• Investment Initiatives Announced in the Budget should be treated with caution

    Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 25th of October, 2015

    Investment Initiatives Announced in the Budget should be treated with caution

    In Prime Minister Najib’s budget speech on Friday, he announced a large number of investment initiatives under the “First Priority: Strengthening Economic Resilience” section. These investments total up to Rm137 billion. Those who are hearing these initiatives for the first time may be impressed by the investment which the government is putting into infrastructure and development expenditure. But in actual fact, only 3.1% or RM4.2 billion of what was announced actually appears in the 2016 budget. The rest of the RM132.9 billion or 96.9% are actually off budget items which are financed by Special Purpose Vehicles (SPVs), GLCs, Public Private Partnerships (PPPs) and the private sector.

    Table 1 below lists all the investment related expenditures under Najib’s “First Priority” section of the budget.

    Investment spending under SPVs accounts for RM82.5 billion or 60.2%. This would include the MRT Lines 1 and 2, the LRT Extension and LRT3 as well as the BRT projects along the Federal Highway and in Kota Kinabalu. The GLC investment spending accounts for RM44.5 billion or 32.4%. This would include Khazanah’s RM6.7 billion in investments in 9 impact areas and Petronas’ investment in the RAPID complex in Pengerang, Johor, valued at RM18 billion in the budget speech. The RM5 billion Malaysia Vision Valley project, as far as I know, will be a largely private sector driven project.[1] And the Jalan Tun Razak Traffic Dispersal Project of RM900 million was announced as a Public Private Partnership (PPP) project. Of the remaining RM4.2 billion in government projects, not much of it are actually brand new initiatives. For example, the allocation for the rural electrification projects and the rural water supply projects worth Rm1.5 billion have been in existence as part of the Rural Basic Infrastructure National Key Results Area (NKRA) under the Government Transformation Program’s (GTP).

    Why should the fact that almost 97% of the announced investment initiatives are off-budget items be of concern?

    Firstly, some of these projects may never take off or attract the amount of investment announced by PM Najib. For example, the RM11 billion Cyberjaya City Center project comes under Cyberview Sdn Bhd which is a government owned company.[2] According to the 2013 Attorney General report (3rd series), Cyberview also has unpaid arrears to the government totalling RM571 million at the end of 2013. If it is not able to service the interest payments due to the government, it is hard to see how it can finance even some of the RM11 billion required for this project to take off. One can point to the Nexus Karambunai integrated eco-resort initiative that was announced by Najib in the 2011 that was supposed to cost RM3 billion but still has not taken off four years later in 2015. The same healthy scepticism can apply to projects such as the RM7 billion KL Aeropolis which comes under Malaysian Airports as well as the RM5 billion Malaysia Vision Valley project.

    Secondly, some of the investment initiatives may not have direct benefits for the rakyat. For example, Khazanah, through its listed entity IHH Healthcare Berhad, will invest approximately RM670 million between 2015 and 2017 in building new hospitals and expanding existing hospitals in Media Iskandar, KL, Klang, Melaka and Kota Kinabalu.[3] But since all of these hospitals are private fee paying institutions, the only beneficiaries will be those who can afford private health care and IHH’s own bottom line. Whether this will translate into more dividends paid by Khazanah to the government still remains to be seen.

    Thirdly, any Public Private Partnership (PPP) project which is announced by the federal government should be greeted with great caution. PPPs in Malaysia have a record of being totally not transparent and lopsided in favour of the private sector. The toll concessionaires and the first generation Independent Power Producer (IPP) contracts are notable examples. So when PM Najib announces a traffic dispersal project for Jalan Tun Razak, which is very necessary given the serious congestion which occurs during peak hours along this main thoroughfare in KL, and that it will be funded via a PPP, one should immediately ask which concessionaire would get this project and how much toll motorists would have to pay.

    In addition, because these PPPs are negotiated by EPU without any of their details made public, it is very likely that they would end up costing the government (and sometimes the end user) more in the long run than if the government paid for these projects by issuing bonds. For example, a private sector contractor, Zecon Bhd, was given the contract to build and lease the new Children’s Hospital next to UKM for 30 years. The government would have to pay a yearly rental to the operator for the hospital and since the private sector is asking for internal rate of returns (IRRs) in excess of 10%, the government may very well end up paying more in the 30 years than if it were to have built the hospital itself.[4] (Of course, since the terms of the PPP are not publicly disclosed, we don’t know if this is indeed the case).

