Wednesday, July 24, 2013

Water For Singapore

As posted by Dr. Mahathir Mohamad at Che Det on July 24, 2013

Water For Singapore

1. I would like to thank the visitor to my blog who pointed out that the terms of the agreement to supply raw water and receive treated water to and from Singapore actually favours Malaysia.  I agree.  But I am talking about revision in the price of raw water since 3 sen per 1000 gallons is ridiculous today.  It would be even more ridiculous in the decades to come.  Hence, the need to renegotiate.  According to the present agreement, if Malaysia sells 1,000,000 of raw water it should be paid 3,000 sen or RM30.00.

2. Malaysia can buy 12% of the raw water treated by Singapore at 50 sen per 1000 gallons i.e for 120,000 gallons, Malaysia has to pay RM60.00 for this.  But the cost of treating water is RM1.09 (say RM1.10)

3. The savings for Malaysia is therefore 60 sen per 1000 gallons equals to RM72.00 for 120,000 gallons.

4. Since 3 sen is ridiculous, supposing Malaysia wishes to ask for 6 sen per 1000 gallons, an increase of 100%.  It can only do so if Singapore agrees.  It can be assumed that Singapore would want to increase the price of treated water.  It may ask for the same quantum i.e a 100% increase to RM1.00 per 1000 gallons.

5. For 120,000 gallons Malaysia will have to pay RM120.00.  The cost of treatment for 120,000 gallons is 1.10 x 120 = RM132.00.

6. The benefit for Malaysia would be reduced to RM12.00 due to the increase in price.  If there is negotiations then Singapore might be persuaded not to increase or to increase at a lower rate.  But this will not be the end.

7. Johor charges Malacca 30 sen per 1000 gallons.  If we charge the same to Singapore would it raise the price above the cost of treatment?  If it does than it would be better for Malaysia to have its own treatment plant.

8. That is why negotiations are necessary from time to time.  We should not allow ourselves to be short-changed over the next 57 years to 2060.

9. Malaysia should learn to include exit clauses when entering into agreements.  It should always remember that over time money depreciates i.e prices increase.

Friday, July 12, 2013


As posted by Dr. Mahathir Mohamad at Che Det on July 12, 2013

An edited version of this article appeared in the New Straits Times of July 12, 2013

1. The secretary to the Ministry of Trade and Industry avers that trade negations must be done in secret, I suppose by the officers concerned. There should apparently be no public debate or even within the Government.

2. I don’t think it is such a good practice, if indeed that is the practice. Let us see the record of trade and other agreements negotiated by the Malaysian Government. They do not seem to favour Malaysia much. In fact they seem to result in Malaysia accepting unfavourable terms.

3. Firstly let us look at the water agreement with Singapore. Malaysia agreed to sell raw water at 3 cents per 1000 gallons. In return Malaysia can buy 12 per cent or less of the treated water for 50 cents. If the rates are to be revised both countries must agree.

4. If Malaysia raises the rate to 6 cent per 1000 gallons (i.e. 100 per cent) then Singapore can raise by the same factor to 1 dollar per 1000 gallons of treated water. This is not going to benefit Malaysia. And so we never tried to renegotiate the prices.

5. The first agreement lapsed in 2011 and we did not renegotiate at all. The next agreement will lapse in 2060. So we will be getting 3 cents per 1000 gallons of raw water when the cost of living has probably gone up many-many times.

6. To avoid Singapore revising the price of water if we raise the price of raw water, Johor was given enough money to build its own treatment plant. Not having to depend on supply from Singapore, we could raise the price of raw water without Singapore raising the price of treated water.

7. I am told that Johor still needs to buy treated water from Singapore. I really do not know why. So the price has not been renegotiated and I suppose will not be renegotiated until 2060.

8. Today the Singapore Dollar is 2 ½ times the value of the Malaysian Ringgit. At the time of the agreement it was one to one. Are we receiving payment in Singapore Dollar or Malaysian Ringgit? Or is this a secret also?

