• Visit to Paris, France under the PIPA program by Dr. Ong Kian Ming, MP for Serdang, from the 29th of June to the 4th of July, 2015

    Visit to Paris, France under the PIPA program by Dr. Ong Kian Ming, MP for Serdang, from the 29th of June to the 4th of July, 2015

    I was invited by the French embassy in Kuala Lumpur to take part in an Invitation Program for Future Leaders (Programme d’invitation des personnalités d’avenir) from the 29th of June to the 4th of July, 2015. The following is a report of some of the key takeaway points from my program. I have omitted the names of the individuals I had official meetings with, but have included the institutions to which they are attached to. These takeaway points are the main lessons which left an impression with me, as a result of my visit.

    Key takeaway points

    1) Institutional reform in the National Assembly and the Senate

    In my visits to the National Assembly (lower house) and the Senate and in my discussions with various individuals, I found that that there has been significant reforms in the legislative process on July 23, 2008. These reforms were part of a larger constitutional reform, the most significant since it was drawn up in 1958[1]. These legislative reforms include:

    • Allowing parliament to set the legislative agenda for half the time when parliament is sitting, rather than allowing only the executive to set the entire agenda
    • The recognition in the Constitution of political groups comprising of individual MPs, which can introduce and amend legislative bills
    • The recognition of the rights for the opposition and minority groups including the setting aside of one day during each sitting to propose legislative agenda, holding the chairmanship of the Finance Committee and the ad-hoc committee in charge of checking, and auditing the accounts of the National Assembly and the right to request for a Commission of Inquiry during a sitting, just to name a few.[2]

    The effect of these legislative changes was to empower parliament, parliamentary committees and opposition groups in parliament, so that it can play a more effective check and balance role on the executive. There are many legislative reforms from the 2008 constitutional amendment which can be examined by the Malaysian parliament, especially now that the speaker of the Dewan Rakyat in Malaysia has announced his intention to introduce significant legislative reforms in the near future.[3]

    2) The relationship between the legislative process and the EU

    There is a special parliamentary group overseeing European Affairs which has to examine the impact of EU legislation on French laws. The briefing I was given by one of the ‘clerks’, who is one of the civil servants who provides the relevant information regarding EU legislation to French MPs, was very helpful in giving me a general idea on how the relationship between the EU and the French legislature is managed. The team of research ‘clerks’ would categorize various EU laws according to their level of importance and priority, so that the MPs could focus only on the most important laws. Of course, some MPs would sometimes question the prioritization choices but on the whole, it seemed to me that the experience of the research ‘clerks’ allow them to accurately categorize most of the EU legislation. There would be a natural gravitation of certain lawmakers towards certain topics and because of the relationship between the research ‘clerks’ and members of the European Affairs committee, the ‘clerks’ would often know which EU law to highlight to which legislators.

    This briefing also highlighted to me the importance of the research ‘clerks’ in analysing and filtering the relevant EU legislation for presentation to the MPs.

    3) The lack of awareness and knowledge among MPs on Malaysia and South-East Asia

    I met an MP from the National Assembly or the lower house who was listed as the head of the France-Malaysia parliamentary friendship group. She was very friendly and provided a useful picture on the semi-urban constituency she represented and the challenges her voters faced, including having to face global competition and industrial hollowing out. But she told me that she had stepped down as the head of the France-Malaysia friendship group because she felt that the position ‘deserved someone better’. She had not been to Malaysia and the only reason why she was still listed as being the head of this group was because no one had replaced her.

    I also met two other MPs from the Senate who are part of the France – South East Asia inter-parliamentary group. One of the Senators had recently visited Malaysia and the other had not. Again, they did not display much knowledge or interest on Malaysian related issues.

    It is not surprising that the level of knowledge and interest in Malaysia among French MPs is low, since Malaysia is a small country and was not a former French colony. Perhaps, the Malaysian embassy in Paris needs to do more to promote French-Malaysia ties among the relevant French MPs in the National Assembly and in the Senate.

    4) Changes in Regional and Local Autonomy

    Through my conversations with various politicians and other individuals, I got the impression that the regional as well as local (at the department level) governments have significant autonomy over policy, as well as budgetary issues including infrastructure spending and education.

