Indonesia and Jokowi: greening hopes? (shared)

This posting is shared from Khor Reports Palm Oil Blog, http://khorreports-palmoil.blogspot.sg/2014/09/indonesia-and-jokowi-greening-hopes.html

Indonesia recent moves tightening up on environmental regulations - hefty fines. I'll look for my piece on indigenous land rights and impact on concessions and post up soon.

• Indonesia haze: landmark peat fire fine, ratifies Asean haze agreement (update 1), Tuesday, September 23, 2014, http://khorreports-palmoil.blogspot.sg/2014/09/indonesia-ratifies-asean-
• Landmark Indonesia ruling on peat infractions, January 13, 2014; http://khorreports-palmoil.blogspot.sg/2014/01/landmark-indonesia-ruling-on-peat.html
• Singapore approves anti-haze bill and Jokowi eyes drones to stop land misuse (update 2), August 6, 2014  http://khorreports-palmoil.blogspot.sg/2014/08/singapore-approves-anti-haze-bill-and.html

On Brazil: How Brazil clamped down on deforestation, Friday, July 11, 2014, http://khorreports-palmoil.blogspot.sg/2014/07/how-brazil-clamped-down-on-deforestation.html


Online links:

Jokowi Wins: This Could Turn Out to be the Biggest Climate News of 2014 By Andreas Dahl-Jørgensen and Michael Wolosin, Forests & Lands, Political Strategy; http://www.climateadvisers.com/jokowiwins/:
 
What does Jokowi’s win mean for the world’s climate? The short answer: Possibly a huge deal. Here’s why. ... where is Indonesia heading on deforestation and carbon emissions? There are two diametrically opposed answers to this question... The “glass-half-empty” camp looks at deforestation rates and sees failure. Recent studies have confirmed that the loss of natural forests has dramatically increased in the last couple of years. Deforestation is now higher in Indonesia than in Brazil, in part due to Brazil’s 80% reduction over the last decade – the largest emission reductions anywhere anytime ....The “glass-half-full” view – which we share – looks not only at the disturbing deforestation data, but also takes into account the dramatic systemic changes and leadership that is taking place. Frances Seymour, previously the head of the Center for International Forestry Research and now a senior fellow at the Center for Global Development, has referred to the deal with Norway as the most significant game changer for Indonesia’s forests in the last 25 years....

...Here’s what we see below the surface:
1.Disruptive transparency that “exposes the mess.”... One Map

2.Fundamental land-use reforms. Moratorium. Land swaps?

3.Ending impunity. The President’s special reform unit and the anti-corruption unit (KPK) have embarked on a review of existing concessions and a comprehensive law enforcement campaign. It is following the money, with fines up to $ 9 million and executives being jailed.

4.Indigenous rights.... Landmark court ruling in 2013 Indigenous claims are being included in the government’s One Map initiative.

5.Private sector sea change.... Large and powerful companies have gone from opponents to critical allies of the reformers.

These remarkable developments are reminiscent of the strategies that helped Brazil’s deforestation rate plummet in a way no one thought possible.

The Jokowi Forest Agenda. There are three big reasons forest advocates and observers should be excited about a Jokowi presidency... First, while environmental issues didn’t feature strongly during the campaign, the things he did say were good, even if lacking specifics. (See Loren Bell’s excellent summary here; http://news.mongabay.com/2014/0724-lbell-commentary-jokowi.html) He stated that Indonesia has “pursued economic growth too aggressively and not paid attention to the environment.”...Second, Jokowi agreed to implement the reforms requested by the indigenous peoples’ organization AMAN, including implementing the Constitutional Court decision granting land rights to indigenous peoples. In return Jokowi received AMAN’s endorsement and active campaign support, the first presidential candidate ever to do so.... The third and perhaps most important reason for optimism relates not to his stance on the environment but his vision for good governance and social justice.... His coalition does not hold a majority in parliament, and he may need to learn to play the political game of favors to get things done. Even with the right reforms, deforestation is unlikely to decline immediately given the sheer inertia. But it’s hard to see how one could have asked for a president more aligned with the anti-deforestation agenda than Jokowi....

Scottish Secession? (update 2)

19 September 2014. It's a "NO" for Scottish independence with 55% vote but the political fallout will still be substantial?

Also interesting to note that Glasgow, the largest city in Scotland, voted for "yes."

Scotland votes 'Yes' to a United Kingdom – what's next? 19 September, 2014  by Moneyweek: "The final count showing a 55% 'No' vote to a 45% 'Yes', and on a massive 86% turnout, it was a comfortable win for the union.....However, it would be a mistake to think that this is all over, just because the votes are in and counted. There will be political fallout – potentially quite substantial. And that's something investors at least need to be aware of.  The debate has stirred up a hornets' nest of questions about the way Britain is run, one that had largely gone ignored. The promise of more power for Scotland – even in the event of a 'No' victory – means that Britain's whole political structure is going to need a rethink.  While plenty of 'Yes' voters seem concerned that the UK parliament will back down from 'Devo-Max' promises, that seems unlikely. After all, whatever Alex Salmond said about this being a once-in-a-generation opportunity, he'd easily be able to argue the case for a re-run if anyone reneges on the deal.... And Scotland is already on track to get major new powers. From April 2016, the Scottish government will be able to move income tax rates by up to ten percentage points, for example.  The big risk with that is very similar to the threat posed by an independent Scotland remaining in currency union with the UK. It's the danger of having part of the country with almost total control over revenue-raising and spending powers, and the reassurance of a bigger neighbour to bail it out if it over-reaches itself.  As Melanie Baker of Morgan Stanley put it in the FT, this "might end up having broader implications for the health of the UK's fiscal finances". At a time when we're already very heavily indebted, that's not a pleasant prospect..... Expect a lot more political turmoil ahead...  Meanwhile, we'll move that bit closer to having a separate English parliament. David Cameron has said he plans to address the problem of Scotland-based MPs being able to vote on issues that only affect English voters...."

