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Friday, 23 February 2018

FELDA Old trees - a serious legacy problem that is being fixed.

Tun Mahathir stopped all new FELDA settlers in 1990 and stopped yearly govt allocations to FELDA in 1996 - ordering FELDA to source for its own funds.

Mahathir was more concerned about Proton, Sepang airport, KLCC, industrialization, KLCC etc.. Agriculture and FELDA was not important to him.

As a result, FELDA was deprived of replanting funds and the trees got old. Yields started falling in 2008 and 2009.

If urgent action was not taken then there may be no more FELDA in 10 years or 20 years time as all the trees would be too old to bear fruit.

As FELDA no longer enjoys govt allocations, a decision was then taken to list FGV as a separate unit to take advantage of high palm oil prices and high palm stock valuations at that time.

Hence the second largest listing in the world then raised RM6 billion and allowed FELDA to realize a big profit at that time - providing much needed funds for not only big-scale replanting but for settlers welfare as well as to expand Felda's land bank in Malaysia.

Unfortunately after that, palm oil prices had dropped while the El-Nino caused production to fall which badly affected the FGV share price.

Felda itself remained strong and have been providing bonuses, funds for replanting and funds for housing and welfare for settlers. Felda FC and their stadium is one example of it.

Settlers were one of the biggest beneficiary of the listing of Felda Global Ventures (FGV). Not only was there a big RM15k bonus per household upon listing but billions in free shares were given to the koperasi. Regular payments were also made. 

Soft loans were also provided to settlers to buy FGV shares and when FGV shares dropped in price, FELDA also made sure that the cost of FGV shares are halved to limit any possible losses to the settlers.

FGV itself has never once experienced a loss in any financial year since listing and have continued to pay dividends. This year, with the new management and recovery in production as well as better prices, FGV's profit is much stronger.

FELDA is a govt agency and its job is to take care of settlers. Much of the profits gained by FELDA when FGV was listed has been used back on the settlers - causing FELDA to experience losses in the years after the listing. FELDA made bumper profits during the listing. There is nothing wrong in spending most of these profits on settlers.

FELDA has assets of RM27 billion and FGV has sales that now approach RM20 billion per year. FELDA is still very strong and will enjoy solid govt support. There is nothing to worry about FELDA.

The Opposition will spread all sorts of false news and falsehoods against FELDA as if FELDA is in big trouble because they know that FELDA vote bank is important to them.

For example, they claim the RM270mil Semarak land is missing. It is not missing. The land is there and efforts are being made to transfer the ownership back to FELDA. 

And how can a Rm270mil land cause FELDA to bankrupt when FELDA's assets are more than RM27 billion - not even 1%.

Also, the share price of FGV has been made an issue by the opposition to suggest that the settlers have lost money. This is a lie. As explained above, settlers are a net beneficiary of the FGV listing and has not lost money. They have benefited. 

Yes, there were some impropriety found in FIC but this is now being corrected while any losses will be recovered. Those responsible will face the law.

The aggressive and expensive replanting of trees made possible by the funds raised from the listing of FGV is now bearing fruit as reported by The Star based on RHB Research's findings.

HAVING a high percentage of old oil palm trees has long been a challenge for diversified planter Felda Global Ventures Holdings Bhd (FGV). 
When FGV was listed in 2012, almost 50% of its palm trees were 21 years old and above – an alarming figure which analysts often highlight to be a big drag on the yield performance of the group’s estates. 
However, fast forward to 2018, this long-standing issue is about to change for the better.
Thanks to the aggressive replanting between 13,000 ha and 15,000 ha annually by the group in the past six years, the rejuvenation process of FGV’s old age palm trees is starting to bear fruit. 
FGV is expected to slash the percentage of old trees (21 years and above) to 33% this year and is set to reduce it further to about 25% by 2020. 
More importantly, the percentage of young and prime age trees will increase to about 47% this year from 30% in 2012. 
By 2020, it is expected to rise to 54%. 
The average tree age in FGV’s estates will also come down to 14 years in 2018 from 17.5 years back in 2012. It will moderate further to 12.8 years in 2020 and down to 12 years by 2022.
RHB Research calls FGV a turnaround story and has forecast even stronger growth for FGV in the years ahead.

Turnaround story
RHB Research in its latest report says: “We believe FGV’s earnings are set to turn around more solidly from financial year ending Dec 31, 2018 onwards.

“Investor sentiment on the stock may change once FGV shows its improved age profile from land bank rejuvenation, which would lead to improved earnings; as well as starts to pull through with its promises of non-core asset disposals and cost-saving initiatives.

“We believe these benefits outweigh the risks, as the market is still unconvinced of FGV’s turnaround story.”

Hence, RHB Research is raising its FGV earnings estimates by 6% to 9% for FY2017-2019, to take into account the impact of the sale of palm kernel shells and other waste products, as well as to impute slightly higher losses at its downstream division.

“We note that our forecasts currently assume a 55% year-on-year (y-o-y) growth in earnings in FY2018, followed by a 22% y-o-y growth in FY2019.
FGV has gone through a period of bad times since listing but the continued focus of improving its operational efficiency and the expensive but very necessary investment in aggressive replanting is showing results.

Gven the situation of the 2007-2009 years when yields started to drop due to old trees, Felda and FGV had not done what it did then after Najib became Prime Minister, FELDA could have ceased to exist in less than a decade.

