Malaysia’s Human Resource Development Fund (HRDF) a ‘personal piggy bank of sr managers!


Moving ahead: (From left) HRDF board director J. Rasamy Manikkam, GOC chairman Tan Sri Rebecca Sta Maria, Kulasegaran, HRDF board director Datuk Quah Thain Khan and HRDF chief executive Elanjelian Venugopal at the townhall meeting.

 Petty cash in the millions

Millions were pouring into the HRDF. And for some
high-ranking personnel, their exorbitant salaries and bonuses weren’t enough. Greed got the better of them and they treated the fund as their personal bank, helping themselves to some RM100mil, maybe more!!

KUALA LUMPUR: High-ranking staff of the Human Resources Development Fund (HRDF) misappropriated about RM100mil or about a third of the RM300mil in the fund.

While certain management staff members were overpaid with high salaries and bonuses, some training providers and a number of HRDF management personnel misused the fund in the name of training to purchase commercial properties.

Large sums of money were diverted without the authorisation of the HRDF board and there was collusion between managerial staff and external parties to award contracts.

Human Resources Minister M. Kulasegaran revealed these wrongdoings at a townhall meeting with representatives of employer associations and HRDF-registered employers yesterday.

He said that some members of the HRDF board of directors also did not declare their vested interests to the board.

“There have been wrongdoings, such as abuse of duties, criminal breach of trust and exceeding procedure without reporting to the board.

“(They were) running (the HRDF) as though it was their own company,” he said.

Kulasegaran, who initiated a five-member independent Gover-nance Oversight Committee (GOC) to review and probe the allegations, said that there were elements of fraud in the misuse of the fund in the name of training.

The HRDF is an agency under the Human Resources Ministry that manages a fund for human resource training and development that were contributed by employers.

Regarding the alleged misappropriation of the fund, Kulasegaran said that the HRDF board was only informed after the money was spent.

“Out of RM300mil, nearly RM100mil has been spent,” he said, adding that some department officers, in other instances, also exceeded their authority and approved projects beyond their authorised limit.

When asked, Kulasegaran said that some staff allegedly involved in the wrongdoings are still holding positions in the agency, while some had left.

“After the Pakatan Harapan government took over, three directors have since resigned.

“If they have done anything wrong, action will be taken against them. We will let the process take place. It is not fair at this juncture to make allegations,” he said, adding that two police reports have been lodged based on the GOC report.

Not denying that more former and current HRDF staff are expected to be called up for questioning, Kulasegaran said that parties at fault would be pursued through civil and criminal proceedings.

“After this, I hope the HRDF management will make the agency transparent and accountable to the public,” he said.

Meanwhile, a source that has left the HRDF organisation told The Star that in the week before the townhall, three senior figures within the organisation were subject to domestic inquiries and released from the company.

Another three senior members were on contract and when their contracts expired recently they were not renewed.

A key figure implicated in the scandal resigned soon after GE14.

“Some senior figures have survived, but there is a definite clean-up exercise under way,” said the source.

In some cases, those due to leave found themselves locked out of their offices and escorted off the premises by security when they arrived for work.

The sources said finance personnel and those in special projects who released funds without going through the proper channels, and those who invested money without any accountability are believed to be among those implicated.

“A lack of accountability on the 30% given by companies to the HRDF led to certain figures treating it like a personal piggy bank,” said the source.

He said the culprits are now looking at making deals by providing evidence against the leadership in return for an easy way out.”

“The rot runs deep, and the money runs into billions,” he said. “That’s why there was no choice but to stop the 30% policy and fix the system before restarting it.”

The source said that a key figure implicated in the wrongdoings used tactics such as poor appraisals and internal audits to try to force out those who spoke out against dubious practices.

Some of the questionable property transactions may have involved property in Bangsar South, said the source. – The Star by allison laimartin vengadesan

 

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Rocky times ahead for China FDI in Malaysia


Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.’ – credit: Malaysia Today

Great wall of controversy: Dr Mahathir’s criticism of Alliance Steel’s barricade for its RM6bil integrated steel
complex has upset some Chinese investors.

A series of attacks on China-funded projects in Malaysia by the Prime Minister is causing anxiety not only to Chinese nationals but also locals.

INVESTMENTS and mega contracts linked to China will have to brace for rocky times ahead if Prime Minister Tun Dr Mahathir Mohamad continues unchecked with his incessant tirade against Chinese endeavours in Malaysia.

The golden era for Chinese investments, which possibly peaked during the rule of former prime minister Datuk Seri Najib Razak, seems to have come to an unceremonious end.

The future of foreign direct investment (FDI) from China is now seen as unpredictable – at least for the next 3-5 years – under the new government of Dr Mahathir, according to Datuk Keith Li, president of China Entrepreneurs Association in Malaysia.

Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.

“The series of comments made on Chinese investments by the PM have affected the confidence of Chinese investors. Those who originally wanted to come are adopting a wait-and-see attitude, while those already in are careful about their expansion plans,” says Li in an interview with Sunday Star.

The outspoken leader of Chinese firms notes that businessmen from the mainland are “worried”, although some comments of the Prime Minister were later “clarified” by other Cabinet Ministers or the PM’s Office.

“Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries as well,” adds Li.

Since his five-day official visit to China that ended on Aug 21, the 93-year-old Malaysian leader has caused anxiety to all by making shocking announcements.

While summing up his China trip on Aug 21, he declared he would cancel the RM55bil East Coast Rail Link (ECRL) and two gas pipelines being built by Chinese firms.

As the ECRL is of strategic importance to China’s Belt and Road Initiative – the policy which Dr Mahathir has repeatedly voiced his support for, Beijing would expect a renegotiation of the contract terms rather than an outright cancellation.

Dr Mahathir had reasoned that with national debt of over RM1 trillion, Malaysia could not afford these projects. In addition, these contracts are tainted with unfair terms and smacked of high corruption.
Although the Prime Minister said Chinese leaders understood Malaysia’s situation, reactions of Chinese nationals on social media were unforgiving with many suspecting Dr Mahathir “has other motives”.

