Bumiputera equity controversy

Lim stands by report, quits Asli



Kudos to Dr Lim for his extremely high level of professionalism and scholastic principle.

Dr. Lim is a profesional, with high principles and integrity, who formed his conclusion based on an acceptable methodology and facts to present the best conclusion possible for the people to make their decisions and conclusions.

Mirzan, like other politicians, is playing with politics. There is very little/no professionalism, principles, integrity and honesty in most politicians.

Economist Dr Lim Teck Ghee stands by findings and says he cannot accept backdown by Asli president, Mirzan Mahathir, who has defended his stand.

The fallout over Asli’s controversial report on Bumiputera equity ownership continued yesterday when its stalwart economist resigned in protest.

Dr Lim Teck Ghee said he could not accept the backdown by Asian Strategy and Leadership Institute (Asli) president Mirzan Mahathir over the think-tank’s findings that the estimated Bumiputera equity ownership in public- listed companies may be as much as 45 per cent.

Mirzan said on Tuesday that the study was based on flawed assumptions and calculations and added that its conclusions could not be “vigorously justified’’.

His comments came in the midst of a heated debate between the government and politicians on one side and Asli.

The Economic Planning Unit says that its more exhaustive study showed that Bumiputera corporate entity ownership was at 18.9 per cent.

In a statement, Lim said that as the director of the Centre for Public Policy Studies, he stood by the findings of the study.

“Since I cannot agree with Mirzan’s statement, and because of the need to defend the position and integrity of independent and non-partisan scholarship, I regret to inform that I will be stepping down,” he said.

Lim hoped that the public space opened by the centre’s work on this and other issues will be expanded.

“It is the fundamental right of the Malaysian public to question all government statistics and policies, more so when these are not transparent or defensible,” he said.

Mirzan yesterday stood by his statement that the methodology used in the study was flawed. He also said that he was reflecting Asli’s position on the matter.

“As president, I am able to take a stand. In the past, I have given speeches as Asli president and nobody questioned me then.” Lim’s resignation was entirely up to him, he added.

“I think it is better for people to do things based on principle rather than on any other agenda,” he said.

Critics of the study argued that the think-tank based its findings on 1,000 companies listed on Bursa Malaysia, unlike the EPU which studied 600,000 Malaysian companies and used government documents.

They also rejected Asli’s argument that government- linked companies (GLCs) were, in effect, Bumiputera companies as the government owned them.

Mirzan explained that the ownership of GLCs would depend on various factors, including investments, capital and profits.

“For example, if Khazanah Nasional Bhd was to declare dividends, it would go to the government, which would then go to a consolidated fund for all Malaysians. This makes it impossible to segregate the fund for each ethnic group,” he said.

Asked whether he was agreeing with EPU’s methodology, Mirzan said while he did not know what methodology the unit used, “all methods are at best good estimates of the situation”.

Asli director Tan Sri Ramon Navaratnam said he was disappointed with Lim’s resignation.

“He is a good scholar who is very well-respected in the academic world and it would be a loss. I asked him not to resign but continue to seek the truth through his research.

“I hope his resignation will not discourage other researchers from pursuing the truth to enrich the government’s capacity to choose better policy options and to strengthen the quality of decision- making,” he said.

Navaratnam said that in all research undertakings, there were weaknesses because of insufficient data.

“But we are hoping to work closely with the EPU and other agencies to get the data and improve the methodology.

“This is necessary, both for their methodology and ours so we can update it and make it more relevant and substantially change the economic structure which has been in place since the 1970s," he added.

Report from The Sun

The research director of the Asli report which concluded that bumiputra corporate equity ownership was much higher than what government statistics showed has resigned after the think tank distanced itself from the findings.

Dr Lim Teck Ghee, director of Asli's Centre for Public Policy Studies, said he stood by the report which stated that bumiputra corporate equity ownership could be as high as 45% and not 18.9% as stated in government statistics.

The resignation came a day after Mirzan Mahathir, the president of Asli or the Asian Strategy and Leadership Institute, issued a statement that the report - Corporate Equity Distribution: Past Trends and Future Policy - was flawed in its methodology and assumptions, and its conclusions could not be "vigorously justified".