An except from my blog post from 1 year ago follows:

A legacy problem that needed urgent correction  

Historical statistics released by the USA indicate that Malaysian palm oil yields have typically appreciated over time, with the strongest period of growth occurring between 1998-2008 when yields increased by approximately 4%annually. 

Malaysian Palm Oil yield started to drop 

As you see in the graph, in 2009 an unexpected break in the long-term national growth pattern occurred where palm oil yields started dropping.

Oil palm is a perennial crop, with trees potentially producing economically viable volumes of fresh fruit bunches (FFB) over a lifespan of 30 years or so. Peak crop yields are achieved from the age of 9-18, and gradually decline thereafter.

In 2009, it was estimated that 65% of Malaysia’s total oil palm area was between the ages of 9-28+, while 26% was at least 20-28+ years old.

Due to neglect from a past prime minister more interested in monolith monuments and building cars, FELDA's problem was worse than the industry - with more than 50% of their palm oil trees then older than 21 years old. 
Age profile of FGV's palm oil trees.

This means that more than 50% of trees would no longer be economically viable 9 years later by the year 2018 - potentially affecting the livelihoods of hundreds of thousands of people.

So, if you were a responsible Prime Minister and the price of palm oil was high then, what would you do?

You would raise as much money as you can - by listing a part of the company to raise funds or borrow when the price of palm oil is highest.

This would be used to fund a massive and costly re-planting exercise and also acquire younger plantations for Felda in order to reduce the overall age profile of your plantations.

You will also use new high yielding planting materials to boost oil yields which are capable of doubling oil yields.

Just like harm was done due to neglect of replanting by a previous Prime Minister that will be known a decade later when the trees die, good that is done by a current Prime Minister will only be known later when the new plants start producing fruit bunches in year 9.

You suffer a bit now so your future is secure rather than have no future if the previous trend persisted.

Facts , figures and history don't lie.

Wednesday, 11 October 2017

Is Malaysia's petrol price too cheap or too expensive?

Whenever petrol prices increases, people will inevitably grumble. It is human nature that people do not want prices to increase even though our income levels and standard of living has increased have increased over the years.

This article takes an objective view of the petrol price today (RM2.19 as at 9th October 2017) with the aim of giving the average Malaysian a fresh perspective of our petrol price.

1. Our Petrol prices have lagged inflation.

That's right, the RON95 petrol price today has failed to keep up with even our official inflation index - an index that many people perceives as too modest.

Over 36 years ago in 1981, RON92 prices were just RM0.89 per liter. If we were to use our official inflation index as defined by our Department of Statistics and calculate what RM0.89 is today, the price would be RM2.41. This is higher than today's price of RM2.19.

And even if you use the price 27 years ago in 1990 of RM1.10 per liter, the price today when you calculate to include inflation would be RM2.30. Again this is higher than today's price of RM2.19.

Even more incredibly is that global crude oil prices for 1990 was just US$25 per barrel when our exchange rate was US$1 to RM2.40 which works out to RM60.00 per barrel.

Compare this to global crude oil prices of about US$60 per barrel and exchange rate of US$1 = RM4.20 which equals to RM252.00 per barrel, which is 4 times more than the ringgit price 27 years ago.

This difference is explained when you realize that, instead of subsidizing petrol Mahathir's govt had taxed petrol at 58sen per liter for decades until this tax was abolished in 2004.

Yes, Mahathir was collecting money from us on every liter we pumped in the entire 22 years he was Prime Minister.

As a side-note, our modern cars are heck of a lot more fuel-efficient than cars of the past. Hence, we are actually paying a lot less in real times per month for petrol when compared to the 1980s and 1990s. And plus, sometimes our petrol prices drop WAY BELOW inflation - like when it was RM1.60 per liter in the beginning of 2016.

2. Our petrol price is half of the global average price.

According to the global petrol price website which tracks fuel prices globally, as at today, 09-Oct-2017: The average price of gasoline around the world is RM4.57 - which is more than double our price of RM2.19 per liter.


3. We are currently 15th or 16th Cheapest in the world for Petrol.

Out of 180 countries, we are 15th or 16th cheapest for petrol prices right now. All those countries ahead of us are mostly major oil producers with production and exports many folds what Malaysia produces.


And of course other than Brunei (which has no democracy but produces 40 times more oil per capita than Malaysia), Malaysia has the cheapest petrol in ASEAN.

But look at the rankings above, which country do you want Malaysia's petrol price to be cheaper than before you will be happy?

4. Petrol has become way more affordable for the average Malaysian

In 1993, RON92 (not even RON95) was RM1.06 per liter.

Data from the Department of Statistics shows that the Median household income for Malaysians during that year was RM1,077 per month for the median Malaysian family.

This means that if you spent your entire monthly income on petrol, the median Malaysian family could only buy 1016 litres of RON92 per month then.

By the year 2016, the median Malaysian household income has grown to RM5,228 per month.

Even at a price of RM2.31 per liter, the median Malaysian household can now buy 2,263 liters of petrol per month - meaning that petrol today is actually 50% more affordable compared to in 1993 under Mahathir when you take the increase in income into consideration.

5. But wait.... isn't Malaysia a major oil producer/exporter and can afford even cheaper petrol for the rakyat?

Well, things change bro.

