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Sakmongkol ak 47

Tuesday 30 November 2010

Controlling the heavens

I am not done yet with what's happening in the communications industry. To me, cyberspace is the next business frontier. Anyone controlling it will have a stranglehold on our economy. I hope the government appreciates the implications of being in control of the heavens. It shouldn't leave the decision making as to who gets a piece of this business to people who make decisions arbitrarily and clearly with the intention of lining their pockets. I am now meeting up with an authority in this industry and will be writing more on this subject.

This morning, i joined many who think PM's instruction for the MCMC and the Ministry of Communications to review the award of rights over the 700 MHz spectrum as a welcome relief. There are many things which can be put right. We should now review the role of the MCMC and how to create a new Telekom Malaysia which SHOULD be the government organ controlling the basics of the communications industry.

While waiting for further writings on this subject, I would like to share a comment posted in response to my article. The comment was posted in the Malaysian Insider.

Clearly, there is lots on Sakmongkol's mind - from "I was an undergrad in UM" circa 1977, his brief take on the perennial Malay malaise (Melayu makan Melayu - chiefly, UMNO who else) and ending with YTL hitting pay dirt.

Without a doubt, the government "gifting" YTL Corp the 700mhz spectrum has everything to do with business and politics UMNO's Way. In most jurisdiction, especially economies of the North, such co mingle of business and political ties would have alarm bells ringing but not so in M'sia.

It is just a matter of time before elections are held but prior to that, before working the ground to get another opportunity (mandate) to continue to 'play' M'sians, forsake and 'makan Melayu' for another term, UMNO's war chest needs replenishing - and yes, the rational is a simple as that.

Except for MCA which is sitting on a healthy cash pile and Taib Mahmud's lot in Sarawak, UMNO and all components don't have access to liquid funds. To make matters worse, UMNO's track record speaks for itself, a bankrupt entity that is not a good credit risk that even Nasir Razak won't extend a helping hand should UMNO call for a loan. Loan UMNO money .... forget it, don't mention it for no banker will hear of it.

Francis Yeoh is a noted Mahatiew crony from way back, so what better way than to revisit old ties - roll out the red carpet for YTL to bag a deal and the son of a gun, born again Christian won't have to sell his daughter to kick back some to UMNO. And sure, other telco's aren't too happy (they will be buying bandwidth/excess capacity from YTL near future) such a major consideration was done and dusted without much ado. If anything, the entire deal was stitched up in double quick time just because Vincent Tan failed to launch his football gaming business, still moaning that lost opportunity but there are market signs Vincent Tan is side stepping various obstacles, regulatory submissions, cutting short due diligence with Securities Comm facilitating the soon-to-be listing of various Berjaya's Food and Beverage business into one stand alone company.

All in, Toto Tan's lost is Francis Yeoh's gain - the fella' with the 70's porn star mustache lost billions, not being able to 'realise' profits from a very lucrative 'cash' business, which in turn translates into UMNO's pain as well. And having said all that, my hats off and pat on the back to all who vehemently protested against PM Najib awarding "the" most lucrative of ALL licenses under the aegis of UMNO - well done.

Just to side track a little, I was against the decision of the football gaming license being awarded to Toto Tan but totally in support for a statutory gaming authority ie social welfare body of past, being charged with regulating and administering a football pool, in the same guise as how the football pool is run in the UK, or S'pore for that matter. The upside presents a two prong benefit by curtailing mob influence, mopping up excess liquidity from the market place. Also, if it ever takes off, the statutory body responsible for doling out profits from football gaming can operate in the guise of public benefactors, just like how the Hong Kong Jockey Club dishes out hundreds of millions in charity each year - making good a public vice for the benefit of a larger collective ]

I'm an avid market watcher, fully vested and it is clear there is much 'monkey' business of late. Beyond the normal horse trade, the KLSE is abuzz with multi-million/billion dollar capers - capers (not the edible) because UMNO is in need of hard cash, so just imagine the charades behind the screen, the uncertain deals stitched amongst few beneficiaries but what I know is the certainty of UMNO proxies and agents making off with their share of the loot and as expected, forsaking the greater good of fellow kin's - Melayu makan Melayu - is such a norm that victims no longer feel the pain.

If I could offer a cue to Sakmongkol, in relation to solving the Malay malaise, perhaps he should start addressing the problem and take the view that education provides the BEST solution.

The road to success (not necessarily material riches) begins with a superior mind - it always been that way from time immemorial, and there is no short-cuts to the method - none of that fast track, promise of false success/life on easy street Mr.Tech Transfer Mahathir Muhammud as advocated by that big slime ball when conceiving Proton. With hindsight, all that effort in vain resulting in many newly rich Malays cropping up - handsomely wealthy not from new or old money BUT "stolen" loot that deprives the more deserving and the many who really really need assistance and a meaningful leg up.

DAMN all 'em monkeys of UMNO, BN dogs and also the notable royal leech - DAMN all y'all blood suckers.

Pray read these comments with an open mind.


Monday 29 November 2010

Trouble in the heavens

You may ask, what's the fuss about? The fuss my dear friends, is that something rotten may be happening in MCMC and by extension in the Communications Ministry.
MCMC's function is regulatory basically. It's to the communications industry like Indah Water is to the sewage industry. It does nothing other than wield its big dick stick. . The infra are all done by property developers and they just receive contributory money. Yet they talk big because the stick they wield is big.
Secondly, all the fuss has exposed the real character of Telekom Malaysia- it remains a eunuch. Who's the bloody CEO? Now, in this particular instance, what happened to the supposed brilliance of those brain boxes from McKinsey and others who infest the inner recesses of Khazanah? Telekom Malaysia is owned by them right? This earliest on the scene passes on like history.
I would have thought, rather than building up the infra from stretch, TM is the best business entity to provide the base infrastructure. What MCMC and the Minister of Communications and Information and whatever should do, is to remove the monopoly enjoyed thus far by ASTRO. Then let other players, Astro kah, Mediaprima kah, YTL communications kah, Mamat Communications rent/lease the space from TM.
But PM must replace the entire management team at TM for failing to see the emerging business trends. Then he should cut the umbilical cord that binds it to Khazanah because the sustenance that is passing through is unhealthy and maybe even arsenic.
This idea of giving monopolies to the select group is abhorrent to free market economics. It is unjust to hardworking people of all races. It matters not whether that monopoly is given to any particular race. It is inherently despicable.
The 700 mHz band is a hot property and up for grabs to the highest multi-billion dollar bidder if an auction is carried out. In other countries, the bandwidth is auctioned off. Here in Malaysia, they are given to a select group. Why? Because they are clever, they can manage better ad nauseum. These select groups of companies have their eyes on acquiring the 700 mHz spectrum and are prepared to spend whatever it takes to gain control of it. Who gets it and what they do with it will have an indelible impact on whether anyone who lives in our society will ever have any chance of privacy or anonymity in any form. The 700 mHz spectrum is extremely valuable for digital use because of its excellent signal propagation properties, especially when applied to broadband wireless computer networks, similar to what we know today as WiFi. In the analog days of broadcasting, we became accustomed to being able to tune our TVs and radios just about anywhere, in our homes or outdoors, and elsewhere.
Currently used for UHF analog channels portions of the 700Mhz band could be re-purposed to wireless carriers, mobile TV platform providers, or open access internet for anyone – perhaps especially in rural areas. So, what is this piece of the spectrum useful for and why is there such a frenzy of political wrangling over it? Obviously is the monopoly over it and the chance to make lots of money.
The other telcos are upset that the 700 MHz spectrum is given to YTL. They will make a lot of noises over who gets control over the spectrum. In actuality, they ALL want a piece of the action.
Now is the time to set things right and make money for the government for once. Reconstitute TM first . Inject  it with visionary management leadership. Make it the owner of the spectrum and let others lease space from it. If the content providers used the spectrum for hybrid communications its ok. Later of they use it for telephonic or internet purposes, that's ok too.
Imagine the capabilities of the 700 MHz spectrum. They go far and can penetrate walls. After all, they've worked for analog TV and we all remember we can switch our TVs on almost anywhere with clarity right? So any cellular phone service provider might instantly lust after the possibility of fewer towers yet better reception. So what's the bull YTL is saying they will have to spend billions of money?
Of course the longer-range, more accessible signal comes with a price. And that price – at least with today's technology – appears to be bandwidth. But despite the apparent limitation this spectrum appears to have captured the imagination of lobbyists and corporations alike on the possibility of providing a 3rd pipe. Everyone wants a piece of the action. Everyone wants to be able to broadcast their content.
Our government is poised to set the terms of the most valuable sale/grant or auction of spectrum — the public airwaves over which broadcasters and cell phone companies operate. We hope the government will use this authority to earn money for our government.
When the award of the spectrum takes place, incumbent broadcasters are to return their bandwidth to the government as nation moves on to digital TV. By the way, has somebody in the MCMC ben feeding insider information to Astro allowing them to hype up its HD TV?
The characteristics and location (in the 700 MHz band) of this spectrum make it ideal for the development of a third, nationwide broadband Internet provider that could compete with the powerful incumbent telephone and cable companies which control broadband lines in this country. But unless the government takes a very different course than it has in the past by giving a monopoly to somebody, this valuable resource will most likely end up in the hands of those very companies eager to retain their stranglehold on the communications industry.
Think of it this way – do you want to be trapped by a monopoly or near-monopoly environment for access to the public internet? Should 1 or 2 companies control access and set pricing? And if that were to happen then will restrictions on content and applications come next.
I certainly welcome the clarification by MCMC issued through Bernama. It clarified that the 700 MHz spectrum given to YTL communications is for broadcasting purposes so that YTL can launch its hybrid broadcasting. Another spectrum, the 800 MHz will be dedicated for LTE and Telcos.
I hope MCMC will follow through with this statement. If some people perceived this award of the 700 MHz spectrum to YTL as breaking up the monopoly thus far enjoyed by Ananda's Astro that is a curious perception. Why break a monopoly by giving another monopoly?
Why not open up the market to as many competitors who want to offer hybrid broadcasting and make them promise, they will not use the 700 MHz spectrum for any other purposes. I am sure we can treat their promises as sacred and on equal footing as the promise given by YTL communications.


