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Sakmongkol ak 47

ariff.sabri@gmail.com

Friday, 11 June 2010

The whipping boy named subsidy


In 2019, if deficits are not managed (spending more than we earn) we will be bankrupt. Jala says that. He's basing this scenario on the growth of our debt and our economic growth rate. Of course he is assuming, the great people of Malaysia and its government do nothing.
It can always do something. It can also adopt the bloodbath budgetary measures. Cut the civil service by 30% from 1.2 million civil servants to 700,000. That would have to mean the 700,000 have to be retooled and re-skilled. Two, higher quality material are absorbed into the civil service. Demand the civil service not be a dumping ground for employment.
No economy can go bankrupt. It can always print money!
But that is not the point. If in 2019 we are a bankrupt nation, in 2020 we are supposed to become a developed nation with average per capita of USD 15,000. Right now, our average per capita is RM23, 000. By 2020, we earn RM 49,000.
Now that will be a record of sorts, Malaysia will become the envy of many nations. IN 2020 MALAYSIA WILL BECOME THE FIRST DEVELOPED COUNTRY WHICH IS BANKRUPT AT THE SAME TIME. Now that is oxymoron embodied.
We haven't been paying attention to managing our assets- liquid and non liquid. Consider the sad case of FELDA. Now, the joker who is presently UMNO's Ketua Penerangan was PM Najib's special officer looking out for FELDA. He hasn't been looking at FELDA carefully.
If he had, he would have noticed the following. Just after the 2004 elections, everyone was elated that DPM Najib as he was then was entrusted to look after FELDA. FELDA was the brainchild of Tun Razak who was influenced by ideas of Socialism when studying in UK. He was influenced by Sidney and Beatrice Webb. He started FELDA in 1956. He and Taib Andak.
At the time when PM Najib took over FELDA, FELDA had 75 oil palm mills, assets of RM 7 Billion and a cash hoard of RM 4.5 Billion.
Plenty of money bwana!
Najib's looking after FELDA was some sort of déjà vu. From father to son. Where else would the gravy drop if not onto the rice? Surely not every drop of gravy spills onto the floor, no?
What has happened since then? The huge cash hoard of RM 4.5 Billion is now only RM 200 Million. So we want to know what happen to RM 4.3 billion. Don't tell me the amount went to the hotels FELDA built here and there and the restaurants FELDA puts up here and there. If this is not explained properly, then those in charge of FELDA can be accused of grand theft. With the record price of CPO for the past few years, FELDA should have cash reserves of RM 6 Billion! 
RM 200 million left is a paltry sum. And FELDA settlers are being misled into believing the assets of FELDA are being looked after diligently. How has the money been spent? It just doesn't mean that with that kind of money, you are allowed to turn a blind eye building an MRSM school which normally costs around RM 40 million for RM 120 million. That's RM80 million cost overruns per scheme. How many schemes does FELDA have? If each scheme adopts the same 'costing', the wastage would run into Billions.
The chairman of Pemandu should be driving us in the right direction instead of deceiving us to believe that our huge deficits are attributed chiefly to this government paying subsidies. The greater leakages bleeding our revenue and earnings are the billions unaccounted for. The internal bleedings in FELDA is a very clear example of how an asset, poorly managed leads to humongous losses and therefore a stronger cause for deficit spending.
Even as the questions regarding the servicing of our submarines (whose constructions are perhaps not finalized yet) remain unanswered, we are told that our government is purchasing special ships for our Navy costing RM 2.2 Billion! But please remember, whether they can sail on our waters. Our density here may differ from the shipyards where the vessels are being built.
That makes a mockery of what the Pemandu people are saying. Instead of austerity drives, we are going to do the opposite. You either ship in or ship out.
But perhaps the right mantra is spend, baby spend!
But enough of all this foreboding and depressing talk about subsidies. Let's listen to a joke about economists. They are dangerous people.
Three economists and three mathematicians were going for a trip by train. Before the journey, the mathematicians bought 3 tickets but economists only bought one. The mathematicians were glad their stupid colleagues were going to pay a fine. However, when the conductor was approaching their compartment, all three economists went to the nearest toilet. The conductor, noticing that somebody was in the toilet, knocked on the door. In reply he saw a hand with one ticket. He checked it and the economists saved 2/3 of the ticket price.

