Bankruptcy! it is not impossible

One minister, Idris Jala, who was a successful manager of Shell Malaysia, declared that Malaysia would be a bankrupt country by 2019 if we do not change the ways we subsided things. I commend him for being honest and bold.

Malaysian government estimates that the subsidies cost us more than 70 over billion a year. But the fact is, we cannot term money spent on education as subsidy, nor can we term healthcare expenses subsidy.

As long as taxes are paid and collected, it should be used to develop  a good education system and healthcare , since this is the basic things expected of any government  elected by the people  and  for the people.  Just like people expect to have a good police force to guard their security, a fair judiciary which would be useful to protect the basic rights of every citizen, and an armed forces to protect our sovereignty.

What we should term as subsidy should only be the money used to subsidise certain foodstuff, and petroleum.

Economists will tell you that subsidies are bad because it distorts the market and the economy. I have no doubt that this is true and i have voiced out that these forms of subsidies must be SLOWLY and Gradually be done away with.

One subsidies are slowly being withdrawn  there must be a system to take care of the poor, and even the lower middle groups living in urban areas. Perhaps a system of giving out cash cards for the purchase of basic things for subsistence like necessary foodstuff, basic clothing etc should be considered. Perhaps some of you good in economics can give better ideas.

Another area where we should and must cut our spending is the civil service. We have 1.1 million civil servants, which by any standard is considered a big number. A system to improve civil service productivity must be implemented, and some of the departments and agencies can in fact be merged. Those reaching retirement age must be retired and not have their service extended.

ANother way is of course there must be political will to tackle corruption, which is so rampant now.  I think corruption at least takes away 10- 20% of  our development budget, and if this can be minimised, then we can easily  balance our budget.

This year the budget deficit is about 5.6% , better than more than 7% last year. But we have been having deficit budget for so long that part of our revenue ( and increasing bigger  portion too, I would say) has to be used to service loan payment. Once the loan amount accumulates until we cannot afford to pay, we will be facing technical bankruptcy. We need to urgently address this problem. There must be a strong political will to tackle corruption, and no one big or small must be hauled up to face the law, if he or she is deemed to be corrupted.

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23 Comments (+add yours?)

  1. Richard Loh
    Jun 02, 2010 @ 13:42:15

    Not only the size of the civil servant be trimmed, the cabinet size and ministers expenses need to be looked into as well. If you have a good capable minister you need not have too many deputies for this and that.

    Malaysians have been crying for years until there are no more tear drops yet the government seem to ignore all the signs that indicate their poor running of this country.

    Like

  2. CYC
    Jun 02, 2010 @ 13:50:52

    Before we trim the size of civil service, we must first trim the redundant cabinet.

    Few suggestion to reduce deficits :

    1. Do away the APs,
    2. No more favoured terms and tax incentives to IPPs and highway operators,
    3. Get rid of direct award of contracts,
    4. All essential goods like rice, sugar, flour should not be monopolies by single industry player,
    5. Shut down Proton or force it to merge with other established auto players, we deemed the existence of Proton is one type of subsidy and increase the burden of consumer,
    6. Revoke the license of Big Sweep and let the govt agency run the lottery business as what it did during the 60s and 70s,
    7. Reform the education sector and reduce the burden of parents on paying extra tuition fees

    And the most important step, declassify Petronas’s account and other operation procedures. Lets have transparency and we the citizen deserve to know how the billions generated were spent.

    Instead of subsidies, set up and grow micro credit as a social reform platform. This may reduce the poor to rely on Ah Longs and banks for credit facilities. Learn from Grameen Bank’s experience.

    Like

  3. Patrick SA Chai
    Jun 02, 2010 @ 13:55:11

    I totally disagree with Idris Jala “bold” comment, it create unnecessary fear among Malaysian businesses and foreign investor.
    The government should act not just talk for the sake of making their job easier for themselves.
    Stop spending Rakyat’s money like no tomorrow, eradicate poverty & corruption, be transparent and dont hide behind OSA.
    Only with these action taken with full effect will then the Rakyat believe the subsidies cut are for the good of the country and not for politicians to pocket more for themselves.

