Here come the robots; your job is at risk

Here come the robots & they are going to take almost all of our jobs...

The new automation revolution is going to disrupt both industry and services, and developing countries need to rethink their development strategies.

A NEWS item caught my eye last week, that Uber has obtained permission in California to test two driverless cars, with human drivers inside to make corrections in case something goes wrong.

Presumably, if the tests go well, Uber will roll out a fleet of cars without drivers in that state. It is already doing that in other states in America.

In Malaysia, some cars can already do automatic parking. Is it a matter of time before Uber, taxis and personal vehicles will all be smart enough to bring us from A to B without our having to do anything ourselves?

But in this application of “artificial intelligence”, in which machines can have human cognitive functions built into them, what will happen to the taxi drivers? The owners of taxis and Uber may make more money but their drivers will most likely lose their jobs.

The driverless car is just one example of the technological revolution taking place that is going to drastically transform the world of work and living.

There is concern that the march of automation tied with digital technology will cause dislocation in many factories and offices, and eventually lead to mass unemployment.

This concern is becoming so pervasive that none other than Bill Gates recently proposed that companies using robots should have to pay taxes on the incomes attributed to the use of robotics, similar to the income tax that employees have to pay.

That proposal has caused an uproar, with mainstream economists like Lawrence Summers, a former United States treasury secretary, condemning it for putting brakes on technological advancement. One of them suggested that the first company to pay taxes for causing automation should be Microsoft.

However, the tax on robots idea is one response to growing fears that the automation revolution will cause uncontrollable disruption and increase the inequalities and job insecurities that have already spurred social and political upheaval in the West, leading to the anti-establishment votes for Brexit and Donald Trump.

Recent studies are showing that deepening use of automation will cause widespread disruption in many sectors and even whole economies. Worse, it is the developing countries that are estimated to lose the most, and this will exacerbate the already great global inequalities.

The risks of job automation to developing countries is estimated to range from 55 to 85%, according to a pioneering study in 2016 by Oxford University’s Martin School and Citi.

Major emerging economies will be at high risk, including China (77%) and India (69%). The risk for Malaysia is estimated at 65-70%. The developed OECD countries’ average risk is only 57%.

From the Oxford-Citi report, “The future is not what it used to be”, one gathers there are at least three reasons why the automation revolution will be particularly disruptive in developing countries.

First, there is “premature deindustrialisation” taking place as manufacturing is becoming less labour-intensive and many developing countries have reached the peak of their manufacturing jobs.

Second, recent developments in robotics and additive manufacturing will enable and could thus lead to relocation of foreign firms back to their home countries.

Seventy per cent of clients surveyed believe automation and 3D printing developments will encourage international companies to move their manufacturing close to home. China, Asean and Latin America have the most to lose from this relocation.

Thirdly, the impact of automation may be more disruptive for developing countries due to lower levels of consumer demand and limited social safety nets.

The report warns that developing countries may even have to rethink their overall development models as the old ones that were successful in generating growth in the past will not work anymore.

Instead of export-led manufacturing growth, developing countries will need to search for new growth models, said the report.

“Service-led growth constitutes one option, but many low-skill services are now becoming equally automatable.”

Another series of reports, by McKinsey Global Institute, found that 49% of present work activities can be automated with currently demonstrated technology, and this translates into US$15.8tril in wages and 1.1 billion jobs globally.

About 60% of all occupations could see 30% or more of their activities automated. But more reassuringly, an author of the report, James Manyika, says the changes will take decades.

Which jobs are most susceptible? The McKinsey study lists accommodations and food services as the most vulnerable sector in the US, followed by manufacturing and retail business.

In accommodations and food, 73% of activities workers perform can be automated, including preparing, cooking or serving food, cleaning food-preparation areas and collecting dirty dishes.

In manufacturing, 59% of all activities can be automated, including packaging, loading, welding and maintaining equipment.

For retailing, 53% of activities are automatable. They include stock management, maintaining sales records, gathering customer and product information, and accounting.

A technology specialist writer and consultant, Shelly Palmer, has also listed elite white-collar jobs that are at risk from robotic technologies.

These include middle managers, commodity salespeople, report writers, journalists, authors and announcers, accountants and bookkeepers, and doctors.

Certainly, the technological trend will improve productivity per worker that remains, and increase the profitability of companies that survive.

But there are adverse effects including loss of jobs and incomes for those who are replaced by the new technologies.

What can be done to slow down automation or at least to cope with its adverse effects?

The Bill Gates proposal to tax robots is one of the most radical. The tax could slow down the technological changes and the funds generated by the tax could be used to mitigate the social effects.

Other proposals, as expected, include training students and present employees to have the new skills needed to work in the new environment.