WSJ says: "...The "No" vote—on a heavy turnout—spared Mr. Cameron, who could have faced calls to resign had Scotland opted to leave. But we note that the Conservative leader's fight is far from over. With a general election looming in May, Mr. Cameron already faces fierce criticism for his handling of the Scottish vote. "There's a sense that Cameron misjudged this vote, took his eye off the ball and was complacent when the details were first hammered out with [Scottish First Minister] Alex Salmond," noted a university politics lecturer. The vote's outcome boosted sterling, lifted stocks and reset market expectations for the path of the country's interest rates, but also left investors with gnawing doubts about the long-term political outlook...."

Early results fall in favour of the union; http://www.theguardian.com/politics/scottish-independence-blog/live/2014/sep/18/scottish-referendum-results-live-coverage-of-the-independence-vote
Blows for Yes camp in Clackmannanshire and Western Isles
• Orkney and Shetland vote strongly in favour of remaining in UK, as forecast
• National turnout anticipated to be around 85%, with some areas topping 90%


18 September 2014. Recent polls and background on Scottish move.

Scotland’s yes campaigners are voting to leave the Titanic - The British state is an imperial behemoth that can only look on in panic as Scots scramble for the lifeboats  by Adam Ramsay, 
theguardian.com, Thursday 18 September 2014 09.00 BST; http://www.theguardian.com/commentisfree/2014/sep/18/scotland-yes-campaign-voting-british-state'
But in the internet age, officials don’t get to write the stories any more. There were always people who had little time for flags, tartanry and shortbread, but who wanted to escape a political system that has made Britain one of Europe’s most unequal counties. And it is these people – a better organised and vastly more powerful version of the Occupy movement – that the Westminster parties and their media partners failed to consider... It’s against this self-organised network that the British state is flagging. Research from Edinburgh University shows that the more information people have, the more likely they are to vote yes. In the face of mass peer-to-peer education, the puffed-up power of elites melts away: polls show most Scots no longer believe what Westminster MPs say. As David Cameron and George Osborne and Ed Miliband huff and puff and woo and cajole the people of Scotland, more and more simply look these politicians up and down, shrug, and say: “You have no power over us any more.” It’s their own fault. Westminster’s parties have made conventional politics so bland that people barely pay attention. To win elections they have got used to flashing simplistic messages in front of our eyes – we don’t notice or care that we’re being patronised. And because they destroyed their pesky grassroots, they failed to spot that the referendum isn’t an election. People are paying attention, are thirsty for information, and don’t take kindly to their leaders treating them like idiots or trying to bully them...  Final poll of Scottish referendum campaign shows six-point lead for no; Ipsos Mori reports slight strengthening of no's lead, with yes voters mainly motivated by hope and no voters by fear... All the leading pollsters have now issued final polls suggesting either a four- or six-point lead for the no campaign, but Labour officials remained cautious, saying it was still unclear how undecided voters would break or what impact a high turnout might have. It is now thought that as few as 200,000 votes could be the difference...Majorities on both sides said they would base their vote more on practical consequences than feelings of national identity. Seven in ten (70%) of yes supporters based their vote more on practical consequences, and 78% of no supporters. Overall, 74% said they would base their vote on practical consequences, with 19% basing theirs more on national identity...  http://www.theguardian.com/politics/2014/sep/18/final-poll-scottish-referendum-campaign

Scotland’s Independence Bid By Rodney Jefferson  | Updated Sept. 18, 2014; Scotland claims credit for inventing the telephone, television and penicillin, not to mention modern economics. Its people built ships, bridges and locomotives for the world and, more recently, Grand Theft Auto. Now many Scots say they deserve to break away from the United Kingdom — and the 307-year-old union with England and Wales — to create Europe’s newest sovereign state. Scottish voters age 16 and over are deciding in a Sept. 18 referendum asking the question: Should Scotland be an independent country?... Scotland is holding the 51st independence referendum worldwide since World War II. The first was Iceland’s break from Danish rule, with the latest creating South Sudan. There was a flurry in the 1990s as countries left the former Soviet Union and Yugoslavia fragmented. So far, 27 of the votes have been in favor of secession, with 23 against. The French-speaking province of Quebec voted to remain part of Canada in 1980 and 1995, though only by a wafer-thin margin the second time. Independence movements are often about ethnic or linguistic splits, but just as frequently they’re about economics. The U.K. was formed by the Act of Union in 1707, as Scotland faced financial ruin after a failed project in Panama.... http://www.bloomberg.com/quicktake/scotlands-independence-bid/

Source: Scottish Government, U.K. Department of Energy & Climate Change  

13 September 2014  Big moves and major news against Scottish independence

Scottish independence, UK RIP? Ditching the union would be a mistake for Scotland and a tragedy for the country it leaves behind; http://www.economist.com/news/leaders/21616957-ditching-union-would-be-mistake-scotland-and-tragedy-country-it-leaves

'I hate England': Tartan-loving fashion designer Vivienne Westwood pins 'Yes' badges on her models (despite the fact she's grown rich in London and hasn't got a Scottish bone in her body)
Read more: http://www.dailymail.co.uk/news/article-2755652/Tartan-loving-designer-Vivienne-Westwood-pledges-support-Yes-campaign-Scottish-independence-slamming-unionists-frightened-stupid.html#ixzz3DMzeeuap