9. Frankly I don’t think we thought very carefully when we negotiated. Incidentally Johor sells water at 30 cent per 1000 gallons to Melaka, i.e. 1000 per cent higher than for Singapore.

10. Then there is the purchase of the F/A-18 fighter aircraft. Actually the Government wanted the MIG-29. Somehow part of the fund was used to purchase the F/A-18. I suppose the people who made this decision know why they must have the F/A-18.

11. Unfortunately the agreement to purchase did not include the source code. Without the source code the F/A-18 can only fly on missions approved by the United States. Until then these very expensive fighter planes can only be used for show at LIMA. Very expensive toys.

12. Then there is the AFTA, the Asean Free Trade Area. We agreed that cars with 40 per cent local contents qualify as national and tax-free entry into ASEAN markets. Forty per cent local contents are easily achieved by cars from outside ASEAN. This means the Japanese, Korean, Chinese and European cars can get ASEAN countries’ national status merely by being assembled in ASEAN countries together with batteries, tyres and a few other components.

13. We produce the Proton in Malaysia with 90% local contents. Naturally our costs are higher and cannot compete with non-ASEAN cars assembled in ASEAN countries. While these cars flood the Malaysian market, hardly any Proton is seen in ASEAN countries.

14. The negotiators may think they negotiated a good deal but I just don’t think so. We are simply opening our markets to countries with closed markets.

15. But to make matters worse, while Proton must comply with Malaysian safety and other standards, the imported cars are given exemptions from most of these. If Proton wishes to export to the countries of the manufacturers, it must comply with all their standards. So far we cannot export to Japan, Korea and the European countries. This is how good the agreements we have entered into.

16. We lost Pulau Batu Puteh but we cannot build the bridge or remove the causeway, or settle the provident fund issue. But we have given up our railway land worth billions to Singapore for practically nothing. And now we must ask Singapore’s permission to build our high speed train.

17. Look at all the agreements we have entered into and you will find practically none of them favours us.

18. Now we want to swallow the American conceived TPP, Trans Pacific Partnership. This is another attempt by America to let their huge corporations penetrate the domestic markets of the small countries, in particular Government procurements.

19. When the GATT (General Agreement on Trade and Tariff) failed they invented WTO (World Trade Organisation) for the same purpose. That also failed. They then invented APEC. Still they cannot achieve their objective. They introduced bilateral free trade agreements. Then they promoted a Globalised World, a world without borders in which their money can go anywhere, destroy economies and then pull out. In case we have forgotten they did this in 1997 – 8.

20. Still they cannot get at Government procurement. And now they invented TPP, a partnership of unequal, of the strong to take advantage of the weak.

21. This is going to be legally binding. If we breach the agreement, their corporations can sue the Government for billions. I have my doubts about our ability to convince the international arbitrators or courts. We cannot even convince the World Court over Pulau Batu Puteh.

22. They will have the best lawyers, lots of them. We will exhaust all our funds to pay our less experienced lawyers. At the end we will lose and pay indemnities and fees running into billions. And we will continue to pay until we comply. And when we comply we will lose more money.

23. We have a domestic problem and we have to solve this problem. They don’t care. Anyone who talks about the New Economic Policy (NEP) is labelled racist by our officials. When the currency rogues attacked us the purpose was to gain control over our economy. We resisted that because we were still free then. But after we sign the TPP we will be bound hand and foot. No more capital control. We will be colonised again. President Sukarno was right about neo-colonialism.

24. I know MITI is already set to agree to the TPP. It will not entertain any counter arguments. It wants to do this secretly. We don’t punish people who make agreements detrimental to the interest of this country. So what is there to lose.

25. This is my country as much as it is the country of the officials and politicians. If people secretly do harm to my country I have a right to complain.

26. We talk a lot about transparency. Let us see transparency regarding the TPP negotiation. The October 2013 ultimatum should be ignored. And let China also be included.