WEDNESDAY, OCTOBER 27, 2010
Private Money, Taxpayer’s Money, Government’s Own Money & Stuff
By Syed Akbar Ali
There seems to be some confusion over what is taxpayer’s funds, private money, Government’s own money and stuff. The confusion seems to be with the Government and the GLCs.
The Government does not own any money. This is Rule No. 1. There is no such thing as Government’s own money. All Government owned money is taxpayer’s funds. Even for countries which do not have income taxes, it is still public funds. The peoples’ money.
I hope the Cabinet Ministers are clear on this concept. Even if the Government borrows money by issuing Bonds, it is still taxpayers’ liability because eventually it is taxpayers’ funds that will be used to pay back the Bonds. And if the Government goes bust or defaults on its hutang, then the taxpayers’ role and their liability will become instantly magnified.
The people in Greece and Iceland have found this out quite rudely. If the Government gets into financial trouble, then they will have to raise taxes on the people, cut spending on public services for the people, increase other revenues and stuff to pay off the Government debt. Eventually the people pay for everything. The Government has no money. All Government funds belong to the people. This is the only rule everyone must remember, especially the Government. There is no Rule No. 2.
Over in the skyscraper corner, PNB has come out fighting to explain that they had plans since 2004 to develop the land they bought near the Merdeka Stadium. They say the 100 storey building is viable. PNB says they have the tenants to populate the 100 storey building. If so good. I really have no qualms if the building is viable. Please go beyond 100 storeys lah. 110 storeys pun elok juga - but only if it is viable. Here let the real estate professionals do the arithmetic for you.
PNB also says that they have their own funds to pay for the building. Fine. However PNB is not entirely a private company. It is set up and owned by the Government through the Yayasan Pelaburan Bumiputera. More importantly it handles public funds. Here is some history about its ASN scheme:
“To launch ASN, the Government instructed the Bumiputera companies (eg. PERNAS) and statutory bodies (eg.SEDCS) to sell part of their equity portfolios to the PNB at book value. Thus, it was reported that PERNAS had to suffer a substantial loss for the year 1982 because it had been forced to transfer more than RM 1 billion of assets to PNB. This government-imposed sale of assets resulted in serious opposition from PERNAS and other affected Bumiputera Companies”
So again, Government was involved and taxpayers funds were involved lah - from the very beginning. And PNB operates an "amanah saham" operation. In English its called a "unit trust scheme". The key word is "amanah" or "trust".
So when Tan Sri Hamad Kama Piah says 'we will use our own money' I think he is missing the point. Pak Tuan, you dont have your own money. Duit kami tu. I am an investor, so is my wife and so are my boys. Millions of Malaysians are investors in PNB's "amanah saham" schemes. Thats where the money comes from. PNB manages our money on "trust" or “amanah”. So please adopt the correct attitude about whose money it is.
PNB must also remember that the ASN and ASB investors are guaranteed the return of their RM1.00 per unit invested in the scheme. In other words, if PNB goes bust, the backstop is the Government, which means taxpayers funds again. So please spend the funds wisely.
I do not doubt PNB’s capacity to build and make a success of a 100 storey building. To a large extent PNB has avoided being part of the GLC fiasco that has been created by Khazanah Nasional Bhd. But dont be too sure about large scale real estate developments. Here is the very latest news (came out just a few days ago) about the Burj Al Khalifa, Dubai’s tallest building in the world :
“Even with an address at the iconic Burj Khalifa, rents for residences in the tower are not immune from Dubai's real estate crash. Indeed, nearly a year after it was inaugurated with a massive water-and-fireworks display, about 825 of the tower's 900 ultra-luxury apartments remain unoccupied, according to Better Homes, a real estatebrokerage in Dubai. The cost of renting a studio with floor-to-ceiling windows, marble fixtures and wooden floors has dropped to $1,815 a month from $3,025, while a one-bedroom apartment is available for $2,722 (it used to be $4,536), the brokerage says”
So let us not be too sure of such grandiose projects. It took some time to fill up the Petronas Twin Towers.
More where that came from:
No comments:
Post a Comment