WIKILEAKS: GOM Touts "Record" Manufacturing Investment Approvals for 2006; Rampant "Ali Baba" Abuses in GOM's Affirmative Action Program Draw PM's Ire: Malaysia Economic Update for February 2007
The source said the study, which has not been released to the public, revealed that many Bumi contractors typically sold off their tenders for quick money, often to finance expensive cars and houses. The report also found Bumiputra contractors had misused payments received from the government to pay off creditors and that they often sought additional government tenders prior to completing the ones already awarded to them.
THE CORRIDORS OF POWER
Raja Petra Kamarudin
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION
1. (U) Summary: The GOM trumpeted figures showing total manufacturing investment approvals in Malaysia rose 48.1% in 2006 to a record RM 46 billion (USD 13.1 billion), and used this as proof the country remained internationally competitive. However, a closer look at the numbers reveals the investment trend in Malaysia is a lot less rosy. Meanwhile, Prime Minister Abdullah publicly vented his frustration over a recent study showing 85% of government construction tenders awarded to ethnic Malays under the GOM's affirmative action program are being sold to non-Malays, defeating the purpose of the policy. In response, the GOM has vowed to get tough on violators. End summary.
We're In the Money!
2. (U) Minister of International Trade and Industry Rafidah Aziz announced February 13 that Malaysia's total manufacturing investments approvals rose 48.1% in 2006 to an unprecedented high of RM 46 billion (USD 13.1 billion), from RM 31 billion projects approved in 2005. Of this amount, foreign manufacturing investment approvals accounted for RM 20.2 billion (USD 5.77 billion), an increase of 13.1% from the RM 17.9 billion (USD 5.11 billion) approved in 2005, while domestic investment approvals accounted for RM 25.8 billion (USD 7.37 billion), almost double the RM 13.2 billion (USD 3.77 billion) approved in 2005, primarily due to fourth quarter approvals for three large petroleum and petrochemical projects (see paragraph 5).
3. (U) The largest share of foreign direct investment approvals continued to be in the electronic and electrical sector, accounting for RM 8.6 billion (USD 2.5 billion) or 42.6% of the total. Japan emerged as the top investor for 2006 with RM 4.4 billion (USD 1.25 billion) in investment approvals, of which RM 1.5 billion (USD 430 million) will be in greenfield industries. [Comment: Japanese embassy economic counselor Takuya Sasayama told the press that the spike in Japanese FDI during the second half of 2006 may be the result of the Japanese-Malaysia Economic Partnership Agreement, which became effective last July. End comment]. The Netherlands came in second place with RM 3.3 billion (USD 943 million) in investment approvals, followed by Australia with RM 2.6 billion (USD 743 million). The U.S. slipped to fourth place with RM 2.5 billion (USD 714 million) in investment approvals, down from its number one position in 2005. About 60% of the U.S. company investment approvals will be re-investments by existing companies for expansion or diversification in the electronic and electrical sector.
FTA "Just a Bonus"
4. (U) The surge in investment approvals exceeded the GOM's targeted average investment approvals of RM 27.5 billion (USD 7.8 billion) per year under the 15-year Third Industrial Masterplan. In press reports, Rafidah said "[d]espite the increasing global competition, Malaysia continues to attract global foreign investment outflows, reflecting the country's cost-competitiveness as a manufacturing and export base." She added the figures demonstrated that a failure to reach a free trade agreement (FTA) with the U.S. would not have an adverse impact on foreign direct investment (FDI) into Malaysia. "The FTA is just another bonus", she said.
Hey, wait a minute...