"Since I cannot agree with Mirzan's statement, and because of the need to defend the position and integrity of independent and non-partisan scholarship, I regret to inform that I will be stepping down from my position as director at the end of the month," Lim said in a media statement today.

He said as the centre's director, he bore full responsibility for the study, and stood by its findings, and the findings of the other studies the centre submitted to the government in February on the Ninth Malaysia Plan (9MP)

"I hope the public space opened up by the centre's work on this particular issue, as well as other important issues, will be expanded on and vigorously defended by others.

"It is the fundamental right of the Malaysian public to question all government statistics and policies, more so when these are not transparent or defensible," said Lim, a former United Nations regional adviser and World Bank senior political scientist, and the recipient of many international academic awards.

The corporate equity report was part of a bigger report the centre worked on called Proposals for the Ninth Malaysia Plan (9MP) which was submitted to government.

The centre's report had concluded that the National Economic Policy (NEP) target of 30% bumiputra equity ownership had already been exceeded, and said the official methodology inherited from the 1970s to measure corporate equity distribution was "narrowly-based" and "unrealistic".

According to the 9MP, bumiputra equity ownership in 2004, as measured by the Economic Planning Unit (EPU), stood at 18.9%.

The Asli centre report also said it was clear that "selective patronage" had resulted in "serious intra-ethnic Malay cleavages", and the continued promotion of the NEP would only increase antagonisms among bumiputras that some are more favoured than others.

The centre did not receive any feedback from government until the corporate equity chapter was widely reported on a few weeks ago.

Since then, Umno vice-president Tan Sri Muhyiddin Yassin has described the report as "rubbish" and challenging the government's authority, following Prime Minister Datuk Seri Abdullah Ahmad Badawi's statement that the report was "baseless", "inaccurate" and "irresponsible".

On Monday (Oct 9, 2006), Utusan Malaysia also quoted former premier Tun Dr Mahathir Mohamad as saying the centre's findings were "illogical" because bumiputra economic control was far below that of other races.

Mirzan was also quoted in the same paper on Wednesday as saying the report's quality did not reflect Asli's expectation, and had undermined the institute's reputation and diverted attention from its other positive recommendations.

He was also quoted as proposing that an editorial board be set up to vet the quality of future Asli research so that its work would not be undermined.

Contacted by theSun on Wednesday night, Mirzan denied that he issued the statement on Tuesday due to political pressure

“My concern is the good name of Asli. Obviously, I need to correct the misconception of people about Asli,” he said, adding that it was his responsibility as Asli president to protect its reputation.

Asked about speculation that the statement was solely his and did not reflect the views of other Asli directors, he said: “We should not jump to any conclusion. I issued the statement as president. So my statement would be Asli’s statement.”

On Lim’s resignation, he said: “If he disagreed with the centre and if he feels very strongly about it, he’s free to do it (resign). We wish him well in the future.”

Asli CEO Datuk Dr Michael Yeoh said he respected Lim's decision to resign, adding that he stood by Mirzan's statement.

Asli director Tan Sri Ramon Navaratnam said Lim's resignation was unfortunate. "I hope it does not send out the wrong signal to others who want to undertake honest and sincere research on the challenges facing Malaysia," he told theSun.

Opposition Leader Lim Kit Siang said Mirzan had failed to explain how the centre's methodology was flawed, and how the Economic Planning Unit's methodology was valid.

On criticisms of the report, he said: "It is a triumph of brawn over brain and a major setback towards creating a 'first class mentality'."

The DAP adviser called on Abdullah to direct the EPU to make public the methodology it had used to measure corporate equity ownership in the interest of openness, accountability and transparency.


An interview with Dr Lim Teck Ghee

The Centre for Public Policy Studies was set up under Asli in September last year (2005). It has its own research associates but draws on a wide circle of academics nationally and internationally.

It's first project was to work on a report called Proposals for the Ninth Malaysia Plan (9MP) which was submitted to the government in February for consideration before the 9MP was unveiled.

The report focused on five main areas that the centre thought were priority areas - the civil service, educational reform, the plight of the low income communities, the plight of our Malaysian marginalised communities living in the forest focusing on the Penan, and corporate equity.