Overall, however, there is likely to be a significant net loss of employment, and the potential for social discontent is also going to be large.

As for the developing countries, there will have to be much thinking about the implications of the new technologies for their immediate and long-term economic prospects, and a major rethinking of economic and development strategies.



Global Trends by Martin Khor

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.


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Yap says manufacturers have to source for high-quality technology from places such as Taiwan and Europe to upgrade their production.

THE Malaysian economy can sure use a boost to grow sustainably in the long term because the indicators for long-term growth do not look very good.

That boost should come from a focus on human capital. To put it simply, a better proportion of skilled workers is needed for the economy to move up the value chain and be globally competitive.

This year the economy is expected to grow just over 4% year-on-year, after growing 5% last year and 6% in 2014. The economy is expected to grow by 4% to 5% next year although the headwinds buffeting the Malaysian economy will make it challenging to hit the upper band of the target.

Moving up the chain will mean producing goods and services that have a higher value, meaning that productivity will rise. The rise in productivity will mean that workers will get better wages. This is the basic argument of policymakers when they speak of how human capital can help the economy.

However, the reality is different. According to data from the Malaysian Productivity Corp, the average annual labour productivity growth between 2011 and 2015 was 1.8% while the 11MP has a target of 3.7% annual growth. The doubling in labour productivity growth is needed to hit the high-income target of the New Economic Model.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan notes that the economy saw a labour productivity growth of 3.3% last year but believes that it will be challenging for labour productivity to grow in the years to come because of the lack of skilled workers.

 

Shamsuddin: ‘I doubt very much whether our policy emphasising English will be successful, as statistics indicate that if we ask teachers themselves to take SPM English exam, possibly half of them will fail.’

The 11MP targets skilled workers, that is, those with diplomas and higher qualifications, to reach 35% or 5.35 million of total workforce by 2020. Currently 28% of the total workforce of 14.76 million are considered skilled workers.

Shamsuddin fears that without more skilled workers, the economy will find it more difficult to move up the value chain and will not be able to attract large capital investments.

He tells StarBizWeek that the 11MP target is well below the proportion for skilled workers compared to developed economies, where the proportion is at least half of the total workforce.

Shamsuddin says government plans to raise the skill levels of Malaysian workers have so far only shown mixed results, with a gap between the plans and the actual implementation.

Indeed, the Organisation for Economic Cooperation and Development, a grouping of rich economies, says in a 2013 report that the country needs to address long-standing economic weaknesses in the medium term in order to progress toward becoming an advanced economy within the next decade.

“Skill shortages and mismatches and the deficiencies in the education system that underlie them and the low participation of women in the workforce particularly need to be remedied,” it says.

It adds that the talent base of the workforce lags behind the standards of high-income nations. “The country suffers from a shortage of skilled workers, weak productivity growth stemming from a lack of creativity and innovation in the workforce, and an over-reliance on unskilled and low-wage migrant workers,” it adds.

Observers say cheap unskilled foreign labour is the bane of the Malaysian economy. According to the latest official estimates, there are 1.9 million documented foreign workers in the country with the Government having put a cap of the proportion of foreign workers to the total labour force at 15%.

Unofficial estimates of foreign workers, both legal and illegal, could be more than double that with the numbers having a negative effect on total wages.

Socio Economic Research Centre executive director Lee Heng Guie says in the long run, businesses will need to increase automation for the low-value processes in the manufacturing sector in order to reduce their reliance on foreign labour.

“We are not asking everything to be automated as some places you still need labour, but what you want is to gradually move up rather than continue to rely on cheap labour.

“It is not a solution for industries to compete,” he says. There is also a need to review policies in order to identify implementation flaws and weaknesses.

But the work cannot be all one-way. Lee points out that the private sector must come forward to work with the Government to create a sustainable ecosystem for innovation.

While businesses acknowledge the urgency of working efficiently and relying less on foreign workers, they point out that the supporting technology including for automation cannot be found in the country and must be sourced from abroad.

Asia Poly Industrial Sdn Bhd executive director Michael Yap says manufacturers have to source for high-quality technology from places such as Europe and Taiwan to upgrade their production processes. The company, a subsidiary of Bursa-listed Asia Poly Holdings Bhd, is a maker of cast acrylic sheets used to make corporate signages, lighting displays and sanitary ware, has a high proportion of foreign workers in its workforce.

Yap also finds it difficult to get skilled workers or even motivated ones compared to the 1980s and 1990s. He says engineers today are not willing to take up challenges and many graduates cannot solve problems.

His colleagues observe that Malaysians also do not want to work in the manufacturing sector, even if the workplace environment is conducive and they are given opportunities to give their inputs.