    There is obviously some inequality between government spending in the more affluent versus the less affluent areas. For example, a municipal councillor in Saint Denis, a municipality just outside Paris with a large immigrant population, complained that the spending on education and policing is much lower than in central Paris.

    I also found out that the 22 regional governments are in the process of being reorganized in 14 regions.[4] The rationale behind this was the reduce bureaucracy and red tape and save money in administrative expenditure.[5] Not surprisingly, these reforms have received their fair share of criticisms and are unpopular in certain regions, because of the prospect of losing the status of regional capitals and identities.[6] At the same time 10 new city regions will have public services created and spending redistributed.[7] For example, the above mentioned Saint-Denis will be included as part of the Grand Paris super-metropole, which hopefully will decrease some of the imbalances in public services that currently exist in the larger Paris metropolitan area.

    5) The influence of think tanks and their relationship with the government and political parties

    I had the opportunity to meet with academics and representatives from various think tanks and research units in universities. I found that there is a close relationship between academics in these organizations and policy makers in the government. Not surprisingly, this arrangement has its pros and cons. On the one hand, it can be very useful for academics with good ideas and policy proposals to be able to channel these ideas to policy makers in the government, so that they can be considered for implementation. For example, one academic I met had a very fascinating proposal to allow the private banks to buy up credits for green investment schemes which would be guaranteed directly by central banks and possibly the European Central Bank (ECB). This proposal was a win-win in that it allows for investment and avoids the liquidity trap and at the same time, helps the government meet its goals for reducing carbon emissions and promote environmental sustainability. The academic was attached to the Center d’Etudes Prospectives et d’Informations Internationales (CEPII)[8] and he was working closely with France Strategie[9], a policy think tank under the Prime Minister’s Office. The proposal can be read here[10] and France Strategie is advocating this proposal through seminars like this.[11]

    On the other hand, the close relationship between the government and think tanks may restrict research projects, especially those which may harm the relationship between the French government and other countries.

    Unlike the German system where each major party has their own think tanks which are publicly funded as a result of their links to the respective parties, not all French parties have their own think tanks. The Jean Jaures Foundation is the one which is most closely associated with a political party – the Socialist Party. It receives most of its rather limited funding from the state and some from private sources, but none from the party so that it can maintain its independence.[12] The Jean Jaures Foundation has some policy influence through its ties with MPs via the party. It also does public advocacy on issues such as climate change and international cooperation, mostly in the former French colonies.

    Of course, international organizations which are based in Paris such as UNESCO and the OECD are independent bodies of which France is only one member country among many. I found my meeting with OECD representatives especially interesting from the point of view that it is a think tank which does extensive and internationally acknowledged research on a number of topics such as education, investment and trade, but who is also answerable to a council made up of representatives of all the OECD member countries which may have slightly different views in regards to the objectives of the OECD. The OECD has recently increased its interactions with South East Asia governments, including the setting up of a small office in Jakarta. It seems likely the level of interaction will only grow over time, perhaps with the admission of its first South East Asian member country.

    6) The economics of the EU, Greece and the Euro

    I expressed my interest in learning more about EU economic policy especially in regards to the Eurozone and to Greece to the French embassy in KL prior to my departure. Little did I know that the “Grexit” issue would take such great prominence during my visit to Paris. In my discussion with different economists, I found the following points of agreement with some individual nuances:

    • That Greece needs to have some or all of its debt forgiven by the European countries if it is to have any chance to get out of its current economic predicament. The nuances would involve the process by which the debt is forgiven / written off and the conditions attached to this. Some economists think that that the Germans are overly rigid in its rules based approach towards its negotiations with Greece.
    • That it would probably be better for Greece to exit the Eurozone and default on its debt obligations if it cannot find a way to reduce the overall debt burden.
    • That the Greek economy is very uncompetitive and tremendously reliant on tourism and to a lesser extent, olive oil. There was a consistent level of disdain towards the Greek economy and a general feeling that the current situation which Greece finds itself in was created by bad government policies and corrupt and compromised governments.

    7) Minorities in France, especially Muslims

    One of the biggest challenges facing the French nation is the issue of how to ‘manage’ or deal with minority groups, including Jews and the Romas but especially the large and growing Arab / Muslim population (Not all Arabs in France are Muslims but a majority of them are).