Many see Dr Mahathir as attempting to raise Malaysia’s bargaining power in the negotiation for compensation for the cancelled projects. China, according to social media talk, is asking for RMB50bil as compensation.

On social media, there are also suggestions that Dr Mahathir is aiming at his predecessor as most China-linked projects were launched during the rule of Najib.

During the rule of Najib, Malaysia-China relations were intimate.

This has resulted in the influx of major construction and property companies from the mainland, followed by banks and industries.

But on May 9, Dr Mahathir’s Pakatan Harapan coalition toppled the Barisan Nasional government of Najib after the most bitterly fought general election in local history.

The second-time premier has put the blame on Najib for the massive 1MDB financial scandal, which Najib has denied, and mismanagement of the country’s finance.

And while the Chinese nationals are all riled up by the cancellation of ECRL, Dr Mahathir came up with an ill-advised statement.

Last week he ordered a wall surrounding Alliance Steel, which is investing US$1.4bil (RM6bil) for a massive steel complex, to be demolished. This was seen as unreasonably targeting a genuine FDI.

Although the foreign ministry later clarified that the leader had mistaken the wall to be built around the Malaysia-China Kuantan Industrial Park (MCKIP), the anger of Chinese nationals lingers on.

The industrial park is a G-to-G project to jointly promote bilateral investments. There is an even bigger sister industrial park in China that houses many Malaysian firms. All these were built during Najib’s reign.

Dr Mahathir’s statement has also caught the attention of China’s Global Times, the mouthpiece of the Communist Party of China.

In an editorial on Aug 28, the news portal warned: “Many words of Kuala Lumpur can spread to China via the Internet, causing different reactions. How the Chinese public sees China-Malaysia cooperation is by no means inconsequential to Malaysia’s interests.”

It noted “while Dr Mahathir advocates pursuing a policy of expanding friendly cooperation with China … but when it comes to specific China-funded projects, his remarks gave rise to confusion. Like this time, it is startling to equate the controversy surrounding a factory wall with state sovereignty.”

Global Times added: “When such remarks are heard by Chinese people, the latter find it piercing. They will definitely make Chinese investors worry about Malaysian public opinion and whether such an atmosphere will affect investment in the country.”

In fact, it would be unwise for the government to disrupt MCKIP. Co-owned by Chinese, IJM Corporation and Pahang government, this industrial park has lured in Chinese FDI of over RM20bil.

It is an important economic driver in the East Coast and has aimed to create 19,000 jobs by 2020.

While the “wall” statement might be seen as a minor mistake, Dr Mahathir’s flawed announcement last Monday that foreigners would be barred from buying residential units in the US$100bil (RM410bil) Forest City stirred another uproar.

On Aug 27, Reuters quoted Dr Mahathir as saying: “That city that is going to be built cannot be sold to foreigners. Our objection is because it was built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats.”

Currently being developed by Country Garden Holdings of China, this 20-year long project, built on reclaimed land in Johor Bahru, aims to house 700,000 people. As about 70% of the house buyers are Chinese, some locals fear this could turn into a China town.

Unlike Alliance Steel that has stayed silent, Country Garden fought back by seeking clarifications from the PM’s Office.

In a statement, the major Chinese developer said all its property transactions had complied with Malaysian laws.

Citing Section 433B of the National Land Code, it added a foreign citizen or a foreign company may acquire land in Malaysia subject to the prior approval of the State Authority.

In addition, it said Dr Mahathir’s comment did not correspond with the content of the meeting he had with Country Garden founder and chairman Yeung Kwok Keung on Aug 16.

During the meeting, Dr Mahathir said he welcomed foreign investments which could create job opportunities, promote technology transfer and innovations.

In fact, this forest city project – along with ECRL – were the main targets of attack by Dr Mahathir before the May 9 election.

Opposition to these projects had helped drive Dr Mahathir’s election campaign, during which he said was evidence of Najib selling Malaysia’s sovereignty to China.

These projects, together with major construction contracts won by Chinese and the inflow of industrial investments, place the total value of Chinese deals at more than RM600bil in Malaysia.

But few would expect Dr Mahathir to use his powerful position to resume his attacks on China-linked projects so soon after his so-called “fruitful visit” to Beijing.

During his official visit to Beijing, the Malaysian leader was accorded the highest honour by China, due mainly to respect for “China’s old friend” and strong Malaysia-China relations built since 1975.

Dr Mahathir was chauffeured in Hongqi L5 limousine, reserved for the most honourable leaders, and greeted in an official welcome ceremony by Premier Li Keqiang. He was also guest of honour at a banquet at Diaoyutai State Guesthouse hosted by President Xi Jinping.

But beneath these glamorous receptions, there were reservations exuded by the Chinese for this leader whose premiership is scheduled to end in two years.

There were no exciting business deals signed in Beijing. There was absence of high diplomatic rhetoric that “Malaysia-China ties have been elevated to another historic high”, oft-repeated during Najib’s past visits.

Many even notice that Premier Li and Dr Mahathir had a cool handshake after their short joint press conference in Beijing.

And although China promised to buy Malaysian palm oil, the statement was qualified with “price sensitivity”, which means it will not buy above market price.

In addition, there was no mention of “buying palm oil without upper limit”, which was promised to Najib last year.

If Dr Mahathir’s original intention was to target Forest City and its owners, his move has certainly backfired. The country will have to pay a price for his off-the-cuff statement.

The “new policy” will have serious ramifications as it would hit the value of the properties not only in Forest City but also in other China-linked and non-Chinese projects.

Country Garden’s Danga Bay project will also be hit. It now faces a more daunting task of selling the balance of about 2,000 units in Danga Bay, according to a Starbiz report.

Other Chinese developers like R&F Princess Cove and Greenland Group will be affected.

VPC Alliance Malaysia managing director James Wong told Starbiz there may be legal suits against the government.

“That may force Country Garden to scale down because it has invested a lot with its industrial building systems factory and an international school, among other investments. It will impact Country Garden and Malaysia’s property sector negatively,” Wong said.