The next day, the mathematicians decided to use the same strategy - they bought only one ticket, but economists did not buy tickets at all! When the mathematicians saw the conductor, they hid in the toilet, and when they heard knocking they handed in the ticket. They did not get it back.

Why? The economists took it and went to the other toilet.

27 comments:

emmie,  11 June 2010 at 03:32  

Dear Datuk

Glad to note that you followed up on the Canadian Bloodbath Policy.

I live in Calgary right now, years after all that took place, the only negative effect these days is the hard-done-by healthcare system. A public system like that of UK...the service is excellent WHEN you finally get it. Waiting room times can go from 8 hours to 2 days! This of course is not ideal, but everyone complains and puts up with it knowing full well that our education and general economic infrastructure is strong and on par with the States and Europe.

We must adopt these draconion methods at the expense of losing votes or suffer the consequences. Unfortunately, our politicians know only too well that it will be the middle class and poor that will do any sort of suffering.

Baharudin 11 June 2010 at 03:32  

Salam Dato',
Fully agree with your analysis... wrong priority really, the govt. should've been focusing on the ketirisan dulu2 lagi... ni duit FELDA dah hilang, duit Petronas entah kemana, duit EPF pun nak disapu... mula sibuk about the sunsidies! I wonder why Najib, being Nottingham-trained economist himself, would outsource his thinking to the smart-ass Idris Jala? Penat lah having leader like this... yang dulu slumbering on the job, now... mimpi disiang hari?!

Frank,  11 June 2010 at 05:58  

Dato Sak

Is Dr Lim Teck Ghee's conclusion correct on this debt and subsidy issue or he is simply being partisan, politically speaking:

Malaysia: A bankrupt nation

"...Although a few recalcitrant leaders are still living in denial and claiming that the minister has misled Malaysians on the true state of the country’s financial health, a closer look at Idris’s speech during the open house on ‘subsidy reduction’ shows that his concern and warning on the country becoming bankrupt (in the same way as Greece is) was absolutely correct and spot on."

Anonymous,  11 June 2010 at 07:06  

Dato
We in Pahang have the opportunity to watch 'live' the various projects carried out by the UBN Govt that are considered draining out public funds held by the the govt of BN as trust of the people. If you have noticed projects like Schools where their roofs collapse, Labs with their roofs collapse. Polytechnic school project in Muadzam Shah ( by the roadside jalan Muadzam/Segamat)that started in 1992 is still not ready. Developers has changed hands but the project is still 'on going'. A police quarters ( barracks) build for the police Pahang at jalan Beserah, Kuantan that kicked off in 1994 and today after almost 20 years is still incomplete. The amount of public money being given to these crony developers by the govt is what is eating the nation and robbing it's citizens of its savings and making the nation go bankrupt and certainly not subsidies.

Anonymous,  11 June 2010 at 07:18  

Today I went to my local grocery shop at my village to do some inquiring about the hohah on the license they are supposed to carry inorder to sell the controlled items, sugar, oil and rice.I totally agree with the retailers that it's a waste of time them selling these items coz No.1 they do not benefit much from selling them.
The most shocking news was only the small retailers are subjected to these restrictions i.e imposing of license and also regulating the sales. The retailer are required to record every sale to show prove of the balance stock tallies with his orders from the supplier. Now, the retailers aren't happy on this ruling because not only they make very little profit they are subjected to keep stock books on these items meaning they have to record ever sale.
But the most shocking part is the big timers, Giants, Tesco and super markets etc are not effected by this ruling. Whats the rasional?? Can the govt explain. If the govt thinks that the retailers are the culprits hiding the sugar. What gurantee is there that the big super dooper corporations handling sugar are not stealing and selling it black market.
Please, yes please release the sugar on market price,i.e. no subsidy and save everyone the trouble of hunting sugar.

