Saturday, July 31, 2010

Some Malays reject 7pc discount for luxury homes


Pua proposed for Selangor to do away with Bumiputera discounts for million-ringgit homes. — file pic

KUALA LUMPUR, July 30 — Some middle-class Malays have surprisingly rejected the seven per cent Bumiputera discounts for luxury homes, calling the policy “embarrassing” and “unconstitutional” despite Malay politicians saying it was still necessary.

Their stand contradicted Datuk Seri Najib Razak’s opinion that removing the discount for select properties as proposed by DAP’s Tony Pua would anger the Bumiputeras, as well as Umno Youth leader Khairy Jamaluddin’s argument that it was still needed to widen Bumiputera ownership in strategic areas.

“It is quite embarrassing to us Malays because it is as if we cannot afford that kind of property,” real-estate business owner Haslinah Yaacob told The Malaysian Insider yesterday.

“It is against the Constitution,” said the 49-year-old, who added that housing discounts are not listed under Article 153 of the Federal Constitution which guarantees the special position of the Malays.
Khairy said the discount was still required to encourage Bumiputeras to own property.
Retired engineer Ismail Ibrahim agreed with Haslinah that the Bumiputera discount was unconstitutional and should be scrapped.

“The discounts are illegal and unconstitutional. There is no such thing as special rights of Malays in our Constitution,” said Ismail, 60, pointing out that Malays’ “special position” as defined in Article 153 of the Federal Constitution did not translate to “special rights”.

The engineer added that the “special position” of the Malays refers to religious and family matters, and not houses.

Pua, the DAP national publicity secretary, recently urged the Selangor government to abolish Bumiputera discounts for million-ringgit luxury homes as well as commercial property in the state to improve competitiveness and restore investor confidence. However, he proposed keeping the discounts for houses up to RM500,000 and commercial properties up to RM2 million.

On another point, businessman Abdul Aziz Ahmad said the Bumiputera discount was not an Islamic practice as the affirmative action did not benefit the poor in general.

“The policy should cover everyone regardless of race. That is more Islamic,” said the 50-year-old businessman.

Abdul Aziz also criticised the New Economic Policy (NEP) for its failure to achieve the stated 30 per cent Bumiputera equity target since its inception in 1971.

“For 40 years, we failed to achieve even 20 per cent of Bumiputera equity,” said Abdul Aziz.

“It (the NEP) is a policy to cover for Umno, to show that they are fighting for Malay interests. But it is for their own benefit, for certain segments in society,” added Abdul Aziz.

Najib has been criticised for backtracking on the New Economic Model (NEM), which was meant to remove the rent-seeking and patronage practices left over from the NEP, after he called the policy a “trial balloon” when faced with a sour reaction from some Malay groups.

The discount may not last forever, said Najib, but will stay for now.
“If I can afford RM2 million, I should be embarrassed to ask for a seven per cent discount,” said management consultant Mohd Radzi Mohd Taib, 50.

“The discount should not be based on racial status but economic basis,” added Mohd Radzi.

Like Abdul Aziz, the management consultant criticised the NEP for reducing the competitiveness of the Malays.

“We (Malays) are weakened by NEP because we don’t compete on the same level,” said Mohd Radzi, pointing out that Malay students would not study as hard as their non-Malay counterparts as they could still enter government universities even with lower grades.

Communications practitioner Arfan Amaluddin echoed Mohd Radzi’s points, and said that the Bumiputera discount policy merited a relook in order to make the grouping more competitive.

“We should revisit the decision, should it be detrimental in the long run. I believe it is time to do so,” said Arfan, 32.

“This is so that we, the sons of the soil, will in fact become more competitive, especially in order to attain that lofty goal of becoming a ‘developed’ nation,” he added.

Although Najib admitted yesterday that the Bumiputera discount practice might “not last forever”, he said that it would not be removed now, citing possible dissatisfaction among the Malays.

The Najib administration had also decided to maintain the 30 per cent Bumiputera equity target in the 10th Malaysia Plan, leading critics to question if the “merit-based” NEM would be finalised months after its debut in March this year.

Friday, July 30, 2010

Jui Meng: Umno controls the minds of the Malays

By Fazy Sahir

PETALING JAYA: Umno, being the largest political party in the country which has ruled over the last 50 years, has poisoned the minds of the Malays, feeding them lies that their position is under threat from the non-Malays, former health minister and MCA vice-president Chua Jui Meng said.

"All these years Umno has brought about this propaganda that the Malays were under threat. They try to control the hearts and minds of the Malays, telling them that the advancement of other races would make them poor. This propaganda to poison the minds of the Malays has resulted in the Malays not being able to see the true picture.

"The problem is not the other races but Umno itself. This message is important for all Malays in Malaysia.

They must be aware of the truth. We have to break their mindset,” he said in an exclusive interview with FMT recently.

He was quick to add that the Malays in urban areas were realising the truth of Umno's political game plan.

However, he said, the Malays in the outskirts, such as in his home state of Johor, still had the orthodox mentality that Umno was Malay and Malay is Umno.

“This kind of propaganda poisons the minds of the Malays," said the 67-year-old lawyer-turned- politician.

He added that access to the new media as well as a paradign shift in the mindset of the urban Malays would enable them to break away from the Umno mentality.