“Foreign buyers and other foreign companies will shy away,” Wong added.

The change in government and the insensitive comments on China-funded projects have turned Malaysia into a high-risk investment destination for the Chinese, according to Li.

“We don’t know which China projects will be targeted next. Looking back, it’s a blessing in disguise that we were pushed out of the RM200bil Bandar Malaysia project. It is also lucky that Chinese money has not gone into the RM30bil Melaka Gateway project,” says Li, who owns a travel agency in Malaysia.

“In the immediate future, more tourists from China are likely to shy away from Malaysia.

“Malaysia may not hit the target of having three million visits from China this year,” Li adds.

Credit: Ho Wah Foon The Star

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SST – for better or worse ?


What is Sales & Service Tax (SST) in Malaysia? – SST Malaysia

Today, the Sales and Service Tax (SST) makes a comeback on our tax radar screen to replace the three years and two months old Goods and Services Tax (GST), which was implemented on April 1, 2015.

The abolition of the GST and replaced with SST is an election promise of the Pakatan Harapan manifesto.

It has been claimed that the GST is a regressive broad-based consumption tax that has burdened the low- and middle-income households amid the rising cost of living. The multi-stage tax levied on supply chains also caused cascading cost and price effects on goods and services. That said, the Finance Minister has acknowledged that the GST is an efficient and transparent tax.

Following the implementation of the SST, the Government will come to terms that the budget spending will have to be rationalised and realigned with the lower revenue collection from the SST to keep the lower budget deficit target on track.

The expected revenue collection from SST is RM21bil compared to an average of RM42.7bil per year in 2016-17 from GST.

During the period 2010-2014, the revenue collection from the SST, averaging RM14.8bil per year (the largest amount collected on record was RM17.2bil in 2014), of which 64% was contributed by the sales tax rate of 10% while the balance 36% from the service tax of 6%.

Faced with the revenue shortfall, the Government expects cost-savings, plugging of leakages, weeding out of corruption as well as the containment of the costs of projects would help to balance the financing gap between revenue and spending.

The sales tax rate (0%, 10% and 5% as well as a specific rate for petroleum) and service tax of 6% is imposed on consumers who use certain prescribed services. The taxable threshold for SST is set at annual revenue of RM500,000, the same threshold as GST, with the exception for eateries and restaurants at RM1.5mil.

As SST is levied only at a single stage of the supply chain, that is at the manufacturers or importers level and NOT at wholesalers, retailers and final consumers, it has cut off the number of registered tax persons and establishments from 476,023 companies under GST as of 15 July to an estimated 100,405 under SST.

The smaller number of registered establishments means no more compliance cost to about 85% of traders.

The distributive traders (wholesalers and retailers) will be hassle-free from cash flow problems, as they are no longer required to submit GST output tax while waiting to claim back the GST input tax. During GST, many traders imputed refunds into their pricing because of the delay in GST refunds. This was partly blamed for the cascading cost pass-through and price increases onto consumers.

For SST, 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to 60% under the GST.

It is estimated that up to RM70bil will be freed up to allow consumers to spend more.


Expanded scope

The proposed service tax regime has a narrower base (43.5% of services is taxable) compared to the GST (64.8% of services is taxable).

Medical insurance for individuals, service charges from hotel, clubs and restaurants as well as household’s electricity usage between 300kWh and 600kWh are not taxable. However, the scope of the new SST has been expanded compared to the previous SST. Among them are gaming, domestic flights (excluding rural air services), IT services, insurance and takaful for individuals, more telecommunication services and preparation of food and beverage services as well as electricity supply (household usage above 600kWh).

For hospitality services, the proposed service tax lowered the registration threshold of general restaurants (not attached with hotel) from an annual revenue of RM3mil under old service tax regime to RM1.5mil, resulting in expanded coverage of more restaurants.

Private hospital services will be excluded under the new SST regime.

How does SST affect consumers?

Technically speaking, the revenue shortfall of RM23bil between SST and GST is a form of “income transfer” from the Government to households and businesses. This is equivalent to tax cuts to support consumer spending.


Will it lead to higher consumer prices?

The contentious issue is will the SST burden households more than that of the GST? It must be noted that the cost of living not only encompasses prices paid for goods and services but also housing, transportation, medical and other living expenses.

The degree of sales tax impact would depend on the cost and margin (mark-up) of businesses along the supply chain before reaching end-consumers.

The coverage and scope of tax imposed also matter.

As the price paid by consumers is embedded in the selling price, this gives rise to psychology effect that sales tax is somewhat better off than GST.

The good news to consumers is that 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to the 60% under the GST.

Technically speaking, monthly headline inflation, as measured by the Consumer Price Index, is likely to show a flat growth or even declines in the months ahead.

It must be noted that consumers should compare prices before GST versus the three-month tax holiday (June-August).

Generally, consumers perceived that prices should either come down or remained unchanged as the sales tax is levied on manufacturers.

On average, some items (electrical appliances and big ticket items such as cars) would be costlier when compared to GST and some may come down (new items exempted from SST).

Nevertheless, we caution that consumers may experience some price increases, as prices generally did not come as much following the removal of GST in June.

There are concerns that prices may still go up in September when the new SST kicks in as irresponsible traders may take advantage to increase prices further.

Household consumption, which got a big boost during the three-month tax holiday in June-August, could see some normalisation in spending.

The smooth implementation of the new SST, accompanied by strict enforcement of price checks and the curbing of profiteering, especially for essentials goods and services consumed by B40 income households, are crucial to keep the level of general prices stable.

Strong consumer activism with the support of The Federation of Malaysian Consumers Association and the Consumers Association Penang as well as the media must work together to help in price surveillance and protect consumers’ interest.