Although the report was widely circulated, the centre did not get feedback until the corporate equity issue - under the chapter known as "Corporate Equity: Past Trends and Future Policy" - was reported in the media.

In an interview in his office on Oct 4, 2006, head of the centre Dr Lim Teck Ghee said although reforming the civil service was far more crucial for the centre than the corporate equity ownership issue, the latter was still an important issue.

"It's one which, if you talk to investors, bankers, people in the economic spheres, you will hear a great deal of concern about it. So, this is not an academic issue. It's an issue which has been articulated by many quarters for a long time, since this target (30% bumiputra equity ownership) was set," he said.

"And what we did in our study was we focused on new data, new methodologies and we've arrived at a number of findings which we thought would be of interest to policy makers."


Excerpts of the interview ...

theSun: Were you surprised at the kinds of criticisms that were levelled at the report?

Yes, I was. I must say that first of all, we were not expecting the furore. Ours was an objective academic study. We undertook the study with the best of intentions. We are not the cat's paw of any interest or group.

The centre is an independent, non-racial, non-partisan body. We stand by our findings and we stand by the methodology that we used. We would be happy to engage in a discussion, a technical discussion on the issues of methodology and definitions, and our view that the (present) methodology used by the government is narrow, is outmoded, and is not realistic. And we'll be happy to sit down with scholars and technicians to discuss this.

Is this centre the first organisation to actually put up a view like that, that the methodology used by government is outmoded and too limited?

I think individual scholars in the past have alluded to this. But, to my knowledge, our centre is the first body, think tank, research organisation to work on this issue.

Were you surprised at all by the findings after the report was completed, that the (bumiputra) corporate equity (ownership) could be as high as 45%?

Well, yes and no. I must say that, we thought that the government figure of 18.9% was underestimated, but we didn't expect to find, using our definitions, that high an achievement.

And I must say that this high achievement shows that the government has been successful in redistributing wealth as defined by equity. So, it's something that the government should be proud of, and it's a finding which shared with the rest of the country, can allay some of the concerns and insecurities (of some groups).

So, we're a little surprised that our critics have accused us of having a particular agenda. The only agenda that we have is that of a non-partisan analysis of scholarly inputs into policy-making.

(We're saying that) in terms of the corporate equity share objective, that very specific target - using our methodology - has been achieved.

By the NEP (New Economic Policy)?

The corporate equity share target has been achieved. We're not saying that the NEP, you know, in all its fullest ramifications has been achieved. But in terms of the corporate equity share, it has, to my mind, reached its target and been successful.

But, quite apart from that, the point that I'd like to stress is that, in no other country in the world, has a marginalised community such as the Malays come up so quickly and attain this position of, economic and social and political, I wouldn't use the word "dominance", but success. Amongst all the countries in the world, the rise of the Malay middle-class and upper-class has been unrivalled.

But at the same time, the poor Malays continue to be poor?

There are many poor Malays and they continue to be poor. And we should prioritise this issue but continuing with the system of corporate equity distribution doesn't help the poor Malays. Giving places in the elite schools, scholarships to middle-class and upper-class, the children of middle-class and upper-class Malays who have benefited from the NEP does not help the poor Malays.

So, what the centre is advocating, and we're not the only ones, is that we need to change our strategy of development which is race-based to one which is race-neutral and more class-based.

What about the criticisms that you shouldn't be using GLCs (government-linked companies) as part of the calculation of corporate equity ownership?

You know, if you want to go into the calculation of it, if you take out the GLCs, like they said. If you take the Malay share of it, of companies, limited companies, and if you add in the Malay part of the nominee, it's 18.9% plus another four or five already. So, you're bringing it up to about 23% or 24%.

And also that doesn't take into account the foreign part of it which may have Malay proxy shares - Malay ownership using foreigners as proxy.

But, perhaps we don't need to get into the details of it (here). We're more than happy to have an open discussion about methodology with anyone.

What kinds of feedback were you hoping for that you thought might be constructive in terms of using this report more effectively?