Many of us still have this impression from our geography text-books during schooling time but the reality is that Malaysia has changed.

Firstly, have a look at our oil production figures over the years. Notice the trend.

Yes, that's right. Due to depletion of oil fields - especially the cheapest oil fields to extract that is close to land, Malaysia no longer produces as much oil as it did in the past.

Mahathir essentially pumped us dry then without replacing many of the oil fields.

Now, have a look at the number of cars sold per year data from the website of the Malaysian Automotive Association (MAA) which tracks official car sales data.

As you can see, the number of vehicles that Malaysians own have exploded. In fact, Malaysia have one of the highest car ownership rates in the world.

Cars and trucks use petrol. The more cars and trucks, the more petrol we use - hence our consumption of oil has been steadily increasing since we last picked up our geography books.

Which leads us to this table.

You can see for yourself how the blue bars (our oil production) has dropped while the yellow bars (our oil consumption) keep increasing year after year.

And when the yellow bar is now higher than the blue bar means that Malaysia is now a net importer of crude oil.

Don't say our government didn't tell you or nobody told you this ah. Gohmen did tell you exactly this two years ago but you don't want to read.

In fact, in the year 2002, both Mahathir and Muhyiddin said that our cheap petrol prices were unsustainable as Malaysia's oil production is being overtaken by our own consumption - hence petrol prices needed to be raised.

But don't risau too much. Malaysia is still a very big net exporter of natural gas. Unfortunately, we don't pump natural gas into our cars - unless of course you convert your car to use LPG, which is cheaper than petrol but has limited petrol stations availability.

So, there you have it!

Malaysia's petrol price is not too expensive in the scheme of things and considering history.

In fact, Malaysia really has no right to be among the top 15th cheapest petrol in the world.

But we are.

When Mahathir first became Prime Minister in 1981, the price of petrol was 89sen per liter.

In 1990, he raised it to RM1.10.

On 20 Oct 2000, he raised it to RM1.20. And then RM1.30 on 20 Oct 2001.

He then raised it 3 more times and by the time he retired as PM, petrol price was RM1.35 per liter - 52% higher than what the price was before he became PM.

Not once did Mahathir ever reduce petrol prices in his 22 years as PM.

In the year 2002, Mahathir and Muhyiddin said that petrol subsidies were unsustainable as Malaysia's oil production is being overtaken by our own consumption - hence petrol prices needed to be raised.

You must also remember that during the time of Mahathir, global oil prices were low and was between US$10 to US$20 per barrel while our exchange rate was USD1 to RM2.40 - as compared to US$60 per barrel now.

The difference was also because Mahathir had taxed petrol at 58sen per liter for much of his reign.

When Najib first became Finance Minister in September 2008, petrol price was RM2.55 per liter for RON97 and RM2.40 for RON92.

Najib then introduced RON95 to replace RON92 and gradually reduced the price to RM1.80.

However, due to blanket subsidies becoming unsustainable, the petrol price was floated in Nov 2014.

After it was floated, the price had fluctuated and was as cheap as RM1.60 for many months.

PM Najib no longer controls the petrol price as the market now determines the price. Therefore, no one, especially Pakatan politicians, ever praised Najib when the price dropped to Rm1.60 then.
(but strangely when the price increases, Najib is blamed - and not the market)

Now it has gone back up to RM2.31 yesterday due to tensions in Saudi Arabia - but it is still among the top 17 cheapest in the world.

At this RM2.31 price, it is still cheaper than the RM2.55 per liter when Najib first became Finance Minister.

You must also take note that Pakatan's alternative budget for 2018 also no longer have blanket fuel subsidies but will only give a 20sen reduction to owners of motorcycles and cars below 1,000cc.
Even the opposition now knows that blanket subsidies for petrol does not benefit the country.

Friday, 16 June 2017

Ten observations on DOJ's June 2017 1MDB-related civil suit

Here are my thoughts on the latest civil suit based on that 250 pages court submission from the USA's Department of Justice submission:

1. It is still a civil suit for forfeiture of assets and not a criminal suit.

Nothing has changed since last year except that more assets are listed. It is also important to note that civil asset forfeiture lawsuits are filed against the assets themselves and not individuals (such as Jhow Low etc). Owners of the assets can contest the forfeiture, which they are doing.

2. It is essentially a continuation of the previous suit in July 2016.

Nothing has changed since last year except that more assets are listed. However, the one that caught the public's interest is the allegation of a USD27 million (RM118 million) diamond gifted to MO1's wife - which everyone knows it refers to Datin Sri Rosmah, the Prime Minister's wife. We shall go into detail on this later.

1MDB did not borrow or lose any more money since last year July 2016. In fact, 1MDB actually made significant progress in making money and paying off debts over the last year.

3.  None of the money allegedly spent or invest legally belongs to 1MDB. 

This means that those money spent is not 1MDB's money.  I had proven this extensively last year in this post. Events since my post one year ago had further confirmed this - especially the IPIC-1MDB settlement in April this year where IPIC was reported to have arranged a buyer for the USD2.5 billion worth of units while agreeing to the following: "The parties have also agreed to enter into good faith discussions in relation to payments made by 1MDB Group to certain entities."

An example would be this: 

Imagine if I pay you RM1000 to invest and pay to your bank account. In return you give me an IOU saying you owe RM1.000 and you guaranteed that I will get minimum RM1,000 back.