Anonymous,  11 June 2010 at 07:53  

"What has happened since then? The huge cash hoard of RM 4.5 Billion is now only RM 200 Million. So we want to know what happen to RM 4.3 billion"

Dato Sak,
The same thing happened when Jala raid MAS and the taxpayer from FY2006 - 2009.

In 2007, MAS Cash and bank reserve was RM 5.25 billions and in 2008 dropped to RM 4.62 billions and end of June 2009 further dropped to RM2.94 billions (a rapid rate of cash depletion of almost RM2.31 billions in a mere 18 months).

More will be revealed slowly but surely.

PERKASA 101

Anonymous,  11 June 2010 at 08:13  

I think Idris Jala knew that bloated government, 'funny' spendings and all those crony economics are the real culprits. He CAN'T say all that without leaving the government, can he? So he put the blame on subsidies to get people like Dato and the rest of Malaysia pointing to where we should be looking at - leakage, corruption, 'robbery', productivity (or rather lack of) etc. Well done, Mr Jala, you know you are not a politician, so you don't mind looking stupid and seem to be doing stupid.

NJ 11 June 2010 at 08:31  

ha! ha! Datuk,

The three economists (vs mathematicians) joke was the three engineers (vs lawyers) in my blog.

Perhaps, the economist's and engineer's names were Razak & Taib while the lawyer's and mathematician's were Najib & Jala. ha! ha!

Click the link below, maybe it is a good advice for the one who is watching over Felda..he..he..

WATCH AND YOU WILL SEE

pemerit,  11 June 2010 at 09:11  

"civil service not be a dumping ground for employment"

Unfortunately this is going to be easier said than done. We have many degree mills in this country churning graduates after graduates with a large pool of unemployed and unemployable graduates mostly of "privilaged" class. You think UMNO has the appetite to solve that by not using the civil service as a dumping ground?

Anonymous,  11 June 2010 at 09:27  

Dato, we need people like you that have brain to be in the government. Otherwise, the nation might be bankrupt sooner than 2019.

Raison D'etre 11 June 2010 at 10:12  

SM,
BD Mnister KSK says it rights on all these you've highlighted: "INDIRECT SUBSIDIES."

How much? Billions, like you said. And they keep lumping these to us poor Yokels who keeps kissing their hands in reverence.

Anonymous,  11 June 2010 at 10:38  

Dato
Kita memang hebat!!! Beli Submarines berbillion RM tapi masih tak menentu lagi dan nak tambah kapal lagi berbillion lagi ehmmm...
Darat pun nak beli berbillion kereta kebal ehmmm....
Tentera Udara nak beli helicopter yang semua orang tahu akan menjadi beban negara lepas ini dengan harga berbillion RM ehmmmm sedangkan Sukhoi yang di beli berbillion RM tu pun masih tak menentu tapi bagus lah untuk terbang tunjuk tunjuk kat orang ramai yang mereka sangka tolol tapi membazir kan minyak sahaja.... beli jet dari itali tanpa injin kata nya tak cukup duit tapi nak beli juga, kan ke tolol punya kerja. Ada injin suruh orang curi sampai sekarang cari tak jumpa, mungkin Panglima ATM tahu agak nya.
Tak ada duit jual Sungai Besi base nak dapat modal-tak tahu lah siapa yang untung rakyat ke kroni.
Civil servants pun terlalu ramai tapi hasil kerja tak ada beza lembab juga. Tentera dan Polis bertambah tambah dan pangkat yang berbintang bintang kat bahu pun ramai juga tapi apa pun tak berguna, jenayah menakutkan dan semua cakap tak serupa bikin.
PM dengan bangga nya nak cerita masa depan yang kata nya akan cemerlang di bawah pimpinan UMNO nya dan dalam masa yang sama Brahim Ali pun berkokok kata nya PM dah dengar PERKASA.
Orang di kampung apa tahu! mereka bukan kenal pun Jala dan yang mereka tahu Najib adalah anak Tun Razak!!! so nasib la kita dato' nak buat camne weh...apahal pun semua orang tak betul dan kalau banyak cakap potong subsdi....orang kampong mana tahu, janji ada makan Rasa nya Dato kena buat roadshow kot!!!
Entah lah Tok...mungkin akan ada mimpi ngeri very soon.