Well, we were hoping that, as we indicated in the report, our database is, has been limited and we hoped that there would be fuller access to data provided by the authorities. We hoped that the authorities when they undertake their work will come out with a fuller, if not complete, explanation of how their statistics are derived.

We think that this kind of exchange would be more important. There's also the issue of the impact of the bumiputra quota of 30%. Now, there has been very little said in the official reporting on this, but there's very clear evidence that this 30% or more has accrued in the hands of a very small group.

So, we hope that the discussion can be widened into the areas of how to ensure that equity wealth, for example, can be more widely shared with a much larger circle of Malaysians. We hope that the issue of rent-seeking and market distortions which have come about as a result of this ruling can be dealt with. In other words, we welcome a full discussion of all the complex dimensions of this issue from technical, to social to political.


Dr Lim Teck Ghee quits Asli

Full statement released by Asian Strategy and Leadership Institute (Asli)'s Centre for Public Policy Studies (CPPS) director Dr Lim Teck Ghee:

Encik Mirzan Mahathir, President of ASLI, yesterday issued a press statement on the study conducted by the CPPS on "Corporate Equity: Past Trends and Future Policy". The ASLI statement was in response to various comments arising from the study's finding on the level of Bumiputera equity ownership. As Director of the CPPS, I take full responsibility, and stand by the findings of the study and the other studies that were submitted in our report to the Government on the 9th Malaysia Plan in February 2006.

Since I cannot agree with Encik Mirzan's statement, and because of the need to defend the position and integrity of independent and non-partisan scholarship, I regret to inform that I will be stepping down from my position as Director at the end of the month.

I hope the public space opened up by the Centre's work on this particular, as well as other important, issues will be expanded on and vigorously defended by others. It is the fundamental right of the Malaysian public to question all government statistics and policies, more so when these are not transparent or defensible.

I would like to thank ASLI for giving me the opportunity to work with it in providing service to the country.

Dr. Lim Teck Ghee
11 October 2006


Read more from others :

Lim Kit Siang :

"What cannot escape notice is the thunderous silence by MCA, Gerakan, MIC, SUPP Ministers and others from Sabah and Sarawak after the Cabinet meeting yesterday over the ASLI report controversy over 45% or 18.9% bumiputra equity ownership when this is not a bumiputra but a national issue affecting all Malaysians and future generations.

If these Ministers agree with Muhyiddin and Syed Hamid and what the duo said reflected their stand in the Cabinet yesterday that the report of ASLI’s Centre for Public Policy Studies (CPPS) on “Corporate Equity Distribution: Past Trends and Future Policy” was “rubbish”, let them have the courage of their conviction to speak up publicly to justify their position. If they had disagreed, having different views, let them speak up too.

Or is their silence the latest proof of their marginalization in the Cabinet and the highest decision-making councils in the Barisan Nasional government – where they dare not and cannot express their views on important national issues with far-reaching consequences for the nation and future generations!

Umno Youth deputy leader Khairy Jamaluddin had also spoken yesterday, deploring that “damage is done already” even with the apology and retraction of the ASLI report.

Is this also the view of the MCA Youth, Gerakan Youth, MIC Youth, SUPP Youth and all other Youth wings of the Barisan Nasional apart from Umno Youth, or are they all so marginalized that like their parent bodies and national leaders, they dare not have any views of their own which are different from Umno and Umno Youth?

In fact, MCA, Gerakan, MIC and SUPP Ministers and their youth leaders should learn from the example of Professor Dr. Lim Teck Ghee.

Jeffooi :

"So, here is the 'rubbish' Umno vice president to answer this question of the day:

Undue emphasis was being given by the government to achieving the 30% bumiputera target.

Tell us, what have been the important transitions that occurred in Malaysian society in the past 35 years?

It is still necessary -- or even relevant -- to have policies concerned with redistributing wealth along ethnic lines?"

MGGPillai:

"But Lim Teck Ghee, who heads the institute's Centre of Public Policy Studies that published the report, stood by the study and said the government statistics were flawed. He subsequently announced his resignation Wednesday.

The ASLI report also sparked anger among Malay groups.

Some community leaders accused the ASLI of "racial chauvinism," while others demanded an apology from the institute and that it retract the report.

