Outlining PH’s performance in the past year
Special interview to mark the first year of the PH federal government
THE Deputy Minister of Domestic Trade and Consumer Affairs Chong Chieng Jen talks about the positive impact of institutional reforms, withdrawal of GST, capping the price of fuel and Standardised Pricing Programme for interior areas introduced by the PH government. He also mentions about PH’s chances in the coming state election.
Q: It has been nearly a year since PH came into power. What have you achieved so far?
A: In this period of one year, we have implemented many reforms. For a start, we have separated the post of prime minister and finance minister into two persons. This is important because in the past when the posts were held by the same person, there was a lack of control within the Cabinet. So now, there are many projects that the prime minister wants to implement but the finance minister will provide the check and balance, looking from the perspective of the coffers of the nation.
Number two, we talk about a few megaprojects that have been withheld – initially terminated and after that re-entered into renegotiation. There are substantial savings for the country. For example, the ECRL was supposed to be RM65 billion. It was a project that was not supposed to be implemented because from the projection, you can never recover the operating expenses. The yearly projected revenue can never cover the projected operating expenses, not even talking about capital expenditure. Not feasible project, nevertheless, entered into by the previous government. We are bound by that constraint that we have to go through the project otherwise there will be substantial penalty of RM20 billion.
We took the bold step to terminate it first, then both parties further negotiated. After negotiation, we managed to reduce the cost to RM40 billion. That’s a substantial saving of RM20 billion. Also what we have achieved in that renegotiation is that there’s increased local participation. It used to be 30 per cent local participation, now increased to 40 per cent.
The third aspect of the saving is that the operating expenditure will be borne 50-50 by the Malaysian government and the China company. For that 50-50, we are talking about tens of millions of savings a year. Besides, we also managed to tie in our export of palm oil – 190 million tonnes of palm oil to be exported to China. These are just a few megaprojects where the government, when we came in, managed to salvage the situation. It’s not something you can do in a week or a month, it’s lengthy negotiation. That’s why it takes a few months; even a year to achieve.
Another achievement would be the abolishment of GST. Although many say that with the reintroduction of SST, the impact on cost of goods is not noticeable, not felt. But if you look at the bottom line, the revenue to the government or the tax paid by the people is about RM20 billion less under SST as compared to GST. But how that translates into the prices of goods, it is still market forces that determine.
The fourth achievement is that we have fixed the petrol and diesel prices. We capped it at RM2.08 for RON95 and RM2.18 for diesel. Without this capping as it is now, the prices would be RM2.51 per litre and RM2.48 per litre for RON95 and diesel. We have not been telling people about these savings. Looking at the inflation figures or consumer price index figures, previously under BN up to May 2018, the average inflation figure was about three per cent. After we took over, the average is below one per cent. Still, we can see people complaining about rising costs of living. One factor is that food at kopitiams and restaurants are still relatively high. About two per cent inflation rate every month. That aspect is difficult to contain. Basically, we are a free economy. For outside food, there are many varieties; we cannot fix a price and compel the traders to sell at a fixed price. When you buy and cook at home, the rate has been maintained at less than one per cent. So it is the choice for the people whether you want to eat outside or cook at home.
The fifth achievement would be the institutional reform. We have appointed the Opposition to be Public Accounts Committee (PAC) chairman. He will determine the agenda of the PAC, and investigate into a ministry’s projects or working decision. He can decide who to call to give evidence or give explanation on the spending of the ministry. This has never happened before. The other institutional reform is that we have a parliamentary select committee for the appointment of important posts in governmentlinked companies (GLCs). The committee comprises some Opposition also. You cannot just, like previously, arbitrarily appoint anyone that is your good friend or relative to sit on important posts. It is subject to scrutiny by the Opposition. Another that we have instituted is the declaration of assets, to curtail the abuse of high powers and accumulation of personal wealth arising from one’s official position.
The immediate effect may not be felt by the masses, but this is for the long-term future development of the country. Surely, they are positive factors to help bring growth and more equitable sharing of national resources amongst the people.
Q: What does the Sarawak PH expect the federal PH to do more?
