How many Warisan merdekas?

This piece of news has been puzzling me. It is about the construction of the 100 Storey Warisan Merdeka tower. Just recently, Dato Najib said it wasn't his idea. Yet he announced it in the 2011 Budget recently. That means, he has agreed to the idea. The ultimate decision maker is of course the PM. unless he gives the green light, Hamad Kama Piah will not move.

The PM says it was PNB's idea. It's easy to verify this. Let's publish minutes preceding the decision to go ahead with this project. Discussions and deliberations must have taken place prior the announcement was made. These must have been minuted down. Let's see them.

There must also be an exhaustive technical study and financial evaluation of the project. A project such as this can't be thought overnight. Engineers and architects must have worked on the commission. We should see all these.

There is the issue of cost. The building will cost M 5 billion. That's RM 5, 000,000,000. Kama Piah says the funding is internally generated. Internally or borrowed, the money represents Malay money. Wasn't PNB created to harness Malay financial capital?

PNB manages investments portfolio on behalf of Malays and earn dividends on their behalf. It has also branched out to handle investments portfolio for Malaysians.

Let see an orang kampong assessment of this outlay. Suppose the RM 5 billion in invested somewhere earning a return of say 6%. That would bring PNB a return of RN 300 million a year.

So instead of building I unit of 100 story building, why not build a 20 story building costing around RM 300 million a year. So that in 5 years, we shall have started building 5 blocks of 20 stoirey buildings giving us an equivalent of 100 story single building. If each cost 300 million, 5 blocks will cost us only 1.5 billion saving us RM 3.5 billion.

With 5 you can place them at will. Spread it around in Kuala Lumpur. Have 2 in Kampung Baru so that the value of the land in Kg Baru escalates. That will make owners earn high income.

I asked an engineer friend. It's not that straight forward issue doing this 100 story building. Because beyond a certain level, the cost of construction escalates. As we go higher, the degree of inefficiency of the building increases that require lots more money being pumped in. In the end, the cost of a single 100 story building may be more than RM 5 billion.

But the more interesting news coming out from the bowels of corporatedom- is that, there will be 2 more similar towers going to be built. This means, we shall be having not one 100 story behemoth, but 3 of them. This will mean Najib will have out-Mahathir Dr Mahathir.

Who are going to propose the other two towers? The voices from deep in the corporate bowels mention the name of Jho Low and Naza. If the real cost of construction is RM 1.5 billion, these people will be making Croesus-like profits.

When PNB completes the 100 story tower, how much rental will they charge per square foot? The PETRONAS Twin Towers cost is RM 1.3 billion. Go ask the rental for the space at the food court. It is RM 130 per square foot. Will the rental rate at the warisan merdeka cost RM 500 per square foot?

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A critical look at Najib’s Presidential speech-1

Let us take a more critical look at Najib's speech. He outlined his thinking in Amanat President. 'Amanat' is no light term. It's like Amanat HJ Hadi.

It's a set of directives, direction from the leader of the party. It's like a blueprint for the future. They are like commandments from the Mount Sinai of UMNO's seat of power.

The Future.

What kind of future? UMNO/BN must keep Putrajaya at all costs. Don't mind the colorful descriptions, -crushed bodies, bloodied noses or whatever. Najib must sound belligerent if he wants to capture the aggression of the delegates. He can't speak in flaccid and uninspiring notes. He must shout and shriek and ignore frothing at the sides.

But it can also be seen as a fearful speech. It's a doomsday commandment speech. Najib is fearful of the unknown future. For the 1^st time, he and UMNO cannot determine the outcome of elections. The politics of announcing development is in their final leg. He also knows the euphoria in PWTC cannot guarantee UMNO's victory. He knows too the chances of Putrajaya falling are a very possible reality. Najib spoke like a man cornered and besieged.

The opposition parties should not be overly rattled at the manner by which the speech was made. It doesn't matter too, if some people actually described Najib as a medicine peddler selling some snake oil solutions under the trees at the Kuantan Padang.

The effects on opposition parties are not Najib's and UMNO's concern. His speech and the contents therein are for the UMNO soldiers. The message is abundantly clear- BN will do whatever is necessary to retain Putrajaya. Otherwise its curtains down and an end of the Tattler lifestyle.

Maybe Najib spoke on high notes because he has the ultimate weapon of mass destruction- that everyone has his price. UMNO and BN are ready with a war chest. 11 Bumi companies are going for listing. There may be huge amount of promissory notes from the big corporate boys whom Idris Jala and Pemandu have identified.

Let us see beyond the rhetoric and the forced smiles. What happened to the big ideas of Najib? 1 Malaysia, NEM, NKRA, New Political Model? These are the things that we need to analyze. See whether they have taken any hold among the delegates.

The elation and the euphoria that accompanies Najib's Presidential speech are no measures of success. Sharizat Jalil can say she feels re-born and others can say this is the best speech so far. Shahrizat didn't say she feels re-born as what and how she wants to be reborn?

