Economic reforms – One step forward, one step back .. and watch the implementation

The mainstream media has been trumpeting liberalization measures announced by Prime Minister Datuk Seri Najib Razak at the InvestMalaysia Conference on Tuesday.

Amid the plethora of measures, the one that stands out is removal of the 30% bumiputera quota for companies seeking listing in Malaysia. It is a bold political move indeed, to eliminate this “something for nothing” crutch.

Having said that, the actual impact to bumiputeras is minimal. The pipeline of new listings has hardly been inspiring in recent years. I challenge you to name even one recently-listed prominent company. Also, the policy had been a huge failure in terms of its intention to build bumiputera wealth. PM Najib said RM54bn had been allocated to bumiputeras (I think it is a lot more), but only RM2bn remains. So, bumiputeras kept less than 5% of the amounts allocated to them!

But it is good news, in that it removes a huge impediment to listing. Many owners of successful businesses shied away when told they had to offer 30% of their company to a new “partner” at a large discount. Let’s hope this results in more and better quality listings on Bursa, which would make the stock exchange more attractive and help fuel trading volume.

I am dismayed though, that replacing this 30% quota is another new fund. The RM10bn Ekuinas fund is supposed to invest in “bumiputera companies and entrepreneurs, based on merit”. Such government-run funds have awful records. And what is Ekuinas going to do that existing institutions do not?

A better approach would be to work with the private sector. For example, the government could offer to share the risks of such loans and investments with banks and venture capitalists. It could agree to bear, say, half the losses if the entrepreneurs fail. That way, the process of credit allocation is still primarily private sector driven, which should be more efficient and it saves the government having to build a duplicate infrastructure of officers to administer and monitor the investments.

As for “watch the implementation”, I am referring to the “stern” directives to:
1. Government-investment corporations (GICs) to reduce their stakes in the government-linked corporations (GLCs), in the name of raising free-floats and market liquidity; and
2. The GLCs to divest non-core businesses.

All sensible reasons, and if properly done, will be good for the economy. “Properly” is of course the crucial word. In particular, I want to see:

1. Transparency in the appointments of the brokers and the fees and commissions paid when the GICs reduce their stakes; and
2. Similarly, transparency when the GLCS sell their non-core businesses. Valuations must be fair – the businesses must not be sold at unduly cheap prices to influential parties – and all the costs, including commissions and advisory fees disclosed.

Trouble for SMEs in mini-budget

Overshadowed by the crowing RM60bn headlines surrounding the mini-budget announced last Tuesday is a measure imposing double levies on foreign workers. This applies to both new and existing foreign workers.

The intentions behind this move are good - to raise employment opportunities for Malaysians, but the timing is terrible. Implementing this could actually lead to even greater unemployment for Malaysians and fewer job opportunities as our businesses, including small-and-medium enterprises (SMEs) have become addicted to cheap labour.

The Barisan Nasional government has for too long now pandered to the business community's lobby for cheap labour and paid too little attention to productivity. Businesses kept asking for cheap labour, which the government obligingly delivered by freely granting work permits for lowly skilled Indonesians, Bangladeshis, Myanmese ...As many as 2,000 approvals PER DAY were granted at the peak, according to Sunday Star report (Mar 15)! The result: no incentive for Malaysian employers and employees to invest in productivity-enhancing measures and low incomes and low standards of living for working-class Malaysians.

The right time to move up the value-added curve is when times are good and companies have extra profits to invest. The worst time is now when businesses are struggling with collapsing revenues. It is a business fact - costs are stickier than revenues. Customers can stop buying your product overnight. But you can't turn around and reduce your capacity overnight. It also works in reverse - if sales go up 10%, your costs don't go up by 10% immediately. So in good times, profit grows quickly; but in bad times, profits can quickly turn into losses as revenues plunge faster than costs.

