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KDN: PP17652/01/2013 (031593) FREE — NOT FOR SALE January 2013 | Issue 1, Vol. 2 REFSA Quarterly is a newsletter to update our generous donors on our activities and achievements. Visit us at www.refsa.org QUAR TERLY THE BUDGET 2013 ISSUE REFSA Says | 12 Oct 2012 Subsidies go up in flames while poor Malaysians suffer By: Teh Chi-Chang, CFA Cheap petrol benefits the rich more than the poor. Ong Johnny by Cartoon ome academics believe that subsidies. on unnecessary ivory-tower analy- S there is little empirical research 3) RM42 billion is enough to give sis. The simple truth is that the to support the popular argument these bottom 1/3rd of households bulk of the subsidies goes to that blanket subsidies such as for RM1,560 per month - which will cheap fuel which is burnt, and the cheap petrol and sugar benefit up- more than double their current rich man burns more than the per-class Malaysians who consume incomes of RM1,500 per month! poor. Just ask the average man on much more than their poorer a small motorbike how much he Quite clearly, federal government cousins. spends on petrol and contrast that subsidies are not going where they to what a man driving a gleaming REFSA lays out some basic facts - should. RM42 billion is enough to BMW spends. 1) The federal government subsidy give the poorest 1 of 3 households bill is expected to exceed RM42 RM550 every 10 days, as opposed There are also views that these billion in 2012, which is a massive to the occasional RM500 BR1M subsidies are a “necessary burden” four-fold increase from RM 10 bil- payment. Note that in addition to in a “highly skewed capitalist lion in 2007. the RM42 billion federal govern- economy like Malaysia”. We would draw attention to the reality that 2) If we can agree that subsidies ment subsidies, Petronas bears income inequality in Malaysia re- should go only to the poor, and we another RM20 billion or so per mains high despite the expanding define the poor as the bottom year in supplying cheap gas to the subsidies under Datuk Seri Najib‟s 1/3rd of households, there will be independent power producers and administration. 2.3 million households or nearly other industries. 10 million Malaysians who will get Let‟s not fritter away resources Continued on Page 22>> 2 EDITOR’S NOTE EDITORIAL TEAM Whenever the National Budget is announced, an adage comes to Executive Editor mind, “If something sounds too good to be true, it usually is.” Like Teh Chi-Chang, CFA the previous year, Prime Minister Dato Sri Najib Razak untied his sack of goodies on 28 Sept 2012 and lo! Out bounced RM 3 billion Managing Editor worth of handouts for poor families, ballooned subsidies, dis- Foong Li Mei counts for public transportation, incentives for the entrepreneurs and, curiously, smartphone rebates for the gadget-glued youths. Art Director We at REFSA joins the more discerning Malaysians in being cau- tious about these budget goodies. Do they really add value to our Foong Li Mei quality of life in the long run? Are they digging a bigger grave for our economy? What is the real price of these big-ticket expendi- Contributors tures in the name of “enhancing the well-being of the rakyat”? To move beyond spinning in rhetorical circles, REFSA attempts to Ong Kar Jin answer these questions by analyzing the Federal Budgets of 2012 Dr Lee Hwok Aun and 2013 within the context of Malaysia‟s economic reality, as well Galvin Wong as pitching them against the Alternative Budgets proposed by federal opposition coalition Pakatan Rakyat. Dr Ong Kian Ming To misquote the online movie-review sensation Nostalgia Critic, Sandra Rajoo we crunch the humongous numbers and dry data so you don‟t have to. Our extensive analyses on the Budget are captured in vibrant and down-to-earth infographics for easy digestion on the chunky topics. You can also view and download these materials on our If you think you are website www.refsa.org. too small to make a Happy new year, Malaysians! We survived plenty in 2012 (such as difference, try sleeping the umpteenth apocalypses-that-weren‟t), but the fight for a better “in a closed room with Malaysia continues. Here‟s wishing our readers conscience and wisdom in the year of the 13th General Elections! a mosquito. Li Mei - African Proverb Managing Editor ” Behind the theatrics Our infographic series Budget 2013: Behind the Theatrics compares and contrasts Federal ROJAK Awards 2012 Budget and Pakatan Rakyat policies. T H E The winners of our Sour Mangoes Pg 3 to 8 Merit Prize, Cool Cucumbers Award, Styrofoam Box Bonanza A Rakyat’s guide BUDGET and the ultimate honour, Order of ISSUE the Rubber Band. Astronomical numbers made down-to- earth. REFSA’s infographic series Budget 2013: The Rakyat’s Guide illuminates how REFSA dissects the fiscal Back cover (Pg 24) the BN Federal government divides our choices and crucial decisions economic pie, and