    Fourthly, future generations will ultimately have to pay for the cost of these mega infrastructure projects. The LRT and MRT projects are being funded by bonds which are issued by Special Purpose Vehicles (SPVs) such as DanaInfra which are 100% Ministry of Finance owned companies. It is almost certain that the LRT and MRT operators will not be able to generate enough cashflow to services these multi-billion ringgit loans. When this happens, the government has to step in to pay for the interest on these loans. Our future generations have to pay for this debt although this is something which is not acknowledged by the government.

    Fifthly and lastly, the government has not announced any new measures to ensure that its own development expenditure will be spent optimally with minimum leakages. For example, the Malaysian Communications and Multimedia Commission (MCMC) collects more than Rm1 billion every year from the telco companies to improve internet and mobile telephony services to underserved communities. This is the fund from which the Rm1.2 billion to increase rural broadband penetration will be tapped. But this is also the fund which was used to purchase more than 1 million netbooks for teachers and students since 2010. The usage and distribution of these netbooks have been full of shortcomings and criticized by many parties.[5] There is little assurance that this RM1.2 billion set aside to achieve its intended target of increasing rural broadband penetration if the government proceeds with business as usual practices.

    In short, before you celebrate the more than Rm100 billion investment initiatives announced by PM Najib, think of whether these investments will be realized, how much leakages will there be and who will have to pay for them eventually.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://www.ptlm.com.my/index.php/component/k2/11-insider/malaysian-vision-valley-mvv-400ha-central-park-green-lung-planned-to-be-like-the-ones-in-london-new-

    [2] http://cyberview.com.my/property/property-development-property/upcoming/cyberjaya-city-centre-project/

    [3] http://www.thestar.com.my/Business/Business-News/2015/09/14/Khazanah-to-invest-in-projects-to-boost-economy/?style=biz

    [4] http://www.thesundaily.my/news/1268430

    [5] http://www.themalaysianinsider.com/malaysia/article/mcmc-denies-handing-out-busted-netbooks-blames-students-for-faults

  • 寻找财政预算案里的“隐藏”支出




    1) 哪一方面的开销会减少和增加?

    在每一次的财政预算案中,财政部都会提供了一本题为“Anggaran Perbelanjaan Persekutuan”或联邦政府的预计开销的报告,陈述政府各部门在目前和接下来的财政年的预计运营和发展开销的细则。[1] 除了对预算案真正有兴趣的爱好者,否则大多数人民是都没看过这份报告里的内容。尽管如此,它仍是一份很重要的报告书,因为它会确实地指出哪一方面的政府开销会减少和增加。





    2) 预算外支出的



    其次,政府投资的名单可以告诉我们,政府在各个上市和非上市公司的实际股权。这也能告诉我们政府对哪些公司拥有有效的控制权。接着,经过一些抽丝剥茧,我们也能发现政府企图“隐藏”其债务的方式。例如,名单中有两间公司,分别是BLT建筑私人有限公司和PFI建筑私人有限公司。它们实际上是特别用途工具,来资助那些没有出现在官方发展开销预算中的各种发展计划。 例如,PFI建筑在2014财政年的债务高达265亿令吉,没有独立的收入来源,意味着联邦政府必须代为支付其债务的利息。那我们是否会在这个名单中看到更多类似PFI和BLT建筑的例子?相信在今天预算案被公布后,我们将从政府2014年财务报表一探究竟。




    3) 针对联邦政府的财务现况和管理的总稽查司报告





  • Perkara ‘tersembunyi’ dalam Bajet yang perlu diteliti

    Kenyataan Media oleh Dr. Ong Kian Ming, Ahli Parlimen Serdang pada 22 Oktober 2015

    Perkara ‘tersembunyi’ dalam Bajet yang perlu diteliti

    Bagi masyarakat umum, mereka ingin tahu bagaimana Bajet akan mempengaruhi perbelanjaan mereka secara langsung, sama ada dari segi kadar cukai pendapatan, kadar GST atau nilai BR1M yang diberi dan pada tahap pendapatan apa ia diberi. Ini merupakan perkara biasa. Namun, bagi pembuat dasar, penggubal undang-undang dan penganalisis, bajet merupakan dokumen holistik yang mempunyai implikasi besar terhadap ekonomi dan bukannya memberi kesan kepada perbelanjaan individu sahaja. Berikut adalah senarai perkara yang akan saya teliti semasa pembentangan bajet serta dokumen berkenaan yang akan dibentangkan di Parlimen.

    1) Di manakah berlakunya pemotongan dan kenaikan dalam belanjawan?

