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Speech

on the Second 2005 Supplementary Estimates

by Lim Kit Siang  
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(Parliament, Tuesday) : The second supplementary estimates 2005 totalling  RM13.7 billion, i.e. RM10.9 billion for operating expenditures and  RM2.9 billion for development estimates, bring the total 2005 budget to RM144 billion �  RM109.5 billion for operating and RM34.5 billion for development.

The second supplementary estimates 2005  is the first budgetary vote  to be sought from Parliament  after the passage of the Ninth Malaysia Plan last Thursday, and we should begin to apply the five thrusts of the National Mission in the consideration of every  budgetary or supplementary request.

The five thrusts are:

• To move the economy up the value chain.
• To raise the capacity for knowledge and innovation and nurture �first class mentality�;
• To address persistent socio-economic inequalities constructively and productively.
• To improve the standard and sustainability of quality of life; and
• To strengthen the institutional and implemention capacity.

A recent Bernama report is a somber reminder of our precarious position  in  the international competitiveness stakes, losing out in indicator after indicator to our neighbours, whether  FDIs, university rankings, e-government readiness, corruption perception index, press freedom, and even  in areas where we should be able to maintain our  pre-eminent position Entitled �M'sia Needs To Do More To Retain Edge In Islamic Banking�,  the Bernama report (29.4.06)  warned that although Malaysia is the world's second largest Islamic banking hub after Bahrain, it may lose this status to Singapore if it does not start making overtures or giving perks to attract more players.

Industry analysts said the lack of new incentives and to a lesser extent aggressiveness could put Malaysia behind its neighbour from across the Causeway in the race for a bigger share of the estimated US$300 billion Islamic finance market which is growing 15 percent annually, warning:

"Singapore is positioning itself as a new hub for Islamic finance by capitalising on its status as a major Asian financial centre and on its strengths in areas such as asset management, insurance, REITs (real estate investment trusts) and project finance."

With the passage of the Ninth Malaysia Plan, let Parliament subject every measure  to the test laid down by the Prime Minister, Datuk Seri Abdullah Ahmad Badawi when presenting the 9MP in Parliament on March 31, 2006:

�We have no time to lose. Only fifteen years remain between now and the year 2020.  These fifteen years must be our most productive years, our best years, so that we may stand tall in the year 2020 and declare that our vision has been realized�.

For a start, the Prime Minister should remove or reorient Cabinet Ministers who are not fully committed to the objective of creating  ï¿½first class institutions� in Malaysia or who have no confidence that Malaysians are capable of �first class mentality�.

He should start  with the Information Minister, Datuk Zainuddin Maidin, who shocked the country when he told Parliament last Thursday that Malaysians are not ready for live parliamentary proceedings as they are not up to the standard of BBC viewers in  the United Kingdom which has live telecast of House of Commons.

For the information of the Information Minister, there has been a special dedicated Parliamentary channel, BBC Parliament, since  in 1992 which provides continuous unedited coverage of parliamentary proceedings.

Canada is  the first Commonwealth country to telecast LIVE Parliamentary debates in 1977.

Do we  have an Information Minister who is such a victim of Western mental colonization that he regards Malaysia as a perpetual  ï¿½third world country� with Malaysians permanently  inferior to the West.

What hope is there for the important Ninth Malaysia Plan and National Mission thrust to nurture a �first class mentality� when we have an Information Minister who has such contempt for the mentality of  Malaysians, even when we are 30 years behind Canada and 14 years behind Britain in live parliamentary telecasts?

Is Zainuddin serving the current Prime Minister who wants to nurture a �first class mentality� or is he still serving the former Prime Minister, Tun Dr. Mahathir Mohamed who has become to regard Malaysia as a �half-past-six country�?

The New Straits Times today reported Mahathir as equating Malaysia with �a half-past-six country which has no guts� for the surrender of national sovereignty to Singapore as a result of the government scrapping of the RM1.1 billion crooked half-bridge.

Of course, �a half-past-six country� cannot be fit or qualified like the denizens of the United Kingdom to enjoy live parliamentary telecasts!

If the Prime Minister is serious about the thrust to nurture a �first class mentality�, let us start work immediately to create first-class institutions, whether Parliament, Judiciary, Cabinet, civil service, universities, police force, media, election commission, anti-corruption agency, Suhakam, NGOs, etc.