Institute president Mirzan Mahathir, the son of former premier Mahathir Mohamad, had Tuesday expressed "deep regret" over the controversy and withdrew the report, saying it could not be "vigorously justified."

Still, ASLI reports have been widely respected in Malaysia."

**********

Mahathir Says Abdullah Is Endangering Malaysian Economic Growth

Malaysian Prime Minister Abdullah Ahmad Badawi, three years in office this month, is jeopardizing economic growth and confidence in his administration is waning, said former leader Mahathir Mohamad.

Abdullah should increase spending on technology rather than boosting agricultural production or signing questionable trade accords, Mahathir, 80, said in an interview. The medical doctor, who led the nation for 22 years until 2003, said he's being sidelined in the media and in Malaysia's ruling party.

``I don't see any new projects coming in which would boost the economy,'' the former premier said in his office in Putrajaya, south of the capital, Kuala Lumpur. ``The last few years, I don't see any change for the better. It is affecting the nation and the growth of the country. It is not personal.''

Mahathir, who transformed Malaysia from a tin and rubber exporter into an industrialized manufacturer, is unable to stay out of politics. He's extending a feud that started after Abdullah reversed high-profile investment decisions made under Mahathir in favor of plowing funds into education and health care.

``The fundamental problem with Dr. M. is he feels that what he has done has a right to be continued perpetually,'' said Abdul Razak Baginda, executive director of the Malaysian Strategic Research Centre. ``That's a fallacy for any leader. The current prime minister has a different philosophy. He's concerned with a more balanced development.''

Azhar Osman, Abdullah's press secretary, said by phone that the prime minister wouldn't respond to any comments made by Mahathir in the Oct. 9 interview.

Vision 2020

In 1991, Mahathir laid out a 30-year plan known as Vision 2020 that aimed to win Malaysia developed-nation status by that date. He accelerated growth by wooing foreign manufacturers, created a technology hub in Cyberjaya, south of Kuala Lumpur, and championed the cause of ethnic Malays. He assured them easier access to housing, education and jobs.

Abdullah announced in March that he plans to increase public development spending 18 percent to 200 billion ringgit ($54 billion) from 2006 to 2010 compared with the previous five years. He allocated a fifth of total spending to education and training, and plans to raise palm-oil output 31 percent by 2010.

Asked if he was optimistic of meeting Vision 2020's objective, Mahathir said, ``right now, I am not.'' He declined to say whether he regretted picking Abdullah as leader.

Muzzled

The former premier said the government prevents his views appearing in local newspapers, while the movements of members of the ruling United Malays National Organization are engineered to avoid coinciding with those of the former prime minister.

``He doesn't allow me to even meet party members,'' Mahathir said. ``He says he's my friend. On the other hand, he muzzles me.''

Mahathir was defeated in a September ballot to select speakers for the November meeting of UMNO, as the party is called. Members were bribed to vote against him, he said.

Mahathir in June said the government's failures included scrapping construction of a bridge to Singapore. In December 2003, less than two months after Abdullah assumed power, he postponed a $3.8 billion rail project. The following month, he scrapped plans to sell 60 percent of the government-owned company managing the Bakun hydroelectric dam project in Sarawak.

``The current government is making an honest and brave effort to put Malaysia on the right track,'' said Manu Bhaskaran, a Singapore-based partner at economic research company Centennial Group. ``It takes a long time before good policies result in a stronger economy, so we need to be patient.''

Taking Risks

Mahathir in the interview urged Abdullah to raise spending on technology, saying the search for tenants at his brainchild, the Multimedia Super Corridor at Cyberjaya, had been neglected.

``It's not being sufficiently promoted,'' he said. ``There are a lot of companies which would like to come.''

The government must be willing to lose money on some information technology investments in return for the chance to profit from a few successful bets, Mahathir said.

``If out of 10 or 20 projects you succeed in one, that is a good result, Mahathir said. ``Unfortunately, we are not really able to understand that we have to take risks.''

Mahathir also criticized an agreement between Japan and Malaysia to eliminate tariffs on $27 billion of goods within 10 years. The accord, which came into force in July, cut duty on products ranging from clothes to agriculture. Malaysia imports Japanese goods and Japan takes Malaysian fruit and vegetables.