Sunday 28 November 2010

Further notes on the 700 MHz spectrum issue

In 1977, I was an undergraduate at UM. In one session of the GED- Great Economic Debate later termed Debat Ekonomi Agung, one of the speakers was Lim Kit Siang. I haven't been to UM for a long time, so I wouldn't know whether there is still the GED sponsored by the FEA.
Somebody from the floor asked him a question concerning Chinese economic predominance in Malaysia. The other speakers were the late Dato Asri and the other one was Dr. Ganapathy ( I can't tell whether this name is correct) I think from UMBC.
His answer was the standard stock in his trade. Yes he said- the Chinese dominate the economy, but who allowed this state of affairs to exist? In other words, he places the blame on the Malay leadership. Malays just can't win.
Today almost 50 years later, the same standard response persists. This state of affairs is the result of those in power (mostly Malays) giving Chinese hongs the opportunities. But there's the added twist. In the hands on these people, so claimed the triumphalist, they can become more competitive etc. The Chinese triumphalist is so over sensitive when criticized.
You are wrong. If YTL is headed by an UMNO feller, I would still write the same way I did. I did so when I wrote about Syabas. I did the same when writing about the construction of the 100 story building. It doesn't matter to me if the 2-3% within the 65% group did the decision making. It was wrong and unjust.
I spoke to a very senior former UMNO minister on a certain subject. I was complaining the ease by which GLCs such as MRCB and UEM buy into non Malay owned property companies under the pretext of achieving economies of scale etc. these are fairly textbook explanations as to why they are doing it. That's bull. Here at this website we have dedicated ourselves at exposing all bulls.
One of the remarks which the former very senior Minister said- the unfortunate truth is that it is the Malays in power who are destroying us. The government didn't bat an eyelid when they went on to save The Mines and Tycoon Lim Kim Siew, the Lion Group and any other Chinese owned business entities. But they threw in all sorts of spanners preventing people like Halim Saad from exercising his put option. Nor Mohamad Yaakob the man who blew away lots of our money in the FOREX market was instrumental in blocking the put option.
What's wrong with those Malays in power? Maybe they have forgotten to be Malays. I see the same futility and hopelessness in the formation of Equinas. In order to help Malays, the Equinas executives have to relearn what it means to be Malays. The main problem with these people is that, having accomplished their stations, they talked themselves into believing, they got there entirely on meritorious grounds. As a result, they expect the other Malays at large to proceed through the same route as they did. They have to get rid of this pompous self-righteousness first.
Look at what is happening to the communications industry. It was once dominated by Telekom Malaysia. Celcom was shaved off and resold time and time again. Other operators applied for cellular license only to flip deals here and there. The Communications Industry it seems is the new battlefield where privileged combatants get to flip deals.
There is some uneasiness in the way MCMC does its job. To achieve a certain level of broad band penetration, we have to give out 1 million laptops. Voila, somebody got to supply the 1 million laptops. In order to be ahead in the market we need the LTE- Long Term Evolution framework in which the 700 MHz spectrum is an integral ingredient. Voila, somebody gets the 700 MHz spectrum.
SPRM or MACC the commission charged eradication corruption should be sending in their troops to study the various cartels like machinations now.
The MACC should also now set its sights on the possible shadowy practices and decision making regarding the award of a monopoly on the 700 MHz spectrum to YTL Communications. Effectively they are giving a head start to YTL for 5 years. The public isn't aware of this goings on and the 4 TELCOS in Malaysia were caught holding nothing but their shrinking testicles.
Sure everyone has to have a national regulating agency. USA has its FCC and Malaysia has our MCMC. Maybe we should be investigating how the decision to award the rights to operate the spectrum is given to YTL only. Sorry but we can't be made to believe that it will be used to offer pay for view TV programs.
Then why the yahooed launching of YES recently offering the cheapest rate for mobile telecom services if there isn't a plan in the future to tap into the spectrum? Sorry YTL, gua takda caya sama lu.
Let us learn from the American experience. Look at what Google did. Even if it did so because of enlightened self-interest. Prior to the bidding process, Google asked that the spectrum be free to lease wholesale and the devices operating under the spectrum be open. Currently many providers such as Verizon and AT&T use technological measures to block external applications.
In return Google guaranteed a minimum bid of $4.6 billion. What has YTL guaranteed the government?
What did the FCC do? The FCC ruled in favor of Google's requests. Only two of the four requirements were put in place. Google had wanted the purchaser to allow 'rental' of the blocks to different providers.
The spectrum, currently owned by broadcasters, has been used for analog television. But it is set to be turned over to the government. Due to its broadcast-attractive physics (like its ability to penetrate walls), this spectrum is desirable for both broadband communications in general and public-safety uses in particular.
The FCC has described the 700 MHz as beachfront property, and has talked up the broadband capabilities of this spectrum swath. About 60 MHz of the former UHF (TV) spectrum is going to be reclaimed by the U.S. government and will be reallocated for public safety and commercial broadband networks.
Without access to the (700MHz) spectrum, the other TELCOs won't be able to expand. With this stranglehold, YTL can either shut out other telcos, or resell bandwidth to them. The other WIMAX provider is P1 but the new spectrum could give YTL total control over the next wave of new technologies in the telco sector.


The 700 MHz issue

YTL does not have the expertise nor does it have the RM8 billion. It will borrow from banks with its letter of recommendation from Min of Finance and roll that money elsewhere and then delay, ask for an extension, borrow more money and then launch the service...much like its 4G-Yes service.

Why can't we have fair open tenders so that companies from abroad with their expertise can jv with local companies and share knowledge can help in building this infrastructure? Most GLC like Khazanah, TM, Syabas, etc are already employing unqualified Malays thru' their abang/adik networks, so you can forget about hiring expertise or stopping the brain drain. No qualified experts will be willing to work under these so-called VPs and Senior VPs who can't even string a proper sentence in English much less provide the needed technical expertise.

The most YTL can do is to give out their contracts to a foreign company or hire Mat Sallehs at inflated salaries to keep the facade of a professional network provider..

28 November 2010 01:57

To put up the infra (towers, etc) to link up the whole semenanjung with a 700 MHz wireless internet service will cost abt RM 250 mil to RM 300 mil only. Speed not as fast as wimax. But can do some 1Mbps - so much faster than streamyx.

If YTL or Govt says it'll cost many RM billions to do the's bullshit.

The 700 to 800 MHz for just a state or two in the US was auctioned off for some USD 29 billion a few years ago. They're really beach-front properties.

700 to 800 MHz were previously meant for analogue TV channels and public safety channels - like police, ambulance, etc.

If YTL really got the spectrum for a song - then it would be the biggest scandal in the history of the nusantara. Suharto's misdeeds wd look like a mere spate of shopliftings in comparison.


I found the above two comments from two anonymous commentators. They were written in as responses to my very short article on the award of the 700 Mhz spectrum to YTL. There is something stinking about the way MCMC awarded this 5 year head start to YTL.

I don't want to turn this issue into a racial thing. But I am most certain those MCMC people deciding on the award are Malay executives and we know who YTL are.

The bigger issue here is we have been looking at the wrong causes for the lopsided distribution of income. Everyone has created a ruckus about Malays owning 30% of this country's wealth, but they forget that is collusion like what MCMC is doing with the likes of YTL is the single most important cause enabling the 35% controlling and owning 80% of the nation's wealth. The sadder truth is, this state of affairs is facilitated by people with authority entrusted to implement justiciable government policies. Or even sadder, the policies were faulty in the very beginning because the politicians and law makers were mentally defective.