Given the increasing importance of the services sector to the economy, Englishlanguage skills are important but again, there is a gap between the plan and the implementation.

The Services Sector Blueprint launched last year targets the sector to make up 56.5% of gross domestic product by 2020.

Shamsuddin says it is critical for the education system to plan for the future requirements of the economy and the command of English is very important to the services sector.

“I doubt very much whether our policy emphasising English will be successful, as statistics indicate that if we ask teachers themselves to take SPM English exam, possibly half of them will fail,” he adds.

Lee feels that a more consistent policy towards English is important, referring to the abrupt change in the teaching of mathematics and science to Bahasa Malaysia after it was taught in English from 1996 to 2012, as a change that has failed Malaysian children.

By ZUNAIRA SAIEED Starbizweek

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Reducing reliance on foreign workers

https://youtu.be/eBG7C3xitL4

More engagement needed with industry to avoid labour shortage in certain sectors

PETALING JAYA: The freeze on the hiring of foreign workers from February reveals how reliant Malaysia’s economy is on low-wage labour for growth.

A rough calculation by Malaysian Palm Oil Association chief executive Datuk Makhdzir Mardan showed that in 2013, when the plantation industry had a shortage of 23,500 workers, the opportunity cost came to RM1.6bil. He points out that in 2013, one foreign worker who works as a harvester equalled RM500,000 in productivity.

While the over-arching industrial policy is to produce higher value-added goods and services, the truth is that large segments of the economy is still very much dependent on low-wage labour, particularly of the low-skilled foreign migrant-worker kind.

Migrant workers Manik and Mohammad Delowar, both 27 years old from Bangladesh, are two such workers working on the multibillion ringgit Sungei Buloh-Kajang MRT line. Manik has lived in Malaysia for the last eight years and has worked on three property projects before being employed to work on the MRT project.

Both earn a salary of between RM1,500 and RM1,600 per month, 75% of which is remitted home to support their families. Manik told StarBiz that the freeze, which came about after a public outcry over an agreement between the governments of Bangladesh and Malaysia to supply low-skilled workers, would definitely affect the flow of workers that wanted to work in Malaysia.

“I do not wish to go back to my country as I’ll not be able to find a job there,” he said, adding that unemployment in Bangladesh was high and he had to support a family of six.

Manik paid RM8,000 to an agent and waited a year before securing a job in Malaysia. He sold land and borrowed money in order to pay for the fees. Mohammad, who has been working in Malaysia for eight months, paid RM12,000 in fees.

Their experience tell the often unheard human story of foreign workers in Malaysia. These millions of workers who come from the most part from Bangladesh, Indonesia, Myanmar, Nepal, the Philippines and Vietnam are familiar faces in various sectors of the economy. The construction and agriculture sectors cannot do without them while the services sector, especially the hospitality, food and beverage and security industries, have large numbers of foreign workers.

Although the low-cost model of growth has served Malaysia well in the 1980s and 1990s, it has also made local firms reluctant to adopt technology or more efficient ways of doing things. Malaysia’s membership of the Trans Pacific Partnership makes higher productivity and efficiency ever more urgent.

Economists argue that without a rise in productivity, measured in the production of higher value-added goods and services, wages will continue to be low. The large number of foreign workers with their lower skill sets and low wages makes things worse.

This is not to say that there are no higher value-added goods or services being produced, or that the Government is not encouraging it. The New Economic Model, together with the National Key Economic Areas, have identified various sectors and subsectors in which Malaysia can have a competitive advantage.

Leadership, clear-cut policy on foreign workers and investment in education as well as technology are just some of the issues that come into play as the country strives to reduce its reliance on low-wage workers and move up the value chain.

Master Builders Association Malaysia president Matthew Tee and Makhdzir agree that the adoption of technology and mechanisation will reduce dependence on foreign workers.

Tee said the Government should provide more incentives for construction firms to adopt more efficient processes such as the industrialised building system (IBS) that could reduce dependence on low-skilled migrant workers. He pointed out that reducing the import duties on construction machinery could also help.

Meanwhile, Makhdzir said more funds should be allocated to oil-palm research and development (R&D) to make the industry more competitive. “If we desperately need to make that progress, we need to put in more talent, and more money to make it competitive in terms of R&D,” he added.

Makhdzir said the policy needed to be more flexible where R&D was concerned as talent must be sourced from outside the country if necessary.

But in the meantime, the freeze on foreign workers is causing a lot of problems as news headlines in recent months show. The problem is particularly acute in the construction and agriculture sectors.