Anonymous,  11 June 2010 at 10:52  

Sak,
In bolehland crooks who swiped billions get away with any crime!You know who the people are but we cannot do anything !Sime Darby and now Felda, What is happening really ? It looks like cheating is that malay thing to go for without being shot at the firing squad for such crimes.
Commercial crime is the way to go.....
When you have a very Weak PM WHO PATRONISE HIS BOYS then we are finished .You dont see such happennings in tiny red dot country south do we ?If it happens among his minister LKY usually loan you a handgun before shamming you.
A pm who put fears into wrongs commited will survive his term but am afraid our PM is just plain lALLANG against the wind!

Anonymous,  11 June 2010 at 10:59  

The 10MP grand announcements are only meant for the gullible Malay folks in the kampongs whose only source of information is Utusan and Berita or TV 1,2,3, 8,9.

Don't be surprised if Najib tells us that the sun will rise from the west tomorrow.
He is a charlatan, C4 expert, liar, illusionist all in one.
I think the total UMNO leaders' assets parked overseas would be several times larger than our national debt.
They may be richer than Malaysia itself!!!

Are You Gonna Go My Way,  11 June 2010 at 11:45  

What I really like when reading comments in Dato Sak’s blog are the diverse opinion of readers with background as economist, financiers, accountants, bankers etc….
All have different understanding of terminology, calculation, school of thought about money and how to spend it. Maybe whats wrong with our country is we have too many of these people….we have too many of these people as ceos, politicians, heads of department etc…They know how to calculate the profit and loss when the money is written on paper. They can make kilang budu financial statement looks like a nuclear plant. But who really make the money in the first place? The forgotten heroes in our economy….the industrialist, the constructer, the builder,the salesman, the traders, the planters, etc…
We need more of these people…

Habib RAK 11 June 2010 at 12:08  

AK47,
I received an email yest stating the same thing about Felda's cash sinking from over RM4.5Billion to about RM200Million. And Felda was under Najib's watch. Now that you too have written the same,the chances are that its true. The person who send me the email was an ex-MP under BN. Now, who is screwing the Malays? The same in Trengganu, where over 90% are Malays and all the Oil and Gas money have disappeared. This is clearly a case of the Malay father raping and sodomizing his own children.

donplaypuks® 11 June 2010 at 12:10  

Here are some economist jokes to get over difficult times:

1. Economists predicted 9 out of the last 5 recessions!

2. I asked an economist for her telephone number and she gave me an estimate.

3. An economist is an expert who will know tomorrow why what he predicted yesterday did not happen today!

4, Three economists went deer hunting. The first fired at the deer and missed by a meter to the left. The second fired and missed by a metre to the right. The third didn't fire at all and started whooping with joy and screamed "We got it! We got it!"

Anyway the planned PCI increase from $23K to $48K between 2010 and 2020 implies an annual compunded growth of 7% which is more realistic than the earlier 10% target.

But no single measure can save us from financial disaster if debt grows at 12% p.a. compounded while earning grow at 6%. The Govt will have to prune prudently, quickly and across the board to trim the thick the adipose layer particularly in the civil service and also in the Glc's. A 5% cut in Mandarins will add $2.1 billion per year to our reserves!

As for FELDA, I too received ex-Gerakan/BN Tan Kee Kwong's email about the shrinkage in its cash hoard from $4.5 billion to $200 million.