Others on secession and self-determination:

Catalans form human V for Vote to seek choice on split from Spain; http://uk.mobile.reuters.com/article/idUKKBN0H60SG20140912?irpc=932

Democracy in China - The struggle for Hong Kong. The territory’s citizens must not give up demanding full democracy—for their sake and for China’s; Sep 6th 2014;  |http://www.economist.com/news/leaders/21615583-territorys-citizens-must-not-give-up-demanding-full-democracyfor-their-sake-and?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709

11 September: I had a chat yesterday evening with a senior historian for the Malay archipelago (the meet up was triggered in part by my updating on the Johor Iskandar-Singapore project and its historical resonance). As we meandered through different topics, he highlighted to me his interest in the Scottish secession referendum, and how this might trigger Catalonia (Barcelona) which is a rich region in Spain to do similar (wiki: http://en.wikipedia.org/wiki/Catalan_self-determination_referendum); and we also noted that the Crimea is making some noises on the same (news link: http://www.channelnewsasia.com/news/world/if-scotland-independence/1355924.html). Why is there seemingly a wave of secession talk and how will these notions affect us in this part of the world - Southeast Asia?

Handily enough in my email box from a few days ago was a report from a bank on the political betting odds of the Scottish Referendum (which points to a "yes" to remain; which differs from opinion polls results) and how it would affect England.  Do read the article excerpts (see below!), which also discusses recent accuracy of opinion polls versus betting odds in politics and points out how reliant Labour is on its Scottish MP base. Looking at 18 September Scottish Referendum betting odds sites suggested, https://www.betfair.com/exchange/politics/market?id=1.110033387:

Bank of Singapore: Follow the Money in Scotland Vote, 9 September 2014   Economics has plenty of obscure areas of research and sometimes they are relevant to financial markets. One field looks at the predictive power of opinion polls compared to the odds in betting markets. The strong conclusion is that we should “follow the money” as betting markets have a much better track record... This is important now that the opinion polls are suggesting the Scottish referendum on independence will be a close vote. Here (http://www.bbc.com/news/events/scotland-decides/poll-tracker) is a link to a BBC website that tracks how opinion polls have developed. Sterling has fallen sharply after one poll showed a majority in favour of “Yes” in the vote for independence that will take place on 18 September, and others showed a tight contest... In contrast, betting markets (such as Betfair or Ladbrokes) continue to show a strong prediction of a “No” vote. Admittedly the odds have narrowed – until recently the betting market gave the Yes vote about a 25% chance, while now it is up to 34%. That is still a huge distance from the neck-and-neck race shown by opinion polls... Betting markets have an established track record of predicting the winners in US politics. Recent examples were when the opinion polls were showing a close race between Bush and Kerry in 2004 or between Obama and Romney in 2012, while the betting markets were leaning strongly in favour of the eventual winner... The idea seems to be that numerous informed and interested participants express their views through a betting market. It is not one-man, one-vote – the biggest wagers will have the most interest in the outcome. In contrast opinion polls are a relatively narrow cross section of potential voters, where the presentation of the question can also affect the result... There is a high degree of uncertainty about the consequences of a Yes vote. Much would depend on negotiations in the 18 months before independence in March 2016, with national defence, the allocation of government debt and assets, location of financial institutions, the choice of national currency and membership of the EU all to be settled... The direct impact on the remainder of the UK does not appear too large, as Scotland represents less than 10% of the economy. However, there is potentially a large political impact, as Scotland predominantly sends Labour politicians to the UK parliament in Westminster. Currently there are 41 Labour MPs from Scotland (out of a total of 257) and just one Conservative, so it would become harder for Labour to win an election.... It is not clear how a pro-independence vote would affect the next UK general election due by May 2015, as the Scottish seats might not be contested or they could only serve until the split in the Union... From a financial market point of view it would increase the chance of a Conservative government bringing a referendum on continued membership of the EU in 2017. Moreover, without the influence of (relatively pro-EU) Scotland it would make an exit more likely. Whether or not this is negative for GBP is debatable, as it would probably lead to a more free market orientation to the UK, less constrained by the social democracy of the EU. However, markets seem to be viewing such an outcome negatively. If the betting markets are right then these are complications that will not trouble us after the vote on 18 September..."

Indonesia presidential race (updated a)

Indonesia presidential race (various updates):

http://khorreports-palmoil.blogspot.com/2014/06/indonesia-presendial-race.html

 

Advert: Indonesia policy platform - crucial key text for business investors. Do you need to better understand the policy platform of the incoming Indonesia Jokowi-JK administration?

• Secondary sources and analysis are important and handy but they can inject bias. Their often limited coverage may also miss nuance and overall perspective. In the course of our own research and analysis on Indonesia policy ideas for the next 10 years (assume two terms) we have encountered big gaps and tonal differences in regular sources and even more so against the original policy text. We were surprised at the differences and you may be too. Although campaign policy ideas may shift, it is important to understand the platform of the incoming presidency as policy ideas invariably reappear.
• Businesses investing and trading with Indonesia will crucially benefit from access to primary Bahasa policy sources presented in English. Since we did a translation of the policy manifesto (and it's proven pretty tough to find one done), we thought to disseminate it to others who may need it at a reasonable fee.
• You get:  i) a full English translation of the Jokowi-JK "visi misi / vision mission" policy platform (original version, 41 pages in Bahasa) and ii) for the first ten early birds, a free supplement : upcoming review (release date to set) of priority Jokowi-JK policy items from the 5 Presidential Debates and statements from Jokowi-JK and key advisors during the early transition period.
• Sectors that will find this of interest include: financial, oil & gas, green energy and technology, logistics and infrastructure, agricultural supply chains, mining, forestry, rural development and more.
• Please contact Deborah at deborah.segienam[at]gmail.com for orders and info.

