REVISITING MAHATHIR’S FLAWED TRANSPORT RECORD

By Kua Kia Soong, SUARAM Adviser 24 July 2017

Now that Dr Mahathir is the chairman of Pakatan Harapan, his former critics who are now his allies seem to be mouthing sweet nothings into his ears while ignorant sycophants are even calling him the ‘father of Malaysian public transport’!

Really? Concerned Malaysian historians need to start telling it like it is. Allow me to remind the country of the litany of woes we have suffered under Dr Mahathir especially the decades of traffic jams while fighting for a good public transport system in our country.

Malaysia is supposed to be on the final leg of the sprint toward attaining high-income status in 2020 only to be reminded by the World Bank (WB) that it is time for us to get serious about developing a more integrated urban transport system in our major cities. Today, Penang, Johor Baru and Kota Kinabalu are facing similar challenges as those in Kuala Lumpur, says the World Bank. Only 17% of commuters in Kuala Lumpur use public transport compared to 62% in Singapore and 89% in Hong Kong. Residents of Greater Kuala Lumpur spend more than 250 million hours a year stuck in traffic. The total cost of traffic in Greater Kuala Lumpur is estimated at 1.1 – 2.2% of GDP in 2014. (WB)

Failed opportunities

The quality of public transport continued to worsen as the non-accountable (non-elected) municipal councils and the property and motor industry barons had their day. More than enough taxpayers’ money had already been spent on endless studies of the transport problem. When the Japanese International Cooperation Agency (JICA) was contracted to undertake the Kuala Lumpur Transport Master Plan in 1997, it was the EIGHTH such study since 1963! (The Sun, 20.8.97)

“This study was clearly biased towards capital intensive road building projects. Policies toward encouraging the use of public transport and the restraining of private transport use during peak hours were noticeably absent.” (ibid)

Subsequent plans did call for a total transport plan including adequate public transport services but somehow, the political will was absent. In 1990, Japan’s Overseas Economic Cooperation Fund warned that Malaysia faced critical bottlenecks in its infrastructure if nothing was done to reform our transport system. (FEER, 5.4.90) By the mid-1990s, there was still no national transport policy in Malaysia.

As early as 1992, a Kuala Lumpur Transport Blueprint was drafted by an offshoot of KTM, Relk and a Canadian transport firm, Delcan. Its aim was to create an integrated bus-rail transport system for Kuala Lumpur by 1996. The plan involved harnessing an existing network of barely used railway tracks that criss-cross the inner city; foreign-designed rail cars and buses would be assembled in Malaysia and it would all cost a modest RM2 billion. The plan also involved including commercial outlets in the new rail stations that would produce profits to defray construction costs. (Doug Tsuruoka, FEER 29.10.92:68) Like the other plans, this blueprint never saw the light of day…

Structure Plans that got overridden

The first Kuala Lumpur (KL) Structure Plan was drafted in 1984 and intended for use until 2000. The strategy was to balance the development in KL through a moderate growth rate in the city centre and a rapid development of new growth centres Wangsa Maju, Bandar Tun Razak, Damansara and Bukit Jalil. (NST 11.3.2003)

As expected, instead of being followed, this first KL Structure Plan was “overtaken” by market developments and the new KL Structure Plan 2020 had to redefine the planning direction:

“The preparation of the Kuala Lumpur Structure Plan 2020 is undertaken in the conviction that most of the policies of the 1984 Kuala Lumpur Structure Plan (KLSP 1984) need to be revised due to unprecedented economic boom and rapid changes in the last 20 years. Some of the major developments that have taken place were not anticipated in the structure plan. Development such as the Multimedia Super Corridor (MSC), the Kuala Lumpur International Airport (KLIA) at Sepang and the transfer of federal government administrative functions to Putrajaya are anticipated to stimulate and influence future changes and growth.” (KL Structure Plan 2020, www.dbkl.gov.my/pskl2020/english/introduction/index.htm)

Bus service as chaotic as ever

In December 1993, the government’s vision of an efficient public transport system was launched through the mid-term review of the Sixth Malaysia Plan. It was announced that the bus companies in Kuala Lumpur would be merged in 1994 and a better bus service could be expected. When the Seventh Malaysia Plan was tabled the following year, the government announced that the bus services in the city would be operated by two consortiums, Intrakota Komposit Sdn Bhd and Park May Bhd. Intrakota took over the mini-bus services that had served Kuala Lumpur since the seventies and replaced them with new buses. Before long, the buses, drivers’ attitudes and the general bus service deteriorated. By end 2000, Intrakota had accumulated losses of RM339 million, partly the result of competition from other bus companies. (Nadeswaran, The Sun, 18.12.2001)

