying.

But just look at the above figure, the government says national debt stands at RM 234 billion. On the next line it says debt stands at RM 362 billion.

Maybe I have not learnt my economics properly. How do I reconcile the two figures coming from one source?

Everyone agrees that deficit spending must be cut. If the spending goes into unproductive outlets, they must be cut. Deficits are not always not good. If the economy isn't up to full employment, capital injection into the economy serves to increase productivity.

The argument becomes messy when the reason for the deficit is attributed to subsidies in the form of welfare and transfer payments. Subsidies for food items and other essentials are probably sensitive issues the government must be circumspect about. Don't bulldoze into cutting deficit by cutting first of all those subsidies going to poor people and low income earners.

We haven't learnt this aspect about governance. Cutting is easier than giving back. Don't cut is the better choice. Cut those non essentials.

The sources of deficit spending must be identified properly. Almost always, the blame for deficit spending is heaped upon the poor, the aged, and the infirmed. I have heard this umpteen times. The parrot like repeating of the same arguments that support and justify deficit spending year after year because we spend on welfare and the poor. You listen to the nauseating apple polishing in the Dewan Undangan Negeri Pahang for instance; you hear the same tired arguments by tired old faces and underused brains.

Or conversely, the reasons for less revenue and income should be exhaustively explored. Government operating expenditure must be reviewed continuously. Government capex items should be combed finely.

We are just told of the maintenance cost of the bloody two submarines which maybe cannot dive in the future being bought without maintenance agreement or are not fitted with standard fittings. In order to install these, we must spend more.

Probably when Razak Baginda brokered the purchase of the two submarines, the translation from the Mongolian was lost in other lower pursuits.

And when we talk about cutting back expenditure on our armed personnel, we don't mean cutting back on conventional warfare material and other less sophisticated requirements. We question those purchases brokered by people such as the Razak Bagindas of this world.

55 comments:

walla,  10 June 2010 at 13:12  

If by the 96 percent domestic debt we understand it to be government debt to local funders like the EPF and banks, then it would seem it is the rakyat and the private sector who are subsidizing the government.

Probably both have had to give specially low terms and conditions to the government when it went to them to get loans.

So it is the rakyat and the private sector who are subsidizing the government.

Hahaha. ET wants to go home now.

Emmie,  10 June 2010 at 13:58  

Latest news off The Daily Telegraph (UK) today; Britain are going to follow Canada's "1994 Bloodbath Budget" which resulted in turning a deficit into a surplus within 3 years. Canadian government departments had their budgets cut by almost 20%, leading to slashes in education and health and leaving thousands of public sector employees out of a job.

No doubt, some of the best Malaysian economists are aware of this. Will a similar plan work in Malaysia. Stupid question right? Thousands of public sector employees = thousands of votes. Don't need to be a clever Malaysian economist to work this one out.

A cheap labour market can keep you afloat for only so long, if the government persists in employing based on religion/race instead of merit, all that deadwood is going to drag everyone under eventually.

donplaypuks® 10 June 2010 at 14:11  

Bro

96% of $362b is $348b.

So, how does the MOF come up with domestics debt of $234b only?

Vice versa, if $234b is 96% of ALL debt, then TOTAL DEBT, domestic and foreign must be $244b!!

The MoF figures shockingly make no sense at all!!

I am also reminded of how retailers plan for stocking up their shops. They have to first establish what their base stock will be i.e. the bare minimum they have to have in their shops to cater for customers' needs. Only then will they decide how many months of additional stock they will carry, based in part market research and part intelligent and guesstimate and then adjusting it periodically by actual results!

Get that drastically wrong and there goes your cashflow and business!

In the same way, our Govt has to decide what is the "base stock cash and debt" for subsidies in education, health, welfare, defence, seurity etc. without turning it into a total welfare state and introducing an entrenched culture of "dole" mentality and total state dependency.

They have 52 years of statistics to be able to work out a fairly accurate "guesstimate"! Right now it appears that the limits are set by political considerations and not by satisfying fair economic needs! There is also much fraud and croneyism in how Govt subsidies are dished out!

And if day after day they continue to get it wrong, it's time for them to quit and make way for others!!

As for Razak Baginda and the scorpenis subs, here are some figures to chew over:

1. Cost of 2 subs - $3.7 billion, of which only 1 has been delivered to-date.
2. "Not a commission" for 2 submarines already paid to RB/Perimekar SB - $534 million!
3. Estimated annual 10-year maintenance cost of subs - $270 million per year expected to rise to %600 million per year after 5 years.
4. Emergency subs salvage, rescue and towing contract being discussed with MoD/MoF - $99 million, but not sure if this is per year for 20 years or for 20 years in total!!

Nice deal if you can get it and then retire to Oxford or the south of France!!

dpp
we are all of 1 race, the Human Race

Anonymous,  10 June 2010 at 14:24  

RM 35 bil MRT >>interest on Capex is RM4 per head per day..if every1 takes a ride everyday..

Add in Ops cost plus Capex Recovery,looking at a RM 15 per ride.

Lots of modern cities going the lower investment routes of urban planning,trams etc..but we got to do it with a bang.

Anonymous,  10 June 2010 at 14:53  

Dato AK47

The clarification seems ok as it refers to external debt made up of public sector and the private sector elements.