He stressed that Pakatan Rakyat should aspire to bring about the change in the mindset of rural Malays in order to see a change in the country.

"I have told (Opposition leader) Anwar (Ibrahim) that I am a Chinese leader in Pakatan wanting to help poor Malays. My heart goes out to them... we need to help these Malays.

“In Johor, there is a huge information gap. We have to narrow this gap. After 50 years in power, Umno is still spreading lies to the people through the mainstream media which is under Umno control,” he said.

Chua, however, said that Pakatan should not be only concentrating on uplifting the Malay community's economic status.

"We tend to forget other races. Like the Indians, they too have problems. Even when they are citizens of this country, their rights are denied. This is the way of Umno," said Chua, who was in MCA for 35 years before deciding to join PKR late last year.

Plans for Johor

Asked on his plans for Johor as the new state PKR chief, he said he was not a novice in politics and knows the ways of the BN from a political perspective, which uses the mainstream media to win votes.

He said since joining the opposition front, he had become more open to the alternative media.

He said on the part of the Chinese, the community had repented and now had an open mindset knowing that they could live in this country without being dependent on Umno.

"The Chinese community works hard and are smart. Their priority is education... although they only receive minimal assistance from Umno, they don't give up. When they are educated, they can be critical and analytical in the way they think," said the veteran politician.

He also revealed that there was no racial issue in Malaysia, although Umno insists on racialising each and every issue that crops up.

"The Malays are blinded by Umno. Look at the education system. It does not allow our students to be independent and become critical of things. We still have laws to control university students... all these are meant to control the mindset of the Malays.

He also slammed Umno for using Islam to further their political agenda despite indulging in immoral activities
like corruption.

"Umno talks about religion. Do they really know what they are talking about? If they know what they are talking about, then why are they still doing wrong? If they hold on to the Quran, then they should also know that corruption takes them to hell... but they still go ahead and do it.

“This message should be sent to the Malays in rural areas: the rich in the country are not the Chinese but those in Umno and their cronies.”

Wednesday, July 28, 2010

Opps.....Malaysia shrinking


Translated by SOONG PHUI JEE

Oh no! How could this happen?

When we look at the latest maps, we can see that Singapore has become larger, so are Indonesia, Vietnam,

Thailand and other South-East Asian countries. But Malaysia is the only country that is shrinking.

I am not referring to the physical geographical maps here. Geographically, Malaysia’s total landmass of 329,845 sq km will remain constant.

I am talking about the investors' maps. They are a kind of economic map, which is much more important than the physical geographical maps.

According to current thinking, the size of a country should be proportional to its economic status.

For example, Ethiopia has an area of 1,100,000 sq km, but no foreign investor bothers about it because of its poor economy. As for Singapore, it occupies only a dot in the physical geographical maps, but it is one of the superior countries in the economic maps.

For investors, the more competitive the economy of a country is, the greater economic growth potential it has, and the greater proportion it will have.

According to the United Nations World Investment Report 2010, the foreign direct investment (FDI) in

Malaysia has plunged 81% from US$7.32 billion in 2008 to just US$1.38 billion last year.

In other words, Malaysia has shrunken in the eyes of investors.

As for Singapore, its FDI for last year was US$16 billion.

Thailand, Indonesia, Vietnam and the Philippines receive more foreign investments compared to Malaysia.

Malaysia is a country relying on exports and trade and its economic growth has largely been driven by foreign investments, especially in the 80s and early 90s.

Why are investors avoiding Malaysia today?

It is because the country lacks competitiveness and is less attractive, causing the investors to have less
confidence and interests.

They cannot see Malaysia in investment maps, and they just bypass Malaysia when they come to Asia.

Less foreign investments lead to less inflow of capital and technology, less economic activities and fewer job opportunities. Also, the target of 6% economic growth and the goal of transforming the country into a high-income economy may also be unable to achieve.

Even worse, the capital outflow from Malaysia in the same period was US$8 billion. In other words, existing domestic and foreign investors have also transferred their capital abroad.

Therefore, we can no longer expect domestic capital to drive domestic demand and growth.

What have been done by the Ministry of International Trade and Industry and the Malaysian Industrial Development Authority?

Let's see how foreign investors view Malaysia:
  • the lack of creativity and bureaucracy is serious in the country
  • the government is not open enough and there are complicated and lengthy procedures
  • corruption problem is serious and there is a great deal of red tapes
  • there is a shortage in general labour, and a lack of professional manpower
  • it has many strong slogans but lacks competitive advantage
Are the government, political parties and politicians really aware that Malaysia has reached a crucial point in which we will have to either wake up and reform or sink and disappear from the world economic map?

Selangor BN clutching at straws

Selangor BN clutching at straws

The unexpected bereavement of Selangor’s BN government in 2008 bewildered many ambitious members of the coalition. The shock threw them off balance. It dazed and confused them as they tried to figure out what the future held in store for BN and, especially, for their individual selves.

Not anymore. Or so it seems. They appear to have finished licking their wounds and are now vigorously going after the ruling Pakatan Rakyat coalition.

Selangor BN’s recent actions and rhetoric can be likened to those of a private demolition company desperately trying to find fault with a spanking new building so that it can tear it down just to keep itself relevant and to spite the contractor chosen to build the new structure.

BN’s self-appointed champions have been whipping up trivial issues in the hope that the noise they make will drown out the voices of those recalling the sins of the previous administration.