When the 21st century dawned, 13 bus companies in all were operating in the capital and the bus service was as chaotic as ever:

“At least two companies have sold their shares to politically well-connected individuals, whom they believe will be able to stave off any attempts to create the consortium.” (R. Nadeswaran & G. Shamala, The Sun, 16.12.2001)

On 29 November 2003, DRB-HICOM sold its Intrakota Komposit Sdn Bhd assets to state-owned Syarikat Prasarana Negara Bhd for RM177 million. Intrakota had suffered losses of RM450 million since the 1997/98 economic crisis from competition with the LRT systems, other bus services and unprofitable routes. (NST 8.12.2003)

Park May was a unit of the UEM-Renong group. Despite the backing of this conglomerate, it had been losing money since 1997. Among its problems were excess capacity, competition among the city bus operators and high maintenance cost. In late 2003, the leading express-bus operator Konsortium Transnational Bhd (KTB) took over debt-laden Park May.

 The National Car & Highways Projects

One of Mahathir’s earliest megaprojects, the national car was promoted at the expense of public transportation. The proportionately huge public development allocation for roads and highways paralleled the expenditure on the National Car Project.

 The number of registered vehicles in Kuala Lumpur more than doubled in seven years from 327,602 in 1985 to 662,717 in 1992. As a result, more than 150,000 man-hours were lost every day by motorists in the Klang Valley. Furthermore, the ratio of people using public transport compared to private vehicles had declined from 40:60 in 1980 to 30:70 in 1990. (NST 16.11.94) By 1998, there were 8.9 million motor vehicles on our roads of which 4.5 million were motorcycles, 3.5million were cars and the remainder being utility vehicles, trucks and buses. (1998 Environment Quality Report)

In recent years, residents in the Klang Valley have seen the rampant building of highways which have accompanied the national car project. In other environmentally conscious cities, there would have been protests over their indiscriminate construction with no heed for the environment, aesthetics or the peoples’ right to the commons and public footpaths.

A sustainable solution that ensures both the preservation of Malaysian nature and enables ease of mobility for majority of urban dwellers lies in creating an effective integrated public transport system, and not endless highways and tunnels for the driving pleasure of the middle and upper class. It is also time for Kuala Lumpur to emulate Singapore and London by limiting congestion by imposing entry charges for vehicles entering the city centre at peak hours, instead of dreaming up one populist measure after another.

The excuse most frequently heard for not implementing traffic restraining measures in the Klang valley is that there is no efficient public transport alternative. This is not convincing when we see that in other cities such as Singapore, Hong Kong and Tokyo, such policies were already in place before the completion of their mass transit systems. Public transport in the Klang Valley has been further undermined by high motorcycle ownership and use (an offshoot of the national car project) which has further contributed to the serious air pollution in the city. (Barter, A.R.P., 1997:9)

Failure of the Privatisation Policy

Dr Mahathir launched the privatization policy during the mid-eighties recession. The financial crisis was worsened by the fact that we had an over-developed public sector. This had come about because after 1971, the New Economic Policy had created more and more Bumiputera trustee enterprises and agencies. The public sector development expenditure for the Fourth Malaysia Plan (1981-85) was RM80 billion. Out of this, 34.5% was accounted for by the Non-Financial Public Enterprises, which were mainly Bumiputera trustee enterprises.

When I was Member of Parliament for Petaling Jaya from 1990 to 1995, I brought up many of these issues. Thus, the Government had certainly been forewarned about these problems. Many of the inside stories of the numerous contracts have been hidden from the public through the years involving corruption and the lack of accountability resulting in delays and inflated costs of these transport projects.

The failure of having a seamless integrated public transport system in the capital city is the result of UMNO’s obsession with its Bumiputeras-only patronage contracting and Prime Minister Mahathir Mohamed’s crony capitalism that would hand over these contracts only to the chosen Bumiputera trustees. Because of their lack of experience in these fields and the failure to secure bank financing, these projects were continually delayed. This in turn led to ever-increasing costs.

Failed Light Rail Systems

A Light Rail Transit (LRT) implementation study for Kuala Lumpur was first launched in 1984 by then Minister of Federal Territory Shahrir Abdul Samad. At the time, financing was a major question. The study was undertaken by a Belgian-French consortium. This LRT system was to be powered by overhead electric lines or catenaries and would cover 18 stations between Petaling Jaya and Sentul. The RM697 million project was targeted for completion in 1988. Unfortunately, the project did not take off. Along the way, the monorail was also proposed and was to have started in 1990. (Business Times, 18 December 1996).