Tee said there was a shortage of 1.3 million workers in the construction sector and predicted a shortage of up to 2 million by 2020. “This will cause delay in projects which could result in liquidated damages by clients translating to thousands of ringgit per day,” he adds.

Tee observed that the government-initiated rehiring programme that in part would also legalise illegal foreign workers had only attracted 3% of the 1.7 million total number of illegal workers in the country. He said the requirements to legalise the workers were inflexible and because of that, many did not fit the requirements – one reason why the overwhelming majority had decided not to get properly documented.

He said firms wishing to hire workers under the rehiring programme found it more expensive than hiring fresh foreign workers. On the other hand, Makhzir said there needed to be leadership in tackling the issue while Tee said there needed to be more engagement with industry as the reaction from the authorities had been slow.


By ZUNAIRA SAIEED

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Malaysia still suffers from corporate scandal after another, says Musa

PETALING JAYA: Malaysia is great at formulating legislation for corporate governance but lacks the ability to implement and enforce these, said former deputy prime minister Tun Musa Hitam (pic).

“As far as I can remember, Malaysia is the leading developing country that currently occupies the top half of the list in formulating legislation, rules and regulations for corporate governance.

“But when it comes to implementation and enforcement, we occupy the lower half of the list,” said Musa, who is also World Islamic Economic Forum chairman. Delivering his keynote address at the Women’s Institute of Management’s Conference on Integrity and Corporate Governance, Musa said that in the past, government and corporate leaders were required to attend a course on corporate governance.

“It is quite obvious that these efforts are to no avail and the programme seems to have been scrapped.

“After all our training, Malaysia still suffers one corporate scandal after another,” he said.

The country’s weakness in corporate governance lay in its inability to enforce the rules and was the major cause of its many scandals, he said.

Musa said that good governance extended to areas relating to corruption, abuse of power, accountability, application of corporate social responsibility (CSR), transparency and protecting shareholder interest.

“If you ensure transparency and accountability in decision making, apply CSR and care about shareholder interest, then you are practising good corporate governance,” he said.

Good corporate governance, Musa pointed out, could only happen if all the laws were implemented without fear or favour.

“This is most crucial for good corporate governance and it is up to the chairman and board of directors to administer this,” added Musa.

Another important ingredient was leadership with integrity, he said.

“Leadership by example produces good governance and in my experience, if this is practised, even the most influential person can be persuaded to act in the broader interest of the corporation and shareholders.” By Jo Timbuong The Star

Corporate governance – a shared responsibility

TUN Musa Hitam was spot on when he said at a conference on Monday that a company’s directors and managers were practising good corporate governance when they ensured transparency and accountability in decision making, applied corporate social responsibility, and cared about the shareholders’ interests.

These are indeed essential ingredients if we want our companies to be run well.

And Musa was right in pointing out that good corporate governance could only happen if the laws were implemented without fear or favour.

This matters because corporate governance thrives in an environment in which the rules are clear and robust, and the regulators are firm and consistent.

However, corporate governance is not just about complying with the letter of the law. It is also about directing and controlling a company through practices, structures and processes.

Many of these elements are voluntary; a thin line separates government oversight and the straightjacketing of business with an overkill of statutory prescriptions.

For example, most experts on corporate governance agree that the roles of chief executive officer and chairman of the board ought to be separated so as to avoid concentrating a lot of decision-making power in one person.

And yet, it is perfectly legal in Malaysia for an individual to wear these two hats at the same time. It is the same in some developed countries.

It remains a hot topic, but it is clear that most regulators continue to be reluctant to outlaw this practice of combining CEO and chairman duties.

The biggest challenge is to persuade company stewards to embrace the principles of corporate governance without being prodded by the authorities and their volumes of laws.

For this to happen, the directors and managers have to be convinced that good corporate governance adds significant value to their companies.

There are many studies that have concluded exactly that, but these findings mean little if there is still the perception that most people do not care about corporate governance.

Let us look at the listed companies, whose value is measured constantly in the stock exchange as investors buy and sell the companies’ shares.

On paper, a company with a poor track record in corporate governance would have trouble getting attention in the stock market.

And yet, we have frequently seen such companies at the centre of feeding frenzies sparked by speculation that the share prices will soar for whatever reason. This is not a great advertisement for corporate governance.

Nor is it encouraging that shareholder activism in Malaysia is limp. Many of those who own small amounts of shares in a company are often indifferent to how the company is performing, preferring instead to focus on the share price.

And when they do turn up at the shareholder meetings, it is seldom to engage with the board and management and to ask tough business questions.

The regulators and company stewards alone cannot push the corporate governance agenda.