30 July 2014: Jokowi goes online for Cabinet by Sita W. Dewi and Yuliasri Perdani, The Jakarta Post, Jakarta | Headlines | Fri, July 25 2014, 8:36 AM; "... Social media played a major role in his presidential-election victory and now president-elect Joko “Jokowi” Widodo has embraced the same tool to recruit his ministers. At the same time he is easing pressure from those seeking places in the Cabinet and attempting to win over his opponents... Amid rumors and media speculation about his Cabinet choices after he is sworn in as president on Oct. 20, Jokowi and his team have produced an online poll called “People’s Choice for an Alternative Cabinet” published on jokowicenter.com.... In the survey, the team is putting forward three different names for each ministerial post in a Cabinet of 34 ministers. The poll also provides an option should respondents wish to propose another name. It is expected citizens will respond enthusiastically to this Indonesian Idol style of recruitment as it will be the first time they have been involved in Cabinet formation....

24 July 2014: I checked with a source who's a Jokowi supporter, who had this to say: "I am holding the jubilation at least until two things happen: i) Golkar crosses over from Prabowo side, giving Jokowi 2/3 majority in parliament thus he cannot be impeached. Currently, the parties backing Prabowo have threatened impeachment on the first few days in parliament* and b) Prabowo finally concedes." *refer to 11 July posting (below), Indonesia’s Parliament in a extraordinary session, amended the constitution. Referred to in the Indonesia media as the "Law on MD3", the next leader of Parliament will be chosen by MPs, rather than awarded to the party winning the most seats i.e. Jokowi's PDI-P....

9 July 6pm note: PDI-P and Megawati declared victory but no concession from Prabowo then.
It seems that big corporate donors sure made a big push Prabowo to win but Jokowi-JK prevailed and their lead grew. For plantations, Prabowo sounded more bullish on upstream and biodiesel topics. Jokowi has warned on special interests and those companies falling short on various issues of governance. But PDI-P is still rather nationalistic and we should expect differences; as seen elsewhere in the world. Our reader SK notes this: Now the question is who will be in the cabinet? Will Jokowi co-opt more competent bureaucrats from Demokrat? We might also wonder how will Jokowi'srelationship with Megawati and daughter-son evolve.

Exit polls: Jokowi-JK win 52.7% vs 47.2%. 9 July 2014 update, 4.15pm. Several polling organisations find for Jokowi-JK victory, 5.5%-age points ahead of the Prabowo team. This is ahead of the 3%-age point narrowing lead just before polling day.

POLLING DAY! 9 July 2014 update, 9am. Thanks to our reader SK, two negatives on Jokowi's campaign - apparent campaign planning and excecution problems in PDI-P and an alleged TNI program... Exit polls in foreign voting show strong support for Jokowi... For those interested in policy directions, UOBKH Research, 8 July on final debate: The final round of the presidential debate was a heated one with Jokowi-Kalla on the attack. Kalla raised the issue of Newmont divestment, graft regarding the people surrounding Prabowo and conditional coalition offered by Prabowo. Jokowi also attacked his rival’s promises and questioned how they would ever realise those plans....
 

7 July 2014 update: News and view on the 5th and final Presidential Debate on Food Security, Energy, Environmental Issues. Also, interesting to note that Jakarta Globe wonders about a situation of "no clear winner" of the election, worries about TNI (armed forces) role and which are the key swing voting regions.....

 

4 July 2014 update: Interview #2 Presidential race heats up, foreigners worry? In the last two weeks, I've been in touch with six (6) people who represent large business interests in Indonesia including in palm oil (domestic and international owners) and three (3) Malaysians who work and/or are invested in Indonesia palm oil.  Khor Reports notes on key Indonesia-Malaysia plantation topics.

 

17 June 2014 - One survey shows  Prabowo-Hatta surpassing Jokowi-Kalla who have been on a narrowing trend. Indonesia surveys were off base when some earlier expected a solid Jokowi-PDIP win in the legislative elections. Sample size was not terribly big for this one and some say that Indonesia voters can change their minds with a large 40% proportion as undecided in other surveys.
I'm also hearing on Indonesia sources that many civil servants are not be terribly keen on Jokowi given his public "shaming" of Jakarta bureaucrats. Thus, they tend to be Prabowo supporters.

9 June's Update 2 is for Jokowi sugar mill update plan.
Khor Reports comment: We've been keeping an eye on this and expected increasing economic nationalism once Jokowi failed to get a large majority in the earlier polls. A plantation expansion moratorium for large companies is in regulations with a 100,000 hectare cap to be implemented but still subject to negotiation on the finer details. One way to lift this ceiling is to be publicly listed in Indonesia - but there is uncertainty as to the public float expected. This situation has not been tested, but we suspect that a significant public float[1] may find favour with Indonesia's economic and financial sector development policies..................

Click on this link for more: Indonesia presidential race (various updates):

http://khorreports-palmoil.blogspot.com/2014/06/indonesia-presendial-race.html

  

 

 

Indonesia policy platform - crucial key text for business investors

 Advert: Indonesia policy platform - crucial key text for business investors. Do you need to better understand the policy platform of the incoming Indonesia Jokowi-JK administration?

