Me, the urban poor

In the 1980s and 1990s, Kuala Lumpur is more a pleasant place to live for the ordinary workers than it is now. Yes, back then the LRTs and the Monorail are non-existence, KLites have to resort to the notorious Bus Mini to get to everywhere. But it is so cheap and efficient that people are willing to 'risk' their lives riding the ever crowded public transportation.

But hey, everything was cheaper back then and the average salaries are more commensurate with the cost of living in the nation's capital. Recalling back what my mom told me time and again that, working as a production clerk in a multinational electronic component factory in Ulu Klang back then earned her about RM1,200 per month (including overtime payment).

And this is in the 80s, mind you, when mamak stall are still serving RM2 per plate for their famous mee goreng mamak, when they are still operating under a shaded tree, when that is the closest thing Malaysians have as an options to 'alfresco dining'. Fuel were so cheap at 85 sen per litre, and public houses were aplenty, built by the City Hall and the PKNS at a token amount of RM90 per month for a one bedroom 'suites'.

So, RM1,200 per month which my mom earned back then as a minah kilang was so plenty, that she could actually saved up for her marriage with my father. Her husband on the other hand was working as a 'readymix' lorry driver, at a time when these type of jobs are still taken up by locals, instead of going to the foreign workers (legal or illegal).

By renting up at a DBKL public housing scheme at RM90 per month, my parents could actually saved up to finally getting a house themselves in a suburban area in Keramat. Build by the PKNS, it was a two bedroom apartment, complete with basic sanitary maintenance, as well as parking lots. Just a couple of yards away was a government school, a bus terminal, and other amenities such as masjid, sport complex, and also commercial areas.

Now, at the age of 55, they have to some extent successfully raised us all three siblings through primary, secondary and also tertiary education. We are so blessed to have a family who has always been planning for the future, and not divulge themselves with unnecessary indulgences. As Malaysia progresses, a lot of its citizens progressed as well, but there remains a large chunk who were left behind in the race of developments.

Flash forwarding to now, we are already in the second decade of the 21st century. Today, as a financial journalist, I earned RM3500 per month. It is more than double than what my mom had earned as a minah kilang back in the 80s. I earned more than what my parents earned combined when they were married. At the young age of 23, I could afford to own a small, city car, produced by our beloved national automotive company, Proton.

However, at the age of 23, I am ashamed to say that I am still living with my parents. I still eat at their house to save on meals, and I still let them wash my clothes everyday. I don't have to pay them any single sen, but I do give the monthly allowance around RM200 per month.

I don't see how, today, with a salary of RM3500 per month, I could actually save up to own a house in the city. There are no longer public housing schemes built in the city centres like what my parents had back then. DBKL has virtually stopped from building these public houses at strategic locations, on the pretext to reduce government's intervention in the economy, to increase the participation of private sectors in the economy, so to speak.

The DBKL public housing scheme which my parents rented when they were around my age in the 90s have been demolished, as it is an "eye sore" with its dilapidated situation, notorious social ills which have sprouted there, and to make way of a multibillion ringgit mix development project led by the private sector, on the pretext of urban rejuvenation. The location was so strategic, in the middle of the city, centered around public transportation systems such as the monorail, LRTs, express buses, as well as very close to public amenities such as a government hospital, public library, green spaces for recreations, and also people's low cost markets and shopping strips.

I haven't heard of any public housing schemes built by the DBKL anymore since the last batches built in Taman Melati, Selayang, Sentul and some other places I can't even recalled. These places are so far-flung from where its tenants work and play, thus increasing the people's reliance on private vehicles for transportation. This inevitable erode the people's purchasing power as they have very few disposable income left after paying for all sorts of things, which have in a matter of just two decades, tripled, or more.

