KDN: PQ/PP1505 (17652) (7) FREE — NOT FOR SALE January 2012 | Issue 1, Vol. 1 REFSA Quarterly is a news- letter to update our gener- ous donors on our activities and achievements. Visit us at www.refsa.org QUAR TERLY Prickly power Open tender nurtures ca- The Budget vs its REFSA Rojak #1 News: >> Pg 2 pable contractors >> Pg 3 Shadow >> Pg 8 Democracy Defaced >> Pg 12

Focus Paper (14 Aug 2011) Too Many Police Are In Non-core Police Work

fear becoming crime 9,000 at the CID (Criminal Inves- victims. tigation Department). But, the We have enough po- communists have long laid down licemen. their arms, and has be- The 106,000 po- come more developed and urban. licemen we have cur- Hence, the reverse would rently is equivalent to seem more appropriate i.e. the a ratio of 1 policeman CID should be the larger unit. to 270 , Let‘s improve efficiency. not far from the 1:250 There are plans to add 50,000 that Interpol recom- police officers by 2015. mends. We suggest existing police alf of Malaysians still fear However, 41% of our police- officers be retrained, redeployed H crime. men are in management or ad- and upgraded instead. The number of reported ministration. This works out to Lower crime rates and strong- crimes have plunged 58% be- each manager/administrator er public confidence can then tween 2008 and 2010. managing or serving fewer than justify salary increases and help This might have been helped two active policemen on average! develop an even more profes- by the reassignment of some po- Redeployment Needed sional police force. licemen to core policing func- The General Operations Force, tions following the 2005 Royal originally formed to fight com- Commission report. munist insurgents, also has near- Full Focus Paper at However, 49% - nearly half - ly 15,000 personnel. www.refsa.org of Malaysians still feel unsafe and This is far higher than the

TAKE ACTION: Let's get police officers back to active police work. Urge our Home Minister to redeploy police officers to better reflect the current conditions in Malaysia. A letter to YB Datuk Seri Hishammuddin Tun Hussein is attached to this Focus Paper at www.refsa.org. Simply key in your details and click ―send‖ today!

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We are a wired nation. Electricity powers our lives in every aspect, and in Malaysia‘s lofty aspiration to achieve a high income status, our dependency on energy would inevitably soar. What happens when our energy resources are mismanaged, or worse, manipulated for the gain of a few? Since July 2011, REFSA has illuminated the pressing need for transparency and reform in the management of our energy resources. Below are the sum- maries of our arguments. PRICKLY POWER Complete articles archived under ―REFSA Says‖ at www.refsa.org

REFSA Says (13 July 2011) FEATURED! The Malaysian Insider, Gas Subsidies Protecting Inefficient IPPs? Malaysian Mirror, Yahoo! News By: Teh Chi-Chang

n Malaysia, gas is supplied by hour (kWh) for electricity generated Are there substantial inefficien- I Petronas to the power sector at a when gas was priced at RM10.70/ cies in the IPPs, resulting in the subsidized price. mmBTU. bloated cost structure? This savings in gas cost are If the gas price is raised to the REFSA calls for the power pur- passed on directly to consumers market level of RM47.42/mmBTU , chase agreements (PPA) be made through lower tariffs, says Penja- we estimate the IPPs will charge public. The declassification of the nabebas, the Association of Inde- about 66 sen/kWh. toll concessions had led to de- pendent Power Producers. For comparison, in Singapore, ferred toll rate hikes and lowered If so, why does IPP power still where fuel prices are based on proposed hikes for the future. cost so much? market rates, the generation cost is REFSA believes that declassifying On average, the IPPs had charged just 41 sen/kWh. The final cost to the PPAs would also lead to rakyat- about 25 sen per kilowatt- residential consumers is just 52 friendly developments. sen/kWh. REFSA Says (11 Aug 2011) culation includes the assumptions that all fuel costs rise in-line with Without Subsidies, Gas IPP Power will be Very Expensive the gas price. By: Teh Chi-Chang We would be happy to fine-tune our calculations if the government inister of Energy, Water and REFSA believes that Encik Azman discloses the annual capacity pay- M Green Technologies Datuk is quoting an average for all inde- ments made to the gas IPPs. Peter Chin and TNB chief operating pendent power producers (IPPs), Currently, secrecy surrounding officer Azman Mohd reportedly including IPPs that use coal. Focus- the power purchase agreements said that Malaysia‘s average elec- ing solely on gas IPPs, REFSA esti- (PPAs) is making analysis needless- tricity tariff would be 47.31 sen per mates that gas IPP power would ly difficult. kWh if gas prices were to be al- cost 59 sen/kWh with gas at REFSA reiterates its call for the lowed to rise to the market level of RM40.70 per mmBTU. PPAs to be made public. RM40.70 per mmBTU. REFSA acknowledges that our cal-

REFSA Says (7 Dec 2011) Energy Efficiency is Crucial: De-coupling TNB’s profit from electricity sales is first step By: Allan Sandoshan (Certified Energy Manager, Association of Energy Engineers) & Teh Chi-Chang