A: From Sarawak perspective, there have been a lot of complaints that a lot of projects have been cut, funds have been stopped. There are projects that have been stopped by the PH government undoubtedly, but it’s not like Sarawak is penalised. If you look at ECRL, we are talking about RM20 billion having been cut. So it’s across the nation. What we are practising now is to have more transparency, more accountability in the award of the projects and management of the projects. Sarawak has few projects under direct negotiation that are way above reasonable prices. Those definitely have to stop, otherwise the bleed will continue. The GPS government still has not come to terms with the new governance; the policies of PH government that you need to be more transparent and accountable in the management of the projects. Those projects that have been awarded under direct negotiation have to be renegotiated for more reasonable prices. There are projects that have been renegotiated at reduced price and that we are continuing, such as the Serian Industrial Training Centre. That was direct negotiation. After we came in for renegotiation of the price, the contractors, at the end, agreed to reduce a certain amount and then we proceeded.
The other thing is we would like GPS to work with the new government, but the old way of profiteering from government projects and contracts must stop. That is the way forward for our country and our state.
GPS needs to be open, less politicking and subscribe to a more transparent and accountable governance policies.
Q: In terms of your ministry, what are the obstacles or challenges faced?
A: We are managing two sectors that have conflicting interests. On one hand, the traders would like to make as much profit as possible. On the other hand, the consumers, they would like the goods they buy to be as cheap as possible. At some point we need to strike an equilibrium. That’s the inherent challenge no matter who the government is.
The other challenge is the bureaucracy within the ministry. To get things done, you need to go through layer after layer. Very often when you direct something to be done, it has to go through a few departments and you need so many people to sign. There is a lot of handholding to be done and constant monitoring of the progress. Also the policy of certain aspects of price control and monopoly of sugar, these are policies that we have to make better from what have been practised all this while. It is a tedious and strenuous process – have to keep on pushing.
One thing we have managed to achieve is with the Companies Commission of Malaysia (SSM). Previously, there was a ban on personal index search of any person holding shares or directorship in a company. Now, you can key in a person’s name and IC, do a search and all the companies where that person is a director or shareholder will come up. It helps to fight corruption. But then a few years back, Najib put a ban on it. You cannot do a search for a person unless you have the person’s consent, so that hampered a lot of public scrutiny on those in high positions. So now we have removed that. Now any member of the public can do a search. This is what we mean when we talk about being more transparent.
What we have changed is what we called Standardised Pricing Programme. Under this programme, the government allocates funds and pays contract transporters to transport goods to rural areas. We pay their costs of transporting. Under the previous government, the appointment was done through direct negotiation. We managed to change that procurement procedure to open tender. So this year alone, there are about 80-over zones to transport all these goods. When we opened up the tender, about 1,200 companies submitted their tenders. This has substantially reduced the average cost for transportation because of the competitive bidding. Last year, the allocation was RM80 million, with 90 per cent of the amount for Sabah and Sarawak. Except for some islands and some really remote areas, the peninsula doesn’t really need the programme anymore. This year, RM140 million has been allocated, a lot more areas and essential goods can be sent to the interior. The effect on the ground is very obvious. Without this programme, it is RM65 per cylinder of LPG in Bario. So now it’s back to normal, back to same amount as in town areas.
It is a bit difficult when there are a lot of unforeseen costs involved when we go into rural areas. For instance, road conditions. And when the transporters go past timber roads, plantation roads, there are ‘tolls’. Transporters have to take a lot of factors into consideration. Over 80 zones with some 400 points of sale, each have varying road conditions and routes. For monitoring and enforcement it is quite difficult but we have to step up enforcement to ensure the goods are delivered. Under this programme, we send seven essential goods, which are LPG, RON95, diesel, sugar, flour, rice and cooking oil. There are many details that we need to go through. We have to really sit down and talk to the officers to get to know the whole picture of how the programme runs before you can suggest how to change it for the better.
Also for the appointment of the contract transporters, still a lot of the existing group got it because they are more familiar with the situation. They have been doing the job, so they know the local conditions. It’s difficult for outsiders to come in, but with the open tender system we managed to push down their prices.
Q: What are the challenges that the PH government is expecting in the next state election?
A: In general, it is still the economic issue, which is affecting everybody. It’s difficult because of the more responsible financial management of the new government that we have to cut some of the subsidies given. We have to reduce some of the allocations. Because of that, the previous recipients of subsidy cash handouts find the amount that they receive under the new government is less or some even will be disqualified. We have to do it because of the longterm consideration for the country. If we continue to spend like what Najib spent, I think our country’s rating will go down, which would mean that your interest payment for loans will go up and you just can’t sustain it. For people to feel the long-term effect, it could take three to five years, but the challenge we face is that the state election is coming in about one and half year’s time. We have to speed up some of the reforms and the positive impact on the people.