Even the PKNS now have not been building low-cost houses for the lower income classes anymore. Instead, they sold off their lands to private developers to be developed into a higher end condominiums, which is tagged as 'affordable' at the price of RM300,000 for a two bedroom, 600 sq ft units. In a matter of two decades, the same type of property, although it has become nicer now with swimming pools, gated parking lots, and 24 hours security guards, has increase in price by approximately 10 times more.

I am not here to offer any solution to this problem. But it seems that our government today are so ashamed with the urban poor that they placed, or rather 'misplaced' these groups into the far flung areas outside the city centres where they go to work, and humiliate them with the need to own a private vehicle for commute. With the ever increasing fuel prices, and the subsequent price increases in essential items, there is no way in the shortest term, I foresee myself, and my generation to be able to own a house located at a decent place.

(written while sipping a RM5.50 lychee tea, exclusive of service charge and government taxes at an alfresco dining at MidValley Megamall. Next to the megamall, under construction is another multi-billion ringgit mix development on a site which houses the former Kampung Abdullah Hukum.)

Whither Proton?

By now, almost every single Malaysian would have known that the national car maker Proton Holdings Bhd is now a subsidiary of conglomerate led by billionaire tycoon Tan Sri Syed Mokhtar Albukhary, DRB-Hicom Bhd, after the latter acquired Khazanah Nasional Bhd's block of stake in the automotive group.

It was said that DRB-Hicom will rope in German auomaker Volkswagen AG as a partner to turn around Proton and improve the group's brand and quality, especially for export market, since the domestic automotive industry is already matured and saturated.

Proton exports a little over 20,000 units of its cars to other markets, a number which is very small for the group to become globally competitive. In fact, Proton can not depend on the domestic auto market alone to drive its growth for reason I stated above.

Besides the imminent partnership with Volkswagen (DRB-Hicom has long being a partner to the German giant), there are also talks that General Motors is keen to utilise Proton's plant to be its South East Asian base. There is also the long standing relationship with Japan's Mitsubishi Motor Corp as it has been Proton's partner since day one.

DRB-Hicom, as the ultimate shareholder of Proton, should decide how it plans to turn around Proton. It has the option to just make Proton as a 'rebadging' automaker, that is by just assembling cars by other automotive group and stamp its badge on top of it, just like the Inspira.

This should make Proton profitable, as it doesn't have to invest substantially in new models and new technology, it will just become another extension of DRB-Hicom's automotive business. However, this will diverge from the raison d'etre of Proton itself , which is to speed up the industrialisation process of Malaysia.

As Malaysia rise up in terms of gross domestic product (GDP) per capita, and aspires to become an industrialised and developed country, it has to move its industries up the value chain. It can no longer afford to become a low cost, low value added manufacturing base like it was twenty years ago.

The partnership with Volkswagen seem to be the best options for all parties. Proton could utilize technology transfers from the Germans, and Volkswagen could utilise Proton's Tanjung Malim plant for its assembly base in South East Asia.

However, there is no guarantee that with Volkswagen in the team to turn around Proton, the national automaker would finally become a force to be reckon with. Proton should not just be another Skoda to Volkswagen for it to become internationally acclaimed like Hyundai-Kia.

Perception has a lot to do with the value of its brand. It is in fact the hardest thing to do, to change people's perception of Proton cars being cheap in all aspect, including quality. DRB-Hicom has to invest heavily into developing Proton's technology, quality and design for it to gain back the people's trust.

Proton need to expand its export market. South East Asia should be its main target, rather than Australia, South Africa, or Iran. It has to carve out a substantial market share in the region's large economies with large populations and rising income such as Indonesia, Thailand, Vietnam and the Philippines.

It has to study the market really well. Indonesia now maybe a big market for multi-purpose vehicles (MPV) and sport utility vehicles (SUV), but Proton should not just focus on these type of cars just to tap the Indonesian market.

Indonesia's rising economy should alleviate millions of its people from poverty and entering the middle class segment. As Indonesia is still lacking in infrastructure especially in public transport in its major cities such as Jakarta, Surabaya, Bandung and Medan, more people will have to rely on private vehicles for transportation.

