Tag Archives: Koon Yew Yin

They say we are wrong to cut our trees to plant oil palms

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Letter

 

Over a period of a few decades around 1850, 95 per cent of the two million acres of Redwood forest in California were cut and destroyed. What kind of men would cut down these ancient irreplaceable giant trees? Each of them was over one thousand years old.

Oil palm smallholdings and plantations meet the United Nation’s Framework Convention on Climate Change which defines a forest as an area of 0.5 to one hectare having more than 30 per cent canopy cover and having a potential height of two to five metres. To accuse the industry in Malaysia and Indonesia of contributing to global warming is sheer nonsense. In fact oil palm trees just as with other forest species, produce oxygen for us to breathe and act to counter coal and oil emissions which are the major cause of global warming.

Environmental activist groups such as World Wildlife Fund, Friends of the Earth and Greenpeace have launched many campaigns alleging that the expansion of oil palm plantations have destroyed forests, threatened endangered wildlife and robbed indigenous people of their land. Many of their arguments are not based on fact but are sensationalized from a small number of cases.

The anti-oil palm lobby in the west includes pro-soya bean and rapeseed groups who see oil palm as a major competitor and have recruited food lobbyists to play on fears of the health hazards of palm oil consumption. Together with environmental activists, these well-funded groups have created trade barriers to the global oil palm trade under the pretext of environmental activism.

In a fair contest amongst competing vegetable oils, palm oil will win hands down. The oil palm tree is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soya bean planted in the West, including United States and five times more productive than rapeseed, Europe’s main oil crop.

It is an undeniable fact that palm oil is the cheapest and most popular form of cooking oil for consumers, including many poor families in the west. Should trade barriers to benefit rapeseed farmers who are already heavily subsidised by the European Union (EU) government be successfully implemented, this will hurt consumers all over the world.

Also should alternatives to oil palm be grown, more land would be needed to produce an equivalent volume of oil to replace palm oil, resulting in more deforestation and problems for Mother Earth.

Finally, the western environmental activists’ campaign against oil palm plantation expansion, in the name of “saving rainforests”, is a violation of international norms and Malaysia’s and Indonesia’s sovereignty.

Koon Yew Yin

A Badly Conceived Election Budget Allocation

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Recently, the leading state newspaper in Perak carried an article which contained details of the Perak State Government’s budget for 2012 which was tabled before the State Assembly on November 21, 2011 (Ipoh Echo, Issue 133, 1-15 December 2011).

Among the key items of planned allocation in what is clearly a pre-election budget aimed at buying votes for the present state government in the coming elections, the most problematic is the RM60 million fund set up to assist first time house buyers by providing the 10% deposit as required by banks to purchase a new house.

I sympathise with the plight of first-time low-income house buyers and agree on the need to assist them in helping with home ownership. I can also understand the populist intention of the programme. However, this programme – as it is currently designed – is not only likely to fall short of its noble goal but will result in grief to the Perak administration.

I can already foresee the following difficulties:

What will happen if the buyers cannot pay the monthly instalments to the banks? A Housing Loan Manager of one of the leading banks told me that the bank can issue the first letter of demand after the defaulter fails to pay up only after three months. Also that the bank is able to initiate legal action only after three letters of demand have been sent out. In all likelihood, the legal procedure to recover the property will take six months or more. Hence, it could take more than one year at least for the bank to evict a defaulter. By the time the house is repossessed, it would be in such a deplorable condition that the bank will not be able to recover its loan and administration costs in most of the cases. To sell a repossessed property, the bank also has to advertise to invite bids. In most cases, the bank will not be able to get

the reserved price in the first auction. If this happens, the bank will have to reduce the reserved price by 10%.  If the second auction is not successful, the reserved price will have to be reduced by another 10%.

What will happen when a buyer cannot pay back the 10% to the State Government? Does the Government have the necessary machinery to recover the debt? As you can see above, there are laws to protect the poor men. Even the commercial banks with all the rules and regulations in place, still have difficulties to recover their money, how can the Perak State Government expect to do better?
The administrative costs to recover the debt is not only likely to be considerable but could also exceed the 10% loan outlay. This will further impoverish the state by diverting resources to unproductive expenditure. What this means is that any recovery of loan funds will be much less than what has been dispensed, leading to a short life-span for the so-called “rolling” fund.