    Like

  4. klm
    Jun 02, 2010 @ 14:31:34

    This Idris is a smart man. But his is equally stupid at the same time when it come to affairs of govt and people. He is a smart stupid person.

    Like

  5. CYC
    Jun 02, 2010 @ 15:20:09

    Our court should drop the sodomy charges against Anwar immediately due to too many BACK DOOR methodology being practiced in the newly revamped cabinet. Its an insult to the RAKYATS ! Address the cabinet brain drain, brain dead, brain stink, brain strain, brainless ……….. urgently.

    Like

  6. kok
    Jun 02, 2010 @ 17:07:00

    without withdrawing subsidy, how to foot all these bill:
    1. PKFZ RM12bill
    2. Submarine RM500mil
    3. Simedarby RM964mil
    4. Paya Indah Westland RM88mil
    5. Posmalaysia (transmile) RM230mil lost
    6. Eurocopter deal RM1bil waste?
    7. Terengganu Stadium Collapsed RM292mil
    8. MRR2 repair cost RM70mil
    9. Maybank Overpay for BII RM4bil
    10. Tourism -NYY kickback RM10mil
    11. 3 paintings bought by MAS—————– RM 1.5M
    12. Overpayment by Sport Ministry ————- RM 8.4M
    13. London’s white elephant sports complex —- RM 70M
    14. MRR2 Repairs—————————— RM 70M
    15. MATRADE repairs ————————– RM 120M
    16. Cost of new plane used by PM————– RM 200M
    17. InventQ irrecoverable debt —————- RM 228M
    18. Compensation for killing crooked bridge —– RM 257M
    20. Lost in selling Augusta ——————— RM 510M
    21. Worth of AP given out in a year ———— RM 1.8B
    22. Submarines (future Muzium Negara artifacts)- RM 4.1B
    23. PSC Naval dockyard ———————— RM 6.75B
    24. The Bank Bumiputra twin scandals in the early 1980s saw US$1 billion (RM3.2 billion in 2008 ringgit)
    25. The Maminco attempt to corner the world tin market in the 1980s is believed to have cost some US$500 million. (RM1.6 billion)
    26. Betting in foreign exchange futures cost Bank Negara Malaysia RM30 billion in the 1990s.
    27. Perwaja Steel resulted in losses of US$800 million (RM2.56 billion).
    28. Use of RM10 billion public funds in the Valuecap Sdn. Bhd. operation to shore up the stock market
    29. Banking scandal of RM700 million losses in Bank Islam
    30. The sale of M.V. Agusta by Proton for one Euro making a loss of €75.99 million (RM 348 million)
    31. Wang Ehsan from oil royalty on Terengganu RM7.4 billion from 2004 – 2007
    32. For the past 10 years since Philharmonic Orchestra was established, this orchestra has swallowed a total of RM500 million. Hiring a kwai-lo CEO with salary of more than RM1 M per annum !!
    33. In Advisors Fees, Mahathir was paid RM180,000, Shahrizat Abdul Jalil (women and social development affairs) RM404,726 and Abdul Hamid Othman (religious) RM549,675 per annum
    34. The government has spent a total of RM3.2 billion in teaching Maths and Science in English over the past five years. Out of the amount, the government paid a whopping RM2.21 billion for the purchase of information and computer technology (ICT) equipments which it is unable to give a breakdown. Govt paid more than RM6k per notebook vs per market price of less than RM3k through some new consortiums that setup just to transact the notebook deal. There was no math & science content for the teachers and the notebooks are all with the teachers’ children now.
    35. The commission paid for purchase of jets and submarines to two private companies Perimeker Sdn Bhd and IMT Defence Sdn Bhd amounted to RM910 million.
    36. RM300 million to compensate Gerbang Perdana for the RM1.1 billion “Crooked Scenic Half-Bridge”
    37. RM1.3 billion have been wasted building the white elephant Customs, Immigration and Quarantine (CIQ) facilities on cancellation of the Malaysia-Singapore scenic bridge
    38. RM 100 million on renovation of Parliament building and leaks
    39. National Astronaut Programme – RM 40 million
    40. National Service Training Programme – yearly an estimate of RM 500 million
    41. Eye on Malaysia – RM 30 million and another RM5.7 million of free ticket
    42. RM 2.4 million on indelible ink
    43. Samy announced in September 2006 that the government paid compensation amounting to RM 38.5 billion to 20 highway companies. RM 380 million windfalls for 9 toll concessionaires earned solely from the toll hike in 2008 alone.
    44. RM32 million timber export kickbacks involving companies connected to Sarawak Chief Minister and his family.
    45. Two bailouts of Malaysia Airline System RM7.9 billion. At a time when MAS incurring losses every year, RM1.55 million used to buy three paintings to decorate its chairman’s (Munir) office.
    46. Putra transport system bailout which cost RM4.486 billion.
    47. STAR-LRT bailout costing RM3.256 billion.
    48. National Sewerage System bailout costing RM192.54 million.
    49. Seremban-Port Dickson Highway bailout costing RM142 million.
    50. Kuching Prison bailout costing RM135 million.
    51. Kajian Makanan dan Gunaan Orang Islam bailout costing RM8.3 million.
    52. Le Tour de Langkawi bailout costing RM 3.5 Million.
    53. Wholesale distribution of tens of millions of shares in Bursa Malaysia under guise of NEP to cronies, children and relatives of BN leaders and Ministers worth billions of ringgits.
    54. Alienation of tens of thousands of hectares of commercial lands and forestry concessions to children and relatives of BN leaders and Ministers worth tens of billions of ringgits.
    55. Since 1997, Petronas has handed out a staggering 30 billion ringgit in natural gas subsidies to IPPs who were making huge profits. In addition, there were much wastages and forward trading of Petronas oil in the 1990s based on the low price of oil then. Since the accounts of Petronas are for the eyes of Prime Minister only, we have absolutely no idea of the amount.
    56. RM5700 for a car jack worth RM50.
    57. Government-owned vehicle consumed a tank of petrol worth RM113 within a few minutes.
    58. A pole platform that cost RM990 was bought for RM30,000;
    59. A thumbdrive that cost RM90 was bought for RM480;
    60. A cabinet that cost RM1,500 was bought for RM13,500;
    61. A flashlight that cost RM35 was bought for RM143;
    62. A welding machine that cost about RM20,000 was bought for RM4,1429.
    63. RM262,256 for an official car’s maintenance fee for four years that cost RM15,197.
    64. Nearly a million ringgit of over payments have been given to some civil servants, causing a total of RM41.01 billion has been spent on emoluments.
    65. A national infrastructure company has been losing money for three years, causing it impossible to redeem the balance of the issued bond amounting to RM7.10 billion.
    66. A total of RM5.77 billion has been spent in the 179km Rawang-Ipoh double-tracking railway. Averagely, each kilometre cost about RM30 million with the overturn of 32.9%