``If you import a car, how many container loads of vegetables are you going to export to Japan?'' Mahathir said. ``We're not good at that.''

`Moron'

Mahathir has a history of verbal volleys. On Oct. 16, 2003, in a speech to the Organization of Islamic Conference, he provoked outrage when he said Jews ``rule the world by proxy.'' In 1997, Mahathir called investor George Soros a ``moron.'' Soros described Mahathir as a ``menace to his own country.''

Attacks on the administration don't signal a desire to return to power. Mahathir ruled out following former Singapore Prime Minister Lee Kuan Yew, who now holds the position of Minister Mentor in the city-state's cabinet.

``I would never do it,'' Mahathir said in the interview. ``I don't want to enter politics.''

Mahathir spends three days a week as honorary president of the Perdana Leadership Foundation, formed in 2003 to promote the ideas of Malaysia's previous prime ministers. He spends two days a week as an adviser to national oil company Petroliam Nasional Bhd. at the Petronas Twin Towers in Kuala Lumpur.


Proton Will Collapse Without Partner, Mahathir Says

Proton Holdings Bhd., Malaysia's biggest carmaker, will collapse unless it finds an international partner such as Volkswagen AG, said former premier Mahathir Mohamad, who set up the company more than two decades ago.

``At the rate it is going, it's not going to last long,'' said Mahathir, 80, who became an adviser to the Shah Alam, Malaysia-based automaker after stepping down as prime minister in 2003. ``Proton is reporting losses all the time, and they still have a lot of cars which they cannot sell.''

Proton has been losing market share to overseas rivals including Toyota Motor Corp., and needs to gain new technology and designs to compete. Volkswagen ended talks with the Malaysian carmaker in January because the two sides couldn't agree on issues including control of the company. Proton ended an alliance with Mitsubishi Motors Corp. in 2004.

``The government may need to offer a bigger stake or give up management control,'' said Raymond Tang, who manages $1.7 billion as chief investment officer of CIMB-Principal Asset Management Bhd. in Kuala Lumpur. Those are ``the main points which they failed to agree on in previous talks,'' said Tang, who doesn't own the company's shares.

Proton's Chairman Mohammed Azlan Hashim and Managing Director Zainal Abidin Syed Mohd Tahir weren't immediately available for comment, the company's head of corporate communications, Faridah Idris, said by telephone today.

Volkswagen

Proton, founded by Mahathir in 1983 when he was prime minister, produces eight car designs under its brand and two types of Lotus sports cars. The exit of Mitsubishi Motors ended more than two decades of investment by the Japanese automaker.

Proton and state-owned investment agency Khazanah Nasional Bhd., which owns 43 percent of the automaker, are studying whether a foreign investor could revive its fortunes, Malaysia's Second Finance Minister Nor Mohamed Yakcop said Sept. 5.

Selling a majority stake isn't ``absolutely necessary,'' Mahathir said in the interview. Volkswagen, based in Wolfsburg, Germany, didn't want control of the company, he said.

``I still think Volkswagen is willing'' to talk, he said. ``Despite my initial intervention,'' Proton ``seems to be not keen at all to have anything to do with Volkswagen.''

Shares of Proton have fallen 26 percent this year. The stock today fell as much as 2 sen, or 0.4 percent, to 4.86 ringgit and traded at that price at 11:34 a.m. in Kuala Lumpur.

`Cannot Survive'

Proton is also in talks to make cars with China's Jinhua Youngman Automobile Group Co. and Chery Automobile Co., as well as India's Mahindra & Mahindra Ltd. Those companies may be allowed to buy a minority stake in the company in return for helping it expand in the world's two most populous nations, Deputy Prime Minister Najib Razak said on June 19.

``We were working with Volkswagen and we had nearly completed'' the negotiations, Mahathir said. ``We would be manufacturing Volkswagen cars here and also using Volkswagen technology here. But the new management wants to work with China and India, thinking that they can enter these markets. I don't think they are going to get very far.''

