Tuesday, November 19, 2013

TPPA: Suspicion of SOE fire sale

Yesterday's posting [read back here] on Carlyle entry into Malaysia via Middle East and American confidence that TPPA will be signed in December are serious matters.

Carlyle's move is deceptive and gullible Malaysian could be hoodwinked into believing the country is getting flow of investment from Muslim brothers in the Middle East. Knowing so well that Arab are difficult lots.  When it comes to money, there is no Islamic brotherhood sentiment.  

The American statement confirmed our posting, "New twist to the American TPPA manouvre." Dato Najib commented that he did not see the TPPA be signed in December. But, the Americans are confident that the Salt Lake City special meeting that is to today till Sunday, 24th will be successful.

It means the American planned arm twisting, conniving, and horse trading manouvre on the chief negotiators will work. It could mean Malaysia maybe willing to compromise on something in exchange for something else.

Although it is a consolation that our negotiators have been steadfast in our demand and we've wrote an article "Restoring trust in Government" in early September, this is the stage we fear most. In the past, Malaysia had traded "horse radish" for auto concession in the Japanese FTA.

The area we should worry is on the investment chapter term. Most of the attention is on trade but the real McCoy for the American is investment and in particular financial services.

Unhindered entry to invest and divest in all the global market is a US$900 billion business. That is accaording to one private estimate. The multiple of real economy to the 'financial' economy is high in US but significantly lower in the rest of the world.

And, it is in the area of investment where they tie up and take away a country's sovereignty using strange legal process and requirements. The case study on the devastation of American's free flow of investment is in the US-Peru FTA. There is an example in Kemaman.

More on that in a later posting.

In Salt Lake City, horse trading could see Malaysia compromise to accept certain terms imposed by the American and supposedly they accept certain terms of ours.

Bear in mind that in the TPPA negotiation, the American is offensively making demands for their MNCs' interest. Malaysia and few other countries tend to be defensive to naught this and that or playing delay tactics.

What will Malaysia compromise?

Before answering, let's see recall back the issues. The area of negotiation are as follows:

The ares numbered 14 till 21 are areas not discussed in other trade negotiations be it FTA or multilateral trade groupings.

Compromise in Intellectual Property Right is not likely to happen because it is basically the American against the rest of the "TPPA countries." Furthermore, there are thousands of issues raised and it will hinder the signing in December. It is the IPR documents that was leaked by Wikileak.

From the list, there was a tip-off that government will compromise on Procurement. It is an area ACCCIM like to see the relaxation and many non-Bumiputera does not want to see any such preferential treatments to Bumiputera.

Some shallow politicians could just agree in order to get Chinese votes out of the believe that ACCCIM can influence and deliver. Remember we wrote here at the end of "businessmen disguising as lawmakers, policymakers, and politicians."

Few of them are strongly in favour of TPPA. No need for us to repeat the name of the bearded one. Logically, there must be some form of self interest motivation to compromise on the honey pot of government procurement.

The issues in summary is seldom explained enough, thus one would think it is only about procurement. So let's pick up from Bantah TPPA open letter here and extract the part on procurement, below:
Government Procurement & SOE: Under this provision the government has to allow companies from the TPPA countries to participate in government tenders beyond certain thresholds and without imposing offsets. It was announced on 1st August by MITI that the thresholds5 have been agreed at about RM23 mil for construction projects and at about RM 600,000 for non-construction bids in the long run. Beyond the thresholds we will be prohibited from allowing preferences for locals or set aside for Bumiputera or to otherwise pursue other socio-economic and national objectives.

There are no provisions for thresholds for Malaysian state-owned enterprises (SOEs or government-linked companies). Thus, all procurements by SOEs would have to be opened to all foreign companies from TPPA countries. To illustrate this, Petronas for example, will have to open every single tender for both construction and non-construction services to foreign companies from TPPA countries, and will thus not be allowed to exercise preferential treatment for local and/or Bumiputera vendors, suppliers, etc.

The concept of National Treatment – which requires all foreign investors to be treated no less than local companies – would be in force. Consequently, SOEs and EPPs (companies and projects under the ETP) which invariably are recipients of some form of Government’s assistance (grants, soft-loans, subsidies) may be penalised for such assistance when in competition with foreign companies from TPPA countries.
These "businessmen disguising as lawmakers, policymakers, and politicians" may see a loss in the compromise on procurement but it is a move that will politically endear the government with businessmen, and non Malays. The impact from politically indifferent and larger majority of young voters is likely to be minimal.