Then you pay RM500 to a gangster.

Can people then say I paid RM500 to gangster?

People would also have to explain why the sovereign fund IPIC took the trouble to guarantee US$3.5 billion worth of bonds of another country's sovereign fund. And why Aabar would want to guarantee another US$2.5 billion worth of fund units of 1MDB.

This is also the reason why 1MDB keeps insisting that none of their money has been lost. 

4.  DOJ's allegations that the BSI or Cayman units were over-valued or wrongly-valued are irrelevant to 1MDB

As previously explained, the value of the units are guaranteed by the real Aabar Investments PJS. As far as 1MDB is concerned, the minimum value of the units is what Aabar had guaranteed it for. As was reported by the Singapore press, Aabar had arranged a buyer for the USD2.5 billion units (which includes the USD940 million units remaining in the BSI funds) and that 1MDB had already started to receive the cash proceeds.

In 1MDB's point of view, they had a certain money in the BSI units guaranteed by the real Aabar. Since the real Aabar had now gotten someone to buy the fund units and pay 1MDB the correct amount then there is no question of whether the fund units are worthless or undervalued or overvalued.

5.  DOJ's allegations that money was siphoned off from 1MDB's Deutsche Bank loan has nothing to do with 1MDB

DOJ reports that the Deutsche Bank loan was to pay for the cancellation of options held by Aabar in return for IPIC guaranteeing 1MDB's USD3.5 billion loan in the year 2012.

According to the DOJ, the money was paid to a "fake" Aabar Seychelles which they claim had nothing to do with the real Aabar in Abu Dhabi.

However, DOJ also confirms that the sole director of Aabar Seychelles was the Managing Director of the real Aabar and that the shareholder of Aabar Seychelles listed in the certificate of incumbency (also known as the company registration) document is the real Aabar.

As far as 1MDB is concerned, they had used the Deutsche Bank loan to pay Aabar for the purpose of cancelling the options.  Whether it is a "fake Aabar" or "real Aabar" does not matter to 1MDB as long as the options were cancelled - and it was.  This is especially so since the party that had dealt with at that time as the official managing director Aabar, Mohamad Husseiny and the company registration documents had clearly stated that the owner of the "fake Aabar" is the real Aabar.

Therefore, if there was any siphoning of money or fraud, it was Aabar PJS in the Abu Dhabi which was defrauded - not 1MDB.

Which brings us to the next point...

6.  Neither Prime Minister Najib, Rosmah nor 1MDB was named as a defendant in the DOJ civil suit. 

This means the US DOJ does not consider Najib, Rosmah or even 1MDB to have committed any wrong-doing. In fact, one Abu Dhabi's sovereign USD125 billion fund Mubadala Investment Company which owns IPIC and Aabar now has now been named as an involved party whose interests will be affected.

7.  There is no evidence that Rosmah ever received the US$27 million diamond

First of all, receiving a gift is not illegal. According to the DOJ lawsuit, Jho Low had purchased USD200 million worth of jewelry over the years and had given it to various parties including to his mother.

Jho Low was also alleged to have given millions in jewelry to his alleged girlfriend, the super-hot Australian model Miranda Kerr who recently married the SnapChat billionaire founder .

So, if receiving a gift is illegal then Jho Low's mother and Miranda Kerr will have to go to jail too.

However, the circumstances which the DOJ says that Rosmah was alleged to be the recipient of the diamond is very suspicious.

Firstly, the DOJ alleges that Rosmah viewed the diamond with a group of people on board of the yacht called Topaz.

The Topaz is not any ordinary yacht but at that time was the largest yacht in the world and was and is still owned by Sheikh Mansour bin Zayed.

Sheikh Mansour is not only among the world's richest man with a fortune estimated at USD38 billion (RM162 billion) in the year 2014 but he is also the deputy prime minister of the United Arab Emirates, minister of presidential affairs and member of the ruling family of Abu Dhabi. He is the brother of the current President of UAE,

And plus, he is also the Chairman of IPIC and the boss of both Aabar Chairman Khadem Al-Qubaisi and also Aabar CEO Mohamed Badawy Al-Husseiny - the two persons most implicated in fraud and receiving funds in this entire 1MDB affair.

Both persons have never been charged for any crime. In fact, it was recently reported Khadem Al Qubasi is still in the UAE and under the protection of Sheikh Mansour Zayed.

This leaves us with two other possibilities.

1) The diamond may have been a gift from Sheikh Mansour to Rosmah. Arab royalty has a habit of giving expensive gifts to members of the leadership of other countries. After all, US$27 million is barely 2 days of interest for Sheikh Mansour's US$38 billion fortune. 

This is assuming that Rosmah even received the diamond in the first place. After all, a VIP from another country does not simply go on to the world's largest yacht owned by Arab royalty and one of the world's richest persons without the owner knowing.

However, if Rosmah did receive the diamond as a gift from Sheikh Mansour then I think she should return it as it is inappropriate to receive such an expensive gift.

2) Rosmah never received the diamond at all and DOJ was misled by the false information fed by the opposition.

According to the DOJ suit, it is important to note that Rosmah did not make the order for the diamond, pay for the diamond nor personally received the diamond.

It has also never been proven that she even posses the diamond.