Credit to Lee Heng Guie – comment

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PM: Understand Malaysia’s fiscal woes


hhttps://youtu.be/Kb266n1yH8M

Video: //players.brightcove.net/4405352761001/default_default/index.html?videoId=5824411529001

Wow! China’s most impressive Guard of Honour for Tun Mahathier

 

TUN Dr Mahathir Mohamad has appealed to China for its understanding on Malaysia’s fiscal woes, as uncertainty hovers over the China-backed infrastructure projects back home.

The Prime Minister, who is on a five-day visit to China, also hoped Beijing could lend a helping hand to solve the problems plaguing Putrajaya.

“We hope to get China to understand the problem faced by Malaysia today and believe it would look sympathetically towards the problem we need to resolve.

“And perhaps help us resolve some of our internal fiscal problems,” he said.

Dr Mahathir was speaking at a joint press conference with his Chinese counterpart Li Keqiang at the Great Hall of the People here yesterday, following the official welcoming ceremony and a closed-door meeting.

While Dr Mahathir had stopped short of specifying the problem, the Pakatan Harapan government had said that the country’s debt is now above RM1 trillion.

The new administration was also critical of the “lopsided” deals with China and moved to suspend projects with Chinese investment, such as the East Coast Rail Link, the Multi-Product Pipeline and the Trans-Sabah Gas Pipeline.

During this visit, Dr Mahathir had stressed that Malaysia was not against any Chinese firms and that he welcomed Chinese businessmen to invest in Malaysia.

At the press conference, Dr Mahathir said Malaysia had much to gain from China and believes that Chinese investment could bring down the unemployment rate in the country.

“Malaysia has a policy of being friendly to every country in the world irrespective of its ideology. This is because we need to have a market for our produce,” he said while expressing hope that Malaysia would become a South-East Asian hub for new technology being developed in China.

“China has great entrepreneurs with innovative ideas in doing business that Malaysians can learn from.

“China has got a lot that will be beneficial to us. It is a big and rich market created by very dynamic people,” he said.

Asked about his views on the trade war between China and the United States, Dr Mahathir said Malaysia would support free and fair trade.

He said he did not want to see this trade war becoming a new form of colonialism.

Dr Mahathir’s trip, which ends today, is his first official visit to China since his return to helm the country.

Ministers joining him on the trip are Foreign Affairs Minister Datuk Saifuddin Abdullah, Primary Industries Minister Teresa Kok, International Trade and Industry Minister Ignatius Darell Leiking, Agriculture and Agro-based Industry Minister Datuk Salahuddin Ayub, Minister in the Prime Minister’s Department Datuk Liew Vui Keong and Entrepreneurial Development Minister Mohd Redzuan Md Yusof.

Meanwhile, Dr Mahathir also had a closed-door meeting with Chinese President Xi Jinping yesterday evening at the Diaoyutai State Guest House.

Accompanied by his wife Tun Dr Siti Hasmah Mohd Ali, he later attended a dinner hosted by Xi and his wife Peng Liyuan.

Bernama reported that Dr Mahathir gave the assurance to Xi that there would be no changes in policy towards under the new Malaysian government.

He told Xi that he was impressed with the level of development achieved by China.

“We see China as a model for development,” he said.

Credit: Beh Yuen Hui The Star

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GST vs SST. Which is better?


MALAYSIA’s decision to revert to the Sales and Service Tax (SST) from the Goods and Services Tax (GST) will result in a higher disposable income due to relatively lower prices it will incur in most goods and services.

Consumers will have a choice in their consumption – by paying service taxes based on their affordability and ability.

The coverage of GST was comprehensive and it covered too wide a sector. While it was able collect a sustainable sum of RM44bil for the country, it was not people-friendly.

The narrowing scope of the SST will at most, collect approximately RM23bil for the country but it will indeed relieve the people – so SST is needed by the people.

Methodology of SST

The Sales Tax Bill and the Service Tax Bill have just been passed at the Dewan Rakyat and are expected to get approval from the Dewan Negara when it convenes on August 20.

This leaves little room for businesses and entrepreneurs to get ready for the new tax regime in less than a month’s time.

Therefore, it is of utmost importance to understand the concept and mechanism of SST as stated in both the Bills.

SST comprises two legislations. The sales tax is imposed on the manufacturing sector as governed by the Sales Tax Act 2018 while service tax is imposed on selected service sectors, with one of the most notable ones being the food and beverage (F&B) service providers.

The Service Tax Act 2018 would govern the selected service providers and the details would be gazetted in the subsidiary legislation, PU(A) Service Tax Regulations 2018.

Finance Minister Lim Guan Eng has announced that the threshold for F&B providers is set at annual turnover of RM1mil.

This would mean that those who operate with less than RM1mil turnover would not charge service tax at 6%.

This translates into hawker food, cafes, take aways or food trucks being able to provide F&B at lower prices as compared to the GST regime of 6%. Consumers are deemed to be given an option to pay service tax or not, depending on their consumptions at places such as fast food outlets, restaurants or food courts.

Generally, living costs will be relatively lower in the SST era as the B40 group of consumers would certainly be relieved in their daily eating affair.

The existing GST regime sets up the threshold at RM500,000 per year, meaning that almost all restaurants, including simple mixed rice outlets, would have a GST of 6% imposed. The service tax regime would not impose service tax of 6% on service charge rendered in any restaurant or café operator.

Service charge in its true essence, represents tips or gratuity to the waiters working in the restaurant and it is entirely at the discretion of the F&B operators.

These operators may choose to charge from 5% to 15% or even free of charge. In summary, in the event service charge is imposed, it would not be subject to service tax.

SST is people friendly as the daily consumption of food and beverages would be much lower in price as compared to the GST regime. The imposition of service charge is not governed by any law and it is entirely at the discretion of the F&B operators.

In order to avoid disputes, it is advised that notice be placed outside the premises if the F&B operator is imposing a service charge ans the rate determined by them.

SST is one stage

Sales Tax is only imposed one time on the manufacturing company when a sale is made to a trading company. The subsequent sales of the goods by the trading company would have no sales tax imposed.

Business entrepreneurs must be mindful and careful in the cost management as Sales Tax – although imposed at 10% – would eventually result in a much lower pricing of goods as compared to the GST regime.