Do we have a �first-class� Parliament playing its full and proper role as the highest legislative and political chamber of the land?

A special Minister for Parliamentary Affairs had been appointed immediately after the 2004 general election, but apart from a few baby-steps most notably  in the establishment of three parliamentary select committees and the appointment of an Opposition MP to be Deputy Chairman of the Parliamentary Accounts Committee, the great  and challenging task of parliamentary reform and modernization has yet to take off.

The Prime Minister must take the bold and courageous step to agree to far-reaching parliamentary reforms to eradicate Parliament�s image  and subservient role as �rubber stamp� of the Executive.

We should work towards a full Select Committee system, with every Ministry being shadowed by a  parliamentary committee. A start should be made with the formation of six  specialized Parliamentary Select Committees, namely Ninth Malaysia Plan Implementation,  Education (including Higher Education), Foreign Affairs, FTAs, Human Rights and  Information Technology.

Do we have �first class� universities?

In the past five days, I have received numerous requests for copies of the Zahid Higher Education Report which was tabled in Parliament last Thursday but I had to disappoint them as there is neither soft nor hard copy available for  interested stakeholders of our society.

The Zahid Higher Education Report had made several recommendations about quality audit of the institutions of higher learning in the country as well as the fullest use of Information and communication technology (ICT) in higher education.

However, it  is clear that equally important as the revamp of the Malaysian universities to ensure that excellence, quality and meritocracy must be their new hallmarks if they are to gain international repute  and the country recognized as an international centre of academic excellence, there must equally be a revamp of the Higher Education Ministry to instill in the minds of its bureaucrats the �first class mentality� which the Prime Minister, Datuk Seri Abdullah Ahmad Badawi had underlined in the Ninth Malaysia Plan.

Clearly, we have yet to have a �first class�  Higher Education Ministry bureaucracy � or how else to explain the failure in the most elementary of knowledge management in ensuring that the Zahid Higher Education Report is easily available and accessible to all interested Malaysians, whether  academics, undergraduates or members of the civil society?

When Higher Education Minister, Datuk Mustapha Mohamed responded to my blog last week, he disclosed that  the Zahid Report �will be made public as soon as possible, to allow for public consultations�.

How could there be any �public consultations� when only MPs are given copies, while no one else among the public could access the report except to get an MP�s copy?

Didn�t the  responsible Higher Education Ministry officials  concerned anticipate the need to  make the Zahid Report easily accessible to the public in order to create the conditions for  meaningful �public consultations�?

If the answer is in the negative, then it is time for the whole set of Higher Education Ministry bureaucrats to be replaced by forward-thinking ones who understand the meaning of �first-class mentality�.

Why hadn�t anyone in the Higher Education Ministry thought of the most convenient and fastest way to make the Zahid Report accessible to interested stakeholders � by posting the whole  Report on the Internet, as is the practice in developed �first class� nations?

After ten years of promoting the Multimedia Super Corridor for Malaysia to make the quantum leap into the information society and knowledge-based economy, there can be no place in a critical Ministry like the Higher Education Ministry to lag behind or to have  bureaucrats who do not have even the most  rudimentary notions about the application of  ICT to disseminate information.

Or are Higher Education Ministry officials fighting a rearguard battle in their opposition to Mustapha�s decision to table the Zahir Report in Parliament in the first place?

Mustapha should issue an immediate directive to the bureaucrats in his Ministry to post  up the Zahir Report on the ministry website by tomorrow.  In fact, let this be a test of the ICT expertise and preparedness of the Higher Education Ministry bureaucrats.

Mustapha at present is not in the country, as he left on Saturday night to join the Prime Minister for  a  two-day visit to Jamaica beginning tomorrow.

However, in this age of instant communication where information travels at the speed of light, he should be able to transmit his directive to the bureaucrats in his Ministry as if he had not left the country.

Recommendation No.  29 of the 138 recommendations of the Zahid Report proposed the compulsory requirement of at least 15 articles published in �international refereed/journals� for the appointment of Professorship, whether in IPTA or IPTS.

This is long overdue and if this international best practice had always been in  place for the appointment and appraisal of university leadership � VCs and Deputy VCs, Deans, Deputy Deans and Heads of Departments, and Institute Directors and Deputy Directors, we would not have lost one of the most distinguished Malaysian scholars of international repute  to the United Nations.