The Malaysian carmaker's competitiveness has been eroded by the government's new auto policy, introduced in March, which made it cheaper to import cars into Malaysia, Mahathir said. The government cut import taxes to 5 percent from 15 percent.

``Proton cannot survive'' without protection, he said. ``When you go to Korea you don't see foreign cars. It's the same in Japan. They have ways and means of ensuring that foreign cars do not compete with their cars in their country.''

Regional Hub

The company's share of Malaysia's car market fell to 40 percent last year from as much as two-thirds during the 1980s.

Malaysia, aiming to become a regional hub for car manufacturers such as Toyota and Isuzu Motors Ltd., offers incentives and tax breaks for overseas carmakers to assemble their products in the country.

Proton's loss widened to 58.6 million ringgit ($16 million) in the first quarter ended June 30, from 12.4 million ringgit a year earlier as a lack of new models damped sales, the company said in August. Revenue fell 31 percent to 1.42 billion ringgit.

``Proton needs a strong partner,'' said CIMB-Principal Asset's Tang. ``The best partners could be something like Honda or Toyota. Those companies are very good at what they do but they may want to be able to institute changes.''

Proton last month signed an initial agreement with PSA Peugeot Citroen to study the possibility of developing new models together. The agreement is Proton's third this year with an overseas carmaker for possible joint product development.

New Models

``If you merely make an arrangement in order to get the platforms from some company, that is not a transfer of technology,'' Mahathir said, referring to the Peugeot accord. If ``that's what they intend to do now, that's not going to do any good for Proton.''

Proton is also developing a new model using Mitsubishi Motors' components and technology, which it plans to start selling early next year. The Malaysian carmaker, which last year posted its lowest profit since 1991, aims to introduce six models, including its first multi-purpose vehicle, this year through 2008 to reverse slumping sales.

Auto sales in Malaysia are set to decline for the first time in three years as falling prices of used cars, stricter lending rules, higher interest rates and an increase in fuel prices curb demand, the Malaysian Automotive Association said in July.

The reduction in import taxes earlier this year pushed down prices of new and used cars.

``The problem is the government insisted that the price of cars should be lowered, which is fine for the buying party but what they didn't realize is that they lowered the price so much that they lost money,'' Mahathir said. ``Proton certainly lost a lot of money.''



In Malaysia, dams for the boys

Even before the problem-ridden Bakun Dam in eastern Sarawak state is completed, Malaysian officials are tabling plans to build two more hydroelectric dams in the area, one of which would make Bakun look puny by comparison.

Questions about the necessity for such dams, how the surplus electricity will be used, the resettlement of indigenous people, and the development of controversial catchment areas seem low on the list of the government's concerns.

The 2,400-megawatt turbines powered by the Bakun Dam on the
Balui River could start churning by 2009, but planners are still mulling over what to do with all that excess electricity. Should they approve a power-guzzling - and extremely polluting - aluminum smelter plant in Sarawak? Or should they channel the excess power to the more industrialized peninsular (West) Malaysia via submarine cables laid under the South China Sea?

The former option would require the participation of major transnational corporations, with questionable benefits for the rural economy of Sarawak. The option to lay cables, on the other hand, would be expensive and is fraught with technical uncertainties.

"Transmission loss and maintenance in the future will continue to pose technical and financial challenges to the project proponents," said S M Mohamed Idris, president of the environmental group Friends of the Earth Malaysia (SAM, for Sahabat Alam Malaysia) in a statement. He added that project delays or technical problems during the cabling process would also result in budget overruns.

Moreover, the past couple of years have shown the volatile nature of tectonic-plate movements, which have caused undersea and overland earthquakes in the region, resulting in enormous losses. "This shows the vulnerability of the underwater ecosystem surrounding the Indonesian and Malaysian waters," the activist warned.

Even as officials pore over their feasibility papers, the Sarawak Enterprise Corp Bhd said in July that it would build a 1,000MW dam in Murum in the Upper Rejang Basin of central Sarawak, once it can confirm buyers for the power and determine the pricing. Officials are also conceptualizing an enormous 20,000MW hydroelectric dam along the Rejang River.

