Speech by Parliamentary Opposition Leader and DAP Secretary-General, Lim Kit Siang, in the Dewan Rakyat on Nov. 1, 1977, on the 1978 Budget
1978 an election budget which gives out sweets to well-off, but which the poor will have to pay for after elections
Everyone had expected an election budget, and true to expectations, the 1978 Budget that was presented last Friday was an election Budget. The trouble with an election budget, which gives out sweets, is that after elections, not only are the sweets taken away, but even more bitter pills are administered to pay for the pre-election sweets.
A closer study of the 1978 Budget shows that the sweets are given to the well-off and not to the poor, but which the poor will have to pay for after the elections. Import duties for jewellery , diamonds gold and precious stones are slashed by 10%, and on top of it, the sales tax on these items are further slashed from 10% to 5%. These election sweets are not for the poor, but for the rich.
Other luxuries like golf bags ( the game of Ministers and the rich ) , cameras, leather products, including “articles of apparel and clothing accessories, of leather or of composition leather” ( but not ordinary clothing ) have had also their import duties slashed. Again the poor are not going to benefit from these reductions.
It is a mockery of the professed New Economic Policy to combat poverty when the Government has time and money to reduce import duties for luxury goods but no time nor money to reduce the import duties and excises on essential goods which the Malaysian poor must spend on.
The Minister of Finance claimed in his Budget speech that “almost all essential goods carry nil duty rates”. The trouble with the Finance Minister is that the definition of “essential goods” for the poor are very strictly and narrowly defined, while “essential goods” for the well-to-do knows no limits!
In view of the serious inflation in the country, where prices keep climbing up, the Finance Minister should have concerned himself with reducing the prices of essential goods, and services, by downward adjustment or abolition of import duties and excise, as for instance, for foodstaffs, textiles, and clothing, transport costs and fuel and power.
The Malaysian poor, who have a little over 10% of total income of the country, pay high or than 10% of the taxes for categories of food, beverage and tobacco, and rent, fuel and power, which constitute relatively large parts of the household budgets of the poor.
For this reason, any financial measure which can quickly add even one percent to the income of the poor should be a matter of immediate priority.
The reduction of a few hundreds dollars in precious stones or diamonds for the rich means more money for the rich to live even more ostentatiously, but a reduction in five or ten cents for bus fares, or a dollar or two for clothing, will make a world of a difference for the poor!
Beginning Oct. 1, bus and taxi fares went up by five and ten cents respectively for the first mile (although in many cases the bus fares have gone up by 10 cents).
For a worker who has to take two buses to work, this will mean an additional monthly expenditure of about $5.50 a month for bus fares alone. If he has say two children, who go to school by bus, the additional transport expenses he will have to bear will exceed $10. This will be 10% of his real income if his salary is $100 a month or 5% of his real income if he earns $200 a month. This is only transport, without taking into account the spiralling costs of foodstuffs and other services. The net result is a detericrating standard of living for the poor and low-income groups.
The Government has in this case allowed itself to be blackmailed by the bus operators, especially Sri Jaya in Kuala Lumpur, to approve the bus fare increases without a thorough study of the adverse consequences it will have the on the low income groups. This is especially apparent as the Ministry of Works and Utilities had earlier claimed that it could not make any recommendations to the Cabinet about the proposed bus fare increases unless all the bus companies had submitted their accounts to the Ministry. When the Government announced approval for the increase in bus fares, half of the bus companies had not yet submitted their accounts.
In defending the bus fare increases, the Acting Prime Minister, Dr. Mahathir Mohamed, claimed that the bus fare increases was given with conditions for improved bus services- while the commuters and the poor who have to make use of bus services as their only means of transport are burdened with a crushing transport bill which slashes their real income by 5 to 10 per cent. This is most unjustifiable, and I call on the Finance Minister to seriously reconsider the adverse effects of the bus fare increases on the standard of living of the poor.
