MALAYSIA Tanah Tumpah Darahku


Thursday, October 31, 2013

The Budget 2014

Well its a bit after the Budget. All the analysis have been done. I am not impressed by the Budget. 

There are a couple of shock treatments that we will all pay for. Removing the 36 sen per kilo sugar subsidy overnite sent sugar prices rocketing overnite.  Now the price of all sugar based products will shoot up. 

Tak boleh ke buat perlahan-lahan? Potonglah sabsidi gula dua sen tiap bulan. Then in 18 months no more sugar subsidies. The impact on prices will be slower. There will not be shock treatments.

The same way potonglah sabsidi minyak dua sen tiap bulan. Then in 36 months the fuel subsidy would have decreased substantially. The impact on other prices will be gradual and not jerky. 

The same with all other subsidies. Potong. Jangan tak potong. Tapi potong lah sikit-sikit. Why cut the subsidy overnite? It will create shockwaves in the economy.

Why increase the RPGT by 100%? From 15% it jumped up to 30%. That is a 100% increase. Transaction in low end properties will taper off. Prices may even fall. The 30% RPGT will eat substantially into any gains. Higher end homes may become more expensive. There is a strong demand for them and people will pay slightly more to get them. Pay more because the sellers will raise the prices to recoup the higher RPGT.

Then I heard the PM talk about the Banting - Taiping Hiway again. I believe this is like the fourth or fifth time this project is being talked about (in the ETP, the previous Budgets). Here is some history about this project :

"The West Coast Expressway (WCE) or Lebuhraya Pantai Barat (LPB) is a planned expressway that will be built on the west coast of Peninsula Malaysia. It will connect Taiping, Perak to Banting in Selangor.  Phase 1 involves the stretch between Tanjung Karang and Banting where construction will begin in June 2008 and be completed by 2011. The highway will cost about RM 4.6 billion, where RM3.6 billion will be construction costs.

2008? That was five years ago. Still projek tak jadi ke? RM4.6 Billion in 2008. By now 2013 it must cost much more. This project has been on the burner since before 2008. It keeps getting mentioned in one Budget after another.

The other project is the lobster farm in Semporna. This project has been bouncing around for some time now. In his Budget speech on 25th October, 2013 the PM said that this "multi billion Ringgit" project will be implemented

However 16 days earlier on October 9, 2013 the PM said this about this lobster farm in Bali. Here is the news :

"US lobster farm in Semporna gets mention by Najib  -   He said a US company, Darden, planned to invest in the breeding of lobsters in Semporna, Sabah.   “Darden uses modern technology in the breeding of lobsters. If the project is implemented it will bring benefits..” he said."

There is a big difference between "If...implemented"? and 'will be implemented'? Which one is which?

The question is who has inputs into the PM's Budget speech - which he obviously does not understand? I think cronies who have vested interests in these projects are able to insert these projects into the PM's Budget speech. That is why these projects keep getting mentioned. 

The lobster farm off Sabah’s Semporna district is going to involve taxpayers money again folks. There are many parts to this huge project. The Americans are the driving force. 

To control quality and ensure their standards are met the Americans will insist that this lobster project in Semporna can only buy their baby lobsters (lobster fry). The lobsters and their feeding cycles will possibly be patented by the Americans. 

Darden has already set up a test farm in Semporna to grow these baby lobsters. And I think the Sabah State gomen is funding some of this research at the pilot farm - taxpayers money again.This is not a bad thing to do but please dont get taken for a ride again.

Although the PM has mentioned Darden it is not sure if they will take an equity stake in this project. Or what will be the size of their equity. Or what will be their contribution to the equity ie cash or kind? 

The project is more complicated than it seems. Market talk is the "promoters" have sort of convinced the Gomen to spend about RM200 million in taxpayers funds to build infrastructure first (roads, jetties, power supply, buildings for cold rooms etc). Then they will build the rest of the project for their profit. 

Not only will they supply the baby lobsters but the American partner will also buy back all the output - contractual offtake. This means the project will depend on just one buyer for their break even sales. 

So the Americans will hold them depan (supply baby lobsters) dan belakang (buy harvested lobsters).  And the final catch - at what prices will they buy? To be determined as the market dictates. In this case the market is a single contractual buyer. What do you think folks? Sounds like a good deal? 

There is more to this. Folks say that the "projecters" may get more taxpayers money to "train the Sulu people who inhabit Sempoerna" to work on this project. You may have to send the Sulus for training and stuff. Again more millions of taxpayers money. There are big profits to be made in training future lobster farmers, maybe even before the farm starts functioning.

News reports say "It is estimated that the revenue generated by lobster farming will amount to RM23.7mil by 2020, and RM3.2bil by 2030."

That is a 135 fold increase in sales in just 10 years.  Or a 13.5 fold increase every year.  I showed this news to a friend who knows this business. He laughed uncontrollably. He said, 'This is not Facebook'. 

Here is more contradictory news for Najib Tun Razak :
  • Darden ..said it does not expect to complete the farm until 2029  
  • It will take several years to ramp up production 
  • a decade before farm lobster have big impact on bottom line
  • company hopes to start producing lobsters by 2017.  
  • plans to produce juvenile lobsters and sell them to independent contractors 
  • Once lobsters reach market size, the farmers will sell them back to Darden
2029 !! So I guess we will be hearing this project being repeated again and again in the Budget - until 2029.

The PM has not much new things to say. He is repeating old projects (Banting Hiway, lobster farm) that have either got stuck, never took off or are too complicated and risky.  

Where is the new wealth creation in the economy?

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