If you take the national debt of
RM362B of which external portion is 4% or RM15B, then under the above figures, the private sector external debt amounts to RM219B (234-15). So there should be no confusion. Please note that the high private sector debt includes the Petronas external borrowings!

Anonymous,  10 June 2010 at 15:06  

Dato AK47

Again I wish to point out that there is no confusion since the text states one is the national debt as defined and the other Govt debt. Please note the term used is Govt debt and not the national debt. So for economists and statisticians this should not pose a problem.

On the issue of deficit spending, I believe we always show a current account surplus on our operating budget while the development budget is funded through domestic and international borrowing. This is Public finances 101.

So most of our government domestic & external debts are to fund our development. But this does not absolve it of the type of development spending that includes the highly priced scorpenes. There is no economic value in defence spending really.

Wenger J Khairy 10 June 2010 at 15:06  

Dato'
Can help support my fight against Pemandu.
My analysis is that they are bullshitting major. Even the calculation of subsidy is suspect when they defer to the OECD (the OECD calls it Social Benefit). More details on my blog.

TQ

alan hiley 10 June 2010 at 15:10  

Following up my earlier comment on Subsidies, where I contended that the Government is subsidizng the Industry more than Domestic Consumers, lets take the cases of Electricity and Sugar:

Electricity
87,780.4 GWh of electricity sold by TNB in 2009 of which 58.8% produced using gas (TNB Annual Report 2009). Gas is sold to power industry at RM6.40 per mmBtu whilst the regional market price is at abt RM 40 per mmBtu (based on Medium Fuel Oil Singapore peg), thus a subsidy of RM 33.60 per mmBtu.
To produce 51,615 GWh of gas-fired electricity (58.8% of 87,780GWH total) requires 516,148,752 mmBtu (Based on average heat rate of 10,000 Btu/kWh). Total Gas Subsidy therefore is 516,148,752 mmBtu x RM33.60/mmBtu (subsidy) = RM 17.34 Billion.
But hang on...
Only some 20% of electricity sold are consumed by domestic consumers.
Hence,
Subsidy to Industry: RM13.874 bil.
Subsidy to Domestic: RM 3.468 bil.

Sugar
Source:- Malay Mail report of Jan 19th, 2010
http://www.mmail.com.my/content/25097-sugar-price-whos-having-sweet-tooth-here

According to the Department of Statistics, for the first 10 months of 2009, total sugar production, import and export in the country was 2.41 million metric tonnes. At a rate of 80 sen per kg, the total cost of sugar subsidy was a colossal RM1.93 billion.
In the Department of Statistics' Household Expenditure Survey, total sugar consumed by households was only about 72.1 million kg per year or total only 2.6 per cent.
Extrapolating for 12 months from abovewe have total sugar production, import & export of 2,787 mil kg per year. Industry consumes 2,715 mil kg per yr, while the domestic consumer consumes 72.1 mil kg per yr.
Hence at 80 sen per kg subsidy,
Subsidy to Industry: RM 2.17 bil.
Subsidy to Domestic: RM 0.058 bil.

No wonder Coca Cola is setting up shop here.

Why are we fed with such a gross distortion. Are our leaders aware of these OR are they by nature hardcore pro-capitalists as the US republicans are.

By the way, the RM 10 billion figure(wenger, sakmongkol)'s probably guesswork; and MOF's RM 18 bil also can't be true..(as the just the above 2 items subsidized to the tune of RM 20 billion already!) and there are so many other subsidies and goodies to the Industry which are not considered yet, but we'll come to that.

And Idris Jala ...he's obviously not so 1Malaysian coz the numbers he presents is not "Rakyat didahulukan" rather "rakyat dicampak ke dalam parit"

amatMok,  10 June 2010 at 15:40  

Datuk,

Even the amount of the country's debt also cannot be 'muktamad'? Alahai, Najib. Kalau dulu dok kata Pak Lah tido, sekarang ni Najib 'Muktamad' mengigau kot?

Richard Cranium 10 June 2010 at 15:56  

...the translation from the Mongolian was lost in other lower pursuits.

Dato, you're a riot! Perhaps, you should have used ..lost in other lower and back-door pursuits.

Anonymous,  10 June 2010 at 15:59  

The debt figure is not final..it will be subject to feedback and deliberation with the rakyat inline with the 1 Msia concept.

In fact 1Msia also not finalised and subject to feedback and consultation..

In fact I am not even here yet and have not given any comments...

Wenger J Khairy 10 June 2010 at 16:28  

Alan,
I have answered you completely and comprehensively over here

Anonymous,  10 June 2010 at 16:34  

Dato Sak,Wenger...
Mr hiley have drilled down and got the real numbers..and have done better then Mr Jala to seek a solution to the subsidy issue>>just no more subsidy to industry on sugar & electricity and we save 15 bil..add the other bits like toll subsidy>>and immediate RM 22 billion saved...with no DIRECT unavoidable hardship to rakyat.
Ok,I may hv to forego Coke,biscuits and stuff but thats not as bad as having no choice at all.
Commendable indeed Dato..your blog is more coherent then Pemandu and its all a FOC no subsidy think tank.