NB is involved in all aspects of 2) Unleash innovation and entre- T electric power services, from preneurship in the potentially multi generation to electricity sales. -billion ringgit industry of energy Energy efficiency would contra- efficiency . It also cuts cost for ex- dict its interest. The more success- isting companies and creates jobs. ful it is at cutting electricity con- Splitting up transmission and dis- sumption, the smaller its sales and tribution (T&D) utility from genera- profits will be! tion company is the first step in However, energy efficiency is par- energy efficiency. amount to: 1) Ensure national energy security, Read the complete dissection at secure long-term economic com- www.refsa.org (archived under petitiveness and protect our envi- ―REFSA Says‖). ronment. Published by: Research for Social Advancement (Refsa), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. 3

EDITORIAL TEAM Relevant Number Executive Editor : Teh Chi-Chang Editor-in-Chief : Foong Li Mei Art Director : Foong Li Mei F for Failure? Contributor : Sandra Rajoo Only 0.2 % Class F contractors Focus Paper (29 Nov 2011) upgraded to higher class FEATURED! Open Tender Policy Free Malaysia Today, in Malaysia Kini Nurturing capable Malay contractors

t must be fair when both for government contracts. 94% I sides cry foul. Barisan Na- of licensed contractors are sional bedmates UMNO and bumiputera. MCA have criticised Penang‘s Furthermore, Class F licens- open tender policy as being es, for jobs below RM200,000 Only 47 of nearly 29,000 F-class contrac- anti-Malay on one hand, and are exclusively for bumiputer- tors managed to upgrade to E and B class, anti-Chinese on the other. as. It follows then that most said Minister of Works Dato‘ Shaziman Bin One is tempted to suggest contracts in Penang are won Abu Mansor in a written reply to YB Dr. Siti that neither side being happy by bumiputeras. Mariah Binti Mahmud (PAS-Kota Raja) on 7 suggests fairness in the pro- The state government is not Apr 2011. cess. Let us delve deeper. being discriminatory Dr. Siti Mariah asked how many contrac- - it is complying with tors broken-down by ethnic group were federal government registered with the Works Ministry and policies. how many Class F contractors were able to What‘s relevant - upgrade to higher level. capable bumiputras The Ministry of Works categorizes public shine. 90% of li- projects according to finance limit and censed bumiputra types and introduced a contractor classifi- contractors are at cation system in the 1980s. Class D or below. Class F contractors refers to those with a Conversely, nearly 1 finance limit of RM 200,000 and a mini- in 4 non-bumiputra mum accumulated capital of RM5,001. are at Class A level. Class A, on the other hand, has a finance The Class F scheme limit of more than RM10 million and a to develop bumi- minimum accumulated capital of putera contractors is RM600,001. a failure. Only 0.2% All ethnic groups are allowed to register have graduated to as contractors with the ministry, except for higher levels, as fed- Class F which is reserved for Bumiputeras eral government ten- only. der award policies foster dependency (see side- In addition, the government has a policy Malay contractors have won of distributing 10% of all projects under bar). more than 70% of tenders. the Ministry of Works / Public Works De- Open tenders in Penang This could be taken as evi- partment amounting to RM10 million and however, reward the capable, dence of Malay capability. But above to Class F contractors. and we would hope to see this such high rates do seem dis- This affirmative action policy is aimed at proportionate. Is there indeed environment nurture higher Class bumiputera contractors. encouraging Bumiputera participation in some subtle discrimination at the construction industry and upgrading work? efforts by Bumiputeras. It‘s all in the numbers. Federal Full Focus Paper at Upgrading does not seem to be happen- government diktat is that only www.refsa.org ing. ―... Class F contractors are interested contractors licensed by the in remaining in comfort zone (Bumiputera Ministry of Finance may bid Class),‖ says the parliamentary answer.

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REFSA‘s warnings that ordinary Malaysians would be the biggest losers of the Air-Asia- MAS collaboration have sadly been proven true. Read the snippets of our stand below. Can Everyone Still Fly? Complete articles archived under ―REFSA Says‖ at www.refsa.org

REFSA Says (13 Aug 2011) Malaysian air customers, the airlines can reduce travel, giving flights and raise prices to maxim- Air-Asia-MAS Tie Up: Ordinary Malaysian millions of Ma- ize profit. consumers will be the losers? laysians the op- Firefly is also being pigeon-holed By: Teh Chi-Chang portunity to fly and pushed up the cost curve at cheaper away from Air Asia. hen previously fierce compet- rates. Airline employees may even see W itors such as MAS and Air Asia To counter the competition, MAS fewer career options and smaller choose to collaborate instead, con- established its own low-cost carri- pay hikes, as the partner airlines sumers tend to be the losers. er Firefly, giving the rakyat more no longer have to fight for talent. REFSA believes at least some of buying power to travel. REFSA suggests that Air Asia and the synergies and savings to be Increased traveling spurs eco- Firefly remain as equal competi- reaped by MAS-Air Asia will be nomic growth, while creating more tors. MAS‘ profit should not be paid for by Malaysians in the form jobs in the tourism and airline in- bolstered at the expense of Malay- of higher ticket prices, less fre- dustry. sians. quent flights, poorer service levels The Air-Asia-MAS merger will and reduced job prospects. end much of this. Without the pre- Air Asia broke MAS‘ dominance of vious stiff competition to draw

REFSA Says (8 Nov 2011) FEATURED! Competition law alone will not protect consumers The Sun Daily By: Sandra Rajoo

n an attempt to justify the AirAsia happen naturally. lurch following flight cancellations I -MAS merger, the article Based on recent reports and past by Firefly. Where are the so- ‗Competition law and the airline accusations from Air Asia itself, it called benefits then? industry‘ published in the Sun seems that adherence to regula- With Air Asia and MAS joining boldly asserts that the merger may tions is not what MAS is famed for. forces, a competitive market no be beneficial to consumers in due More significantly, less than 3 longer exists. Once the element of course if the airlines ‗comply with months after the collaboration was choice is removed, consumers the applicable laws, including com- announced thousands of air travel- would be at the mercy of monopo- petition law.‘ lers from to , Kota lies and oligopolies. It is naïve to assume that compli- Kinabalu, Surabaya, Bandung and REFSA remains deeply skeptical of ance with laws by the airlines will Bangkok have been left in the this collaboration.