In the near future, car ownership in Indonesia will become what it is right now in Malaysia - a necessity rather than luxury. Proton should take advantage in this growing economy and expand its present there. As the evolution of Indonesia's economy continues, more of its people would want a nice car at low cost.

Proton could tap the Asean Free Trade Area (AFTA) agreement to its advantage to expand its presence in Indonesia. It has almost 100% content made in Asean, so it should have cost advantage to other automakers especially those from Japan and South Korea.

The same goes to Thailand, Vietnam and the Philippines. But again, brand awareness and perception could become the decider in Proton's bid to strengthen its domination in the local automotive market as well as its export markets.

Proton's journey as a contending automaker in Asia Pacific is just about to start, with DRB-Hicom at its helm. So sit back, Malaysian, and lets just pray for the best for the national pride. A lot has been said about Proton, but it is not wrong or spent for us to believe that one day, Proton could actually stand on the same league as the other car makers in the global arena.

Ananda selling out from regulated businesses?

Tan Sri T Ananda Krishnan is back under the spotlight again. This time is due to him selling his power generating assets under Tanjong Energy Holdings Sdn Bhd (TEH), a subsidiary of Tanjong plc to government investment arm 1Malaysia Development Bhd (1MDB) for RM8.5 billion.

It is not a surprise why the reclusive billionaire wanted to relinquish his power generating assets in the country. This is because the fourth generation power purchase agreement (PPA) is expected to not be as attractive as the first generation agreement for the billionaire to bank on.

Analysts and industry observers alike speculated that the fourth generation independent power producers (IPPs) will not be given attractive rates to sell power generated to state utility company Tenaga Nasional Bhd (TNB), judging from the agreement signed for the second and third generation IPPs.

"The latest round of PPA might not be too generous for the IPPs. If you see, the power purchase rates agreed in the second and the third generation are lower than the first generation.

"We don't think the government would want to give the so called fourth generation better rates than the third," says an analyst with a local bank.

However, some observers pointed that Ananda is "offloading" his investment in the power sector because he wanted to get out of regulated sectors. This is because any changes in government policy or circle of power will influence the direction of the business.

Except for his telco business, his other businesses such as power generation, gaming and satellite television are seen as 'regulated businesses'. Power generation business is tied to power purchase agreement with the government, while licenses for gaming business are renewable annually.

Last year, Ananda sold his gaming business, Pan Malaysian Pool Sdn Bhd, to a consortium of Malaysian Chinese businessmen, which include fellow billionaires Tan Sri Quek Leng Chan and Tan Sri Lim Kok Thay of Hong Leong and Genting group respectively.

The reason given for the disposal of the gaming business by Tanjong was as part of its bid to be more shariah-compliance to expand its power generating business in the Middle East.

However, many contemplated that to become more 'Islamic' was not the reason to the sell off of Pan Malaysian Pool, but due to the regulatory nature of the business.

This is because to make Tanjong a shariah-compliant business, Ananda could just list out Pan Malaysian Pool as a separate entity, rather than having to dispose it off in its entirety.

Pan Malaysian Pool controlled about 25% of the number forecasting business in Malaysia, behind two other larger rivals Berjaya Corp Bhd's Berjaya Sports Toto and Magnum, controlled by Multi-Purpose Holdings Bhd.

As at January 31, 2010, Pan Malaysian Pool generated RM730.78 million of revenue and RM234.82 million in operating profits for the Tanjong group. It is a cash cow to the group, besides the more lucrative power generating business.

So could it be that the reason he sold Tanjong's power assets to 1MDB, and Pan Malaysian Pool to a group of Chiness businessmen was because of the high regulatory risks imposed upon these sectors by the Malaysian government?