Ok..shall we Pemudah next?or 1Talent ?

Anonymous,  10 June 2010 at 16:43  

7 NEW toll highways under consideration for 10MP.

Anonymous,  10 June 2010 at 17:01  

Mr Wenger..
U can't use USA pricing as basis for the gas price...
In Malaysia different mechanism used i.e

The market rate of natural gas in Malaysia is indexed to the weighted average monthly price
of medium fuel oil (MFO) spot and posted prices in Singapore. The MFO
price is in US dollars.

Anonymous,  10 June 2010 at 17:05  

Existing subsidised gas price for the power sector is RM10.70 per Million British Thermal Unit (MMBTU), which is 74 per cent lower than the actual market price. In comparison, large power consumers in Malaysia pay RM15.35 per MMBTU, while Gas Malaysia Sdn Bhd pays RM11.05.

>>this may help

Unsubsidised price or current market price for gas (in December 2009) for the energy sector is RM41.16 per MMBTU; heavy consumers, RM56.20; and Gas Malaysia, RM42.35.

Read more: Hidden cost to subsidies http://www.btimes.com.my/articles/sidie/Article/#ixzz0qRIQRWDa

sakmongkol AK47 10 June 2010 at 17:08  

alan hiley,

what is it that we want to debate about? pls restate the topic maybe i can come up with something.

Wenger J Khairy 10 June 2010 at 17:48  

Anon 16:34
Yeah - I know that Nat gas is based on Platts assessment but unfortunately you cant publish their price without paying them money!

But chemically whats the difference between CH4 sold in the US vs. CH4 sold in Malaysia?

On the other hand the price settled between Petronas - TNB can be based on a fixed long term price. Either way - this number is accounted by the Treasury and Alan Hiley's number is suspect as he has not accounted for the fact that the contract with Petronas is a long term supply contract. If you know anything about hedging you would realize that we cannot use the commodity price at the spot market to work out the price paid by the consumer (industry)

The final "subsidy" is calculated by the Treasury. Period.

Wenger J Khairy 10 June 2010 at 18:06  

Alan,
I am waiting for your response on my blog.

You challenged me I challenged you back.

alan hiley 10 June 2010 at 18:09  

Wenger wrote in his Blog:
Alan Hiley,
Once again your confused.
Number 1 you are using data based on 2009. The Government expenditure for that in 2009 was RM 21 billion in addition to an RM 2 billion direct cash assistance!

Jala was talking about 2010. Jala said in 2010 we are paying subsidy of 74 billion. In 2010 the median price for Nat gas per MMBtu is not RM 40 per unit. The number is RM 16. See Wenger Note:
You can check the price here
here.
Pak Lah paid so much subsidy but did not make a fuss/

PS: Some people have pointed that we cannot US price but we must use some controlled cartel price.

I reject this rubbish argument. CH4 is CH4. MMBtu is MMBtu. Just becos some joker says we stupid Asians have to pay a higher number, all these idiots jump and say - thats the price.(RM 40) Bodoh! By the way - who controls the Natural Gas? Petronas lah . So we pay higher means we also make more money.

HILEY's clarification:

Dear Wenger,
Gas price in Malaysia is tied to Medium Fuel Oil (MFO),in Singapore. MFO is a blend of gasoil and heavy fuel oil, with less gasoil than intermediate fuel oil.

The daily average price of MFO in Singapore has risen to around US$72 per barrel in December 2009. One barrel is equivalent to 6.18 mmBtu. So price of MFO is USD 11.65 per mmBtu. So at RM3.4 to the USD works out to about RM 39.61 per mmBtu.

There is a 4% premium for Natural Gas so price of gas then is RM 39.61 (MFO) x 1.04 = RM 41.2 per mmBtu.

Check it out with the Surhunjaya Tenaga people or TNB or Petronas. They'll tell you.

Sin Chew has also published an article covering price of MFO. http://www.mysinchew.com/node/37496

You can't use Nymex.

The subsidy is at Petronas level actually so i supposed the government may put it in the national accounts quite arbitrarily.

You may want to refer to Penjanabebas (assoc of IPPs) when they did the subsidy calculations in 2008. http://www.penjanabebas.com.my/wp-content/uploads/2008/08/penjanabebas-press-statement-final-_130808_.pdf

Wenger J Khairy 10 June 2010 at 18:26  

Dear Tun and followers of Tun,

I now publicly absolve Tun from all issue surrounding the IPP subsidy for natural gas.

The reason is because that the subsidih is artifical based on an artificial price. Price for natural gas in Asia is not the same as the price in the US even though they are exactly same the product. (Asians pay almost 2x the price).

So even though on the left hand the Gomen is spending money "to subsidy" the IPP (based on the Asian price) on the right hand the Gomen is making money from Petronas due to this high price.

Furthermore, there is more supply of gas than there is demand. Even the Indons are forced to export their gas to the US because there is so much gas around. So really the Gomen is not losing money on the IPP because if the IPP did not use the gas, Petronas will be forced to export to the US and in the US they will not pay the same high price we pay.

So the opportunity cost is 0. Its just an accounting from left to right

(Am surprised Tun did not explain this. Anyhow - Tun is cleared from this)

So shame on you Idris Jala for not explaining this! The "subsidih" for natural gas is artificial - its just a left to right exchange of money from Gomen to Petronas and back to Gomen via dividend.