In return, the suspicion is that they will get the prime pieces in the SOE (or as we called GLC to emulate Singapore) that have to be sold off or closed up. It may not be quite noticeable and the sell off could be seen as a usual privatisation process like the sales of Avenue to ECM Libra, attempt to sell off MAS to Air Asia, and many others.

The lucrative ones will be those that have some form of monopoly or competition like utility companies. Also, there will be companies in duopoly or licensed businesses like telco, etc.

Remember our posting on the cigar and wine bar, The Escobar here and here?

Well ... there seems to be a work-in-progress. Read below:
Workers Unions, Associations Urge Energy Commission Not To Split TNB

KUALA LUMPUR, Nov 14 (Bernama) -- Four Tenaga Nasional Berhad (TNB) workers unions and associations on Thursday urged the Energy Commission (EC) not to carry out the proposal to split the national utility company into five separate entities.

"The EC's announcement has caused a great deal of uncertainty among the staff. We ask those who intend to split the company to respect our request and not play up the issue anymore. We're prepared to defend TNB in any way we can," the group said in a statement here.

The group were comprised of the TNB Executives Association, TNB Staff Merger Union, Tenaga Nasional Junior Officers Union and the TNB Safety Unit Association.

On Nov 8, a local daily reported that the EC had proposed for TNB to be split into five different entities under the Incentive-based Regulation to enhance the efficiency of its operations and better monitoring of each business unit.

The group have also sent a letter to the EC today to inform it of their intention to visit the commission soon to obtain further clarification.
The public discussion will be on whether one should break-up TNB and create a competition. After all, even in one state in the US, one can find several power companies.

There will also be another emotional public discussion on an impending tariff hike which is due. Since property assessment is up after no adjustment 21 years, it will strengthen their argument for tariff hike. .

Our concern is: Could it be a fire sale in preparation of TPPA?


Anonymous said...

Sebagainama krisis matawang di mana Malaysia menolak mentah-mentah bantuan IMF, hanya ayahanda Tun Dr Mahathir yang berani dan boleh berfikir untuk masa depan negara. Belajarlah dari sejarah. Pemimpin hari ini jangan digadai hak kita,berani lah untuk reject point blank TPPA.

Anonymous said...

The TPPA is a creature created by Singapore in 2005 which got nowhere until after the financial crash of October 2008. Singapore's GDP got mired in nothingness after the wealth garnered from the Cold War. The killer to Singapore's wheeling-dealing ended with Pax Americana's 'Globalization, Free Trade and Human Rights'. From 2000 onwards, Singapore never had 7% GDP again. Now, the Government is desperate to pry open the Malaysian market for her trading segment of the GDP and amounts to 1% of the whole. The TPPA is a killer for our beloved Malaysia and a life-saver for one-street Singapore. Man proposes. God disposes.

limkitboo said...

Malaysians must keep a tight leash and keep track of TPPA. I agree with KPKK now KKMM , its the worse managed Ministry,as gomen media arm, its RTM, JASA and Info dept did not contribute to help the govt win the 13th GE. 'Shy to live, die you donwant'. The ministry runs around liek a headless chicken , it lives for the contracts where its top officers fight with each other for contracts.
They have a clueless Finas and Minister , no clue what to do with its creative industry, no plans to capture control of their own media, and only alive when they can go overseas. 'To market to market to buy a fat pig and make your pockets big with free money to spend'.
Imagine letting this KKMM ministry jokers have a hand in TPPA. They will bury the industry and the country.Is it surprising that kkmm have been given zero budget by the PM. HUHUHUU...

RiverSong said...

Anon 12:55 PM must be labouring under several kinds of delusions.

Are you seriously implying that a little red dot like Singapore can manipulate the likes of the US, Australia, Canada etc into the TPP FTA.

Wow - I knew that Singapore's bureaucrats are good. But not this good!

Which makes me wonder what other goods this Anon is trying to peddle?

sea song said...

River song... Why are you so concern about anon 1255 comment.....
If it nothing then its nothing...

Anonymous said...