    France has been and continues to experience a large emigration of its Jewish population to Israel, possibly as a result of high profile terrorist attacks against the community.[13] This predates the attacks on the Charlie Hebdo office in January of this year. This trend continues despite the attempts of the French government to protect the Jewish community from further attacks. I was told that Jewish synagogues and schools are constantly under surveillance by the French security services for their protection. A personal story which was related to me by Jewish activist working against Anti-Semitism was his experience of going to his synagogue and finding three French soldiers sleeping in there because they were taking a break from their duties. He found this comforting as well as disconcerting, because he felt that he should not be living in a country where synagogues needed such a level of protection.

    I also found out that France has a small but significant population of Romas (or the Romani people) – as many as 500,000 – many of whom are fully integrated into French society. I had not realized this before, since my impression of the Romas were that they were nomadic peoples and mostly found in big cities in Europe seeking out a living as scrapers and pickpockets – but there are actually different groups of Romas with origins from Germany, Italy and Spain.[14] The Romas who are nomadic only number 20,000 but they have received a lot of publicity over the past two years because of their clashes with the French government.[15]

    The Roma activist whom I met who is from Albania (and not a French citizen) had many interesting viewpoints on how to advocate for the rights of the community. For example, he said that activists for minority groups in France should not adopt a victimhood mentality and also minimize dialogues which he found to be ineffective. He preferred action over dialogue and viewed the admission of past guilt by the French authorities with slight disdain, as this would give an excuse to the authorities to say that they have done enough for minority groups while ignoring current transgresses. When I asked him if he would support a move by the French government to establish a Holocaust-like museum for the Romas who were exterminated during the Second World War, he replied that he was lukewarm towards the idea. One take away point from this conversation is not to refer to Romas as gypsies, as this was considered as a pejorative.

    The biggest challenge for the French authorities continues to be how to deal with the Arab and especially the Arab-Muslim population. The French concept of the state as being secular and being encapsulated in the concept of Laïcité is currently being challenged most strongly by the Muslim community over issues such as the wearing of the Muslim headscarf or hijab in public, the eating of halal food in public schools and praying on the streets during Friday prayers, just to name a few. The fact that many Arab-Muslims live in economically backward and dilapidated suburbs or ‘banlieues’ on the fringes of major French cities only further complicates the challenge of ‘managing’ this community.[16] The disturbing development of many young French men (and some women) joining the IS (or ‘daesh’[17] as it is called in France) also further complicates the dealings of the French state with its Muslim population.

    The French authorities do not want to be criticized for either privileging the Muslim community nor do they want to be seen as targeting the Muslim community. The Muslim community feels marginalized since they feel that there is a larger phenomenon of Islamaphobia which exists in society and in institutions, which is made worse by the fact that the government does not admit to the existence of such a phenomenon. The Muslims can’t help but feel that some laws have been enacted to target them using the concept of laicite as a smokescreen, such as the banning of the display of religious symbols in schools and the prohibition against wearing the face veil in public.[18] From my discussions with various individuals including a representative from the Collectif Contre L’Islamophobie En France (CCIF)[19], it is very likely that the tensions between the state and the Muslim community will continue to simmer.

    It is also likely that the Muslim community will form more Muslim NGOs in order to mobilize support for its causes, such as battling Islamaphobia and other community advocacy initiatives. CCIF, for example, collects and then investigates reports of discriminatory attacks and actions against Muslim individuals[20] and then publishes the results of their investigations.[21]

    The French authorities do seem to be acknowledging the need to do more outreach to the Muslim community, including having regular dialogues between the Minister of the Interior and representatives from the Muslim community including those who are not from the officially recognized French Muslim Council[22] which has a legitimacy problem in the eyes of some French Muslims. The Ministry of Foreign Affairs also has a special ambassador who is in charge of dealing with religious affairs, which includes issues within and outside France which have a religious dimension to them. In my conservation with the ambassador, he acknowledges that the Muslim world, especially near to France in the Middle East and Northern Africa are his key priorities for now.

