Supremo-bloggo-journo Datuk Ahirudin “Rocky” Attan broke the news that Federal Government Minister in-charge of EPU Tan Sri Nor Mohamed Yackop would be presenting the plan of withdrawal of subsidy tomorrow. Times are still difficult for many, where subsidies are still required. Be it direct or indirect.
Of course, they would rationalize it. Knowing the habit of getting consultants to do the script, even for agencies such as PEMANDU, they would use bombastic economic and merchant banking jargons would inadvertently confuse more than it explains, let alone convince. Subsidies for Malaysians now it an intergral part of their lives.
Probably which ever party rule the nation, any revocation of subsidy would be a minus point when they face the rakyat at general election. Withdrawal of subsidies is equivalent of increasing tax. History have taught many societies that increasing taxes would become so unpopular that there would even be an uprising.
In 1990, Britain saw the iron-lady Prime Minister Margaret Thatcher was thrown out from her job by her own party. One of the reason is the introduction of highly unpopular poll tax. Despite having led Britain to victoriously recapture Falkland Islands 6,000 miles away from the invasion of the Argentinians eight years earlier, Britons were very angry when Thatcher imposed the GBP 400.00 per head for everyone living in Great Britain.
One question that loom in our mind is that if the Federal Government is bent on reducing the RM 80 odd billion per annum various form of subsidies, have these economic planners really pondered through all the numbers with microscope. Yes, as price of crude oil price continue to rise and it eventually would cost the system RM 14 billion in subsidies to keep the retail price of various fuel low, there is the question of other subsidies that are given out and away.
We are talking about ‘corporate subsidies’. Money making corporations are still being given tax holidays and even exemptions. Of course they would have economic excuse to rationalize these ‘corporate subsidies’ allowed. One of the corporation which is enjoying this is AirAsia. Almost a year ago, it was announced that Air Asia would be getting 5 years tax break.
AirAsia net profit falls 23% on lower forex gains
(AFP) – 4 hours ago
KUALA LUMPUR — Southeast Asia’s largest budget carrier AirAsia said Tuesday its first-quarter net profit fell 23 percent mainly due to lower forex gains rather than high oil prices.
Net profit for the quarter ending March 31 was 171.9 million ringgit ($56.3 million), compared with 224.1 million a year earlier, the airline said in a statement.
Revenue increased by 20 percent to 1.05 billion ringgit from 870.6 million.
Group chief executive officer Tony Fernandes said the airline’s performance was “excellent despite high fuel prices.”
“What is particularly significant for us is that our operating profit margins were also significantly higher year-on-year, demonstrating that we are maintaining tight control of costs even as we grow revenues,” he said.
The airline recorded operating profit of 241.72 million, up 46 percent year-on-year. The operating profit margin was 23 percent, up three percentage points.
“Yes, fuel prices shot up — but that is something beyond our control. Our response is not to wring our hands and moan, but to use our creativity to address the issue and find ways to overcome this challenge. And our Q1 results indicate that we are on the right path,” Fernandes said.
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Air Asia could have bag a cool RM 1 billion profit for their operations. And yet Treasury allowed ‘corporate subsidy’ in the form of tax break. This is a corporation which vehemently refused to pay its dues like charges for the use of airports to Malaysia Airport. Ten of RM millions in areas are recorded. Then when its highlighted in the media for these unpaid charges, they have the cheek to ask for discounts.
They should be charged interest for late payment!
Air Asia is talking about losing money to forex. This is should be construed as an insult because Air Asia actually prefer to do their maintenance, repair and overhaul (MRO) services in Singapore instead in Malaysia. Moreover, with Malaysia Airlines which is a GLC. In an airline business, a lot of money is allocated to MRO. Especially with high utility operation such as Air Asia, where aircrafts are subjected for fast turn around and gotten airborne to maximise its utility and they really bank of the numbers game. We are not sure on their MRO or flight operations but they seemed to be having a little bit issues on safety.
Having notable personalities such as former Minister of International Trade and Industry Tan Sri Rafidah A Aziz as the Chairman and someone who is very close to Prime Minister Dato’ Sri Mohd. Najib Tun Abdul Razak, Omar Ong, in the BOD is very good strategy for their business. This include to maintain the tax break and probably other rebates or exemptions.