Investors and other stakeholders too must show that they appreciate the fruits of good corporate governance, instead of complaining bitterly only after companies have collapsed and huge investments have gone down the drain. The Star Says

A-G: GLCs should adopt best practices

 

Praise and encouragement: Ambrin speaking during the WIM Conference on Integrity and Governance at the One World Hotel in Petaling Jaya.

“In theory, the country’s best practices could be easily adopted wholly or in part by most GLCs. But in reality this is not always the case as you can see from our audit findings with regard to the business performance and corporate governance of these GLCs.

“If guidelines are not being adhered to or given exemptions, it may severely compromise the governance and expose the companies to risk of fraud and corruption,” he said in a keynote address at the Women’s Institute of Management (WIM) conference on integrity and governance yesterday.

The 2015 Auditor-General Report (Series 2) was released two days ago, in which issues like poor management of the Cooking Oil Stabilisation Scheme and weaknesses in the management of medicinal supplies at health clinics nationwide were highlighted.

On the issue of GLCs that were not doing well, Ambrin said these companies were supposed to contribute to wealth creation for the government and act as a trustee to the public.

“Instead, they might become a burden, asking for bailouts and additional grants or to convert their loans to equity so they can continue to exist as a going concern, but to whose benefit really, one might ask,” he said.

The Auditor-General also observed that based on his audit experience, there were times where a GLC’s board of directors had been conveniently bypassed on major decisions.

He added that companies should have at least some, if not all, the best practices required to ensure integrity and good governance in their organisation.

“For example, I am very impressed with Khazanah, they have a high standard of governance and are very professional, so to me they are a model GLC.

“Of course we don’t expect smaller companies to have the full-scale best practices that they have, but at least have some elements like a standard operating procedure, internal audit committee, and a good board of directors,” he said.

Former Law Minister Datuk Zaid Ibrahim said merely having policies for integrity and good governance in place were not enough.

“Malaysians need to talk about it and live it in order to move a step ahead,” said Zaid who was a panellist at the conference.

He said putting integrity into action may be challenging because of restrictive laws like the Official Secrets Act but that shouldn’t stop people from doing so.

Zaid said if Malaysians were committed to the principles of integrity and good governance, they needed to be courageous in their cause.

“You cannot defend integrity without courage but be prepared to pay a price for it. You might not get promoted, or get the title, or the contract you want but integrity needs to be cultivated, no matter the price,” he said.

Zaid also said the courage to fight for integrity must come from within and individuals cannot expect the higher-ups to lead the way.

“You must own it and start with yourself,” he said, adding that the more people embrace the idea of integrity, the higher the chance of creating a society driven by morals and truth.
-  By LOSHANA K SHAGAR and JO TIMBUONG The Star

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MINISTER in the Prime Minister’s Department Datuk Paul Low recently told the Dewan Rakyat that the Malaysian Anti-Corruption Commission (MACC) detained 1,011 civil servants and 26 executives of government-linked companies (GLCs) for alleged corruption and money-laundering between 2014 and September this year.

Assets amounting to almost RM172mil were seized and frozen in relation to these cases.

The government officers nabbed outnumbered the GLC executives by nearly 40 to one, but that is no reason to focus less on the fight against corruption in the GLCs.

The GLCs are in many ways a special class of companies.

A GLC is like any other company in the sense that its primary objective is to make money from commercial activities.

At the same time, a GLC is controlled by the Government (usually through majority shareholding) and is thus an extension of the Government.

But that is not the only way that a GLC is like a government department or a statutory body.

Often, GLCs serve as instruments of public policy.

For example, they undertake huge projects that drive the country’s development. They are in industries that are strategic to national interests — aviation, finance, telecommunications, natural resources, automotive, ports and power.

They tailor certain aspects of their operations, such as human resources and procurement, to suit objectives set by the Government. And they champion causes that support what the authorities want to do.

As such, we have every reason to be dismayed if a GLC is not run with integrity and efficiency.

Do we derive comfort from the MACC’s detention of two GLC top men over the past week?

On Nov 10, the Commission picked up the general manager of a GLC at his house in Seremban to assist in a corruption probe.

And on Monday, a director of a GLC was detained for alleged abuse of power and corruption back when he was chief executive officer of another GLC.

We can view these developments as encouraging signs of the MACC stepping up its efforts to combat corruption in GLCs.

But the feel-good factor will not last if the investigations are not followed by swift and successful prosecution.

Hauling up people for questioning and freezing assets is only half the job.

The culprits must be brought to court and people need to see justice delivered without fear or favour.

If this does not happen, it only serves to bolster the longstanding argument that government has no business being in business.


 By The Star Says - The Star analyses the issues and developments of the day, and offers a viewpoint.