Instead of reducing import duties on luxuries, the Finance Minister could have helped the poor, if not in reducing their transport costs, but at least in maintaining and stabilising their transport expenses.
The Government could achieve this without burdening the poor by reducing import duties on petrol and heavy and fuel oils for bus companies or by reducing road tax for buses and taxies.
Doubling of Income Tax Relief Allowances
The Finance Minister has again missed his second opportunity to reform taxation laws in keeping with the professed aim of the New Economic Policy to directly benefit the poor, the low-income and lower-middle income Malaysians.
For instance, in last year’s budget debate, I called on the Finance Minister to re-examine the tax rebates with the purpose of meaningfully helping the poor by (i) confining it only to those from the lower-income brackets caught by the present income tax incidence; and (ii) to double the tax rebate to $120 for each taxpayer, $60 for wife and rebates also for dependant children.
This has not been done. In fact, a thorough reform of income tax laws is long overdue, as the laws had not been reformed since its introduction in 1947 to make it an instrument of social equity especially in view of the fall in the value of money 30 years ago in 1947.
At the very least, the relief allowances for individuals and, wife should be doubled, and new relief allowance introduced to provide for the dependancy of parents in keeping with Asian tradition. I hope a day will not come when the terrible unhappiness and loneliness of old-aged parents in the West living alone or in old-aged homes become a common feature in Malaysia – and the refusal of the Finance Minister to introduce relief allowances for parents living with taxpayers seems to indicate not only a failure to appreciate the commendable Asian tradition of looking after one’s parents, but an indifference whether Malaysian old-aged parents suffer the loneliness and unhappiness of their Western counterparts in Europe- as is already happening in some Asian societies.
DAP calls for educational rebates to meet higher education expenditures abroad for those who could not find university places locally.
It is also to be regretted that the Finance Minister and the Barisan National Government has failed in another direction to make our income tax laws an instrument of equity and fairer distribution of income and social opportunities.
As I said last year, it is indeed ironical and a Malaysian tragedy that, while every year, the government claims that it is spending more and more money on education, more and more Malaysian youths experience loss or dimunition of higher education opportunities in Malaysia. The only avenue left for them is to go overseas like England, Australia, New Zealand to pursue further studies.
Apart from the wealthy families, this is a crushing financial burden on parents who have to bear these educational expenses.
In this budget, the Finance Minister extended the accelerated depreciation allowance of 80% for capital expenditure on plant and machinery to all industries, to encourage physical investment leading to greater productivity. Education is a human investment leading to greater national productivity. The Finance Minister has failed to encourage and give an explanation as to why, if capitalists and manufacturers are encouraged and given incentives to invest in physical plants and machinery, Malaysian pitizens are not given incentives and assistance in investment in human capital and qualified man power by sending their children abroad for higher studies when they could not find places locally.
I call on the Barisan National government to grant tax reliefs or an education rebate to Malaysians, especially to those with lower incomes below $15, 000 annual income, to meet the educational expenditure of their children abroad, where they have not received governmental financial help.
DAP calls for Government Approval for the Establishment of Proposed Merdeka University
In this connection, any measure which could increase educational opportunities for Malaysian youths to pursue higher educational studies in their homeland should be supported. It would be ideal if higher institutions and universities, established and run in fully conformity with the constitutional provisions and guarantees, could be started by the people themselves bearing the entire expense – for this will not only reduce governmental financial commitments, but contribute to national educational development in increasing local higher educational opportunities.
In enlightened countries, people who come forward to establish educational institutions which will contribute to the enlargement of educational opportunities for the nation’s sons and daughters would find an honoured place in society and highly commended by the Government of the Day. But in Malaysia, there appears to be a tendency to regard such persons as trouble-makers, and even bordering on being anti-national! Why is this so? Does education hold such a lowly place in our nation?