Professor K.S. Jomo    left the University of Malaya for the United Nations to take up the appointment of Assistant Secretary-General under Kofi Annan after decades of frustration, discrimination and non-recognition of his academic and intellectual talents and qualities.

An internationally-renowned economist and scholar, Jomo was never given any senior appointment, whether as Dean of Faculty or even Head of Department, although many of his students have occupied these positions. In the early nineties, he was even subject to the embarrassment of a demotion when after serving for a number of years as Professor at the Institute of Advanced Studies, he was reverted to be an Associate Professor at the Faculty of Economics and Administration before he was finally appointed a full Professor.

His last straw was three years ago when his application to be Senior Professor (from Grade C to B) was rejected, although he had a star-studded reference of three Nobel Laureates, including Amarty Sen and Joseph Stiglitz.  I do not think there has been any other case of application for academic promotion in the local universities where there is even one Nobel Laureate as a reference, let alone three Nobel Laureates � yet Jomo failed in his application!

If  follow the selection procedure they have in good universities in Europe and US today, with international refereed/journals divided into  four tiers in terms of recognition of quality of scholarship,   around 80% of our professors will not qualify. Will the government have the political will to withdraw their professorships? Or at least will they avoid appointing them as contract professors upon their retirement?

On the basis of 15 published articles in international refereed/journals, the new
Vice Chancellor of University of Malaya, Datuk  Rafiah Salim would also not qualify.  Is she prepared to give priority to scholarship and transparency by making easily accessible the C.V.s of all academics in the University of Malaya?

It has been pointed out to me that apart from Prof Khoo Kay Kim, all the other members of the Search Committee which selected Rafiah as the new UM VC do not have any publication of international standing.

The following academics will make a Search Committee 99% better then the one that had been formed, viz:

1. Prof. Wang Gungwu (formerly of UM and Hong Kong)

2. Royal Prof. Ungku Aziz (former VC of UM)

3. Dr. Syed Husin Alatas (former VC of UM)

4. Datuk Mohd Sham Mohd Sani (former VC of UKM)

5. 2. Datuk Kamal Salih (former DVC of USM)

6. Datuk Sharom Ahmat (former VC of Brunei)

7. Datuk Dr Zawawi Ismail (former VC of UNIMAS)

8. Datuk Prof. Zakri (Director of UNU-Tokyo)

9. Dr. Nungsari Razi Ahmad (former member of parliament)

10. Dr. Jomo K.S. (world renowned scholar in political economy).

11. Prof. Dr. Mokhtar Thamin (formerly Dean of FEA).

After the appointment of Rafiah Salim as UM VC, the Higher Education Minister expressed confidence the first woman VC would return UM to its position as the best university in the country. 

Has  UM�s position as the premier university in the country come under doubt, even in the Higher Education Ministry?  However, being first among the local universities do not mean among the �first-class� universities in the world.

Do we have a first-class University of Malaya?

If UM is �first class�, it would not be now facing the risk of losing the Asia-Europe Institute to Singapore.

It is open secret that the European Union is taking the Asia-Europe Institute of University of Malaya to Singapore due to dissappointment with its performance, 10 years after Malaysia committed to launch an Asia-Europe programme in higher education under the ASEM (Asia-Europe Meeting) process.

The following is the brief background of AEI:

 1. 1996 - AEI - Pledge of Malaysian government to launch Asia-Europe program in higher education under the ASEM process.
2. 1999 - AEI was founded.
3. 2003 - Masters programmes launched at AEI with agreement with Autonoma University (International Masters in Regional Integration [IMRI]) and Leeds Metropolitan University (International Masters in Information Management).
4. 2004 - International Masters in SMEs was launched with agreement with Ancona University.
5. 2005 - Only IMRI was run.
6. 2006 � Wisma Putra informed by EU of its intention to move AEI to Singapore and place it under the watch of Asia-Europe Foundation (ASEF) in the second half of the year.

Can we afford to lose this institution to Singapore? Can the AEI as it was originally conceived be saved and kept in UM?

Do we have a first-class institutional and implementation capacity to ensure that no  government expenditure, whether operating or development, is squandered, whether as a result of waste, extravaganece, abuse of power, rent-seeking or corruption?