The first phase of the Light Rail Transit (LRT) project comprising 12 km was privatized in December 1992, by which time its cost had increased five times the original estimate. It was awarded to Sistem Transit Aliran Ringan (STAR). The Renong group was given the franchise to undertake the second LRT project which was scheduled to be operational by the end of 1997 before the start of the Commonwealth Games in 1998.

In 2001, the government took over the light rail systems Putra and Star because they were having difficulties servicing their loans. At the time, the bus, LRT and KTM Komuter systems were not integrated at all and feeder buses at LRT stations were inadequate. The Commercial Vehicles Licencing Board had refused Putra’s application to operate a feeder bus service and the local authorities were not helpful in providing the necessary facilities for bus stops. (ibid)

When we look at STAR’s LRT project, how does a project that had failed for seven years to get any financing suddenly become “financeable” by EPF? STAR, after all, started as a 2-dollar company. STAR had claimed capital returns of as much as 18 per cent. But what penalty would it be liable should this not be possible? What assurances did EPF give Malaysian workers that this would not happen? Furthermore, as construction was not awarded under open tender, the private contractor could cream off a high proportion as construction profit, thus pushing up costs. To recover these high costs, fares had to be raised and we ended up with an LRT system that was not affordable even with government subsidies.

By the end of 1996, the first phase of the LRT was six months behind schedule because the mass transit system was facing some serious technical problems not easily corrected: “The delay could be a costly embarrassment, not just to the government but to the LRT’s British civil contractors – especially since Malaysia is also experiencing difficulties with fighter jets and frigates ordered from the British.” (Asiaweek 18. 10.1996)

Considering such staggering amounts of public subsidies, how can the government claim that privatization has saved the country millions in state revenue? Besides these soft loans from Government coffers, these private monopolies have also relied on Malaysian workers’ Employees Provident Fund (EPF) to finance their projects. Apart from the transport sector, EPF funds have been used to back such privatized projects as the Independent Power Producers (IPP) Segari power station at Lumut, the Kuala Lumpur International Airport, Bakun HEP, the Sewerage project as well as the Light Rail Transit (LRT).

But the ultimate subsidy that taxpayers provide these privatized industries is when we have to bail out ‘lame duck’ companies such as BMF, Perwaja, Ekran, UEM, MAS, the list goes on. Two LRT operators had to transfer the rail lines to the government-owned Syarikat Prasarana Negara Bhd in 2002, while the monorail was transferred in 2007. These operators had found themselves in financial distress after failing to make sufficient returns on the operations to finance their debts incurred in the construction and operational demands. (Star 26.6.2010)

Monorail too had to be bailed out

Kuala Lumpur City Hall first announced the monorail project in January 1990 after it had been approved by the cabinet in June 1989. The 14-km, 22-station system designed to carry more than 34,000 passengers a day through Kuala Lumpur’s commercial centre was estimated to cost RM143 million and was scheduled to begin in June 1990. This was then postponed to May 1991 because the city’s mayor complained that tenders submitted for the preparatory work were too high. The main contractor was a company, BNK, which had no experience in such urban transport projects and had reported a loss of RM224,660 in the year up to 31 March 1990. (Doug Tsuruoka, FEER, 26.9.91)

The RM1.18 billion KL Monorail project finally started in 1997. It was to be built by a consortium of Japanese companies including Hitachi Ltd and Toyo Engineering Corporation but the financial crisis of 1997 stalled it. Work only resumed in 2000 with financial assistance from the government, lending the company RM610 million in addition to RM300 million soft loan given in 1998.

KL Monorail Systems began operations in July 2002, providing an additional 8.6km of transit network stretching from Jalan Tun Razak to Jalan Tun Sambanthan near KL Sentral, interfacing with STAR-LRT at the Titiwangsa and Hang Tuah and Putra-LRT at Dang Wangi and KL Sentral stations.  Unfortunately, its huge elevated concrete infrastructure served to screen many of Kuala Lumpur’s oldest heritage sites such as the Guan Yin temple and the Chen ancestral temple.

Prasarana had to purchase the monorail after it faced bankruptcy in 2004 and gave operating rights to their subsidiary Rapid Rail Sdn Bhd. The light rail projects also faced problems when Putra defaulted on interest payments totaling RM44.6 million after its revenue could not cover its expences. (Business Times, 28.10.2000) The LRT operator STAR also faced closure when it accumulated debt of RM1 billion at the end of 2001. Its creditor Commerce International Merchant Bankers Berhad (CIMB) applied to wind up the company on 2 April 2002. (Star 3.4.2002) Rapid Rail Sdn Bhd was established to place all three rail operators – STAR, PUTRA and KL Monorail – under one administrative umbrella in 2004.