DOJ's allegation is that a Malaysian friend had collected the diamond and she was supposed to then hand over the US$27 million (RM118 million) diamond to Rosmah. But there is never any proof that the diamond was handed over to Rosmah.

This brings us to the next point...

8.  The whole diamond necklace and DOJ lawsuit seems suspiciously politically-motivated

Firstly, the DOJ had no evidence that Rosmah ever received the diamond but proceeded to include that story in all its juicy details in the suit anyway.

Secondly, the story has always been consistent with the opposition story about Rosmah buyting diamonds and cincin - until PKR's Rafizi Ramli was sued by Najib and said to the court that he was "just joking"

Thirdly, the timing is suspicious as it comes a week before Malays balik kampung for the Hari Raya where such a juicy story would be discussed. 

It is no secret that Pakatan is hoping for a "Malay Tsunami" and such a story at such a timing would benefit Pakatan the most.

It is also no secret that Pakatan is working with and has received funding from George Soros to help topple the BN government and Najib.
Late last year, the famous expose website Wikileaks had leaked details of a March 2016 lobbying by George Soros to the US Government to remove Najib and replace him with Anwar Ibrahim.

please don't call Anwar as a "barua" Amerika
One reason why the USA should remove Najib: China!

The secret documents from Wikileaks showed that Soros told the US Government that PM Najib is not fully loyal to the USA and plays both sides with China.

Soros also told the USA Governmetn that Anwar would be instrumental as the new leader of Malaysia if Najib falls. And even if Najib doesn't fall, Anwar can provide the USA Govt with "insight and strategic leverage" on Malaysia.
Four months later after that lobbying, the USA Government's DOJ launched a civil suit against 1MDB and popularizing the MO1 name to cause maximum damage to PM Najib and BN.

How coincidental and convenient!

That led me to this particular excerpt in the DOJ court document regarding where the DOJ seeks to recover movie collectibles purchased by the owners of Red Granite, Riza Aziz and McFarland.

Rather than saying "we seek to recover memorabilia purchased by Aziz and McFarlane as we believe it was paid for using illicit funds", the DOJ chose to sensationalize it by publishing excerpts of email exchanges between the two persons who were merely joking about their shared hobby.

I have asked several legal professionals and they say that this is highly unusual, unprofessional and totally unnecessary for a legal writ.

It seem to be designed to incite hatred and to provide sound-bites - like the one done by MalaysiaKini.

Nowhere was it also mentioned that Riza Aziz and McFarland had been highly successful and made a lot of money in their movies - which would have allowed them to finance their future movies directly and with other investors.

Certainly this DOJ writ does more political damage than actual legal damage - especially since the previous case in July has not moved since.

And more shockingly this diamond that DOJ had written so extensively in the civil suit IS NOT the subject of the items that DOJ says they want to seize due to alleged money laundering.

Yes, the much talked about diamond is not a subject of the DOJ's civil suit!

Is this because there is no such proof that the item exist nor gifted to DS Rosmah nor in the possession of DS Rosmah or was it because it simply cannot be linked to money laundering?

This is a proper legal document - not a Robert Ludlum fiction novel.

Serious questions now have to be asked of the DOJ as to why did they even bother writing such sensationalized details of the diamond in their civil suit if it is not even a subject of the civil suit.

Can anyone answer? Can Mahathir or Matthias or Soros answer?

Writing such details in a legal civil suit without a legal basis or aim other than to inflict political damage on behalf of Pakatan means there is a sure sign of collaboration or deliberate feeding of misleading stories from here to the USA.

Strangely, some pro-opposition individuals in Malaysia are even proud and prepared to be called a CIA agent or foreign agent as was reported just last week in MalaysiaKini.

Why would Malaysians and our opposition leaders want to work with foreign powers to launch propaganda attacks and bad-mouth Malaysia just so they can be the ones in power?

That is sabotaging your own country, bro. It's treason.

9.  1MDB's profitability and progress is unaffected. No Malaysians or their future generations will end up paying for 1MDB's debts.

Due to the April 2017 IPIC-1MDB settlement and also the past rationalization efforts, 1MDB now has assets of RM60 billion compared to still outstanding long-term (up to 2039) debts of an estimated RM41.7 billion.

If you can believe MalaysiaKini then the profitability of 1MDB will be even more as the forecast that the value of Bandar Malaysia is RM90 billion instead of RM26 billion.

Hence the value of 1MDB's assets is RM124 billion compared to RM41.7 billion debt.

For so long, Pakatan and their friendly portals have been saying that govt will go bankrupt because of 1MDB's debts (which is already substantially repaid with the rest taken care of) and that govt has to use GST, use fuel subsidies, use sugar price bla bla bla to bail out and that this debt will be a burden on your next generation and the generation after that.

But now the Pakatan folks are saying that Govt will make huge profits on 1MDB and there is no more debt that will be a burden on your next generation and the generation after that or need to bail-out?

So, there is no question of anyone having to pay for 1MDB's debts. In fact, the possibility of 1MDB being very profitable is high.

10.  Unlike in the past, the financial markets did not react to the news of this DOJ suit. Neither are many Malaysians

The Ringgit did not weaken substantially and the stock market did not drop.

In fact, the Bursa stock market went up today despite the news. It continued its rally as Malaysia's economy continues to perform well and our prospects continue to brighten. Investors continue to believe in the transformation agenda under Prime Minister Najib.