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Water Corruption | SSWM http://www.sswm.info/content/water-corruption The Star Says: A crisis of integrity and a lesson to be learnt ...

Sabah's watergate scandal unfolds, engineers nabbed, civil service back in vogue

 

Sabah's watergate scandal unfolds

THE amount involved in Sabah’s watergate scandal is unbelievable.

The Malaysian Anti-Corruption Commission (MACC) seized RM114mil worth of assets –RM53.7mil in cold cash stashed in houses and office – from two senior Sabah Water Department officials on Oct 4.

The duo were investigated for alleged abuse of power and money laundering linked to contracts for RM3.3bil federal-funded projects channelled to the department since 2010. Two others – a Datuk businessman who is a brother of one of the officials and an accountant – were also arrested.

Six days later, MACC traced RM30mil stashed in foreign banks and another RM30mil in 127 land titles for housing, agriculture and commercial.

That’s not all.

MACC also seized nine vehicles worth RM2.7mil, an assortment of jewellery worth RM3.64mil and designer handbags worth RM500,000.

The following Tuesday (Oct 11), three Sabah Water Department employees “voluntarily” surrendered about RM1mil allegedly taken in the process of approving water projects under the RM3.3bil federal allocations.

When you go out of the state capital, you’ll find Sabahans depending on rivers, streams, ponds, wells or rain for their daily needs.

What do we tell M. R., a 34-year-old Rungus housewife from Kampung Bongkok in Pitas, about the Sabah Watergate?

Since she was born, she has relied on wells, rivers or ponds in the jungle to bathe, wash clothes and dishes, and on rainwater for drinking and cooking. Daily, she has to walk a few kilometres to carry 10 litres of water back to her house.

Her water woes worsen when there is no rain for weeks.

“The villagers will be suffering, especially getting water for drinking and cooking,” she said.

“What’s your comment on the Sabah watergate?” I asked.

“That’s what is heartbreaking. We have been asking for piped water for our village. But the excuse they give to us is the source of treated water in Pitas town is about 28km from our village,” she said.

“If the funds meant for water projects were used properly, we would have clean water supply for which we have waited for many decades.”

What do we tell M. J., a 37-year-old Bisayah civil servant from Kampung Sukai in Beaufort about the Sabah watergate?

There is a water pipe that runs through M. J.’s village. However, no water flows in the pipes and yet the villagers are billed for it.

“The pipes were installed in 2010. We had water for about one year and then it went dry, maybe because of leakage,” he said.

Now many villagers rely on the blue water tank they got during elections.

“When there is no rain, some of the villagers have to buy water from a town about 30km away for drinking and cooking,” he said.

“For other uses, the villagers get murky water from wells and a polluted river along a mangrove swamp.”

“What’s your comment on the Sabah watergate?” I asked.

“As a true Sabah-born I’m extremely disappointed. The people’s first call is not delivered because of greed. If only a portion of the money were distributed, the villagers would not be thirsty for the promises made by politicians.”

What do we tell N.V. H., a 49-year-old Chinese businessman from a suburb in Tawau town, about the Sabah watergate?

Once a week, there is a water cut lasting three to 12 hours in his residential area. During the previous El Nino season, there were 12-hour water cuts on alternative days for two months.

With the constant water cuts in Tawau, he had to install two 400-gallon stainless steel water tanks and pneumatic water pumps at his home. He also had to install two 100-gallon water tanks and automatic on-off water pumps at the ground floor of his shop and another 400-gallon water tank and pneumatic water pump at the first floor. The total cost is RM16,000.

N.V.H.’s household has never experienced water woes, as supplies from water tanks last for five days.

“What’s your comment on the Sabah watergate?” I asked.

“Of course I’m angry when I come across all these water scandals. But we can’t do anything about it,” he said.

What do we tell M. S., a 47-year-old Bajau Sama managing consultant from Kota Belud, about the Sabah watergate?

The shortage of clean water in his district is unexplainable, he said.

“What’s your comment on the Sabah watergate?” I asked. “There is an abundant water source from Mount Kinabalu, flowing through rivers across Kota Belud. The rivers are full of water yet it has failed to be converted into clean water,” he said.

The water supply covers about 30% of the villages in the district and the rest depend on untreated gravity water.

“Sad to say that some villages have a piping system but no water. The water department implements piping projects in every election. Yet the clean water shortage is here to stay,” he said.

I pray that the MACC’s investigation reaches to the top. And that those who are responsible will pay for their greed.