This double-levy initiative serves to increase business costs at a time when businesses are struggling. It could well tip barely-afloat enterprises into bankruptcy. And that would mean Malaysians would also be thrown out of work, along with the cheap foreign labour. Of course there would be far more cheap foreign workers affected than Malaysians, but this is akin to throwing the baby out along with the bath water. We need to keep whatever employment opportunities we have.

Here's a better idea. Khazanah, despite its miserable execution record, has been given RM10bn to spend under the latest stimulus package. Instead of giving it to Khazanah to fritter away on various projects of 'long-term' benefit (by which time we are all dead, as Keynes astutely observed), let's help small and medium enterprises (SMEs) support Malaysians by offering them a cash payment for each Malaysian employed instead.

It could work this way: For each Malaysian employed, who earns less than RM2,500/month, the government will pay RM1,000 of the wages. This will narrow the gap between the cheap foreign labour and Malaysians, encouraging SMEs to employ locals while still keeping their costs competitive. RM10bn will be enough to cover 420,000 Malaysians for 2 years! After that, the government can slowly reduce this support, say to RM800 per year, then RM500, then zero. This will give both employers and employees time to reinvest in productivity enhancements which result in higher wages AND higher profits.

Before anyone accuses me of plagiarism - let me say here that Singapore is implementing a similar move.

Call on the Works and Finance Ministers for a Toll-free North-South Expressway by 2016 and to save taxpayers’ RM14 billion

I joined our MPs Tony Pua (PJ Utara), Teo Nie Ching (Serdang) and Lim Lip Eng (Segambut) at a press conference this morning to publicise our proposal:

“The DAP Ops RESTORE (Restructure Toll Rates & Equity) Team would like to congratulate the Works Minister for first having declassified most of the highway toll concession agreements, and followed up with the removal of two toll plazas at the New Pantai Expressway (NPE) and the Sungei Besi Highway in the past two weeks.

We call upon the Works Minister to declare the compensation promised to these concessionaires for the abolition of the toll, for if the compensation involved is equivalent to the toll that would have been collected, then the joy for Malaysians will be shortlived.

In addition and more importantly, DAP Ops RESTORE Team calls upon both the Works and Finance Ministers to make the entire North-South Highway and its related concessions such as the ELITE, Butterworth-Kulim (BKE) and the Second Link Highways under PLUS Expressways Berhad completely toll free by 2016.

Following our team's consultations to date with legal experts, investment bankers as well as the general public, we have developed a comprehensive, practicable and creative programme to return the highways to the people at the least possible cost, and shortest possible time without compromising the integrity of the financial markets.

Our proposal will:

1) Impose no further increase in North-South Highway toll rates.
For example, a return KL-Penang journey will remain at RM86.60 today instead of RM115.30 in 2015 and RM168.80 by 2030.

2) Create RM14 billion savings for Malaysians from 2009-2015
This will be the amount saved either (i) by Malaysians using the highway because of no further toll rate increases or (ii) in terms of compensation which would have to be paid by the Government to PLUS Expressways.

3) Continue to collect toll only until 2015

4) Incur no additional cost for the Malaysian Government or Malaysian tax-payers

Background information:

1) PLUS is listed on Bursa Malaysia at a price of RM2.88 per share and a market capitalisation of RM14.4 billion (24th February).

2) The Government of Malaysia, via Khazanah owns 65% of PLUS.

3) PLUS has outstanding net debt amounting to RM8.5 billion.

We call upon the Government to take the following actions:

1. The Government should make a General Offer (GO) to acquire all minority shareholders of PLUS with a generous 15% premium at RM3.30 per share, costing RM5.25 billion thus ensuring that minority shareholders are protected.

2. The cost of acquisition, added to the RM8.5 billion net debt of PLUS will amount to RM13.75 billion.

3. This cost will be funded by issuing Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. Total repayment will amount to RM16.2 billion over 6 years.

4. At the same time, PLUS should generate at least RM20b in net positive cashflow the 6 years to 2015 without further toll rate hikes and assuming a conservative 3% pa traffic growth.

5. Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country.

Not only will the execution of the above proposal bring joy to all Malaysians with a toll-free North South Expressway, the exercise will fit perfectly with the upcoming “mini-Budget” by the Finance Minister:

• RM14 billion saved by Malaysian consumers will reduce the cost of living for the average Malaysian in times of economic difficulties we face today.
• RM14 billion saved will also redirect expenditure to other more productive sectors of our economy by increasing domestic consumer demand.
• The reduced toll rates and its subsequent abolition will substantially reduce the cost of doing business in Malaysia, increase logistical efficiencies and ultimately make Malaysian companies more globally competitive.
  
• Best of all, the plan will stimulate demand and make available substantial funds for public infrastructure development without the Government having to increase the precarious budget deficit further.
  

Hence, the DAP Ops RESTORE Team would like to reiterate our call to both the Finance and Works Minister to include the above proposal in the proposed mini-budget set to be announced by the Finance Minister on the 10th March for the benefit of the Government and all Malaysians.”

Keen readers will note the toll-free target is now earlier at 2016 instead of 2020. The main difference between this and the proposal we presented at the public forum is we now assume 3% pa traffic growth, compared to zero before.

Labu LCCT – make it genuinely private

Air Asia boss Tony Fernandez has taken his lobby for a new terminal at Labu on-line. Do take a look.

I personally doubt the practicality of having Air Asia's proposed Labu terminal so close to the existing KLIA at Sepang. The two runways will be only 7km apart. A jet plane coming in to land travels at about 350km/hour, so it can cover this distance in just 1.2 minutes. I am worried about safety issues, compounded by Labu having separate air-traffic control from Sepang. How will they coordinate?

But Air Asia on its website says “AirAsia regards the safety of our passengers and staff as of utmost importance. We will not compromise on this issue”. Taking this at face value, we should certainly support all private sector initiatives that add value to the Malaysian economy, and benefit the rakyat, even more so in these trying times.

Any economically viable low-cost-carrier-terminal (LCCT), whether at KLIA or at Labu or wherever else in Malaysia will help add value to the Malaysian economy. A viable LCCT means many flights, which means more connectivity and greater potential for business and tourism activities. It may also help spur development activities around the LCCT.

The key though, is economic viability. Air Asia believes that its passenger traffic will soar by nearly 60% in the two years to 2010. It expects to carry 15.7m passengers in 2010, from just 10m last year in 2008. I think that's a heroic assumption. Airlines elsewhere all over the world are reducing flights and leaving planes parked on the ground because passenger traffic has collapsed.

But perhaps Air Asia does have a magic formula that can generate such strong growth in this weak environment. And if Air Asia and Sime Darby, as private sector entities, believe enough in their capabilities to put their own capital on the line, we should not stand in the way. However, there must also be NO taxpayer involvement. The BN government should publicly and firmly say there will be no direct, or indirect government involvement whatsover:

1)Besides the cost of the Labu terminal and the runway, the cost of any other ancillary facilities such as new roads and highways to connect to Labu will be 100% privately borne;
2)There will be no government guarantees or reassurances to lenders (like there were for the toll highways);
3)Labu will compensate the government for the cost of providing services such as immigration, customs and air-traffic control (ATC);
4)In the event of Labu being not viable for whatever reason, including passenger growth being less than Air Asia's forecast, the government will not provide any assistance whatsover as it is a pure private sector initiative.

Private hospitals = licence to over-charge

I was appalled when the BN government tried to privatise Institut Jantung Negara. I am all for government getting out of business. But medical care should not be a business.

We deserve competent, reliable medical care at reasonable prices. But that has become increasingly hard to find as the BN government disregards its healthcare responsibilities. The result – highly lucrative private hospitals, profit-driven doctors and astronomical medical bills.