If its true that Air Asia is using Perak State Government to lobby for a dedicated low cost carrier airport in place of the failed proposed ‘Labu LCC Airport’, then this new proposal should be scrutinize really carefully. As a GLC, Malaysia Airports have the monopoly to run all airports (with the exception of Senai) and the interest of the rakyat comes first. This include the investment and opportunity cost for an airport being built which will impair existing Malaysia Airport operations and business.
Rakyat must come first. It is part of ’1 Malaysia’ vow Malaysians subscribing to lately. Rakyat means common people. Not corporate citizens. Especially those who is expected to make 10 digit in profits!
Congratulation. You’re talking sense from common sense.
how about a pay cut on non performing GLCs just like the singapore PM intend to do to his cabinet after the election.
these GLCs fight for bonus if they perform but no paycut when they failed to achieve target.
and bulk of the yearly expenses goes to the GLCs top management salary and perks.
banyak lagi kompeni patut ditarik balik tax holidays and tax breaks nya… especially companies that pay their tax somewhere else..
Well done! This posting is particularly pertinent for the rakyat, especially since it is quite likely that the subsidy on RON 95 fuel will be reduced causing fuel prices to rise.
Your points on the Air Asia tax break well noted. We can choose not to fly with Air Asia, but, we have no choice when it comes to our electricity supply.
What about the issue of the subsidies given to independent power producers (IPPS)?
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IPPs have been enjoying privileges on both sides of their operations. They purchase gas from national oil producer Petronas at a subsidised price and sell electricity to Tenaga Nasional Bhd (TNB) at a high price.
Former Energy, Water and Communications Minister Shaziman Mansor disclosed in 2008 that Petronas was selling gas to IPPs at RM6.40/mm BTU when the production cost was RM15/mm BTU to RM16/mm BTU. It was reviewed to RM10.70/mm BTU in 2009, but this is still lower than the market price.
The agreements between TNB and IPPs, also known as power purchase agreements (PPAs), compel TNB to purchase all electricity produced by IPPs regardless of demand, causing Malaysia to hold some 40 percent of excess electricity.
On top of that, the PPAs, described by former TNB executive chairperson Ani Arope as “grossly unfair”, allow IPPs to sell electricity to TNB at price higher than TNB’s own generation cost.
Unquote
From the Business Times website:
http://www.btimes.com.my/Current_News/BTIMES/articles/viu/Article/
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The IPPs are YTL Power Generation Sdn Bhd, Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd, Powertek Bhd and Port Dickson Power Sdn Bhd. They are controlled by some of the country’s richest families and individuals.
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Indeed, as the country faces economic slowdown and local consumers are burdened with significant rises in the cost of living, lucrative payments to the IPPs do not appear apt. Electricity is a necessity and thus, excessive profiteering from such essential should not continue.
All other industry participants have played a role – Petronas via a gas subsidy, TNB via absorbing higher costs and customers through higher tariffs. The only one left is the IPPs, which continue to make huge profits even when the industry is facing problems due to the increasing costs of supply.The IPPs had made so much money by overcharging, and they should overcharge no longer for the sake of the rakyat.
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The Consumers Association of Penang recently noted that TNB’s total payout to IPPs amounted to RM78.3 billion from 2001 to 2010. Last year alone, it would have paid an estimated RM19 billion, or 65 per cent of its total revenue. TNB president and chief executive officer Datuk Seri Che Khaleb Mohamad Noh had once been quoted as saying that the renegotiation of the PPAs was one of the ways to reduce tariff charged on consumers.
TNB, whether it likes it or not, must buy electricity from the IPPs even though the country has a 40 per cent spare capacity out of a total 19,000MW generating capacity.
In effect, TNB – which needs a reserve of only 15-20 per cent – buys electricity it does not need. The IPPs thus win both ways, leaving TNB squeezed in the middle with extra costs eventually passed on to consumers. TNB is a vehicle to provide electricity to nearly 100 per cent of the peninsula, including rural areas and remote islands, and not entirely focusing on being profitable.
Unquote
Who is laughing all the way to the bank and who is soon to be crying?
I don’t see how it is fair to ask Tony to pay up when Lynas gets tax free status.
Dear MAS Fly Kite
your father never pay tax and always cheat people at the singseh shop
Good one, Big Dog!
The main reason why I don’t like the Barisan Nasional is because it is a capitalist party, despite the populist policies it has adopted towards the rakyat, especially to the Bumiputras so far to win votes.
Singapore’s PAP and Thaksin of Thailand are similarly populist too, which is why they retain support from amongst the rural folk and the urban working class, but not the middle class.