It is worth noted that TEH does not only own power generating assets in Malaysia, but also in Sri Lanka, Bangladesh, Pakistan, Egypt and United Arab Emirates. It is not known how the regulatory risks in these countries could affect Ananda's decision to sell his entire power portfolio.

"However, the turmoil in Egypt, as the country sees the transition between military rule to civilian government led by the Islamist factions could as well be an uncertain event for Ananda to continue holding power generating assets in the country," says an observer.

"Once Tanjong's power assets is transferred to the government, any arising dispute or policy changes by the incoming government of Egypt could be amicably resolved through bilateral discussions between the two governments," adds the observer.

The direction of which Egypt's new government will take in regards to the country's economy is not yet clear. There remain risk of the government trying to nationalise some of the country's crucial economic sector, which may include power generation, contemplates the observer.

Plus, when it comes to changes in government policies or circles of influences, Ananda has had his share of his businesses being hit by the uncertain political situations in a particular country.

Besides the regulated nature of Malaysia's power generation and gaming businesses, his investment in pay television in Indonesia was met with restrictions which caused him to lose money in the venture. He pulled out from Indonesia soon after making in roads into the country.

Ananda has also been under the spotlight for the wrong reason in India.

He and some of his business affiliates and the former telecommunication minister of India, Dayanidhi Maran are under scrutiny and investigation by the republic's Central Bureau of Investigation (CBI) due to some irregularities in Maxis Communications Bhd's investment in Aircel Ltd several years ago.

It was alleged that Maran as the then telecom minister of India when Maxis acquired stakes in Aircel, favoured the group in the takeover of Aircel over other bidders, and in return investments were made by the Astro All Asia Networks in Sun TV owned by Maran family.

It was also reported that Ananda is planning to exit the pay TV sector in Malaysia, of which his company Astro has been enjoying 15 years of monopoly.

He was reported to include MEASAT Global, the holding company of Astro through MEASAT Broadcast Network System, into the sale of the power portfolio.

However, in the announcement regarding the acquisition of Tanjong's power assets, 1MDB did not mention that it is acquiring the satellite operator as well.

With the introduction of internet protocol television (IPTV) by Telekom Malaysia Bhd (TM) and his own Maxis, Astro is now facing competitions, something it has not experienced for the last one and a half decades, an industry observer points out.

Foreign companies such as Asian Broadcasting Network (ABN) has also been reported to be interested to set up another pay TV station in Malaysia. This move could have send the signal for Ananda to exit the business fast, adds the industry observer.

"There has also been some rumours that the government is mulling for all pay TV stations to share their contents. It's going to be more intense for the sector going forward, so he (Ananda) might not be interested in it anymore," says the observer.

Nevertheless, Ananda's move to exit the power generating business in Malaysia might not be followed by the other first generation IPPs. Other first generation IPPs including YTL Power International Bhd (YTLP), and MMC Corp Bhd's Malakoff.

YTLP and Malakoff are expected to continue bidding for the rights to build power plants for the fourth generation IPPs, according to another analyst with local investment bank.

The analyst said all the first generation IPPs has submitted for their bids for pre-qualification in regards to the Prai power plant in Seberang Prai to the government.

"The government is pushing for a lower rates for the power and renegotiate the first generation PPA for the extension of another ten years period for their power plants,

"The government is also mulling to rope in foreign companies to take a maximum stake of 49% in the Prai power plant project, if the first generation IPPs don't want to renegotiate the terms," says the analyst.

The first generation IPPs are expected to abide to the government's will to renegotiate the rates, as they would not want their assets to be left redundant without making any money, adds the analyst who covers the domestic power sector.

Nevertheless, some large IPPs are contemplating of exiting the business as well, or at least not to bid anymore for the fourth generation PPA, according to the analyst.

Genting Bhd, which controls Genting Sanyen Power Sdn Bhd, might not want power generation to be one of its core businesses going forward, say the analyst.