Let us not forget, these are the same sentiments that followed every UMNO President's speech before Najib. Najib is getting the same fawning responses previous UMNO presidents got. When Mahathir spoke, some people pee in the pants. The point is UMNO delegates' response to presidential speech is likely to be ephemeral and brief.

They have little bearing on the shaping opinions on those that matter- the voters outside. Let us also not forget- that Najib is speaking to his same kind in a controlled environment. You are not talking to the outside. You are talking to division heads and committee members most of whom came to PWTC in big flashy cars designed to make Puteri UMNO members and young vixens salivate and some designs of their own.

You think the UMNO delegates would later break out into smaller groups and debate what the President spoke in workshop sessions? As soon as the day's session end, many would eagerly patronize the dangdut bars nearby or go shopping in the city. Najib's speech was good only while it lasted. It lasted as long as delegates' attention span. Which is very short.

Consider this. Today we read UMNO delegates reaffirmed their commitment to have affirmative policies ala NEP. There you are.

To me, this very public refutation is a slap at Najib's face. He is the author for NEM, GTP, ETP, NKRA, NKEA, PPP etc. these are concepts not compatible with the wishes of the majority. He has paid those bloody Mckinsey boys a lot of money. Damn Omar Ong. Damn the consultants- Najib must be cursing them.

At this assembly they spoke. But they spoke in direct contrast with what Najib wanted.

In other words, what Najib wanted really- his big ideas of market driven affirmative policies and accommodative social relations were rejected by the delegates. That forced him to capitulate. None of the speakers came out defending and promoting the ideas of 1 Malaysia, GTP, ETP and all the NKRA's. These were mentioned as cue from Najib. Hardly any speaker spoke on these.

On the contrary who spoke on the President's debate wanted more Malayness be infused in government policies. Some wanted equity to be raised to 60% to reflect the ethnic composition. Nobody wanted to have access to privileges, shortcuts, and all that to be abolished. That's what UMNO has fought for, say the majority of them.

This also confirmed my earlier impression. The delegates were more taken in by the rhetoric and high drama. The substance? Lost in the crowd.

Najib wanted New Economic Model. It would eschew all those elements associated with NEP. Big government will be replaced eventually by market solutions. That guy from Melaka, denounced the NEM as a policy that would lead to re-colonization of Malays. Najib wanted some feedbacks from the crowd in the Hall to tell him about the ETP, NKRA and all that. No one spoke in support on the matter.

It is now confirmed that there is a great divide between the big ideas of Najib and the understanding by the UMNO masses. The big idea of 1 Malaysia hasn't sunk in. meanwhile billboard makers, advertising companies are making 1 Malaysia profit.

In the end, he had to do the PERKASA thing- unable to push through his big ideas into general acceptance, he had to fall back to one indisputable fact- to stress that as son of TUn Razak he won't abandon the latter's legacy.

So, to me this speech is of the same standard of the speech he made at the Kongess Ekonomi Perjasa. Don't believe me? Ask Ibrahim Ali as soon as he comes out from hospital. How so we can anyone come out with the conclusion that this speech is the best so far.

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Amanat Presiden 2010- whats new pussycat, whoa, whoa,whoa

The UMNO general Assembly is almost over. This Saturday, it will be winding up session. I think it was after the 1st day session, I received a call from someone representing Astro Awani. They wanted me to be one of the panelists discussing the speech by the UMNO President. It is to take place shortly before or during the winding up debate.

I said I am game. But I must warn you, I told the caller, that my views are not exactly mainstream. I will speak as I see it. On that note, the caller, said, ok, we shall call back to confirm. The caller never called back and I am not meant to become a panelist.

If not, I would have my 10 minutes fame.

It is alright. I can still be the only panelist on my blog. I can do a better thing- write my impression on the President's Speech.

So today, I will write my impression on that speech. It shall be followed by my take on the various issues spoken by the delegates.

Just a little on the assembly. It is another round of an orgy of self congratulatory and pat on the back performances. It's a contest to come up with the most banal, the most stupid and the most outrageous thinking. One such banality was the call to end the advertisement of ladies sanitary pad because such advertisements lead people astray. Malay or non Malay, missy?

Then there is this joker from Melaka, who within a short space of 10 minutes pronounced the evils of the free market. So, he called for bigger government and bigger intervention. He wants bigger penetration. Hello, towkay, it's this sort of strategy that led to the highest GINI indices within the Malay community.

Why should Malay economic well-being depend or not depend on the help of non Malays. Malay economic wellbeing MUST be the outcome of own doing and the doing of a Malay led government.

But I am slightly ahead of myself. more of the not exactly mainstream thinking will come later. For now it is Najib's 95 point speech.

What was I expecting?

I thought this would be the best opportunity for Najib to close the disconnect between his ideas and bring his ideas directly to the UMNO warlords and leaders. They would then disseminate his ideas down the line, making his ideas, shared ideals.