    One particularly interesting conversation I had was with a municipal councilor in Saint Denis, who is in charge of anti-discrimination policy. He is a French-born Muslim with parents or grandparents from North Africa who is a strong supporter of Palestine. He represents the Left Front[23] who sits on the left of the Socialists. At the same time, he is also a strong supporter of the LGBT movement. In his opinion, Muslims in France should not support policies which discriminate against any group including LGBTs, even though they may not agree with their lifestyle choices. He noted that even though some Muslim groups had initially joined anti-LGBT protests by far right groups, most Muslims groups would refrain from joining such protests in the future.

    8) Urban regeneration

    I specially asked to visit the Stade-de-France which is located in Saint Denis, to see if the development of the stadium in an economically depressed area just outside Paris had brought about long-term development and urban regeneration 17 years after the staging of the 1998 World Cup.

    What I saw was indeed encouraging. The upgrading of the Canal Saint-Denis, in conjunction with the development of the Stade-De-France, which has become a tourist attraction and used by many for recreational purposes, is arguably one of success stories of urban regeneration.[24] There is a public cycling / jogging path of 6.6km on both sides of the canal which leads all the way up to the famous Saint Denis Basilica[25], located in the heart of Saint Denis town, that was the burial place for the Kings and Queens of France. When I visited the Basilica, it was being prepped for the Saint Denis Festival featuring a symphony orchestra.[26] The festival predates the World Cup – it started in 1970 – but I can’t help feel that some of the positive ‘vibes’ surrounding the Stade-de-France had also filtered into the town of Saint Denis. While there are still some pockets of poverty around the town area, I could see a very diverse crowd in the town center which had a street market, busy restaurants and small shops.

    As a result of the construction of Stade-de-France, a large highway from Saint Denis to Paris called A1 was converted and this added new and valuable real estate to the area. Much of this was converted into public parks and many neighbourhoods which were previously separated by the A1 highway were reunited, with positive results.

    On the whole, one would say that the building of the Stade-De-France has been a success story in terms of urban regeneration for the Saint Denis area.[27]

    9) Paris COP 21

    There was great awareness of the Paris COP 21 summit on climate change, which will be taking place in November and early December this year. There were also many signboards and public advertisements promoting Paris COP 21.

    Unfortunately, because I had not indicated my interest in environmental issues, I was not able to arrange for specific meetings with the relevant experts to discuss the details of Paris COP 21.

    10) The experience of Paris

    Finally, one cannot go to Paris without experiencing the sights and sounds of Paris. I had the pleasure of running along the Seine on the Left and Right Bank and seeing the many famous landmarks in the heart of Paris. I also managed to visit the Picasso museum which had been recently renovated. I had dinner and drinks with a Singaporean academic who was also on the PIPA program. I met up with a Malaysian friend for dinner and she introduced me to other academics who are interested in Malaysian / South East Asian issues. I had dinner with a French academic whom I knew from her research visits to Malaysia, and her husband was kind enough to give me a ride back to my hotel in his scooter. So I can say that I saw Paris in a car, on foot, on a train and on a scooter. Sadly, I didn’t manage to rent a bicycle to cycle through Paris because of the unseasonable heat wave that hit Paris during my visit. The accessibility of Paris as a city really struck me as a visitor.

    I even managed to squeeze in some time to buy some Belgian chocolates from my friends and family back home.

    Finally, my visit would not have been so memorable without the assistance of three people – Marie-Pierre Levert, the person at the Ministry of Foreign Affairs in charge of my program, John Ritchie, my interpreter and chaperone, and my driver, Patrick Gagnaut.

    It was a fantastic learning experience and one which I will not forget for a long time to come.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    Some pictures from my visit

    Running along the Seine and around the Louvre in the morning

    With two Senators at the Senate building, Jardin du Luxembourg

    Bicycles for public rental

    With activists fighting for minority rights

    With Paul, my driver, and John, my interpreter, at Stade-de-France

    From the Picasso Museum

    [1] https://en.wikipedia.org/wiki/French_constitutional_law_of_23_July_2008

    [2] These changes can be found in the document entitled: “The National Assembly in the French Institutions”. The pdf file in English can be found here: http://www.assemblee-nationale.fr/connaissance/fiches_synthese/septembre2012/national-assembly.pdf. The latest version has been updated to November 2014.