• Secondary sources and analysis are important and handy but they can inject bias. Their often limited coverage may also miss nuance and overall perspective. In the course of our own research and analysis on Indonesia policy ideas for the next 10 years (assume two terms) we have encountered big gaps and tonal differences in regular sources and even more so against the original policy text. We were surprised at the differences and you may be too. Although campaign policy ideas may shift, it is important to understand the platform of the incoming presidency as policy ideas invariably reappear.
• Businesses investing and trading with Indonesia will crucially benefit from access to primary Bahasa policy sources presented in English. Since we did a translation of the policy manifesto (and it's proven pretty tough to find one done), we thought to disseminate it to others who may need it at a reasonable fee.
• You get:  i) a full English translation of the Jokowi-JK "visi misi / vision mission" policy platform (original version, 41 pages in Bahasa) and ii) for the first ten early birds, a free supplement : upcoming review (release date to set) of priority Jokowi-JK policy items from the 5 Presidential Debates and statements from Jokowi-JK and key advisors during the early transition period.
• Sectors that will find this of interest include: financial, oil & gas, green energy and technology, logistics and infrastructure, agricultural supply chains, mining, forestry, rural development and more.
• Please contact Deborah at deborah.segienam[at]gmail.com for orders and info.

Sovereign wealth funds (SWF) - GIC, Temasek, Khazanah

3 August 2014: Singapore GIC and Temasek  returns, Khazanah-Temasek tie-up on Iskandar Malaysia

GIC Has 4.1% Annualized Return, Warns of Lower Asset Gains  By Klaus Wille and Joyce Koh  Aug 2, 2014 10:23 AM GMT+0800; "GIC Pte, manager of more than $100 billion of Singapore’s reserves, posted an annualized return of 4.1 percent and warned that the current high prices in financial markets signal a challenging outlook.... GIC’s 20-year annualized real rate of return, or increases on top of global inflation it uses as its main metric, as of March 31 compared with 4 percent the previous year, the fund said in the annual report published today. The sovereign fund declined to elaborate on specific holdings.... The MSCI World Index, which tracks stocks in 23 developed countries, gained 17 percent during the period, the most in four years, as central banks worldwide kept interest rates low to fuel growth. Citigroup Inc. (C), of which GIC owns 3.7 percent according to data compiled by Bloomberg, gained 7.6 percent in the period. Switzerland’s biggest bank, UBS AG (UBSN), in which GIC is the biggest owner with 6.4 percent, rallied 26 percent.... GIC is more “positive” on emerging-market assets going forward, Lim said, citing valuations and progress in reforms in countries including China, India, Indonesia and Mexico...." http://www.bloomberg.com/news/2014-08-01/gic-has-4-1-annualized-return-warns-future-growth-challenging.html

Temasek’s Portfolio Gains Include $4 Billion From Government By Klaus Wille  Jul 10, 2014 3:02 PM GMT+0800; "Temasek Holdings Pte’s performance was helped by a S$5 billion ($4 billion) capital injection from Singapore’s Ministry of Finance, according to the state-owned investment firm’s annual report.... Temasek’s portfolio rose by S$8 billion to S$223 billion as of March 31, the company said in its review on July 8. The gain included the funds from the ministry, its only shareholder, “as part of their asset allocation decision,” it said.... The total shareholder return of Temasek, which includes dividends and capital gains and excludes capital injections, shrunk to 1.5 percent for the past year from 8.9 percent in its previous fiscal year, as holdings in Asia remained little changed. The funds from the ministry boosted its portfolio gain to 3.7 percent, according to data in the annual report..... The additional capital came from government funds, including proceeds from tradable Singapore Government Securities, any government surpluses as well as proceeds from land sales, the ministry said in an e-mailed statement.... Singapore’s government had injected S$10 billion in cash in 2007, the largest since Temasek’s inception in 1974, the ministry said in August 2008.
http://www.bloomberg.com/news/2014-07-10/temasek-s-portfolio-gains-include-4-billion-from-government.html

Singapore Set to Get LNG Cargo From Indonesia for Third Tank By Chou Hui Hong  Jul 28, 2014 7:46 AM GMT+0800; "Singapore LNG Corp., which operates the Asian city-state’s first receiving terminal, is set to get a liquefied natural gas cargo for its third tank delivered today by the vessel Wilpride.... “We confirm that the Singapore LNG Terminal will be receiving a cargo of LNG that is not intended for import into Singapore,” SLNG’s spokesman Simon Ang said in an e-mailed statement yesterday. Ang declined to give further details of the cargo, citing reasons of commercial confidentiality.... SLNG’s Jurong Island facility in western Singapore has three tanks that can handle 6 million metric tons a year. A fourth will be added by 2017, increasing capacity to 9 million tons. The company may make the third tank available for traders to carry out short-term transactions, SLNG’s chief executive John Ng said in an interview at his office March 20.... Temasek Holdings, Singapore’s state-owned investment company, set up Pavilion Energy in April last year. Pavilion Gas concluded its first spot LNG deal earlier this year...."
http://www.bloomberg.com/news/2014-07-27/singapore-set-to-get-lng-cargo-from-indonesia-for-third-tank.html

Cut-Price Luxury Homes Fuel Singapore Tri-Nation Sprawl   By Sharon Chen Jun 9, 2014 9:20 AM GMT+0800; "Darren Chin gave up a 15-minute train journey to his office in Singapore for a two-hour drive with a stop at passport control. The reason: By commuting from Malaysia, he can afford his own two-story home and car. “It’s worth it,” said the Malaysian financial adviser, who leaves his house before 6:45 a.m. to get to his job at Oversea-Chinese Banking Corp. (OCBC) on time. “I’m saving on rent and I’m paying for my own house.”... Chin is part of the expansion of Southeast Asia’s richest city across its borders as residents and companies seek property, labor and amenities, often at half the cost or less. The result is a three-nation urban complex with a population bigger than London and an economy that would rank as one of the fastest-growing in the region...." http://www.bloomberg.com/news/2014-06-09/cut-price-luxury-homes-fuel-singapore-sprawl-cities-correct-.html

Interview #2 Presidential race heats up, foreigners worry?