The other challenge would be implementation of the projects. GPS is playing hardball against the federal government. For example, the RM1 billion allocation for remedial work of dilapidated schools. GPS said ‘I give you the loan and you allocate for the dilapidated schools.’ In principle that’s agreed, also the federal government said ‘Never mind about the loan, you still owe RM2-3 billion. You repay that amount, I set aside this amount of money to allocate back to the project.’ What the state government now said since you agreed, I’m just going to spend that one billion and then offset it. I spend the way I spend it, you have no say. After I use the one billion, I send you an invoice or something as proof of payment of one billion and you offset the loan. That does not comply with financial procedure. Although it is a repayment of the loan from the state to the federal, and federal allocated the money for the project, it is still federal funding. Surely federal procurement procedure has to be complied. In the national financial procedure, the money has to be paid into the consolidated account first. Then it’s for the Ministry of Finance to allocate the money for the certain projects. Also, we have our most stringent procurement procedures. You cannot just say that ‘I go and spend the whole money and just bill you.’ It is the point of contention in this RM1 billion project. The GPS government has to come to terms that there’s a change of government now and we have more stringent, more transparent and accountable procurement procedures. It cannot just be ‘business as usual’ like what you have done under Najib’s time.
People tend to read headlines and usually people don’t go into these financial details to see what happened and the argument behind it. With the GPS government politicising the issue, it is painting a very bad light of the federal government. So these are also one of the challenges that we face in the coming state election – how to convey the message to the people about the need for proper, more accountable and transparent governance.
Q: What do you think of the challenges with the growing emotions over MA63 and the restoration of rights?
A: This is surely what we call regionalism politics. On the restoration of rights, there is no question that the PH government will go towards that direction. I would call it a decentralisation of powers, to give more power to the state government. This is in line with our general policy. For the restoration of MA63, we have tabled constitutional amendment in Parliament on April 4. It is in the exact form as the 1963 constitutional provision on the structure of the country, that is, Malaya States and Borneo States.
There is too much politicking on this by GPS. I don’t know whether they’re aware of the actual sting of their accusation about erosion of power, all those that they’re accusing the federal government of doing. They are actually accusing themselves because all those happened in the 55 years. This sentiment can be easily manipulated. If you look at this sensibility or rationally, what they are accusing the federal government of doing, is actually the doing of the BN government. They are slapping their own face. For the convenience of their state election campaign they can easily twist it around. The issues have been confused and muddled up.
Q: There are reports that the support for the PH government has reduced. What do you think about it?
A: It is a worrying trend definitely. It is for the whole Cabinet, the whole team. I think it is for us to look into it and come up with better policies. For sure, when you have this lavish spending, which we know we cannot sustain, but it makes the recipients of subsidies and handouts happy. But when you talk about more responsible spending by the government, the recipients will feel unhappy about it. Any reform is painful, but it is necessary.
I think there may be a drop in support but in a coalition government there are a lot of things to consider. Some reforms may not be able to come so soon, so some people may take it as a disappointment. The Cabinet needs to have a stronger political will to take on these challenges. We may not see the immediate reforms in certain things, especially when it comes to policies with racial elements. I think it is a balancing act.
Q: Do you think PH can change the government in Sarawak?
A: I would think the chances are better than when we were in the Opposition. Now that we are in the federal government, the Election Commission (EC) is more independent, with enforcement of election rules more stringent.
I foresee in the coming state election, money politics will be very much reduced. It will be fairer to both sides. Sarawak has been the fixed deposit of BN. I think one of the reasons is because of the money politics involved. With the rules of the game now fairer, I think it will change the outcome and the result of the election.
Furthermore, I’m confident that with the direction that we are moving in, especially on the economic reforms of the country, Malaysia and Sarawak will progress economically. That is something positive, rather than we get entangled in these debts that will burden our future generations.
One of the major concerns by the supporters is about why there is no MACC action on Sarawak’s corrupted politicians. I think it is sooner or later. The priority now is Najib. Sooner or later, the investigation will come to Sarawak, the Inland Revenue Board will start querying the disproportionate excess revenue of these highranking politicians in Sarawak. That is one of the disappointments.
Q: Will you be standing as a candidate in the coming state election?
A: I will stand again. If the PH government comes to power in Sarawak, my preference is to serve in the state government.