    Untuk setiap pembentangan bajet, Kementerian Kewangan akan membekalkan sebuah buku tebal bertajuk “Anggaran Perbelanjaan Persekutuan” yang menyenaraikan pecahan anggaran mengurus dan pembangunan bagi setiap kementerian untuk tahun kewangan semasa dan tahun kewangan hadapan.[1] Kecuali pengkaji bajet, ramai dari masyarakat awam tidak pernah melihat isi kandungan buku ini. Namun ia adalah sebuah buku penting yang memberi maklumat tentang pemotongan dan kenaikan belanjawan yang berlaku.

    Sebagai contoh, jumlah perbelanjaan kerajaan dijangka meningkat dari RM264 bilion pada 2014 kepada RM274 bilion pada 2015. Namun peningkatan ini tidak dibahagi sama rata. Anggaran bajet untuk Jabatan Perdana Menteri meningkat sebanyak RM2.5 bilion, iaitu dari RM16.5 bilion pada 2014 kepada RM19 bilion pada 2015. Manakala bajet bagi Kementerian Pengangkutan pula berkurang dari RM5.2 bilion pada 2014 kepada RM4.6 bilion, iaitu pengurangan sebanyak RM 0.6 bilion.

    Dokumen ini memberitahu kita di mana keutamaan perbelanjaan kerajaan serta menunjukkan kemungkinan perbelanjaan yang kurang telus. Sebagai contoh, sebahagian besar RM2.5 bilion peningkatan dalam bajet JPM adalah untuk perbelanjaan pembangunan yang termasuk RM1.5 bilion untuk perumahan PR1MA, RM1.9 bilion untuk 5 pembangunan koridor dan RM1.6 bilion untuk “projek khas” (butiran tidak diberikan). Pada masa yang sama, perbelanjaan mengurus untuk universiti awam telah dipotong daripada RM8.5 bilion (2014) kepada RM7.4 bilion (2015), iaitu pengurangan sebanyak RM1.1 bilion.

    Terdapat banyak perkara menarik yang dibongkarkan dalam dokumen ini, sama ada perkara berskala kecil – misalnya RM20 juta pada 2015 untuk program ANGKASA, hinggakan perkara berskala besar – misalnya anggaran RM2.2 bilion pada 2015 untuk pelbagai subsidi berkaitan padi.

    Yang pasti, kita perlu memberi perhatian kepada butiran kecil, dan butiran yang disenaraikan mempunyai implikasi ekonomi dan sosial yang mewajarkan yang pemerhatian lebih teliti.

    2) Perubahan dalam item luar bajet

     Dalam setiap sesi pembentangan bajet, Kementerian Kewangan dan Jabatan Akauntan Negara akan menerbitkan sebuah dokumen bertajuk “Penyata Kewangan Kerajaan Persekutuan.” Ia menyenaraikan perbelanjaan sebenar kerajaan bagi tahun belanjawan sebelumnya. Ia juga memberikan senarai pinjaman tertunggak negara, senarai pelaburan kerajaan dan juga senarai pinjaman jaminan kerajaan oleh syarikat berkaitan kerajaan (GLC) dan syarikat milik kerajaan.

    Mengapakah senarai ini begitu penting? Pertama, senarai pinjaman terkumpul kerajaan memberitahu kita jumlah sebenar hutang syarikat-syarikat tersebut kepada kerajaan. Sebagai contoh, sehingga tahun 2013, Lembaga Pelabuhan Kelang (LPK) masih berhutang RM3.7 bilion dengan kerajaan berikutan penerimaan pinjaman mudah untuk menyelamatkan LPK dari skandal PKFZ. Begitu juga dengan Indah Water Konsortium (IWK) dan National Feedlot Corporation (NFC) yang masing-masing berhutang RM2 bilion dan RM225 juta kepada kerajaan persekutuan. Walaupun pinjaman ini disenaraikan sebagai aset kerajaan, namun sebahagian besar syarikat ini tidak berada dalam keadaan yang membolehkan mereka membayar hutang tersebut. Oleh itu, besar kemungkinan bahawa kerajaan akan terpaksa menghapus kira hutang ini. Akhirnya, pembayar cukai yang terpaksa menanggung kos ini.