Perhaps its vice-versa instead of Anon12:55 that is delusional.
First you forked out a faint voice in defence of Carlyle Group. Then you attempted to downplay the significance the role of Singapore.

Anon 12:55 probably had digged deeper and realised the impending onslaught.

Trade and Industry and persistent Global conflicts comes hand-in-hand.

Why Australia felt the need to listen-in into SBY cellphone, why does Singapore proudly name a local in the UN Team of Chemical Weapon inspectors....

This is not sidetracked from TPPA issues here, just cautious reminder.

If you want foresight, Dr Mahathir is the best reference.

"Never underestimate the power of one to comprehend".


Anonymous said...

Can anyone here remember the biggest joke of the century when a die-hard PAP cadre was parachuted fresh from Singapore into the UMNO owned New Straits Times as the Chief Editor in 2005? Not only that, a luscious SIME DARBY contract was placed on his lap to lessen his sufferings in the ULUS ! Love thy enemy !

Anonymous said...

River Song. As long as there are men and women, a little red dot like Singapore can bring down giants. You the Malaysian who brought down the United States Navy with just a few skirts and made milions and millions of US Dollars ? Anchors aweigh !

Anonymous said...

Anonymous. Singapore is a failed State because of the brilliant Lee Kuan Yew's 11 failed Policies for Singapore. The wealth which it garnered during the years before 2008 is all gone and becoming difficult to recover. Singapore was knocked by Pax Americana's 'Globalization, Free Trade, Human Rights' after the end of Cold War. Singapre's GDP never recovered thereafter. So, Singapore thought up this devious TPPA to open up Malaysia's market as its slave forever. Smart. Like the 1962 Water Agreement. But it is 2013 now and we have many Malaysian fellows smarter than the brilliant Lee Kuan Yew of 1947 vintage ! Acheh !

RiverSong said...

Well, let's see now.

Who is going to challenge the Malaysian government to unilaterally withdraw from the TPP negotiations and wash it's hands of the whole sorry mess?

If that's what should be done, then who is going to be the first to bell this particular cat?

And if you are relying on the WTO's often-postponed Davos round, then you are far more optimistic than many of the WTO's members.

But what the heck...if you think that Malaysia can hack it on it's own, without the help of FTAs and an open trading environment, then # guess it's goodbye Vision 2020 and developed country status.

Just don't wish that on future generations of Malaysians.

Incidentally, I am puzzled by all this angst about Singapore.

Could it be that the Pedra Branca issue has raised more than a few hackles?

And is Singapore to be blamed if it plays the diplomatic game well and if it has knowledgeable and hard-nosed negotiators who know the ins and outs of international law, markets and multilateral trading systems.

Perhaps Malaysia is realising that you cannot send out kids to play in an adult game!

And don't we miss Rafidah Aziz in times like these?

Anonymous said...

Anon 1:14 PM

Moody's has put Malaysia's credit rating at A3 with a positive outlook.

And Singapore's rating is Aaa (triple A) with a stable outlook.


Anonymous said...

Sir, Singapore without the TPPA will have to make the following choices in less than 25 years but longer with our beloved Malaysia as its TPPA slave.
1. Singapore becomes the 53rd State of the United States.
2. Singapore becomes a Crown Colony again.
3. Singapore re-merge with Malaysia.
4. Singapore maintains status quo with the aging Gurkha brigades, the F35s, the rusting tanks, 2 submarines, AWACS, corvettes, spies, the S$2 Billion strategic water reserve, drone, long range artillery, the caverns etc.etc. Then, Singapore needs at least 2 US$ billionaires to become residents every day !

Anonymous said...

River Song. Malaysia bungled in the Palm Oil Tariff with India in the eary 1980s, just around the time the Tun assumed Prime Ministership. Who was the Minister for Trade then ?

Anonymous said...

River Song. Puzzled by all these angst against Singapore. You forgot the CLOB and how it was operated by Singapore since 1965. With the CLOB, the KLSE crashed 12 times ! Without the CLOB, no crash like now ? How ? One day I will explain to you how the CLOB worked like a Hoover to suck Malaysians ringgits up and down.
And the infamous 1862 Water Agreement whereby Malaysia now has to deliver free raw water and pay more for delivery to Singapore because the Singapore Dollar has appreciated 150% !

My Say