In the last two weeks, I've been in touch with six (6) people who represent large business interests in Indonesia including in palm oil (domestic and international owners) and three (3) Malaysians who work and/or are invested in Indonesia palm oil.

• View of Indonesia invested MNC interests
• Indonesia domestic business interests
• Malaysia observers

Click here to view: http://khorreports-palmoil.blogspot.com/2014/07/interview-2-presidential-race-heats-up.html

Interview: Wong Chen on a controversial tax bill, how Parlimen Malaysia works, baiting and walk-outs (update 1)

25 June 2014: Interesting developments in the Malaysia fiscal scene bring us to interview again (in an unexpectedly short space of time) Wong Chen, MP for Kelana Jaya. He broke the story on the IRB Act proposed amendment. Over the years I've been loosely following Malaysia fiscal and state-controlled pension investment programs.

29 June 2014: Update 1 comprises inclusion of link and summary of Prof Mukul Asher's analysis.


Picture of The Edge Malaysia business weekly which features the IRB amendment story as follows “Oh no, not the taxman too? Everyone fears the taxman coming after their money. Now the taxman has to worry about people coming after his money. Read our Cover Story on the controversial proposal for the Inland Revenue Board to invest part of its money in stocks and bonds….”

Related posting: ISEAS Perspectives - The Tough Task of Narrowing Malaysia’s Fiscal Deficit by Khor Yu Leng Here's is my review of key risks in Malaysia's fiscal situation and the likely problems in addressing them. These include concerns about patronage affecting the bond market. http://khoryuleng.blogspot.sg/2013/10/iseas-perspective-tough-task-of.html

Other analysis: Professor Mukul Asher's view here, http://asiancenturyinstitute.com/economy/673-malaysia-should-not-mix-tax-collection-with-wealth-generation; concluding that "The 2014 Bill could hamper the task of Malaysia’s Fiscal Policy Committee (FPC), setup in June, 2013 to manage or to help ensure fiscal sustainability and long term macroeconomic stability. In its 2013 Article IV consultation report, the IMF had suggested that the FPC should progress towards greater operational independence, improve professionalism, enhance transparency of fiscal operations, and contribute to better quality public policy debates on Malaysia’s public financial management....  The 2014 Bill however is likely to lead to heightened perceptions of Malaysia’s fiscal risk, and to concerns about Malaysia’s international competitiveness. In the current uncertain and gloomy global macroeconomic prospects and heightened financial and capital market risks, the timing of the 2014 Bill is therefore also wrong...."

An exclusive interview with Wong Chen, Parti Keadilan Rakyat*, Member of Parliament for Kelana Jaya, Selangor, 20 June 2014.

*Parti Keadilan Rakyat is led by Anwar Ibrahim, the de facto leader of Pakatan Rakyat, the opposition coalition that includes the Democratic Action Party (DAP) and Parti Seislam Malaysia (PAS).

Q. On 12 June 2014, you broke the story of a new investment fund proposed via amendments to the Inland Revenue Board (IRB) Act. What was this all about?

The current Inland Revenue Board (IRB) Act allows the IRB to create a fund called the IRB Fund to make investments. The proposed amendments by the Finance Minister sought to create an Investment Panel to replace the IRB’s powers on all investment matters. If the amendments are passed, the IRB will give away its investment duty and powers to this proposed Investment Panel.

In addition, the amendments sought to expand the Investment Panel’s power to invest in any type of investment as long as it is approved the Minister of Finance (currently PM Najib) including IPOs. The amendments are peculiar because the IRB is a tax collection agency and not a sovereign wealth fund. What was even fishier: the amendments propose that the Minister of Finance be given direct and indirect powers to appoint 6 out of 7 members of the Investment Panel. The inclusion of the Governor of Bank Negara Malaysia (the central bank) as the 7th member, was a dead give-away that this fund would not be a small thing but likely to be a multi-billion Ringgit fund. Why else would the Governor be called to such duty?

In business circles, when we talk about creating an “Investment Panel”, it is understood that billions would be involved. I immediately had a bad feeling about this and decided to hold a press briefing.

 

Q. Who did you discuss your concerns about the amendments to the IRB Act? Who was most interested?

I spoke to a professor of public policy, who is a world renowned expert in fiscal matters. He was very surprised to hear about this approach. Within the party, I consulted with Rafizi Ramli (MP for Pandan) as this was a matter of national importance and he has a strong corporate and management accounting background. I alerted several Malaysia financial news editors and international ones including the Financial Times, Asian Wall Street Journal and Bloomberg. Most importantly, I contacted the international rating agencies. I thought they would be interested as it is a national fiscal issue, where tax revenues could be tapped at source and the Finance Minister could pursue more off budget projects. My immediate suspicion was that this looked like the proposed formation of the next 1MDB. In fact, the IPO clause might have seen the IRB Fund also being used to invest in the soon to be listed 1MDB.

 
Q. What was Barisan Nasional’s rebuttal or clarification? Do you accept what they say?

Three days after my press conference, the 2nd Minister of Finance made a statement, which was reported in Sin Chew that that no tax revenue would be used by the Investment Panel. He said that the IRB Fund would only comprise of moneys from 1.5% on tax revenues after deducting salaries, bonuses and operating costs of the IRB.

First, an important digression. This is the first time the BN government has confirmed what everyone has been suspicious about, that the IRB is being incentivized by a commission rate to collect more tax. According to the Minister, the current commission rate is 1.5% of total tax collected. We must remember that 1.5% rate is not law and it is not fixed by legislation. This rate could vary on executive orders, up or down.

