Peter: It Is Your Call!

I am not political but it is time that they settled this water fragmentation mess left over from the former government of Selangor. Many hidden hands were involved but that is history and the people wants to know when they can get clean water and to ensure that the water subsidy scheme remains in place.

The person everyone is looking at for a solution is Peter Chin, the Federal Minister of Water. What ever happened to the restructuring exercise?

Let us look at some of the salient points involved here.

The Selangor people wants the best solution. They want the best deal. They are hoping that with the powers vested in him viz the Water Services Industry Act (WSIA), he may work out something good.

“Section 114 of WSIA, if invoked, gives the minister the power to force the water players to hand over the assets in the name of national interest.”

So far there have been three offers. Let us look at them at close range.

i.  The Selangor government’s offer to restructure the state’s water industry.

Apparently it is fair to all water concessionaires as well as benefit the rakyat guaranteeing  no tariff increases for the foreseeable future. This is structured in such a manner due to the lower proposed leasing cost by the state government from PAAB of approximately five per cent. Compare this with Gamuda’s cost of six per cent.

Further cost savings can be realised by “the lower cost of acquiring all assets of water concessionaires”, previously estimated at between RM9.2 billion and RM10.3 billion.

The State Government acquisition is based on the principle and philosophy of not  seeking to “maximise profits but instead maximise returns” to the public. Compare this to Gamuda Bhd's offer that will instead guarantee equity returns in excess of 10 per cent per annum.

This offer  was the attempt by the  Selangor government, via its investment arm Kumpulan Darul Ehsan Bhd, to  take over the restructuring  of the water industry thereby fulfilling  its promise to provide cheaper water to its electorate.

The state’s offer of RM9.2 billion was accepted by water concessionaires, Konsortium ABASS and Splash, but was rejected by Syabas and Puncak Niaga Sdn Bhd (PNSB).

ii. The Federal Government Bid

Done through its Water Asset Management Company (PAAB). It made an “informal” offer to acquire all assets from the water concessionaires amounting to RM10.3 billion in March 2010.However, the offer was rejected by water concessionaires, Abass and Splash, while both Syabas and Puncak Niaga Sdn Bhd (PNSB) have missed the April 6 deadline to repond.

“The deal by the Selangor state government is the best there is for the rakyat as we have affirmed no tariff increases for the foreseeable future. This can be achieved due to the lower proposed leasing cost by the state government from PAAB of approximately five per cent, compared to Gamuda’s cost of six per cent.
Pua added that further cost savings would be realised by “the lower cost of acquiring all assets of water concessionaires”, which was previously estimated at between RM9.2 billion and RM10.3 billion.
He added that the state government was not seeking to “maximise profits but instead maximise returns” to the public. Gamuda Bhd has confirmed their offer will guarantee equity returns in excess of 10 per cent per annum.


iii. Gamuda also made a revised offer yesterday to acquire all of the state’s water concessionaires through its associate, Splash, and this would cost the conglomerate RM10.75 billion. This is the best in terms of the valuation of the water concessionaires, being the highest offer on the table. They have promised to freeze water tariff increase in the first year and increase only between 2-3 per cent annually for subsequent years.

The Pahang-Selangor  Water Transfer Project has already started a month back and yet we see a lack of will among politicians to resolve the problem of the restructuring of water concessionaires.

Who are we waiting for? Godot?

We must be a first world nation with a third world mentality.

Malaysia: The Traffic Back-pedal

We have become a nation of back peddlers. Soon we may just have an international event called Tour d' Langkawi for Backpeddlers. Wouldn't that be fun?

This latest backpedal from the government definitely has something to do with the Hulu Selangor by-election. We should the voters in this constituency for helping us removed three measures that will possibly cause more dismay and apprehension among the poor. I am talking abut the exorbitant traffic fines and the increase in age to 17 before you can drive.

Let us read some excerpts from a news item filed at the Malaysia Insider online  web-site today.

"A controversial increase in traffic fines has been withdrawn from amendments to the Road Transport Act 1987 today after it became a campaign issue in the Hulu Selangor by-election.