The KL Monorail was not able to meet even half its ridership target of 85,000 passengers a day by 2003 because it was not conveniently linked to the other two mass transit systems, Putra and Star. Passengers had to alight and walk considerable distances between systems to get to their destinations and feeder buses were not available at many stations. By 2005, Putra’s daily ridership was 170,000, Star’s was 100,000 compared to Singapore’s MRT achievement of two million passengers a day. (Malaysian Business, 16.5.2004:22) The planned Putrajaya monorail costing RM400 million to be built by MTRANS Holdings Sdn Bhd was shelfed in 2004.

Mahathir and the failure of Malaysia’s public transport

From the foregoing, it is clear that Mahathir failed to implement the necessary reforms for an integrated and efficient public transport system in the country because of his obsession with the national car project and privatisation. He does deserve the epithet ‘Father of neo-liberal capitalism in Malaysia’ after witnessing the spate of privatisation of our national assets and his promotion of crony capitalists in the country.

This is just to put the record straight. We must now ask, which political coalition can provide an efficient, affordable and sustainable public transport system in Malaysia and how can long-suffering Malaysian consumers be empowered in the process?  Such an important public service such as public transport system needs state support, regulation and intervention to operate efficiently and fairly; power must be devolved to regional transport authorities which then integrate all rail, bus and transit systems; certainly, local government must be elected by the people to ensure accountability and efficiency in the provision of public transport services, environmental protection and regulation of city traffic. Last but not least, Malaysian workers’ pension fund (EPF) should not be used by businessmen who have failed to obtain financing from banks.

MAHATHIR AS THE TOP DOG OF PAKATAN HARAPAN: AN UTTER BETRAYAL OF REFORMASI

Press statement by Kua Kia Soong, Suaram Adviser, 20 July 2017

It was bad enough when Pakatan Harapan made an alliance with the unrepentant former autocrat, but now that Mahathir has been made the ‘top dog’ of the coalition, it is the biggest betrayal of the Reformasi Movement yet.

Well, now that Mahathir has been made the Chairman of the coalition, Pakatan Harapan will have to answer for all his scandals. PH must be prepared for more than the RM30 billion forex losses incurred during Mahathir’s term.

It is not as if the former Prime Minister had sincerely become a ‘born-again democrat’ by showing a sliver of contrition, but up to now, he has not. He is not sorry for the white terror of Operation Lalang; for the political conspiracy against Anwar Ibrahim and saying on record that the latter is morally unfit to be PM because he is a womaniser and sodomiser; for squandering more than RM100 billion in the financial scandals during his term in office through crony capitalism and bailing out failed businessmen including his son…

The litany of woes inflicted under Mahathir’s rule has been well-documented and every community has its story: The 10,000 indigenous peoples who were forcibly displaced from their ancestral homes in Bakun in order to make way for yet another of Mahathir’s grandiose dam projects at a time when the project had been suspended during the financial crisis in 1998; the Indian plantation workers whose communities were destroyed through Mahathir’s neo-liberal capitalist policies and who were forced to become urban settlers; the needless communal controversies created around mother tongue education during the eighties including the Unified Examination Certificate in 1975, the National Culture Policy, the unqualified school administrators sent to Chinese schools in 1987, and others.

Let us not forget that Mahathir was also the first Prime Minister to claim that Malaysia is an Islamic state and as recently as the 2013 general election, criticised Najib for wasting public money on the Chinese voters after they had voted for the Opposition. He is also the top dog in the new ‘Pribumi’ party which is only open to ‘Pribumis’ no less.

You have to be a “Zombie Democrat” to accept such a party into the coalition that is supposed to embody the Reformasi Movement! Do the PH leaders still remember what their Reformasi programme stands for?

1MDB, FOREX LOSSES – NEVER AGAIN!

By Kua Kia Soong, SUARAM Adviser, 4 July 2017

Just as I predicted in the first paragraph of my new book ‘GE14: The Big Issues’:

“Malaysia’s 14th general election will no doubt be fought between a Barisan Nasional coalition that boasts its sixty years of “stable rule” and a Pakatan Rakyat coalition calling on the electorate to “save Malaysia” from the BN’s kleptocracy. There will certainly be plenty of the usual mudslinging on both sides and Malaysian voters will likely be treated to tirades about current scandals including 1MDB, as well as past scandals such as the forex losses, now that the former Prime Minister has joined the Opposition…!”