However, now the BN is going to do a “Soeharto” and cut subsidies, and we know what happened to Soeharto, who was forced to cut subsidies under pressure from that imperialist institution, the IMF.
While I don’t deny that the Pakatan Rakyat parties are pro-capitalist too, still they may be less so than the BN is being right now.
Only under a socialist system, will we be free of capitalist economic forces which dictate such anti-people policies, and can have an economy where production is for social need, not private profit.
Support Parti Sosialis Malaysia.
BTW. The Argentinians did the British people a great dis-service by invading the Malvinas Islands.
Thatcher’s was heading for an electoral defeat in the next elections but by re-capturing the Malvinas (which are Argentinian anyway), Thatcher’s popularity soared, which kept the Conservatives in power for 13 years, during which time she dismantled much of the welfare state and privatised many of Britain’s strategic industries.
I was a student there in the 1970s and Britain was quite an affordable place to live in but after Thatcher, it’s become horrendously expensive.
I’m totally anti Neo-liberal, which is what Thatcher, Reagan and the globalists are, and it seems that Najib is taking the neo-liberal route.
If have no issues with subsidies to help the rakyat, provided they benefit ALL the rakyat, especially ALL the lower income rakyat, and not a particular ethnicity.
So let’s seen how the BN does in the next elections, or perhaps Najib, et al will be booted by some other faction within UMNO, quite possibly a faction headed by a certain “M” and that “M” is not the head of MI5, as in James Bond films.
Socialist? Aren’t you so outdated? Nobody talks about socialism any more.
What socialism do you want? The British welfare system? Why don’t you talk about that? Instead of Malvinas, Argentina, Thatcher and all.
Haven’t you seen China, a communist system even, changed to capitalism? Now becoming the 2nd largest economy in the world. Still run by the Communist Party. So is Russia. Nobody talks about the oppressed working class, bourgousie or whatever any more.
What “subsidies to help the rakyat, provided they benefit ALL the rakyat, especially ALL the lower income rakyat, and not a particular ethnicity” are you talking about?
And why go “M”, James Bond and MI5? Because you studied in UK in the 1970s?
“Socialist? Aren’t you so outdated? Nobody talks about socialism any more.”
Internet wallahs who are influenced by neo-liberal ideas don’t mention socialism any more but there are still others who do.
Like there is such a party as the Parti Sosialis Malaysia and its head is the MP for Sungai Siput who ousted Samy Veloo in 2008.
Also, Hugo Chavez of Venezuela and Fidel Castro of Cuba still call themselves socialist
The capitalist system is crumbling and the lower income and middle class people are suffering and sooner or later, they will be talking about socialism again.
Yes, I was referring to old Labour Party welfare state, though full-blown Marxism-Leninism-Stalinism is fine with me.
I also don’t follow fashion, since I’m sure of what I believe in and don’t blow with the wind to fit in with the current chic.
As for “M” – well let’s sat I watched too many James Bond movies here in Malaysia. Only saw one in a UK cinema
“M” was the name given to the head of MI5 in James Bond stories (books and movies) but the “M” I was alluding to is not that “M” but rather “M” as in R.A.H.M.A.N.M.
Now get it?
BTW. C.P.C. stands for Capitalist Party of China,
Once in a while, you make some sense for the benefits of the rakyat. It’s this type of contribution that we will very much appreciate instead of creating racial rhetoric. Likewise we don’t see any value from Perkasa other empty vessel making the most noise.
You talk about not liking “racial rhetoric”. But in the next line you hentam Perkasa. Apa daaa ..
How come, then, that airlines like Singapore Airlines (SIA), Emirates, Air France-KLM, Lufthansa and Cathay Pacific are making good profits, in spite of high oil prices (and in Cathay’s case, earnings in US Dollar-pegged Hong Kong Dollars)?
Whereas MAS is stumbling from crisis to crisis, the latest being incurring a loss in the Jan-March 2011 quarter.
Has MAS even got a strategy? It seems to have ceded dominance in the regional market to SIA, Cathay Pacific and Qantas. Even it’s Firefly LCC unit is running behind the likes of AirAsia, Jetstar Asia, Tiger Airways and SilkAir.
And why is Lynas getting tax break to dump waste on our bumi??
Syabas tuan. Rencana yang bernas dan berasas. Kroni kroni buat duit ber billion billion tapi rakyat juga yang tersepit.
More details on how they wasted rakyat money here
http://www.rockybru.com.my/2010/08/why-sia-is-worth-s187-b-and-mas-is.html