REFSA Says (24 Nov 2011) has thrown fore the ‗collaboration‘. further doubts It is ironic that this rakyat- Khazanah accelerating Firefly’s demise? on the future unfriendly ‗collaboration‘ is being By: Teh Chi-Chang of the compa- led by GLCs like Khazanah and ny. CIMB. Surely it is not the govern- EFSA read with dismay news of Firefly has reduced its operations ment‘s intention to boost MAS‘ R the abrupt resignation of Firefly ever since the Air-Asia-MAS col- profits at the expense of ordinary managing director Datuk Eddy laboration was announced in Au- Malaysians? Leong, who has been said to be gust. We urge the government to end instrumental in the success of Fire- Datuk Seri Shahrir Samad, MP for this monopolistic merge, which fly and turning a profit. Johor Bahru, has spoken out in contradicts stated national policies REFSA is even more distressed to parliament on behalf of thousands to increase connectivity, lower cost, learn that Khazanah Nasional is of Johoreans stranded by flight encourage competition and widen facilitating Leong‘s startling depar- cancellations. consumer choices. ture. Leong will be joining Destina- Passenger traffic at Subang Air- Competition will make Air Asia tion Resorts and Hotels, a unit of port, one of Firefly‘s main bases, and MAS stronger, benefit the Khazanah, as COO. has reportedly fallen some 30% in rakyat, and boost the economy. The dramatic resignation of Eddy September, compared to July, be-

Published by: Research for Social Advancement (Refsa), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. 5 REFSA Says (9 Nov 2011) NFC’s ‘Gemas Gold’ is as expensive as Wagyu beef beef favoured by con- FEATURED! noisseurs. Wagyu cattle carcasses Malaysia Kini, Harakah go for between RM30,000 Daily, Yahoo! News to RM60,000 each. ‗Gemas Gold‘ cattle cost RM55,000 per head as of I nadequate supplies and high 31 July. prices of imported beef have been Now here‘s the rub. The the bane of the beef-loving Ma- National Feedlot Centre is laysians. linked to somebody in So, Malaysian beefeaters were the government. Thanks very hopeful when the govern- to the revelations of the ment boldly announced the Na- Auditor-General, the red tional Feedlot Centre (NFC) cattle- flags are out on the fami- rearing project in 2008. ly of Minister of Women, This joint venture between the Family and Community Negeri Sembilan state government Development Datuk Seri Shahrizat. alright. High in its impact on tax- and the Ministry of Agriculture Sharizat‘s husband Datuk Dr payers. We get a strong feeling of and Agro-based Industry to pro- Mohamad Salleh Ismail and their déjà vu every time the Auditor- duce beef locally was touted as a children are involved in the man- General‘s report is issued. We High Impact Project under the agement, or mismanagement, of wonder at the wastage and ineffi- Ninth Malaysia Plan. NFC. ciency that exemplify government With the very bullish vision of NFC has clearly failed in its so- initiatives year after year. The ―attaining 40% self sufficiency for called ‗noble‘ aim to develop a careless way money is spent is beef production by 2010,‖ pro- ―fully integrated livestock farming appalling. ducing 8,000 heads of cattle in and beef production facility that Dare we hope that NFC be the 2010 was the grand target. manages the import of livestock, bulwark of the new Malaysia? That So, the project got a big kick-off feedlotting, slaughtering, pro- the perpetrators who generated so with RM74 million and 5,000 cessing, packing and marketing of much red ink and so little fodder acres of land in Gemas. beef in Malaysia‖ as stated in its be brought to account? 8,000 cattle would be expected website. PEMANDU says that the govern- to generate plenty of smelly mess; Also, its stated mission ―to lead ment will pursue an agenda of ―… and we would have been only too the industry in a manner that fos- reduction of leakages of funds pleased if that were the case. ters excellence and integrity‖ now allocated for national develop- sounds like utter bull. Alas, the Auditor-General‘s 2010 ment and operational expenditure Report revealed that the stink was For the amount poured in, NFC as well as ensuring transparency generated by 2-legged bipeds could have supplied wagyu beef in the awarding of contracts…?‖ with opposable thumbs, not by 4- with its ―trademark marbling and Did the government not make legged bovines. tenderness.‖ The NFC beef surely the clarion call for an ―institutional does not exhibit this fine quality RM182 million had been chan- framework for detecting, prose- but its cost of production exceeds nelled into NFC as of 31 July cuting and punishing offenders…‖ that of wagyu. 2011. Mismanagement, inefficien- for abusing power and public cy and incompetence culminated The bottom line is, we are pay- funds? in a measly total of 3,289 cattle ing super premium prices for Will it now take the bull by the roaming a badly-kept farm over- purely run-of-the mill local beef. horns? grown with prickly shrubs. Sadly, throwing good money af- Will there be any action taken for The NFC beef is ironically called ter bad describes the way things this blatant lack of transparency, ‗Gemas Gold.‘ Working out at are done in government. Where or are the words so smugly dis- RM184 per kilogram, the bulls NFC is concerned, we suspect played on the PEMANDU website from NFC don‘t quite cost as more money will be bulldozed merely rhetorical? much as gold bullion (not yet, an- through to revitalise this failed yway), but they are certainly in the cattle-rearing project. Only with transparency and ac- countability can Malaysia develop. realm of the legendary Wagyu NFC is a ‗High Impact‘ project