But it is not so easy to chase away hungry ghosts. Words can mislead, but they cannot obliterate the record of years of extravagant and wasteful public spending, graft, power abuse and poor governance.

Onlookers of average intelligence can tell that BN has conceived its ghost stories poorly and they are not rushing for tickets to watch the theatre versions.

The much-promoted road show about shifting sands and muddy waters is a flop. It has not generated any meaningful interest. Instead of injecting fear into Pakatan, as promised in the pre-publicity, it has shown up the organisers and actors as poor amateurs and losers.

It is hard to tell whether the BN script is supposed to be serious or comical. Perhaps it is a fantasy. In contrast, Pakatan has gone for realism.

To understand the water issue, for instance, one only has to read the explicit and detailed account given by Kuala Selangor MP Dzulkefly Ahmad in his article, “Battle over Selangor’s water continues unabated”. Dzulkefly, a PAS leader, sits on the Selangor Water Panel.

The would-be BN heroes are even pretending to show deep concern for the health of the natural environment, something they used to rape with abandon. In fact, the previous Selangor state government, like many other BN governments, have a dismal record when it comes to protecting the environment.

The sad truths

BN has left a record of poor management of land and water resources, which we can blame for major floods, water shortage, pollution and loss of biodiversity in Selangor and elsewhere.
A biologist with a local university reported in 2005 that eight lakes and 11 rivers in Selangor and Kuala Lumpur had alarmingly high levels of pollutants caused by effluents from livestock farms and pharmaceutical industries.

Mangrove forests in Pulau Ketam, Pulau Tengah and Pulau Klang were over-logged and fast depleting.

The multimillion Paya Indah Wetlands sanctuary was a failure. It had to close down, even though the public had paid RM33.4 million for it.

There are more sad truths. The BN government promised that privatising water services would enhance the quality and availability of household water.

The fact is that millions of homes have been forced to install water distillers and cleansing equipment because of the poor quality of water flowing through the pipes. Water rationing has become an off-and-on affair, partly because of illegal logging under the BN administration.

Indeed, because logging is such a good source of income for BN cronies, many eco-systems in the country have been seriously compromised.

Under BN rule, our rivers die. In 1990, there were 48 clean rivers. By 2000, there were only 34 clean rivers left. It is anybody’s guess how many rivers are still clean now.

In short, BN has left a record of poor management of land and water resources, which we can blame for major floods, water shortage, pollution and loss of biodiversity in Selangor and elsewhere.

But incompetence, greed and corruption defile more than just water and air. They pollute morals as well. The Selangor exco village, the Cairo trip of the state public accounts committee and many other unsettled issues from the ghostly past still haunt Selangor residents and taxpayers.
Comic sketches
In 2006, a Selangor resident calling himself Subra wrote in a newspaper’s letters column:

“I have very little faith that things will ever change for the better as long as this country (under BN) rewards incompetency and throws merit down the drain.

“Corruption and incompetency are rife. My dealings with MPPJ on my father’s behalf were a joke. For instance, it took me three years and countless visits to the engineering department to get the 30-year-old crumbling roadside drain outside my house fixed.”

With all these in mind, one wonders where the current onslaught by Umno and MCA is heading. Political point scoring is one thing, but to exorcise the sins of the past is something else.

Hopefully, Selangor voters are cultured enough to distinguish between comic sketches put up by incompetent schoolboys and realistic plays presented by professional thespians.

Stanley Koh was the former head of MCA's research unit.

Tuesday, July 27, 2010

Najib, you can't band aid the economy

You can't band-aid the economy, Najib told

By FMT Staff

KUALA LUMPUR: The Malaysian economy will continue to sink unless the government comes up with a wholesome reform plan and sincerely follows it through, said PAS leader Dzulkefly Ahmad.

He said it was time for Prime Minister Najib Tun Razak to admit that Malaysia was no longer attractive to investors, who prefer to take their money to neighbouring countries because of their more conducive political and economic climates.

Instead, he added, Najib was “desperately trying to band-aid the economy” to attract investors so that the national GDP could be pushed up to six percent in the next five years.

Lethargic and embarrassing—that was how he described the current state of the Malaysian economy, once among the most dynamic in Asia.

Foreign investments have fallen, compared to investments in the Philippines, Thailand, Indonesia, Singapore and even Vietnam.

A recent United Nations report said Malaysia was capable only of competing with third and fourth world nations like Cambodia, Myanmar, Laos and Timor-Leste.

It noted that foreign direct investments (FDIs) in Malaysia had plunged from USD2.56 billion in 2004 to negative USD2 billion in 2006, negative USD2.7 billion in 2007 and negative USD7.67 billion in 2008.

Malaysia is unmarketable

Dzulkefly said one of the reasons investors were running away was that the cronies of BN leaders had an unfair advantage over them.

“There was an exodus of RM24 billion in 2009 because local investors wanted to invest elsewhere,” said the MP for Kuala Selangor.

“Why is that? Because they allege that domestic opportunities have been reduced. They are not cronies; so they can’t compete. The Finance Ministry awards contracts only to certain companies. If you look hard, you’ll see the same faces all the time. It’s frustrating to investors.”

Dzulkefly also spoke of attempts to cover up huge corruption scandals, saying they had made Malaysia unmarketable.