Unlike in the past, Malaysians now seem indifferent to the DOJ-1MDB news

As Uber-Blogger Rocky Bru observed today:

"It's been a year since the US Department of Justice made that explosive lawsuit announcement involving 1MDB. Since then, the Americans have elected a new President, Dr Mahathir Mohamad has confirmed his desire to be Prime Minister of Malaysia once again, and the DOJ's lawsuit hasn't moved an inch. The department's latest "action" has similar elements and juicy bits that featured in its "action" of last July's. So why aren't Malaysians not debating it like they did last July? I belong to several dozens of WhatsApp groups but only one is discussing the DOJ's action and by "discussing" I mean one individual has been providing all the links to DOJ news that might be spun against PM Najib Razak. Does that mean we are immune to news involving alleged corruption and stealing of billions from our coffers? 
Or are Malaysians generally not buying what the DOJ's claiming, especially since nothing has come out of their last action?"
To most people and also thanks to the successful rationalization of 1MDB and its tangible evidence of its progress, most people feel that the 1MDB story is stale or "basi".

Pakatan's continued attack on 1MDB did not help them in the Sarawak elections last year where they had lost their pants. Neither did it helped them in the twin by-elections at Kuala Kangsar and Sungai Besar.

So, you must wonder why Pakatan is behaving like the (oft-misquoted) proverbial definition of idiots who "do the same thing over and over again and expecting different results"?

Wednesday, 7 June 2017

Part 2: BN "sold" Jelutong Highway land in Penang for RM20psf? Here are the facts.

Continuing on from my previous posting where Penang Chief Minister's Lim Guan Eng's accusation that the previous BN Penang Govt sold land for a ridiculous RM1psf for the Tanjung Tokong/Pinang project, I go on to his second allegation.

Here's Guan Eng's much repeated (but lying) table again.

This time, it's the alleged sale of 325 acres of land at "Jelutong Expressway" for a total of RM325 million or RM20 per square feet (psf).

Again, this is an outright lie by YAB Lim Guan Eng.

The first thing that would tip you that this is not land is the fact that the land is named "Jelutong Expressway" by Lim Guan Eng.

I mean, which developer would go buy land which a highway is sitting on, correct?

This is because it is not actually land but was a privatization project signed 20 years ago in 1997.

This project is extensively researched in an article in the February 2014 issue of the International Journal of Construction Management.

Ignoring the fact that land prices would have cost much lower 20 years ago in the height of the Asian Economic crisis would be much lower than now and should not be even used for comparison like what Guan Eng did, let's go to the details of this project.

Firstly, this privatization project was awarded based on an open tender by the previous BN Penang Govt and involves asking a contractor to build a much-needed highway in return for land reclamation rights (not land). 

A company called Jelutong Development Sdn Bhd (JDSB). JDSB was initially owned by IJM Properties Sdn Bhd (40%), Hume Industries (Malaysia) Sdn Bhd (40%) and Kumpulan Pinang Holdings Sdn Bhd (20%).

IJM Properties Sdn Bhd later took up Hume Industries (Malaysia) Sdn Bhd’s share in October 2002 for RM3.02 million, making JDSB effectively a wholly owned subsidiary of the listed IJM Corporation Bhd

The Privatisation Agreement was signed on August 22 1997. In exchange for the 4.7 km Jelutong Expressway (JE) constructed on 81.04 acres of land which would be handed over to the Penang State Government at no cost, 324.9 acres of land (partly existing but mainly reclaimed from the sea) would be alienated to JDSB. 

All costs pertaining to reclamation would be borne by JDSB. 

JBSD was required to pay the Penang State government RM1.3 million upon signing of the privatisation agreement and a further RM24.1 million in instalments. 

JDSB was expected to develop new integrated precincts (for commercial, retail and light industrial use) on the reclaimed land. 

It was also expected to build 5,500 units of low cost and low middle cost dwellings, and over 4,000 units of other types of residential units. The entire real estate development associated with the JE was expected to take about 15 years to complete.

The JE project was awarded in 1997 and was expected to be completed at the end of 1999. It was originally valued at RM350 million, including squatter compensation, land acquisition and all direct costs pertaining to the project.

JDSB however was contractually bound to maintain the JE for two years after its completion. JDSB also guaranteed the expressway design for seven years and had to ensure that the design life of the interchanges was 20 years following construction, while that of intersections was 10 years following construction.

The JDSB was allowed to reclaim land totaling 324.9 acres, partly for the expressway, but mainly for residential (partly to resettle affected populace), recreational, commercial and industrial development from which JDSB could recover its investment. Half of the land to be reclaimed was given freehold status, while the remaining portion was on 99-year lease. In addition, JDSB was allowed to convert a 30 acre piece of land which had been previously been used for agriculture and refuse dumping, also for real estate development.

At that time in 1997, land in the middle of Georgetown was selling for RM150-RM200 psf while reclamation cost was estimated to be RM20 psf.