Here is a real mental block. We have quarreled and got worked up over the wrong reasons. We have looked at the wrong question. Thus, we have asked and fought everyone on the issue of 30% ownership of this country's wealth. The group that is fighting for the 30 % share constitutes some 65 % of this country. And they have achieved only about 20%.

Putting it more graphically it's like stating 7 persons share 2 loafs of bread. The question, which is the bigger one that we have overlooked, is who has been cornering 70% of our wealth?

It must be the balance 35%. Doesn't matter who they are, yellow, brown or black. Comparing apple to apple it's like saying 4 persons gobble up 8 loafs of bread. Each gets to eat more than 1 loaf or even 2 loafs, while over the other side; each gets to eat not even half a loaf.

What has accounted for this anomaly? Maybe its politics. Maybe it's the system. Whichever is the cause, the 35% are more united by their unending desire to have more and more. So, maybe all this while, this 35% group sponsors havoc and disturbances so that our focus is to quarrel on who gets the 30%. We can't even let the 8 people get half a loaf, yet we still damn this group asking for 30% of the wealth.

Very often I have heard the arguments that a certain racial group is given the opportunities and business deals because they deserved the award. Also, because they have the intelligence, the experience, the money and the wherewithal.

Well, the two above comments at the beginning of this article expose the bull.


Saturday 27 November 2010

A very preliminary thought on the 700 MHz spectrum.

PM Najib shouldn't be talking to heads of Malaysian telcos to explain MCMC's decision to award YTL a 5 year head start in operating the 700 MHz spectrum. What he should do is to CANCEL that decision. The public has had enough of this idea of parceling out economic and business exclusive enclaves to selected people.

In America, which is much larger than Malaysia, the cost of building a nationwide wireless network over the 700 MHz spectrum is around $2 billion. That's about RM 8 billion. Award this contract to build the infrastructure to Telekom Malaysia. Then open bids for all operators to get a slice of the business by renting the facilities provided for Telecom Malaysia. Bring back the glory days to Telekom Malaysia before it was disemboweled and cannibalized by corporate raiders and bean counters who were and are glorified as terrific business leaders.

The costs are lower in rural areas, due to less interference issues and wide-open spaces. That's because each tower broadcasting at 700MHz covers twice as many square miles. Some estimates say that a single 700 MHz tower can cover 20-miles.

Cancel the decision to award to YTL. Instruct the MACC to study the decision making at MCMC. See whether executives from MCMC have been spending inordinate time at Marriot or Pangkor Laut.


Friday 26 November 2010

The big rod on Syabas

Let's just be blunt: The Eurozone's bailout program has failed. It's not solving the underlying causes of the European debt crisis; it might even be making matters worse.
The above is a quote I read on an assessment of what happened in Ireland recently. Ireland is seeking out a bailout from the European Union and IMF.
So let's also be blunt. The government shouldn't be bailing out private businesses even if they are owned by UMNO supporters who went on to form BAPAK. Rozali Ismail is a fat cat happy and contented. Mazlan Aliman is lean and has got that dangerous hungry look.
Syabas or Puncak Niaga does not need an Ireland style rescue. If the government steps in, it should go in IMF style. Bring the big rod and don't be shy using it. Replace Rozali Ismail for instance would be a good initial measure.
The text book strategy, perhaps dished out by people at Khazanah which is essentially Mckinsey-esque through and through so far has been simple: Put up rescue funds, demand reforms in the management and hope those steps rebuild confidence in financial markets that people like Syabas can pay back their giant debts.
This kind of approach is meant first and foremost as a confidence-building measure only, so bondholders could be assured that enough cash was at hand to make them whole, no matter what happened in Selangor or elsewhere for that matter.
Why will this bailout strategy fail? Because investors don't believe it is viable. The strategy is predicated on the notion that the companies receiving bailouts can fix their finances sufficiently enough to restore confidence in their ability to pay their debts. That means Syabas and whoever leads the consortium have to implement steep budget cuts and other austerity measures. Clearly they have been incapable of doing so- they have been spending like wild men, that is why they are facing this problem now. Gentle persuasion is not working.
How about cutting Rozali Ismail's humongous salary first if he stays on? He gets paid over RM 400k a month and he sets up a fund for those who have overpaid to contribute to help out those who can't pay. Why doesn't he volunteer cutting his salary by 50% and give it to the fund? Or give him a golden handshake?
But if we do that (the gentle persuasion or feather teasing method) it will only further depress an already depressed business. Even if UMNO politicians can muster the political will and authority to sustain those policies – and that's a big if -- there's no guarantee they will work to turn the business around. In fact, the bailout-mandated cuts, by suppressing growth, may make it even harder for Syabas and it cohorts to repair their financial position and pay their creditors. So investors don't believe that the bailout programs are ensuring they'll get their money back. That keeps the fear of eventual debt restructurings, in which bondholders share the losses, or even worse, defaults, very much alive.
The instinct of investors under these circumstances is to sell the bonds of weak businesses. Stopping this cycle of fear and crisis won't be easy. Investors have to be convinced that their money is safe as Syabas bonds.
How can we correct the situation? The government moves in to discipline the errand boys. It has to address the problem with more than budget cuts and bailouts. Syabas, and the others all have to get their fiscal deficits under control and stabilize debt levels. What were the causes of overspending n the first place? Huge operating costs? Losses? Corruption of non-water revenue leakages? Blind slashing with a hatchet can't be the sole method.
Make Syabas tackle its debt problem more proactively, not waiting until the edge of the abyss to call the government to step in, but getting ahead of the markets and putting in place reform-based bail outs. How so? Make it mandatory for them to allocate funds into the reserve fund. Clearly this requirement has been violated because perhaps, putting reserve funds has been voluntary. Otherwise, if it has been mandatory all this while, then monitoring it has been lax or some people have been paid to look the other way.
We can't just put up some cash for a bailout and let Syabas go about their business as usual. Putting in bailout money is going to place heavy political pressure. The public is asked to be frugal while our taxed money is directed to helping people like Rozali Ismail.


Thursday 25 November 2010

Snap election is a march of folly

I think Dato Najib has better watch out for overzealous news carriers saying that it's time for general elections. The recent victories in Galas and Batu Sapi are no indicators of a changing tide in people's affection. Galas was won on account of Tengku Razaleigh. Batu Sapi's victory leaves a sour aftertaste. Shafie Afdal worked hard to deliver victory at Batu Sapi. Good for him, though not necessarily for BN.
People are looking out for success stories. Where are they? Success at carrying out an Islamic Fashion show in Monaco doesn't conjure a feel good approval. People know, that show was just a machination by Reza Shah to earn some money. Those people attending the BAKTI bash the other day are also not impressed by the attendance of Shahrukh Khan and a bevy of Bollywood beauties gracing the event.
While they view as salutary the concern of HRH the Sultan of Selangor over the RM300, 000 dinner party by Yayasan Selangor, people are also eager to know how much the spenders spent on the Islamic Fashion Show in Monaco or the same event at St Regis New York. Can Messrs. Jamie Fox, Robert Deniro or Charlize Theron provide any semblance of accreditation that Islamic fashion has arrived? These elaborate PR exercises are too far removed from the exacting demands of life and reality in Malaysia.
What are people looking for? People want to see a purge of UMNO leadership. UMNO is a byword for arrogance and detachment from reality. UMNO is the political version of jom heboh and rah rah get together. Staying in power isn't the result of only UMNO people voting in. it's the people. You go around, there is still this easy to utter expletives against UMNO. To me this signifies a general attitude that is worrying.
What are people actually looking out for? First of all they want to see a new UMNO leadership composed of people, young or old who are committed to the greater good of society. They simply want good men at the helm. Dedicated, purposeful, determined and more or less clean. The last requirement usually insisting on a saintly quality is much overrated. The saintly person gets credit for himself and earns spiritual points. A saintly but incompetent leader while a credit for himself is a disservice for the greater good. It's not like entering priesthood.
People will definitely be looking at the state of the economy. With the appreciation of our currency, our exports will become relatively more expensive and we can expect export earnings to shrink. In major towns, the price of homes is getting more expensive by the day. In Selangor Malays are selling their houses in Taman Tun because of better price. With this demographic shift, UMNO/BN can forget about regaining Selangor.
The main scourge of this country is still corruption at almost every level of government and among political leaders.
I am reminded of the story of Voltaire which I have told before. He disembarked in Portsmouth and was greeted by an execution of a British admiral. Upon inquiry he was told that was the penalty for the inability of the admiral in killing French navy men. On the necessity of doing the macabre, he was told that every once in a while, the British finds it necessary to kill one or two admirals so that others will work harder.
South Africa's former police chief and ex-president of Interpol Jackie Selebi was convicted of corruption for accepting bribes from organized crime. The trial laid out his startling links with the criminal underworld, in particular with convicted drug smuggler Glenn Agliotti who was accused of giving him cash and luxury gifts. Would this kind of thing happen in Malaysia? In Hong Kong, the ICAC will check the bank accounts of top government officers including former top cop to see whether they have accumulated money beyond their salaries. Will that happen in Malaysia?
The best thing that can shore up PM Najib's credibility and seriousness is to arrest 2 or 3 ministers. This  should be our Voltaire moment.
Please don't make a decision based on the perceived weakness of the PKR and PR. Those PKR people are just going through a phase of bloodletting. They will regroup and reunite. Don't use Zaid Ibrahim as a yardstick. If he forms another political party, he will fade into oblivion. His only chance to stand as candidate would probably be as PAS candidate. Zaid Ibrahim made the mistake of forgetting that PKR was formed in the first place, having as one of its core mission, seeking justice for Anwar. It's in their DNA and Zaid just can't wish this will go away.
Decide on the basis of our own strength. This involves an honest evaluation of the readiness of the combat troops on the ground; the acceptance of the people of UMNO and BN and putting up winnable candidates.
The government in addition must earn the respect from the public. It must show some success stories.
The public is weary of empty promises. They now want action. The clamoring are in line with the PM's commitment to uphold the rule of law and imposing zero tolerance on corruption. It would appear every avenue of government spending is seen as a chance to skim the fat.
The purchase of laptop computers which can be gotten at maybe RM 200 from China are sold at RM 1000 apiece. A friend of mind has a more practical idea of refurbishing old laptops with new innards to make them current. These can be sold at a very much cheaper price than importing new.
A project such as building the new LCCT2 will incur cost overruns. Those people doing the costing and the quantity surveyors must have been boozed out of their heads to undercost the project the first time around. The purchase of capital items seems to be always overpriced because it incorporates the tea money meant for retiring KSUs and so forth. A former KSU of Home Affairs sits on the board of the Lotus group of restaurants and you wonder how on earth Lotus restaurants get unlimited supply of foreign workers.
So, please Mr. Prime Minister be your own counsel. You have been at this game since 1976. You are better at reading the tea leaves than others.


