Speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Petaling, Lim Kit Siang, on the 11981 First Supplementary Estimates in the Dewan Rakyat on Thursday, April 9, 1981
Call on the Government not to hide behind the cult of secrecy to deny meaningful and effective Parliamentary control of public expenditures, especially multi-million dollar expenditures in defence, as it would be the mother of corruption, inefficiency and incompetence
The first 1981 supplementary development estimates, in asking for an additional vote for $4,294 million, probably makes history as the biggest supplementary vote ever to be asked by the Government since Merdeka in 1957. This is the result of the approval of the Fourth Malaysia Plan on Monday.
It is essential that there be meaningful and effective parliamentary control and scrutiny of public expenditures, not only to ensure that every ringgit spent gets the full value, but that there is no corruption, deviations, inefficiency and meaning whatsoever.
I am very concerned that with government expenditures growing by leaps and bounds, parliamentary control in fact becomes even more ineffective and cease to have any meaning whatsoever.
Parliament is in fact being asked to approve billions of dollars of development expenditures, without being told what those expenditures are about, how they would spent, and in fact, when MPs questioned the way expenditures are being made, the Government would hide under the cult of secrecy to justify a blanket being thrown over the expenditures.
A good example is with regard to the defence expenditures, which amount to $2.1 billion for 1981. During the Fourth Malaysia Plan debate, I spoke of my concern at the scandalous way in which the Ministry of Defence went about procuring defence hardware, as in the cases of the proposed purchases of Fire Support Vehicles (FSCs), Armoured Personnel Carries (APCs), 30 pieces of 155mm gun howitzers, 56 tanks, which will all cost hundreds of millions of dollars.
The reply by the Deputy Defence Minister, Datuk Abu Hassan Omar, on Monday that the purchases of all defence equipment in the country are above board and subject to checks and balances by two Ministries, where the Defence Ministry decide on the technical specifications of the weapons to be bought while the Finance Ministry would have the final say on the financial arrangements and tenders, is most unsatisfactory and generally regarded as an ‘eyewash’ by all those who have experience in the field of tenders not only for defence contracts, but huge multi-million dollars contracts in other fields as well.
Datuk Abu Hassan’s claim that the double-level decision system before defence equipment costing more than $5 million are made provided the check and balance and would prevent any arbitrary and high-handed purchase being made is not borne out by experience.
The Prime Minister and the Finance Minister should take note that in contracts involving hundreds of millions of dollars, whether in defence field or in the highly costly field of telecommunications equipments, decisions appeared to have been made before the formalities of tenders are called, and specifications are written in such a way as to ensure that only a particular previously-selected make of equipment would qualify.
As expected, the Deputy Defence Minister hid under the claim of government secrecy to try to escape from public accountability. He even suggested that I should change my attitude towards revealing the nation’s defence matters for the good of the country.
Let me state here that it is the Defence Ministry which, for the good of the country, must change its attitude about defence matters, in particular with regard to defence procurements.
It does Malaysia no good that the whole defence world including our potential aggressors know what defence equipments Malaysia wants to buy, what makes of equipment Malaysia is considering and which make it is favouring, except for the Malaysians for whose sake the procurements are being made.
Let me state here that what I said in the Fourth Malaysia Plan about defence equipments and procurements is open knowledge of those all over the world who are involved in defence, except the ordinary Malaysians and probably Members of Parliament.
Malaysia gains no benefits by keeping such defence procurements under a clock of secrecy, for the simple reason that they are open secret to the defence world except to ordinary Malaysians. Such cult of secrecy will not only result in mothering corruption, deviations, incompetence and inefficiencies which may be more detrimental to the national security and good of the country.
Such cult of secrecy on defence procurements, which cannot be kept secret from the defence would outside, can only benefits the corrupt and decadent in the country, and this is why the Defence Ministry must change its attitude and make itself publicly accountable to Parliament for it purchases, its choice of equipments, etc.
The DAP will be second to none in our defence of the country, and we fully agree that defence strategy and plans should be kept a secret; but we cannot countenance secrecy on purchases which serve no useful defence purpose but to protect the corrupt.
The present system whereby two Ministries are involved in finalising defence purchases have not prevented unsatisfactory equipment being brought.
For instance, the Army purchased 12 units of Bofi 40L70 Anti-Air Craft guns about three years ago, costing about $55 million. Recently, the army has found the anti-aircraft guns to be defective, e.g. the radar on the gun was found to be faulty, transmitting impulses and not receiving impulses; and more seriously, the problem of barrel decoppering, i.e. the barrel wear of the gun was more excessive than specified, affecting the life span of the gun. I understand one gun is now cracked.
Surely, Parliament has a right and duty to concern itself with expenditures it approves are properly extended, even to inquire into technical requirements and choices.