5. (U) A closer look at the numbers reveals the sharp rise in Malaysia's investment approvals last year may not be sustainable. Three major domestic petroleum and petrochemical projects (SKS Development's RM 7.7 billion oil refinery in Kedah, Petronas' Methonal RM 2 billion plant in Labuan and Panca Intan's RM 1 billion petrochemical plant in Sabah) accounted for over 23% of the RM 46 billion in total investment approvals. In addition, large domestic bio-diesel projects accounted for RM 6.1 billion, or over 13.2%, of total investment approvals. [Comment. If these volatile energy sector projects are excluded from both the 2005 and 2006 numbers, Malaysia's total investment approvals would have risen only 1.4% for 2006, not the 48% touted by Minister Rafidah. Therefore, unless domestic companies continue to pump money into mega energy projects for 2007, it will be very difficult for Malaysia to sustain the high level of investment approvals seen last year. End Comment]
6. (U) Another dark cloud for Malaysia in last year's numbers is that fact that total investment approvals in the high value-added electrical and electronics industries (which in Malaysia are dominated by American high tech companies such as Intel and Dell), shrank 27.5% decline in 2006 to RM 10 billion from RM 13.8 billion in 2005. This, combined with Intel Corporation's recent decision to triple its investment for a new chip assembly and test facility in nearby Vietnam to USD 1 billion, could point to a gradual decline for investment in, or actual disinvestment from, Malaysia's highly prized ICT sector.
Now Show Me the Money
7. (U) The RM 46 billion in investment approvals does not refer to actual investments in Malaysia but rather projects that have been given the green light from the Malaysian Investment Development Authority (MIDA). According to MIDA, actual investments will normally be committed in the coming one to three years following approval. Of the 5,889 foreign projects approved by MIDA during the 2001-2006 period, 72.5% have commenced production while 21.8% are in various stages of planning and implementation and 5.6% have not gone forward at all.
"Ali Baba" and the Bumi Thieves
8. (U) Meanwhile, Prime Minister Abdullah Badawi expressed frustration and disappointment over findings from a recently released Ministry of Works report showing 85 percent of government contracts awarded to "Bumiputra" (ethnic Malays and indigenous Malaysian groups) contractors under Malaysia's affirmative action program end up being subcontracted to non-Bumiputra firms, a practice commonly referred to here as "Ali Baba". "They (Bumiputra) do not want to work, do not want to learn, and give little importance to the opportunities provided by the government...This approach will only make us hope and wait for aid and subsidies. Such a mentality thrives among the people, including Bumiputra petty traders and contractors," he said. Abdullah made the comments during a dinner speech on February 13th.
9. (U) In Malaysia, many government construction contracts are open only to Bumiputra owned businesses. Although the rationale for the policy is to bolster the competitiveness of Bumiputra contractors vis-`-vis contractors of other races, in practice many of the Bumiputra firms (the "Ali" in "Ali Baba", typically Malay Muslims) immediately subcontract the work to non-Bumiputra contractors (the "Baba", typically ethnic Chinese - the term comes from "Baba-Nyonya", a reference to descendants of marriages between Straits Chinese men and Malay women), enabling the Bumiputra contractors to quickly pocket profits but preventing them from acquiring the experience and expertise the policy was intended to engender. Abdullah said Ali Baba practices not only frustrated the GOM's policy aim of empowering Bumiputras but also undermined its broader Bumiputra agenda of ensuring Malaysia achieved progress and stability in the long term.
You Can't Trust Anyone Anymore
10. (SBU) A source from the Ministry of Works told EconFSN that their report, entitled "Study on Bumiputra Contractor Leakage", was the result of feedback from various industry sources on failed and successful projects. The source said the study, which has not been released to the public, revealed that many Bumi contractors typically sold off their tenders for quick money, often to finance expensive cars and houses. The report also found Bumiputra contractors had misused payments received from the government to pay off creditors and that they often sought additional government tenders prior to completing the ones already awarded to them. The official said contractors were irresponsible and had abused the trust given to them by the government which was meant to help Bumiputras progress.
Blacklist the Really Bad Bumis
11. (SBU) Separately, executive chairman Moehamad Izat Emir of the Malay Entrepreneurs and Merchants Association said payment is the main issue facing the contractors. He said that while Abdullah had directed the disbursing agency to pay the contractors within two weeks after completing the work, this often does not happen. He proposed that Bumiputra contractors be trained to upgrade their skills and suggested government-linked companies (GLCs) be required to support these contractors. Roslan Awang Chik of the Malay Contractors Association shared his view that "competency comes from exposure". He is puzzled why many well-known and qualified Bumiputra contractors were not being awarded government contracts while several unknown ones were. He suggested the government blacklist any contractors found to be selling their tenders. "They can be considered traitors", he said.
Now Promise to be Good...