This is my unfortunate recent experience at a private hospital in Kuala Lumpur. The bill was covered by medical insurance, but it still left a very sour taste in my mouth as I felt completely exploited and taken advantage of by the hospital.

Yes, it is a private hospital, and private entities are entitled to make fair profits. But this hospital was gouging the patients. It certainly wasn't making an honest profit because it 1) Forced patients to accept unnecessary services and 2) Over-charged for medical supplies. Besides which it was clearly not operating efficiently.

Operating efficiently can be a matter of perception, so let's stick with the facts, stating with the unnecessary services forced on patients:

a)After registration, a porter escorted us to the relevant hospital department. We were shocked when told this was compulsory. Why? Surely the hospital sign-posting is clear enough for two able-bodied adults to find their own way. Why pay someone just to do this? The savings can go towards cheaper medical bills;
b)On arriving at the ward, the nurse was very insistent on us ordering a “Complimentary meal”. Who are we kidding? The cost of the meals is surely built into the hospital charges. Meals can be made optional. Some patients coming out of anaesthesia simply cannot consume any food, some prefer home-cooked food and some wish to just go straight home-sweet-home. Waiting for a hospital meal just means more unnecessary time in the ward, which means more costs;
c)Which brings me to an interesting point. The hospital in its “Conditions of Service for Inpatients” says it will take “approximately an hour to process the bill”. Also, it says, “half day room charges are applicable … if patients are discharged after 12:00pm”. My question: if the doctor gives the patient clearance to go by 11.15am but the hospital only produces the bill at 12.15pm, is the patient liable to pay the extra half day charge? And is this why the nurses are so keen to have the patients eat the “complimentary meal?”
d)Then, there was a “complimentary” toiletry kit at the bedside comprising a plastic water jug, small towel, shampoo, soap, powder, comb, toothbrush, toothpaste and toiletry bag. That “complimentary” word again. How about just having the convenience store downstairs stock toiletries at reasonable prices?
e)And finally, two bottles of “complimentary” water. Again, unnecessary cost, not to mention the environmental impact. Surely the hospital can instal water coolers;

The gouging does not end there, Besides the unnecessary items, the hospital over-charges for medical supplies. Just two examples: a) RM10 for a pair of surgical gloves. A quick search on the internet shows US$90 for 200 pairs, or about RM1.70 per pair. The hospital was charging 6x as much!; b) RM3 for cotton buds. The doctor used the grand total of 3 sticks. I think I can buy an entire pack for RM3;

The over-charging was clear only because I asked for the detailed bill, which, by the way, took 10-15 minutes to produce. The hospital usually just gives a summary bill, which presumably most patients just sign because it's covered by insurance. Isn't it normal, good business procedure to show the detailed bill when requesting payment?

Even with the detailed bill, three items were not adequately explained (i) gaseous supply; (ii) medication; (iii) nursing procedure. We did not use any gas, nor take any medication and there was no observation by the nurses.

Private hospitals are taking advantage of a captive, disadvantaged market. People who are ill just want to get better. They don't have the time or energy to shop around or argue. This is when new laws are appropriate – to protect the weak and level the playing field. The BN government, instead of chasing poor families to belt-up, should come up with a law to force private hospitals to clean up their acts.

Until it does, you and I end up paying for the higher costs and the unjustified profits. You don't notice the cost at first, because it's covered by your medical insurance. But the insurance company needs to make money too. Ever notice how your medical insurance premiums keep going up? It's in our interest to keep private hospital charges fair.

Some insurance companies have been pushing the hospitals to be fairer. Help them to help you. If you have a similar experience and agree with me, write to your insurance company so they have the facts to help them negotiate.

This new year: Let's resolve to help ourselves

I hope you've had a nice end to 2008. Relaxing, unwinding, taking it easy with family and friends … remembering there's more to life than just material wealth …

The treadmill starts again tomorrow. A new year with new budgets and new targets to meet amidst an intimidating backdrop of global and local economic headwinds. The newspaper headlines are still depressing, and it does look like it will be a tough year ahead.