“Just look at the country’s marketability today. With so many scandals, such as the controversial purchase of Scorpene submarines, it is no surprise that investors have a bad opinion about the country. These scandals have convinced them that Malaysia is a bad bet.”

He said the government must adopt a competitive attitude.

“There have been reports that Australian investors don’t want to come to Malaysia because the Internet services are weak,” he said.

“I brought this up in Parliament and read the reports out loud. Investors want speed. Investors want efficiency. We promised them megabyte broadbands, but they can get only kilobytes.”

Buying at higher price

He took the government to task for its indecisiveness in implementing the so-called New Economic Model in the face of attacks from the ultra-Malay movement Perkasa.

He called on Najib to stop blaming the global financial crisis for the shrinking FDIs, noting that other countries in the region were not as badly affected.

"The mistake here is that the BN leaders are still comatose,” he said.

“I recently raised the issue of the purchase of 38 train carriage units for Keretapi Tanah Melayu, said to cost RM1.8billion. When we checked, we discovered there was an excess payment of RM500 million.

“At the beginning there were eight bidders. But all their bids were rejected. The government went to China and bought the carriages for RM500 million more than the actual price.

“The Transport Ministry was apparently forced by the Finance Ministry to buy the units in China at a higher price.”

Monday, July 26, 2010

The big Napoleons

JULY 26 — There is always a big Napoleon behind the little Napoleons.

It is said that it was a little Napoleon’s idea to forbid national secondary schools from having non-Muslim societies.

The little Napoleon said that any school intending to form non-Muslim societies must first get consent from the state education director, according to an Education Ministry circular dated December 16, 2000. Non-

Muslim societies formed without consent must be shut down as it was a violation of the law.

As a result, Deputy Prime Minister and Education Minister Tan Sri Muhyiddin Yassin came forward to clarify that the circular was issued on December 16, 2000 and thus, all non-Muslim societies formed before that date would not be affected.

“You can take my word for it,” he said.

Yes, three non-Muslims clubs — Kelab Agama Hindu, Kelab Agama Buddha and the Christian Union — at the Klang High School can continue their operation.

A historical problem has been resolved.

However, how about the present and future problems?

For example, could secondary schools form non-Muslim societies now, I mean, after December 16, 2000?

Also, does it mean that all national secondary schools have not been allowed to form non-Muslim societies over the past decade?

Sorry, I think I have asked the wrong person. It may have nothing to do with Muhyiddin, as according to the circular, schools must first get consent from the state education director before they can set up any non-
Muslim society.

They cannot shut down the existing non-Muslim societies but it should be okay not to allow the formation of new non-Muslim societies as it is the power of the state education director for not approving the applications.

This is strange. Why non-Muslim societies formed before 2000 can be accepted but special permission is required after 2000?

Could it be because the non-Muslim societies formed before 2000 were more in line with the multi-racial national condition of Malaysia, able to promote good social atmosphere and instil correct values in students?

And such societies formed after 2000 could undermine the multi-racial national condition, harm the society and instil inappropriate values in students?

Perhaps, it is how the little Napoleons think. And such kind of information is provided by a big Napoleon.

The “big Napoleon” that I am referring to may be the manipulator who issued the circular, or someone in the state education department who is responsible to implement the circular. It may also appear as an ideology that views all non-Muslim activities with a narrow vision.

There are little Napoleons only when there is a big Napoleon.

Today, everyone, including both the ruling and opposition parties, is blaming the little Napoleons, saying that they are making trouble.

However, everyone seems to tolerate the big Napoleons, and blame only the little Napoleons whenever there are problems.

The British were afraid of Napoleon Bonaparte 200 years ago and thus, they exiled him to St Helena Island, which is located in the Atlantic Ocean, about 2,000km to the west of Angola.

Napoleon had no choice but to spend the last six years of his life on the island doing nothing, except watching seabirds.

It seems that our big Napoleons should also be isolated or exiled. Of course, we do not have any small island like St Helena. However, it is also good to leave them in an air-conditioned office room so that they can live a leisure life. —

Saturday, July 24, 2010

Under BN this is what we get........

Country in the red as 2009 FDI nosedives 81%

A nosedive in foreign direct investments in Malaysia in 2009 follows a continued downward trend in FDI, increasingly overshadowed by regional players, noted a United Nations report.

According to the World Investment Report 2010 unveiled today, FDI plunged 81 percent from US$7.32 billion (RM23.47 billion*) in 2008 to just US$1.38 billion (RM4.43 billion) last year.
(*Calculated based on exchange rate of US$1 = RM3.20650)

The 2009 FDI is less than half of the annual average FDI inflow between 1995 to 2005, which encompasses the long recovery period following the 1997 economic crisis.

Malaysia’s performance also pales in comparison with neighbouring economies like Thailand and Indonesia whose FDI figures did not contract as severely, despite the global financial crisis.

Thailand suffered a decline of US$4.44 billion (RM14.24 billion) while Indonesia saw a more modest drop of US$2.60 billion (RM8.32 billion) in foreign investments in 2009.

The severe dip also places Malaysia in the red for the first time in  the last 15 years, with figures for cumulative FDI (see chart right) surpassing incoming investments by about US$1 billion (RM3.21 billion).