It is great that Pakatan Harapan will be going around the country to expose the BN’s 1MDB scandal. The rakyat who do not already know about this scandal will get to know about how more than RM40 billion of our sovereign wealth has been squandered by the coalition that has run this country since Independence.

Equally wonderful is the fact that the Barisan Nasional will be going to town about the more than RM30 billion forex losses incurred by Mahathir’s government during the Nineties. The old man may even get a taste of what incarceration feels like if he is found to have misguided the Cabinet and Parliament in the Nineties and squandered so much of our valuable assets.

If Mahathir had not joined the Pakatan Harapan coalition, PH would only have been tainted with the corruption charges against the PH Chief Minister in Penang and the allegations of corruption by PH themselves against the former PH Menteri Besar of Selangor. Worse luck, thinking they had roped in a big fish to trawl for rural Malay votes, PH must now bear the cross for the former kleptocrat’s sins!

Karma chameleon

It never fails to amuse me that the laws of karma work in such a way that ensures that justice will always prevail, even in what too often appears to be so unjust a world. Who would have thought that two decades after the Mahathir administration had frittered away more than RM30 billion of Malaysian tax payers’ money in the forex losses, we would finally have a Royal Commission of Inquiry into this scandal which the Leader of the Opposition Lim Kit Siang described thus:

“Up to now, the government has failed to “come clean” on the colossal Bank Negara forex losses as a result of speculation in the international currency markets from 1992-1994, with the losses cited as ranging from RM10 billion to RM30 billion…The reasons which I had advanced in Parliament in 1994 for a Royal Commission of Inquiry into the colossal Bank Negara forex losses remain valid today, and should be the terms of reference of a White Paper… To determine the actual extent of the colossal forex losses suffered by Bank Negara 1992-1994; whether there had been any financial malpractices and abuses in view of the inconsistencies and conflicting explanations about the colossal forex losses; and establish how Bank Negara could incur such colossal losses.”

I imagine the leader of the Opposition must be so pleased that his call for an RCI in 1994 has finally come to pass. Now at least the Malaysian rakyat will be able to get to the bottom of this seemingly bottomless pit of financial squandering under the Mahathir regime.

When will we see a credible RCI on 1MDB?

Certainly, the rakyat also demands a credible RCI on the 1MDB scandal. Unfortunately, Mahathir was responsible for concentrating so many branches of power under the Executive branch of the Government that the independence of the AG chambers and the MACC have now been compromised under the Prime Minister’s Department. Likewise, the Judiciary has not fully recovered from its rude assault by Mahathir after Operation Lalang in 1988 when the Lord President and three Supreme Court judges were sacked. Will it be poetic justice that Mahathir might have to face the judiciary of his own making?

We will have to be patient and wait for the laws of karma to work in such a way that we will also have a credible RCI on the 1MDB scandal. Waiting might have to be until the present Prime Minister meets his UMNO nemesis and becomes the hare in the race. If he then joins the Opposition, I wonder if he will be forgiven by the Opposition for his 1MDB indiscretions? Since we have waited more than twenty years for the RCI on the forex losses, let us hope we do not have to wait that long for an RCI on 1MDB!

BN and PH’s unacceptable tolerance of corruption

By now, it must be clear to all Malaysians that there is a pattern of an unacceptable level of tolerance of corruption within both the BN and PH coalitions. If Dr Mahathir had quietly retired, we would definitely not be hearing about this RCI on the forex losses in the Nineties. But he has his own agenda and has chosen to challenge Najib, so he will have to face the consequences and bite the bullet while facing the assault from Najib.

Within PH, PKR Secretary-general Rafizi Ramli recently exposed corruption involving money and “women” for those wanting to deal with the Selangor government. He similarly made the standard proviso that he “MIGHT take action unless…” He said he had received the complaint from a “bona fide person that apart from money, now there are also requests for women when dealing with the state government”.

This is not the first time we have witnessed such a tolerance of corruption by Pakatan leaders in which the alleged corrupt person involved is given a CHOICE of following a course set out by the accusers in the coalition. We saw such a strategy at work during the gambit to get rid of the former Menteri Besar of Selangor Khalid Ibrahim when PKR leader Saifuddin Nasution waved a file of alleged corrupt practices over the Khalid’s head to force him to step down as MB. However, since the day Khalid did indeed step down as MB, we have heard nothing more of the alleged corruption scandals on which his removal was apparently based.