Let me illustrate the point. This year the IRB targets to collect RM140 billion in tax. IRB will be paid a 1.5% commission rate on the collection; i.e. thus for 2014, the IRB will get RM2.1 billion for its operations and investments. There are 11,000 IRB staff. Do the math and you will see that for each officer, RM190,000 is spent on them for operational costs, salaries, bonus and investments. That’s why the IRB officers have been working extra hard.

Now back to the Minister’s point on the IRB Fund. The Minister is saying that the IRB Fund will come purely from the 1.5%. So after deducting salaries and bonuses and operating costs, the leftover is to be used for investment. So how big is this leftover? In 2011, (this is the latest figures publicly available) the IRB Fund for investments stood at RM255 million, all in fixed deposits with licensed banks.

So what the Minister basically said is that I was wrong in my allegations and that the Fund will continue to be relatively small at around RM255 million and that this is not a 1MDB sized type of fund. That this IRB Fund is merely a small fund for officers of IRB and thus not a big deal.

What the Minister said is not the full story. When I first read the bill, I saw the genius of the drafting for these amendments. Whoever drafted this is one smart fellow. The current section 23 of the Act, allows the IRB Fund to increase in size not only from internally generated commissions alone. So the IRB Fund is not just about the 1.5% commission.

Furthermore, it states that the IRB Fund could increase by way of receiving grants from the Finance Minister. The IRB Fund could also load up on debt. This really raised the eyebrows of senior KL bankers that I spoke to. The IRB Fund could also increase in size by virtue of a catch all phrase of “all other moneys lawfully received”. In other words, legally the Minister of Finance can increase the IRB Fund into the multi-billions.

That is the genius of the amendments, if you slack off as a lawmaker and just read the actual amendments, you will miss out the full picture. The key is to read the whole Act and put in context these amendments to the current sections. I read with great alarm that the IRB Fund could be the next 1MDB by using the existing section 23 combined with the formation of the Investment Panel and the powers to invest in anything under the sun.

Look, if the fund is really so small as stated by the 2nd Finance Minister, the Bank Governor will not get out of bed to attend an Investment Panel meeting. If the IRB Fund is so small, why go through the trouble of legislating to create an Investment Panel, why not just appoint a Chief Investment Officer in the IRB. Why must the Finance Minister take the trouble of making sure he has powers to appointing 6 out of the 7 Investment Panel members? Lastly, if the amendments are harmless, why did BN withdraw the bill?    

 

Q. Barisan Nasional has the numbers in Parlimen Malaysia to vote en bloc to approve any bill or amendment. Why do you think they held back from pushing through the amendments to the IRB Act?

Good question. Yes, BN has more than 51% majority (they have 60%) and could have easily pushed it through. What stopped the Finance Minister? Well I spoke to several BN backbenchers and urged them to be ready to do the right thing if push comes to shove. I also spoke to the Public Accounts Committee members and they were very concerned.

However Malaysian politics is extremely partisan. When push comes to shove, even the most “concerned” backbenchers will vote for the government. Since I started my term last year, I have not seen any BN backbenchers ever vote against the government. No abstention even. Not even during the vote on the new ISA provisions in the Prevention of Crime Act (PCA). I remember vividly how MCA had publicly said that they will vote against the PCA bill and a few days later, I saw all of the MCA MPs sheepishly stand to support the PCA bill. In other words, I don’t think Najib will give two hoots to what MPs like me think about his IRB amendments. I also don’t think he cares much for the views and opinions of his own Backbenchers.

So, I suspect the real reason why Najib withdrew this controversial bill must have something to do with questions raised by international financiers and rating agencies. PM Najib has proven to react and retract positions if it has international repercussions. This matter was picked up by Malaysian financial papers as well as international newswires. So when it comes to the international finance types, he sits up and listens.   

 

Q. Since you’ve been in Parlimen Malaysia, how many times do you think Barisan Nasional has pulled back in this way?

I can remember only once. The Prevention of Crime Act (PCA) was withdrawn when the heat was on. It was then reintroduced with superficial amendments in the following Parliamentary session and was just steamrolled through. So it is very important that we remain vigilant on this IRB bill when Parliament sits again in October. We need to start a solid campaign in September.

 

Q. Many people seem to think that your party, Parti Keadilan Rakyat (PKR) is the least organized among the Pakatan Rakyat opposition coalition. How did you come to identify this major issue ahead of the others?

Haha, are we the least organized? Well at the grassroots level, yes we have room for improvement. We are a truly multi-racial party so we find it more difficult to attract support. This country is very polarized, racially and older folks (with money) are more willing to support single race parties. Thank God the trend is changing slowly and as such PKR has seen steady growth in grassroots support in the last few years.

Let’s be blunt about this. Good organisation requires money and we don’t have any. So, to be fair, I think we are doing the best we can with limited funds. Most of our staff are severely underpaid and most are doing partial voluntary service. You can’t sack a volunteer for under performance.

As for the PKR MPs in Parliament, we are well organized. We have a pre-counsel every Monday lunch to discuss and portion out the bills to be debated. For the last session, I was assigned three bills, the Supplementary Budget bill, the IRB bill and the Anti Money Laundering and Anti Terrorism bill.