    Kedua, senarai perbelanjaan kerajaan menunjukkan pegangan saham kerajaan dalam pelbagai syarikat tersenarai dan syarikat tersenarai bukan awam. Senarai ini memberitahu kita syarikat manakah yang dikawal oleh kerajaan. Dan mungkin jika dikorek sedikit, ia akan mendedahkan kepada kita beberapa cara yang digunakan oleh kerajaan untuk ‘menyembunyikan’ hutang itu. Sebagai contoh, dua buah syarikat yang tersenarai – Pembinaan BLT Sdn Bhd dan Pembinaan PFI Sdn Bhd – merupakan syarikat khas yang digunakan untuk membiayai beberapa projek pembangunan yang tiada dalam bajet perbelanjaan pembangunan rasmi. Sehingga tahun kewangan 2014, Pembinaan PFI telah berjaya mengumpul hutang berjumlah RM26.5 bilion dan ia tidak menjana sebarang pendapatan secara sendiri, bermakna bayaran faedah yang dikenakan ke atas hutang adalah datang dari sumber kerajaan persekutuan. Adakah mungkin ada syarikat seumpama Pembinaan PFI dan BLT dalam senarai ini? Kita akan melihat perkara ini selepas pembentangan bajet pada hari ini apabila penyata akaun kerajaan bagi 2014 dikeluarkan.

    Ketiga, senarai jaminan kerajaan ini menunjukkan berapa banyak kerajaan perlu berbelanja untuk menyelamatkan syarikat dalam senarai ini jika ia diisytiharkan bankrap. RM5.8 bilion dari jumlah hutang 1MDB adalah merupakan jaminan kerajaan pada 2013 sebagaimana RM29.2 bilion hutang PTPTN. Jumlah keseluruhan jaminan kerajaan (atau dikenali sebagai liabiliti luar jangka) berjumlah RM157.5 bilion setakat 2013. Jika jaminan ini ditambah kepada hutang kerajaan, maka nisbah hutang kita kepada KDNK akan melebihi 55% had kerajaan.

    Terdapat juga syarikat dalam senarai ini seperti TNB dan Khazanah yang mempunyai kedudukan kewangan yang kukuh dan mungkin tidak perlu bantuan kerajaan dalam masa terdekat. Namun pada masa yang sama, hubungan kewangan kerajaan dengan syarikat seperti 1MDB jauh melebihi jumlah RM5.8 bilion jaminan kerajaan. Berapa banyak lagi akan liabiliti kerajaan meningkat selepas ini?

    Kita akan tahu selepas meneliti penyata kewangan kerajaan persekutuan yang terbaru.

    3) Laporan Ketua Audit Negara berkenaan Status dan Pengurusan Kewangan Kerajaan Persekutuan

    Semasa setiap sesi parlimen bajet akhir tahun, Ketua Audit Negara mengeluarkan laporan tahunan berkenaan status kewangan dan pengurusan kerajaan persekutuan dan setiap kementerian.

    Ia bukanlah sebuah dokumen yang diteliti umum, namun ia mengandungi maklumat penting seperti kualiti pengurusan kewangan oleh setiap kementerian, syarikat yang mempunyai masalah untuk membayar balik pinjaman kerajaan dan status perbelanjaan akaun amanah tertentu. Di dalam dokumen inilah saya mendapati Pembinaan PFI telah membelanjakan hampir RM30 bilion untuk projek berkaitan perbelanjaan pembangunan dan juga menemui syarikat seperti Cyberview Sdb Bhd yang mengumpul tunggakan pembayaran sebanyak RM571 juta kepada kerajaan persekutuan.

    Oleh itu, walaupun ramai orang akan memberi tumpuan kepada perkara besar dalam bajet yang menarik perhatian, saya pula akan meneliti dengan terperinci beberapa perkara yang ‘tersorok’ dalam bajet dan dokumen berkaitan yang mungkin mempunyai maklumat menarik dan penting berkenaan dengan keadaan kewangan negara ini.

    Dr. Ong Kian Ming
    Ahli Parlimen Serdang

    [1] http://www1.treasury.gov.my/index.php?option=com_content&view=category&id=447&Itemid=2473&lang=en

  • “Hidden” Budget Items to look out for

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

    “Hidden” Budget Items to look out for

    To the man on the street, he would be looking out for how the budget affects his pocket directly, whether it is through the income tax rate, the GST rate or how much BR1M is being paid out and at what income levels. This is only natural. However, for policy makers, lawmakers and analysts, the budget is a more holistic document that has larger implications on the economy beyond the direct impact to one’s pocketbook. Here are some of the things I will be looking out for in today’s budget and budget related documents which will be tabled in parliament.

    1) Where will the expenditure cuts and increases be?

    During every budget session, the Ministry of Finance provides a thick book entitled “Anggaran Perbelanjaan Persekutuan” or Estimated Federal Expenditure which provides a breakdown of the estimated operating and development expenditure for the items under each ministry for the current fiscal year and for the upcoming fiscal year.[1] Except for budget junkies, most members of the public would not have seen the contents of this book before. But it is an important book in that it tells us exactly where the expenditure cuts and increases will take place.