Sadly, his ideas are the making of consulting firms, fabricated in the several labs overseen by Pemandu. He didn't bring his ideas to the people that matter most- the UMNO foot generals. There were only brief remarks about GTP, ETP , 1 Malaysia, NEM and NPM. New Political Model.

I was expecting Najib to elaborate on his NPM. Instead he talked in terms of generalities hoping UMNO people will fill in the blanks. They can't, if their heads are blank too.

So while his speech was good in the manner it was presented, in terms of its efficacy to get the desired objectives, to paraphrase the infamous words of Mukhriz son of Mahathir- there's nothing new.

Why nothing new? Talk about the history of UMNO struggles. Been there, done that. Talk about the Monarchy? Been there, done that. Talk about UMNO working hard? Been there and done that too. We have heard the themes repeated over and over again, varying only in the manner of presenting them. PAS bashing, Anwar Bashing, non Malays bashing?- same old stories. Nonsensical speeches, open display of idiocy? It's a permanent feature of UMNO GA.

so, what's new pussycat? Whoa, whoa, whoa…

Let's see what's new.

When listening to speeches, I prefer not to see the faces of those who speak. I want to avoid making subjective judgments.

Because if we do see, we are more often than not, likely to be influenced by the nuances, the condiments to the speech- flailing of arms, grimacing of the face to stress a point, the shouting and shrieking. Sometimes artful rendition of a speech hides the substance by which we must judge the speech.

But if we are not concerned about the substance, we must judge the speech by another measure. Efficacy of the speech. Did the Najib speech of 2010, achieve its objective? Rallying the troops, burning the spirit etc?

Najib has an history of shouting when making agitated speeches. The shouting may elevate any of the speeches to a stature more than it justly deserves.

And judging from the response from the worked up crowd, Najib's speech was successful in its efficacy. Even the speaker who is supposed to be neutral and officious joins in hallelujah-ing the speech.

Watch out people,- as we near the end of the UMNO General Assembly, expect a few bawdy and sexist jokes from the permanent chairman. Sample….ok pembentang ucapan, biak renkas ucapan hang ya…kaum ibu dah tungu 4 hari ni dah..alahai… aduih….

I prefer to read the text of the speech. To avoid being emotional. That's why we saw many who wept listening to the UMNO president's speech. The were there and witnessed Najib's performance on the speech.

A few of my friends who were on the golf course, stopped for some good few minutes to cry. They cried when hearing people cried.

But I want to say at the onset, it was a fairly good speech. The comments by the former PR MB of Perak on Najib's speech are irrelevant. First the speech has no bearing on what the PR wants to do. They want to capture Putrajaya and Najib is rallying his troops to defend Putrajaya. PR is stupid if they expect UMNO to hand it over on a silver plate.

That is expected. Second, the speech is made by an UMNO president designed to first, capture the imagination of UMNO faithfuls and hopefully, embraced by the majority of Malaysians.

This time his researches have done an above average job. It was a speech tailor-made for the audience. These are UMNO delegates. People who are easily agitated if there is a maverick or a firebrand amongst them.

It was also a personal victory for Najib. His image has taken a beating as someone who is easily compromisable. He has seen as too accommodative and his Maleness Malayness has somewhat been dissipated. Much of his thunder was stolen by Perkasa's Ibrahim Ali. The NGO led by Ibrahim Ali has been vocal on the articles of the Constitution which Najib now is strangely playing up. Articles 152 ND 153.

What is new, is the explicit acknowledgement of the role of Malay rulers. As the ultimate protector of Malay privileges and Malay rights. They are the final adjudicator notwithstanding articles 152 and 153.

Najib has now elevated the stature of the Malay Rulers. Now, this is very surprising. In the past attacks on the Malay rulers hadn't come from opposition parties what more from non Malay parties. The attacks and assault came from UMNO itself.

Now the UMNO president is extolling and saying in so many words, the Royal Institution is a Godsend. It's the final bulwark against the erosion of Malay rights and privileges. Hence Najib was saying, even if the government and constitution is changed, any attempt to dislodge Malay rights and privileges will have to get past the consent of Malay Rulers.

But I am saying, our kings are kings of also non UMNO subjects. That means if other non UMNO people get to Putrajaya, they are still bound by the Malay Rulers proviso. If the Malay Rulers represent the final authority on Malay interest and Malay special privileges, it is also, by way of Najib's admission, an acceptance that even UMNO is not relevant. That would also mean, UMNO is dispensable and the Malays, because Malay rulers are there, will be none the worse off. Furthermore, Najib of course assumes that Malay rulers are all UMNO members.

The BN non Malay member parties have nothing to fear..Chua Soi Lek said many things can be discussed further behind closed doors. No worries, we yam seng together maa- everything boleh kautim.

He was expressing disagreement on certain points raised by Najib. Rest assured, he will be assured by Najib, the speech was targeted at essentially a Malay audience.