12. (U) In response to the controversy over the study, Ministry of Finance Secretary General Izzudin Dali announced on February 16 that under new regulations Bumiputra contractors seeking government tenders will soon be required to sign an official declaration promising not to sell or subcontract their tender to other races. Violators will have their contracts and registrations terminated. Izzudin added that under the new rules contractors undertaking public infrastructure contracts will now be awarded only one project at a time and that projects will be distributed evenly among contractors in the same area or district.
13. The GOM's practice of giving preferential treatment to Bumiputra contractors began as part of its New Economic Policy, an ambitious and controversial affirmative action program launched in 1971 following the race riots of the late 1960s. Although aimed at reducing the socioeconomic disparity between Malaysia's Chinese minority and its Malay majority, these policies have been only partially effective while often stirring resentment on the part of non-Bumiputra ethnic groups. According to the GOM's last census in 2000, Malaysia ethnic composition is 65.1% Bumiputra, 26.0% Chinese and 7.7% Indian.
14. (SBU) Comment. The current system of awarding lucrative government contracts to bumis provides them with a strong economic incentive to simply act as agents, turning over as many projects as possible and taking a cut before handing each one off to a competent non-bumi implementer. This "bumi agent" system is firmly entrenched in Malaysia. Any effort to make reforms is likely to be resisted not only by well-established bumis, but also by the non-bumi implementers who have built up a network of well-oiled agent partnerships. End comment.
SHEAR
written by Rosminah, September 21, 2011 07:52:56
NOTHING WRONG FOR ALI BABAS TO SELL THEIR CONTRACTS TO CHINESE AND INDIANS. BUT WHAT IS TERRIBLY WRONG IS THE CONTRACTS SOLD ARE ALWAYS UNDER-REPORTED AND NON-BUMIS PAY BAGS OF SECRET CASH. ALSO MALAY APARTHEID IN MALAYSIA BECAUSE ALL OF GOMEN CONTRACTS GO TO MALAYS ONLY- IS A SLOW WAY OF CHOKING OTHER RACES.
The main crooks are the PM, Ministers, chief ministers who sell the contracts to Malays at twice the actual price but half of that are repaid to the PM, Ministers, CMs in secret cash or foreign bank accounts.
They are all stealing money from Treasury for their own pockets.
I know of someone who had to give a bagful of secret money to Ibrahim Ali for a contract.
Chief mInister Rustam took back about $10 million from the submaring-on-land project he gave to a company, a project cost $20 million but he took $10 million for his pocket.
He also had his mafia foot soldiers to get engineering companies to see him about showing interest in a water project but the company had to pay him 500,000 Rm in cash, just to see him.
These are just small examples of the obsenities that go on to plunder Malaysia for their pockets.
If these things happen in Singapore or thailand, they will be in jail for life and all their possessions taken back.
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written by Symphatatic, September 21, 2011 06:43:28
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written by Malay James Bond, September 21, 2011 01:09:13
Pls you get wikileaks to check on transancition MB PAHANG GIVEN MORE THAN THOUSAND EKAR GOLD AND IRON OIL LAND AT FELDA SG TEMAU,KUALA LIPIS PAHANG TO HIS BROTHER DATO HASNUL NOT DIRECTLY, DURING EXCO MEETING THEY APPROVED UNDER KSG,MUIP KSG BELONG TO KHAIRY GHAFOR AFTER ONE YEAR HIS BROTHER TAKE OVER FROM KHAIRY UNTIL TODAY BUT LECENCE APPROVED UNDER KHAIRY UNTIL TODAY.
TIPU MATA RAKYAT DAN EXCO SAJA.
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written by cool boy, September 21, 2011 00:54:45
UMNO CABINET MINESTERS ALSO SELLING TAXI PERMIT VI THIER PROXY TO CHINESE EXAMPLE NAZRI HIMSELF.
MAHATHIR SELLING SULAIMAN MANAN BUMI TITLE ASSET AT SENTUL .AND MERRIOT HOTEL.STARHILL AND LOT 10 TO YTL AND PUTTING HIS SON PROXY SYED ABDULLAH IN THE YTL BOARDS MEMBER.
IF I WANT TELL YOU BANYAK YANG KEMUNGKARAN UMNO.