Last Wednesday, the Prime Minister unintentionally revealed the leakages in the GLCs was as high as 20%, when he said that the  top 15 government-linked companies (GLCs) can potentially save up to RM10 billion by improving their procurement processes.

This amounts to about one-fifth of their total procurement cost a year. GLCs spend over RM50 billion a year to buy goods and services, an amount equivalent to 10 per cent of the country�s economy.

This 20% leakage is probably a grossly conservative as an estimate.  I know of a recent case where the original cost for a bid is RM10 million, but after going through various layers of rent-seeking in the chain of government contracting, the final cost billed to the government and taxpayers is ten times or RM100 million!  What is the percentage of the leakage is this case? It is as high as 80 per cent, giving the first original cost of the contract a 100% profit!

This is a very grave problem.  If there is a conservative 20 to 30 per cent leakage from the RM220 billion development allocations under the Ninth Malaysia Plan, whether because of waste, extravagance, rent seeking or corruption, we are looking at  a huge sum of RM44 billion to RM66 billion.

Recently, several scandals have created grave doubts that we have a �first class� implementation and monitoring capacity, viz:

• The 300% increase in per kilometer cost for the 11 km of the East Coast Highway from 174 km to 185 km from RM1.7 billion to RM2.1 billion;
• The 55% increase in cost of the 7.5 km Sentul to Batu Caves Rail Double Track from 420 million three years ago when the project was suspended  to RM650 million;
• The �Award First, Design Later� RM250 million CIQ contract, without tender,  to Gerbang Perdana after the cancellation of the RM1.1 billion crooked half-bridge;
• The RM490 million Sports Training Centre in London and RM6 million a year allocation by the Sports Ministry for the biweekly sports tabloid Malaysia Today.

Last week, the Prime Minister pledged that no one will be discriminated under the Ninth Malaysia Plan.

I was in Sarawak yesterday and I saw this report about discrimination against a Bidayuh who had applied for a RM5 million loan meant for bumiputera entrepreneurs, but rejected on the ground that he was not �recognized as a bumiputera�.

This is not an isolated case of discrimination, as this is also the experience of many Ibans.  This is completely unacceptable.

INFLATION

Consumer Price Index (CPI) -  Rising month by month despite puny steps taken by Bank Negara, like interest hikes. There is no evidence of a coherent strategy beyond talk of price controls and subsidies. There is the continued  unwillingness to address the root causes.

With a distorted CPI resulting in complacency, and  alarming trends of inflation setting in, the policy responses � raising interest rates , price controls, subsidies � are palliatives and inadequate. Rising interest rates affect investment climate; price controls lead to hoarding and  increased smuggling; subsidies introduce distortions, inefficient use of resources and unjustifiable given the already unsustainable deficits.

There are serious policy gaps � no deregulation to increase efficiency, lower costs of doing business ; no safety nets to protect fixed income groups like pensioners; widening of already unconscionable income disparities pushing more individuals into poverty

There are also policy contradictions -  procurement policies ( restricted, negotiated  tenders raise costs) and  expansionary fiscal policy such as  unsustainable deficits) which contribute  to increased money supply and  further fueling of inflationary pressures

There is no contingency planning for meeting a global slow down linked with escalation in energy prices which may touch US$100 per barrel or  increased protection in developed economies which  will impact on middle income countries such as Malaysia. Malaysia needs a comprehensive contingency plan centered around:

• Deregulation  to improve business climate, increased competitiveness, easier entry into business.
• Delay mega projects to ease expansionary pressure and curb escalating fiscal deficits
• Introduce competitive bidding for all projects --- both Government and GLCs.
• Index pensions to the inflation rate
• Introduce minimum wage for low income employees to protect them falling below the poverty line
• Develop comprehensive study to assess the impact of rising   oil prices and come forward with a package of measures

Inflation is  the single biggest threat to successful implementation of the 9^th Malaysia Plan � as more Malaysians will fall into poverty if safety net programs fail to provide protection. There must be an urgent review of on-going poverty eradication  programs. Poverty is NOT just a rural issue � it is equally important to urban dwellers. Inflation will also impact economic fundamentals � investment, the fiscal picture etc.

TRADE POLICY 

The statement by Second Finance Minister, Tan Sri Mohamad Nor Yakop  during the debate on the 9^th Five Year Plan was somewhat reassuring. His acknowledgement of the need to seek inputs from the business sector and civil society is welcomed. However, �walk the talk�.

