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Speech by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong during the debate on the 2001 Supply Bill ( 2001 Budget) in Parliament on 30 October 2000

.I rise to take part in this debate with a strange feeling because despite so many incentives investors are still not so keen on coming to Malaysia including food production. There is investment, but it is not as big as before 1997, the pre-crisis level. I am also feeling odd when the Government implies as though the challenges of globalisation, liberalisation and digital wave and their implications on national competitiveness. In fact, globalisation began many years ago: in the 80s and 90s last century, Malaysia had impressive economic growth.

I have said here before that when foreign direct investment, FDI, stimulated our economy, we were not aware of the weaknesses in international financial architecture, IFA, and the Government did not admit ( and still does not) that there were (still are) intrinsic weaknesses such as cronyism, nepotism, corruption, wastage and mismanagement. Some turn their back on reality and misuse the rights and quotas specified in the New Economic Policy, NEP. That fish will soon be caught that nibbles at every bait. In July,1997, rapacious speculators attacked currencies in Malaysia and other countries. Our intrinsic weaknesses and the relatively small international reserves made the economic crisis worse.

Now, we have not changed IFA. Speculators are drilling into the Australian dollar.

International economic growth may not be so good next year. However, the ties between North and South Korea reduce regional tension. This is good for the economy.

Strategy to handle capital control

The Right Honourable Prime Minister ( Dato' Seri Dr Mahahtir Mohamad ) reiterates that he does not see what is so bad with the fixed exchange rate. It was necessary during 1997 and 1998 because the economy was going down. Still, it is not bad for the national reserves. If our neighbours devalue or revalue their currencies up to 15%, Malaysia will review the Ringgit, but not to the extent of our neighbours.

Some people continue to welcome the fixed exchange rate. The undervalued currency makes their goods more competitive for export.

Although the effects of the economic crisis linger on, the economy is not as bad as that during the crisis. The capital control is said to have been modified - only targeting currency speculators - it causes concern. I repeat that we need a strategy to deal with it.

Master plan for k(nowledge)-economy, e(lectronic)-commerce and ICT(information and communications technology).

I agree that that we need to reassess and adapt our policy on the economy and modern technology. We have built public and private institutions of higher learning. We want more, at least 35 public universities of international standard. Now, we are going to build four new universities. This is reasonable. We must make sure that all universities attain international standard. (We have colleges to handle courses lower than those in the universities.) Truly, k-economy is not new. What is new is the slogans and the desire to expedite the development of ICT. The Government must produce an ICT master plan on which we strive to achieve higher level. But, we must not forget the basics: utilities, housing, transport, education and so forth that have to be provided at a reasonable cost.

What is the percentage of ICT in our economy? What will it be in 15 or 20 years?

We see demographic changes - in 15 or 20 years, 75% of Malaysian population may be in urban areas and 25% in rural areas. We must have basic facilities.

Malaysian ICT

Will our ICT master plan be based on the American model? United States of America, USA, started with ICT over two decades ago. We are only imitating USA in the last few years - we have only 1.4 million Internet users. Do we want all houses including those in the villages to have computers or other modern apparatuses? Are those using satellite better than computers? As Malaysia is different from USA, we must create a Malaysian version of ICT. We should not blindly ape USA.

Restructuring corporate management

His Honourable Finance Minister (Tun Daim Zainuddin) insists that foreign investment in this country has increased. The number of appications to Malaysian Industrial Development Authority. MIDA, has increased by 67.6% with the value of RM 17.5 billion. With the prepackaged incentives, seven projects totaling RM 11.25 billion have been approved by the Government. Further, investment in high technology in the MSC, Multimedia Super Corridor, is RM 2.8 billion. Actually, FDI is still relatively low because of crisis of confidence. The returns from companies are still low.

On 10 August 2000, the Minister for International Trade and Industry (Datin Paduka Rafidah Aziz) said that she knew more about FDI flowing in. Between 1995-2000, approvals for FDI and local investment in the manufacturing sector exceeded the target of RM 110 billion for the period. How many have invested after approval? Huge companies such as Royal Ductch, Shell, Siemens, Motorolla and Toshiba have invested in the country for many years. Their projects are big. They give a big figure for the FDI mentioned by the Finance Minister.

The Director of Malaysian Institute of Economic Research, MIER, Dr Mohamed Ariff confirms that FDI has gone down by 71.2% in the first five months of this year compared to the reduction of 16.4% in the same period last year. Willy-nilly, FDI is still not big. In spite of the prepackaged incentives, investors hesitate. Although the manufacturing sector contributes 32.6% to the Gross Domestic Products, GDP, we see crisis of confidence in some aspects of the financial sector.

According to the World Economic forum, the competitiveness of Malaysia has gone down from number 9 in 1997 to 25 in 2000; Indonesia 15 to 44; Thailand 18 to 31 and Korea 21 to 29; in East Asia, Japan 14 to 21, Taiwan 8 to 11 and Hong Kong 2 to 8.