GST is operating on a value added concept with input tax available as deduction. The supply chain moving from manufacturers to distributors, dealers and to consumers would result in higher pricing as GST is imposed on final stage, comprising of value add and profit margin.

SST is a business cost

Under the GST regime, input tax is available as a credit or deduction against output tax based on tax invoice received from GST registrant suppliers.

This would mean that GST is never a business cost as deduction is available against output tax even though there is no sales generated. Sales Tax on the other hand, would be paid by the trading company purchasing goods from the manufacturing company.

It is a business cost and deduction is only available when there is a sale. This would mean that business cost would be higher as Sales Tax is part of the inventory cost and to be deducted as cost of sales when goods are sold or exported. In simple terms, no sales, no deductions.

Businessmen are urged to carefully analyse the cost and not overprice the goods for the benefits of the people and the sustainability of their businesses. The reduction of GST from 6% to nil would immediately translate a price reduction of 6%, which is a must for a businesses to adhere to.

Failure to adhere to the pricing would expose the operators to the fines and penalties on anti-profiteering governed by Price Control and Anti-Profiteering Act 2011.

As the breakdown shows, SST is well suited in the Malaysian environment, to both the business communities and the people.

Source: Dr Choong Kwai FattDubbed the Malaysian tax guru, Dr Choong Kwai Fatt is a tax specialist and advocate.

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Has Penang Island’s growth & development become a hazard to life?


  • Malaysia’s Penang Island has undergone massive development since the 1960s, a process that continues today with plans for transit and land-reclamation megaprojects.
  • The island is increasingly facing floods and landslides, problems environmentalists link to paving land and building on steep slopes.
  • This is the second in a six-part series of articles on infrastructure projects in Peninsular Malaysia.

GEORGE TOWN, Malaysia — Muddy carpets and soaked furniture lay in moldering piles on the streets of this state capital. It was Sunday morning, Oct. 29, 2017. Eight days earlier, torrents of water had poured off the steep slopes of the island’s central mountain range. Flash floods ripped through neighborhoods. A landslide killed 11 workers at a construction site for a high-rise apartment tower, burying them in mud. It was Penang Island’s second catastrophic deluge in five weeks.

Kam Suan Pheng, an island resident and one of Malaysia’s most prominent soil scientists, stepped to the microphone in front of 200 people hastily gathered for an urgent forum on public safety. Calmly, as she’s done several times before, Kam explained that the contest between Mother Earth’s increasingly fierce meteorological outbursts and the islanders’ affection for building on steep slopes and replacing water-absorbing forest and farmland with roads and buildings would inevitably lead to more tragedies.

“When places get urbanized, the sponge gets smaller. So when there is development, the excess rainwater gets less absorbed into the ground and comes off as flash floods,” she said. “The flood situation is bound to worsen if climate change brings more rain and more intense rainfall.”

Five days later it got worse. Much worse. On Nov. 4, and for the next two days, Penang was inundated by the heaviest rainfall ever recorded on the island. Water flooded streets 3.6 meters (12 feet) deep. Seven people died. The long-running civic discussion that weighed new construction against the risks of increasingly fierce ecological impediments grew more urgent. George Town last year joined an increasing number of the world’s great coastal cities — Houston, New Orleans, New York, Cape Town, Chennai, Jakarta, Melbourne, São Paulo — where the consequences are especially vivid.

The empty apartment construction  site where 11 men died in an October 2017 landslide. Image by Keith Schneider for Mongabay.

Penang’s state government and Chow Kon Yeow, its new chief minister, recognize the dilemma. Three weeks after being named in May to lead the island, Chow told two reporters from The Star newspaper that “[e]conomic growth with environmental sustainability would be an ideal situation rather than sacrificing the environment for the sake of development.”

But Chow also favors more growth. He is the lead proponent for building one of the largest and most expensive transportation projects ever undertaken by a Malaysian city: a $11.4 billion scheme that includes an underwater tunnel linking to peninsular Malaysia, three highways, a light rail line, a monorail, and a 4.8-kilometer (3-mile) gondola from the island to the rest of Penang state on the Malay peninsula.

The state plans to finance construction with proceeds from the sale of 1,800 hectares (4,500 acres) of new land reclaimed from the sea along the island’s southern shore. The Southern Reclamation Project calls for building three artificial islands for manufacturing, retail, offices, and housing for 300,000 residents.

Awarded rights to build the reclamation project in 2015, the SRS Consortium, the primary contractors, are a group of national and local construction companies awaiting the federal government’s decision to proceed. Island fishermen and their allies in Penang’s community of environmental organizations and residential associations oppose the project, and they proposed a competing transport plan that calls for constructing a streetcar and bus rapid transit network at one-third the cost. (See Mongabay –https://news.mongabay.com/2017/04/is-a-property-boom-in-malaysia-causing-a-fisheries-bust-in-penang/)

For a time the national government stood with the fishermen. Wan Junaidi Tuanku Jaafar, the former minister of natural resources and environment and a member of Barisan Nasional (BN), the ruling coalition, refused to allow the project. “The 1,800-hectare project is too massive and can change the shoreline in the area,” he told reporters. “It will not only affect the environment but also the forest such as mangroves. Wildlife and marine life, their breeding habitats will be destroyed.”

The state, and Penang Island, however, have been governed since 2008 by leaders of the Pakatan Harapan coalition, which supported the transport and reclamation mega projects. In May 2018, Pakatan Harapan routed the BN in parliamentary elections. Former prime minister Mahathir Mohamed, the leader of Pakatan Harapan, assumed power once again. Island leaders anticipate that their mega transport and reclamation projects will be approved.

It is plain, though, that last year’s floods opened a new era of civic reflection and reckoning with growth. Proof is everywhere, like the proliferation of huge blue tarps draped across flood-scarred hillsides outside of George Town’s central business district. Intended to block heavy rain from pushing more mud into apartment districts close by, the blue tarps are a distinct signal of ecological distress.