In a nut-shell under the so-called "sale", IJM:

- will get 350 acres of land, of which the majority is reclaimed by themselves at their own coast, 
- has to build the 5km dual three-lanes on grade Jelutong highway with 5 intersections at their own cost of RM350 million mostly on land that they reclaimed themselves,  (compare this to the 5km Lim Chong Eu to Air Itam by-pass dual two-lane roads that the DAP Penang Got wants to build that will cost RM1 billion)
- has to hand-over the highway back to the state govt including the 81.04 acres which the highway sits on.
- pay RM25.4 million to the state govt.
- has to pay for land acquisition, compensation and resettlement of the squatters including temporary housing
- has to maintain the JE for two years after its completion;
- guarantee the expressway design for seven years and had to ensure that the design life of the interchanges was 20 years following construction
- has to build 5,500 units of low and low-medium cost housing units (RM25,000 - RM50,000 type) on their reclaimed land, many of which were also given as compensation to the squatters.

The last part is even more telling when you compare to the so-called affordable housing of up to RM400,000 built by the DAP Penang Govt using their RM500 million state fund - the first 520 units of which is scheduled only to be completed next year, a staggering 10 years after DAP had taken over.

After 10 years, the first 520 units of affordable housing built by DAP Penang Govt costing up to RM220,000 on the mainland will be ready.

Imagine this. The IJM consortium that was claimed to have gotten land cheap by Lim Guan Eng actually built 5,500 affordable homes costing between RM25,000 to RM50,000 on the island - compared to 520 units costing between RM72,500 to RM220,000 on the mainland.

Again, just like the alleged RM1psf "land" sold at Tanjung Tokong, YAB Lim Guan Eng's allegation that RM20psf "land" sold to IJM in 1997 for the Jelutong Highway without tender (it was open tender) is yet another pack of lies that he uses to defend and divert attention away from his 500% increase in Penang operational expenses and his tens of billions of state land, land rights and assets that he has sold or traded away since taking power in 2008.

Monday, 5 June 2017

BN Penang Govt's RM1 per square feet land sale? Here are the facts.

Recently, Penang Chief Minister has been under fire for selling land without open tender and also for increasing the yearly operating expenses of the Penang Govt by an astonishing 500% since 2008, which is covered mostly by sale of state land and assets - until there is little left.

In return, the Chief Minister continues to roll out his umpteenth-times repeated cover-line to say that BN sold 36 times more land and got  less money, which is of course untrue.

By now, most people would have seen the following table from Lim Guan Eng multiple times:

Much of these land were "sold" decades ago when prices on the mainland was cheap. In fact, it was not even land. Most were land reclamation rights.

I had written about this before here: 'BN sold more land than Pakatan in Penang and collected less' ??

But today, let's focus on item 1 Tanjung Pinang  where 980 acres of land was supposedly "sold" for RM1psf  under the previous BN Penang Govt - netting just RM42.7 million.

This is certainly a serious allegation - "selling" state land for just RM1psf.

But here are the facts:

This is not even a land sale but a 30 years land reclamation concession agreement awarded in1992 by the then BN state govt to a Joint-Venture that is 60% owned by the state agency Koperasi Gabungan Negeri Pulau Pinang  (KGN) and 40% owned by the 100% state-owned Penang Development Corp (PDC).

There is not a single inch of Penang land sold. On top of that, the concession was awarded by the BN Penang Govt to 100% state agencies.

In the interest of not coming up with capital to reclaim the land, the KGN-PDC partnership then formed a joint-venture company called Tanjung Pinang Development Sdn. Bhd. (TPD), with a company called  Permaijana Ribu (M) Sdn. Bhd. (PR).

Permaijana Ribu is owned 72% by UEM, 18% by Mechmar corp and 10% by Yayasan Bumiputera Pulau Pinang 

At this stage, the project has become 70% PR-owned and 30% KGN-PDC owned - with KGN-PDC getting it's 30% shareholding for free while PR has to bear the cost of the shares and  most of the reclamation expenses.

After UEM fell into difficulties due to the Asian Financial Crisis, it sold its stake to a private company called Bridgecrest Resources Sdn Bhd (Bridgecrest).

Therefore the effective ownership of the project is as folows

Note: Over the years, there were various changes in shareholdings as some of the shareholders sold out. As of today, the project is now 78.2% owned by listed Eastern & Oriental Bhd,, which Sime Darby is a major shareholder and 21.2% owned by the Penang Development Corp (PDC).

As you can see, fully 37% of the so-called RM1psf "sale" is owned by state-owned company which has already benefited by getting free shares and capital injections by the private companies who partnered with them.

This also means that when the land is fully-reclaimed, these state agencies will own an effective stake in 37% of the reclaimed land.

Wait... there's more!

Under the terms of the agreement. other than the 37% owned by the state agencies, a certain percentage of the land reclaimed has to be surrendered back to the Penang State Govt directly.

Under phase 1 of the reclamation (called STP1), which ended in the year 2006, a total of 240 acres of land was reclaimed.

And out of this 240 acres of land, 47 acres of land was handed back to the state govt free of charge.

Under phase 2 (called STP2), the remainder 760 acres of land will be reclaimed - out of which 191 acres will be handed back to the Penang Govt free of charge.

In fact, the STP2 was approved by the current DAP Penang Govt in 2011 and generously gave a 3 years extension to the concession too.

The Penang Govt has used 110 acres out of these 237 acres to pay for the RM6.34 billion Penang Tunnel project. - which values the entire land handed back FOC to the Penang Govt to be at least RM14 billion.