There is presently a proposed application for the establishment of the Merdeka University, which the Government gave business registration in 1969. I call on the component parties in the Barisan National, in particular the MCA and the Gerakan, to give support to this Merdeka University proposal, and urge the Government to give approval for its establishment to provide more higher educational opportunities for young Malaysians. The people are waiting to see whether Barisan National MPs, in particular MCA and Gerakan MPs, have anything to say on the proposed Merdeka University, or nothing to say at all!
Call for review of indirect taxation, especially import duties, excises and licenses, to reduce burden of taxation on poor Malaysians.
I have said earlier that although Malaysian poor, who have a little over 10% of total income in the country, pay higher than 10% of taxes for categories of food, beverages, tobacco, rent, fuel and power, which constitute relatively large parts of the household budgets of the poor.
The Finance Ministry should review indirect taxation especially import duties, excise and licenses, to reduce the burden of taxation on poor Malaysians.
Price Stability at 5%?
The Finance Minister claims in his budget speech that the government has achieved price stability – yet he admits that the Consumer Price Index has increased by about 5% for 1977. The Minister claims that there has been economic expansion with price stability – but this economic development has been the most lo-sided one, with the wealthy reaping the benefits of economic development, while the masses paying the price of inflation.
The Finance Minister’s homily that “the pursuit and achievement of price stability cannot, be the sole responsibility of the Government”, and his call for more effective community action by organised consumers, housewives, voluntary organisations and trade unions, to combat price increases, would have fallen on more receptive ears if the Government’s record showed that it appreciated and valued consumer role in the fight against inflation. But again and again, the Government has ignored consumers when announcing approval of far-reaching price increases involving a whole range of essential goods and services. A good instance is the Government approval for new bus and taxi fares- which were made and announced without prior consultation with consumer bodies. Government approval of other essential commodities, like diesel and petroleum products, are made after secret negotiations between the oil companies and the relevant Ministries – without the benefit of consumer participation.
If the Government is genuinely sincere in wanting a strong, independent and effective consumer movement in the country with an effective role to check unfair prices and sub-standard products, then the Government must finance the consumer movement with an annual grant to operate effectively, and with a complete undertaking to give the consumer movement a free hand of operations – even to attack and launch a public movement against the government for unreasonable approval of prices of essential commodities!
Call for establishment of a Ministry of Consumer Affairs to champion consumers’ interest in Cabinet.
Furthermore, the Government should appoint consumer spokesmen into the Senate so that the consumers’ interest are represented in the upper house, and not as at present, whereht the Senate is used to dump political has-beens. by the ruling parties.
The Prime Minister should also establish a new Ministry of Consumer Affairs whose responsibility is to protect consumer interests and fight for consumer interests in Government and Cabinet, who, in the nature of things, is likely to be at loggerheads with several other Ministries. No government approval of prices for essential commodities should be made without prior consultation with the Ministry of Consumer Affairs, which would solicit the widest representations from consumer mobements and consumers in the country.
It should be also the task of such a Ministry of Consumer Affairs to put an end to the scandalous situation where prices of goods go up but do not come down.
Why price of bread has not dropped despite drop in price of wheat?
For instance, although there has been a 23 per cent decline in the price of imported wheat grains, and a reduction of 5 cents a kati to 35 cents of the retail price of wheat flour, the price of bread had not been adjusted. Why had the government done nothing to safeguard the interest of consumers?
Sugar is still being retailed at 65 cents a kati as in 1974 when the world market price of raw sugar stood at $1,622.50 per tonne. There has been continuous sharp drop in the price of sugar to about $1, 111.96 per tonne in 1975, $684.10 per tonne in 1976 and $508.90 in the first half of 1977. Malaysians should not pay more than 40 cents a kati of sugar, and this is one of the biggest items which had unnecessarily raised the cost of living of the Malaysian poor.
The Malaysian Government should press energetically to re-negotiate its sugar contract with Australia, under which Malaysian undertook to buy 1.65million tonnes of sugar from Queensland over a period of six years up to 1980 at a starting price of $814.50 per tonnes.