Or the flood-damaged construction sites in Tanjung Bungah, a fast-growing George Town suburb. A lone guard keeps visitors from peering through the gates of the empty apartment construction site where 11 men died in the October 2017 landslide. About a mile away, a row of empty, cracked, expensive and never-occupied hillside townhouses are pitched beside a road buckled like an accordion. The retaining wall supporting the road and development collapsed in the November 2017 flood, causing expensive property damage.

  • A row of empty, cracked, expensive and never-occupied hillside  townhouses are pitched beside a road buckled like an accordion. The retaining wall supporting the road and development collapsed in a November 2017 flood, causing extensive property damage. Image by Keith Schneider for Mongabay.

    Gurmit Singh, founder and chairman of the Centre for Environment, Technology and Development, Malaysia (CETDEM), and dean of the nation’s conservation activists, called Penang state government’s campaign for more growth and mega infrastructure development “a folly.”

    “It exceeds the carrying capacity of the island. It should never be approved,” he said in an interview in his Kuala Lumpur office.

    Singh, who is in his 70s and still active, was raised on Penang Island. He is an eyewitness to the construction that made much of his boyhood geography unrecognizable. “Everything built there now is unsustainable,” he said.

    It’s taken decades to reach that point. Before 1969, when state authorities turned to Robert Nathan and Associates, a U.S. consultancy, to draw up a master plan for economic development, Penang Island was a 293-square-kilometer (113-square-mile) haven of steep mountain forests, ample rice paddies, and fishing villages reachable only by boat.

    For most residents, though, Penang Island was no tropical paradise. Nearly one out of five working adults was jobless, and poverty was endemic in George Town, its colonial capital, according to national records.

    Nathan proposed a path to prosperity: recruiting electronics manufacturers to settle on the island and export their products globally. His plan emphasized the island’s location on the Strait of Malacca, a trading route popular since the 16th century that tied George Town to Singapore and put other big Asian ports in close proximity.

  • Sea and harbor traffic on the Strait of Malacca. Image by Keith Schneider for Mongabay.

    As a 20th century strategy focused on stimulating the economy, Nathan’s plan yielded real dividends. The island’s population nearly doubled to 755,000, according to national estimates. Joblessness hovers in the 2 percent range.

    Foreign investors poured billions of dollars into manufacturing, retail and residential development, and all the supporting port, energy, road, and water supply and wastewater treatment infrastructure. In 1960, the island’s urbanized area totaled 29.5 square kilometers (11.4 square miles), almost all of it in and immediately surrounding George Town. In 2015, the urban area had spread across 112 square kilometers (43 square miles) and replaced the mangroves, rubber plantations, rice paddies and fishing villages along the island’s northern and eastern coasts.

    There are now 220,000 homes on the island, with more than 10,000 new units added annually, according to National Property Information Center. George Town’s colonial center, which dates to its founding in 1786, was designated a UNESCO World Heritage site in 2008, like Venice and Angkor Wat. The distinction helped George Town evolve into a seaside tourist mecca. The state of Penang, which includes 751 square kilometers (290 square miles) on the Malay peninsula, attracts over 6 million visitors annually, roughly half from outside Malaysia. Most of the visitors head to the island, according to Tourism Malaysia.

    Nathan’s plan, though, did not anticipate the powerful ecological and social responses that runaway shoreline and hillside development would wreak in the 21st century. Traffic congestion in George Town is the worst of any Malaysian city. Air pollution is increasing. Flooding is endemic.

  • Blue tarps drape the steep and muddy hillsides in George Town to slow erosion during heavy rain storms. Image by Keith Schneider for Mongabay.

    Nor in the years since have Penang’s civic authorities adequately heeded mounting evidence of impending catastrophes, despite a series of government-sponsored reports calling for economic and environmental sustainability.

    Things came to a head late last year. Flooding caused thousands of people to be evacuated from their homes. Water tore at hillsides, opening the forest to big muddy wounds the color of dried blood. Never had Penang Island sustained such damage from storms that have become more frequent, according to meteorological records. Rain in November that measured over 400 millimeters (13 inches) in a day. The damage and deaths added fresh urgency and new recruits to Penang Island’s longest-running civic argument: Had the island’s growth become a hazard to life?

    George Town is far from alone in considering the answer. The 20th century-inspired patterns of rambunctious residential, industrial and infrastructure development have run headlong into the ferocious meteorological conditions of the 21st century. Coastal cities, where 60 percent of the world’s people live, are being challenged like never before by battering storms and deadly droughts. For instance, during a two-year period that ended in 2016, Chennai, India, along the Bay of Bengal, was brutalized by a typhoon and floods that killed over 400 people, and by a drought that prompted deadly protests over water scarcity. Houston drowned in a storm. Cape Town is in the midst of a two-year drought emergency.

    George Town last year joined the expanding list of cities forced by Nature to a profound reckoning. Between 2013 and mid-October 2017, according to state records, Penang recorded 119 flash floods. The annual incidence is increasing: 22 in 2013; 30 in 2016. Residents talk about a change in weather patterns for an island that once was distinguished by a mild and gentle climate but is now experiencing much more powerful storms with cyclone-force winds and deadly rain.

    Billions of dollars in new investment are at stake. Apartment towers in the path of mudslides and flash flooding rise on the north shore near George Town. Fresh timber clearing continues apace on the steep slopes of the island’s central mountain range, despite regulations that prohibit such activity. Demographers project that the island’s population could reach nearly 1 million by mid-century. That is, if the monstrous storms don’t drive people and businesses away — a trend that has put Chennai’s new high-tech corridor at risk.

    The urgency of the debate has pushed new advocates to join Kam Suan Pheng at the forefront of Penang Island’s environmental activism. One of them is Andrew Ng Yew Han, a 34-year-old teacher and documentary filmmaker whose “The Hills and the Sea” describes how big seabed reclamation projects on the island’s north end have significantly diminished fish stocks and hurt fishing villages. High-rise towers are swiftly pushing a centuries-old way of life out of existence. The same could happen to the more than 2,000 licensed fishermen and women contending with the much bigger reclamation proposals on the south coast.