On the other hand, Sime Darby was reported to be interested in the acquisition of the Jimah power plant, which is held by Jimah Energy Ventures Holdings Sdn Bhd.

During Sime Darby's media briefing on its financial period ended December 31, 2011, its president and chief executive officer Datuk Bakke Salleh pointed out that the group will be looking for acquisition of assets or businesses which is in line with its current core businesses.

After selling out its oil and gas fabrication yards last year, Sime Darby might want to acquire new assets to give its energy division a timely boost. A power plant with a long term concession to supply electricity at a favorable rate is definitely a good choice of investment for the group.

The 13th General Election is just around the corner!

It is that time of the year again. Although the Prime Minister Datuk Seri Najib Razak hasn't yet announce the dissolution of the Parliament to make way for the 13th General Election, signs are there that the time for the people to go to the ballot box is near. Moreover, it has been four years since the groundbreaking March 8, 2008 general election which saw the ruling coalition Barisan Nasional lost its traditional two third majority in the lower house, which would have enabled them to pass all laws and jurisdictions virtually unopposed.

According to English daily The Star (yes, the one who costs the nation major PR disaster) today reported that the signs are already there that the government will call for the dissolution of the Parliament soon. For instance, the government's decision to halve the toll charged at the Cheras-Kajang Highway (better known as the Grand Saga Highway) is deemed as an effort to shore up its popularity in the eyes of the people. This is because toll rates have always been a political hot potato as the scheduled hike in toll charges at the rate of between 5% to 10% every three or so years burned a huge hole in the rakyat's pocket.

Another sign is the fact that the PM has been on a nationwide tour, with the latest was in Kedah, where he made a "public apology" on the short comings of his administration in the rice bowl state in the years prior to the 12th general election in 2008. Kedah, which its current government Parti Islam se-Malaysia (PAS) saw an internal strife between camps favoring the current Menteri Besar Datuk Seri Azizan Abdul Razak and those who oppose, and its lackluster performances especially in attracting larger foreign and domestic direct investments into the state, could have seen more state seats going to the BN this time around.

The federal government coalition has been taking on the generous man role, as in the six months to one year period to date, it has given cash hand outs and incentives to the rakyat, especially in the rural states and the urban poor, to mitigate the rising cost of living which is deemed to be very high. In its budget 2012, the government announced various cash hand outs schemes such as, among others, one-off cash hand outs for low income households, and to all primary and secondary school students nationwide, with a promise that it'll reduce the burden of rising cost of living.

Popular and socialist policies are common features in the Malaysian political scenario. Both parties of the political divide has been trying to outdo each other in churning out or proposing popular, socialist policies to shore up support in the politically divided settings. The federal opposition coalition, Pakatan Rakyat has repeatedly calls for lopsided agreement between the government and independent power producers (IPPs) to be reviewed, citing it has forced the state utility company Tenaga Nasional Bhd (TNB) to buy electricity from the politically connected IPPs at a high price. The coalition has also called for the abolishment of toll rates or at least to freeze any scheduled increase in toll rates.

Recently, former prime minister and the architect of Malaysia's modernisation in the early 1980s to the middle 1990s, Tun Dr Mahathir Mohamed has commented in his blog post that the government's minimum wage legislation will cause the country to bankrupt. He said the nation has already too many holidays and that the increase in wages should be accompanied with the increase in labor productivity. Citing Europe which is mired with a debt glut, Mahathir said Malaysia should not simply follow the European way of paying high salary to their workers but labor productivity remains low.

The signs are there that the general election will be called very soon. After the groundbreaking outcome of the 12th General Election in 2008, the next general election is touted to be the most crucial one for both the ruling coalition and the federal opposition. BN would want to recapture the states that it has lost to PR, and also increase its share in the lower house of the Parliament to at least a 2/3 majority. On the other hand, PR's ascension politically in the rakyat's mind and heart will give them a fair share at winning the federal government, although it would not be an easy fight.