Falling an immediate responses from Australia to reduce its agreed price to more reasonable world market level, then Malaysia should buy raw sugar at the relatively lower world price from other sugar producers, so that Malaysian consumers are not penalised by a long-term sugar contract with Australia, which, on hindsight, has proved to be all-advised and an important factor in reducing the living standards of both the rural and urban poor.
The Third Malaysia Plan indentified several poverty groups. I suggest that as the yearly budget is the annual plan of the Five-Year Plan, that at least in the Economic Report of the Treasury, there should be an annual review of the progress that is being made in poverty-redressal programmes in each poverty group. This should be done, if elimination of poverty rates as one of the two major objectives of the New Economic Policy.
I want t take this occasion to make some comments about some of these poverty groups.
(i) Padi Cultivators: Their basic problems are small acreage and tenancy. The overwhelming majority of the padi cultivators have uneconomic holdings of less than 3 acres, and as I have said many times in this House the existing Padi Cultivators Act has failed to protect the status and interests of tenants. A new Padi Cultivators Act should be enacted to replace the existing ineffective one, to ensure that the benefits derived from hundreds of millions of dollars of irrigation development do not accrue to the – absentee-landlords, while leaving the crumbs to the padi cultivators who break their back out to produce the crops.
(ii) Rubber smallholders
Rubber yields in smallholdings is a far cry from estate yields, and the Ministry of Primary Industries should give this problem urgent attention in concentrating on expanded and improved extension services to smallholders.
However, the Government should not allow various government schemes, like replanting schemes under RISA, to be abused to the detriment of the smallholders.
$700, 000 Risda Scandal in Johore
Here I want to draw the House attention’s to a $700, 000 RISDA Scandal in Johore, were 180 smallholders in what was formerly Central Paloh Estate, Paloh, Kluang, were deprived of $700, 000 of replanting cess over a period of 11 years.
On 8th January 1966, the owners of Central Paloh Estate, KULIM RUBBER PLANTATIONS LIMITED, entered into a sales agreement to sell the entire Central Paloh Estate.
I have a relevant extract from the Director’s Report and Statement of Accounts for the year ended 31.12.76 of the Kulim Rubber Plantations Ltd., which reads:
“As announced in the Interim Report issued on 15th December 1967 the Company has contracted to sell one of its properties, comprising 1, 761 acres of pedigree rubber, for a price equivalent to £343, 833. Instalments totalling £136, 479 have been duly paid to date and it has now been agreed that payment of the balance is to be brought forward to 17th July 1968, on which date the purchaser will take possession of the estate.”
The Central Paloh Estate, with 1761 acres, was sold to some 180 smallholders, most of whom took possession in 1968. However, although Kulim Rubber Plantations Limited has sold the 1, 761 acres of Central Paloh Estate, form 1966 to 1976 it claimed and was paid replanting cess for an estate which it did not own.
The particulars of the cess which RISDA paid annually to Kulim Group from 1966 to 1976 was given in an official letter, dated 5 July 1977, by Osman bin Mhd. Said of Estate Division of RISDA in Johore and signed on behalf of the Chairman/ Director General of RISDA, addressed to DAP State Assembly for Bandar Keluang, Sdr. Lee kaw, in reply to his inquiry.
“Bahagian ini tidak mengetahui bahawa Estet di atas ( Cetral Paloh Estate) telah di jual kepada Pekebun-Pekebun kecilsehhinggalah perkara ini tuan bangkitkan dalam Mesyuarat Dewan Negeri pada 28 h.b. Mei, 1977. Berikutan dengan berita ini saya akan menulis kepada Syarikat Kulim Group Ltd. meminta pengesahan samada Estet di atas telah dijual kepada Pekebun-Pekebun kecil yang tuan nyatakan itu.
“Geran-geran estet di-atas telah diperiksa oleh Bahagian ini pada 27 hb. Mac, 1976 dan didapati bahawa nama Kulim Group Ltd. masih tercatiti diatas geran-geran itu. Berdasarkan penyamakan ini adala nyata bahawa setakat 27 h.b. Mac, 1976, pemilek Estet diatas masih Kulim Group Ltd.