They want the power from this dam transmitted via submarine cables to the more densely populated Malay Peninsula. The cost of the cables alone for this mammoth dam would be staggering. "It would cost RM3.5 billion [US$900 million] per cable that can carry 800MW. But this [laying of the cables] is over the next 15-20 years," Energy Minister Lim Keng Yaik was quoted as saying.

Sarawak consumes only 750MW now and currently obtains its electricity from the Batang Ai Dam, built in 1975, in the Sri Aman division as well as from diesel, natural gas and coal. Both Sarawak and neighboring Sabah state in north Borneo now have comfortable reserve margins.

Across the South China Sea, the more industrialized peninsular Malaysia has an even bigger reserve margin, and its electricity-generation capacity has been rising as well. To justify the need for another huge dam when the reserve margin is now more than 40%, Lim said that margin would be used up completely in 10 years.

The Bakun Dam, now three-quarters complete, has been jinxed from the start. Twice shelved, plagued by cost overruns, delays and contract disputes, the project has seen companies such as Ekran Bhd and Asea Brown Boveri come and go, submerged under a pile of debt, losses and cost overruns. Some of these companies were compensated with taxpayers' money when the project was shelved during the 1997-98 Asian financial crisis.

Relocated indigenous people have been disgruntled about the relocation site and the land allotted to them in Sungai Asap in the Belaga district, Kapit. Mostly subsistence farmers, many of them would have preferred to maintain their autonomy as shifting cultivators rather than expose themselves to the vagaries of the market economy through the planting of cash crops, much less toil as wage laborers in plantations.

"It's a disaster," a researcher based in the Sarawak state capital, Kuching, said of the resettlement. "Some of the houses are already rotting because the people don't want to live there. They couldn't afford to pay for the electricity, so it was cut off."

Moreover, the allotted land - 1.2 hectares each - was neither sufficient nor fertile enough for cultivating rice. Some of the resettled people, comprising ethnic groups such as the Kenyah, Kayan, Lahanan, Ukit and Penan, have gone back to living near their old villages, higher up from the dam site, he said.

Last month, a delegation from the Human Rights Commission of Malaysia visited Sungai Asap and found shoddy housing, poor drainage and roads, delays and disputes in the compensation payment, an inadequate number of health personnel, and loss of access to surrounding forest areas.

Others are concerned about the safety of the dam. The dam's lead contractor, Sime Engineering Services Bhd, claims that Bakun, which will stand 205 meters high, will be the "second-highest rock-fill dam in the world next to the Shibuya Dam in China". It will submerge an area the size of Singapore, including large areas of virgin rainforest and fertile agricultural land.

Yet in August, the Xinhua News Agency published a report on its website revealing that four Chinese state-owned enterprises, including China Sinohydro Corp, had been "downgraded" because of "safety or environmental pollution accidents". Sinohydro is one of seven firms in the Malaysia-China Hydro Joint Venture consortium working on Bakun.

But the big story isn't about the dam and the power coming from it, but what's happening with the catchment area, claims another Sarawak-based researcher familiar with the interior of the state. "Basically, they are allowing all kinds of development in the catchment, including plantation development, and have done next to nothing to protect, conserve, rehabilitate the catchment."

The Murum River joins the Balui River a short distance above Bakun; yet, he said, "the Murum catchment - including the Belepeh/Seping, Plieran and Danum river catchment - has been licensed out for plantation 'forest' - a mix of oil palm and Acacia mangium, involving clear felling of the logged-over forest, and 'reforestation' - in an area which was primary forest a dozen years ago". Similarly, in Ulu Balui, the logged Bahau-Balui area has been licensed for plantation forest.

Thus while the public is bearing the costs of the dam construction, the catchment areas are being stripped by others, he said.

With all these uncertainties, why are there more dams in the pipeline?

"They want these projects because they are all construction projects; they will not do the work themselves but subcontract them to some other company," said political scientist Andrew Aeria, who has studied the political economy of Sarawak. "They want easy money without doing any work; this is the character of politically connected businesses in Malaysia.

"You can rest assured there is no [thorough] examination of the cost-efficiency of the projects vis-a-vis alternative sources of power, especially renewable sources," he said.


Malaysia Proton Mahathir Abdullah Ahamd Badawi Asli