    “How are they going to survive?” Han said in an interview. “This generation of fisherman will be wiped out. None of their kids want to be fisherman. Penang is holding a world fisherman conference in 2019. The city had the gall to use a picture of local fisherman as the poster. No one who’s coming here knows, ‘Hey you are reclaiming land and destroying livelihood of an entire fishing village.’”

    “We all want Penang to be progressive. To grow. To become a great city,” he adds on one of his videos. “But at whose expense? That’s the question. That’s the story I’m covering.”

  • Andrew Ng Yew Han, a 34-year-old teacher and documentary film maker whose “The Hills and the Sea” describes how big seabed reclamation projects on the island’s north end have significantly diminished fish  stocks and hurt fishing villages. Image by Keith Schneider for Mongabay.

    Another young advocate for sustainable growth is Rexy Prakash Chacko, a 26-year-old engineer documenting illegal forest clearing. Chacko is an active participant in the Penang Forum, the citizens’ group that held the big meeting on flooding last October. Nearly two years ago, he helped launch Penang Hills Watch, an online site that uses satellite imagery and photographs from residents to identify and map big cuts in the Penang hills — cuts that are illegal according to seldom-enforced state and federal laws.

    Kam Suan Pheng and other scientists link the hill clearing to the proliferation of flash flooding and extensive landslides that occur on the island now, even with moderate rainfall.

    In 1960, Malaysia anticipated a future problem with erosion when it passed the Land Conservation Act that designated much of Penang Island’s mountain forests off-limits to development. In 2007, Penang state prohibited development on slopes above an elevation of 76 meters (250 feet), and any slope with an incline greater than 25 degrees, or 47 percent.

    Images on Penang Hills Watch make it plainly apparent that both measures are routinely ignored. In 2015, the state confirmed as much when it made public a list of 55 blocks of high-rise housing, what the state called “special projects,” that had been built on hillsides above 76 meters or on slopes steeper than 25 degrees. The “special projects” encompassed 10,000 residences and buildings as tall as 45 stories.

 

Rexy Prakash Chacko, a 26-year-old engineer who helped launch Penang Hills Watch, an online site that uses satellite imagery and photographs from residents to identify and map big cuts in the Penang hills. Image by Keith Schneider for Mongabay.

“There is a lot of water coming down the hills now,” Chacko said in an interview. “It’s a lack of foresight. Planning has to take into account what happens when climate change is a factor. Clearing is happening. And in the last two years the rain is getting worse.

“You can imagine. People are concerned about this. There was so much lost from the water and the mud last year.”

Ignoring rules restricting development has consequences, as Kam Suan Pheng has pointed out since getting involved in the civic discussion about growth in 2015. After the October 2017 landslide, she noted that local officials insisted the apartment building where the 11 deaths occurred was under construction on flat ground. But, she told Mongabay, an investigation by the State Commission of Inquiry (SCI) found that the apartment construction site abutted a 60-degree slope made of granite, which is notoriously unstable when it becomes rain-saturated.

“State authorities continued to insist that development above protected hill land is prohibited,” Kam said in an email. “There is little to show that more stringent enforcement on hill slope development has been undertaken. Hopefully the findings of the SCI will serve as lessons for more stringent monitoring and enforcement of similar development projects so that the 11 lives have not been sacrificed in vain.”

 

Judged on merit and nothing less


It’s official: The Yang di-Pertuan Agong  Sultan Muhammad V presenting the letter of appointment to Malanjum at
Istana Negara. Looking on is Prime Minister Tun Dr Mahathir Mohamad. —Bernama

Judicial diversity and meritocracy are inseparable in order to win the faith of society. The appointment of Tan Sri Richard Malanjum, a Sabah-born Kadazandusun, as the top judge is a first for a non-Malay Malaysian and is welcomed as a major step towards winning greater confidence in the Judiciary, CHELSEA L.Y. NG writes.

IT’S a fairy tale come true for some Malaysians banking on a better Judiciary grounded on merits when news of Tan Sri Richard Malanjum having been sworn in as the ninth Chief Justice of Malaysia started to trickle down to the media late Wednesday evening.

Just several hours before that, the witty Malanjum had brushed off talk of him being selected as the next top judge.

“Itu cerita dongeng (It’s a fairy tale),” he told reporters in Kuching before walking off quickly.

But by then there were already some pictures of him attending an alleged rehearsal session being circulated among a few privileged ones.

Well, going by some of the not-so-welcoming responses from those who thought that the position was reserved for only Malay judges, the initial hush-hush circumstances were understandable.

But we cannot really fault those who think the positions are reserved purely for Malays. If you have only been exposed to Chief Justices (CJ, top post) and Chief Judges of Malaya (CJM, top three) after 1994, then you might be forgiven for thinking that the posts are for Malaysians of Malay origin only (see lists of LPs and CJs).

In the last two decades, top posts had been taken by Malay judges but if we look further back, the situation was much different prior to 1994. There used to be a good mix of judges from different races at least for the CJM post, which was then known as the Chief Justice of Malaya (a No.2 post then and not to be confused with the current CJ post, which is a top post). The top judge was known as the Lord President (LP) then or Lord President of the Supreme Court in full.

The LP position was created after the abolition of appeals to the Judicial Committee of the Privy Council in 1985.

Below the LP were the Chief Justices of the High Courts of Malaya and Borneo.

 

In 1994, the LP was renamed CJ when the Supreme Court reverted to the name of Federal Court, which was the name used prior to 1985 but with the Privy Council as the highest authority.

In 1994, Parliament amended the Federal Constitution and approved a reorganisation of the court system and significantly set up the Court of Appeal as the second highest court and renamed the highest court Federal Court (previously Supreme Court). After 1994, there was a new No.2 position created called the President of the Court of Appeal. The CJM hence moved to the third position.

For senior lawyer Datuk Roger Tan, judicial diversity is an essential element.

“It is pivotal in creating confidence in a multi-racial society. Diversity can be on the grounds of race, religion and gender.