“Wang ses yang telah dikembalikan kepada Kulim Group Ltd. dalam tahun 1966 hingga 1976 adalah seperti berikut: —
Tahun Jumah ses yang telah dibayar
1966 $ 54,897.82
1967 $ 72,228.69
1968 $ 63,685.53
1969 $ 64,397.20
1970 $ 60,813.40
1971 $ 56,771.67
1972 $ 60,245.68
1973 $ 60,348.82
1974 $ 67,476.87
1975 $ 56,797.15
1976 $ 66,814.19
“Bagi tahun 1977 belum ada apa-apa penbayaran wang ses yang di buat kepada Syarikat Kulim Group Ltd.”
I am shocked that the RISDA is unaware that Central Paloh Estate has been sold by Kulim Group to smallholders, when this is not only publicly acknowledge by the Company in its Director’s Report in 1967, but a public knowledge. For it is clearly impossible to hide the fact of a sale of 1,761 acres, unless RISDA is living in a completely world of its own.
It is not good enough that the cess for 1977 have not been paid. In paying some $700, 000 of replanting cess to Kulim Group when it was no longer owner of the 1, 761 acres of rubber estate is clearly a colossal act of irresponsibility, especially as far back as 1972, one of the smallholders had written to the Government Replanting Authorities informing them that the Central Paloh Estate had been sold to smallholders.
Kulim Group has no right to claim, and to recieve, some $700, 000 as replanting cess for Central Paloh Estate for these 11 years when it was no longer owner of the Estate. This money belongs to the smallholders and should be paid in toto to them.
I hope the Minister of Primary Industries will investigate into this matter and give the house a satisfactory explanation. In fact, I suggest that the NBI should asked to investigate into the claim and payment of replanting cess – for such a colossal mistake just cannot be nade by responsible RISDA officials and their predecessors over a period of 11 years.
Kulim Group has now been restructured, and is now known as Kulim (Malaysia) Bhd., with substantial shareholdings by the Johore SEDC exceeding 40%. The Chairman of the Boards of Directors is still the same person, namely P.B.L. Coghlan, and other directors are the same, except for the entry of two Johore SEDC nominess, Bahaudin bin Pasok and Haji Basir Ismail. Kulim (Malaysia) Bhd. as a responsible corporate citizen of Malaysia, should pay over the $700, 000 to the smallholders involved.
(iii) New Villagers: the basic problem of new villagers is the limited land per household. Only about half the new villagers have any agricultural land to cultivate. Of these, about a third cultivate land for which they have no recognised title, while the bulk of the others have the most limited form of title.
I do not understand how a Government which is concerned about giving our new villagers a stake in our country should allow over 25 years to pass without giving the new villagers permanent title.
On Sunday, I was in Triang, in Pahang and I was told of how titles of new villagers are always carted out with the approach of every general elections, to induce the people to vote for ruling party candidates; yet after every general elections, the whole matter is forgotten, only to be reactivated again in the subsequent general elections. In fact, in some new villages in Pahang, like in Triang, Mentakab, Bentong, and Temerloh, four titles were issue out in each new village during the elections as an indication of the seriousness of the promises of the ruling party candidates. But after the elections, the whole matter is again forgotten.
In Pahang, there is no shortage of land, yet land is used specially by MCA state and local leaders to become rich. There have been so many complaints of MCA leaders getting the genuinely landless to collectively sign up an application for land to the State Government, and when the land is finally alienated, the land is parcelled but to complete outsiders! Someone make a big fortune, while the genuine landless are made used of and reamain landless and poor.
This land scandal is happening not only in Pahang, but in Johore, in Perak and throughout the country.
How can the problem of the landless whether he be new villager, estate worker who has been retrenched, or landless peasant, be solved if there continue unhecked such deviation and betrayal of the poor and exploitation of the natural resources of the country by the rich and privileged?