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written by din, September 21, 2011 00:31:38
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written by kuttykutty, September 20, 2011 23:48:26
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written by Mr MR, September 20, 2011 23:12:02
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written by Rosminah, September 20, 2011 22:27:18
They are much much worse than those Ali Babas because they double the price of the contracts for Bumis who have to secretly return half the contract money for themselves and their Mafia gang- in bags of cash or secretly transfer money to overseas accounts.
SO THERE IS NOTHING WRONG WITH THE ALI BABA ABUSES because the CEO of Malaysia mafia, the PM do corruption a thousand times worse.
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written by Integrity, September 20, 2011 22:16:07
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written by michael62thegreat, September 20, 2011 21:59:41
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written by Bang, September 20, 2011 20:36:45
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written by Glom, September 20, 2011 19:01:02
Wake up now and vote for the change to come.
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written by DPG, September 20, 2011 18:27:32
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written by Raja Petra Kamarudin, September 20, 2011 18:13:51
MT Team
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written by Angela Ooi, September 20, 2011 16:06:07
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written by by2020, September 20, 2011 11:31:09
Just that the MRT fare should go up a few cents next time. Folks get ready to pay a bit more to finance this shopping trip yeah!
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written by Beezee_Beezee, September 20, 2011 11:12:26
I hope these goons will taubat and back to the real thinking Muslim/Malay and do good to the rakyat.....
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written by Fart Fart Wah, September 20, 2011 09:47:31
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written by Bellboy263, September 20, 2011 09:14:43
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written by Beezee_Beezee, September 20, 2011 08:58:13
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written by Beezee_Beezee, September 20, 2011 08:53:28
There is no way at any one time will the BN Project be delivered or completed successfully without Variation Order.
However during the UMNO functions the leader will try to have the forum to try to justify collectively on how to raise the Budget.
Now everywhere you can see the Bumi Contractor will glued them selves to the leaders of UMNO to do business in Oil & Gas. They used PETRONAS Licensing to issue them license by copying the qualified and competent contractor Model. We have evident that shows that a contractor without the appropriate category and expertise successfully awarded with contract and they don;t even have a workshop and machinery. The other poor contractor who invested so much in their infrastructure lost the bid. The trick is used Lump Sum where the actual work appropriately using unit rates.
Hopefully this will be stopped and the PETRONAS Licensing department to be changed to a more Industrial competent Leader to lead the department.
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written by panca, September 20, 2011 08:40:47
Malaysia, the epitome of rich getting richer where the Malay saying of Kais Pagi Makan Pagi, Kais Petang Makan Petang hold true to those who prefers to be the 'sons of the soil' and handed to them on the palate is not dissimilar who do not want to work but at every other chance wants to enjoy it easy, like it or not it is no different to a Fcuking Pimps(Sombong) and the orang Rakyat - divisive, prostitutes(Bodoh) get screwed and still happy with pregnancy of daily problems otherwise easily alleviated.
As they say in Malaysia, there are two things highly reccomendable for success 1) join politic like umoOno 2) become a extremelist religionists! And in most cases they blend and become one! Viola you get to enjoy both worlds, with accolades in front of their names and God love them as they would have you believed them!
Bodoh punya orang!
Rakyat bukan bodoh lagi asal jangan diperbodohkan lagi!
MooooOOOO! KaMoOOOO semua!
just one thing, no matter what your beliefs are, only if we are willing to commit ourselves this lifetime, vote for ABU if we want to allow change to take place!
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written by SpeakOut, September 20, 2011 07:00:16
Every time I see an UMNO member I just want to muntah. When thye start talking about the superiority of the race I jus want to muntah. These people have no shame. They cannot compete fairly. I just don't know how and wht they pray to five times day. And the sad thing is that even in the PKR there are ex umno members who think the same way. That's is why we need to support the MCLM. Thank you RPK, you need to gasak somemore.
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written by Greg Yin, September 20, 2011 06:46:31
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If this is what u called corruption then how to cari makan then?
With power money would be like iron sticking to the magnet. So it's just sth that happened naturally. How can that be wrong rite....hehe
Do the RIGHT THING AT THE BALLOT BOX.