Full article on natural gas economics. Worth it read and find out why the Mat Salleh can pay for a lower price here

Proof that there is over supply, even Indons are exporting their LNG
here

Wenger J Khairy 10 June 2010 at 18:36  

Alan,
I am still waiting for your response. You must respond to my blog. You challenged me now you must respond.

Wenger J Khairy 10 June 2010 at 18:36  

Alan,
Your are not seing the picture. Its a left to right artifical transaction. Suppose the market for Penumpangs's magazine is fixed at 1,000 copies a month and Platts sets the price at RM 10 per copy.

But you can produce 10,000 copies. So what is the cost of the marginal copy?

You can't sell it to anyone else because the market is oversupplied. So you sell it to the IPP and the Gomen pays Penumpang the difference and Penumpang returns the difference via dividend.

MMBtu is an energy conversion unit. Its directly convertible and comparable regardless of what heavy light or fat fuel oil. Furthermore once you drill the well head, the gas sprouts up. You cant store the gas without incurring huge cost.

The nat gas susbidih is artificial. So Treasury tells Petronas, look here macha you cannot charge us market price. Hence the treasury can negotiate a lower price in a fixed pay fixed supply contract.


So please understand economics and not be one of the mindless people running around shouting subsidih subsidih.

alan hiley 10 June 2010 at 18:39  

Oh dear, I don’t want to debate with you Pak Sak. I am no match for you but surely you don’t expect or want all yr readers/ardent followers (even !) to be a passive lot.
I in fact marvel at yr ‘prolificness’ in generating so much credible arguments and insightful perpectives at such speed.

I have several issues however:
In the absence of an effective Malay representation at the mainstream level, I think Ibrahim Ali despite his ‘colourful history’ should be allowed to air his views (however crude sometimes )- which I strongly believe are quite congruent with the views of a large section of the Malay community. As such I am not quite fond of yr belittling and goofing on him, unless it be on an intellectual basis. I believe when your survival is at stake, when yr childrens future and survival is also at stake - you don’t want to be pussyfooting around your stance with pleasantries and political correctness.

I must also commend you for yr openness as far as yr blog is concerned. MT has become infested…

Anonymous,  10 June 2010 at 18:49  

If you wanna know hedging..u got to ask Mr Jala.

Anyway..Henry's Hub is wellhead pricing..indeed u can purchase that at RM 16 and ship it down here>MISC will be only too happy to oblige on the shipping & GMSB will not say no to a nifty trade on the local distribution.But by the time it gets to your doorstep,costs is a lot more then RM 16.

Therein lies the problem really.Are the high prices due to supply chain inefficiencies plus profiteering?Wonder wats the price of raw sugar?

I am sure even at RM 6 Petronas is not losing actual money..only the potential of making more money.But by 2015..it seems..we have to actually import gas.Thats the crunch I guess.

China is paying RM 25 on long term contracts but have to bear some major infra cost.

sakmongkol AK47 10 June 2010 at 19:00  

alan hiley,

i meant well. i must have lost you somewhere. what topic would you want me to write? if i am up to the challenge, i shall oblige.
i see your polemics with wenger are of high level. i have to go over slowly over what you people are saying.

Anonymous,  10 June 2010 at 19:02  

Anyway that RM 74 bil number cannot be correct...
It will be interesting to know actual number & who gets the bigger chunk?

I know that the guy in the Cayenne is paying same per litre for petrol but he uses a lot more then my Myvi.

But then again my uncle in Batu Gajah does not use as much toll roads as I do yet he is deemed to be subsidised.

Its confusing indeed.

Btw>> is the debt actually due to subsidies?

Anonymous,  10 June 2010 at 19:12  

Wenger>>this is contrary to ur gas surplus assumption>>http://bit.ly/cT8DOd

Govt promises to solve supply shortage

Minister of State Enterprises Mustafa Abubakar has promised to help solve the acute gas supply shortage being suffered by state gas distributor PT Perusahaan Gas Negara (PGN).

He estimated the gas shortage had reached about 297 million standard cubic feet per day (MMSCFD).
Hendi said that PGN planned to import liquefied natural gas (LNG) from Qatar to cope with the supply shortage problem. But the import plan would not be able to immediately solve the problem because it would take years to implement it.

Anonymous,  10 June 2010 at 19:34  

How to compete, Najib gertak aje with his 30% removal of bumi equity, so Umno needed the Perkasa pseudo Umno gertak party to give Najib the excuse, SEE I TRIED BUT THE PERKAKAS MEMBERONTAK SO i AM FORCED to back down. How now all the promises made to foreign investors, all bullshite talk, How beleivable is Malaysia to the international community. Today you say one thing tomorrow complete reverse. Investors dah fedup, they want a stable environment, no changing of policies akin to shifting the goalposts.
"30% CRUTCHES TO STAY" that is the new name for Malaysia to the business community. How now, more flip than the other sleeping flop Badawi.

alan hiley 10 June 2010 at 19:46  

Wenger,
as far as Jala is concerned we are on the same side, betul kan? Lets not then cloud the issue.

My original point was this.