6 Extracts from overseas articles INTERNATIONAL CITINGS | that quoted REFSA’s research

products. Singapore Straits Time, Nov 2011 Such financial innovation should be undertaken by the private sec- Fresh row over KL's swelling civil service tor, he said, adding: 'If this isn't By Carolyn Hong, Malaysian Bureau Chief happening, the government's role is to create the right environment : When the Malaysi- ment does seem 'high', noted Mr to encourage such innovation - not an government recently advertised Teh Chi-Chang, the executive di- to do it itself.' for 20 technicians to fill its vacan- rector of the independent think- […] cies, it was swamped by over tank Research for Social Advance- The government, however, ap- 15,000 applications. A call for 14 ment. pears to be aware of the problems new administrative assistants saw Civil servants, including the an ever-growing civil service will another 14,000 people applying. armed forces, make up 10 per cent produce. The data, published by the Public of Malaysia's 12 million workers. It has hinted that it may have to Services Commission, would have Singapore's Public Service, which trim its workforce, with economic been astounding, if not for the fact was about 124,000 strong as at reform plans recommending that such a rush for civil service January, accounts for about 4 per 'downsizing and refocusing'. jobs has become the norm in the cent of the workforce. [Malaysian Prime Minister] Mr country in recent years. With so many civil servants in Najib's 2012 Budget also included In the last few years, the govern- Malaysia - two for every three tax plans for an 'exit policy' for under- ment has been besieged for jobs payers - it makes the country's performing staff and those who by the thousands of young Malay- manpower bill expensive. Salaries want to opt out. sians entering the workforce annu- and pension payments, which total […] ally. Having absorbed many of about RM62 billion (S$25 billion) a them, the civil service has grown year, now account for almost 30 Given the political sensitivity, the rapidly, from about 770,000 work- per cent of the government's oper- issue is likely to be shelved for the ers in 1990 to some 1.2 million ating expenditure. time being. It could also be a ra- cially sensitive issue, as more than now. The constant intake of staff, not- two-thirds of public servants are […] ed Mr Teh, could be a result of the Malays. Malaysia now has the largest civil government taking on an increas- But, as Mr Teh indicated, it needs service in the region, according to ingly large role in areas that to be addressed at some point. 'It a United Nations survey. When put should be left to the private sector shouldn't be seen as a racial issue, in the context of the country's en- - like a RM200 million venture it's about administration,' he said. tire workforce, its public employ- capital fund being set up to create new syariah-compliant financial […] Power Engineering International (Vol. 19, Issue 8), Sept 2011 the equivalent of 41 sen/kWh. ―Put simply, if the gas subsidy in Malaysia Rings the Changes Malaysia is completely removed, the IPPs‘ generation cost would be By Chris Webb, UK 80 per cent higher than that of power generators in Singapore,‖ […] withdrawal of subsidies in natural said Refsa executive director Teh For many years, plentiful natural gas. The Research for Social Ad- Chi Chang. Singapore fuel prices gas has been at the heart of Ma- vancement (Refsa) think tank says are market based. Refsa‘s esti- laysia‘s power industry […]. bloated and inefficient cost struc- mates follow statements from the Yet things could be about to tures will force IPPs to charge Association of Independent Power change, as the country continues much more than their Singapore Producers that savings in gas costs to bank on solar and biomass to counterparts if natural gas were — effectively the difference be- cut greenhouse gas emission, and sold to them at market rates. tween international gas prices and some industry insiders eye energy The think tank estimated that fixed price set by the government efficiency as offering low hanging local IPPs would need to raise their — are passed on directly to con- fruits. average prices from 25 sen (8.4 US sumers through lower tariffs. […] cent)/kWh to 74 sen/kWh if subsi- […] dies were removed and gas prices Analysts and other industry ob- Full article at were allowed to rise from 10.70 servers also warn of an impending www.powerengineeringint.com/ ringgit/mmBTU (293 kWh) to the robust shake-up of the market as articles/print/volume-19/issue- present market price of 47.42 independent power producers ringgit/mmBTU. In comparison, 8/power-report/malaysia-rings- (IPPs) respond to a reduction or Singapore power producers charge the-changes.html

