I wrote this piece before I chanced upon Tony Pua’s "outrageously stupid agreements" as published today. I have taken another approach to look at the “stupidity”.
When we say corruption is killing this country, we are perhaps only half right. I think a more comprehensive answer is corruption plus stupidity.
True, corruption trades away public/national interests in exchange for private gains. But if public officials are sufficiently stupid, the giveaways are far greater than the private gains they solicited.
This is what I gathered from most of the events unfolding around us today.
Do our public officials know the worth of guarantee letters issued by the Ministry of Finance? Do they know how much they have short-changed the country in return for the pittance they have received, if indeed they are corrupted? Seriously, I think we need brains to be corrupted too.
Crony capitalists, project promoters and highway concessionaires have never had it so good in this country.
When they get a privatised project, the government guarantees them revenue flows, profits and even loans they take from the banks.
Immediately, the feasibility of these projects is thrown to the wind. Who would want to work out the risk and return trade-off when the government has stood as the guarantor for everything?
The guarantees have assured the promoters to make an enormous amount of money practically with no risk. It is just a one way bet for them. When they make money, it belongs to them. When they lose money, the government bails them out or takes over.
The promoters get loans from banks easily, sometimes even generously evaluated. But who cares when banks and the promoters know that these loans are guaranteed by the government. If the promoters can’t pay, the government will pay on their behalf. Loans have effectively become incomes to some of these promoters.
This is the degree of moral hazard we are facing today where promoters of projects and crony capitalists are not concerned with risks and inefficiency since they are securely protected by the government. Seriously, what could be more lucrative and beneficial than doing business without risks and over and above that, using other people’s money?
Through sheer stupidity, public officials have given away billions to crony capitalists, privatised concessionaires and promoters without them realising it. The “tragedy” is some of these public officials are not even corrupted.
When they get a privatised project, the government guarantees them revenue flows, profits and even loans they take from the banks.
Immediately, the feasibility of these projects is thrown to the wind. Who would want to work out the risk and return trade-off when the government has stood as the guarantor for everything?
The guarantees have assured the promoters to make an enormous amount of money practically with no risk. It is just a one way bet for them. When they make money, it belongs to them. When they lose money, the government bails them out or takes over.
The promoters get loans from banks easily, sometimes even generously evaluated. But who cares when banks and the promoters know that these loans are guaranteed by the government. If the promoters can’t pay, the government will pay on their behalf. Loans have effectively become incomes to some of these promoters.
This is the degree of moral hazard we are facing today where promoters of projects and crony capitalists are not concerned with risks and inefficiency since they are securely protected by the government. Seriously, what could be more lucrative and beneficial than doing business without risks and over and above that, using other people’s money?
Through sheer stupidity, public officials have given away billions to crony capitalists, privatised concessionaires and promoters without them realising it. The “tragedy” is some of these public officials are not even corrupted.
* T.K. Chua reads The Malaysian Insider.
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