Surely, Parliament has a right and duty to ensure that problems the Mindef faced in the past about supplies in spares and ammunition in times of war do not recur in future. For instance, during the Indonesian Confrontation, Malaysia was not able to obtain ammunition from Bofors of Sweden for our naval 40L70 guns as Swedish neutrality forbid it to supply arms to warring nations in times of war. As a result, the Malaysian government had to utilise the Crown Agents in England for its supply of ammunition while, in the meantime, the Navy faced the danger of rundown of its stock of ammunition.
I don’t think I have to mention the scandalous purchase of the Panhard vehicles, which are mostly in No. 1 Workshop in Sungei Besi.
The Deputy Defence Minister said that he had faith and trust in Armed Forces and Ministry officials in the choice of weapons and tanks because they would have the safety of the users, including themselves, in mind.
I don’t fully agree for it is the low rank-and-file who will be the users, and not the top generals and the Ministry officials who will decide on the weapons and equipment.
Parliament will be remiss in its duty if it allows the continuation of a situation where all it does is to issue a blank cheque for billion-dollar expenditures, without taking the trouble to check and scrutinise that every item is properly expended, both from financial and technical points of view.
Otherwise, Parliament might as well meet once every five years to five the Government of the Day the fullest liberty to spend whatever sums and raise whatever taxes during these five years.
I therefore call on the Deputy Defence Minister not only to give a satisfactory reply to the various defence matters I raised, but that all Ministers should adopt a more responsible and responsive attitude towards Parliamentary checks on government expenditures, and not hide under the cloak of government secrecy.
In matters which genuinely affect secrecy, in the sense that even the international defence world does not know, then the Mindef should be prepared to brief Parliament in camera – and this is why I suggested that a Parliament Standing Committee on Defence should be set up, to act not only as a watchdog on defence expenditures, but also as a specialist parliamentary organ to deal with defence matters.
Selective restructuring of society
The restructuring of society to eliminate the identification of race with economic funtions is one of the two NEP prongs to create national unity. However, of the restructuring is selective, and applies to only one racial group, then it will foster national disunity and division.
In the last ten years, restructuring has been rather one-sided.
The Third Malaysia Plan (para 25) said socio-political stability could not be maintained for long in situations where, for example, a Malay farmer coming to town, even with an increased income, felt somewhat alienated, somewhat an outsider, simply because he saw so few Malays in the shops, restaurants and factories of the town. And so might the Chinese and Indians when going into a Malay dominated agricultural area.
In the last ten years, much efforts have been made towards restructuring the urban economic sector to comply with specified management and employment quotas; but nothing serious appeared to have been done to restructure the agricultural and other sectors which are identified with race, e.g. the armed forces and the public service. JUST AS A MALAY FARMER SHOULD NOT BE MADE TO FEEL AS AN OUTSIDER OR SOMEWHAT ALIENATED WHEN COMING TO TOWN, SIMILARLY A CHINESE OR INDIAN SHOULD NOT BE MADE TO FEEL AS AN OUTSIDER AND ALIENATED WHEN HE GOES TO GOVERNMENT DEPARTMENTS AND FIND SO FEW CHINESE OR INDIANS.
For instance, in land development and settlement programmes in new areas aimed at producing viable farming communities, FELDA settled 42,200 families, FELCRA resettled 16,600 families and 4,100 youths in its fringe and youth schemes respectively. These land settlement schemes, however, are overwhelmingly of one race, despite the government’s pledge to restructure society to, among other things, to promote the growth of a more balanced residential pattern!
The police and the armed services are undergoing rapid expansion, but since the start of the NEP in 1971, they are among the most visible symbols of ‘unrestructured’ sectors where there is a distinct identification with race.
For ‘restructuring’ to succeed to serve as an agent of national unity, rather than as a force of national division, it must be seen as an impartial force to ‘MALAYSIANISE’ the various sectors of the Malaysian economy, and not as an instrument to MALAY-ISE the Malaysian economy, as is clearly the rationale behind the UMNO Youth stand on the UMBC case.
This is why 10 years after the implementation of the ‘restructuring’ prong of the NEP, it has created so much reservations and opposition, leading to a sharp fall in the domestic private investment in during the Third Malaysia Plan.
It is also obvious 10 years after the NEP that the government is only pre-occupied with the redistribution of income and wealth between the communities, but has made no serious attempt at redistribution within the communities where grave disparities have appeared.
For instance, the recent government announcement of transfer of 660 million shares with an estimated market value of more than $1.5 billion from 21 trust companies to bumiputras raises the question whether in the end, it is the rich and privileged Malays, and in particular the UMNO-putras, who will benefit, aggravating the income disparity within the Malay community itself.
It is difficult to see how the padi farmer, the fisherman, the Iban shifting cultivator, or the Kadazan peasant, could benefit from the share transfer scheme.
In view of the obvious backwardness of the indigenous peoples in Sarawak and Sabah, I would like to ask the Finance Minister whether there is an allocation of certain quotes in the share transfers for the Sarawak and Sabah bumiputras, in particular the Ibans and the Kadazans, or whether there would be a ‘free for all’ among the bumiputras in the acquisition of the shares.
