1. I see Sakmongkol, Tony Pua, Guan Eng all weighing in their views on the June 2011 electricity tariff hike, and misinformation abounds especially when ignorant politicians try to score cheap political points. In the end, the rest of those people working in the industry are still going about their daily business-as-usual routine, scratching their heads at how ignorant politicians from both sides of the divide are.
2. The rising Brent crude oil price has increased steadily from abt USD80 of last October to USD110 per barrel, and of course the whole crazy subsidy mechanisms we have in place puts paid to all our economic plans, and induces lots of desperate panic policy making. First off, is that probably no one allocated enough buffer when budgeting government spending when it became clear that oil price at 70-80 was just waiting for some leads to rise up in the global economy. Surely, someone somewhere would have already figured out that despite the economic crisis of 08-09, the global leveraged finance still has plenty of liquid capital trying to work its way into the next big thing, and commodities were surely a clear target, and relatively soft prices of oil were certainly a target. I could have put in my blogs before that I’d think the pricing of USD per barrel could stay for some time now, as hedge fund speculators weigh their bets on how much further this can spike. So, while this could have some positive impact for some sectors eg commoditization of our biomass resources with the caveat of if we can get our house in order, generally the inflationary pressures would be eating into household expenditures very soon.
3. As inflationary pressures begin to take hold, where do the government address the subsidy cuts? Malaysia is not alone, UK, Greece, US (!) and just about every nation other than China will be affected. Petronas will make a killing this year, but with the shift of exploration to local oil wells preserving short-term capital bleeding at the tradeoff of uncertainty on long-term potentials, the increased Government revenues from Petronas cannot and should not be used to offset the current inflationary pressures of the oil price increase.
4. So, what then? RON95 is still at 1.90, whereas RON97 is already at 2.90. Where will the targeted subsidy go to? Electricity is a good choice, seeing as it were that we’ve been subsidizing MNCs for monkey years for them to pollute our environment. So tariff hike for electricity is a good choice.
5. And then you get side debates of the IPPs getting subsidies. No, the issue of the IPPs are lop-sided contracts, which I am very sure can be unilaterally revoked ie expropriated by the Government in the interests of nationalization, if there were some smart people doing the contracts. Subsidies isn’t the issue with IPPs. The issue is with below market gas price, but because of the lop-sided contract terms, if these were equalized to market rates, the cost pass-through mechanism would only affect end-customers.
6. And then you get people questioning Che Khalib’s pay. There are two issues here, is CK qualified to be CEO of TNB, and what is the compensation package of a TNB senior management team. For a RM20b PLC, and CEO drawing a RM1.2m, that’s bloody measly, but it’s still double that of his next most-senior officer. It would be good if CK can be magnanimous, publicly say how he has failed as a CEO, and give up 25% to his anointed successor, a true blue TNB / LLN breed. CK in my mind has not been the CEO that the media seems to paint, CEO of the year? He has largely been able to keep the company ticking over, but how much of that is due to the strong team supporting him? And what about the failure to grow non-electricity supply revenue? Regional aspirations? Over-dependence on tariff structure? Staff morale? All in all, he seems to be an improved version of previous CEOs, but to triple his pay for that? It seems that the issue isn’t whether he’s overpaid, the issue is whether he is qualified?
7. And associated with that is how investment analysts can be paid 2x/3x what GLC engineers / accountants / professionals are being paid to do less substantive work. This is really an injustice, as this disparity of income allocation and distribution will just shift people away from the perception of low-paying, unrespected, vulnerable to litigation but exceedingly mission-critical jobs, to risk-free, penalty-free, high paying jobs in the financial sector. Apparently as my previous post has shown, it’s a worldwide injustive induced by capitalism and the greed to make more money. I don’t dispute or even feel bitter to these people, but the quality of the characters for these sort of activities must be present. It’s ok to make money if you are Rockefellers, the Gates, Bloombergs, Oprahs, Yusuf Islam, Li Ka-Shing and put your money into sincere humanity interests and activities, although of course perusing the list shows how personal agendas can actually be built-in by the rich and powerful.
8. So, the first and foremost are not just good characters, they are strong leadership characters to build the next generation. The present generation has done their job, it’s time to move over and let the new breed take over. But the infusion of the new breed with the capacity to think, to accept responsibility not just for themselves but also for others have become supercritical for Muslims. And for Malaysia, the concoluted mess we are in, I’m afraid for you. I’m looking at the landscape, and seriously, I see no one with the sincerity, foresight and character to lead, particularly not from UMNO.
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