It wasn't a call to arms. It wasn't an incendiary speech asking Malays to brandish kerises and kill of enemies. The whole speech contained 95 points. The few last points included a demand for a pledge to defend Putrajaya at all costs. It was dramatically worded to have the desire effect of galvanizing the UMNO faithfuls.

I am not going to deny in saying, on the whole this was a good speech- provided of course the UMNO people, not just the 2300 of them gathered in the main hall of PTWC, but the whole 3.5 million understood. More important, whether the 3.5 million UMNO members under the correct leadership of the leaders , understood what is being asked of them.

Akan bersambung….

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A closer look at the 2011 Budget.

Yes, I know the hot topic at the moment is the UMNO General Assembly. I will write on that later. Have no fear.

But at the moment, I am not quite finished talking about our recent budget. It's an important financial road-map for our country. We can't trivialize it and so, laborious as it is, we have to discuss about it. It's about the use and application of our money.

Let us begin by telling something about spending taxpayers money. Let's start by analyzing the Pemandu outfit. Yes sir, the unit headed by Mr. Scrooge, cut subsidies Idris Jala.

It is distressing. Here is why.

Idris Jala who warned the government can go bankrupt if subsidies are not reduced gets over RM 12 billion to run his outfit. Most of it will go to paying consultants like Mckinsey who were the people who actually prepared the ETP and the various KPIs and other acronymitis infected outfits. NKRAs, NKEAs, GTP, PPP, so on and so forth.

Contrary to widespread belief- writing of Idris Jala is not my favorite subject. Writing of the myth about his extraordinary talent is. for example, I thought his presentation of the ETP was just pyrotechnics accompanying the entrance of professional wrestlers.

The one who says lets curb spending is spending like a wild man out of the jungles of Sarawak. When I wrote that the ETP was possibly crafted by McKinsey quite a number of people said that I underestimated Idris Jala.

Well, actually he wasn't the one who prepared the whole show. He was just a presenter of the show and if you have people who pronounced tertiary as ter-tia-ri, then we wouldn't be surprised they will ogle at him showing off the PowerPoint slides.

Unfortunate description, but I have to say it. So the next time, a minister comes to you and say lets conserve and be prudent, you tell him to FO!.

And I say this for reasons I am backing up. Idris Jala failed to curb the continuous rise in government expenditure. Idris' various outfits are themselves now big spenders,. Its all there in Budget 2011.

This makes people angry. You preach to us about curtailing spending but you don't bat an eyelid asking for the sky is the limit allocation of taxpayers' money on yourself. Officially, PEMANDU is given an allocation of RM 20.67 million in 2011 An additional item of RM 897,800 under "Dasar Baru" or new policy is also given to PEMANDU. There is also a "one-off payment" of RM18.43 million for PEMANDU. On top of that , the PM has allocated RM136.87 million for contract worker's emoluments is utilised by Idris' outfits.

Idris Jala seems to have a free hand to spend our money.

Only in Malaysia, under NTR-Najib Tun Razak, are alphabets pricey items. NKRA for crime fighting was allocated RM9.1 million, education, RM 22 million, and 1Malaysia, RM 38.42 million.

In addition to that, the delivery task force of NKRA for Low Income Household costs RM 265 million how will this scheme work? Najib's style is to go around to Kampungs , identify some houses to be repaired and then allocate RM 8000 per house to rectify.

Consider next , the operation cost of NKEA. It is even costlier than NKRA. It's going to get RM355.9 million.
That is the cost of operating it. Under the development budget, NKEA will be allocated a total of RM 11.86 billion in 2011-2012 in which the estimate for 2011 is RM5.4 billion – more than 10 percent of the entire development budget for 2011.

The man who sent shivers to many by claiming that we can go bankrupt is now spending like nobody's business. Where is the essence of frugality usually associated with a budget?

A budget means you accept that your financial outlay is limited and you therefore allocate your limited resources judiciously.

Most of the time, I suspect people in power fail to appreciate the gravity of having deficit budgets. It's never an excuse to justify you failure to contain spending. The usual suspects for justifying spending includes such banalities like having to spend to help the poor and the aged, we need to spend ir order to develop and so forth. Most of the time, I thinks these excuses are overworked. Deficit budget may actually mean financial indiscipline and profligate ways.

It is a fallacy to assume that OUR money will be rightly applied by other people. They won't. They will spend it in the name of the will of the people. Most of the times its nonsensical.

I remembered reading what Milton Friedman once wrote: (1) wasting public money is not as painful as wasting one's own, thus why there is little incentive to learn from past mistakes, (2) that government policy may be plagued with vested interest and hence not represent people's will.

What do we get from surrendering our assets? For the Sungai Buloh project, what's in for the government? The Sungai Besi project. Yes, that one wheeled by our Jho Low with people from Malton chipping in.