With tough times, there will be increasing calls for the government to do more. And yes, I agree the government must help the most disadvantaged and poorest of society. But I am sure there'll also be appeals for help from able-bodied, capable, intelligent Malaysians, such is the subsidy mentality that permeates our society today.

Let's break out of this subsidy trap. Subsidies don't make us richer. They just make us weak and dependent. Our manufacturers claim they need cheap power and labour to be competitive. The reverse is true – it is cheap power and labour that have made us uncompetitive.

Power is so cheap in Malaysia that companies and individuals barely make any effort to consume it wisely. The best evidence – how many of us wear jackets/sweaters in the office because the air-cond is too cold? And take a look at the lights – both in your home and at the office. I'll bet there are more old-fashioned energy-hungry menthol bulbs and even worse, halogen lamps instead of energy-saving bulbs.

And consider petrol. While our businesses lobbied for lower prices, corporations such as courier company UPS in the US actively used their creativity and skills to reduce consumption. UPS looked closely at the delivery routes taken by its vans. It discovered lots of time was lost, and fuel burnt, as the vans waited to make left turns. It replanned routes to minimise left turns and maximise right turns, where wait times are far shorter. The result: Less fuel burnt AND greater productivity – one driver can now make more deliveries, which can then justify higher wages!

Cheap fuel and power only perpetuates inefficiencies, further weakening Malaysia's competitiveness against leading nations. Businesses in those countries actively sought ways to minimise energy consumption when fuel prices were high. These energy-saving methods are now part of their competitive arsenal; and they have an extra source of profit margin now that energy prices have fallen.

So, for 2009, let's resolve to use our brains and work smarter. Not use our brains to scheme for subsidies.

Happy New Year and cheers to a wealthier, more prosperous, more productive Malaysia!

Cheap power may benefit foreign workers and rich more than ordinary Malaysians

The Penang state government has been actively meeting businesses to see how it can help mitigate the economic downturn and minimise retrenchments. A very common refrain is to please cut electricity tariffs. Pakatan MPs in other states are also getting similar feedback from industrialists and entrepreneurs, “The cost of business is going up, we're facing challenging times, please cut power tariffs.”

The subsidy mentality permeates all levels of our society. Cheap power is a subsidy too. And like all subsidies, we should look closely to see if it truly benefits those most in need. Before we cut power tariffs, we should find out: 1) How many Malaysians the companies actually employ and 2) What will the companies do with the savings?

“How many Malaysians the companies actually employ” is particularly pertinent. When Indonesia liberalised fuel prices, including gas prices a few years ago, many manufacturers who depended on gas left Indonesia. It used to be a major player in the latex glove market – one where Malaysians such as Top Glove and Supermax complete. They quit, Malaysia ramped up market share.

But how many Malaysians did that really benefit? Top Glove, the world's biggest maker of latex gloves, was hit with a RM11.4m fine for having 1,769 illegal foreign workers on Aug 16, 2006. It has not reduced its dependence on foreign labour. The IHT reports that it employs 3,500 migrants - about half its work force - at 12 factories across the country. 

Why are we subsidising this company and all these foreign labourers? Subsidies should go towards developing core Malaysian skills and improving productivity, not employing low-skilled low-valued add foreign labour.

Which brings me to the next question, What will the companies do with the savings? Any bets it'll tell workers you're lucky to stay employed; and the owners will happily pocket the additional profit? That doesn't help Malaysia – it just means another long-term subsidy which we cannot afford. No pure handouts please. Companies must earn the cheaper power by coming up with better ways of doing business.

5x higher chance of being robbed, 7x raped, 8x murdered .. and we're focusing on rear seat belts??!!

I’ve just been reminded that back-seat passengers will have to belt-up starting 1 Jan. Otherwise the driver stands to be fined RM300.