Minister in the PM's Deaprtment  Nazri Abdul Aziz revealed that the government has withdrawn three amendments for further revisions after objections raised by its backbenchers. But the DAP has made it a campaign issue, saying raising fines from RM300 to RM1,000 would be a burden to the poor.

This is also the latest laws being taken off from Parliament with the first being the Good and Services Tax (GST) Bill on the eve of the current sitting.

“I had received a letter from the BNBBC through chairman Tiong King Sing, stating their objections to the amendments of the Act. I read its contents and have negotiated with the Dewan and also obtained confirmation from the Prime Minister and the Deputy,” Nazri said, referring to the Barisan Nasional Back Benchers Club (BNBBC).[My toes are laughing!]

“So we have decided to withdraw the amendments to the next session to be discussed along with the objections raised by the BNBBC,” he added, saying the Bill will be retabled in the next parliamentary session.
The three amendments which have been dropped are:

1. Compound fines for vehicles, originally priced at RM300, amended up to RM1000 has been withdrawn.

2. The minimum age for obtaining a vehicle licence, proposed to be raised be 17 years has been retracted, keeping it at the present 16 years old.

3. Amendments to allow only JPJ (Road Transport Department) to assign a registration number plate to any vehicle registered under the act have also been withdrawn."

I do not have to list the string of backpedals beginning with the withdrawal of English as the medium of instruction for Science and Maths.

Australia’s central bank felt a coming boom in export earnings meant it could not delay a hike in interest rates earlier this month, leading investors to wager on a further rise by June at the latest.


The Reserve Bank of Australia (RBA) felt a hike to 4.25 per cent, the fifth in six policy meetings, was needed because surging prices for iron ore and coal exports would boost the economy more than expected just a few months ago.

The hawkish tone to the minutes of its April meeting led some investors and analysts to bet it may raise rates yet again by another 25 basis points as early as May.

“A swift move to get back to normal levels seems almost certain,” said Bill Evans, the chief economist at Westpac.

“We think that the next move will be in either May or June, and on balance, the very clear emphasis on the resources boom tips the scales towards May.”

The market seemed to agree that further rate rises should come sooner rather than later. The Australian dollar rose to US$0.9275 (RM2.97) after the minutes, from US$0.9256 before.

Implied rates showed the chance of a move in May edged up to 28 per cent, from 25 per cent, while interbank futures implied a 64 per cent of a hike in June.

The minutes showed the RBA thought at the April meeting that rates were “a little below average”, and that the April move was a step in the process of returning them to “normal” levels.

“The prospective rise in the terms of trade was now likely to be noticeably stronger than had been expected was a factor suggesting that it might be prudent not to delay adjustment,” the minutes said.

Many private-sector economists believe the “average” or “normal” level of rates that the RBA refers to is between 4.5 and 5.0 per cent.

That seemed to be in line with what the RBA thinks. Governor Glenn Stevens said last month rates may rise to between 4.5 and 5.0 per cent.

Yet, with the domestic economy growing so strongly, some economists predict the RBA may lift rates to beyond 5.0 per cent this year to shift policy settings to a tightening mode.

“The bank will inevitably pause at some point, but the boost to income from the boom in the terms of trade will see the cash rate lifted to 5.25 per cent by the end of this year and 6.25 per cent by the end of next year,” said Felicity Emmett, an economist at RBS.

That is more hawkish than the market’s bets for rates to rise to 5.0 per cent in 12 months time .

A record mining boom 

A healing world economy that is lifting factory production, as well as China’s insatiable demand for commodities, have helped Australian miners to win steep price hikes for iron ore and coal, the country’s two biggest exports.

Iron ore prices alone are set to rise 90 per cent or more this year, delivering extra export earnings worth perhaps two percentage points of Australia’s gross domestic product.

So big is the windfall that some analysts are calling it Australia’s biggest mining boom on record.
In line with that, analysts expect Australia’s terms of trade, or the amount earned from exports for every dollar spent on imports, to grow between 15 and 20 per cent over the next year.
That is far bigger than what the RBA anticipated in February, when it predicted growth of around 5 per cent or less.