We know how the great democracy and the great market economy of the USA works, right?

The democracy and the market economy of the US is the worst of its kind anywhere in the western world.

There in the USA everything is geared to enrich the rich and they couldn't care less about the rest of the masses. Hopefully Obama will improve things.

I found this book "Take The Rich Off Welfare" by Mark Zepezauer where it illustrate how the US Govt actually subsidized the big corporations some US$620 billion a year whilst spending only US$ 190 billion for the public. That was in the 90's.

Zepezauer explain how programs once intended to benefit the public have been warped to profit only the corporate bottom line; how administrations manipulate the tax code to slide their extortion from the bottom half past congressional oversight; and how the politicians from both parties employ budget doubletalk and paper trickery to make it look as if the economy isn't being sucked further into a sinkhole in order to line the pockets of the few.

Now isn't that familiar.

I earlier tried to illustrate that (when i presented the mile-long list of subsidies, grants, tax exemptions and incentives)- that such handouts similarly benefits the big corporate entities or the Industry only and marginally the malaysian people at large, much less the Malays - since subsidies were always unfairly associated with the Malays. But worse its the people, the rakyat who gets to carry the guilt of konon-nya being heavily 'subsidized'...bloody crooks!

Just look at my electricity and sugar numbers!

Wenger J Khairy 10 June 2010 at 20:07  

Alan,

(1) I agree with your points on Jala

(2) I agree also that subsidy is unfairly blamed on the Malays. Its rubbish

Wenger J Khairy 10 June 2010 at 20:41  

Anon 19:12,

Read the article carefully. The issue is about subsidy once again. Can you tell me the price paid by the local fellas? If the Indons are shipping the gas to the US then it means that the price the Yanks pay is greater than the price the Indons pay domestic. My calculation is using the American price as the proxy for the marginal cost of gas. Malaysians essentially pay the American price.

Pls understand the nat gas market supply and demand is a long term based contract
see here

The contracts can be up to 20 years. The last I check Petronas has ample gas reserves - eqv. of 14.6 billion barrels of oil equivalent.

And furthermore Petronas is increasing its production of natural gas. Year on year Petronas increased its daily production of natural gas by 6.5%

According to the Penjana report kindly provided by Alan, IPP requires 1350 million cft/day. Petronas current production (March data) is 6,300 million cft/day so IPP is taking only 20%.

But this is number is also misleading. You dont go and drill a hole in the ground and produce gas. You need to build the chiller plant and the planning cycle is up to 10-20 years. So to understand todays gas production, you must go back to 2000.

What was the price of gas then?

So Malaysia has excess supply of gas and Tun decided that it is best to use the gas to power the electricity.

Lets assume IPP do not use gas. Petronas must then find markets for its additional 20% of gas. Who are they going to sell it to? At what price?

I reject the use of simplistic argument. If lets say the Gomen said way back in 1999 - ok no subsidih for the power sector then Petronas would not find the market for their gas and there would be no gas production and exploration. Those guys would probably use coal instead or hidro.

In my argument I give the price the IPP pays for gas is a market price (US based) and not some cartel price controlled by Platts. Ok you tell me Anon - why is it the Asian price is 2x the US price? Jawab.


Not everyday I defend Tun, so understand that this is a special day for the Tun supporters and proves that I, Wenger J Khairy, am a fair man

Anonymous,  10 June 2010 at 21:18  

Now that everything is pretty civil>>can we get to the root...wats the blinking subsidih?

Its not Jala's kitchen sink n all 74 bil nor MOF welfare infused 18 bil

And lets make sure those Pemandu guys end up as real supirs...

Anonymous,  10 June 2010 at 21:33  

Wenger itu duit scholarship, Mara, NEP, bumi grants, International certification requirements for non-bumi companies- but Bumi companies ada refund from govt. inclusive of consultancy fees from our uni experts. What about the houses- bumi discount, you think the developer is subsidisingkah, nope he takes it out of the pockets of the Non-bumi buyers, Pleaselah just because you wanna lie to yourself, that's your problem> but for us the non privileged, macam mana, we call a spade a spade. How to succeed as a nation if the govt. has lopsided corrupted policies. Try putting yourself in our shoes.
Gaber

Anonymous,  10 June 2010 at 21:45  

http://www.janes.com/articles/Janes-Sentinel-Security-Assessment-Southeast-Asia/Defence-budget-Malaysia.html
Read and weep. You and all of us know the buayas waiting at the front gates of Mindef EVERY MORNING with their Proposals and their local 'Connected Partners". Strange thing though what is the govt. arming itself to the teeth for. Where is the threat coming from? Who is going to attack Malaysia, was the israelli Navy sighted in the Selat Tebrau or Melaka?

Anonymous,  10 June 2010 at 22:41  

Anon 18:49,

Where is the natural gas produced? The last I checked we did not need to import from US, only from Trengganu.

And furthermore there is a nice pipeline network in existence. MISC can go and figure something else to do with their ships.

Wenger is correct and spot on the issue. Pure nonsense that we need to import natural gas. I checked Wengers figures with Bank Negara.

This issue like many other issues is a race issue. Non Malays says that the Government is subsidizing the Malays.