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  7. disgusted
    Jun 02, 2010 @ 18:52:38

    Saving the RM70 billion? For whose pockets?

    Like

  8. aca
    Jun 03, 2010 @ 00:36:32

    Ask Chor if BN punishes bad practices?

    Like

  9. tonyphuah
    Jun 03, 2010 @ 08:19:35

    Not directly related to this post. I just want to let you aware that Singapore, the countries you often used to compare with ours, has its own problems as well – their politics is highly coercion (高压政治), for example see http://www.merdekareview.com/news/n/13617.html. So don’t oversell it or you may risk your credibility when it is got into trouble.

    Another is about Gerakan. I think its last slogan “Reinventing” is right; it sees people want to change. But the problem is people are hard to believe that it can push changes under BN. DAP is more likely the “change you can believe in”. The only way out for Gerakan is to prove that it has really made changes. No shortcut.

    Like

  10. Dr Hsu
    Jun 03, 2010 @ 10:06:24

    tonyphuah

    Yes, I agree with you on your points. I am not tying to sell the little red dot, only their certain good points such as almost corruption free environment, business friendly policies, meritocracy policies in schools and education., and their policies regarding high tech industries and so on. They have their faults, and in fact, I do not see any perfect democracies in this world; the ones that are near to ideals are perhaps the Scandinavian countries, but they have very high taxes and they do not have high population growth.