Wednesday 24 November 2010

Some economic common non-sense

UEM land, which is part of UEM plans to buy over Sunrise bhd for 1.4 billion. People can give all sort of rationale for the purchase, but a more important question is why buy over Sunrise? The excuses given that UEM land has no expertise in some development areas is nonsensical I think. You can build highways, high-rise buildings; suddenly you say you don't have experience in building high end condos like those built by Tong's Sunrise.
How banal can this reasoning be? Suddenly, UEM land is brain dead to the extent that they cannot outsource people who can do the same thing as Sunrise has been doing all this while. It doesn't even have sense of pride by admitting it doesn't have the marketing skills? What have we spent government money on these many years? The bozos at UEM land should be sacked.
Second, why does UEM land need to buy over Sunrise? Can't it find any other Bumi property developer with substantial land holding if its land they are after?
I find this reasoning by a GLC that it does not have the expertise (which they can buy) very facile. My own feeling is that with this purchase some people will earn humongous commissions.
And talking about commissions- has MAS secured enough traffic volume to justify its gargantuan expansion? I think in 2 years, MAS will be coming around to see the government, with bowl in hand to ask for bail.
Have you seen the traffic on MAS's first class seats in recent years? They are dwindling and no marketing strategies seemed to be planned seriously. By the end of this year, MAS takes delivery of three units of Boeing 737-800. Over the next 4 years, it will take delivery of a further 32 units of 737-800s. In addition it will buy 15 airbus A330-300s from next year to 2015. It will also buy 6 units of A380-800 super jumbos. It has the option to buy 30 more airplanes.
So MAS has a spending model. It doesn't show us its revenue earning model. But never mind, I see huge commissions over this purchasing exercise.
I see chairman of Puncak Niaga and Syabas, Rozali Ismail doing another con job and pulling wool over our eyes. He has formed BAPAK an NGO designed to counter the onslaught by ANAK also an NGO formed by Felda settlers which is attacking the government.
The launching of BAPAK followed revelations that Syabas is seeking a bail out from the government. I have written about this. The formation of BAPAK is nothing more than an artful strategy by Razali Ismail to ingratiate himself to the government. Rumors have it that Rozali Ismail will get some water treatment deals in Sarawak.
When a business entity intends to issue bonds I am sure it has prepared a rigorous business model and submits it to the authorities. The brain boxes with the authorities will scrutinize the business plan and sagely nod their approval. Well, it now appears what the business entity submits was a con job to borrow money from unsuspecting and trusting public.
Let those who cheat the public eat cake.



Sunday 21 November 2010

Values agenda vs. political agenda.

This PM is pushing for a values agenda. 1 Malaysia with its agenda for inclusiveness and unity is a values agenda. An economy based on merits based affirmative action is another. The weakness I think is in the execution. It's not being explained down through the ranks. That won't do, if the values driven agenda are to become shared ideals.
I wrote of the imperative of having a successful showcase. The fight and commitment to stem corruption for example must involve prosecution of those high level people who are involved. Fair play and transparency are further values that need to be shown to be believed.
For example, how can we justify helping out the financial and management mischiefs of Syabas? The people there made tons of money (I am tired of saying so many millions or billions) which they keep private. Now, because they are unable to increase the already high tariffs they want to default on their IOUs (bonds) and shift the blame onto others. They have already taken all the profits and now, they want to share the liability and losses with the public.
If the government helps out, it must clarify the basis for helping out. I hope it's not because Rozali Ismail is an UMNO member and now heads the NGO BAPAK to handle complaints from Felda settles and compete with ANAK. So Felda's problems are actually anak beranak punyak hal.
Is the federal government planning to provide a RM 1 billion bail out to Syabas or will it take over and assume the RM6 billion liabilities? You ask the consultants and they can come out with 1001 gobbledygook financial instruments to save the culprit- if they want to.
Let us remain true to a values agenda. In this agenda for example, we don't shelter cheats, crooks and the incompetents. Syabas and the water concession players in Selangor are making tons of money. Yet, they cannot stay profitable.
They are all looking at the state to bail them out. My question is why should the government bail them out? If they can't pay, let's do an open tender and see which private companies can offer the government better service and better returns.
The government shouldn't be treated as the savior of last resort. The government is not God and Santa Claus 2 in 1. The water concessionaires in Selangor shouldn't be let go scot free. They must pay for the bonds they have issued. They have made tons of money and they must be made to pay. Let their companies be taken over by other private companies. if the liabilities are be taken over too as is the normal case when another company takes over, these defaulting companies must take a haircut and it must be a crew cut.
In the name of pushing for a values agenda, I think the Najib administration should allow the free play of market forces. The defaulting companies who made tons of money should be punished in accordance to the law. Let them file for bankruptcy if they can't pay. The government should not be forced to use public money to bail out privatized businesses. Let's not see this problem as some sinister conspiracy against the water concessionaires in Selangor.
Consider the financial magnitude. The four water companies have a combined debt of RM 6.4 billion. The federal government has already given Syabas a soft loan of RM 320 million. The total interest on this 20 year loan is RM 250 million, and Syabas will not be required to pay a single sen of this amount. Instead, this cost will be fully borne by Malaysian taxpayers.
Puncak Niaga Sdn Bhd (PNSB)'s net debt is RM1.3 billion, Syabas's is RM2.9 billion, Splash's (Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd) is RM1.6 billion and Konsortium ABASS is RM640 million. The total is RM6.4 billion.
The Syabas people cannot run to the federal government and say they are in this predicament because the state government refuses to allow them to increase the water tariff in the state. On what reasons can they justify the increase?
I think we should learn how a smaller outfit such as Perbadanan Bekalan Air Pulau Pinang can make money on lower rates and on smaller revenue. The Selangor state companies which supply more water and on higher tariffs cannot?
They cannot simply because, the companies may not be run efficiently or that the woes of JBA Selangor before the utility supplier was privatized are not tackled. Leakages and losses and sheer mismanagement. And the list of mismanagement included; - as a matter of public record, an audit report on Syabas which showed more than 72% of contracts, worth RM 600 million in total, was awarded to companies chosen through direct negotiation not by open tender process. Also, RM 325 million was found to be 'missing' in discrepancies between Syabas' public accounts and the records of contracts awarded from 2005 to 2007.
In June 2005, Syabas contravened the terms of their concession when they imported RM 375 million worth of pipes from an Indonesian company instead of sourcing them locally. The Indonesian company was owned by Tan Sri Rozali Ismail, the CEO of Syabas.
In the face of these shenanigans why should we expect any decent government to not allow Syabas from raising water tariffs by 37%?
But at the same time, why should the state itself now endeavoring to reacquire all water concessions from the private water companies?




Friday 19 November 2010

Regaining lost ground

I have read numerous comments saying UMNO is doomed. I too have been criticizing UMNO quite a bit but I have also maintained my faith in UMNO. It's difficult to abandon something you were a part of and indeed got elected on its ticket. So while I criticized and shall continue to do so, I maintain my belief in this party which Malays can identify with.