Published by: Research for Social Advancement (Refsa), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. 7 IN THE MAINSTREAM | On the Air with BFM 89.9 REFSA debates Budget 2012 with ISIS on BFM’s Breakfast Grille

udget 2012, announced on 7 equivalent, who make up 70 per- B Oct 2011, received both bou- cent of the local workforce. quets and brick-bats for its good- The global food shortage also ies-galore bent. drove Mahani to advocate subsi- BFM‘s Breakfast Grille was siz- dies for the agricultural industry, zling with discussion that morn- thus lessening the country‘s de- nesses in the market. ing. pendence on food imports. C hi Chang cautioned that with Interviewed by BFM host Noelle The Devil is in the Debt GLCs being the major players in Lim, REFSA executive director Teh Our national debt is at a whop- industries like education and Chi Chang took on the hot seat ping 53 percent of GDP (European healthcare, conflict of interest is with ISIS‘ CEO Dato Dr Mahani Union considers 60 percent the bound to arise. For example, Zainal Abidin to highlight what debt ceiling). Mahani opined that while the government is expected Budget 2012 should address. our debt level is still manageable. to improve public healthcare, they also hold major stakes through Support, not Spoon-feed Chi Chang did not share her op- GLCs in private hospitals. The Mahani emphasised that subsi- timism, pointing out that 53 per- thriving of one would lead to the dies should be targeted to people cent is not far away from 60 per- suffering of the other. who need it most, because such cent. Mahani, however, rebutted by financial aid is difficult to with- He explained that the national saying that public and private draw once given. debt would be manageable with healthcare are catering to two dif- C hi Chang suggested a holistic returns from development. But ferent market segments. The ones aid package, which includes direct with our government still having who can afford private services cash payments, educational sup- to help people struggle against should be given the option to do port and job training, so that the inflation, the prospect of escaping so, without crowding out the pub- poor are able to break out of their from the growing debt in the near lic service. dependence on subsidies. future seems bleak. Chi Chang and Mahani also He suggested pumping funds GLCs: Too Close for Comfort? debated on the effects of GLCs into a more inclusive system that People don‘t realise how in- buying out private companies. allows the less academically- volved the government is in the inclined a fair share in the eco- economy, said Chi Chang, citing nomic pie. Vocational education Khazanah National Berhad‘s find- Complete podcast at and upskilling programmes opens ings that the significant presence job opportunities for those with of government-linked companies www.refsa.org only SPM- level education or its (GLC) crowds out private busi-

MAS-Air Asia Tie-Up: Are Malaysian IPPs Inefficient? Bad for Malaysian Consumers? [Originally posted in BFM website] ecently in the news report ―IPPs do not benefit eh Chi-Chang, Executive Director of Research for from gas subsidy‖, the Minister of Energy, Water Social Advancement (REFSA) discusses how con- R T and Green Technologies Datuk Peter Chin, along sumers can be adversely impacted by the recent MAS with Tenaga Nasional Berhad‘s chief operating of- -AirAsia tie-up. ficer, Azman Mohd, had reportedly said that Malay- Under the comprehensive collaboration framework, sia‘s average electricity tariff s 47.31 sen per kWh is Khazanah, which has a 69.5% stake in MAS, will take gas prices were to be allowed to rise to the market up a 10% stake in AirAsia through Tune Air, while level of RM 40.70 per mmBTU. the latter will acquire 20.5% of MAS. According to REFSA, Encik Azman could be quoting REFSA believes the tie-up between MAS-AirAsia an average for all independent power producers will impact consumers in terms of less frequent (IPPs) including the ones that use coal. And with a flights, higher ticket prices, poorer service levels and sole focus on gas, REFSA has estimated that gas IPP reduced job prospects. power would cost 59 sen/kWh with gas at RM40.70 per mmBTU. Podcast at www.refsa.org Podcast at www.refsa.org

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Focus Paper: Critique on Budget 2012 (Part 1 of 2) FEATURED! Free Malaysia Today, Budget 2012: Eclipsed by its Shadow Malaysia Kini till overspending - 2012 deficit considered as over-optimistic. S likely to be closer to 6 %. The Slower growth will mean smaller- Still building castles in the air. The government‘s 4.7% budget deficit than-anticipated tax and other 100-storey Wawasan Merdeka forecast is based on economic revenues, driving the shortfall mega-project is on-track, befitting growth projections that are widely higher. assertions hailing Malaysia as an ―upper middle income country‖. Budget 2012 is built on unrealis- tic foundations. We wonder which upper middle income Malaysians would wish to shop in the bur- geoning Kedai 1Malaysia thrift stores or partake of austerity Menu Rakyat 1Malaysia meals. On track to RM1 trillion debt by 2020. The handouts for the rakyat are just ‗ikan bilis‘ compared to the mega projects. Besides Warisan Merdeka, there is nearly RM3 billion for school con- struction work, RM1 billion for the various corridors and RM420m to develop Langkawi. Borrowing is fine if it is spent ef- fectively on productive pursuits. But our borrowings are ballooning beyond our repayment capability— interest charges alone are equiva- lent to 11% of federal revenue.