Does the former MB not have to face these allegations of corrupt practices anymore and does he not have to accept the consequences if found guilty? Did the tax payers of Selangor suffer any loss of their state revenue as a result of the alleged wrongdoing? If so, should he not have to pay these back to Selangor tax payers? On the other hand, if the alleged corrupt practices are found to be concocted and untenable, do the Pakatan leaders who were responsible for such irresponsible ruses (including the frivolous Kajang Move) not have to face the consequences of their actions?

After he stepped down as MB of Selangor, Khalid Ibrahim has insinuated that there are irregularities in the purchase of the water assets by the Selangor Government, namely one of the water concessionaires has been offered favourable terms through links to personalities in the Selangor state government. In the interest of Selangor rates payers, this deal should be investigated by an independent inquiry as well.

Urgent reforms in GE14:

1.       Zero tolerance of corruption

So, what does this tell us about the attitude by the Pakatan leadership to corruption? They have shown us that they are prepared to tolerate corrupt practices as long as the guilty ones follow the coalition’s wishes. This is totally unacceptable.

In the reformed Malaysia that Malaysians yearn for, there must be zero-tolerance of corruption. We expect every case of corruption to be reported to the relevant authorities including the police for prosecution and nothing less than that.

Corrupt leaders and civil servants have to be accountable to the people. Furthermore, they have to pay back what they have corruptly obtained from the people and atone for their indiscretion. And this is irrespective of whether the amount of money involved is 2.6 billion in your personal bank account or 2.6 million that you paid for a house.

2.       Public officials charged with corruption must step down until cleared

In addition, any public official charged with corruption must step down while the case is in the courts as a democratic principle and good governance. This principle is not subject to any populist campaign which claims that “the people say the CM need not resign”. Any guilt over corruption charges can only be decided in the courts and not by selected sections of the public.

If this rule is not followed and if MO#1 is finally charged for corruption, this will be a precedent that he can cite to justify staying on in his capacity as MO#1.

3.       Make our sovereign wealth fund and Bank Negara transparent and accountable

It is not enough for PH to tell us the details of the 1MDB scandal and for BN to expose the shenanigans of the Mahathir administration which led to the forex losses. The rakyat want to know how the BN or the PH will ensure these scandals never happen again by putting in place strict reforms to make our sovereign wealth funds and Bank Negara transparent and accountable.

Our sovereign wealth fund and foreign exchange reserves must be managed in a transparent manner for the benefit of Malaysian workers, especially their expectation of a respectable pension when they retire and investment for our future generations. Political objectives and capitalist greed must not influence their management.

We want a standard that ensures that international investments of our government, including foreign exchange reserves, sovereign wealth funds, and government-owned such as pension funds, are based on clearly stated policy objectives and investment strategies, transparent and accountable to the people. The opaque operations of the Malaysian governments in managing our international investments is what led to the forex and 1MDB scandals.

We say, ‘Never Again!’

If BN and PH want our votes, they must tell us in no uncertain terms how they will ensure that such scandals never happen again and what specific reforms they will put in place to achieve this – namely, how they will consolidate the rule of law and good governance and how they will step up the efforts against corruption and enhance our policy and regulatory frameworks.

NAJIB MERELY MODELING MAHATHIR ON FOREIGN INVESTMENTS

Press statement by SUARAM Adviser Kua Kia Soong 5 Mar 2017

It is amusing to watch Tun Mahathir continuing criticisms of China investments in Forest City in Johor and other multi-billion foreign direct investments (FDI) in the country. You would think that this is a new policy by Prime Minister Najib to seek such multi-billion inflow of FDIs.

When Japan was Flavour of the Month

In fact, it was Tun Mahathir’s policy in 1982 to “Look East” that started the trend of encouraging FDIs from a singular source. When he looked east then, without a 20/20 vision he could only see Japan. Beyond the fluffy talk of equating “Eastern values” with Japanese values, the Look East policy was actually a camouflage for an influx of Japanese foreign direct investments into Malaysia.

Before long, Malaysia’s iconic building at the time, the RM400 million Dayabumi Complex was built by a Japanese company and in a very short time, Japanese and South Korean construction companies bagged about RM5 billion in major contracts, frustrating local builders. (AWSJ, 8 March 1984) Malaysia’s national car was a partnership between HICOM and Mitsubishi; Japanese companies were favorites to win energy contracts during the Eighties and Nineties, and there were many more contracts won by Japanese investors. Before long, more and more Japanese were making Malaysia their “second home”. Did Tun Mahathir raise any alarm bells about any suspicious “Project IC” that might be used by these Japanese second homers?