One time in New York, Najib was huddled with his team of advisors. Enter young Jho which had Najib's mostly mentally-challenged advisers taken aback. later Najib walked out of the room talking privately with Jho Low. That's how close the PM is with Jho Low.

Everyone MUST interest themselves on the nation's budget. It's our money. And remember those people spending it are doing whatever they want to do with our money. Like appropriating over 100 million for a program to nurture exceptionally intelligent children. How many of them? Did the Malaysian Chinese who got to become top student at Cantab go to a permata-like school in Ipoh? Compare that amount with that allocated to Sekolah Agama Rakyat.

Spending our resources on unproven hunch about exceptional clever children. Hello brother, some children are more precocious at younger ages. That money is better spent on upgrading students accommodations so they they can study in better environs.

Let's take a look at sources of revenue.

The main sources of our revenue are:-

• Income tax            38%
• Non tax income        26%
• Indirect taxes            13%
• Import duty            1%
• Export duty            1%
  

  Now you may point out rightly, that's only about 79%. Not quite enough. For the shortfall, the government borrows from the public. They issue bonds for example. Institutional IOUs. To make them more palatable, issue Islamic bonds- sukuk( plural), sakk(singular). That way, god fearing Malays and non Malays are keen to buy some equity in preparation for after life.

This is hardly glossed over. Instead we are taken on a road trip to an imagined glory days- an MRT which is super-fast landing in Singapore on a Singapore-owned facilities since we have given up over 400 acres of KTM owned land of 999 year tenure. We exchanged that for some pieces of land belonging to Singapore of 99 year tenure. On top of that, we are going to pay 60% of the SD1.8 billion development charges.

We gave up a property of 999 years for that of 99 years. If that happens in another country, the government of day would have fallen. Instead we called it a success. No wonder Singapore leaders are looking at our leaders as all form, but no substance variety.

By the way, where will get the money to pay the development charges? Will it come from government coffers? Now, that will be part of the budget probably hidden as debt servicing charges?

Debt servicing charges. These are costs for money borrowed by the government. The keen eye will notice that charges on borrowings( caj perkhidmaan hutanf) is 8.7% of 212 billion. That's about RM 18 billion.

Has the government performance in this aspect been prudent? It is, if we can show, the amount of borrowing from the public has gone down. How can measure that? We measure the portion as part of the GDP for example. If the debt servicing portion is becoming an increasingly larger part of the GDP, then we can infer faulty financial management. How come? Because it implies that we , the present generation is careless in bequeathing increasingly larger amounts of debt on future generation. Not the permata generation. The sekolah atap or the Chung Hwa Type or Batu Talam Tamil school types. They will suffer and be angry. They are not going to support BN.

The fact of the matter is, the charges on debt servicing is increasing signaling the government is borrowing more. This will in turn mean, the charges on debt servicing and the burden of shouldering larger debts will be borne by the next generation. Our children will inherit a debt ridden economy caused possibly by our government's profligate ways.

What is the portion of public debt as of GDP for example? In 2009, public debt as a portion of GDP was almost 55%.

Debt is good just as Gordon Gekko proclaimed Greed is good.

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Najib and his Budget

The PM and his Budget.

Everyone was interested at listening to the Finance Minister delivering his budget speech. It was a Friday. So he was dressed in a resplendent baju Melayu. The kain samping he wore costs probably RM 40,000. I know. I was his Information Chief.

They had different reasons going for them. The big corporate boys were happy because they were probably lined up as recipients of big government contracts. The rest? They are indifferent really. If Najib as the finance minister goes around or his people go around, he and they would have a different picture.

Government servants were just waiting whether he will announce a month's bonus. Forget about whether they are 1.3 million strong. They are not a homogeneous lot. They don't give a damn about Aseh Che Mat. They don't even know that their number is 1.3 million people. Civil servants are saying during Pak Lah's time, despite being derisively referred to as sleepyhead, he managed to pay 1 month's bonus. To civil servants, Pak Lah was a good FM. When the current PM fails to do so, they regard him simply as a failure at managing the economy.

The kampong people are not interested whether toll rates will not be raised for the next 5 years. So what? They are not heavy users of the highways anyway. Also they know, the government pays toll operators compensation. PLUS for example will get billions. The going rate is RM 800 million per year. So they get RM 4 billion for not raising the toll rates. This is economic racketeering. The government pays protection money to induce toll operators not to raise rates.

Kampong people are interested only to see whether the price of rice and other essential food items go down. Cigarettes which they consumed in large quantities are wished sold, at cheaper prices. The government doesn't addressed these issues.

In general, this year's budget is received in a lukewarm manner almost nonchalant. The only people saying this is a good budget are first of all the sycophantic ministers and people who are lazy to go through the budget proposals. That includes sitting MPs.

The cynicism, Mr. PM, is pervasive.

What has the construction of a 100 storey tower got to do with the government budget? Or for that matter the construction of the RM 43 billion MRT, the RM10 billion mixed development of Sungai Buluh, the RM 26 billion construction of the KLIF hub, RM 10 billion worth of highways got to do with government budget?