Focus Paper: Critique on Budget 2012 (Part 2 of 2) Shadow Budget pragmatic for pressing problems he Shadow is holistic. The economic and revenue forecasts T populist handouts got the are less optimistic than the gov- headlines and were heavily criti- ernment‘s. cised. But Pakatan Rakyat‘s Shad- The constraints and challenges ow Budget 2012 actually hands posed by the low-income, low- out fewer ‗goodies‘ than the gov- skills and poor-productivity reality ernment‘s Budget 2012. of Malaysia today are acknowl- More importantly, close scrutiny edged. Expensive ‗silver bullet‘ reveals a nuanced approach. Pa- solutions are avoided while re- katan views the ‗goodies‘ as inter- forms, difficult yet necessary for im steps until its policies to raise Malaysia‘s sustained health, are disposable incomes take hold. prescribed. Two-pronged approach to raising Soft reforms, not imposing edific- incomes. Firstly, Pakatan aims to es. The government has dramati- create opportunities by measures cally increased its role in the such as developing skilled profes- economy. It is now involved in sions for the 70% of our workers everything from providing venture who are SPM-qualified or lower, capital to bailing out failed busi- reducing low-skilled foreign la- nessmen, at great cost and with bour, improving public transport little to show in return. and creating a conducive environ- Pakatan proposes to unshackle ment for private enterprises. the economy from unfair and un- Secondly, it aims to curtail soar- reasonable government competi- ing living costs by curbing high- tion and regulations. This would cost monopolies and lopsided benefit all Malaysians, not just a Full critiques at concessions. privileged few. www.refsa.org The Shadow is pragmatic. The

Published by: Research for Social Advancement (Refsa), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. 9

In the weeks leading up to the announcement of Budget 2012, REFSA published the ―Pre-Budget 2012: The Rakyat‘s Guide‖ series. Divided into four Focus Papers, the series laid out pressing economic concerns. Read the summaries here. Full analyses at www.refsa.org (under ―Focus Paper‖).

Pre-Budget 2012: The Rakyat’s Guide (Part 1) 011 is the 13th year that the cur debts that have to be repaid. It 2 government is over - is the same with countries. Minister Focusing on Spending is Wrong spending. The formal term of this YB Senator , has warned over-spending is the more innocent our country could suffer like sounding ―deficit‖. Greece. By the end of this year, it is esti- REFSA believes a responsible gov- mated the over-spend over the 13 ernment should design a sustaina- years will be RM290 billion. This is ble and balanced budget, not focus equivalent to RM10,000 for each on spending, goodies and and every Malaysian. handouts. It is time to exercise responsibil- More at www.refsa.org on how ity. When ordinary people over- your money is being spent! spend, we run into trouble. We in-

Pre-Budget 2012: The Rakyat’s Guide (Part 2) use compared to a BMW X5? Money spent on subsidies could Large subsidies are a sign of fail- have been put to other good uses. Let’s Stop Burning Subsidies ure. Subsidies are now 15% of fed- The proposed MRT will reportedly eral government operating ex- cost about RM50 billion. Consider he rich benefit more than the penditure. We agree society‘s this – RM54 billion was spent on T poor. The bulk of the subsidies weakest must be helped. However, subsidies in 2009 and 2010. That is literally burnt – RM15 billion goes the need for extensive subsidies amount could have paid for this to cheap fuel. Cheap petrol, and suggests a failure to create eco- public transport system in full! sugar and flour, are blanket subsi- nomic and social policies conducive More at www.refsa.org on how dies – subsidies that everybody en- to good, fairly-paid employment. subsidies should be replaced joys. Blanket subsidies benefit the Extensive subsidies also create a with targeted welfare support rich far more than the poor. Con- culture of entitlement and apathy instead. sider this – how much petrol does a while debilitating the nation‘s fi- modest motorcycle or Perodua Myvi nances and competitiveness. Pre-Budget 2012: The Rakyat’s Guide (Part 3) large corporations and the elite 20 percent of Malaysians. Fair Cut for All The government‘s initiative of pumping in subsidies and opening he pie smells. Our economy has 1Malaysia stores offering cheaper

T soared by 82 percent in the last goods, while well-intended, only ten years, but income disparity breeds a culture of apathy and enti- casts a large shadow. tlement, while attacking small-time The bottom 40 percent of Malay- entrepreneurs with unfair price sians struggle to earn a mere 15 competition. percent of the national income pie Visit www.refsa.org for our five and have to scrimp and borrow to suggestions on levelling the get by. The bulk of the growth fed playing field for all Malaysians. Pre-Budget 2012: The Rakyat’s Guide (Part 4) Unhealthy Competition: Reduce the supply of cheap labour he truth is, we are all just out to cari On a macro level, low wages spell high T makan. But at what expense? T h e debt levels as Malaysians borrow to sur- abundance of foreign labour, mostly un- vive. Malaysian‘s household debt to per- skilled, at very low wages snatches sonal income is 140 percent, higher than away opportunities for Malaysians to the 123 percent in USA. An economy improve productivity and upskill. with personal consumption growth sus- Employers hold the trump card – they tained by debt is like building a house need not worry about keeping employees with borrowed bricks. happy, or even safe. There are always Read www.refsa.org for our win-win more desperate, cheap foreign workers solution. for hire.

