Running the country on luck

By MT Webmaster Last updated Apr 14, 2014

We need leaders of vision and leaders with a mission. I do not see that in both Barisan Nasional and Pakatan Rakyat. And this is what worries me. We are living under the illusion that the cure to our ailment is to change the government. But is not doing the same thing over and over again while expecting different results be what is called insanity?

THE CORRIDORS OF POWER

Raja Petra Kamarudin

First ex-Deputy Prime Minister Musa Hitam reveals a secret regarding Memali that he had been keeping close to his chest for the last 30 years. And now ex-Finance Minister Tengku Razaleigh Hamzah reveals what has not been a secret regarding Petronas that we all knew for the last 30 years (READ THE NEWS ITEM BELOW).

Are these two old men who are almost at the end of their lives (sounds like the Roman gladiators does it not? “We who are about to die, yada, yada, yada…”) coming clean and confessing their sins so that they can avoid hell and get admitted into heaven when they die?

Anyway, what Musa said about Memali was exactly what PAS has been saying for 30 years — that there is more regarding Memali than what was revealed in Parliament. And what Ku Li said about Petronas was exactly what we in the Malay Chamber of Commerce had been saying for 30 years — that the country is being kept alive by the Petroleum money.

To understand the present and to get an idea on what the future holds for Malaysia, we need to take a walk down memory lane and understand where we came from, where we are today, and where we go from hereon. And that is the greatest weakness of most Malaysians. They look at things in isolation or in a vacuum. They do not understand that everything that happens and will happen in future is the result of what happened in the past.

The Malay states first saw the arrival of the Europeans in the 1500s. It was not until 200 years later, however, that the Malay states became important to European interests when they began to open up trade in India and China and between India and China. It was then that the Malay states became very crucial as a strategic military asset to control the trading route between India and China, the Straits of Melaka (still one of the busiest waterways in the world).

Then the Industrial Revolution erupted in Europe soon after that. Before that, Europe was basically an agricultural economy where 80% of the people lived in the rural areas and survived on agriculture. Due to the Industrial Revolution, Europe saw mass migration from the rural areas to the cities. And this triggered a new problem.

In the past, when the people still lived in the rural areas, they grew their own food or raised livestock. In the cities, they worked in the factories. So how to feed these people in the cities that saw its population multiply in leaps and bounds? There were more people than there was food and famine soon broke out all over Europe killing millions.

They had to transport food from the rural areas to the cities to feed these millions of new urbanites. This would take weeks so by the time the food reached your cooking pot most of it would be rotten. They had to find ways to keep this food edible (although it may not be fresh) and the way to do this would be to can the food. So they came out with the idea to can the food in tin cans.

Lo and behold, Malaya, which was already a British ‘asset’ by then, had an abundance of tin. So the British set up tin-mining companies to mine the tin and export it back to Europe. The tin mines were a gold mine, figure of speech, of course. Suddenly Malaya became more than just a strategic military asset. It was also a strategic economic asset as well.

But the British faced a problem. For sure none of the gwailos or white skins would want to work as coolies in the tin mines. And none of the Melayus or brown skins would want to do that either. So the British brought in Chinese workers from China to do this job. And that was when the Chinese were first brought into Malaya in big numbers — although the Chinese had already started coming to Malaya a couple of hundred years before that (like Tian Chua’s ancestors).

So tin became one of the first commodities that made Malaya prosperous. And it was not because Malayans were clever. It was just that Malaya was lucky. They needed to feed the Europeans in the cities and prevent famine and starvation and the only way to do this would be to can the food in tins and import the food from the rural areas. And Malaya, by chance, happened to be sitting on a lot of tin.

At that same time, the British had discovered hot chocolate — after discovering tea from China earlier on (before that they just drank wine and beer). So they planted cocoa in Ceylon and it was a real money-spinner even though Starbucks was not around yet at that time. Unfortunately, the cocoa plantations were hit by a blight, which not only destroyed all the cocoa plants but also contaminated the soil to make it unsuitable for any further use.

Then one bright spark suggested that they transfer this industry to Malaya, which had the same weather and soil as Ceylon. So Malaya soon took over as the new cocoa centre to replace Ceylon. But then, yet again, none of the Melayus would want to work in these cocoa plantations so the British brought in the workers from Ceylon and Southern India. Anyway, these Ceylonese and Indians were more experienced than the Melayus so it made sense to bring in these people rather than persuade and train the Melayus to do the job they did not want to do.

Unfortunately, Brazil was also planting cocoa and there was an over-production of cocoa in Brazil. This caused the cocoa price to collapse so it was no longer viable to plant cocoa in Malaya. The British now owned vast plantations in Malaya with a huge work force but with nothing to plant.

Another bright spark realised that Brazil not only planted cocoa but also planted rubber. And if cocoa can be planted in both Brazil and Malaya then surely rubber, which was being planted in Brazil, could also be planted in Malaya. And, to cut a long story short (because it is certainly a long story indeed), rubber was soon planted in Malaya to replace the no longer viable cocoa.