Despite the trade surprise, the RBA stuck to its forecast for 2010 growth to come within trend levels, and for inflation to be at 2.5 per cent, right in the middle of its 2.0-3.0 target range. But some analysts reckon the RBA may soon have to raise its forecasts since the economy could well be growing above trend.

“It seems blindingly obvious that the Australian economy is already growing above trend - the unemployment rate falling for the past six months is as good an indicator of this as anything,” said Peter Jolly, an analyst at National Australia Bank who sees rates at 6.0 per cent by the end of 2011.

“Very soon they will need to shift their rhetoric and logic and start talking about taking interest rates to restrictive levels,” he said.

Hulu Selangor: Now Its Two for the Road

Well, as expected, the two independents chickened out and withdrew, leaving only the BN and the PR to sling it out.

Since nomination day, many things have happened. Some politicians got wounded on barbed wires and as the campaign started, Zaid got hit below the belt when focus was made of his drinking habit. This is anathema to Islam and BN wanted to capitalised on this big-time. The Election Commission have asked BN to take down such posters showing Zaid drinking alcohol.

On both sides, the big guns are coming and going. When Anwar left for Sibu, in came Hadi and now Guan Eng and Tok Guru Nik Aziz is on his way there too. On the BN side, Ibrahim Ali has made camp in Hulu Selangor with his Perkasa-leaning friends. PM Najib and the two independents that went with him to the US Parliamentary caucus will also be showing their faces in Hulu Selangor.


It  looks like we are reaching the climax of the campaign period.

An interesting  thing I read was there are yet to be posters of Kamalanathan in the Hulu Selangor constituency. Is something amiss here?

Malaysia: A Looming Debt Burden at the Bend

The World Bank issued its warning to Malaysia. A rising debt burden will cause possible damage to her economic growth potential unless it implements tough reforms and tackles its subsidy regimes.

Are the economic planners taking heed or this warning or are we still on that Cloud 9 euphoria of Malaysia Boleh?

In a Reuters report today (19th April), the World Bank has froecast in a  report presented in Kuala Lumpur that Malaysia could grow by as much as 5.7 per cent this year but said that rate could fall back to as little as 4.2 per cent annually if reforms were not implemented.

PM Najib has pledged to restructure subsidies, introduce new taxes and tackle the country’s race-based system of economic preferences, but he continues to back-pedal i n the face of immediate political consideration; backing off some key tax and subsidy reforms recently.

“A stalling of the reform momentum would however cause an incremental loss in competitiveness, translating into slower growth of 4.2 per cent in the medium term and adding upward pressure on the government debt-to-GDP ratio,” the bank said.

Although Malaysia’s ability to finance its public sector deficit is not in doubt due to the country’s strong domestic bond market, the bank warned that government debt would continue to rise.

The World Bank’s baseline forecast shows that government debt will rise to close to 60 percent of gross domestic product, but warned that it could go higher without strong economic growth and the implementation of reforms such as cuts to subsidies and a new goods and services tax.

Subsidies cost Malaysia RM24.5 billion in 2009 out of total operating spending of RM160.2 billion.
Plans to cut subsidies on fuel have recently been deferred, causing investors to fret that Najib, whose government is politically weak, will not follow through on reforms.

“Malaysia’s competitive position in the global market place is expected to slip and growth could fall to levels averaging at 4.2 per cent over the projection horizon. As a result, the debt level would accelerate to close to 70 per cent of GDP in 2015,” the bank said.

Do we have the will and courage to save the economy?

Hulu Selangor' s Four For the Road

Its nomination day Saturday for candidates planning to contest the April 25 Hulu Selangor by-election.

Nomination opened at 9am and closed at 10am with an hour for objections.

It is a four-corner fight pitting PKR's Zaid Ibrahim agaainst BN's Kalamanathan and 2 independents. One lady wannabe independent got shut out by the police and could not stand as a candidate so it seems.

There are 64,500 registered voters in Hulu Selangor, with 63,701 regular voters and 799 postal voters.Of the total, the Malays make up the majority with 34,020 voters or 52.7%.