Our authorities have their priorities all skewed. How important is this in the overall scheme of things? Surely our overburdened and undermanned police force has more important things to do than to harass the family man taking his family out for an evening drive? Like, for example, curbing snatch thieves, or burglaries, or Mat Rempit …. The crime rate in Malaysia is high. Here are some statistics per 100,000 population, as pointed out by Lim Kit Siang and Tony Pua:

Robbery: Malaysia 90.49 cases per 100,000 population, Japan 4.78, Hong Kong 17.56
Rape: Malaysia 11.47, Japan 1.62, Hong Kong 1.54
Homicides: Malaysia 2.12, Japan 1.09, Hong Kong 0.26

Put into layman's terms, a Malaysian is 5 times more likely to be robbed than a Hong Konger. The more serious the crime, the higher your chances - 7x better chances to be raped and 8x a murder victim! Higher chances are great if like me, you were trying for the Toto Jackpot, but certainly not to be a crime victim.

Not wearing rear seat belts is a personal issue. If Mum and Dad decide their precious ones don't need to belt up, that is their own decision and they can live with the consequences, if any.

Also, thanks to our horrible public transport and outmoded auto policy, many of us don't have alternatives. Large numbers of our national car, Proton, were fitted with only two rear seat belts when manufactured. Kudos to Proton for agreeing to retrofit rear centre seat belts on these cars, totalling 226k units made between 2004 and 2008, including 82k units of the Gen 2. But the whole exercise will take 13 months to complete! So what’s the family of 5 going to do until their car is fixed? Force someone to stay home every time the family goes out? Hardly great. One would think tough times like today call for even more family unity.

Most families would understandably decide to take the risk of being caught. Which brings me to the core issue – sowing the seeds of law-breaking. Break one law and breaking others become easier.

So how about this? Creating new laws is useless if they’ll not be obeyed anyway. Parliament should take a break from law-making. Our MPs can use the time to help monitor enforcement of existing laws instead. No more new laws until the existing ones are complied with.

It all starts with accountability

Accountability: /əkaʊntəbɪlɪti/ the state of being accountable, liable, or answerable; a state unknown to Malaysians.

I was among the speakers at “The New Economic Vision for Penang and Malaysia” International Conference in Penang over the weekend. It was heartening to see so many people who care about Penang and Malaysia and its future. About 350 participants registered and they were not just there to see the heavy-hitters – Datuk Seri Anwar Ibrahim, Penang Chief Minister Lim Guan Eng and the Menteri Besars of Perak and Selangor. The conference hall was fairly full throughout the entire 1.5 days.

Kudos to Penang Invest for running such a well-honed conference. Timekeeping was excellent, as were overall logistics. An achievement all the more impressive given the very short notice. I have attended many conferences in my previous banking career. The global banks have huge conference budgets and specialist teams to manage these affairs. Penang Invest punched well above its weight to deliver this event so smoothly.

There was lots of high level talk and aims and visions and strategies from the politicans and the heavyweight academics. I am jaded. No disrespect is intended to the learned academics. We were privileged to hear their learned thoughts. But lofty aims and visions and studies are all too prevalent in Malaysia. Execution is lacking.

We need accountability. Heads must roll when negligence is proved. University Malaya's Professor Rajah Rasiah who shared a panel with me said he had personally enticed leading specialists over to Malaysia under the “Brain Gain” programme (remember that?). Within 2 years, most had gone back overseas.

What went wrong? The government must follow-up on its policies instead of announcing a new one every few years. In this instance, investigations should have been done. Why did those specialists go back? Was the environment unsatisfactory? Did bureaucrats get in the way? Only if we know the answers can we fix the programme. And if someone was found to have been negligent, he or she should be punished. Not just transferred, but very publicly demoted and/or fired.