    [3] http://www.themalaymailonline.com/malaysia/article/pandikar-starts-parliament-reforms

    [4] https://en.wikipedia.org/wiki/Regions_of_France

    [5] http://www.theguardian.com/world/2014/jun/03/france-redraws-boundaries-map-revolution-francois-hollande

    [6] http://www.economist.com/news/europe/21650564-redrawing-regional-boundaries-causing-big-rows-and-will-save-little-new-kids-block

    [7] http://www.citymetric.com/politics/france-just-created-10-new-city-regions-over-night-615

    [8] http://www.cepii.fr/cepii/en/welcome.asp

    [9] http://www.strategie.gouv.fr/

    [10] http://blog.en.strategie.gouv.fr/2015/02/policy-brief-proposal-finance-low-carbon-investment-europe/

    [11] http://www.strategie.gouv.fr/evenements/transitions-bas-carbone-role-institutions-financieres-internationales-banques-centrales

    [12] http://www.jean-jaures.org/

    [13] http://www.theguardian.com/news/datablog/2015/feb/05/is-there-really-a-jewish-exodus-from-western-europe

    [14] https://en.wikipedia.org/wiki/Romani_people_in_France

    [15] http://www.bbc.com/news/magazine-25419423

    [16] Of course, there are various communities within the larger Arab-Muslim community with those from Tunisia and Algeria being the largest.

    [17] http://theweek.com/speedreads/446139/france-says-name-isis-offensive-call-daesh-instead

    [18] http://www.nytimes.com/2013/12/03/opinion/french-secularism-on-trial.html?_r=0

    [19] http://www.islamophobie.net/

    [20] http://www.islamophobie.net/contact

    [21] http://www.islamophobie.net/sites/default/files/CCIF-Annual-Report-2015.pdf

    [22] http://uk.reuters.com/article/2015/02/25/uk-france-islam-dialogue-idUKKBN0LT1OB20150225

    [23] https://en.wikipedia.org/wiki/Left_Front_(France)

    [24] http://uk.tourisme93.com/canal-saint-denis.html

    [25] https://en.wikipedia.org/wiki/Basilica_of_St_Denis

    [26] http://www.france-voyage.com/events/saint-denis-festival-31.htm and http://www.festival-saint-denis.com/

    [27] http://unhabitat.org/wp-content/uploads/2010/07/GRHS2009CaseStudyChapter08Paris.pdf

  • UKM should start having open dialogues with its students instead of punishing them for expressing their views

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 27th of June, 2015

    UKM should start having open dialogues with its students instead of punishing them for expressing their views

    On Monday, 29th of June, 2015, the Student Office Affairs at UKM will call up 13 students who were involved in a protest on the 27th of March, 2015, over the issue of water disruptions to a number of residential colleges in the university, some of which had been without water for more than two weeks.

    The freedom to assemble peacefully is enshrined in Article 10.1(b) of the Federal Constitution and the students’ demonstration on the 27th of March, 2015, was definitely peaceful.

    One of the accusations being levelled at the students by UKM is the fact that they handed me a memorandum during the protest on the 27th of March (See Attachment 1). I was informed that the students were organizing this protest and as the MP for Serdang, which UKM is part of, I felt that it was my duty and responsibility to listen to the problems facing the students as a result of these water cuts.

    I was also told that the students had asked UKM to organize a briefing involving SYABAS, the UKM authorities and student representatives so that more information could be given to the students including the reasons behind the water cuts and the possible solutions moving of forward.

    After the protest on the 27th of March, 2015, I wrote to the Vice Chancellor of UKM on the 16th of April (see Attachment 2) to seek for a meeting for us to discuss the best way to work together to solve the water problems in UKM which are not new and has been happening over the past 10 years. Unfortunately, till now, I have not received any information or correspondence from UKM in response to my letter.

    This kind of attitude reflects the larger problem at hand – which is the unwillingness of UKM to engage in an open and transparent dialogue with all the stakeholders including student leaders over an important issue which seriously impacted the well-being of students in the affected residential colleges. Rather than punishing them, the UKM authorities should be working together with the students and other stakeholders such as SYABAS, the local ADUN and MP, the local authority and the state government in order to solve the problem at hand.

    As long as this sort of attitude prevails in our public universities, whatever talk of trying to attain the status of a world class university will be empty rhetoric, devoid of substance. How can a public university speak about attaining academic excellence when it continues to shackle its own students?