I hope all members of the Perak State Assembly will consider these comments seriously and delay the implementation of the scheme until a later date when all the design and operational kinks and problems are fully understood and accounted for.

A better planned and more stringent housing loan scheme is needed for the state if it is to be sustainable. The unseemly haste with which this poorly designed scheme is being pushed through for the coming elections will surely backfire on the state government and all Perak subjects.

Koon Yew Yin

New Mega Projects: Mega Question Mark Over Procurement

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How to evaluate and award contracts to the cheapest contractors?

By Koon Yew Yin

I refer to the article ‘Transparency in MRT Planning’ by Risen Jayaseelan which appeared in a major newspaper on 5th Oct 2010. The purpose of my writing this piece is to forewarn the public and the Government that the way this proposed project is being considered by the Government is basically wrong and may well end up with tax payers having to pay a much higher toll rate than justifiable.

This warning is not only for the MRT project but for all 131 projects that are being envisaged under the Economic Transformation Programme (ETP) which is supposed to transform Malaysia into a high income nation.  Basically I see no change at all in the current procurement procedure which has been used before in large concessions. The results of the evaluation and bidding procedure for mega projects such as the current MRT, the power provided by IPPs, toll roads, and the Selangor water supply have seen the consumers being forced to pay unreasonable rates because the bidding and tender process has been riddled with opportunities for rent-seeking, corruption and wastage.  Besides, cheaper and more efficient alternatives have not been fully considered by the Government.

I was shocked to read that the Chairman of Land Public Transport Commission, Tan Sri Syed Hamid Albar, has said that the technical study of the proposal submitted by Gamuda and MMC would be completed by the end of the month and that following it, LPTC would submit their report to the Government for approval.

I would like to ask how in the first place can the LPTC know that this proposal is the best in terms of technology and costing? It is impossible for LPTC to do an honest job if they have only one proposal to study and they do not have at least several other proposals to compare with.

As we know, the cost of this MRT project will be several billion ringgit. Negotiating with only one consortium, Gamuda and MMC, is likely to encourage corruption and waste, and is against all elementary principles of good economic governance.  The price can be 10, 11 or 12 billion ringgit. Who is there to decide whether a costing of 10 billion ringgit is in the best public interest and will provide full value for Malaysians and not the project developers?

The sum provided by the only bidder is like taking a figure out of a hat. We are talking about billions of ringgit involved. Are there saints in the evaluation committee or project developers who do not like big money?  The amount of money involved is so enormous that even saints will surely be tempted.

The public must demand that the Government stops this method of award.  It is the height of economic foolishness to award a concession or monopoly on a first come first served basis.  Mega project awards should not be given out on the basis of service that is dished out in restaurants.  If we do that, we will end up with a lethal case of economic poisoning of the Malaysian consumer.

The Best Way to Evaluate Tenders

The best way in terms of award of tenders is for Government to follow the guidelines as established by the World Bank.  Incidentally these procurement guidelines are easily available over the website and are even applied in some of the most corrupt countries of the world in an effort to reduce corruption. It does not cost us even one sen to adopt them.

Firstly, the Government must engage a reputable engineering consulting firm which has experience with similar projects to put up a proposal and to open the project bidding to all contractors to tender. All the contractors must be prequalified based on both their technical and financial ability. All contractors must submit tenders conforming to the original design so that the cheapest tender can be selected. If all the contractors are prequalified, the Government tender board has only to look at the tendered price. Always award the contract to the contractor who submits the cheapest tender assuming that all the other criteria are met. It is important not to allow anybody from the Government to negotiate with any contractor to avoid corruption.
Finally transparency and accountability requires that all documents on the proposal and other 131 projects in the ETP be placed in the public sphere – not just limited information but detailed and full breakdowns in accordance with international best practices.

If we want to reach the status of a highly developed nation, we must immediately implement the standards of economic good governance, accountability and transparency that come with it.