10 REFSA Says (21 Dec 2011) Firstly, MOSTI is still unable, at this point, to clearly define areas CPA 2011: The Bill that Gates Jobs that will be categorised as CNII. Secondly, how would the Board Across Malaysia determine ‗adequate computing By: Teh Chi-Chang & Foong Li Mei experiences‘? Mark Zuckerberg created Face- EFSA disagrees with the pro- lege drop-out. Would our new book while he was in just his se- R posed Computing Profession- Board ‗certify‘ him given his ab- cond year in university. Would he als Act 2011 (CPA). sence of paper credentials? This meet the ‗adequate‘ requirements, REFSA recognises the good inten- process would be the death-knell which we have yet seen defined? of enterprise and innovation; tions of the Ministry of Science, REFSA concedes that savants like Technology and Information 2. The proposed Act is extremely Jobs and Zuckerberg are rare. (MOSTI) to safeguard IT industry far-reaching. Any activity that However, the Bill would also im- standards and ―enhance the value ―impacts on national economic pose barriers on talented IT pro- of the profession‖. strength, image, defence, public fessionals who are not computing However, this Act will likely stifle health and safety and the govern- graduates. ment‘s ability to function‖ may be innovation and result in higher They do not need certifications to listed as sectors under the CNII. costs, with little gain. enhance their value, neither do The CPA mandates that only indi- The CNII entities will be identified their clients demand formal paper viduals and firms certified as qual- by the Chief Government Security qualifications. Forcing them to un- ified computing professionals and Office (CGSO). Where will the CGSO dergo a registration process would service providers can work on Crit- draw the line? merely mean an additional layer of ical National Information Infra- For example, it is plausible that costs without any benefit. structure (CNII) projects. The certi- telecommunications companies It is extremely worrying that fication is subjected to a Board of and banks could be considered MOSTI has admitted it is facilitat- Computing Professionals Malaysia ‗vital to the national economic ing this bill at the behest of multi- (The Board) to be set up. strength and image‘ of the nation, national companies and industry REFSA sees at least 3 major flaws which would mean that any IT leaders. This then lays hollows the with the proposed Act: company wishing to serve them olive branch of MOSTI saying that would have to be certified; the industry can decide members 3. It will add another layer of costs of the Board. and bureaucracy with little gain. IT Such a Board would be dominat- procurement is an established, ed by the existing leaders, whose multi-billion dollar industry self-interest may not be aligned around the world. Large multi- with new start-ups or freelance national companies are confident professionals. enough in the existing industry REFSA calls upon the Malaysian structure, without government cer- government to withdraw this pro- tifications, to buy and develop IT posed Act. 1. It is divorced from industry real- systems critical to their operations. IT standards can be improved by ity. Unlike other professional ser- It is hard to see what value the Ma- the government adopting an open- vices such as law and accounting, laysian Board will add. tender policy, with concomitant the IT arena is fast-moving and In response to criticism of the rewards for those who deliver, and fast-changing. proposed Act, MOSTI assures that penalties for those who do not. A ―registration with the Board … will Furthermore, IT industry advanc- market-oriented carrot-and-stick also take into consideration those es are largely forged by innovative, approach is what we need, not from other disciplines with ade- self-taught hobbyists. The Board more red tape. would necessarily have to rely on quate computing experiences‖. academic and vocational qualifica- It said that registration with the REFSA has signed the petition tions in its ‗certification‘ process, Board only applies to those identi- MOSTI: Stop Computing Pro- which would be behind the latest fied with CNII projects. fessionals Bill 2011. developments. These responses do not address If you wish to sign too, go to The late Steve Jobs, immortalised the core problems – the ambiguity www.change.org and search as an icon by our Prime Minister‘s and incompatibility with the reality Budget speech, is famously a col- of the industry. for ―CPB2011‖.

Published by: Research for Social Advancement (Refsa), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. 11

REFSA understands that REFSA executive director for many, the Budget Teh Chi-Chang (far left) sharing the stage with is tedious to read, speakers at the RHB REFSA and even harder to Election Talk 2011. understand. From right: political EVENTS Thus, REFSA has analyst Karim Raslan, worked to dissect the The Malaysian Insider economic intricacies of the Prime Minis- editor Jahabar Sadiq and NST new media editor ter‘s Budget 2012 and the Pakatan Azmi Anshar. Rakyat‘s Shadow Budget at various events, including: Chi-Chang speaking at  Institute of Southeast Asian Stud- “Malaysia’s Economy: ies (ISEAS) in Singapore Are we heading in the right direction?” forum,  ―Malaysia‘s economy: Are we with heading in the right direction?‖ economic experts Dr Ter- ence Gomez and Dr forum, Shah Alam Cheong Kee Cheok .  RHB Group‘s ―Election Talk 2011‖ Moderator:  Pusat LB Rakyat, Bangsar State Exco YB Teresa Kok.  Pecha Kucha Night KL Vol. 13, Kuala Lumpur (www.pecha - kucha.org/night/kuala - REFSA pen- lumpur/13 ) wielder Foong Li Mei pre- REFSA also sought to educate the pub- senting our lic on little-known but important reali- ideas for a ties about Malaysia. For example: better Malay- sia at Pecha  ―Affirmative Action: The Malaysian Kucha KL Vol. and South African regimes com- 13 at Lot 10 pared and contrasted‖ talk, by Dr s h o p p i n g Lee Hwok Aun, senior Lecturer at mall, KL. University of Malaya.  Workshop on Managing Water De- James T. mand with James T. Cherian. Cherian shar- James highlighted that up to 2020, ing his in- sights at the all our water needs can be met workshop on without environmentally - Managing damaging new dams or tunnels. Water De- mand. REFSA REPLIES | The editorial team’s take on current issues

QUESTION: Political parties from both sides of the divide are riddled with in-fighting, inconsistencies and scandals. Election is like choosing the least bruised apple from a crate of rotten fruits. Why bother voting?