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    Attachment 1: UKM 13: Tatatertib Protes Air

    Attachment 2: UKM 13: Surat 16 April 2015 Krisis Air UKM

  • Are we heading towards an energy crisis in 2018 with the delay of Project 4A?

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 22nd of June, 2015

    Are we heading towards an energy crisis in 2018 with the delay of Project 4A?

    It was reported in last weekend’s The Edge Weekly that SIPP Energy was seeking a new partner for Project 4A, after the Energy Commission rejected the proposed tariff submission by the SIPP Energy-TNB consortium which had been awarded this contract via direct negotiation. Without any obvious willing partners for SIPP Energy and with the likely delay of the Project 3B power plants due to 1MDB’s inability to raise the necessary finances to build these plants, it is possible that our country will face a serious energy shortage by 2018.

    Recall that on May 31, 2014, the Energy Commission awarded Project 4A, via direct negotiation, to a consortium led by SIPP Energy (51%) with YTL Power and TNB to build a new 1000MW-1400MW combined cycle gas turbine (CCGT) power plant in Johor which is supposed to be operational in June 2018. According to the EC as well as the Ministry for Energy, Green Technology and Water, the fast tracking of this project without a competitive tender was justified because of the impending energy shortage which the country will face by 2018 as reserve margins continue to fall.[1] This project was criticized from the beginning not just because of the lack of an open tender but also the fact that SIPP Energy has no prior track record in the building of power plants. YTL pulled out of this deal on the 19th of June, 2015 leaving SIPP Energy and TNB as the two remaining partners.

    It was reported that the SIPP-Energy and TNB consortium submitted a bid of RM39 sen / kWH for the proposed CCGT power plant, which is 12% higher than the RM34 sen / kWH for the 1071MW TNB CCGT power plant in Prai, Penang that recently began operations.[2] Recall that the 1071MW TNB CCGT power plant contract was awarded via open tender which is an important reason for the lower tariff is offered by TNB.

    With the latest failed tariff bid by SIPP Energy and TNB, the Edge Weekly reports that SIPP Energy may sell of its 51% stake in Project 4A for as much as RM300 million. This cost, presumably, will be factored into the new proposed tariff rate for Project 4A likely making the proposed tariff higher than if Project 4A was awarded via open tender.

    The manner in which the Energy Commission and the Ministry of Energy, Green Technology and Water have handled Project 4A is disgraceful. What was supposed to have been a fast-track project to build a CCGT power plant that would be up and running by the 1st of June, 2018 (before 1MDB’s Project 3B which is due in Nov 2018 for the first 1000MW and Nov 2019 for the second 1000MW) will now almost certainly be delayed since it would take some time before SIPP finds another partner or sells its stake to another party which would then have to put in a new revised tariff to the Energy Commission.

    With our actual operating reserve touching a mere 9% at the peak demand period in June 2014, it is a distinct possibility that we would be facing an electricity crisis by 2018.[3] The original decision to award Project 4A via direct negotiation is now coming back to haunt the Energy Commission and the Ministry of Energy, Green Technology and Water. The EC should have opened up the bidding for Project 4A for a competitive tender so that the most experienced party with the lowest price would have received this contract. Instead, what we are left with is yet another delay in the construction of a much needed power plant that may push our country towards an electricity crisis in 3 years’ time or less. The EC and the Ministry must to be held to account for its actions.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://www.thestar.com.my/Business/Business-News/2014/07/25/TNB-SIPP-Energy-sign-agreement-for-power-plant-project-in-Johor/?style=biz

    [2] http://www.tnb.com.my/tnb/application/uploads/newsclips/c40e44dc9475b32ee4778167cb94c7c8.pdf

    [3] http://www.thestar.com.my/Business/Business-News/2015/04/11/Its-the-rakyat-who-will-pay-for-power-plant-delays/?style=biz

  • The Minister of Energy, Green Technology and Water, Datuk Seri Maximus Ongkili, must compel the full disclosure of Tenaga’s takeover of Project 3B from 1MDB

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 20th of June, 2015

    The Minister of Energy, Green Technology and Water, Datuk Seri Maximus Ongkili, must compel the full disclosure of Tenaga’s takeover of Project 3B from 1MDB

    During last Thursday’s debate to amend the Electricity Supply Act (1990), I asked Minister of Energy, Green Technology and Water, Datuk Seri Maximus Ongkili, on the latest update on Project 3B, a 2000MW coal fired power plant project which was awarded to 1MDB (70%) and Mitsui (30%). The Energy Commission was supposed to announce the decision sometime in February but no updates had been forthcoming until the Minister’s statement on Thursday.