Then, lo and behold, the Industrial Revolution in Europe spawned other industries, such as the automobile industry. And suddenly they needed large quantities of rubber, especially for the tyre industry (and to make rain coats for the miserable English weather as well, of course). And, yet again, just like in the case of tin, Malaya happened to be sitting on large quantities of rubber, like it was sitting on large quantities of tin.

So Malaya was just lucky. A lot of things happened by chance. Because of what happened halfway across the world Malaya benefited. You did not need to be clever to manage Malaya’s economy. You just needed arse luck and Malaya had a lot of arse luck. And it also had many Chinese and Indians who were prepared to leave their homeland to work in the mines and plantations, jobs that the Malays were not prepared to do.

And that is why, today, the Chinese and Indians are about 40% of Malaysia’s population — although that is another story for another time and not what I want to talk about in this article.

Of course, there is another story related to palm oil but I think you get the point I am trying to make — which is we got to where we are today by sheer arse luck and not because we had clever leaders (or clever colonial masters because they did what they did merely to exploit the country and get rich).

And then came petroleum. And, yet again, that was merely arse luck. Malaysia happened to have large reserves of oil and gas and the price of this black gold shot through the roof. So, without having to be clever or without having to have clever leaders, the country became very rich just like in the days when tin and rubber made us rich, although that is no longer so.

In the beginning, tin used to be our lifeline. Soon after that, rubber became our lifeline. Then palm oil became our lifeline. Finally, oil and gas took over as our new lifeline. But how long can this go on? Malaya has always been lucky. Something happens in another part of the world and we become rich. It was like striking a lottery. But can our luck continue?

As I said in my earlier articles this week, I am not concerned about the 14th general elections expected in 2018 or so. I suspect that the outcome of this general election has more or less already been decided. Who wins and who loses this election is not crucial as far as I am concerned. My concern is what will happen after 2018 when we get to see the new government formed, whether it is Barisan Nasional or Pakatan Rakyat?

Can we continue to move forward depending just on luck? We have so far been lucky for almost 300 years. Will we continue to be lucky for another 100 years? If our luck runs out what will happen then? Living here in the UK and seeing how Britain, which has been lucky for almost 300 years and is now going to be the new ‘Sick Man of Europe’, raises concerns that what we see in Britain today may be what we see in Malaysia 100 years or less from now.

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Petronas has been bailing out Putrajaya financially since 1985, says Ku Li

(NST) – The founding chairman and chief executive of Petronas yesterday lamented that Putrajaya has been treating the leading oil and gas company as a cash cow, especially in bailing out government-linked outfits of financial trouble.

Tengku Razaleigh Hamzah, or Ku Li, said since its inception in 1974 and until 2011, Petronas paid the government RM529 billion in dividends, taxes, petroleum proceeds and export duties.

He said the reliance of Petronas to help government-linked outfits out of financial trouble had been going on since 1985.

Ku Li, a finance minister from 1976 to 1984, said that year Petronas rescued the then Bank Bumiputra with a RM2.5 billion bailout, and again in 1991 when it coughed up another RM1 billion.

In 1997, he said Petronas had to rescue the financially ailing Konsortium Perkapalan Berhad for RM2 billion.

He added that Petronas was made to underwrite the construction of the Twin Towers, located in the heart of Kuala Lumpur, for RM6 billion and the building of the extravagant Putrajaya, the administrative capital of the Federal Government, for RM22 billion.

“This amount could have been used more productively to fund a national pension programme for Malaysians, as has been done by a certain Scandinavian country,” he said in his speech at the launch of the book “Rich Malaysia, Poor Malaysians” at the Sultan Sulaiman Club in Kuala Lumpur last night.

The book, authored by Anas Alam Faizli, is a collection of essays reflecting his thoughts on energy, economy and education in Malaysia.

The bailout and construction of mega projects was done during the premiership of Tun Dr Mahathir Mohamad, who initiated a series of major infrastructure ventures in the 1990s.

Ku Li said the exorbitant amount of the bailout and construction of these projects that was forced onto Petronas had also deprived the company from the much needed cash build-up for reinvestment, which would ensure its business sustainability.

He said it was important for Petronas to look further afield at business investments outside the oil and gas sector, and it was critical for the corporation to have a strong cash reserve for reinvestment purposes.

“It was this need for prudence that had led Tun (Abdul) Razak, the prime minister of the day (1970-1976) to impress upon me the need to ensure that Petronas would enjoy parity with such multinational companies,” he said.

He said today Petronas was on par with oil majors and was ranked as one of Fortune 500’s largest and profitable oil and gas companies.

“But sadly, it is being abused and treated as the piggy bank whenever the government needed cash in a hurry,” he said.

Ku Li said while subsidising of consumer goods was not the most efficient of ways in managing the high cost of living, it was fairly understandable if the government extended a helping hand to the small man.

“What is sinful and cannot be forgiven is the ease with which the powers that be had been dishing out subsidies to such entities like the national power supplier, the independent power producers and some other non-power outfits,” he said.

As pointed out by Anas in his book , Ku Li said since 1997 this subsidy had amounted to RM136.5 billion.

He said the sad part was that while these power producers continued to enjoy subsidised fuel price, petroleum subsidy to the consumers – which purportedly cost the government RM14 billion in 2011 – was partly discontinued.

Raja Petra Kamarudin RPK