Last week, I bemoaned the fact that the well-intentioned NEP had gone awry because of the rentier model of economics which thrives under the public policy of purchasing and opportunity management promoted by the finance ministry today.

Let me build a more complete thesis on this issue which I have been concerned about for more than 15 years now. I have even registered a full-fledged complaint to the Parliamentary Committee on Integrity, but from which I have heard nothing to date.

The main objectives of the NEP were related to the equitable distribution of the fruits of growth and development so as to address rural poverty and socio-economic considerations, thereby strengthening national unity. I believed in the NEP then, but not anymore because of the way it has been implemented.

It has become a backdoor policy to make some individuals rich. This responsibility of ensuring and promoting the model of distributive growth and its full realisation belonged to the EPU, the General Planning Unit (later, the Socio-Economic Research Unit) and ICDAU, all under the PM\’s Department.

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In the last 25 years or so, ever since the so-called privatisation policy was introduced, the goal of restructuring society has taken on an even more explicit form of growing new bumiputera entrepreneurs. This was the Mahathirian model of privatisation through the creation of \’10 billionaires\’ agenda. The theory was based on the trickle-down effects of capitalistic growth models. The policy became the explicit agenda for creating Malay billionaires and the EPU even issued a Privatisation Master Plan to fulfill this policy intent.

However, in the last 15 years or so, (partly as a result of Anwar\’s alternative SME model of distribution) and a decade after the original plan and policy, it would appear that the equitable distribution phenomena has become silenced by many sectarian interests who have interpreted their own master plan to steal government assets by the backdoor. I believe Umno and her political allies, through privately-owned companies, are probably the greatest culprits for policy derailment.

Furthermore, I believe there was explicit and purposeful connivance on the part of both civil servants at EPU and much of the rest of the Barisan Nasional party apparatus towards this policy derailment. Unfortunately, the development of this agenda coincided with the most serious leadership challenge that Umno has ever faced. Today, all Malaysians are victims of this failed challenge and the resultant revivalist agenda of Umno. There is no more a Semangat 46 agenda or the 57 Merdeka spirit; it is only the new Umno working for her own survival via the Ketuanan Melayu agenda.

I would therefore like to use this article to question the current implementation of the privatisation policy. Recent headlines about government procurement are only symptoms of a very real and serious problem. Therefore, I am personally quite amused that the institution of the Auditor-General (AG), while annually making reference to the abuse of the tender and purchasing policies, does not seem to have the political will to get to the root of the problem. Dear Mr AG, let us simply call a spade a spade. What is the real cause and source of this rent-seeking model which gives rise to the new services industry in Malaysia, one that creates no real value but adds 30 percent to the cost of doing government business?

Today\’s model

Well the truth is that this is today\’s version of the privatisation model converted into \’piratisation\’ by friends of the powers-that-be. I believe the Opposition Leader first said this in the early 1980s in the light of the UEM case of the North-South Highway. Since then, with the explicit compliance of the Attorney-General\’s Chambers, the AG, and public service representatives, sectarians interests usually linked to the government and their cronies make outrageous proposals for all kind of real and perceived needs to provide services to the government, often without a tender, and thereby make a killing of at least 30 percent for doing nothing but for identifying a new need and then supplying services for it.

In the government-linked business sector, such \’expert services\’ are called \”connect and collect\”. What is amusing to me is that all cabinet ministers appear to express surprise about the nature of such projects, after every AG\’s Report, when most of such projects are in fact awarded by the cabinet without any due process of qualification via a tender process. I even believe that such proposals are not even done with cabinet papers but rather with what is called a Nota Cabinet or an information paper that becomes the basis for a cabinet decision.

During a course in 1995, I asked the then AG why his Audit Report did not take up such issues of piratisation instead of reporting the small deviations which result from these purchases of services? His reply: \”They were all approved by cabinet decision and therefore the AG had no authority for any review of the purchase decision.\”

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True? I believe not. Theft of government resources cannot be justified under any circumstances, even with a cabinet decision. There is our so-called system of checks and balances but all those have been checked to collude with the Executive or else.

The AG\’s Report is always formally tabled only to the Parliament and therefore does not need not to fear anyone but can instead tell the truth, but still those responsible for follow-up action close an eye after their annual frustration venting ceremonies. At the end, every senior government servant gets promoted regardless of the marks against him by the AG.

Why really is such a policy still relevant? The truth is that the first round of privatised agencies are most of today\’s government-linked companies (GLCs). Why can\’t the current GLCs compete with the real and serious private sector for the provision of all such real need for services? The competition can in fact be between both the GLCs, privately or publicly owned companies, and even the international private sector in Malaysia. The new purchasing system can then be explicitly totally and only by tender.

Maybe this was what was intentioned by the Budget policy speech. The budget policy statement said that such projects will be undertaken by a tender. Are not all government purchases supposed to be done by tender anyway? Although, I hear that most are done today by what is officially called a \’negotiated tender\’, an oxymoron at best. A tender is a tender and cannot be negoitiated. Only some specialised contracts may be conducted by negotiated purchases, but even then a due process of tendering must be used, if I remember my Treasury instructions well.

Furthermore, an even more serious question, why is the EPU undertaking decisions on privatisation, when this involves a purchase and disposal of government assets and opportunities; and which is directly under the jurisdiction of the finance ministry?

These questions remain as I review the policy of piratisation of government assets and opportunities by mainly crony companies allied and closely linked to the government. So, I am amused that the minister of international trade and industry and second finance minister appear bemused that \”toilet bowls can cost so much\”.

Dear Ministers, these were the same problems faced in the early 1970s even when open tenders were a norm, and it was usually related then only to the defence ministry. Today, even local authorities make dog-catching into a very profitable business, but really for whose interests?