the key questions to made on Malaysians‟ behalf. ask of Budget 2013. Diversity in discourse Pg 11 to 19 Guest writer Ong Kar Jin does not believe that politics should be Rising above the muck black and white when the world isn’t. He calls for open minds that Tired of politicians’ mudslinging and dirty tricks? We can maturely accept criticisms. are too. Thankfully, REFSA’s forum showed that voices Pg 20 of reason prevail among our rising young leaders. Pg 9 Extreme showdown N e e d - based action flawed BN vs PAS - which is the real extremist? Our University Malaya’s Dr Lee Hwok Aun reasons why need- infographic pitches the two sides’ stands against one another. based affirmative action is unworkable. Pg 21 Pg 16 Published by: Research for Social Advancement (REFSA), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. Printed by: Infocus Printing Sdn Bhd, No. 11, Jalan PBS 14/14, Taman Perindustrian Bukit Serdang, 43300 Seri Kembangan, Selangor. 3 INFOGRAPHIC | Budget 2013: Behind the Theatrics Did you know? REFSA is a small organization, with only 3 full-time staff. Wish to keep REFSA going? Read Page 23 to find out how! REFSA’s study of O & G industry 0% of Malaysia‟s revenues under “A Southeast Asian 4 is derived from the oil partnership for better gov- and gas sector. However, ernance in extractive indus- information on this crucial tries”, which has the objective sector is scant. It is known of promoting the effective, that national oil company transparent, and accountable Petronas - which reports management of oil, gas, and directly to the prime minister mineral resources by sub- - has exclusive control of our national and national gov- petroleum resources. But ernments in Southeast Asia. who are the other major The lead organisation for players? What are the oil- this wider initiative is the producing states entitled to? Revenue Watch Institute What are the contract terms (RWI), with funding from the and conditions for explora- United States Agency for tion and production? International Development REFSA is embarking on a (USAID). The initiative falls scoping study of the oil and under the umbrella IKAT-US gas industry in Malaysia to initiative: “Civil societies in- gather the facts and figures novating together”, promot- into an authoritative docu- ing partnerships, networking ment. This will serve as the and the sharing of experi- base for future advocacy ences between Indonesian, work to increase standards of US, and Southeast Asian civil transparency, accountability, society organisations. and responsible resource This scoping study is being stewardship in the oil and undertaken by Eugene Lee, gas sector, with the ultimate who can be contacted at eu- goal of Malaysia joining the [email protected]. Further Extractive Industries Trans- information on RWI and the parency Initiative (EITI). EITI is available at REFSA‟s project represents www.revenuewatch.org and the Malaysian component http://eiti.org respectively. 4 INFOGRAPHIC | Budget 2013: Behind the Theatrics - Aid to entrepreneurs no remedy for ailments in biz culture Published by: Research for Social Advancement (REFSA), 2nd Floor, Block A, Wenworth Building, Jalan Yew, Off Jalan Pudu, 55100 KL. Printed by: Infocus Printing Sdn Bhd, No. 11, Jalan PBS 14/14, Taman Perindustrian Bukit Serdang, 43300 Seri Kembangan, Selangor. 5 INFOGRAPHIC | Budget 2013: Behind the Theatrics - Aid to entrepreneurs no remedy for ailments in biz culture INFOGRAPHIC | Budget 2013: Behind the Theatrics - Pumping money into vocational education is not enough Place your order now! Visit shop.refsa.org or drop us an email at [email protected] 6 INFOGRAPHIC | Budget 2013: Behind the Theatrics - Will the race to raise household incomes uplift the poor? UMNO-nomics excerpt N o t o G S T ccording to our Prime A Minister, Malaysia is a “modern industrial upper middle income country.” Simple statistics easily con- tradict this bold statement: the average income of 80% of all Malaysian households only comes up to about Cartoon by Johnny Ong, from UMNO- RM2500 per month. When nomics: The Dark Side of the Budget. the government distributed the RM500 payment to ing the millions of Malaysian households with incomes families surviving on less below RM3000 a month un- than RM50 per day. der its BR1M scheme, over 4 The rationale behind the million households qualified! GST – to generate more gov- So many Malaysians need ernment revenue and stimu- help that the subsidy bill is late entrepreneurship – is massive – equal to 18% of all understandable. However, as government revenue. Also, Pakatan Rakyat‟s (PR) Shadow surely „upper middle income Budget revealed, there are countries‟ do not need thrift other methods to raise tax stores as the Kedai Rakyat 1 revenues without increasing Malaysia (KR1M)? the burden of the average As such, the federal gov- Malaysian.

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