Doubts over high income target

Speaking at the UN Headquarters in Kuala Lumpur today, Universiti Malaya economist Rajah Rasiah  said that Malaysia’s poor performance casts doubts over whether it can achieve the targets set to achieve high income status.

“Malaysia is fortunate to be in a good neighbourhood, located among growing countries. The three largest recipients of FDI are located in Asia (but) Malaysia does not even make the top 10 list of recipients,” he said.

He added that this is remarkable for a country with a specific FDI policy, unlike Taiwan which is placed 10th in the list.

Conversely, Malaysia is “doing well in FDI outflows”, ranking fifth in the list of South, East and Southeast Asian countries investing abroad.

“Speaking to fund managers, I get the impression that we have the resources to invest locally but not many viable options to do so. Even local investors find us less attractive,” he said.

Human capital a barrier

The main stumbling block, he said, remains our narrow human capital pool which leaves industries stagnating in low-end production.

He added that while foreign investor laud the ease of doing business in Malaysia, a lack of skilled labour, research and development and technological capabilities is placing the country on the losing end of the increasingly competitive FDI battle.

Malaysia has 300 to 400 science and technology workers for every 100,000 persons, as opposed to 3,000 in countries which made the transition from middle to high income status, he said.

Similarly, the country is under-investing in research and development at only 0.64 percent of GDP, while others like Taiwan and South Korea are investing about 3 percent of theirs.

It should also look at mirroring such nations in developing a “vetting mechanism” for FDI to ensure that the investments can be a catalyst for human capital and technology development.

This will include screening FDI by choosing those with technologies that could be upgraded along the value chain and monitoring to ensure a transfer of expertise takes place.

“We allow foreign firms in by giving grants and tax incentives, so we must ensure that spillovers (in terms of technology transfers) occur,” he said.

The bottom 40 percent of the population should also be assisted insofar as developing their skills to meet the shortage in industry.

“In assisting the lower income population, we should look at developing skills like precision engineering and die casting, which are sought after by foreign investors,” he said.

Aidila Razak/Mkini

Thursday, July 22, 2010

World's Best Tax Havens

By Richard Murphy

Even if you've worked for some years trying to prevent the problems caused by tax heavens, people will still ask you which places are the best in the world to shield your money from taxes. Working with the Tax Justice Network I set out to provide a definitive answer.

"Best" is, of course, a pretty subjective term, so it needed definition. We used two. The first was a measure of a place's opacity, or how secret it is. There's good reason for that. Some time ago I gave up trying to define what a tax haven is, as that proved to be a pretty thankless task. Instead I suggested that unless a place is a secrecy jurisdiction, which means that regulation is intentionally created for the primary benefit and use of those not resident there, it really can't operate as a tax haven. In effect, secrecy jurisdictions create regulation that is designed to undermine the legislation or regulation of another jurisdiction.

To facilitate its use, secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that shields the identities of those making use of its flexible regulatory system. This is important. Even though people who use secrecy jurisdiction claim their activities are perfectly legal, it seems they don't want people to find out about them. So secrecy is a key.

Secondly, enjoying secrecy in a place that does not have the know-how to handle money is not of much use if, like most users of secrecy jurisdictions, you want to move money without too many questions being asked. That's why we added another criterion, a pretty simple one: To be considered significant, a place had to have the capability to move money in serious quantities, or it just didn't rank.

These two characteristics, when combined, create an index of secrecy jurisdictions, or tax havens if you prefer, called the Financial Secrecy Index.

The research was fascinating. First we had to determine what places were secrecy jurisdictions. To do this we created a "list of lists" looking at tax haven listings over a period of more than 30 years and selecting for testing, broadly speaking, all those that came on two lists or more over that period. Then our team researched data on a wide range of issues--about 200 variables per location

Twelve criteria were then selected as key indicators of opacity, varying from whether there was formal banking secrecy or not, to whether accounts were required to be on public record, to how many tax information exchange agreements the jurisdictions had. The place got a mark for being opaque and none if it was transparent. This produced a list of the usual suspects: Switzerland, Malaysia (Labuan), Barbados, Bahamas, Vanuatu, Belize, Brunei, Dominica, Samoa, Seychelles, St Lucia, St.Vincent  and Grenadine, and Turks and Caicos.

Next we had to determine the amount of cash flowing through each location using International Monetary Fund data. The top 10 here were:
The U.K. (City of London), the U.S. (Delaware), Luxembourg, Switzerland, Cayman Islands, Ireland, Hong Kong, Singapore, Belgium and Bermuda.

Of course we're not saying that all of this cash is illicit--far from it--but if you're going to hide illicit cash, where better to do it? Where it stands out from the crowd, or where it can be lost like a needle in the proverbial haystack? Big numbers help the owner of dubious cash lose theirs in the crowd, and the places named above are big.

Combine the two rankings (deploying a little mathematics along the way, I admit) and you get the overall top 10 list. These are the 10 most significant secrecy jurisdictions in the world, in the opinion of the Tax Justice Network: the U.S. (Delaware), Luxembourg, Switzerland, Cayman Islands, the U.K. (City of London), Ireland, Bermuda, Singapore, Belgium and Hong Kong.

That final list is going to surprise, shock or even annoy a lot of people, but there is good reason for listing places like London and Delaware as tax heavens among those which might be considered the more usual suspects.