And like a good student of his former mentor, Prime Minister Najib seems to be keen to carry out the second phase of the Look east Policy especially after the Japanese Prime Minister Abe’s recent visit to Malaysia. The Japanese investors are certainly eyeing the multi-billion KL-Singapore High Speed Rail project.

The East used to be Red

Ironically, in recent years it has been “Red China” that has rescued world capitalism, especially the US and the Eurozone from their sovereign debt crisis. China’s financial resources helped to contribute to solving the eurozone’s debt problem and to continue to sustain the US’ deficit. In the process, China has increased its investments in European industrial and infrastructure projects.

Closer to home, China’s latest mission is the timely purchase of our national assets that needed rescue after the recent 1MDB fiasco. Thus we can say that former “Red China” has rescued Malaysian capitalism and especially the political fortunes of Prime Minister Najib in the nick of time!

Thus, while Singapore, the US, and Japan have traditionally been Malaysia’s main trading partners, the People’s Republic of China (PRC) has now become the country’s most important trading partner and source of FDIs. China has invested in manufacturing projects as well as in real estate such as the Malaysia-Kuantan Industrial Park as well as Bandar Malaysia, the main terminus of the planned High Speed Rail, Forest City in Johor Bahru, port development in Klang, Malacca, Kuantan and Tumpat. In infrastructure development, the PRC government-linked corporations have secured contracts for the RM55 billion East Coast Rail Link, the RM9 billion Gemas-Johor Bahru dual tracking project, as well as provisions of rolling stoc

Certainly, without transparency, such increased FDI will see more rent-seeking activities and strengthen Najib’s grip on power just as it did for Mahathir during the Aching Eighties.

Lessons from Mahathir’s Look East Policy

Mahathir’s Look East Policy should be a lesson for Malaysia to be wary of these multi-billion inflows of FDIs from singular sources. Despite the hype, Mahathir’s Look East Policy with massive Japanese FDI inflows failed to lift Malaysia out of the middle-income trap chiefly because the strategy was founded on utilizing unskilled and semiskilled local labour. Japanese companies were slow to invest in skill-intensive industries in Malaysia and even slower to transfer new technology to their Malaysian units. They tended to employ more expatriate managers than other foreign investors.

Will the latest purveyors of FDI largesse – the PRC and Saudi Arabia – be any different from the Japanese investors of the 1980s? Will they also be using mainly expatriate managers and relying on their own supply chains and raw materials? We should ensure that the failures of the past are not repeated and these foreign investors adhere to our local requirements.

Transparency in award of contracts

First, for a very different outcome, we need transparency over the award of all these multi-billion contracts to ensure that the successful tenders are made in the people’s interest, for the good of all. Next, we must ensure that the terms and conditions agreed in the contracts with foreign investors fully commit to: engaging and developing local human capital, enhancing enterprise development and applying clean technologies to Malaysian projects.

Most important of all, we have to ensure that these development projects do not violate or degrade our environment or encroach on the customary lands of our indigenous peoples such as the Mah Meri on Carey Island or in Sarawak and Sabah. If the PRC still claims to be Socialist, we could depend on it being more discriminating in its choice of investments to ensure that indigenous peoples’ rights are not violated.

Consolidating rule of law and good governance

For a firm people-centred strategy with foreign investors, the government must do much more to build trust at home by consolidating the rule of law and good governance, including stepping up efforts against corruption and enhancing policy and regulatory frameworks. Otherwise, there will be opportunities for rent-seeking activities and corruption, which will continue to suck the nation dry.

If foreign investors are to be rid of the excuse that we cannot provide the high skills they need, then we have to thoroughly reform our education system to provide specialised skills beyond basic education and to curb the brain drain. To ensure a healthy workforce, we need a good public health infrastructure, including a secure supply of clean water. Workers’ rights to unionise and collective bargaining are essential to eliminate child labour, workplace discrimination and will help to upgrade their skills and raise the motivation of Malaysian workers.

Is BRIM corruption or crass populism?

Is BRIM corruption or crass populism?
Press statement by Kua Kia Soong, SUARAM Adviser 30 December 2016

Dr Mahathir and now Azmin Ali have claimed that the BRIM handouts are akin to corruption by the Najib government. While Dr Mahathir is prone to selective amnesia, the Selangor MB should know that Najib’s BRIM cash handouts are actually a copy of similar cash handouts made by the opposition-led Penang state government.