Well Najib and PAC, where are you?

dpp
we are all of 1 race, the Human Race

Anonymous,  11 June 2010 at 12:16  

"civil service not be a dumping ground for employment"

Some graduates whose CGPA is a mere 2.0 (which means 'C' for all subjects) are today given jobs as civil servants and even teachers. They also sell stamps in Pos Malaysia.

PH Chin 11 June 2010 at 13:33  

Dato'

May be the wisdom of a plumber can shed more light on the subsidy issue.

The plumber will never fix a bigger outlet pipe than the inlet pipe to the water tank.

However, our politicians keep inserting more draining pipes to our dwindling national reserve.

Thanks be to Ibrahim Ali.

At this rate, our reserve will dry up in no time.

Suci Dalam Debu 11 June 2010 at 14:01  

Sir,

....and you are still a strong BN supporter.

Oxymoron?

Anonymous,  11 June 2010 at 15:52  

Dear Dato Sak,
Please keep up the good work!
Appreciate if you can translate your thoughts into BM as well to reach the Malay readers in the heartland.
Fed on smoke & mirrors and spin by the local MSM, these rural folks are taken for a ride big time and are left out of progress in the end.
God bless !

sniper,  11 June 2010 at 17:02  

sir

In the first place, the money spend by the gomen on the subsidies were collected from the taxes on the rakyat and the traders.

and where the hell on this earth that the gomen did not give any subsidies to the rakyat directly or indirectly.

It's a matter of how wisely you channel it back. It's about ketirisan.

Anonymous,  11 June 2010 at 18:26  

Ask Perkasa which Chinaman had whacked the blood money of Felda settlers that at every turn, the battle-cry is raised against the Chinamen?
The biggest enemies of the Malays are found in their midst.

Anonymous,  11 June 2010 at 23:11  

Can't agree more with are you gonna go my way ,

Maybe the problem in this country is giving so much trust to bullshit artist economists who .... Most of the time never got it right anyway,lawyers and pure redneck politician.
I browse thru our KSU credentials.Art stream nearly all of them.its not that I have anything against them but ... Kesusasteraan ???? As KSU ? No wonder most of time when I send official letter to gov dept to explain a solution or proposal to them,ill get eh u tak cukup tulis pangkat bos saya,ur wording not mengancam enough etc.Hey , I'm an engineer telling you what could help you not learn how to learn art of writing.We are good at real maths.we don't fuck around with figures like economist does or even overcharged lawyers .we just can't.building may collapse,software will crash electronics will fail.
Give more power to advise to WORKING people in the industries to advise.hey even my salesmen have more up to date info of 'real' market senario than those ministers informers,economist,consultant etc with all those big word position.
Listen to real people.Those who want to live not in luxury but comfortable,those who q up to pay bills,have to be prudent with their financial move,care after their workers etc .
Listen to use dammit.I have to sweat to work ! And I have to pay RM18,000 of tax last year!!! Ah nice to vent my anger.thanks for your space here.


Jamal JB

vercingetorixa 12 June 2010 at 09:34  

Felda Holdings,IJM,IOI Comparison

Felda makes on average 5% Profit Before Tax (PBT) whilst IOI and IJM Plantation makes about 10% and 20% PBT average respectively. See above comparison.

How sad.

vercingetorixa 12 June 2010 at 09:45  

What, what..? Did someone say chinaman in felda..why, why.. got some more project one aah?
I can do one..i do all felda projects, i am so good fren with all felda people..which project ah? big ah? all felda people my fren one.
contact me ah, dato lim gung ho, ecobest, ok?
i also do big project in johor baru now

Anonymous,  12 June 2010 at 12:41  

Bakke is the TOP Bumi manager...apa lagi mau cerita?He has the ears of the PM.
He will ensure that we have more lembus then we need with his new cattle rearing initiative,

Can convert palm oil waste to cattle feed..its one complete cycle..palm tree shit cow eat cow shit palm tree eat.

U lousy scientist,engineers mana ada idea gitu..not smart enough to dream of the future.

Like Jala went shopping for kerosene and Zubir go swimming in Bakun and Red Sea.

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