Anonymous,  10 June 2010 at 23:10  

aiyah dato sak ah, the bloody submarine is aint gonna be put to waste.It simply cant dive but can stay afloat, right? so it can serve as a boat/ship or whatever u wanna call it.So just lease it to the Majlis Perbandaran Kuantan guys.They can organize leisure rides along the pahang river starting from benteng.It would certainly be a crowd puller.Where else can u get a submarine leisure ride?

p/s check out the MPH bookstore, some very interesting books on sale, edited by someone who made a few billions from the "dokleh" dive submarines.He might be having the last laugh as we continue to applause in anguish and anger!

Anonymous,  10 June 2010 at 23:26  

Mr wenger,

This briefing by EPU DG shld answer ur question>>by 2015 we will be importing gas

http://epu.gov.my/html/themes/epu/images/common/pdf/chart/Energy%2022%20March%202010.pdf

As to why gas is cheaper in USA..hv to look at their reserves/demand.10 years back gas was expensive in USA..but thats another story

Anonymous,  10 June 2010 at 23:31  

Mr Wenger,

U can chk the price trend for Natgas in US of A here http://www.eia.doe.gov/emeu/mer/natgas.html

Thats delivered gas..

Anonymous,  11 June 2010 at 00:47  

wenger...this shld explain the gas pricing mechanism n why US of A & Asean hv different pricing benchmarks..
http://www.europeanenergyreview.eu/data/docs/Viewpoints/081120%20Factsheet%20-%20Pricing%20mechanism%20for%20natural%20gas%20in%20Europe.pdf

Wenger J Khairy 11 June 2010 at 00:54  

Gaber,
MARA pls research the facts b4 sprouting nonsense. Ask Dato how much was given to MARA? How much was given to scholarship? How much for your so called international certification

This number is a pitiful small number. MARA and Scholarship is RM 3 billion. Our Gomen budget this year is RM 200 billion. Waah a lot is given right???

By the way - Gomen revenue (RM 157 billion) is only 11% from Income Tax. 64 billion comes from Petronas and Govt GLC which is a pure Malay account. Only 16 billion comes from Individual Income Tax which is a pure non Malay account. So is it wrong for the Govt to collect RM 64 billion from the Malay account and spend RM 6 billion to help the poor Malays?

Anonymous,  11 June 2010 at 03:29  

Wenger that is the problem with your kind- the UMNO BRAINWASHING a' la Mahathir- actually 22 years of his B.S., you said "64 billion comes from Petronas and Govt GLC which is a pure Malay account."
WAS THERE AN ENACTMENT IN PARLIMENT, or an announcement from the AGUNG which states PETRONAS only belongs to the MALAYS? These are National assets belonging to all 27 MILLION MALAYSIAN CITIZENS, If it were different, the founding fathers would have made it very clear at independence. Or let me put it another simple way, to show what our founding fathers were thinking, come every election, how many votes can you vote as an individual Malay as compared to a non-Malay, does your vote get you 2 votes or 1 vote similar to a non-malay. As long as this aparthied Bumiputra only mind-set continues, the country will end up bust. Either this country progresses as 1 unit of Malaysians or it will be a failed nation of split individuals. You want the non-Malays to give respect, it takes 2 to clap mate.
I am just a form 5 educated Malaysian who's family is into its 5th generation. I may not articulate in High flatulence, but my 1 vote is same as yours.

Gaber

walla,  11 June 2010 at 07:00  

2/2

However, by 2008 development funding had already reached MYR13.5 billion, suggesting that by the end of the plan it will have exceeded the originally planned level substantially.

It is also unclear what proportion of these funds have been made available for new purchases and how much is already accounted for by previous acquisitions that have yet to be fully paid for, in particular a batch of Sukhoi 30-MKM fighter aircraft.

The Ministry of Defence has suggested that, with so many major acquisitions completed in recent years, resources will be focused on training, surveillance, joint service operations and naval platforms rather than more expensive combat hardware.

Procurement expenditure is likely to come under additional pressure as a result of the rising support and logistical costs that are associated with operating the diverse range of military equipment purchased in recent years (such as four different types of combat aircraft).

Several less high-profile purchases have also been initiated including new armoured personnel carriers, armoured infantry fighting vehicles, offshore patrol vessels and helicopters.

Immediate security concerns driving these acquisitions are unresolved border disputes in the east of the country, tension growing in southern Thailand and a variety of piracy and illegal immigrant problems.

The army is facing significant cuts in manpower of around 30 per cent, partly in order to help fund these acquisitions, but many argue that the threats currently facing the country highlight the need to keep personnel numbers at present levels.

The high-profile acquisitions listed above were originally outlined in the Seventh Malaysia Plan 1995-2000 but had to be delayed due to the impact of the economic crisis.

Under the subsequent Eighth Malaysia Plan, which ran from 2001 to 2005, most of the delayed orders were finally confirmed. However, with a SARS-induced stimulation package affecting the government's finances an expected order for an additional 18 F/A-18 fighter aircraft was cancelled.

The impact of previous purchases is illustrated by the low allocation of MYR2.35 billion in 2009 and MYR1.91 billion in 2010 to development expenditures.