In my 38-year lifetime I have seen lots of plans proposed by the BN government ranging from the Malaysia Plans and Multimedia Super Corridor to Iskandar Development Region and the various Corridor Initiatives. I will agree some of the plans were decent, others less so. But the commonality is all failed – because of poor execution. Until we focus on execution, in another 38 years, we will still be saying the same things at conferences and talks, whether the government is Pakatan or BN.

Accountability works both ways. Reward those who deliver, like Penang Invest. Penalise those who don't.

A road by any other name …

Hot on the heels of DBKL’s controversial renaming of Jalan Alor to Jalan Kejora comes news that my DAP colleagues are proposing that four roads in Ipoh, Tapah and Petaling Jaya be renamed to honour four party stalwarts “who have contributed greatly towards the party and the people.”

More form over substance. A road name is just a road name, a marker for a location, unless the observer has some sort of personal connection with the honoured. I drive along Jalan Yap Kwan Seng, Jalan Raja Abdullah and Jalan Tun Sambanthan everyday, roads undoubtedly named for historic personalities. But they could very well be named Jalan Satu, Dua and Tiga and I would not notice nor care for the names do not carry any significance to me.

When I was in India earlier this year and asking for directions, I was told to go down MG road. My first thought was. “Wow, (actor) MGR actually has a major road named after him!” Fortunately, before I embarrassed myself, someone said it was Mahatma Gandhi road.

I am not proud that an actor, albeit a very well-known one, took precedence in my thinking over the great Gandhi. Nor am I proud of my lack of knowledge of Malaysian history. But the fact is posters and publicity of actor MGR are part of my vivid childhood memories, whereas Gandhi was a dry entry in a text book.

Naming a road after a historical personality will have a meaningful impact only if the public feels some connection to the person. So let’s focus on the substance. Let’s teach history better for a start. I barely passed my SPM history. It was such a boring collection of facts. My memory of Melaka history, as taught in school, was having to memorise a list of Sultans from 1400-1511; the Emergency and struggle for independence were dry academic treatises.

It was only long after I left school that I came across an Economist feature that brought to life the intrigues of the spice trade and why Melaka was so keenly fought over by the European powers. Most recently, Five Arts Centre’s Emergency Festival! offered entertaining and thought-provoking perspectives on that period.

There have been calls recently for the social contract to be taught in schools again. I fully agree – our history syllabus needs a thorough revamping in content and delivery. We should not need DBKL or politicians to rename roads. Roads should only be renamed when the people speak out and ask for their heroes to be honoured.

That’s palm oil in your teh tarik; when fresh milk is not whole milk

Take a closer look at the labels next time you’re shopping for fresh milk at the refrigerated section of the supermarket. I had assumed “Full Cream Milk” is made from fresh milk, especially since it’s sitting in the chiller compartment. But something made me look at the ingredients that day. I was shocked to find “Full Cream Milk” is made from milk solids, milk fat, something called choline chloride and permitted food conditioners.

Only “Fresh Milk” is actually made from fresh cow’s milk without additives. And those of you thinking you’re being healthier by going for “Low Fat Milk” – be aware that it also contains choline cloride and food conditioners.

Condensed milk has already disappeared from our shelves. Will whole milk also become impossible to find? Wait, I hear you say. You must be wrong. How do they make my teh tarik if there is no condensed milk?

Teh tarik now contains palm oil! It’s Condensed Creamer being sold nowadays. And look at the ingredients – palm oil is in it. Now, I am a strong supporter of palm oil and am dismayed by the unfair western lobby against it (Remember the misinformation that palm oil is bad for the heart? And now they’re bringing orang utans into the argument? Oops. I might have just antagonised some greenies. Let me say upfront that I’m a member of the Malaysian Nature Society and we’ll save this for another blog another time).

I like palm oil; I use it to cook at home and it’s great for deep-frying my chicken chop. But I absolutely hate palm oil in my tea! I noticed the emergence of palm oil two years ago, when my favourite coffee-shop drink, teh-C-kosong started tasting odd. Because there is no sugar to mask the taste, the “funny” taste of the “milk” quickly became apparent. That was when I started looking more closely and realised that most manufacturers were selling Evaporated Creamer instead of Evaporated Milk. The difference – palm oil is used instead of milk.