“In Britain, they just had the first female President of the Supreme Court in hundreds of years,” said Tan.

Lawyer Fahri Azzat said there is nothing in the Constitution that demands that a Chief Justice, President of the Court of Appeal or the Chief Judge of Malaya must be of Malay heritage, or dictates that the racial composition of the Federal Court or even the Court of Appeal contain a majority of citizens of Malay heritage.

In fact, Article 123 of the Federal Constitution which deals with the qualifications to be a High Court judge and above provides the following:

A person is qualified for appointment und

er Article 122B as a judge of the Federal Court, as a judge of the Court of Appeal or as a judge of any of the High Courts if –

(a) he is a citizen; and

(b) for the 10 years preceding his appointment he has been an advocate of those courts or any of them or a member of the judicial and legal service of the Federation or of the legal service of a State, or sometimes one and sometimes another.

For Fahri, that a persistent racial pattern at the appellate courts continues in the Judiciary suggests that race is a more influential factor than abilities or merits when it comes to the appointment and promotion of a judge.

Fahri even wrote about it in 2010 on the LoyarBurok website about the racial composition of the Judiciary.

“Any litigator who is in the thick of litigation practice in our civil courts will acknowledge that at the level of top senior counsel, the composition is the opposite of the nation’s racial population.

“Where top senior legal counsel are concerned, the ratio of Malaysians of Indian heritage are highest as compared to those of Chinese heritage who come in second as compared to those of Malay heritage who have the lowest numbers. That is how I know it to be from experience and conversation,” Fahri wrote then.

However, on Malanjum’s appointment, Fahri has this to say: “I think it is a step or start in the right direction. Whether it closes the gap in terms of judicial diversity and meritocracy remains to be seen with subsequent appointments of both the top judges and the High Court judges.

“I think it will be the starting point for the public to renew its faith in the Judiciary but that again remains to be seen from their judgments, judicial statements and the Judiciary’s actions collectively.

“Just as a swallow does not a summer make, a few judicial appointments do not guarantee rejuvenation of the Judiciary,” he said, adding that these positive developments if seen through over the long term will help foster faith and trust in the Judiciary and the administration of the justice system as a whole.

Retired Federal Court judge Datuk Seri Gopal Sri Ram said the appointment is definitely a welcome move and expected to improve the Judiciary.

“This is the first time we have a non-Malay being made a top judge. Prior to this we had non-Malay judges being appointed to the second highest positions. But that was before 1994.

“From the time of independence until then, no one had looked at the appointments on racial or religious angle. Only in recent times did people start to do so.”

He named a few prominent top judges then such as Tan Sri H.T. Ong, Tan Sri S.S. Gill and Tan Sri Gunn Chit Tuan.

“Richard’s appointment verifies the oneness of Malaysia. That there is only one Malaysia. That there is no East Malaysia or a West Malaysia,” said Sri Ram.

Sultan of Perak Sultan Nazrin Shah had in his special address at the book launch of Tun Arifin Zakaria last year mentioned a valuable quote by his father Sultan Azlan Shah, who was also a respectable Lord President.

“I quote, ‘The rules concerning the independence of the judiciary … are designed to guarantee that they will be free from extraneous pressures and independent of all authority, save that of the law. They are, therefore, essential for the preservation of the Rule of Law,” he said.

The Sultan hit the nail on the head. Justice and judges should be free from any extraneous pressures and everything has to be based on the merits of the law.

The Ruler had on the same occasion called on Federal Court and Court of Appeal judges to write dissenting judgments if they do not agree with the majority of the Bench.

“Sometimes, the brave dissenting voice is transformed into law. A classic case is that of Brown v. Board of Education 347 US 483 (1954) when the US Supreme Court gave weight to the spirit of Justice Harlan’s dissenting voice in Plessy v. Ferguson 163 US 537 (1896).

“As a result, and in a historic judgment, then-chief justice Warren held that racial segregation in public schools constituted a violation of the US constitutional guarantee of equality of rights,” he said.

The Sultan added that judges should be free to express reasons in their judgments as they thought fit, and in other words, for the Rule of Law to flourish, courts and their participants should be allowed to express a variety of ideas and principles.

In the case of Malanjum, some critics even brought up the point that he was not qualified to be made the Chief Justice because of his dissenting judgments in the case of Lina Joy and the use of the Allah word in the Bible.

In Lina Joy, she lost a six-year battle in 2007 to have the word Islam removed from her identity card after the Federal Court dismissed her appeal in a majority decision.

In his dissenting judgment, Malanjum said the department responsible for issuing identity cards should have just complied with Lina Joy’s request to remove the word from her IC. He accused the National Registration Depart­ment of abusing its powers.

“In my view, this is tantamount to unequal treatment under the law. She is entitled to an IC where the word Islam does not appear,” Malanjum said.

In the second case, the Federal Court was divided again with Malanjum dissenting and arguing that the Constitution must remain the supreme law of the land.

In his column, constitutional law expert Prof Dr Shad Saleem Faruqi had also written about Malanjum’s boldness in voicing out his stand and daring to dissent.

According to Dr Shad, in PP v Kok Wah Kuan in 2008, the Federal Court had in a majority judgment “mocked the doctrine of separation of powers as having no legal basis” in the Constitution.

The judgment went further to say that the power of the courts was limited to whatever Parliament bequeathed.

“Fortunately, there was a bold dissent from Malanjum, our Sabah and Sarawak Chief Judge, who insisted that separation of powers and judicial independence are firm pillars of our constitutional edifice.

“He rejected the view that ‘our courts have now become servile agents of a federal Act of Parliament and that the courts are now only to perform mechanically any command or bidding of a federal law’.

“Justice Malanjum was eminently correct on both scores. A Consti­tution is not mere words written on paper,” Dr Shad wrote in his column.

These words by the eminent professor were enough to back Malanjum as a strong guardian of the rule of law and is definitely fitting for the grand position of a Chief Justice.

Enough said, time will tell if we have taken the right path.

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