The next largest group is the Chinese with 16,964 voters (26.3%) followed by the Indians at 12,453 voters or 19.3%.

This is going to be an interesting fight. A phone in poll by NTV7 tonight showed PKR is a shoo-in at over 90% of the responses.

Let me draw a scenario of the possible outcome.

The two independents  have little to fight for without a manifesto and a machinery behind them. They are spoilers and are likely to lose their deposits.

Unless something untoward happens  in the run-up to polling day, it looks like a weak BN will be responsible for its own defeat.

There are so many issues coming up or already is political fodder for the PKR to work on and for the voters to digest.

Let me list the potential bugbears for the BN.

1. New compromise candidate who is an unknown in town. Like PKR's Zaid, he is also a stranger in town.
2. The campaign period of 7 days is just too short for Kamalanathan to get the know the local voters
3.The Hulu Selangor area is too big to cover in a week
4.His last minute candidature reflects badly on the MIC. He will lose protest voters who will likely spoil their votes,do not appear on polling day or worse, vote for the opposition and independents
6. He is unlikely to get the support of the younger set of voters who are most likely anti-establishment.
7. He is unlikely to get Felda votes as the problems there have not been successfully resolved.
5.He will face the problems of national issues such as APCO,corruption,lack of transparency, the situation of the Interfaith panel, religious issues and the Teoh Beng Hock trial.

The things going for him will be

1. The postal voters possibly of the police stationed in the Police College in in Kuala Kubu Bahru.
2. A big chunk of the traditional pro-government Malay voters including government civil servants.
3. Some senior Chinese voters who will always be pro-government.

As for Zaid,there should not be many problems. The things going for him will be:

1. The largese of the Selangor State government in giving land titles. This will work well in Chinese dominated areas in new villages and in the township of Kuala Kubu Bharu. MCA with all its brand new 'gungho marketing' will not dent one bit the intent of voters to vote opposition.
2. Zaid is a national figure and has been perceived as upright and principled.
3. Zaid is a potential leader to lead the Pakatan Rakyat in case Anwar should be jailed.
4.The power of the alternative media, blogs, cellular phones, Face-book and Twitter.

Between BN and PKR, Kamalanathan is definitely the underdog. He claimed so himself today. Could he be pleading for sympathy votes? He is not only facing a difficult foe but more importantly, there is going to be sabotage against him both from disgruntled UMNO and MIC members. So, the candle is burnt for him at both end. He is in a hot place!

We will see what else develop till polling day.

Axiata: Prolonging Debt

KUALA LUMPUR, April 16 — Axiata Group Bhd’s wholly-owned subsidiary, Axiata SPV1 (Labuan) Ltd, has proposed to issue senior unsecured US$300 million (RM958.5 million) 10-year fixed rate guaranteed notes.
Axiata, one of the largest Asian telecommunication companies focused on high growth low penetration emerging markets, will unconditionally and irrevocably guarantee the notes.
The issuance was part of ongoing efforts to improve the group’s capital management post demerger and would allow Axiata to have a longer debt maturity profile, the company said in a statement today.
“The net proceeds of the issue, which represents the first US dollar bond offering by a Malaysian corporate in 2010 to date, will be used for the purpose of refinancing the existing borrowings of Axiata’s subsidiary and for the general corporate purposes of the group,” it said.
It said the notes would not be registered under the United States Securities Act of 1933 (as amended) and would be offered outside the United States in accordance with Regulation S under the Act.
“Applications have been made to list the notes on the Stock Exchange of Hong Kong Ltd and the Labuan International Financial Exchange,” Axiata said.
In the statement, Axiata President and Group Chief Executive Officer Datuk Seri Jamaludin Ibrahim said the exercise reinforced Axiata’s commitment to optimise the group’s capital structure.
“In a short space of time, Axiata has gone from deleveraging during the financial crisis to being rated investment grade, enabling us to tap into new sources of funding, namely the international debt capital markets, thus providing the group further financial agility for long-term growth.
“Furthermore, the exercise will enable Axiata to remain relevant and visible on the radar of investors,” he said.