Fiscal Prudence must begin with the Government

Much has been said over the Auditor General’s report and there is no need to repeat it here.  As the list of wastages continues, Malaysians will turn less receptive over the Government’s subsidy rationalization exercises and the potential introduction of GST on the basis of trimming spending and reducing the budget deficit.  

No doubt, there is a real urgency to address the budget deficit. And yes, the pain will have to be shared.  But reports of such wastages lead many to wonder why the Government is not more financially responsible at a time of limited resources.

Surely, to be credible and gain the support of the public who are asked to make sacrifices, the Government must at the very least show commitment to be more prudent and to ensure that actions are taken against all abuses, without fear or favour.   All leaders can only lead by example.

The business of MCA

Recently, the President of MCA proudly declared that under his leadership, since March 2010, the party made RM107 million. I like to share a few interesting analysis, comments and questions:

1. As can be seen from the dividend table below, only the 1^st interim dividend of 2010 and the special dividend are subject to tax. This taxable dividend amounts to 55.4 Sen. Since Huaren and now MCA owns 313.3 million shares of Star Publications (M) Bhd, MCA received some RM173.6 million. At 25% tax rate, the tax savings of moving the ownership of Star to MCA was RM43.4 million.

During the three years since 2010 under the present President, MCA made a further tax savings of about RM700,000 a year from the rental income of Wisma MCA. So, we add another RM2.1 million.

Total tax savings from moving the assets of Huaren to MCA is RM45.5 million.  Now, where is the balance of the RM61.5 million from?

2. From 2014 onwards, all dividends paid will be single-tiered in Malaysia. In other words, moving The Star from Huaren to MCA generates no future tax savings.

The question is, why then is The Star brought under the direct control of the MCA leadership?

3. Since March 2010, Star Publications (M) Bhd has paid over RM693 million in dividends. MCA received RM313.13 million. Add this to the income from Wisma MCA, the party would have received over RM320 million income.

How is this money applied? MCA bought Menara Multi-Purpose for RM375 million in 2011. What is the amount of loan taken to buy the building? How much was paid in cash? It is safe to assume that the party has a very healthy bank account.

4. Since March 2010 under the present President, the stock price of Star Publications (M) Bhd has dropped from RM3.35 to RM2.40 presently (or by 28.4%). Unrealised capital loss for MCA is RM297.8 million!

During this same period, Bursa Malaysia’s Composite Index gained a whopping 33%.

Firstly, I was surprised that the President of MCA articulated on making money as a political party. But even if that was an objective, it actually lost almost RM300 million instead. To be kinder, adding back dividends paid, it broke-even.

Don’t get me wrong. I have no interest in MCA politics. As an analyst, the recent debates call for an analysis of the facts.  And in so doing, questions beg to be answered.

DAP, still far from being a multi-racial party.

In the Central Executive Committee (CEC) election just concluded, Zairil Khir Johari was the sole Malay elected into the 20-member CEC. This is rather disappointing for a party that professes to be multi-racial and promotes the Bangsa Malaysia slogan.

In defense, I am sure the argument is that the party promotes meritocracy and the election was an exercise of democracy. It says a lot of the 2,000 plus delegates and the general membership of the party.

Surely, as a national party of significance, Malaysians should expect the DAP to begin making real change to be inclusive, especially when it comes to race. And the party is the first to know that while the virtues of democracy is ideal, in practice it tends to favor incumbencies, and is not always able to level the playing field.

One positive outcome, however, is that the highest number of votes at the election did not go to a person with a “Lim” surname.

PCA, seeking justice through injustice?

The raging debate in the Malaysian Parliament currently is on the amendments to the “Prevention of Crime Act (PCA)”. If approved, it allows for detention without trial for 2 years and could be extended for a further 2 years. Rather draconian. Although there are assurances that it will be carefully enforced and only on “known criminals”, power once given cannot be easily reined in.

Of course there is also the question that if their “crimes are really known”, then such an Act is not necessary as they can be prosecuted under existing laws. By logical extension then, people who will be jailed under this Act are those whose crimes cannot be proven in Courts.

I understand this Act is tempting in the face of rising crimes in the country. But, do we really want to make this sacrifice of freedom, values and beliefs? What defines fairness, right over wrong, the protection of minority views, and the right to be different, if we do not uphold the universal values of “innocence until proven guilty”? Guilt by accusation reminds us of the dark ages, where women were burnt on accusations of witchcrafts.

One of the justifications of this Act is that the police force finds their work difficult, to put accused criminals away, after the abolishment of the Emergency Ordinance and the Internal Security Act. While I sympathized, surely the solution lies in “better policing”. In training, in personnel, in intelligence services, in technology application and so forth. One would assume policing all over the world faces the same challenges. To quote a movie, Touch of Evil (1958), “A policeman’s job is only easy in a police state”.

Let us not make the same mistake as in our education policy. Faced with falling quality of our education due to insufficient good teachers, we lowered the passing grades. It is politically expedient. But what are the consequences?

We need to address the root causes of crime. Why and by whom? We need long-term solutions of upgrading the police force. The answer does not lie in lowering the barrier … whether it is passing grades of students or putting accused criminals in jail!

“There is one, and only one, thing in modern society more hideous than crime namely, repressive justice”. Simone Weil