• 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

  • FGV是否买进(前身为BW种植)Eagle High种植公司里高风险的资产呢?

    (2015年6月17日)沙登区国会议员王建民博士的媒体新闻声明

    FGV是否买进(前身为BW种植)Eagle High种植公司里高风险的资产呢?

    上周五,土展环球投资(FGV)宣布会以26亿令吉(现金加股票)来购买(前身为BW种植)EHP的37%股权。针对此项交易,在众多理由之中包括,FGV有意通过这项收购来提升非土地租凭协议(LLA)的储备量和存在扩张大量印尼绿地储备量的潜力。(参阅以下图表三)

    EHP的确拥有大量约419,000公顷的土地储备量。它也凭其147,000公顷的油棕园土地晋升印尼交易所第三大油棕园种植的上市公司。然而,FGV没说的却是未来潜在的挑战和涉及开发大量未种植土地的成本。

    在2014年11月20日由Chain Reaction Research所公布的报告,来自华盛顿特区的环境研究分析指出由飞鹰集团所收购的BW种植的土地储备被视为高风险的投资。[1]

    其中存在的风险包括“该储备的70%土地,用于油棕种植的准证尚未获批和仍处于遥遥无期的阶段”,及其它值得关注的问题还有“或涉及在泥炭地上种植,去森林化和侵占红毛猩的栖息地”。这些问题极有可能会影响大力响应“反对油棕种植中的去森林化,反对在泥炭地上种植油棕,反对在油棕生产中压榨剥削劳工”政策(No Deforestation, No Peatland, No Exploitation)的重要客户。

    如以下图表一所示,EHP(BW种植的前身)的土地储备共有65%是尚待种植,而这大部分都是来自Green Eagle 和Rajawali 其余的土地。它们都是于2014年11月在飞鹰集团接手BW种植期间被注入的。

    根据Chain Reaction Research报告进一步阐述该尚待种植的土地储备,“申请准证仍处于非常初期的阶段:目前只有园地准证。该准证拥有法律失效日期,加上无法实质地转换成种植开发权。BW种植公司在招股声明中无法清楚地提供详细资料来阐明这些未种植土地在未来开发的前景。尚若是基于该未种植土地储备的开发潜力来为Green Eagle Holdings 估价,那缺乏这方面的公布对BW种植的股东来说是极具严重的问题。

    该报告还指出BW种植在2014年的业务客户共有40%由Golden Agri-Resources和Wilmar包办. 这两件公司都曾公开地响应“反对油棕种植中的去森林化,反对在泥炭地上种植油棕,反对在油棕生产中压榨剥削劳工”政策(No Deforestation, No Peatland, No Exploitation) 。

    换言之,纵使EHP拥有庞大的土地储备量,但开发这些未种植园地的准证还未全部获批和在该公司种植政策无法满足持续性发展原则下EHP极可能无法寻找足够的客户。

    CRR的报告进一步地证明涉及收购EHP37%股权的金额太昂贵和FGV的股东们(Felda控股和民众)有朝一日会为管理层和董事局的错误付出代价。

    王建民博士
    沙登区国会议员

    [1] http://chainreactionresearch.com/reports/bw-plantation/

  • Adakah FGV telah membeli aset berisiko tinggi daripada Eagle High Plantations, yang dulu dikenali sebagai BW Plantations?

    Kenyataan Media oleh Dr. Ong Kian Ming, Ahli Parlimen Serdang pada 17 Jun 2015

    Adakah FGV telah membeli aset berisiko tinggi daripada Eagle High Plantations, yang dulu dikenali sebagai BW Plantations?

    Pada Jumaat lepas, Felda Global Ventures (FGV) mengumumkan bahawa ia akan membeli 37% pegangan dalam Eagle High Plantations (dulu dikenali sebagai BW Plantations) dengan harga RM2.6 billion dalam bentuk tunai dan saham FGV. Antara sebab yang diberikan oleh FGV berkenaan urus niaga ini adalah bahawa FGV ingin meningkatkan penerokaan tanah simpanan yang tidak melibatkan Perjanjian Pajakan Tanah (LLA) dan meluaskan tanah simpanan ‘greenfield’ di Indonesia melalui pemerolehan ini (Lihat Jadual 3 di bawah).

    Tidak dinafikan bahawa EHP memang mempunyai pegangan tanah yang luas, iaitu sebanyak 419,000 hektar. Daripada jumlah tersebut, 147,000 hektar merupakan ladang sawit yang menjadikannya syarikat minyak sawit ketiga terbesar yang disenaraikan dalam Bursa Saham Indonesia. Namun, FGV masih belum mengeluarkan kenyataan tentang kemungkinan cabaran serta kos pembangunan tanah simpanan yang masih belum dibangunkan itu.

    Dalam laporan yang disiarkan pada 20 November 2014 oleh Chain Reaction Research, sebuah organisasi penyelidikan analisa risiko alam sekitar dari Washington DC, pengambilalihan rizab tanah ini diklasifikasikan sebagai BERISIKO TINGGI.[1]

    Antara risiko yang disenaraikan adalah “untuk 70% rizab tanah, permit belum terjamin untuk memulakan penanaman pokok sawit, malah sukar untuk dipastikan bahawa ia akan berlaku”, serta kebimbangan besar “berkenaan dengan pembangunan di atas tanah gambut, penebangan hutan serta pencerobohan habitat orang utan” yang mungkin memberi kesan terhadap pelanggan utama yang komited terhadap dasar “tiada penyahutanan, tiada tanah gambut, tiada pengeksploitasian.”