The transfer of the massive government shares should be designed to serve two objectives: to increase bumiputras stake in corporate sector of the national economy, and secondly, to help relieve the poverty of the poorest in the land whether in Penisular Malaysia, Sarawak or Sabah.
I would suggest that the $550 million shares, or the bulk of it, should be transferred to all those below the poverty line, as the present share transfer scheme provides that all bumiputras are eligible to participate in the scheme by registering and making a payment of $10 for purchase of up to a maximum of 50,000 units.
As the government guarantees a minimum of 10 per cent bonus for ten years till 1990, until which time the shares are not markettable, these shares should be managed in trust of the shareholders by the National Unit Trust.
Control and Regulation of the UMNO-putras one of the key challenges of the 1980s
Since the inception of the NEP in 1971, in the name of restructuring the economy to ensure a 30% bumiputra participation in commerce and industry by 1990, a small group of Malay politicians and technocrats – whom I would for short describe as “UMNO-putras’ – have concentrated in their hands control of much of the private sector of the economy.
The managed the institutions which were given the task of spearheading government efforts in the creation of a commercial and industrial community among bumiputraa through direct participation in the private sector. These institutions included MARA, PERNAS, UDA, State Economic Development Corporations, Bank Bumiputra, Bank Pembangunan Malaysia Bhd.
In the period between 1971 and 1980, PERNAS created and acquired equity capital of over $500 million through its subsidiaries and other interests in mining, construction, trading and plantation industries. Up to the end of 1980, PERNAS provided direct employment to 8,741 bumiputeras out of a total employment of 16,593 at all job levels.
In addition to providing credit, training and consultancy services MARA through its companies, including Kompleks Kewangan Malaysia Berhad, provided jobs for 9,421 bumiputras and held in trust equity shares totaling about $182.9 million up the end of 1980.
The SEDCs undertook industrial and commercial ventures either on their own or in joint-ventures with the private sector, and they hold a total of $438 million in share capital as at the end of 1980.
Under the Fourth Malaysia Plan, PERNAS would be allocated another $200 million, MARA another $495 million and the SEDCs $1,131 million.
UDA, which was allocated $469 million from 1971-1980, would be given another $568.79 million under the Fourth Malaysia Plan.
Permodalan Nasional Bhd., which was allocated $500 million on its formation under the Third Malaysia Plan, would be allocated another $1.5 billion under the Fourth Malaysia Plan to but shares in trust for bumiputras.
From 1971 to 1980, out of a total public development expenditure amounting to $34,730 million, $11.1 billion was spent on transfers to the private sector as ‘disguised’ private investment. For the Fourth Malaysia Plan, $5,433 million of development expenditure would be used in the private sector for the same purpose to “accelerate the restructuring process, the creation of employment as well as to correct regional imbalances.”
When we take into account Petronas, Malaysian International Shipping Corporation and Malaysian Airways System, we have a picture of billions of dollars of public money being controlled by a small group of UMNO-putras completely without adequate methods of ensuring public accountability and disclosure. Such large concentrations of economic power and decision making without the discipline of competition or adequate parliamentary scrutiny, is most dangerous.
We have seen from the Waterhouse investigations into the Bank Rakyat how vast sums of public funds held in trust of the rakyat could be abused, misused and misappropriated – in that case required $155 million of government money to bail Bank Rakyat out of bankruptcy.
But the Bank Rakyat case came to light because of political power struggle, and if Datuk Harus bin Idris had not become a challenger to the UMNO top leadership, there is no doubt that the Bank Rakyat scandals would have remained hidden from public view.
Similarly, in the various public enterprises which collectively control billions of dollars of public funds in the private sector, deviations and betrayals on the Bank Rakyat scale not be ruled out.
A system must be devised to keep these mightly public enterprises in check. The Government argues that these pubic enterprises are registered as companies under the Companies Act to enable them to operate with the freedom and enterprise which is not possible as a government department. Be that as it may, it must never be forgotten that these public enterprises or public companies are controlling vast sums of public monies, and that they must be held under check and accountability.
The present system whereby a question could be asked in Parliament about these government companies through the Minister in charge is completely inadequate and ineffective to allow Parliament to discharge its responsibility to ensure that public funds are properly used and invested.
After 10 years of operation of such public companies and enterprises, who in fact are answerable to no one as the Minister in charge probably knows very little than what he is informed by the public enterprise, the time has come for the country to take stock of the proliferation of such companies, to check any corruption of abuse and to improve on their performance, and to emphasise their accountability to the public and Parliament.
This can be done by the establishment of a Parliamentary Commission to review the operation of all public companies and enterprises in the last 10 yrs. to ensure that there have been no hidden Bank Rakyats in these institutions, and also to review the whole question of the accountability of these organisations to Parliament.