If so, why did the party lose a lot of Malay support in 2008? It lost a number of states. I have already written two articles on that and shall continue to point out in some follow up articles.

It's easy to criticize a party when they dropped in the polls. And it now seems clear that the polls of 2008, things didn't look rosy for UMNO and BN. from a commanding position of securing 2/3rds majority, it has lost that lead. It now has 140 seats in parliament while the non BN parties have 82. As I said in my two articles the chief cause for the losses are UMNO's arrogance and their trivializing of risks.

The problem for the BN and UMNO is obviously that they're and will be looking at quite a sustained period of bad news. Presumably we're looking at many months of sluggish economic growth, more job losses, and just the general mess that Governments have to put up with.

The PM, UMNO and BN will hope to be able to announce a turnaround in the economy which the public actually notice and feel. For example, they have postponed the introduction of GST- which the public will definitely feel. What's the use of implementing a tax system that actually hurts the lower income group who will be compensated only later in the form of aid package?

But they still need to do something to keep their polling numbers up in the meantime. The government can't expect to do this just by lining up "feel good news" stories - public holidays, minor tax breaks etc.

Instead there seems to me to be two options. The first is deliberately choosing a few very high-profile rows on those issues most important to the public, above all the economy. This would involve the deliberate highlighting (and exacerbating) of major policy disagreements such that the public was forced to choose in their own minds between two competing futures.

For example, the policy makers in the government can put up a spirited case as to why the ETP projects will indeed work. So far the opposing side has shown nothing other than just opposing these plans. Another is to justify the construction of the 100 storey building by PNB when many are questioning the wisdom to do so including this author. employ consultants if you need to put every one of us in our place. You need to show just one success story to silence your critics.

The second model would be to follow the one created by Clinton in the mid-90s - where he announced a series of high profile policies designed to show that he was in touch with the values of Malaysian voters such as serious action against corruption, real reform on the judicial system with the retirement of nonproductive judges, a cleanup of the police force again through retiring the rotten apples in the force, or even retiring some non performing ministers. Also policies on steps to introduce transparency such as mandating open tenders.

Perhaps the two most important issues that are creating public distress are corruption and lack of transparency. In the former, what would immediately earn public respect is action against people who are generally believed to have amassed wealth beyond their means while holding high office.

Najib should find it be possible to create a "values agenda" here, demonstrating that UMNO/BN are in touch with the public, and the PR people with their own internal feuds and squabbles are out of touch. The areas which we outlined above offer an endless supply of policy announcements that should be relatively cheap but high impact. While no one issue will be enough to turn the polls, the public will end up getting the message in the end.

The main objective is using people's concerns with the state of Malaysia to make them think "I'm just glad they're in the charge and not the other lot." If we can instill this kind of thinking in the public, the opposition parties are gone.


Thursday 18 November 2010

Let’s KPI Khazanah

Was Asas serba's offer to take over the 23 toll road concessions for RM 50 billion rejected because Nor Mohamad Yaakob wanted it that way?
For that matter, had the offer been made by any other entity for RM 50 billion, would such an offer be cavalierly rejected?
I say cavalier because the boss at Khazanah, Azman Mokhtar made just a cursory mention that it had received an offer from Asas Serba. RM 50 billion and yet no considered evaluation? 50 billion isn't exactly small change is it?
He went on to say, PLUS highways are generating cash and profit and the highways belonged to the people. But we are never told the basis for rejecting offers to buy the PLUS highways. Surely the reasons to divest are there because Khazanah and EPF formed a SPV to take over the business.
My point is, if there are reasons justifying the eventual takeover of PLUS highways by the Khazanah-EPF JV, then the same reasons must have existed at the time when Asas Serba or MMC made their offers. Or the people from MMC and Asas Serba didn't think about these reasons?
We the 'people' who own the PLUS highways don't know what is happening.
Asas Serba offered to buy at RM 50 billion. That would make the owners RM 50 billion richer. RM 50 billion would go into the system and would probably increase liquidity. The government would probably save money by not having to pay compensation in the form of subsidies.
There was also an offer made by MMC group led by Syed Mokhtar alBukhari. It was also rejected. The offer was said to be somewhere in the region of RM 15-16 billion.
I always thought, the basic role of Khazanah, at least before being headed by Azman Mokhtar is to function something like Warren Buffet's Berkshire Hathaway. Basically it invests in sound companies and let those who are cleverer and better than them, manage and operate the businesses. It's a sovereign fund anyway.
In that way, it ensures the best returns to it as a stakeholder. It now seems Khazanah wants to micromanage everything which means it is running the business. It is now in business with the luxury of using money belonging to us the people.
Now, as we read the many public statements by Azman Mokhtar, the principle which he uses to reject or spurn an offer is to say it won't sell a profitable business. The other excuse he uses is to say a particular business belongs to the people. I like these two principles by which he swears because; we are going to take him on that.
Why did it reject a RM 50 billion offer without explaining? It gives rise to suspicions that a reasonably good business offer is rejected on some non-objective reasons. Why is Khazanah still being controlled by Nor Mohamad Yaakob when it is the finance Minister who should be in charge of it? Hasn't Husni Hanazlah got the steely determination in his constitution to counter Nor Mohamad Yaakob?
Has khazanah got a big war chest? Has it got money to spend around? Has Khazanah veered from its original objectives on which it was established?
A look at the management structure of Khazanah gives the impression it's a club for the alumnus of consultant companies. Mckinsey, Ethos and Bina Fikir. The 'best brains' said Nor Mohamed Yaakob at one UMNO General Assembly. These people would live and breathe by the code of KPI.
That's a lot of bull crap. Anyone who attended the fanfare-ish ETP presentation by Idris Jala would be immediately aware of the emptiness in that claim when the young cikus (a large number from McKinsey) manning the many booths were often hung out to dry.
We need to examine the incestuous practice of seconding or hiring consultants in charge of Khazanah and then having the same people consulting out their work to their previous companies. Do we need consultants to hire consultants?
I am still trying to make business sense from the purchase of PLUS highways by the SPV belonging to EPF and Khazanah. By doing so, it's tantamount to taking PLUS highways private in the same manner what Ananda Krishnan did to his company.
These two already owned chunks of PLUS highways. EPF already owns a 12.3 per cent stake and Khazanah holds 55.2 per cent of the firm that operates the lucrative North-South highway running from the northwestern tip of Malaysia to Singapore. The Employees Provident Fund (EPF) and state investment arm Khazanah Nasional formed a special purpose vehicle (SPV) to take over the assets and liabilities of PLUS at RM4.60 per share.
Why the takeover and how can it be justified?
The target became the subject of public interest when an unknown company called Asas Serba submitted a proposal to take over PLUS highways and the other 19 highway concessions from the respective owners for RM 50 billion. The offer included a reduction of toll rates by 20%. It sounded good. But the offer was received in a lukewarm manner and by Nor Mohamad Yaakob in an openly hostile manner. He went on to say, it cost the government over RM 200 billion to build the highways. In other words he was saying, over his dead body.
Was the offer rejected on sound business reasons? The SPV is taking over the 4 toll concessions held by PLUS for RM 23 billion, now RM 26 billion? The share was valued at RM 4.60 each. Asas Serba's offer of RM 50 billion was for all 23 toll road concessions. The rest are loss making entities. It didn't separate what it would have paid for the PLUS toll concessions. Was it a wrong strategy to lump its offer altogether giving anyone the lame excuse, it's difficult to know what the offer would be just for the PLUS assets.
So we have no way to ascertain whether had AS lodged an offer for PLUS, could Asas Serba financially manage to keep to its earlier promise of not only cutting toll rates by 20% but also keeping them flat until the end of the current concession agreement. Keeping it flat or reducing the tools rates is not a major issue, because the government compensates the toll operators anyway. The offer would be superior if in addition to offering that price, reducing the toll rates and keeping them flat over the entire tenure, it can say the government doesn't have to make any compensation. Did the government get this?
But Asas Serba's offer was already doomed from the start. First the group is said to be associated with Halim Saad or Daim Zainudin. Halim's Saad UEM group was taken over on the excuse that Halim could not exercise his put option. This is an old story which I am hoping to retell. The company he headed wasn't even bankrupt which would have really necessitated the government taking over his business empire. His greatest sin it seems to me, looking as an outsider was his inability to exercise his put option within the time limit and the general impression that he was linked to Daim Zainudin.
If the government then had wanted to help out, they could. Because it helped out other distressed companies such as Lion Group and Azman Hashim's Ambank. But the other two were not linked to Daim.
Then of course, you have the sage-like evaluations by analysts. One typical evaluation goes like this:- suppose AS buys PLUS in a leveraged buyout deal in excess of RM23bil, we wonder just how much financial wriggle room would Asas Serba have if much of PLUS' cash flow be used to service the debt taken on to fund any takeover. So? You have cash flow- do you just ogle over it? After it takes over, its cash flow belong to them and they will manage it in the best way they could.
Then, in a I-told-you-so very facile aside, a wry comment would go like "If something goes wrong with PLUS after a takeover by Asas Serba, would it then lead to another bailout?"
Others noted that the issue on who would eventually gain control of PLUS and its highways went beyond pricing concerns.
This is purely a private sector business proposal. If Asas serba should fail, the government can always sell it to the next buyer. Others will offer to buy them out. The mischievous question as to who would gain control over PLUS beyond pricing questions is just that- mischievous. They have got to be controlled by somebody in the end. Does it matter whether it's Z or Y.
The better question would have been, is Z better than Y.
Asas serba would certainly employ its cash reserves for some specific objectives. We haven't been told how they would raise their finance fully. PLUS's cash flow is an obvious candidate but we cannot discount the possibility of other sources. Now that the offer by Asas serba has been rejected, we don't have the chance to see the details of their offer.
My question is, have the offers from both Asas Serba and later Syed Mokhtar's MMC been scrutinized carefully and if they have, by whom? You can't expect Khazanah and EPF, to offer an objective evaluation.
Asas Serba said it planned to issue bonds with a dividend component to pay for the estimated RM50bil it would cost to complete the transaction. The bonds, which will be issued by the new concession company set up by Asas Serba and other new shareholders, would carry an annual coupon rate of 7% PLUS a share of profits that is equivalent to a 2.5% to 5% effective yield. The bonds with the dividend sweetener will be issued with tenures to be fixed based on the projected cashflow statements of the toll-road companies.
Asas Serba said the share of profits would give bondholders the benefit of sharing the upside of the returns to the new concession company. Its proposal contains a number of options for current shareholders and lenders. The lenders can cash out of their investment, invest in the bonds that the new concession company will issue or stay on as creditors. Shareholders too can choose to cash out, invest in the bonds or invest as shareholders in the new company.
The company believes that its plan would work as it centers on making the operations of the highways more efficient by reducing costs. The company feels it can cut costs by 15% in a short time and implement programs to raise non-toll revenue.
Now that the Khazanah-EPF SPV has taken over the PLUS highways, perhaps the best option available to Asas Serba is to take over the remaining 19 tolled highways and show they can make profit from there. Or as defined by Azman Mokhtar, because highways are the people's assets, then maybe Khazanah and EPF should plan to take over the remaining highways.
It would be interesting to speculate on who will get to buy the Plus highway should one day, Khazanah and EPF chooses to divest this business just as Azman Mokhtar's contract is not extended?