Needed steps:

�        Begin with an over view of trade policy � at present there are contradictions. Stance taken in Doha WTO negotiations differs from positions taken in bilateral FTAs negotiations with Australia, New Zealand, Japan etc. Other divergences --- ASEAN FTA. Need to have an overall trade policy framework that is consistent, coherent and transparent. Have open hearings giving all sectors the opportunity  to present views leading to the preparation of a White Paper for consideration by Parliament. White Paper should spell out framework for future FTAs.

�        Make public the recently concluded FTA with Japan along with calculations of losses/gains. Making public the contents of the FTA critically important to ensure that the private sector becomes aware of new opportunities, if any, and take steps to maintain competitiveness in areas where concessions granted to Japan affect viability of local industry.

�        FTA with US. Need for better preparation involving inputs from the private sector via open consultations. Do not be driven by US set �fast track� time-table. Preparations must involve doing cost/benefit calculations . The Minister for International Trade and Industry, Rafidah  Aziz claimed in this House that  these have been done --- if so, make these public and present to this House. According to media reports US has done its calculations and made public its �gains� which amount to the tune of US$ 22 billion per annum. Is this �gain� for the US a loss for Malaysia?  If not, what is the corresponding �gain� if any for Malaysia? The public is entitled to be told what the net gains/losses are.

�        Malaysia must draw lessons from the experience of other countries that have entered into FTAs with the US e.g. Mexico in the context of NAFTA, Central American countries in relation to CAFTA, Australia with US to avoid pitfalls.

�        Use the ASEAN framework or bilaterally consult with Thailand and Singapore to achieve a common position on critical issues e.g. IP policy, agricultural products procurement and investment rules which are central to US demands in many FTAs. Other critical issues concern dispute resolution mechanisms including the role of the courts in the partner countries and the scope of sanctions.  We must note that FTA negotiations between Thailand and US have been suspended because of major disputes over critical issues concerning IP.  Is Malaysia going to concede on these issues and break ranks with an ASEAN partner?

�        Rafidah must make a full Ministerial statement to this House on the current status of FTA negotiations with Australia and New Zealand.  Is it true that talks on the Malaysia-NZ FTA have broken down.

US � MALAYSIA BILATERAL RELATIONS: THE US$1.2 MILLION SCANDAL

The Foreign Minister gave this House vague and incomplete answers to the questions I had raised concerning the role of the Malaysian Embassy in channeling US$1.2 million to Jack Abrahmoff who has now been convicted and sentenced by the US Courts. The answers provided by Dato Syed Hamid were totally unacceptable. The following key issues remain unanswered:

• :If public funds were not used, as claimed by the Minister, why was it necessary for the Embassy to be billed?
• Why was the Embassy engaged in money laundering on behalf of private interests?
• Did the Ambassador act independently of Wisma Putra or was he taking orders from other powers? In either event, there was a flagrant abuse of process and a breach of rules of conduct affecting public servants.
• The actions of Tan Sri Ghazali were unbecoming of an Ambassador. He was, as an  unregistered foreign lobbyist  in breach of US laws concerning and may indeed become embroiled or even be indicted in the ongoing criminal investigations concerning the role of Abrahmoff and Representative Tom DeLay, the former Republican Majority leader in the US House of Representatives. Were this to happen it would greatly tarnish the image of Malaysia. This House is entitled to a full statement from the Minister on the position that the Foreign Ministry takes with this outrageous and scandalous episode.
• Although the term of Tan Sri Ghazali as Ambassador to the United States has ended, no public statement to that effect has been issued by Wisma Putra. The Minister owes this House an explanation. The Minister should explain whether it is true that  Tan Sri Ghazali, although well past retirement, is being given another high appointment in the foreign service, with him remaining in North America. The Minister should indicate to this House the exact status and role of Ghazali. What are his future functions? Where will he be based?

I urge the Minister to provide this House with full explanations as this scandal has far reaching implications for Malaysia�s international image. Improprieties have been committed, possible corrupt acts may have taken place, and Wisma Putra may face a serious loss of credibility. Has  the ACA been  called in to get to the bottom of the US$1.2 million Malaysian lobby scandal in Washington?

(02/05/2006)