What are the health implications? Are we sowing the seeds for a whole generation of calcium-deficient adults? How many parents realise that the ‘milk’ they are putting into the Milo/Horlicks/Nescafe/tea/coffee is actually creamer? Nutrition is not my forte; so comments here would be very welcome.

From the economic perspective, it is clear evidence that price controls do not work. Condensed milk is a “controlled-price” item. If the controlled price is too low, there will first be lower quality as poorer ingredients are used, then shortages as less efficient producers pull out and ultimately no product at all when it is unprofitable for anybody at all to make it.

Next, it also leads to a misleading inflation (CPI) number. If the price is controlled and does not change, then the CPI shows no inflation. But the product itself is also not available in the market, so consumers either have to settle for inferior substitutes, or more-expensive products. Minister of Domestic Trade & Consumer Affairs Shahrir Samad had honestly and sensibly pointed out in March that price controls are in place on products that do not exist! He said he was working on resolving these. I do hope he does, at the very least so that I will be able to get decent teh-C-kosong again.

(With thanks to Lulu for help with background).

MIC-A for Malaysia

I received an email chain-letter the other day. The writer fumed about the various pro-bumiputera policies in place and the ever-shrinking share of non-bumis in Malaysia.

Titled “WAKE UP!!!” the email contained 55 assertions along the lines of “12% is what ASB/ASN (Malays Own banks) got per annum while banks fixed deposit is only about 3.5% per annum”, "99% of 2000 Petronas gasoline stations are owned by Malays”, “0 Chinese or Indians were sent to Japan and Korea under 'Look East Policy'” (assertions reproduced here verbatim for context and to give an indication of the tone of the email. I have not confirmed the assertions)

The writer concluded with “FIGHT FOR YOUR OWN RACE”. I understand the angst, but believe we should step up from this “Us” against “Them” attitude. All Malaysians should work together to grow the economy for all, and a helping hand should be extended to those most in need.

It is an unfortunate fact that after 38 years of the NEP and its successor policies, bumiputeras are still, on average, the poorer section of society. The average bumi household earns RM2,711/month, Chinese RM4,437, Indians RM3,456 and Others RM2,312 (Source: 9^th Malaysia Plan, data for 2004). If we believe in social justice and measures to help the poorest, then by design the policies will benefit bumiputeras and others more than Chinese or Indians, because they are the ones in greater need.

The pertinent issue is, who benefited from all the pro-bumiputera policies if the average bumiputera did not? The wealth transfers over the last 30 years were immense. Consider one example – all companies going for listing on Bursa Malaysia have to allocate 30% of their shares to bumiputeras. And another example – APs to import cars, given primarily to bumiputeras, were reportedly worth tens of thousands of ringgit EACH. Why then is the average bumiputera income still lagging so far behind after all these efforts?

The answer is the increasing gap between the richest and the poorest. Malaysia's gini coefficient (a measure of income disparity between the richest and the poorest) has been rising. The higher the number, the greater the disparity. And for bumiputeras, the Gini coefficient rose from 0.433 in 1999 to 0.452 in 2004 (Source: 9^th Malaysia Plan). These pro-bumiputra policies, which were intended to help poor bumiputras, were and are still being reaped mainly by an elite few instead. And I am sure you will agree, most of this elite few are UMNO-related.

Malaysia economic policy should not be about Malays, Chinese, Indians dan lain lain fighting for a share of the pie. It should not be each community hunkered into our own silos and scheming to deprive the other of their assets. The issue should be all of us working to grow the pie, and giving a share to those most in need. It should be all of us standing up against UMNO corruption and arrogance. Hmmm ... how about a Malaysian political party ... MIC-A – Malays, Indians, Chinese ... ALL for Malaysia.