    As for Gerakan, it would not be able to change within the confine s of the coalition.

    Like

  11. CYC
    Jun 03, 2010 @ 11:40:29

    Dr Hsu,

    What’s wrong with high taxes if it is within the capability of taxpayers and money collected were spent on the well being of the citizen? Low population growth is not something we should worry but the opposite. We should not fall into the myth of higher population to spur consumption thus higher GDP type of argument.

    The Scandinavian countries have excellent welfare system and education system in place. They have excellent technological R & D which also incorporates environmental preservation as an essential consideration. More importantly, they practice democracy in a far more balance manner than USA, the self proclaimed champion of democracy.

    Perhaps KTK will be a good minister in one of the Scandinavian countries, but he looks like an down syndrome kid within our political scenario. Conclusion : he lives in an ideal world and he can’t adapt. In line with Darwin’s theory, he will not survive as he is not fit and adapt to the environment he lives in.

    In Buddhism, we always talked about the existence of 180,000 types of problems, and 180,000 types of solutions. KTK try to resolve the 180,000 problems with his ONE and only IDEAL solution : wait for the problem to heal by itself.

    Like

  12. lhheng
    Jun 03, 2010 @ 11:42:15

    Actually, i quite respected Idris when he was getting “Mana Ada System” around. Since he joined B..eNd, i have my second thoughts. Before he become a tool of BN/UMNO, we hope Idris should at least help exposed all the wrong doings of BN/UMNO and all the component parties(esp one big white ex-shark in MCA and another equally big black one in MIC, just to name a few). Why talk about cutting subsidies for poor rakyat when you have so so many big greedy corrupted sharks and their cronies hanging around milking the poor rakyat money. Billions and billions of dollars are wasted or ended up into these big sharks and cronies pockets.Yet nothing has been done to recover or at least stop the bleeding of our poor rakyat money till todate. Just take a look at that biggest and greatest “Slime Derby” GLC. Its is totally UNBELIEVABLE that none of the thousands of staff, some with incredible credentials, are totally unaware of the billions$$$$$$ siphoned and wasted during the project implementation all these years.
    Come on, Idris, are u with the BN/UMNO trying to scare the poor rakyat firstly on cutting subsidies and then went further to say that Bolehland will get bankrupt in 2019?? Sure some naive and innocent rakyat may believe u and those BN/UMNO politicians. But there are also a lot who know that what u and the government motives are. All in all, I still believe you have some dignity and courage left to do what you should do. Resign from BN and work for PKR before you end up like OTK. See, how a guy trying to expose a big scandal ended up. To the eyes of the rakyat you can at least stand and walk with your head high wherever you go. ACT NOW!!!!!!!!

    Like

  13. disgusted
    Jun 03, 2010 @ 17:57:11

    Kok, good list. Save for the next GE. Can send me a copy?

    Like

  14. Bentoh
    Jun 03, 2010 @ 22:16:46

    Dr Hsu, I believe with the supplementary budget that was approved by the parliament early this year, our deficit is around 7% right now…

    Like

  15. pilocarpine
    Jun 04, 2010 @ 21:59:51

    kok, d list keeper.. cheers!!

    Like

  16. stevent
    Jun 05, 2010 @ 01:01:11

    Well tony, perhaps you should read lee kuan yew’s memoir before justifying our neighbour’s ‘problems’. Singapore made it clear that it will forgive all the old communist leaders as long as they gave a written account of their past activities and signed a letter stating that they have already left the ‘old communist party’. Isn’t that a lot more historical than giving a speech or seminar? Many communist leaders have already been forgiven and their families have been given jobs in Singapore. It’s all meritocracy and that’s the jump start needed for us to prosper once more.

    Like

  17. tonyphuah
    Jun 05, 2010 @ 06:39:15

    As someone who stays in Norway for quite some time, I would say Scandinavian countries still have their problems, but Malaysia’s problem is much larger. I do not see high taxes is their problems, because they really redistribute them to improve well being of the citizen (as CYC said). Low population growth may not good from the country perspective but good for the world.