After the 2008 general election, the Penang state government prided itself on a plan to give cash handouts of 100 ringgit annually to every senior citizen aged above 60. It also introduced a scheme to wipe out hard-core poverty by ensuring that every family receives at least 500 ringgit a month. Then in a move that I called “populism gone mad”, the Selangor state government decided to provide free water to consumers in the state. The current water crisis in Selangor is perhaps the instant karma that comes from such a poorly conceived populist project. Water is a limited precious resource and water demand management acknowledges this by setting targets for per capita water use, and reducing the scale of non-revenue water – giving away free water makes a mockery of the need to conserve that precious resource through water demand management.

Free makan at whose expence?

Before he became Menteri Besar, Azmin Ali’s had criticised the State Government under Khalid Ibrahim for it’s spendthrift ways in splurging RM500,000 on a single official ceremony at a time when the state reserves had dipped below RM800 million. Has Azmin put a stop to such wasteful and populist free makan splurges? Who pays for the free makan at Open Houses during each festival – the state government, Pakatan coalition or Selangor ratepayers? There was even the time when the PR Speaker told off the State Exco Ronnie Liu for spending RM10,000 on durian feasts for his constituents. Who knows what else goes on…

Is this corruption, or do free handouts count as corruption only when they are given out close to an election? Both coalitions are equally guilty of vote buying through free handouts during the election campaign.

Mahathir gave only to favoured Bumis

While Dr Mahathir’s term in office was not noted for free cash handouts to the lower income masses irrespective of ethnicity, he did grant contracts, licences, share options and other benefits specifically to ethnic Malay individuals and companies over and above other ethnic minority groups. He created a class of newly rich Malays with a vested interest in keeping their patrons in power. Many of these “favoured Bumiputera capitalists” only managed to survive the 1998 financial crisis through being bailed out indirectly by Malaysian taxpayers.

In fact, soon after the 2013 general election, Dr Mahathir accused Najib not so much for this alleged corrupt practice of free cash handouts but of pandering too much to the Chinese and of not giving enough attention to the Malays, who form the backbone of Umno’s support.

During Abdullah Badawi’s administration in July 2007, ahead of the March 2008 general election, civil servants were awarded hefty pay increments of between 7.5% and 35% while their cost-of-living allowances were doubled. Government pensioners, too, were awarded significant hikes in their monthly checks.

Can all this be considered corruption too or is it only considered corruption when free handouts are race-free as in the case of BRIM?

The nation needs improved social services & reforms

For a sustainable economy and society, the lower income earning Malaysians require an improved social and public welfare services and other reforms, not one-off cash handouts which are not sustainable and will worsen the budget deficit and national debt.

First, we need fiscal reforms to ensure fair income redistribution by imposing a higher marginal tax rate on high income earners, an incremental Capital Gains Tax on property, other progressive taxes on wealth and luxury goods; plugging tax loopholes; reviewing capital allowances and tax holidays for foreign firms; regulating and imposing a tax on all international financial transactions and hedge funds; abolishing regressive taxes such as GST.

Secondly, we need to defend workers’ rights & interests by promoting workers’ right to unionise; legislating a progressive guaranteed minimum wage for all workers, including foreign workers; ensuring full employment, retrenchment and pension fund for all workers; abolishing the contractor system for employment of workers; allowing workers and their trade unions to be part of economic influence and decision-making of enterprises, especially control of their pension funds; promoting self-governing workers’ cooperatives to produce goods that are useful for society; according full rights as workers to all migrant workers irrespective of their immigration status.

Thirdly, we need an improved free public health care system for all Malaysians by allocating at least 10% of the GDP in the annual budget to healthcare; implementing better conditions for doctors, nurses and hospital workers in the public sector; freezing the expansion of private hospitals and preventing the leakages in the public sector to private contractors; providing homes and day-care centres for the elderly and disabled through benefits, support services, including access to mobile health care.

Fourthly, we need a people-centred and caring social policy by instituting a Housing Development Board, managed by elected local councils to implement an effective low-cost public housing programme for rental or ownership throughout the country for the poor and marginalized communities, with adequate space for community activities, recreation and green areas; respecting the rights of urban settlers in any development plan to upgrade their area or to re-house them; prioritizing the public transport system in the country while regulating highway construction and car traffic in city and town centres; providing child-care and crèche facilities in all public and private sectors; providing rehabilitation facilities for those suffering from substance abuse.

Cash handouts do not empower the people

While some economists claim that these cash handouts will lead to higher domestic demand and consumption and stimulate the economy, others are concerned about rising fiscal deficits and inflationary pressures. They do not consider the most important factor in all this populism – the long term dignity and empowerment of the people in the process of a sustainable national development.