Secrecy is not something, as many like to think, that happens "over there." It is really happening at home too. Delaware provides a degree of corporate secrecy for those who operate there that makes it highly significant. Incidentally Nevada and other states also offer this feature, but because more companies use Delaware, it stood out from the crowd.

Wednesday, July 21, 2010

A growing economy but shrinking incomes?

July 21, 2010

For the average Malaysian, figures like the 10.1 per cent GDP growth remain an abstract. — file pic

KUALA LUMPUR, July 21 — Noraishah Abu Bakar has heard that the economy is growing. By how much, she cannot remember. But she is fairly confident that it is as she hears it on the nightly news.

Yet she says this with a hesitant tone.

“Ya lah, kita dengar… tapi … (Yes, I heard about it, but)” And it is what comes after that is most telling about how she really feels.

“... Kita tak rasa (we don’t feel it)”.

This last sentiment does not usually follow those rosy announcements of 10.1 per cent economic growth in the mainstream media by government officials.

Neither is the real-world context presented when those same ministers boast about Malaysia moving up the competitiveness scale. For what does “being more competitive” really mean to the millions of ordinary Malaysians trying to make a living?

For Noraishah, these announcements are accepted at face value but what really matters to her is how she and her 40-year-old husband are struggling to make ends meet.

Their combined RM3,300 income is not going as far as it once did about a year ago, and they are worried about providing for their three school-going kids.

“Prices for food and clothes keep going up every six months and now I hear that fuel is going to go up because they are cutting subsidies,” laments the 38-year-old clerk.

Many of the shoppers at a morning market in the working-class neighbourhood of Section 6, Shah
Alam expressed the same concern — that their monthly incomes are barely keeping them afloat.

There apparently is a disconnect between the buoyant announcements coming out of Putrajaya and the furrowed looks of Malaysians earning less than RM3,000 a month.

For if the economy is steaming ahead, then why are families not feeling it?

People are yet to feel the effects of Malaysia’s economic growth.
Statistics “lie”

Figures like growth rates and gross domestic product (GDP) numbers are actually bird’s eye views of the economy, explains Datuk Paul Selva Raj.

“They measure things like the total goods a country produces, its total exports, how much cash and debts it has.

“They do not explain how people are doing financially and how they feel about the economy,” says Selva Raj, of the Federation of Malaysian Consumer Associations (Fomca).

It will take time for such numbers to have an actual effect for the man on the street, in terms how much their salaries can buy and whether the wages themselves will go up, he explains.

Though the noises coming out of Putrajaya may seem buoyant, public sentiment is still cautious.

This, even when there has been a lot of talk lately that Malaysians are becoming more confident in the Najib administration’s stewardship of the country.

A widely-quoted poll conducted by the independent Merdeka Center in May showed that 52 per cent of the Malaysians surveyed felt that the country was moving in the right direction. This was an increase from a March 2009 poll, when only 29 per cent of respondents thought the same.

Of those who thought that things were better, 21 per cent said it was because of the “economy turning better and the increase in people’s quality of life”.

Worsening racial relations was the main reason given by the 34 per cent who thought the country was heading in the wrong direction.

As with the big economic numbers, says Merdeka Center director Ibrahim Suffian, the poll results in themselves do not tell the whole story.

“We’re not out of the woods yet”

Pollster Ibrahim says despite the positive numbers, public sentiment remains shaky.

“Right direction,” Ibrahim says, is more of a feeling of relief rather than being cheerful about economic conditions.

“If you look at the details of how people feel about the economy, it’s not that strong.”

They are relieved that the economy did not tank like many countries during the recession, Ibrahim says, but a lot of them are still finding it tough to make ends meet.

Only 50 per cent of those surveyed felt the economy was doing favourably. About 52 per cent were unsatisfied with job opportunities.

But the most telling is the 75 per cent who said the prices of goods and services were unfavourable.

A 2007 study by the Statistics Department, says Ibrahim, showed that 62.1 per cent of Malaysian households were earning less than RM3,000 a month.

Of that number, 41 per cent earn below RM2,000 monthly according to the 2007 statistics.

“For a couple with two kids, a house and a car earning RM3,000, there’s not much left over in month after they spend it all on the basics, such as food, water, clothing and rent.”

It is difficult to imagine how households earning RM2,000 a month are staying afloat. For Center for Policy Initiatives researcher Jayanath Appudurai, there is an urgent need for the way we measure poverty.

Currently, only households earning below RM763 in the Peninsula are considered to be living below the poverty line, otherwise known as Poverty Income Line (PLI). The PLIs for Sabah and Sarawak are RM1,048 and RM912, respectively.

The question is whether RM763 is realistic. Under the government’s definition, this amount is sufficient to meet eight basic needs for a household. It includes food, utilities, clothing and rent.

“But what about RM900, RM1,000 or even RM1,500? Can a family of four be expected to live on that for a month in Malaysia?” asks Jayanath.

Honesty is the only policy

It is well and good to present a rosy picture to foreign investors about the country’s GDP and growth rate.

But those investors are not the ones who are going to suffer once the government cuts subsidies.

That the massive RM24.5 billion subsidy bill has to be cut is certain — and the government has already begun doing so. Problem is those same subsidies may be keeping the 40 per cent of Malaysians at the bottom of the income scale from starvation and homelessness.