Not only do previous procurements have an impact on new programmes, including the delay in moving forward with a combat search and rescue helicopter and the cancellation of a squadron of utility helicopters for the army, but a combination of the political and economic situation in Malaysia along with controversy over the costs and methods of defence procurement in the past and present have led the government to be reluctant to approve large scale defence purchases.

Therefore, it seems likely that any new major acquisitions will largely depend upon the inclinations of the government.

..............................
(Platts LNG prices are also available).

walla,  11 June 2010 at 07:00  

re: anon 21.45

Defence budget, Malaysia
26-Feb-2010
Jane's Sentinel Security Assessment

Summary

Defence spending trends 2010

Total Defence Spending
(MYR billions) 11.01
Total Defence Spending
(% of GDP) 1.64

Malaysia's defence spending has been decreasing since 2008, given the government's cuts in its spending due to the global financial crisis and the contraction in Malaysia's GDP growth.

Malaysian defence officials, however, have stated that it is a natural occurrence for the 2009 and 2010 defence budgets to be significantly less as these two years were the last ones for the five-year Ninth Malaysia Plan (2006-2010) and the majority of the defence funds were spent during the first three years of the plan.

Defence spending trends

Although Malaysia publishes an annual defence budget figure as part of the government's state budget, it is split into just two sections - operating and development expenditure - and it is widely thought that real defence spending is significantly higher than the official budget suggests.

The official budget, for example, does not include defence industry funding, nor does it cover certain procurement items which are sometimes settled by other arrangements including barter agreements.

What is certain is that actualspending has exceeded the official budget regularly in recent years.

According to the Malay Ministry of Defence, expenditure in 2006 (the most recent year for which expenditure details are available) was 8.5 per cent higher than the budget allocation, with the majority of the overspend coming in the operations budget.

This was not unusual as the degree to which military spending exceeded budget allocations has been steadily increasing since 2003, going from 3 percent in that year to 3.8 per cent in 2004 and to 5.5 per cent in 2005.
2007 and 2008 saw further budget increases, fueled in part by sustained economic growth of around 6 per cent in real terms, while the government has also seen increase in its revenues and expenditure.

However, during 2007 and 2008 overspending was also recorded in the operations budget by 1.7 percent and 6.5 percent respectively with 2008 entailing an operations expenditure of MYR10.597 billion, whereas the actual allocation was MYR 9.939 billion.

The 2009 allocation appears to have reflected this with MYR10.65 billion allocated towards the operations budget.

It has not been confirmed if this sum met the Ministry's actual spending, as the official figures have been issued yet.

In the allocation of the 2010 operations budget, however, this has now decreased to MYR9.1 billion as part of the Malaysian government's plan to reduce government spending and with the bulk of the cuts falling in the training and operations budget.

The Ninth Malaysia Plan (2006-10) includes MYR15.7 billion in development funds for defence, 12 per cent less than the allocation for the previous five-year period.

Anonymous,  11 June 2010 at 07:44  

Dato I dont always agree with your views but on the matter of the subsidy and wastage, please continue to bring it up. Jala's greatest contibution to this nation will be if his statements bring forth the realisation that something must be done to cut wastage and leakages but it is up to UMNO to show the way.

Anonymous,  11 June 2010 at 09:35  

I always wonder how could intelligent beings, like Wagner ( NOT Wenger!), Goebbels etc, can be as racist as the tribalist.

WengerJK proves that without doubt!

‘By the way - Gomen revenue (RM 157 billion) is only 11% from Income Tax. 64 billion comes from Petronas and Govt GLC which is a pure Malay account. Only 16 billion comes from Individual Income Tax which is a pure non Malay account. So is it wrong for the Govt to collect RM 64 billion from the Malay account and spend RM 6 billion to help the poor Malays?’

What kind of twisted logic is that? All Petronas and Govt GLCs r pure Malay accounts.

WengerJK, u might have a brain, but it sure goes the way of Mein Kampf!

fukc...when Malaysia failed blame it on the other Malaysians..fukc fukc fukc!

BTW, u r a ‘trained’ engineer, trying very hard to be a certified financial advisor, kan? So by chance u might like SF. Thus recommend u to read Windup girl to get a feel of the yellow card as registered by the Thai govt & forced ‘shippeopled’ out of Malaya by the extremist green headband. It's SF but the scenario is quite real & possible. When that happened then what? Cry for help to JK? &/or yr Christian God?

One last thing, u r right about projected pricing of LNG. But the keyword is projected. It takes BIG boys to see into the future & thus plan. Definitely not hindsight as spelled out herebefore by u & the likes.

& purely because it’s a projection, the chances of getting wrong is also very real. It takes conviction & determination to forge ahead with the plan & hopefully u r right.

In this regard, Jala’s work during his tenure at MAS was just that! & yet there were people trying to compared that with Sime’s fiasco.

One word – ‘trained’ rubbish always remain rubbish, irrespective of how many titles behind the name – same thing as GIGO.

Go figure – ok? Pantang dicabar? My foot!

Before u go into the crap about my anonymous, u r NOT much better! As WengerJK is as anonymous as any other anon. NO?

Wenger J Khairy 11 June 2010 at 10:25  

Walla,
(Platts LNG prices are also available)??

Pls show the public source? Platts price assessment is subject to license. Even to quote that number in an email means you have to pay them money - what more to show it in a public facing website.