DAP calls for a Royal Commission into Land Abuses and Misuses
There is urgent need for establishment of a Royal Commission to inquire into land abuses and misuses in the various state in the country. All these land malpratices should be exposed and brought to a half.
Coming to new villagers and their problem of limited land per household, I understand that a FAO-IBRD mission proposed that the Government undertake a systematic survey of the land situation within a reasonable distance from each of the 400-odd new villages to ascertain the extent of land available adjacent to the new villages which could be distributed to the new villagers. I am not aware that this has been done. I hope the Minister concerned can clarify the House on this, which should be treated urgency.
Interruption of electricity supplies in Paloh, Chalah, Bekok and Labis
In his budget speech, the Finance Minister spoke of the provision of rural electrification as one of the important programmes in improving the standard of living as well as the quality of life of our rural people.
However, it is shocking that areas which had been supplied with power supplies should have their supplies interrupted, as in Paloh, since June 1; Chalah since August 1, and Bekok and Labis, from today, causing not only severe business and economic losses and hardships, but resulting in great increase in incidence of thefts and burglaries.
Although these areas are supplied by private power companies, and who are demanding increase in electricity tariffs against rates laid down by the LIN, the authorities concerned, namely the LIN and the Ministry of Works and Utilities should take urgent action to restore power supplies power to these towns. I have seen the Deputy Minister Work and Utilities, Dr. Goh Cheng Teik, who have promised immediate action. I raise this matter here because only last night I receive reports that the supporters and the local leaders of the Member of Parliament for the area, Mr. Loh Fook Yen, are going round in Paloh claiming that they are prepared bet $5, 000 against $1, 000 that electricity in Paloh will not be restored.
I want to ask the Barisan Nasional government: Do they really want to help the ordinary rakyat, or they delight in seeing the rakyat suffer and deprived of basic amenities?
Repeal of Industrial Co-ordination Act a pre-condition for the encouragement of foreign investment and release of domestic capital for domestic investment.
The Third Malaysia Plan target for private investment is 10%. The Finance Minister’s forecast for private investment in 1977 is 9%, the Finance Minister claimed last Friday that the rate of private investment achieved for this year will be 8.2%, which is generally doubted.
What is hot doubted, however, is that the pick-up of investment in Malaysia has been dismally slow. The basic reason is one of confidence, for not only are Malaysians edgy and scary of investing their capital locally, but Barisan Nasional leaders are known to have siphoned funds abroad. In these conditions, it is naive to expect foreign investors to come in droves to put their money in Malaysia, when Malaysians and Barisan Nasional leaders are steering clear of their own country.
The DAP calls on the Barisan Nasional to regain confidence of Malaysians to invest in Malaysia. Before this can be done, there are several vital steps which the Government must take.
Firstly, it must be repeal the Industrial Co-ordination Act, which typically represents what is wrong with the New Economic Policy implementation in eroding and removing legal protection for local investors, especially non-Malay investors, and the introduction and substitution of the concept of bureaucratic discretion in approving plans, licenses and applications. Vague terms of ‘national interest’ can, form past experience, cover a multitude of sins!
The repeal of the Industrial Co-ordination Act is therefore a Prerequisite to regain confidence of Malaysians in the security of their investments in their own country!
The introduction of the concept of bureaucratic discretion in approving plans, licenses and applications provide opportunities for corruption, abuse and misuse of power.
Secondly, the restoration of the confidence of all Malaysians in the future, of Malaysia for their children. That this has been a great question mark can be gauged by the mass migration of doctors and professional people abroad, including the doctor-brother of the Deputy Minister of Education, Mr. Chian Siang Sum.
The Government has so far turned a blind eye to these concerns of large sections of Malaysians, and so long as these concerns are ignored and their basic factors disregarded, then there can never be a full domestic confidence about the future of Malaysia. In fact, this can be highlighted by the fact that Minister prefer to have their children educated abroad whether for primary or secondary education, rather than locally!