Anwar Ibrahim chairs our meetings and provides guidance and leadership. The Chief Whip, Azmin Ali (Gombak) is a capable organizer and is tasked to communicate to the Speaker and BN MPs. These behind the scene talks are crucial to ensure that Parliament functions properly. He is supported by his deputies, Sim (Bayan Baru) and Darrell (Penampang). Rafizi, Gooi, Laksmana Imran, Abdullah Sani, Dato Johari, Zuraida, Dato Idris, Hee, Jayakumar, Nurul Izzah, Dr. Azman, Dr. Tan, Manivanan and others are regulars at such meetings. Our think tank, headed by Ooi Heng prepares our talking points. My own office also has a dedicated researcher. Everyone gets a chance to speak and argue out points. It’s a little bit like being knights of the roundtable. It is a privilege. Meetings are filled with humour as MPs try to be witty. But, we do take the work seriously.          

How did I get to break the IRB story? Well pure chance, I volunteered to do it. Nobody had a chance to read it prior to the meeting since it was presented to us that very morning. So when the Whip asked who wanted to do this bill, there were no other takers. I volunteered since I worked on tax issues at the last Budget. I guess I lucked out. 

 

Q. How does the opposition coalition coordinate their strategy and tactics in Parlimen Malaysia?

There is no formal arrangement, except when something big happens. The chief whips of each party work together and coordinate on important matters. The whips also sort out the order of debate for Pakatan Rakyat. The only time the MPs from all sides get together are for events and presentations. We also work closely in crafting the Alternative Budget via the Pakatan Rakyat Secretariat, which is chaired by PKR. However, most strategy and cooperative planning are done on personal initiatives.  

Personally, I take the initiative to talk to my counterparts from Pakatan Rakyat. In the last session, my researcher and intern presented our findings on the Anti Money Laundering bill to 3 PAS MPs, 2 PKR and 1 DAP. I issued an open invitation and the 6 MPs responded.

The PKR office is on the 14th floor of the Parliament building and PAS’s office is also on the same floor. I would meet PAS lawmakers while waiting for the lift, which is notoriously slow. So in the 3 to 5 minutes waiting and being in the lift, we would discuss issues coming up for debate. It helps a lot that I grew up in Kelantan!

I also go to Parliament at 9 am. I usually have long breakfast meetings with another early bird, Raja Bahrin from PAS. Occasionally, I will also drop by the PAS Parliament office to catch up with Dr. Hatta, Khalid Samad and Mahfuz. I get on well with Dr. Hatta, he has a dry witty sense of humour, and he’s very smart. With DAP, I work closely with Charles Santiago on the TPPA and I am friends with Dr. Ko and Julian Tan (we are at the junior seating positions, at the farthest back corner away from the Speaker).       

 

Q. What is the quality of debating in Parlimen Malaysia? I hear that some of the new MPs are bringing a new approach?

Old school and new school debate differently. The old school guys can latch on a single point, most likely a controversial news item and milk it for 10 minutes. They have the gift of the gab. These are confident and gifted orators. Most speeches in Parliament last between 10 to 20 minutes. Occasionally, the Speaker will allow you to talk for 30 minutes.

I have also seen some MPs digress on policy debates. Last year, there was a bill to increase the fees and finance of Muzium Negara. It is a very simple, insignificant and non contentious bill. But to my surprise a lot of MPs stood to debate the matter. Back then there was a breaking news story about a contractor who destroyed a historical site in Kedah. I saw several MPs make a link of this hot news item to the fact that Muzium Negara had antiquities, so that “allowed” them a link to debate at length about the contractor’s desecration. No one talked about the actual amendments to the fee structure of Muzium Negara.     

Rafizi is pioneering a group of younger PKR MPs to actually stick to the point when debating. He was a debating champion in MCKK. I can’t speak for my fellow MPs, but I try to do thorough research before speaking. I will basically keep to the actual amendments and not digress too far. I use a simple speech structure: 1/3 focus on the history and social context of the bill, 1/3 on the actual amendments and their direct impacts and the last 1/3 on my critique of the bill and if any, suggestions for improvements.    

  

Q. There was a recent walk-out of opposition MPs. There are also a couple of MPs who seem to enjoy being barred from Parlimen. Some say it’s childish to shirk your duties in this way. Isn’t there a better alternative to such walk-outs and baiting?

The issue of Surendran and the Speaker seems to be something beyond a question of standards or professionalism. Many of us are beginning to feel that the animosity might now be personal in nature. I don’t think Surendran enjoys being suspended but he has strong views on how Parliament should be. A lot of us respect that, but it is not a very practical approach.

Most of us will work within the confines and challenges of the system. We have to be smarter and work harder to catch out the Ministers. Occasionally, like the IRB matter, we can actually swing views and win small victories. Ultimately, you are elected to serve your constituents. You have to choose your own path on how best to serve your community.

Walk-outs happen. When you are in Parliament, and you see grave injustice and one of your own brother MP is being persecuted, you don’t really think - you just react. There is no room for restraint or gentlemanly behavior in such instances. You are not at a society ball sipping tea, this is political warfare with the full might of the government bearing down on you.

The stress that Pakatan Rakyat MPs put up with, having our Parliamentary questions rejected, having to receive inane and deceptive answers from Ministers, having to put up with heckling without protection from the Speaker. All these builds up inside you. It builds up during the Parliamentary session, so by the time we reach the last day of the session, when suspensions are handed out, we are all in a foul and combative mood. So when an external event, such as the recent suspension of Surendran happens, and you are seeing all these injustices unfold, you react. There is a cathartic release of sorts in a walk out. It is a show of solidarity and a moment that binds all Pakatan MPs together, to remind us that we fight for fairness and justice. A walk out is probably the most civil action we can take. I think we are still very far from Taiwanese punch ups.  

Other interview: Thursday, June 5, 2014 - Interview: Wong Chen on electoral politics in rural Malaysia and Teluk Intan; http://khoryuleng.blogspot.sg/2014/06/interview-wong-chen-on-electoral.html