Anonymous,  11 June 2010 at 11:42  

Mr Anon 11 June 2010 09:35

It takes conviction & determination to forge ahead with the plan & hopefully u r right.

So did Zubir,Halim,Tajuddin...all of them had a plan they're pretty convinced thats right...and went for it.But extraneous factors did them in.

The honorable thing to do is to walk the plank..simple.

Anonymous,  11 June 2010 at 12:13  

Mr Anon 11 June 2010 11:42

So u r a Jala pesterer!

‘So did Zubir,Halim,Tajuddin...all of them had a plan they're pretty convinced thats right...and went for it.But extraneous factors did them in.’

Muahahahahaha…

u make my day! Thanks for the jester laugh & NO thanks for the tear that idiots still run wild masquerade as Jaguh Kampong!

‘The honorable thing to do is to walk the plank..simple.’

Did those gentlemen walk the plan OR been parachuted with golden handshakes, costing Joe M’sians millions, perhaps billions????????

Oh,… they did it for Alif Ba Ta so whatever money they took is A OK! No?

After all, majority will be paid for by the BST of the pendatang.

One more thing, all resources from nature, within M’sia, belongs to the Malay M’sian only as Wenger said it. So they can do whatever they like, as if those were their inheritances from their grandfather’s.

No?

Anonymous,  11 June 2010 at 12:25  

Dato,

I suggest you have a look at Mr Hiley's calculations proving that the bulk of subsidies goes to industries.Although,it seems many are still arguing on the correct definition of subsidies,I am of the opinion that industries should not be subsidised for gas,electricity,sugar,flour and petroleum products.If they are exporting,it means the government is subsidising other countries too.And there is no asurance that they bring back profits or even employ locals.

As one of your commentators said..he can live without Coke.

The other subsidies such as petrol and tolls should also be removed as it benefits a smaller group only.Sometimes,we complain but soon we adjust our lifestyle to fit the new higher cost of living.We just live with it to the best we can.

But industries and commercial concerns,they have means to mount vociferous campaigns to ensure their profits are protected.Although,the particular price increase will only have a small impact,they will declare it as Armageddon.

Thus,I hope Government can be persuaded to withdraw subsidies to Industry whilst keeping the essentials low for rakyat.We have no voice,no funds and no means to lobby the PM as the Industry has.

Our means are blogs like Dato's..the silent voices which collectively can roar.

Pemandu have failed whereas Dato and your band of commentators have really distilled the issues.

Anonymous,  11 June 2010 at 13:10  

Anon 11 June 2010 12:13

Hoi friend>>walking the plank is an involuntary act lo..is it necessary to talk 101 to make you understand?

Some excerpts from the std BTP toolbox

MAS plunged into a cash and profit crisis. ..... crunch, that is changing
The key objectives were to survive financially in 2006,

But in 2009 when the CASH CRISIS was REALLY severe...silence >>then of cos MAS saved by the rights subtly presented as a "owning planes better then WAU leasing.."

Some excerpts from the GTP toolbox

Malaysia will be bankrupt by 2019 if it does not cut subsidies and rein in borrowings, said Minister in the Prime Minister’s Department Datuk Seri Idris Jala on Thursday.

See>>same style of shock and awe WITHOUT addressing real issues.
Now>>did MAS really need to sell the HQ,Catering,Training Centre?And similarly,should rakyat didahului in subsidy removal when a greater impact could be through industry restructuring?

PM Najib>>if you want a corporate guy get Fernandez.

walla,  11 June 2010 at 13:36  

Wenger J Khairy (10.25)

I said it's available but didn't say it will be posted on public webs.

It takes about twenty seconds to scroll down the computer bar of the list of items that are available on just Platts; Argus and Cera are amongst others..

The list starts like this (sample items listed below only)..and what's available are latest, yesterday, 45-day and archives.

Asian PetrochemicalScan
...
Gas Daily Price Guide
...
International Gas Report
...
Nuclear Fuel Uranium Pricing Supplement
...
World Crude Table
...
Futures/Nearbys Nymex Metals
...
M2M Power North American 20-Year Forward
...
DME Oman Crude Oil (XL)
...
RACKS PSTR (various)
...
Jet Fuel (JF)
...
Baker Hughes Rigs Stats
...
Natural Gas LNG Tables
...
Aromatics Latin America
........

This is just a drop in the whole ocean of data.

Frank,  11 June 2010 at 13:49  

The subsidies were laid out by this govt to support the cronies and the buttress the wealth of the instant millionaires created during the Mahathir regime. UMNO's relevance depends on these wealthu UMNOputras.

Jala cannot say it. So he threw a hand grenade onto the public domain and let others analyse the fallout.

Jala is a smart cookie. He knows he has to protect his bread and butter without sacrificing his own professional integrity. Tough job.

In some ways, credit must be given to Najib for head hunting Jala for the job. It makes Najib's move to tackle head on the economy a bit easier.

Anonymous,  12 June 2010 at 15:19  

walla,
what happened to the pic (yr avatar)?

walla,  12 June 2010 at 20:39  

anon 15.19,

i forget the password to login the account! (cry)

now i won't know how popular i am (cry).

:(

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