    For example, total government expenditure was expected to increase from RM264 billion in 2014 to RM274 billion in 2015. But this increase in expenditure is not distributed evenly. The Prime Minister’s Department saw its estimated budget increase from RM16.5b in 2014 to RM19b in 2015, an increase of RM2.5b while the Ministry of Transportation saw its estimated budget decrease from RM5.2b in 2014 to RM4.6b, a decrease of 0.6b.

    This document tells us where the government spending priorities lie moving forward and points to possible areas of less than transparency discretionary spending. For example, most of the RM2.5b increase in the budget of the Prime Minister’s Department was in development expenditure which includes RM1.5b for PR1MA housing, RM1.9b for spending on the 5 development corridors and a shocking RM1.6b for “special projects” (details not listed). At the same time, the operating expenditure for the public universities was cut by an estimated RM1.1b from RM8.5b in 2014 to RM7.4b in 2015.

    There are many interesting items which are revealed in this document, ranging from the small – RM20m in 2015 for the ANGKASA space program, to the large – an estimated RM2.2b in 2015 for various paddy related subsidies.

    As they say, the devil is in the details, and the details which are listed in this document have real economic and social implications which warrant closer scrutiny.

    2) Changes in Off Budget Items

    During each budget session, the Ministry of Finance and the Accountant General’s Department of Malaysia publishes a document entitled “Federal Government Financial Statements” or “Penyata Kewangan Kerajaan Persekutuan.” It provides details of the actual government expenditure for the previous budgetary year. It also provides a list of outstanding government loans, a list of government investments and a list of government guaranteed loans by GLCs and government owned companies.

    Why are these lists important? Firstly, the list of outstanding government loans tells us exactly how much some of these companies owe to the federal government. For example, it tells us that, as of 2013, the Port Klang Authority (PKA) still owed the government RM3.7b as a result of a ‘bail out’ soft loan provided by the government to save PKA from the PKFZ scandal. It also tells us that the Indah Water Konsortium (IWK) and the National Feedlot Corporation (NFC) owed the federal government RM2b and RM225m respectively as of 2013. While these loans are listed as government assets, the fact that many of them are given to companies that are not in a position to service these loans means a high probability that the government has to write some of them off as bad debts. Which means that ultimately, the taxpayer would have to foot the bill.

    Secondly, the list of government investments tells us the exact shareholdings of the government in various listed and non-public listed companies. This list tells us which companies the government has effective control over. And, with a bit of digging, it may also reveal to us some of the ways in which the government ‘hides’ its debts. For example, two of the companies featured in this list – Pembinaan BLT Sdn Bhd and Pembinaan PFI Sdn Bhd – are actually special purpose vehicles set up to finance various development projects which do not appear in the official development expenditure budget. Pembinaan PFI’s debts, for example, stood at RM26.5b as of Financial Year 2014 and it has no independently generated revenue which means that the interest payments on its debts will have to come from federal government sources. Will there be any more Pembinaan PFI’s and BLT’s in this list? We will see after today’s budget announcement when the government’s financial statement for 2014 is released.

    Thirdly, the list of government guarantees shows us how much the government has to spend to ‘bail out’ companies on this list if they ever declare bankruptcy. RM5.8b of 1MDB’s debts are government guaranteed as of 2013, as are RM29.2b of PTPTN’s debts. Total government guarantees (otherwise known as “contingent liabilities”) stood at RM157.5b as of 2013. If these guarantees were added to government debt, then our debt to GDP ratio would exceed the 55% government limit.

    Of course, some of the companies featured in this list such as TNB and Khazanah are of sound financial standing and would probably not require a government bailout in the near future. But at the same time, the government’s exposure to companies such as 1MDB is much more than the listed RM5.8b of government guarantees. How much more has the government’s exposure increased?

    We will know after perusing the latest financial statements of the federal government.

    3) Auditor General’s Report on the Financial Status and Management of the Federal Government

    The Auditor General also releases its yearly report on the financial status and management of the federal government and the individual ministries during the year end budget parliamentary session.

    It is not a very well-perused document but it contains important information such as the quality of financial management by the individual ministries, the companies which have problems servicing their government loans and the expenditure status of certain trust accounts. It was in this document where I discovered that Pembinaan PFI had spent close to RM30b in development expenditure related projects and it was also here that I found out that companies such as Cyberview Sdn Bhd had accumulated RM571m in payment arrears to the federal government.

    So while attention is being paid to some of the headline grabbing items in the budget, I will be carefully scrutinizing some of these ‘hidden’ items in the budget and budget related documents that may contain other interesting and perhaps even more important information pertaining to the financial situation of our country.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://www1.treasury.gov.my/index.php?option=com_content&view=category&id=447&Itemid=2473&lang=en

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