“Everyone knows that subsidies are not properly targeted. They are supposed to be for the poor,” says Fomca’s Selva Raj.

The biggest beneficiaries are the SUV-driving crowd that still gets subsidised petrol and buys sugar at rock-bottom prices. Yet they are the ones who complain loudest when the government talks of removing subsidies.

Before the government does trim subsidies, a system to help the poor directly — such as cash payouts and food aid — must be in place, says Selva Raj.

Again, to do this, there must be a realistic measure on who should be termed “poor”.

At the same time, the Competition Act must be passed and enforced to break monopolies in the market that keep prices artificially high, he says.

“The Malaysian consumer must also realise that they cannot always blame high prices on the government. Prices should be determined by markets.

“If sugar is expensive, then put les sugar in your Nescafe.
In essence, the only way we’ll get an accurate pulse of the economy is through honesty — in assessing poverty, having a more open market and paying for what we consume.

Monday, July 19, 2010

What Anwar's trial means for Malaysia


A guilty verdict would be a serious step backwards for this aspiring Muslim democracy

When I visited Malaysia last month, it was clear that not just Anwar but also most observers expect a guilty verdict in August. At that point, the question is whether he remains free on bail during his appeal or is jailed immediately. 

By John R. Malott, Wall Street JournalThe trial of Anwar Ibrahim, Malaysia’s opposition leader and his nation’s best-known and most respected international figure, is scheduled to resume this week in Kuala Lumpur.

The Malaysian press dubs the affair “Sodomy II,” for it appears to be a repeat of the Muslim democrat’s 1998-99 trials, when he was convicted on corruption and sexual charges. Sentenced to 15 years in prison, Anwar’s conviction later was overturned, and he was released after six years in solitary confinement.

As the U.S. ambassador to Malaysia when Mr. Anwar first was arrested and put on trial, everything I knew then and know now leads me to conclude that this trial also is an attempt to sideline him politically.

Already convicted by the government-controlled media, Anwar and his defense team have been denied access to the evidence that the government possesses, including police and medical reports, surveillance tapes, and even the witness list. Malaysia does not have a jury system. The verdict will be rendered by one judge, appointed by the same government that wants to remove Anwar from the political scene.

While a handful of human rights groups and some Australian parliamentarians have condemned the trial, there has been little interest at the broader international level. The Obama administration has been silent.

When I visited Malaysia last month, it was clear that not just Anwar but also most observers expect a guilty verdict in August. At that point, the question is whether he remains free on bail during his appeal or is jailed immediately.

A charismatic campaigner, Anwar led his coalition to near victory in Malaysia’s last parliamentary elections in 2008, when the opposition took 47% of the popular vote and gained 62 seats. The government’s new political game plan seems to be to put Anwar in jail and the opposition in disarray, call snap elections, and ride to victory.

Today Malaysia gets little attention in the world press. The lingering image is of an Asian economic success story, a moderate Islamic country and aspiring democracy, and a multiracial society where harmony prevails. Unfortunately, that is not the case today. Malaysia is a nation adrift. 

Once one of the world’s dynamos, Malaysia’s economy has underperformed over the past decade, with an average annual growth rate of 4.5%. Much of that growth was the result of government spending, which has pushed Malaysia’s debt level to 54% of GDP.

Foreign direct investment (FDI) has remained relatively flat over the past 15 years, while flows into Thailand, Indonesia and Vietnam have soared. To make matters worse, Malaysia experienced a net outflow of $6 billion in FDI capital in 2008.

Malaysia desperately needs to upgrade its skills base and innovation capabilities, but almost 500,000 Malaysians—nearly 2% of the entire population—left their country for good between 2007 and 2009. Malaysian experts believe most of these émigrés were skilled ethnic Chinese and Indian Malaysians, concerned by economic decline and growing racial and religious tensions.

Worried about losing political support, the ruling party has responded by appealing to the more base instincts of the country’s Malay Muslim majority.

For example, it told Malaysia’s Christians that they may no longer use the word “Allah” for God, even though the word existed in Arabic long before Islam arose. A new militant group called

Perkasa, which claims that Malay rights are under threat from the Chinese and Indian minorities, has won backing from former Prime Minister Mahathir Mohamed and other members of the ruling party.

For Malaysia and the world, there is more at stake in Anwar’s trial than whether one person is convicted. Malaysia is at a crossroads in its history. The road that it chooses matters not only for some 30 million Malaysians, but for the entire world.

The country could be a model for the 600 million people of Southeast Asia and for the entire

Muslim world, if it returns to the promising course it was on 15 years ago. But a guilty verdict for Anwar means that the corruption and cronyism that now pervades Malaysia, its lack of political freedom and its economic decline, will continue.

The country’s non-Malay citizens will continue to seek a better haven overseas.

In 1998, Anwar said, “If this can happen to me, it can happen to anyone.” That is no less true today. If Anwar is denied his freedom, then Malaysia will continue to be denied her freedom and her promise.

Mr. Malott was the U.S. ambassador to Malaysia from 1995 to 1998.