Chi-Chang replies: Sandra replies: Li Mei replies: he road of emi- es, voting is elinquishing T gration is well- Y tough when R your vote is like trodden. Why not we have less than putting your head pursue your own credible options through a noose— happiness and go before us. Still, if you are strangling somewhere blessed we don‘t exercise the possibilities with political leaders this (voting) right that could have you admire. we have, we only come with making Stuck here? Then have ourselves to the best of it. Vot- like it or not, this is home. How com- blame when we get rotten apples ing is more than just about choos- fortable your home is, is entirely up for leaders. What‘s a few bruised ing a leader. It is casting a ballot on to you. If the roof leaks, whining ones then, so to speak? But with what you believe Malaysia can be. about it raining all the time just awareness soaring high now, The act of voting asserts that your leaves you sodden. You have to play perhaps we‘ll see bona fide lead- stand counts. It is reminding the your part, be the change that you ers stepping forth. Dare we hope politicians that you are watching, want to see. If you think you‘re too for a miracle? I‘m keeping my and judging. One vote may seem small to matter, you‘ve never been in fingers crossed. negligible, but it puts a foot down bed with a mosquito! infinitely louder than a non-vote.

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REFSA Rojak is our weekly take on the goings-on in Malaysia. We trawl the newsflow, cut to the core and focus on the really pertinent. REFSA Full of flavour, lots of crunch, this is the concise snapshot to help Malaysians keep abreast of the issues of the day. ROJAK Our editorial pick of the TOP 5 News Items of 2011:

#5: PPSMI battle half-won and impose fines of up to PAGE (Parent Action Group for RM20,000. Education) and NGOs who fought Perhaps what infuriated Malaysi- to reinstate PPSMI (teaching of ans more than the Bill‘s repres- Maths and Science in English) tast- siveness was the unusual haste in ed success. which it was passed. The Dewan All current batches will continue Rakyat passed the controversial Bill with PPSMI until Form 5. But the with only ‘s votes, fight is not over – PAGE wants the as the opposition MPs walked out option to be given to 2011 Year in protest. The gave One pupils who started studying the bill the green light a month the subjects in Bahasa Malaysia later. this year. While nerves are still raw over the #4: Betting on Budget 2012 new draconian law, the proposed Computing Professionals Act (CPA) Nobody can resist goodie bags. 2011 sandpapered them with its And there were lots of them in Center (NFC). 60 percent short of jagged flaws. The IT industry cried Budget 2012! Generosity is com- its breeding target, the hot brand- foul at the Act, which only allows mendable but the approach taken ing iron of failure seared the be- ‗qualified‘ computing professionals in the Budget is making econo- hinds of the RM73.64 million ―Beef and service providers to bid for mists uneasy. Valley‖ project, awarded to Minister Critical National Information Infra- Our economic growth will Datuk Shahrizat Abdul Jalil‘s fami- ly, who had no previous track rec- structure (CNII) projects. (Also read be ―between 5 to 6 percent‖ and Pg 10) deficit will be reduced to 4.2 per- ord in cattle rearing. Organisers of Seksualiti Merdeka cent of GDP, declares the govern- However, it‘s the thick cut of also found their hands chained. ment. Economists and analysts scandals that really choked tax- The annual event aimed at helping forecast a different set of numbers paying Malaysians. PKR charges the marginalised lesbian, gay, bi- – a lower growth and a higher defi- that NFC had used public funds to sexual and transgender (LGBT) cit. Can we afford the numbers purchase premium condominiums, community understand their legal game? (Also read Pg 8) luxury car, expensive holidays and rights, was declared illegal. Stop #3: Demands ink-orporated property in Singapore, among oth- ers. (Also read Pg 5) this ‗free sex‘ festival, said the The massive spillage of Bersih mainstream media - a statement #1: Democracy defaced 2.0 marchers onto the streets of which proves why the awareness- Kuala Lumpur on July 9 wasn‘t spilt Hopes hung high for our demo- raising festival needs to be held. cratic freedom when our Prime milk after all. One of the election On a brighter note, a draft Minister announced on September watchdog‘s eight demands, the use amendment to Section 15 of the 15 that ISA would be repealed, but of indelible ink to curb multiple Universities and University Colleg- they were really dangling above a voting, has been cleared for use by es Act 1971 (UUCA) is underway, sea of snapping shackles. February 2012. The voting rights allowing students aged above 21 of Malaysians abroad, however, is Two months later, click! We fell to become members of political still the subject of debate. right into the manacles of the parties. The amendment followed #2: Money mucked Peaceful Assembly Bill, which rules the Court of Appeal ruling that The Auditor‘s General Report that gatherings can only be in des- Section 15 of the Act was uncon- 2011 has unveiled plenty of stink, ignated areas, disallows street ral- stitutional, as it restricts freedom and the most repulsive of all came lies and gives discretionary powers of speech. from the bull of National Feedlot to police to arrest demonstrators PLEASE HELP REFSA SUSTAIN OUR WORK FOR A BETTER MALAYSIA REFSA is an independent, not-for-profit research institute. We provide relevant and reliable information on issues affecting Malaysians to inspire open and constructive discussions that should result in effec- tive policies to address those issues. You may contribute via:  Online donation at www.refsa.org  Cheque deposits made out to Research for Social Advancement Bhd and banked into our Public Bank (account number 3128-1874-30)  Cash deposits into the same Public Bank account above. Thank you for supporting impartial research. Every little bit counts! Please contact us at [email protected] and we will issue a receipt.

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