These are elements of long term economic planning more suited to be incorporated in the 10^th or 11^th Malaysia Plan. But the budget? Hence the nagging feel that they are mentioned to spice things up even though they are not going to be financed by public money.

Year in and year out we have MPs listening to budget speeches yet no one pointed out these are components of a Malaysia Plan. Not a budget. So how could we blame Dr Mahathir when he said, the government is full of half past six people.

Maybe they are mentioned to point out that we have an ecosystem amenable to rapid economic development. The last time we had the smart partnership idea and that term was repeated countless number of times across the country. Now, we have another acronym- PPP= Public Private Partnership.

The term 'ecosystem' has since been fashionable when it was used by the PM. Accordingly, we should not be too harsh in our judgment.

Ok, let's not, but let's take a look at what other people's ecosystems have done to their economy.

The world economy is growing at an average rate of 11% but Malaysia is doing so at a rate of 6%. Why are we below average? Is our ecosystem not compatible to the world's ecosystem? This issue is not addressed.

Why is Malaysia growing slower than the world? Have we applied our revenues the sub optimal way? Will this way be repeated in 2011?

Certainly it reflects our lower level of productivity caused by various factors. Certainly that reflects our competitiveness. Singapore is growing at a rate of over 13%, China at 11 %, Thailand with its red shirt problem is growing at a rate comparable to ours.

Yet our country which is relatively free from social turbulence save perhaps from Rais Yatim's war against bloggers in general and one blogger in particular can only grow at around 6-7% for 2011. Even that , is out from an economy with negative growth. .

That is certainly a reflection of our collective management- the political leadership and the civil service. Yet the PM is rewarding the civil service with financial goodies.

Why are we in terms of managing the economy, lagging behind the other Asean countries? ( minus Timor Leste, Brunei, Laos).

A budget should be straight to the point. It addresses the sources of government revenue- taxes, dividends, royalties, interests payments, non tax revenues etc. then the various allocation to the ministries. Inflow-outflow. If there is a deficit in government revenue, the finance minister proposes how to raise the money. Then you can talk all you want about bonds, sukuk etc etc. yes, the public sector borrows money.

Gone are the days, when a Budget is presented as a strictly business affair. As in during the time when Daim Zainudin or Tengku Razaleigh presented their budgets. They did as a matter of business, not much panache but businesslike.

Of course the most outlandish presentation of a budget was during Anwar Ibrahim's time- with all those Indonesianised terms and coinage of philosophy that prompted a giggly someone now at Media Prima to proclaim Anwar was the best finance minister. Najib doesn't have to imitate Anwar with those fuzzy thinking and taking us in circles.

But to his credit, Anwar as opposition leader is better at dissecting the 2011 budget. He did so mercilessly and the BN [people were reduced to a pitiful lot saying , the opposition will  and can only say bad things. The opposition is always envious- says Utusan Malaysia. I hope the PM kick these people out from being candidates the next round.

Reading the text of his take on the 2011 budget, I have to say, he has redeemed himself and revealed a very analytical side of him. He did learn something afterall during his stint as FM while playing tennis(sometimes) with Nala Karuppan.

Repeat: what is a budget? A budget addresses the issue of sources of government revenue and allocation to the various ministries. Who wrote this budget for Najib? This is why in my previous article, I wrote the budget is as good as the people writing it, and because it wasn't written by Nobel laureates of economists, someone like I who pretend to be an economist, can debate them.

For the 2011 budget, we are incurring a another deficit for the 13^th year. That's 13 consecutive years. We are spending more than we earned. Spending is of course not necessarily bad if its directed at building capacity, enhancing competitiveness and so forth. But it will be a cause of concern if much of that spending is absorbed into activities that sapped our competitiveness or that does not add to our capacity building.

Suppose you want to build the 100 storey building. The government wants to do it. Then it lays down how it's going to raise the finance. In this case, PNB is going to do it. That's a private affair. How does that figure in a government budget?

Then there is the RM 43 billion MRT. It's going to be built using private finance. How does it figure in this government budget? Does the government get money from this project? The land on long lease provide revenues for the government? Then of course that will a source of revenue for Mr. G. does government has equity in the project? Mr. G is Mr Government nor G Palanivel. That's the chap who wants to be minister.

It then has a stream of dividends from it. That is revenue. Unless these elements are there, it's part of the budget.

Because it's going to be built by Gamuda and MMC- that's their affair. Nothing to do with this budget. The development of the Sungai Besi? What does the government get in return? Proceeds from the sale of the land? Dividends from its equity? The government invests through 1MDB which has no experience in developing a piece of real estate. It ropes in Desmond Lim who built the Pavilion. Its bringing in the Mudabala Group, another private sector initiative.