Monday 15 November 2010

The post UMNO Malaysia-Part 2


Because Hillary Clinton had just visited Malaysia last few weeks, let me compare UMNO in an analogy with America. I was listening to the BBC program Hard Talk- in which the interviewer asked the guest speaker what he thought about America. Without hesitation, the guest answered- America will remain as the preeminent power.

That is the observation and prognosis despite America having suffered much battering at its image. This despite America suffering economic problems such as subprime debacles, increasing unemployment, gargantuan deficits as Obama thinks about all kinds of stimulus spending, its growing indebtedness to China etc. this is despite America being led by not always competent presidents.

Now why is that? Because it's basic values and motivations are still shared by the majority of nations on this earth. America stands for freedom, rule of law, good governance, democracy and such things valued by freemen all over. It stands for modernity and practical solution to life's problems. Despite many shortcomings, America remains as the primus inter pares.

Iranians and Iraqis and many of those who hate America want to send their students to study in America. The most strident of voices arguing for a return to puritanical Islam originate also in America. That's because, the American setting or to use a more fancy word, the American ecosystem allows that kind of outpouring of zany ideas however incredulous and outrageous they seemed.

Why, because America represents the dream of the majority. People subscribe easily to egalitarian ideals. People want to demolish all vestiges of privileges. If we are moving towards these ideals, UMNO cannot extend its relevance if it hinders these trends. It must adapt.

What UMNO must do is to go back to its fundamentals. The old UMNO was a tolerant UMNO cognizant of the interests and rights of others. It knew the way forward is to give sufficient space for other stakeholders. In return, it secured the understanding of the other stakeholders of the dominant presence of Malays in this country. Perhaps the mutual understanding was interpreted as the social contract although no such agreement formally exists. Mutual respect and the realization of sharing the same destiny bind people together. This lost idealism must be recovered.

Over the years, UMNO has lost it sense of balance. The reasons are many. The chief is inability to deal with success which resulted in arrogance and the trivialization of risks. When those in power think their actions are riskless, they act with wanton abandon. UMNO didn't do well in coping with success.

What do people point out as proofs that UMNO cannot and will not change? They will point out that UMNO has violated the constitution by selecting parts of the Constitution that suit them, they point out to the corruption, bad governance, lack of transparency, they point out to the violation on the justice system. They will point out to the corruption and subversion of UMNO's struggles and point out to the pervasive culture of seeking personal interests and wealth. They will point out to UMNO's clever machinations of racial sentiment and constant malicious tinkering with the fragility of inter-racial relationships.

Clearly, these are attacks from people moved by libertarian ideals. However, they do not stop there. The assaults on UMNO also come from its supporters. They point out to UMNO's negligence in uplifting the Malays. They openly censor UMNO's leadership double-faced dealings. UMNO as the vanguard of Malay interests stands accused as over compromising.

Can we say the UMNO leadership insulates itself from these afflictions? Of course they don't but it would be stupid for UMNO to advertise to the world what it is doing to address the situation. Certainly it won't broadcast the measures it's taking to the opposition parties. So, the opposition people (not necessary party people) infer UMNO hasn't change. What UMNO does to its own body politic is UMNO's business. It will carry on regardless.

How was the response from the UMNO leadership? The spokesman for the UMNO response is Najib Tun Razak. He came out with a slew of grand designs, visions if you may. The New Economic Model, the Economic Transformation Plan, Government Transformation Plan, New Political Model etc.

Obviously, these are not churned out as badges of self-glorification. Najib can't be seeking immortality through these initiatives that needed to be worked on and whose success depends on a host of other factors. They can't, because self-glorification is too quirky a justification for coming out with such elaborate plans. If Najib had wanted that, he would do a better job by erecting statues of him or producing busts of him and placing them at strategic places.

He has to reconfigure UMNO from a party that is inward looking to a party that is forward looking. He needs to recapture the original spirit of UMNO. First, he has to make UMNO people relearn its own idealism and history. He has to recast UMNO into a party willing to give space to other stakeholders. His problem? Finding a balance with demands from his own ward with those of others.

In that forward looking scenario, he finds these. People want to live in less troubling social, political and economic settings; they want to embrace modernity and practical solutions to life's problems. Not many are seeking immortality through martyrdom. Those who offer extremism either in politics or religious movements do indeed attract people, but they will be small in number, both the sponsors and their adherents.

He sees a society wanting the rule of law, better good governance, more egalitarian ideals and removal of privileges. That's where he finds being sticky on NEPish policies is not defensible.

I accept there will be large number of doubters who dismiss the idea of an UMNO willing to change. The anecdotal and personal musings will turn out to be largely wrong. The anecdotal musings are probably the result of personal rejection of the many abuses in the system, corruption, the abhorrence to the rise of puritanical groups such as Perkasa which is considered an extension of UMNO and so forth.

But what proportion di these groups represent the bad side of UMNO? Very small. The noises created by these disparate groups that may have given birth to the personal musings are just the work of gangs of misfits. The majority want modernity and stability which BN can give. The majority of UMNO people are sensible people.

Meanwhile, while America will remain as the preeminent power, others are asserting their presence on the world stage. France, Germany and even Turkey have played crucial roles in geo political crisis managements. In economics, China and India are emerging as major players. Obama is supporting India be given a seat on the Security Council. Brazil and other countries are also capable of playing center stage in business and economics. America is just ceding some of the areas which it monopolized in the past not because America is declining, but because the rest is moving up.

Something similar to that is happening to UMNO. UMNO may have lost many seats and states, but together with other BN parties retain control over the federal government. It still has 140 seats. UMNO alone still has 79 seats. But the rest have also risen. PR and non BN parties got 82 seats, less now as a result of desertions. The rest are asserting their presence. But whether that rise can be sustained is another matter which the 13 General Elections will reveal later.

Whenever I write something that places UMNO is a good light, there will commentators who will scoff at the idea. The usual flippant are just personal claims backed by mostly anecdotal and personal accounts that UMNO and BN will be kicked out. I have only one term to describe these musings- it's just a cottage industry spewing out invectives mostly personal at UMNO. Its wishful thinking, wishing UMNO will just fade away. It will if ALL its leaders are ignoramuses, an assertion that is supremely difficult to objectively defend.

UMNO still remains (in Malaysia) the political superpower. But like America it is no longer the sole voice narrating the story of Malaysia just as America is not for humankind. Most of the leaders recognized this. That is why they are making adaptation.