Friday, July 16, 2010

Global fund managers look to trim Malaysia holdings

July 16, 2010

Datuk Seri Najib Razak’s administration has been trying to raise Malaysia’s profile as an investment hotspot. — file pic

KUALA LUMPUR, July 16 — Malaysia was the second-least-favoured destination among global emerging market (GEM) fund managers, according to a poll by Bank of America Merrill Lynch Global Research released this week.
The July survey had Taiwan, Malaysia and Chile as the most underweight markets for GEM investors. They were also slightly underweight on China due to slower growth prospects.
In financial markets, the term underweight is used by analysts to advise investors to reduce their holdings.
The findings of the survey could potentially signify a setback for Malaysia’s bid to become a more competitive destination for global portfolio investment.
The Najib administration has been trying to lift Malaysia’s profile as a destination for foreign investment to help the country achieve an average gross domestic product growth of at least six per cent per annum over the next five years, in an effort to become a high-income nation.
The country’s foreign direct investment rates have fallen faster than other regional players like Singapore and China, and at the same time, capital outflows have dampened private domestic investments. Net portfolio and direct investment outflows had reached US$61 billion (RM197 billion) in 2008 and 2009 according to official data.
Asia-Pacific fund managers that were surveyed, though slightly underweight on Malaysia, held a more favourable view of the country and were looking to cut back the most in Korea, India and Australia instead, while China, Indonesia and Taiwan were the most-favoured markets.
There was an increased pessimism among the fund managers overall on the economic outlook, with a net 12 per cent expecting weaker economic conditions over the next 12 months, as compared with a net 42 per cent expecting a stronger global economy in a survey two months ago.
The fund managers also expect China’s prospects to worsen, with a net 39 per cent expecting weaker growth, as compared with 60 per cent seeing stronger growth in January of this year.
Malaysia’s economy grew by an impressive 10.1 per cent in the first quarter of this year but the prime minister had on July 6 cautioned that growth in the second quarter could be slower due to deteriorating external circumstances.
The local stock market had been on a seven-day winning streak and neared a two-year peak before succumbing to profit-taking yesterday.
About 200 global fund managers with portfolios worth from US$250 million to over US$10 billion had participated in the Bank of America Merrill Lynch survey.

Tuesday, July 6, 2010

A deliberate backwardness: This is how Umno-BN stays in power

Why are the majority of the Malay and other bumiputra communities still lagging behind even though their so-called champion, Umno, has been continuously victorious in the past general elections?
By Viktor Wong, Malaysia Chronicle
Why is it that after more than 50 years of independence, the majority in the Malay and the other bumiputra communities still lag behind? Why is that after more than 50 years, they are still suffering from backwardness despite hundreds of government corporations and agencies specially established to enhance their livelihood?
Or perhaps the key question to ask should be, why are they still lagging behind even though their so-called champion, Umno, has been continuously victorious in the past general elections?

Even until now, many in these communities do not have access to the basic comforts that their counterparts in the urban areas take for granted, as a matter of right as citizens of this country. Yes, many Malays and bumiputra still live in areas that do not get water or electricity. Neither can they afford basic education for their young and have to live in old and dilapidated huts. The New Economic Policy (NEP) did not reach them at all. Why and how come?

Sadly, the answers are very much connected to how Umno brought about their continuous electoral victories and the methods they adopted to maintain their influence in the villages and other rural parts of our nation.

One of the main factors contributing to the party's success is to keep the communities they claim to represent in the dark - for decades. And we are not just talking about the lack of electricity. There is a greater darkness - from the standpoint of education, blackouts of information and distribution of deliberate misinformation.

Indeed, the rural folk have been denied the pace of development enjoyed by the town and city dwellers - quite often, it is deliberate. For example in the development of information technology, or rather, the lack of so as to make sure that the rural communities are solely dependent on government TV and RTM channels for their daily consumption of news and data. In the eyes of the official media, everything about Umno and BN is good and benevolent, all others especially Opposition Leader Anwar Ibrahim are traitors and enemies of the state.

Also, despite all the cheap funding and loan facilities offered under the so-called bumiputra schemes, special share option schemes, special economic assistance, by and large, the majority of the Malays and bumiputra do not get to tap these opportunities to create a better livelihood for themselves. Instead, the facilities end up being enjoyed only by the Umno elite and the families of the mid-level leaders. These people become wealthier and more powerful, finally entrenching themselves into the "golongan bangsawan".

What about the non-Umno members and the ordinary man-in-the-street bumiputras? No doubt, some of them have been lucky enough to get some benefits, but the fact is most of them do not. That is why the poor are still very poor today, those uneducated are still uneducated, while those living in backwardness are still totally backward.

Yet, despite these terrible conditions and outright marginalization, why do they still vote and support Umno-BN?

The reasons are simple. One of these is because they are constantly fed information and data sourced only from RTM, Utusan Malaysia and Berita Harian. No Internet - this means they are unable to get any news from opposing or independent sources. The excuses given by the government include no coverage, or coverage is too expensive, or the villagers will just have to wait.

That is the official line but what they don't tell you is that they don't really need any sudden explosion of progress in their traditional bastions of support. After all, to these Umno-BN leaders, prolonging their vested personal interests come first. As far as they are concerned, independent sources of information and news are lies anyway - defamation in disguise from traitors and so on!

So, brainwashed is the word. Malaysian villagers and rural folk, due to limited development through the decades, have been co-opted into supporting Umno-BN blindly and continuously. This is why many of the rural constituencies are still firmly controlled by Umno leaders and their local warlords. The votes for Umno are indeed 'controlled, manipulated and guaranteed' in these areas.