    Seperti yang ditunjukkan dalam Jadual 1, 65% daripada tanah EHP (sebelum ini BHP Plantation) masih belum ditanam dan majoriti tanah tersebut merupakan tanah Green Eagle dan Rajawali yang disuntik ke dalam BW Plantation sebagai sebahagian langkah pengambilalihan rizab pada bulan November 2014.

    Laporan Chain Reaction Research turut menyatakan bahawa bagi tanah yang masih belum ditanam, “proses pelesenan masih dalam peringkat awal: hanya terdapat satu izin lokasi. Permit lokasi mempunyai tarikh tamat tempoh dan kebiasaanya permit sebegini tidak akan ditukar kepada hak pembangunan ladang sebenar. Tidak seperti laporan lain, prospektus BW’s Plantation tidak memberikan maklumat prospek berkenaan tanah sebenar yang akan dibangunkan. Disebabkan penilaian Green Eagle Holdings adalah berdasarkan potensi tanah simpanan yang masih belum dibangunkan, kekurangan pendedahan data ini perlu diambil serius oleh para pemegang saham BW Plantation.”

    Laporan ini turut menyebut bahawa 40% daripada penjualan BW Plantations pada tahun 2014 adalah kepada Golden Agri-Resources dan Wilmar, di mana kedua-dua syarikat ini amat komited terhadap dasar “tiada penyahutanan, tiada tanah gambut, tiada pengeksploitasian.”

    Dalam erti kata lain, walaupun EHP mempunyai tanah simpanan yang luas, namun tidak semua kelulusan lesen telah diberi bagi tujuan membangunkan tanah yang masih belum dibangunkan. EHP juga berkemungkinan mengalami kesukaran untuk mendapatkan pelanggan jika dasar penanaman di kawasan ini tidak mengikut piawaian kemampanan (‘sustainability standards’) yang ditetapkan.

    Laporan CCR membuktikan bahawa FGV membayar terlalu banyak bagi 37% pegangan saham dalam EHP. Akhirnya, pemegang saham FGV yang terdiri daripada peneroka Felda dan orang awam akan menanggung pembayaran disebabkan oleh kesilapan yang dibuat oleh pengurusan dan lembaga pengarah FGV.

    Dr. Ong Kian Ming
    Ahli Parlimen Serdang

    [1] http://chainreactionresearch.com/reports/bw-plantation/

  • Did FGV buy into a High Risk asset in Eagle High Plantations, formerly known as BW Plantations?

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 17th of June, 2015

    Did FGV buy into a High Risk asset in Eagle High Plantations, formerly known as BW Plantations?

    Last Friday, it was announced that Felda Global Ventures (FGV) would be buying 37% of Eagle High Plantations (EHP), formerly known as BW Plantations, for around RM2.6 billion in cash and FGV stock. Among some of the reasons given by FGV for this purchase is increasing its exposure to non-Land Lease Agreement (LLA) landbank and a significant greenfield landbank expansion potential in Indonesia via this acquisition (See Figure 3 below).

    EHP does indeed have a large landbank of 419,000 hectares. Its 147,000 hectares of planted palm oil makes it the third largest palm oil company listed on the Indonesian Stock Exchange. But what FGV has not come out to say thus far is the potential challenges and cost associated with developing this large unplanted landbank.

    In a report that was published on the 20th of November 2014 by Chain Reaction Research, a Washington DC based environmental risk analysis research outfit, the reserve takeover of BW Plantation by the Rajawali Group was classified as a HIGH RISK venture.[1]

    Among the risks cited is that “for 70% of its land bank, permits are not yet secured to start oil palm planting, and it is far from certain that they will be” as well as serious concerns “in relation to peatland development, deforestation and encroachment in orang-utan impat” which may affects its main customers who are committed to the “No Deforestation, No Peatland, No Exploitation” policy.

    As shown in Table 1 below, 65% of EHP’s land bank (formerly BW Plantation) are unplanted and most of this is from the Green Eagle and additional Rajawali land bank that was injected into BW Plantation as part of Rajawali’s reserve takeover exercise conducted in November 2014.

    The Chain Reaction Research report further states that for the unplanted land bank, the “licensing process is still in a very preliminary stage: there is only a location permit (Ijin Lokasi). Location permits have a legal expiration date, and often these permits are not converted into real plantation development rights. Unlike many similar reports, BW Plantation’s prospectus does not provide details on the prospects of the unplanted land bank actually being developed. As the valuation of Green Eagle Holdings is mainly based on the potential of its unplanted land bank, this lack of disclosure should be of serious concern to shareholders of BW Plantation.”

    The report also shows that 40% of BW Plantation sales in 2014 were to Golden Agri-Resources and Wilmar, both of which have publicly committed to the “No Deforestation, No Peatland, No Exploitation” policy.

    In other words, even though EHP has a large land bank, the licenses to develop the unplanted land bank have not all been approved and EHP may not be able to find enough customers if its planting policies in these areas are not in accordance to recognized standards of sustainability.

    The CCR report is further proof that FGV is overpaying for its 37% stake in EHP and that FGV’s shareholders – the FELDA settlers and the general public – will end up paying for the mistakes of FGV’s management and board of directors.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://chainreactionresearch.com/reports/bw-plantation/

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