    As for Singapore my main point is not communist, but its tightly controlled media, freedom of speech and others seems to distort its political institution and of course have many other side effects to its culture. The question is just how long can it be.

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  18. Nick
    Jun 05, 2010 @ 17:05:05

    Idris is doing us all a favor by calling a spade a spade. Let’s not shoot the messenger as Idris is not the problem He does not control the levers or power. The ones who have this are us all, everyone of us. We can do something in the coming GE13 or any buy-elections. It is a good wake-up call. At least the Cancer has been diagnosed. Is it too late if we follow proper treatment, surgery, change of life patterns?

    Like

  19. frank
    Jun 05, 2010 @ 17:33:10

    Our Nation may become bankrupt not because of subsidies given out. By saving subsidies and the corruptible Governments do not change their habits and continue to plunder from the national wealth, seems legitimately, it will be an act of robbing the poor Peter (rakyat) and for the already filthy rich Paul (corruptible politicians)!

    What is 70-billions compared to those trillions of ringgits siphoned out to overseas banks, and still, by those Country’s Supremo over the years?!

    Idris jala was speaking thru his anus!!!!

    And tony should stay with the Singaporean to find out whether breads are more important than the cheap talk of freedom and democracy and that they will find it a problem lack of such a thingy to them?!

    Didn’t Taiwanese enjoy their crazy yet freaky type of freedom and democracy when even their wireless media TVBS can day and night “8” their President Ma and the stupid Senators are behaving like apes in the Parliament fighting like mad?!

    Yet, the Taiwanese’s main concerns are still economy and moolah and much more moolahs!

    Certainly the Country will be a bankrupt in no time at the rate mal-administration continues with only bunkum in lieu of real reforms!

    Like

  20. Meng
    Jun 05, 2010 @ 19:09:38

    “”There must be a strong political will to tackle corruption”””

    No way Doc, corruption is the way to maintain umno/Bn in power…

    Like

  21. mykantree
    Jun 06, 2010 @ 03:21:03

    While Idris Jala may be trying his best to do his job well, his proffered solution to the economic problem clearly reflect the government’s inability and unwillingness to address the real causes of the country’s financial problem.

    Typical of the UMNO/BN government, it is forever looking to easy and unthinking solutions to whatever problems that ails the country.

    Like

  22. atila
    Jul 03, 2010 @ 03:28:36

    Dr Hsu

    With 400 over GLCs all depending on Petronas “funding” and only 10 pay taxes to the goverment, top is Petronas. Think about it how much spent per year for all these GLCs.

    Can Gerakan make an impact by telling PM to restructure GLCs by not making GLCs dependent on Petronas?

    Secondly, look at the directors of all 400 over GLCs, to name one first….big fat salary to UEM MD dato ridza abdoh, has be been able to do projects outside Malaysia by none bailing with Petronas money? ZERO.

    No need to write long long here the cronies of the Penang Second Link you can read in blog anotherbrickonthewall.

    What happened to Ridza today? He was taken out from UEM a few months ago and disappear.
    Meaning govt OK with all his mistakes? Dr. Hsu, these people get away with wrong doings?

    Think about the mess in other GLCs…

    I just cannot write more becoz its repetition,
    as rakyat i m angry, i dont know when will BN govt stop all this unncessary spending with Petronas has only 8 more years to harvest its Petroleum. Until today Malaysia has nothing to replace after we soon exhaust Petroleum about 2020.

    We are worst of than Indonesia, Dr. Hsu!!
    Soon Malaysians will be going to Indonesia to work, its not impossible!!

    Like

  23. Dr Hsu
    Jul 03, 2010 @ 09:24:52

    Atila
    Yes, if we dont mend our way, we will be worse off than Indonesia.. Unfortunately, my voice in Gerakan is small…I do ot hold what the Cantonese says “Fit” meaning I do not hold the power…and i do not intend to at my age and with my type of temperament.

    Like

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