One man's meat by Philip Golingai The Star/ANN

19 engineers nabbed in probe as graft scandal widens with arrest and seizure in assets across Sabah

(File pix) The Malaysian Anti-Corruption Commission (MACC) has nabbed 19 engineers to facilitate investigations into the Sabah Water Department’s multi-million ringgit graft scandal. Pix by Mohd Adam Arinin ; MACC held a news conference in KK where they announced and displayed a whopping haul of RM114 million worth in cash, jewellery, land grants and branded goods. — Bernama pic

KOTA KINABALU Oct 21 2016:  The Sabah Water Department graft scandal has widened, with the arrest of 19 engineers across the state and the seizure of RM7.8mil in assets, including RM4.2mil cash.

The district or divisional engineers, aged 29 to 59, were detained at 27 locations in the state as the Malaysian Anti-Corruption Commis­sion (MACC) continues its probe.

Its investigations have already implicated top officials in the department in connection with the siphoning of money from RM3.3bil worth of federal allocations for state rural water projects since 2010.

The engineers were remanded for between three and seven days in Kota Kinabalu, Sandakan and Tawau after they were arrested on Wednesday.

Yesterday, MACC deputy commissioner (operations) Datuk Azam Baki said they may have been collecting as much as 27% to 30% in kickbacks from the contracts awarded. But he did not disclose the amounts involved.

He said investigators also seized procurement files and were sifting through the documents.

Asked about speculation on social media that certain top politicians were linked to the scandal, Azam said the probe was focused on civil servants at this point.

“For now our investigations do not involve any political figures in the state or at federal level.

“I am asking people not to politicise the matter and not to take advantage of the investigations for their own interest,” he added.

He said MACC officers were going through the numerous documents in detail before submitting the investigation papers to the Deputy Public Prosecutor.

“We assure everyone that our investigations will be transparent and professional,” he said.

The latest collars were a second wave to the arrests of the two top water department officials and the seizing of more than RM190mil in assets, including RM57mil cash, since Oct 4.

Apart from the officials, who have been suspended by the state government, MACC also nabbed a senior officer’s businessman brother, his accountant and an engineering adviser to the state Finance Ministry. All were released early this week.

The officials were alleged to have abused their powers by awarding contracts to 38 companies owned by their families or cronies, to siphon off the federal funds.

MACC investigators were also looking into suspected money laundering as they try to recover some RM30mil that has been reportedly stashed in overseas accounts. The Star

One more SWD engineer held

An array of cash both ringgit and foreign currency, gold jewellery, land titles and luxury brand watches and handbags were seized from two high ranking Sabah state agency officials in a graft investigation. ― Picture by Julia Chan

KOTA KINABALU Oct 25 2916:  Another district engineer has been arrested in the ongoing massive graft probe into the Sabah Water Department.

The officer, who was arrested at 6.40pm on Sunday, was produced before Tawau magistrate Faizal Che Saad who allowed the Malaysian Anti-Corruption Commission’s (MACC) application for a five-day remand.

Five of the department employees who were among the 19 department staff detained on Oct 19 were released on bail yesterday.

The five were freed on RM50,000 bail each after being produced before magistrate Cindy Mc Juce Balitus at about 2.40pm.

Earlier this month, five suspects, including the department’s director and deputy director, were detained under Ops Water which also saw the seizures of some RM190mil in cash, properties and other valuables.

Also picked up during the second wave of the operation were 22 engineers and technicians, some of whom were said to have received as much as 30% in kickbacks for the water projects.

The investigators seized RM8.4mil in the second phase of their probe.

MACC deputy chief commissioner Datuk Azam Baki confirmed the latest arrest when contacted.

Meanwhile, sources said there was pressure for the investigators to speed up their probe into the case.

“It would take a much longer time to wrap up investigations due to the vast amount of documents involved,” they said, adding that the amount of documents seized was equivalent to “half the size of a tennis court”.

“Due to this, we have to fly in more officers from Putrajaya and several states to Kota Kinabalu to assist in gleaning, sorting out and scrutinising the documents.

“Every piece can provide a vital clue,” one of the sources said.

All the documents – in the millions – are now kept in a secret location here and a team of officers are taking turns to guard them round-the-clock.

“As this is a high-profile case, certain quarters are trying to take advantage of the situation. But the MACC will not allow any outside elements to jeopardise our probe.

“The investigation team is doing its best to come up with an airtight case before submitting the investigation papers to the Attorney-General’s Chambers to press charges against those responsible,” added the source.

The probe is one the biggest ever in the country to be carried out by the MACC involving abuse of power, corruption and money laundering from the RM3.3bil in federal allocations for water since 2010.

Civil service back in vogue - for the wrong reasons

THE civil service may fall short in meeting the job prospects of a large number of people, but it has made up with abundant opportunities for self-enrichment – if one is prepared to take the risk of facing the law.

