The Research for Social Advancement (REFSA) think-tank concluded from its analysis of the data provided by the ETP Putrajaya’s efficiency unit and compare with the ones given by the Performance Management and Delivery Unit (PEMANDU) shows that transformation of the economy since launching its ambitious Economic Transformation Programme ETP in October 2010 has failed.
It is not that difficult to comprehend because it does not need rocket science to understand that all these need money and without money nothing much can be done.
When Najib’s advisors explained the ETPs concept and knowing the stark reality of our economic predicaments i.e the UMNO/BN government has not enough money and the National Debt was ballooning at RM445 billion, they proposed several ways way to finance the economic activities.
The main components in their idea are to use the Government Linked Companies (GLCs) to provide the financial resources, and to implement self-financed projects via Self-Financed Initiatives (SFI) where Special Vehicle Entities/Companies (SVC), an independent company specifically created by the parent companies to undertake the projects. The idea is to ensure that the money available shall be put into these companies to ensure that it is not siphoned out by the parent companies and to protect the parent companies from going bust if the projects fail limiting the liabilities to the SVCs only. Please note also that they are all cronies.
The big problem is that the GLCs do not have the money. The GLCs are making huge losses because of their incompetent management mostly consisting proxies of top UMNO politicians milking the GLCs dry. In the end, the GLCs main function is to bail out each other to keep each other afloat.
Let us look at a few examples
When Jamaluddin Jarjis was the CEO of TNB and then promoted as Minister of Science, Technology and Innovation, TNB went on a long construction spree building its headquarters in every state in the image of four star hotels; siphoning out money. Then at the same time TNB was hard hit by the forced purchase at high prices of the electrical power generated by the Independent Power Plants. To cut the story short, PETRONAS has to bail out TNB by continue subsidizing the price of fuel for the power plants when the world oil prices continue to rise. So TNB and PETRONAS have not been able to use the money for development and to contribute in the ETPs.
Sime Darby is another GLC that has blundered due to its involvement in creating the now defunct SIME Bank and later when the group announced it huge loss ever in the third quarter of 2010 at RM309 million duet to huge losses in its Oil and Gas division initially at RM1,019 million but later reduced to RM964 million. Thus Sime Darby has to focused on its own financial situation and not able to contribute in the financing of the ETP projects. Sime Darby chairman, Musa Hitam the ex-deputy of Mahathir, refused to resign from the chairmanship, because he is somebody in UMNO but had several Sime Darby managers taken to task as scapegoats.
We all know about the Malaysia Airlines (MAS) story and the failed MAS-AirAsia share swap and need not be written at length here.
The SPV and SPI concept of the ETP is to ensure that the companies use their own strength, reputation and clout to provide the funds to finance the projects, then upon completion the UMNO/BN government will either pay them back or let them operate the business or the complex for several decades and then hand over the business or complex to the government.
The problem is most of the UMNO/BN crony conglomerates are themselves without much money. These companies are just surviving while the real owners; the individuals with major shares are the ones controlling the money in their personal overseas accounts. They will never use their own money to do business; the use others. But the private banks are not willing to lend them the money, so in the end the UMNO/BN government has to provide the money via the so-called development funds allocated in the yearly national budgets. The UMNO/BN has entrusted the Bank Pembangunan among several others by pumping in money as funds needed to be distributed in the form of loans to these SPVs. However the fund is limited and the UMNO/BN government is not able to provide more.
Anyway, the SFI envisaged by Najib is a farce in the first place. The UMNO/BN cronies would not use the money; the UMNO/BN government is indirectly financing the projects!
There are at least ten mega projects under the SFI that cannot be implemented despite having set up the SVCs, and the implementers (contractors, consultants and others involved). The problem is further aggravated when several completed projects are not able to recoup the money as planned; the scheme simply did not work. An example is the Southern Integrated Terminal (TBS) in Bandar Tasek Selatan which is barely operational.
So now since the GLCs are busy bailing out each other and the banks unable to provide loans and the UMNO/BN government has not enough money, how on earth can the ETP be successful?