Consider the concept of 1 Malaysia. While I may personally not like the term 1 Malaysia, it does represent a step towards adapting to new political realities. Najib recognizes the need to give more space to other stakeholders. The Chinese for example who have so much role to play in Malaysian economics will want a bigger political role. Whether they do this through MCA or other party is irrelevant actually. I have once said that maybe one day, UMNO may have to work together with the DAP which appears to have cornered Chinese loyalties.

In Malaysia UMNO is no longer the only voice telling the Malaysian story. Like America, UMNO no longer dictates a unipolar world. It is now a Malaysia where power is diffused. No longer monopolized by UMNO.

This is the post UMNO Malaysia I am talking about. There is a term to describe this. Samuel Huntington, the person who wrote that famous Clash of civilizations called it a uni-multipolarity world. I prefer the term used by Chinese geo-political thinkers. They called it a world where there is one superpower but many powers.

In our context, UMNO remains the superpower but it lives in a world where there are other alternative power bases who are acting with greater assertiveness and with greater activism and also dynamism. Hence I entitled this article- the post UMNO Malaysia.

The title of this essay may be misleading. No, it's not a Malaysia without UMNO. It will be a Malaysia with a redesigned UMNO. UMNO is not going to be written off just yet. The Pakatan people and others may continue in their wishful thinking. UMNO is not about to wither away. Very sorry people.

It's about a Malaysia where UMNO is pragmatic enough to share the building of this nation with other stakeholders. The strident voices shrieking out narrow patriotism and master race-version of the Malaysian story are voices in the peripheries.

In order to achieve this, UMNO must provide renewed and different kind of leadership. So too must the other stakeholders. The MCA, MIC and others who share the vision of BN.

The sad thing is, the majority of UMNO people (not just the leadership) is in denial. Most are patting themselves in the back while sailing on the Titanic which is heading straight into the iceberg. In the recently concluded UMNO GA, there were hardly any restraining and realistic voices. UMNO people still talked of an old order founded along the lines of NEP, continued dominance of Malay rule, etc.

Could it be possible that only a handful of our leaders most notably Najib Tun Razak see the incompatibility of such a stance against reality?


Sunday 14 November 2010

The post UMNO Malaysia-part 1

The post UMNO Malaysia- Part 1.

Readers will be disappointed if they think judging from the title of this article, it's a Malaysia without UMNO. It's a Malaysia with UMNO and the rise of the others. People are busy documenting the rise of others that they forget UMNO is capable of adapting.

By the others I mean non UMNO political parties that are asserting their presence as stakeholders of this country. Correspondingly, it's a Malaysia where UMNO recognizes this fact. It's a Malaysia, where UMNO which will remain as the preeminent political power adapts to a new environment where it has to give space to other stakeholders. But it's also a Malaysia the other stakeholders must know that UMNO and the Malays are not going to disappear just like that. That's the only way to ensure its survival. It's also the only way for the others to survive.

I have not been writing for some time. I have gone back to catch up with some reading. Also, a brief interval is necessary to allow me to see things in perspective.

For example I have extensively criticized Najib's big ideas; 1 Malaysia, the ETP, GTP, New Economic Model etc. I am still critical and will continue to examine these ideas. These ideas must be examined on their merits.

On the other hand, looking at these on a wider perspective, there is a rationale behind them. It's a plan for political survival. For UMNO essentially.

How so? Najib knows UMNO must adapt or perish. It can't survive in its present form. His biggest problem? Making the UMNO people understand this. It's troubling to note that most of his big ideas were rejected at the recent UMNO General Assembly. Yet none of the big UMNO leaders addressed this point.

He needs to disseminate his ideas for which he needs champions at various levels. If many in the higher leadership do not share his passion in his big ideas, how can they be the common cause of the masses? Either many of them are indifferent or are too daft or its only Najib that is thinking how UMNO can survive.

What's happening to UMNO can be discerned if we ask why couldn't Japan overtake America as the biggest economy or most powerful nation etc.? In the 1980's many people were forecasting that Japan will overtake USA. That didn't happen because; Japan didn't have the institutions and the values to allow it to overtake USA. In order to move into the next phase, Najib and his government must devise ideas and institutions that support his grand designs.

I take it therefore; the requirement to enable an entity to move to the next phase is that we must have the institutions and practice that support that transition. Its UMNO and the government machinery first.

UMNO couldn't make it to the next phase because the institutions that made it successfully in rural areas, the values that can sustain the transformation are not there. We don't have the same grassroots organizations that operate in villages replicated or transplanted in urban areas where the majority of Malay voters now reside.

In the villages you have institutions such as ketua kampong or village heads, the penghulus, the kumpulan 10, the surau and madrasah committees etc. and many other voluntary social organizations. Through these, the government can disseminate ideas and also receive feedbacks with great immediacy. The same grassroots organizations are not replicated in urban areas.

So how do you ensure longevity and survival? You adapt. It calls for a strategy of adjusting to the process of natural selection, politically speaking that is. Najib has several options; one to submit passively to a process of natural selection letting UMNO to develop traits that can ensure its survival or to carry out artificial selection. The former process may take a longer time and a luxury Najib cannot afford. Also, we are not sure, the cross section of UMNO people want to develop the necessary traits.

The next option is artificial selection, by grafting onto UMNO the desired traits that can ensure its survival. This will demand an iron willed leadership. No flip flopping and no going back.

An organization that fails to adapt to changing environment, will become extinct. So, in a related sense, those big ideas that Najib churned out, are measures thought of and taken to adapt to new demands from the political environment. Failure to do so will cause UMNO to perish.

But I maintain my reservations that his big ideas do not have the soldiers to carry them though. Most were hatched in labs and are clubbish in nature. And I am not sure Najib has the absolute political resolve to see it through. That may be an indication, that his ideas have not been fully accepted by senior UMNO leaders too. He must inspire confidence in us.

He must have that team, a new one if necessary to carry through his ideas. He must have a team that works harder. I was listening to the conversation with Andrew Gould, the CEO of Schlumberger (the French company) talking about leadership. One of the things that he mentioned is team building. The incoming CEO must have a team that shares his passion and ideals. He must first identify members of the outgoing CEO who can make the transition to his team most easily and usually there is only a handful. The rest he must release and take on a new team that is able to more reflect and share his ideas and passion. PM Najib must have a new team. And that must also include members of his staff.

When Voltaire arrived in Portsmouth, he was shocked to see a man being executed with pomp and ceremony. Upon inquiring, he found out the man who was shot is an admiral. His crime? He did not kill as many enemies when in battle against a French navy. But why execute him asked Voltaire. The answer was, the British find it necessary once in a while to execute an admiral so that the others work harder.

So, in forming his team, maybe PM Najib needs to execute one or two admirals so that the others understand he means business. Throw out those dysfunctional ministers.

UMNO must relearn what it means to be Malay.

UMNO considers itself as the only real voice of the Malays. Now it must validate that claim by understanding what it is to be Malay. Understand first and formulate the operating strategies accordingly.

The social outlook of a typical Malay is shaped by the values he lives by which have been drummed into him for generations. He is basically submissive and functions well in an ordered and structured society. By that I mean, the typical Malay operates best when there is a well ordered hierarchy in society. He will follow the leader, out of respect and also out of adherence to the way as it has always been. Malays follow the leaders, elders, the positioned, the uniformed etc. Malays submit to authority and finds nothing demeaning about that. It has always been that way.

Understanding this basic nature will then require us to approach a desire to graft and cultivate desired traits in a certain way. The only way I suppose, given the cultural disposition of the Malays, is to impose a regime of disciplines. This requires an iron willed leadership or some kind of benevolent dictatorship.

This notion of a will imposed from without, the notion of a regime of a disciplinarian or benevolent dictatorship may be abhorrent to democrats. Personally I feel that too, but I fear our kinship with libertarian ideas can't be the route to change the mindset of the Malays. Not in my generation I think

They need the exhortations from the strong willed leader or leadership. They can't be expected to voluntarily develop the necessary traits to survive farther.

This is my central point as regards UMNO. Like the Malay, it can't be expected to change on its own. We can't expect UMNO people, with their vested interests and their cultural set up like the Malays, to voluntarily develop the traits to ensure its survival in the future. It must be whipped into shape by an iron willed leadership.

So if Najib announces his various initiatives without the discipline, the iron resolve, and without the foot soldiers to carry them through, they cannot transform the Malays and UMNO. He needs good men at every level of leadership to ensure his various initiatives can go through. He must operate via the operations room method of Tun Razak.

Otherwise his big ideas do not become shared ideals and his army of ketua bahagians and other party men are in the dark about his big ideas. He has inadvertently created a vacuum that is filled by gangs of misfits such as Perkasa. While Perkasa may fight for some causes that find ready clientele in the Malay heartland, I think what they are fighting for is superfluous. UMNO is fighting the same causes and is better organized to achieve them.