Similarly with the development of the Sungai Buloh area. What does the government get? If they get anything, whatever they get is part of government budget. Otherwise all these things Najib mentioned are all part of a long term business plan for Malaysia. a business Plan is not the government budget.

It makes many think- why does PM Najib list down all these business plans which have nothing to do with the government budget? These are elements of long term business plan, not elements of a budget. The answer I suspect is to invoke a sense of feel good or even worse, as red herring to conceal the real subject matter of the 2011 budget.

What's the deal?

We are taking out from the consolidated fund some 212 billion Ringgit. How is it applied?

The government is spending around 77% on OPEX. The bulk of the rising OPEX to cater mainly for 1.3 million civil servants and handouts to the party supporters in the form of JKKK members and RELA recruits. That leaves some 23% for development expenditure and the building of capacity.

How is the spending financed? The government will borrow around 22% and the rest is financed by tax and non tax revenues.

This is the second year he has prepared a budget. This year he has launched a series of ,let's say, "ideas" about long term planning. The New Economic Model. I asked him once- what is it essentially? It's a model to launch Malaysia into a high income economy. How do you reconcile that with demands by groups like Perkasa, I asked? There will still be emphasis on Malay economic interests he said. But it has to be based on merits- market driven affirmative actions.

In case you are wondering- I get to ask the PM when I get a chance to see him. I was his ADUN before and served as his division's information chief for 4 years. So despite my open criticisms, I do get to see him off and on.

Then we have heard all the acronyms. GTP, NKRA, NKEA, PPP, and finally ETP. The list seems to go on and on. Never-ending. Never muktamad. No finality. Here is I what I think. It's true that too much of a thing, will land us into trouble.

You see, all these are elements of long term planning. If I were a professor and student Najib prepares me a budget like this, he will barely passed.

He is suffering from Acronymitis. It's a new disease I suppose which has become fashionable since Najib took over from Pak Lah. And we are seeing its deleterious effects when the PM/Finance Minister prepared the 2011 budget recently. He is suffering from an economics heatstroke I think.

Can you back up your claim? What is a budget if I may asked you. a budget is essentially an address on government revenues and application of that revenue. How much is allocated to government ministries. It's about the finances of the government. Hence all those things about the construction of the 100 storey tall building for example is nor relevant. It's not the government's money. The money does not come from government revenue.

Najib must not confuse a Budget with long term economic plans.

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A more spirited look at the 2011 Budget

 

I promised my friends I will try not be a trenchant critic of the budget. Really I do. Why are you so critical, they asked. You were his ADUN before and he is your MP.

Unfortunately I can't guarantee it. Because so early in the speech, the PM contradicts his promise to make this budget a people's budget. He lays out a red carpet for the big players. Probably they are identified before hand.

You remember some of the things PM said when talking about revising some aspects of NEPish policies and referring to some vague notions of a NEM? About NEPNEMing our economy?

Something of needs based? The 2011 budget have many things that flout this lofty claim. Many things will be done not in accordance to needs based. Do we need for example a 100 storey tower of Babel? Do we need a maddening increase in real property sector of the economy?

If you were a stock picker, you will see things in a different light. You would be recommending buyers about the stocks of those companies rumored to be getting those mega deals. You will be interested only on 'positive' economics issues. Remember your courses in positive and normative economics?

That is not a wrong thing. But busybodies of the world, don't see things that way. They see things in the 'normative' economics way- how things should and ought to be instead of how things are. This I believe is in line with our desire to change things. I am sure many have heard the famous phrase: " The philosophers have only interpreted the world in various ways—the point however is to change it"

If the PM can invite anyone who cares to submit suggestions over the internet and have his people at the MOF incorporate these into a coherent and relevant part of the budget, it only proves by inference, that the big players have a bigger access in putting their views across.

So we won't begrudge those good and god fearing people who get wet dreams imagining their humble views make their way to some shadowy webmasters manning the PM's blog. We will not ridicule them for thinking their views matter in this budget.

Therefore we are intrigued for example, when the PM says 3 stock-broking licenses will be given to locals, foreigners or JVs. I am pretty sure, this idea was forwarded or even intimated to the PM by some well placed Mr. fix it. Maybe some people Jholowed them to him.

This is becoming the usual suspect under the PM's way of managing the economy. Basically therefore, the business ideas in the budget are representations of the ideas of some businessmen behind the scenes.

So how can I restraint myself from being a trenchant critic? Certainly I take comfort that luckily, this budget was prepared by those hardworking people at MOF and others. Since the budget is as good as those people working on it, I stand a good chance in debating with them. I mean, they are not Nobel prize winners in economics or something to that effect. If they are, I would have to be more circumspect and avoid being made to look an idiot.

Since they are just people like us, we can engage them freely and without fear of intellectual censure. So here goes.

Transparency is the basic building block.

Transparency will continue to remain a sine qua non to underline the government's resolve to promote economic growth. I hope the MOF which is supervising the venture capital fund will not be selective or pre-selective. Have clear guidelines published so as to give as wide access to businesses as possible. Otherwise the strategy will the same as before- picking winners among the stable.