    In his reply, the Minister confirmed that the cabinet had indeed given the approval for TNB to take over Project 3B from 1MDB. He also confirmed that there would be a “small revision” to the power tariff given that the project was already six months late and the exchange rate has changed since the project was first awarded to 1MDB.[1] The Minister did not disclose the terms of purchase of Project 3B by TNB from 1MDB, citing that it was on a “willing-buyer-willing-seller” basis.

    The Minister’s reply is totally unacceptable for the following reasons:

    Firstly, since 1MDB is a 100% Ministry of Finance owned company and has been the subject of national and international headlines and since TNB is a Government Linked Company (GLC) which is one of the largest listed entities on the KL Stock Exchange, there is public interest at stake in terms of the terms which TNB offered to 1MDB in exchange for Project 3B.

    The haphazard fashion in which the Minister made this announcement – the government had not even notified TNB of its decision – created massive uncertainty in the stock market and caused TNB’s share price to drop by 50 sen from RM13.10 toRM12.60 on the day of the announcement, because of fears that TNB was being asked to “bail-out” 1MDB. Only after TNB CEO, Azman Mohd, came out with a statement reassuring the public that TNB would not pay a premium for 1MDB’s 70% stake in Project 3B did the share price of TNB recover to RM12.86 the next day.[2]

    For the sake of transparency and in order to reassure the markets, the Minister must disclose or ask TNB to disclose the terms of the agreement between TNB and 1MDB over the sale of Project 3B.

    Secondly, the Minister cannot wash his hands of the TNB-1MDB Project 3B agreement using the “willing-buyer-willing-seller” excuse since the Project 3B license is under the Energy Commission. The Energy Commission has the right to fine 1MDB for not being able to start Project 3B on time and it has the right to transfer the license to TNB. In fact, one of the reasons for the amendments to the Electricity Supply Act (Section 9B in particular) is to increase the power of the Energy Commission over those who have been awarded the license to generate electricity.

    Those in the electricity generation business i.e. the license holders must know if the Energy Commission is willing to impose harsh fines on those who fail to live up to the terms in the licensing agreement. Without these details being made public, other license holders may think it can ‘get away’ with delays and shortcuts in the fulfilment of the licensing agreement.

    Hence, for these two reasons, the Minister must compel the full disclosure of the TNB’s takeover of 1MDB’s stake in Project 3B as well as the fines imposed on 1MBD as a result of its inability to deliver on Project 3B.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://www.themalaysianinsider.com/malaysia/article/tnb-buys-1mdbs-stake-in-project-3b-plant-minister-confirms#sthash.RtrlbeNU.dpbs

    [2] http://www.themalaymailonline.com/malaysia/article/1mdb-power-project-stake-buy-is-not-a-bailout-says-tnb

  • Other than Pembinaan PFI, what other off budget expenditure items is the government trying to hide?

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 18th of June, 2015

    Other than Pembinaan PFI, what other off budget expenditure items is the government trying to hide?

    I was both amused and horrified when reading through the Parliamentary Accounts Committee’s (PAC) Proceeding Reports on Pembinaan PFI Sdn Bhd which was released earlier this week.[1]

    Among the highlights of the PAC Report which are shocking are:

    (i)                 The fact that Pembinaan PFI Sdn Bhd, which was allowed to accumulate RM27.9 billion in liabilities, has never been audited by the Auditor General’s office

    In his testimony to the PAC, Deputy Head of the National Audit Department, Datuk Haji Anwari bin Suri admitted that his office has not audited Pembinaan PFI Sdn Bhd because it was only included in the gazetted list under the AG’s office this year i.e. 2015. Even the PAC chairman was amused when he heard this news. He said:

    “Maknanya nak dekat 10 tahun baru gazet syarikat ini sebagai kena audit”

    So even though the total liabilities of Pembinaan PFI Sdn Bhd were noticed by the AG’s office because it was the third largest among government owned companies (after Petronas and Khazanah), it has never been audited by the AG’s office.