This theme will be examined in the next few articles.



Monday 8 November 2010

Trust regained = monumental shift.

For UMNO, its Malay trust that is.
First some clarifications are in order. Maybe some people misread my criticisms on my own party. I saw my article being uploaded by Anwar Ibrahim ( Zaman kebangkitan?). Another article was uploaded by Lim Kit Siang. (Momentum yes…). The main purpose of these two articles is to provide a reality check on UMNO's exuberance. They are not written to push forward the agenda of parties opposed to UMNO.
I have said it many times, I believe in UMNO being the safest bet for the Malays and Malaysians in general. Because, the bedrock of UMNO has always been moderation and pragmatism. For example, some people may say cooperation with non-Malays is tantamount to selling out Malay interests. The truer interpretation is that UMNO is pragmatic enough to acknowledge that this country needs the participation of all Malaysians. 1 Malaysia as a concept of inclusiveness is workable provided the big idea percolates down wards. It can become an operational concept provided, I believe, if that idea becomes a shared ideal.
At the same time, the UMNO leadership must be realistic enough to admit it cant shed its ethnicity and the responsibilities entrusted upon it as a result of that identity.
Unfortunately as I see it, the idea is not being sold down the line. It then becomes non-operational and the PM is looked upon as being disconnected. That portion of connectivity and making the concept operational, I have criticized extensively.
I have called it as it is. During the recent UMNO General Assembly, if delegates and UMNO people are honest enough, they will have to come to terms that delegates in general rejected the big ideas of Najib. They didn't want 1 Malaysia- they wanted Malay first. They didn't want the New Economic Model- they insisted on NEP like policies. In the end, Najib has to defend himself by declaring the fact that he is Tun Razak's son.
I bring the same attitude when assessing what happened in the recent by elections. People forget that I was rooting in for an UMNO win in Galas. But then I see something wrong in the extrapolations after Galas.
Some people are irked that I said the wins in Galas and Batu Sapi created a momentum but they haven't reached the level of a monumental shift.
The Batu Sapi's majority is marred by a mathematical error. Indeed, the BN candidate won but not by the majority of 6000 plus. The majority should be the difference between her votes and the combined votes of the opposition. It's not the difference between her and her nearest rival.
When seen in the proper way, she got a marginal increase over that achieved by her late husband. It's a win in any case of course. We must be honest in our analysis if we were to make meaningful responses.
The opposition says BN spent a lot of money. That's not true. The projects brought by BN will be enjoyed by both who voted and those who didn't vote for BN. in any case, haven't we heard the opposition parties saying that politics of selling development don't work anymore?
But in terms of a quantum leap? She only got 620 votes more than her late husband did. This is not a monumental shift.
In Galas, we shouldn't uncork the non-alcoholic sparkling drink yet. UMNO won by a majority of 1190 votes. That's true. But where does the majority come from?
The increase in Malay votes for UMNO was around 4 percentage points. This is hardly a monumental shift. UMNO got more votes from the orang Asli and gained some 200 votes from the Chinese.
The only possible explanation that I could come up with, the bulk of UMNO's support came from 'repenting' UMNO votes. PAS won the last time because a sizeable number of UMNO people voted for them. From those who didn't like the UMNO candidate then- Saufi Deraman. They have now come back.
So in terms of Malay votes, there is only a perceptible change in status quo. I would say, Malay supporters of UMNO and PAS are about even.
The people who hold the balance are the Chinese and the orang Aslis. I am sorry to say, these are fickle minded supporters. They flow with the tide of fortune. They may go the other way around.
So, in order to say that we have created a monumental shift, a lot more work has to be done in the Malay heartland.
So before UMNO people start accusing me of riding rough shod over UMNO's sensitivities, please think again. I believe UMNO is the safest bet for Malays and Malaysians.
But UMNO must first of all recapture that trust among Malays first. In Galas, if it could only take away 4% of Malay votes from PAS, I can't support the opinion that says it's a monumental shift. It's even more ridiculous if I am forced to interpret this marginal shift as indicative of the general acceptance of 1 Malaysia, ETP, GTP etc.
I am not saying I am right, but unless you can come up with a more convincing argument beyond mere invectives saying that I am double faced and serves me right for being dropped as candidate in 2008, I will be inclined to say you are a fool.
I want UMNO to win with substance and secure that victory on conviction.
So think about this. In 2008, UMNO candidates got only about 2 million votes from 5.7 million Malay votes. I will concede, we have made a monumental shift, if we can recapture the bulk of the 5.7 million Malay voters. Now, that is a tectonic shift.
As for me, let's just say I am UMNO's early warning siren. Does not matter if it's self-appointed.


Sunday 7 November 2010

A momentum yes, monumental shift not yet.


We need to distinguish between a crass propagandist and a sober politician. Ahmad Maslan fits into the former category it seems.

Ahmad Maslan, the UMNO information chief cited 4 reasons for the victory in Galas. The acceptance by the people, of the national leadership of Najib and Muhyidin. The influence of Tengku Razaleigh Hamzah and Mustapha Mohamad, the acceptance of the people of the various initiatives thought of by our great leader which will be implemented by the ruling government and so on. He was referring to such initiatives like 1 Malaysia, ETP and so forth. Finally, and here is the earth shattering observation- people are fed up of the politics of the opposition to the ruling BN. It's a triumph of moderation over extremism. One writer puts as the alarm bell for the 13th GE.

For whom does the bells toll?

People in Gua Musang and Galas in particular must be the most intelligent people in Malaysia. There must be something in the pristine air and the physical terrain of the area. Or maybe something in the diet of Gua Musangians. The nasi kerabu and berlauk at Restoren Kak Zah or the stalls near Fully Inn?

They understood the concept of 1 Malaysia when the same concept baffled Tun Mahathir and misunderstood by other Malaysians. The people eating at Restoren Kak Zah in Bandar Lama Gua Musang talking politics and cock understand and embrace the various initiatives by the national government. The people in Sungai Terah and Batu Papan are waiting for their ETP, GTP and whatever P's we can think of.

Gua Musang should be made the administrative capital of Kelantan then or perhaps be made a federal territory and developed into the east coast Putrajaya. There is so much good talent here.

In Galas, the people are roughly divided between Pas and UMN. The UMNO candidate secured some 54% of the vote while Pas commanded the balance. I can't read this as a monumental shift in preference. Pas lost 265 votes from what they got through the late Che Hashim. UMNO gained 1571. UMNO was able to capitalize on the larger turnout of voters.

In order to wipe out the 646 vote deficit, UMNO had to effectively secure 1800 votes. I had predicted UMNO to win by around 2300 to 2500 votes. My detractors were jubilant I was wrong here but curiously silent on my prediction that UMNO will win. The effective 1800 vote is close enough to 2300. Indeed UMNO could have garnered more than that, had the meddling by outsiders and internal sabotaging were minimized.

So to come back to what Ahmad Maslan said. I see no evidence of the validity in these assertions. What was at work in Galas last week was pure retail politics not wholesale politics. When Muhyidin came the first time around, he was astonished at the muted and subdued air about the election.

Retail politics involve the articulation and championing of purely local issues. This is opposite to wholesale politics where, national issues not directly related to local situations are aired. Perhaps Ahmad Maslan should direct his mind to these concepts.

The Chinese in Desa Pulai were not more motivated by people distributing leaflets on the circumstances leading to the death of Teoh Beng Hock. I suspect they were remotely interested in the issue surrounding the shooting of the late Amirul in Shah Alam. Of course, these are indeed important issues to those immediately concerned but hardly in resonance with people in Galas. The loss of loved ones is not light matter.

Chinese in Desa Pulai were more interested in the security of their land tenure. They were more concerned about the affairs and future of their Chinese school. The Chinese and homeless people in Gua Musang are more interested in getting housing faculties. The fence sitters in Gua Musang are more interested in seeing KESEDAR managed more efficiently and corruption weeded out.

If PAS and the other opposition parties to UMNO rule had been more vigilant and had paid keener attention to local issues, they could have made a big impact. Like raising the issues on the management and abuses of Kesedar. But they didn't. Gua Musangians are interested in this issue.

People in Gua Musang were more amused and probably entertained by the sight of Theresa Kok and her coworkers carrying DAP flags and banners around Bandar Lama Gua Musang.

My point is this. If we can and are eager to dismiss these attempts to foist national issues into ones of concern to local voters as useless irrelevance, the same ruling should be applied to the big idea, that this win in Galas is an endorsement of national leadership. No such thing.

This Galas by election is won on the influence of Tengku Razaleigh simpliciter and we are thankful he is an UMNO man. The majority of UMNO members in Gua Musang understood this and gave their all out. The people in Gua Musang in general understood the strategic advantage of giving a win to UMNO this time. Gua Musang is the only election area in Kelantan to have 100% UMNO/BN representation. PAS may grumble for a few days, but in the end sobriety will take over. Only permanent interests matter.


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