It has been said that Malaysia lives between a Dream and a Nightmare. Its dream is the enormous potential wealth of its natural resources and its small population of only 10 million. Its nightmare is the spectre of political violence between races an economic interests over the distribution of these benefits.
We are presently heading towards the nightmare. Let us retrace our steps and realise our dream.
We can do this by recognising, firstly, that the NEP, through its pre-occupation with the creation of a Malay capitalist class, can only accentuate class tensions among the Malays, and even worse, the eventual resort to the politics of race to explain why the Malay poor masses remain poor after the NEP had created a Malay capitalist class. Secondly, the emphasis on race distinctions in every facet of Malaysian life from school onwards is highly detrimental to the task of nation building aimed at the inculcation of a Malaysian consciousness and identity transcending racial ones.
Both these factors if not checked will become major divisive forces destroying the economic and political future of the country. We should retrace our steps from such a nightmarish future by
1. Focussing on the upliftment of the poor regardless of race, most of whom, will be Malays.
2. A genuinely, and not selective, restructuring of Malaysia society; and
3. Full acceptance in principle and practice of the multi-racial basis of our nation, where every Malaysian can develop his or her potential and capacity to the fullest and contribute to the development of the country.
DAP calls for a public inquiry into the collapse of the First General Insurance and the circumstances leading to government approval for formation of South East Asia Insurance Bhd.
The Ministry of Finance, through its Insurance Division, has failed to protect the interests of the insuring public in the case of the collapse of the First General Insurance. This case give riset to question as to whether the Finance Ministry can competently lock after public finance.
Firstly, the mystery surrounding the collapse of the FGI must be cleared. As far back as in 1973, the FGI’s auditor’s, Hanafiah Raslan and Mohamed made qualifications to their report. The auditors pointed out that receiveable amounting to $6.2 million were not adequately secured and that they were unable to form an opinion whether they could be recovered. The auditors further concluded that the assets of the company’s insurance fund maintained under the Insurance Act were insufficient. There were also other qualifications involved. The 1974 accounts were even worse. A fixed deposit of $6 million in the 1974 Balance Sheet mysteriously disappeared from the 1975 Accounts contained over two dozen qualifications by the Auditors. There were definitely very clear indications that FGI was in financial difficulties as early as 1973. Why did the Director-General of Insurance ignore all these glaring irregularities for so long as a period?
When the Mosbert empire collapsed in 1974, and the Singapore Government conducted an investigation into all Mosbert’s companies, there were further indications that the financial standing of FGI was further in doubt. Again the Director-General of Insurance took no action to protect public interests.
When the FGI collapsed, it had a $20 million insurance liability. The Director-General of Insurance invoked section 12(A) of the Insurance Amendment Act which authorises him to make an annual levy of 1% of the gross premium written by insurance companies.
As a result, the insurance industry has been made o bear the $20 million outstanding claims of FGI. Is the Minister of Finance aware that this is no real solution, for eventually the this $20 million borne by the insurance industry would be passed to the insuring public, who will have to pay higher premiums.
The question that cries out for answers is why the authorities concerned allowed the FGI to operate since 1974 without proper checks which, if imposed at that time, would have involved very much lesser losses to the public.
The other aspect of the FGI scandal that calls for answers is why has the Government granted the South-East Asia Insurance Bhd. a licence to collect all the outstanding premiums owing by agents of FGI, but without having the liability to the FGI’s $20 million outstanding claims.
This clearly is a licence to make money! Furthermore, the Finance Ministry appeared to have broken its own policy that new insurance companies, of which the South-East Asia Insurance Bhd. is, should have bumiputra particiaption. There is on the other hand South Korean participation. These are great irregularities which make the public suspect not only the competence but also the integrity of Finance Ministry officials in the stewardship of financial affairs of the country. I await satisfactory answers to the questions I have posed, failing which, I will pursue the matter further.