    (ii)               The fact that the expenditure incurred by Pembinaan PFI was structured as an off-budget item to ensure that Malaysia’s government debt to GDP ratio was less than 55% so as to avoid a Ratings Downgrade

    The money borrowed by Pembinaan PFI Sdn Bhd was used for the construction of buildings such as schools, hospitals and other government infrastructure projects. This expenditure should have been classified under Development Expenditure. But because the government did not want to book this spending under development expenditure, it shifted this spending to operating expenditure whereby the interest payments incurred by Pembinaan PFI could be spread out over time.

    The chairman of the PAC noted this when he said:

    “Good way jugalah itu avoid rating punya downgrade”

    And the Secretary General of the Treasury, Tan Sri Dr. Mohd Irwan Serigar bin Abdullah, agreed with this view when he said:

    “Ini Tuan Pengerusi, your understanding it very clear. That you know this is off-budget. It doesn’t come in to the government so that why you know our debt level and rating and everything we can maintain”

    (iii)             The fact that the interest payments of Pembinaan PFI Sdn Bhd is classified under “Other Payments” rather than under debt servicing in order to show that our debt servicing levels are still manageable

    According to the 2014/2015 Economic Report, debt service charges in 2014 are estimated to increase 11.6% to RM23.2 billion from 20.8 billion in 2013. The report further stated that “as a percentage of total operating expenditure and revenue, debt service charges remain stable at 10.5% and 10.3% respectively. The government will ensure that the debt service charges will not exceed the threshold of 15% of total revenue under the administrative fiscal rules.”

    However, the PAC report has revealed that the servicing of Pembinaan PFI’s debt does not come under debt servicing but other “other payments.” This was confirmed by Dato Dr. Mohd Isa bin Hussain, the Secretary of the Companies Investment Section of the Government (Setiausaha Bahagian (Syarikat Pelaburan Kerajaan)).

    This is very worrying since it was revealed recently that the Ministry of Finance has to make annual payments of between RM4.76 billion to RM11.62 billion from 2015 to 2020 for interest payments of 9 Ministry of Finance owned companies including Pembinaan PFI Sdn Bhd.[2] If these payments are added to the debt servicing figure, then the 15% threshold may be breached!

    (iv)              That the debts of Pembinaan PFI does not appear as contingent liabilities because there is no government guarantee in order to hide the overall indebtedness of the government

    Not only are the debts and expenditure of Pembinaan PFI an off-budget item, they do not appear as a contingent liability since there is no government guarantee for its debts. Even part of the loans of 1MDB are government guaranteed (RM5.8 billion) and as such appears on the list of contingent liabilities which totalled RM157.5 billion at the end of 2013. But you will not find the debts of Pembinaan PFI appearing anywhere on the list of contingent liabilities.

    As stated by Dr. Irwan: “This is not part of contingent liabilities. There is no GG, no government guarantee.”

    This is a very ingenious or perhaps disingenuous way of ‘hiding’ government expenditure and debt.

    (v)                What else is the government hiding from us?

    The Secretary General of the Treasury, Dr. Irwan, testified in the hearings to the PAC that foreign rating agencies such as Standard & Poors and Moody’s know about the debts of Pembinaan PFI. In fact, he testified that “Everything they know. Our contingent liability – they know more than Malaysian sometimes.”

    When else do the rating agencies know that Malaysian’s don’t? Is the treasury revealing information to foreign rating agencies which it is not disclosing in parliament or even to the cabinet as a whole?

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://portal.parlimen.gov.my/ipms/modules/risalat/res/risalat/2015/Laporan%20Jawatankuasa%20Kira-Kira%20Wang%20Negara%20Parlimen%20Ketiga%20Belas%20-%20Prosedur%20Kawalan%20Pengurusan%20Syarikat%20Pembinaan%20PFI%20Sdn%20Bhd%20(Kementerian%20Kewangan).pdf

    [2] http://www.themalaysianinsider.com/malaysia/article/putrajaya-must-help-9-firms-pay-billions-annually-says-najib#sthash.BwxzFPcR.dpbs

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