To summarize, not only is this not a RM1 psf land sale by the previous BN Penang Govt, but the Penang people benefits from the following:

1) State agencies own 37% of the reclaimed land for both phases of Gross development value (GDV) of RM21 billion
2) Penang Govt got roughly RM14 billion of land handed back FOC to them.

So, YAB Lim Guan Eng: How can you call this RM1 per square feet sale of land?

How can you claim the total sales proceed of 980 acres of land is only RM42.7 million?

How can you even claim this is sale of land?

Because of your repeated lies, many Penang people have the wrong perception that the previous BN Penang govt had sold land at RM1 per square feet to a private company.

What a liar that you are.

A lie that you have repeated umpteenth times over the last few years to justify your incredible sale of tens of billions of state land and assets.

Saturday, 27 May 2017

Crocodile tears: Mahathir and Proton

1. Proton sales started to decline in the year 2003 while Tun Mahathir was still Prime Minister. Just two years later in 2005, it was overtaken by Perodua in the Malaysia market and overtaken by Honda in 2016.
Exports sales to UK and Singapore have now dropped to zero.

In Australia, from Jan to April 2017, Proton only managed to sell 11 cars.

2. Lotus Cars have lost money every single year since Proton bought the company in 1996 - losing a total of an estimated RM6 billion over the past 20 years and RM920 million in 2013 alone.

3. Tun Mahathir had asked Volkswagen to take a 50% stake in Proton in the year 2005 but the deal did not happen. Later, Tun Mahathir asked the government to sell all of Proton to DRB-Hicom in 2011.
4. Since DRB-Hicom fully took over in 2012, Proton have lost RM4 billion. In the year 2016 alone, Proton lost RM1.4 billion. Proon had also dragged the parent DRB-Hicom group into losses - putting 100,000 jobs at risk.

Proton was threatening to bring down the entire DRB-Hicom groups that was very diversified and includes airports, ports, construction, power, logistics etc - along with its 60,000 jobs.

You can see this clearly from the Group's earnings since they completed the purchase of Proton in 2012.

5. The heavy losses and lack of cash in Proton also caused payments to Proton suppliers and vendors to be unpaid - putting another 40,000 jobs at risk.

Mahathir's son, Mokhzani Mahathir owns the official distributor of Porsche cars in Malaysia and has a long involvement in the local Auto Industry. The situation is so bad that Mokhzani, who had a fortune of RM4.22 billion in the year 2014 and is the second richest Malay tycoon, did not dare to pay the RM1.1 billion to buy up DRB-Hicom's stake to help save Proton

6. Due to the big amount of jobs at risk, the govt had no choice but to give RM1.5 billion in soft loans to Proton in early 2016 which Proton immediately used up to clear off all its debt to its suppliers and vendors. In late 2016, the govt was also forced to give another RM1.7 billion in credit line to Proton to enable it to continue operating.

7. The total assistance given by Govt to Proton in 2016 alone is RM3.2 billion -  This is more than half of the RM5.9 billion that the govt paid in BR1M to 4.7 million households and 2.7 million single individuals for the year 2016.

This would be on top of the RM14 billion assistance that the govt had given Proton since it was founded.

8. After being made Chairman of Proton in Jan 2014, it was Mahathir and Tan Sri Syed Mokhtar who traveled to China in April 2014 to invite Geely to help save Proton. It was Mahathir who first approached Geely for help.

The Govt no longer owns Proton. The sale to Geely was DRB Hicom's decision - not the govt.

As pointed out earlier, it was Mahathir who had asked Govt to sell its stake in Proton to DRB Hicom, a private company, which then sold a stake to Geely.

Therefore, it is strange for Mahathir to suddenly criticize the sale of a stake in Proton to China's Geely and claim he is crying since it was Mahathir who first said that Proton should sell a stake to Germany's Volkswagen in 2005, it was Mahathir who asked Government to sell all its stake in Proton to a private company in 2011 and it was Mahathir who first approached Geely in China in 2014 to ask it to help save Proton.

In fact, just 3 months ago in February 2017, Mahathir said he has no objection with Geely buying a stake in Proton. Suddenly, 3 months later he criticizes the government, blames Najib and he says he wants to cry because his "son" was sold?

Looks more like Mahathir was the one who sold his own son instead. Bapak jual anak!

Even though Mahathir was instrumental in the govt selling off Proton to private companies and in getting Geely to be interested in Proton, this has not stopped Mahathir from going all over Malaysia during the month of Ramadhan to slander and blame Prime Minister Najib over Proton's sale and make low-classed jokes about Najib's wife. This is from two days before Ramadhan started.


Of course, Mahathir supporters and fan-pages take their cue from his low-class jibes and proceeds to hit even lower lows with posts such as this - on the first day of Ramadhan too.

9. Proton continues to be 50.1% majority-owned by DRB-Hicom, a Malaysian company while Geely owns 49.9%. Geely has a good track-record. After buying 100% of Volvo from Sweden in 2010, Geely has helped make Volvo a success. Last year, Volvo sold the highest number of cars in its history - it's fourth straight years of record sales.

10. By partnering with Geely, Proton's survival is more assured. Instead of a market of just 30 million people in Malaysia, Proton can now access a market of 1.4 billion people in China.

It is better for Malaysia to own 50.1% of a company that has chance to survive and have a market of 1.43 billion people than to own 100% of a company that is on the verge of bankruptcy and losing billions of Ringgit every year in a market of just 30 million people.