In a nutshell, the “Watergate” incident involving top officials from the Sabah Water Department is increasingly serving as an eye opener for the majority who had shunned the civil service previously due to limited prospects and lower remuneration compared to the private sector.

As the number of people involved in the “Watergate” discovery keep stacking up, with some junior officers returning money to become state witnesses – the chatter in coffee shops is on the level of abuse within the civil service when it comes to handing out contracts through a restricted tender process.

To be fair, the majority of Malaysia’s 1.2 million-strong civil service are merely ordinary employees providing a service to the public. They carry out their duties diligently despite the constraints and remuneration.

However, there is something wrong with the system when we hear that even basic matters such as the transfer of a student from a mediocre school to a school that is “highly sought after”, or students seeking grants and scholarships from the Government may require some kind of monetary gratification to someone within or outside the system.

Generally, cases involving a small exchange of money go unreported because the party that is prepared to hand out the gratification just wants to go about their business with a minimum of hassle. At most, the topic is fodder for talk among friends or relatives. But when millions are seized from the homes and offices of civil servants – money supposedly meant to upgrade the water services in Sabah – it no longer is merely coffee-shop chatter.

It has been a topic of serious discussion almost everywhere in the last 10 days.

When Budget 2017 is announced next week, the nation will see another round of Government allocation to various ministries for their expenditure and development. In the budget last year, the Federal Government estimated the operating and development expenditure for this year to be RM265.22bil. Generally, the development expenditure is less than RM50bil and the rest goes towards the cost of operating the Federal Government.

While in previous years, the focus was on the Government’s growing operating expenditure, which means less money for development, the question that will be racing on the minds of many is how much of the amount allocated is going to be siphoned off in the form of corruption and kick-backs for inflating the cost of projects and “fixing” restricted tenders.

The Government has limited options in its spending, considering that there is a target to keep the fiscal deficit down. This year, the fiscal deficit is expected to be negative 3.2%, which is a remarkable improvement compared to negative 4.3% in 2012 and a figure of more than negative 5% in 2009.

Next year, we are supposed to bring down the fiscal deficit to 3%, meaning Government spending has to be cut further.

It is part of the plan to have a balanced budget by 2020, which is only four years away. A balanced budget means that what the Federal Government receives in revenue is enough to cover its operating and development expenditure.

Many countries tend to keep a surplus budget, something that comes in handy during bad times. A fiscal surplus effectively means the Government earns more money than it spends. It has reserves that can be touched when it needs to spend more than what it earns. And a fiscal surplus or balanced budget commands the respect of rating agencies.

Earlier this week, Australia’s 30-year debt papers garnered a triple-A rating despite the country going through an economic slowdown due to the fall in the resources sector. The country used to run a surplus budget until 2007.

As for Malaysia, achieving a balanced budget by 2020 is part of a plan to shore up the country’s balance sheet. However, the Government must ensure that the machinery works towards optimising every ringgit spent.

In the case of the Sabah Water Department incident, alleged abuse was allowed to happen due to the practice of having “restricted tenders” when awarding contracts. It is a common practice in all departments and ministries. The only difference is the amount that can be awarded.

For instance, at the ministry level, the level of approval for the minister to award contracts through restricted tenders can go up to RM100mil or more. As long as there are eight to 10 companies that are registered with the ministry competing in the restricted tender exercise, the minister can award the job to the lowest bidder.

The companies tend to act in concert, something that is known to the officers handling the tender process. When the contract is awarded to one company at an inflated price, the other companies get paid for their participation.

The officers in the ministry are also being rewarded and it goes down from the top to several layers down. The restricted tender process can easily be a farce!

The argument that favours a restricted tender is that it can be awarded quickly compared to an open tender, where the evaluation process is often time-consuming. However, a competitive open tender process allows for an efficient price-discovery mechanism.

For instance, the 1,000MW Prai power plant in Seberang Perai was awarded on a competitive tender. The winning bid came in on a tariff of 34.7 sen per unit, which is now the benchmark for any future gas-fired power plants.

Restricted tenders have been quite prevalent in the past few years. However, they have a massive amount of drawbacks, based on the rising number of civil servants being charged or under investigation for corruption.

However, the restricted tender process has brought back the allure of the civil service – for the wrong reasons though.

There was a time in the 1960s and 1970s when civil servants were the preferred choice of grooms in arranged marriages. It was apparent especially among Indian parents.

From the mid-80s onwards, the shift was towards those working in the private sector, especially prospective grooms in large multinational companies holding mid-management positions.

Now, the civil service sector is back in vogue – especially positions that involve the awarding of contracts. All thanks to the enormous publicity that “Watergate” has drawn.

- The alternative view by M. Shangmugam, The Star/ANN

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