Likewise, we want to know details of the BPTF- where will be the funds be channel through? This is the Bumiputera Property Trust Fund- a fund set up to help Bumiputeras own strategic properties in the cities. Again, lets wish the Fund is administered and operated with transparency in mind. Let's have the fund accessible by as many who can provide sound proposals.

One question that has been nagging me is this. So many times we hear the government wants to take us out of the middle income trap. We are not poor enough to qualify as a poor country but not yet rich enough to qualify as a developed country.

Metaphorically speaking, we are like the man wearing a short sarong. Roll it up, you expose the extremities. Roll it down, you expose your torso.

Intuitively the main cause for that entrapment is the inability of our economy to break through. That is caused perhaps by low productivity. Low productivity is dependent on knowledge internalized and technology applied. It is also caused by management. The country is not properly managed such that we don't have that elusive ecosystem that promotes rapid transition. Witness the slide in competitiveness that our country suffers.

We lack also perceptive leadership that does not know how to get us there.

At a more fundamental level, I have often asked, if we want to get out from the middle income trap, shouldn't we devote the bulk of our resources to the middle income players? This means the SMEs- which formed 75 % of the country's production machine.

Let's look at the 2011 budget. The PM says it's a people's budget. He is correct if he means by people, those big players who are already awarded plum projects. He uses the fashionable term- PPP- not the decrepit political party but Public-Private Partnership. The PM has shown a proclivity of acronyms and high sounding terms of late.

Experience has shown us, big sounding names usually don't have the substance. But we hope they do.

This 2011 budget begins by laying out a red carpet for the big boys. It contradicts its own commitment to give priority in building the middle income sector.

The construction of the RM 5,000,000,000 Warisan Merdeka tower, the 43 billion MRT, the RM 10 billion development of the Sungai Buloh land, the so many billions beatification programs etc etc. these are all non SME projects.

So the PM is banking on the big boys to push his agenda to make our country a high income economy.

How will the PM increase the liquidity market? By asking the GLCs to divest its business interests. This is basically a good move to liberalize the market. The GLCs have long crowded out genuine private investments and discriminate against many. I hope this idea of divesting will be applied across the country. This will break up unnatural monopolies that came into existence because of non market legislations. This move will free the market for increased participation.

Not all investments and businesses in which GLCs are involved are done efficiently and competitively. In the plantations sector for example, those GLCs operating under the protection of policies are often operated less efficiently than do private companies. And in certain sectors, private participation is closed altogether. In that sense, the GLCs operate under a closed system where it is often impossible to measure their competitive.

But again, the divestiture should be done transparently. Thus far, we only hear of things after they happened. The Plus highways which are cash cows are all of a sudden bought over by EPF and Khazanah. Hence Khazanah and EPF play the role of sellers and buyers at the same time. What happened to the proposals by Syed Mokhtar AlBukhary and that of Asas Serba? How do we reconcile the price of RM 23 billion which the Khazanah-EPF partnership is buying with the RM15 billion and RM 50 billion offered by competitors?

The money that the budget wants to spend is ours. Its procured by moving a motion in parliament to appropriate a certain amount from the consolidated fund for the purposes outlined by the mover of the motion.

Let us speak out because that is the people's money that is going to be applied for the purposes outlined.

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The Tower of Babel.

The story about man's vanity to build tall towers is well known in the Bible. It is also told in the Quran. Quite aside from the issue of man's technical ingenuity and quest to break frontiers, is another story.

It is one about the symbolism in building such towers.

Before the tower was built, according to biblical records, mankind shared one language. I suppose, it's something like 1 Malaysia that we are now having. It was 1 this and 1 that.

In the bible the mythical tower was the tower of Babel. It symbolises man's arrogance in challenging the power of god. It wasn't just a tower to unite the efforts of mankind, or about making the tower as the focal point of cities. It was also a symbolism of a structure to subjugate the minds of mankind under the rule of one.

We know where it ended. It ended in breaking up of the one language. Its breakup was intended so that mankind could not come together in conspiracy. From here we learn, there is much merit in maintaining diversity as there are much disadvantages in uniformity.

One tower can also be a symbol of dictatorial powers and arrogance.

In Islam, Muslims are also well aware of stores about building towers. The Pharaoh ordered Haman to build up a tower to the skies. So that he can confront the God of Moses. It was his arrogance to build the tower so that he can prove Moses to be a liar.

It's also a symbolism of big government. That our bounties are determined and cared for by the overseeing and paternalistic government. That we derive the good life here as a result of the rule of one man.

But we must also be mindful of the ending.

When God saw that they acted so madly, he did not resolve to destroy them utterly, since they were not grown wiser by the destruction of the former sinners [in the Flood]; but he caused a tumult among them, by producing in them diverse languages, and causing that, through the multitude of those languages, they should not be able to understand one another.

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