The Finance Ministry mentions the large reinvestment of Siemens, Motorolla and Toshiba in Malaysia. But, our competitiveness has fallen much more than what can be accounted for by the economic crisis. Factors such as corporate restructuring are important. I propose that the Government review all aspects of restructuring in the finance sector especially the corporate sector.

The efforts of Danaharta and Danamodal, property management and capital management companies, must be increased. Danaharta has taken over and managed RM 46.785 bilion of non-performing loans, NPLs, from the financial system and Danamodal has transfused RM 7.59 billion into the banking system. Similarly, Corporate Debt Restructuring Committee, CDRC, has restructured 38 schemes worth RM 25.693 billion, but 37 applications worth RM 20.236 billion have not be restructured. We have to show the world that we are serious about restructuring management and NPLs, not haphazardly, not protecting those companies with bad management.

Danaharta is still holding properties totaling RM 26.27 billion. Although it has sold some such as 96 properties worth RM 127.80 million on 30 June 2000, it has to do more. As I have said before Danaharta should not behave like a bank.

Don't misuse provident and pension fund.

The budget is RM 91 billion, operating and development expenditure being RM 62.21 billion and RM 28.84 billion respectively. On the other hand, federal revenue is forecasted as RM 69.61 billion, giving a budget deficit of RM 21.44 billion. From where will the Government get the money to balance the budget?

Normally, the Government eyes the provident and pension fund. The total resource from the nine provident and pension funds is RM 201.614 billion, the Employees' Provident Fund, EPF, contributing RM 127.507 billion, 85.6% and Social Security Organization, Socso, RM 8.232 billion.

The government can say that it will give 5% interest for the RM 21.44 billion from the funds. Otherwise, the bank interest is only 3.5%. It is such a generous Government? The Government should not misuse the RM 201.614 billion from over 10 million people.

Why is the economic growth 7.5%

The growth in the first half of 2000 was 10.5%. But, the Finance Minister says it will be RM 7.5% by the end of the year and maybe 7.0% in 2001. This means that in the second half of this year, the growth will only be 5.5%. It is what a jump. The Prime Minister believes that it is difficult to have a higher growth, but not impossible.

While we pay special attention to stimulating economic growth, initiatives for competitiveness and a caring society, we must add justice, transparency and accountability.

Steps such as venture capital RM 500 million are in the right direction. But, ideas and measures to improve domestic consumption and FDI may not necessarily bring results. The most important is confidence towards the Government's capacity to manage all sectors especially finance and public sectors after the Vision Development Policy to be announced in April 2001

Use Education Allocation fairly and effectively. .
We require consistent policy.

In 2000, the allocation for education is about RM 14 billion. Next year, it will be RM 18.6 billion. We have to pay attention to education and training because trained human resources will decide the future of this country.

The Finance Minister says that 167 primary schools, 120 secondary schools and 42 new day residential schools will be built next year. The increase in staff members will be 11,684, comprising 9,424 teachers and 2,260 new members.

I hope that we will implement these effectively. The 42 residential schools should be open to all races as fairly as possible. The poor and the less fortunate transcend races.

The Government repeats its policy on having schools with a single session. But, it has not succeeded because of various factors such as the lack of schools. We hope that the new schools will be completed according to schedule. How many will be Chinese and Tamil schools?

In November 1999, on the eve of the last general elections, the Government announced the approval of new Chinese primary schools. One year after the general elections, the government has not kept its promise. I propose that it give RM 3 million and five acres of land for each new school.

The RM18.6 billion allocations should be shared fairly at all levels. All projects should be implemented effectively. At the same time, the policy must be consistent. At times, we see the Education Ministry implements its projects hastily such as the 3R's new curriculum introduced in 1982 when there was shortage of trained teachers and facilities. The same applies to living skills and abacus projects. When the Prime Minister visited Tokyo some years ago, he saw Japanese students using abacus. He commented on it referring to their strength in mathematics and science. Then, the ministry had the inspiration to start an abacus project. Millions were spent on training teachers and buying equipment. But, the project has been shelved.

Education policy must be consistent and all projects thought out carefully. It should not be influenced by party politics.

For mackerel I set out to fish,
A tiny sting ray's what I got;
To girdle mountains was my wish,
An iguana's all I caught.

In the last few years, the ministry has been talking about Vision Schools to nurture racial harmony starting from primary schools. It is good to have vision, harmony, unity and friendship. (On principle), all parties should support unity. But, we have to pay attention to the ways it is implemented.

Chinese educationists are worried about Chinese schools losing their character. Despite the promise of the Education Minister (Tan Sri Musa Mohamad), they fear that the sharing of facilities by three types of schools will result in the change in their character. The minister must consider their apprehension and give them a chance for dialogues so that a way can be found to solve the problem of implementing Vision Schools. Let us not create suspicion, fear and anxiety about the loss of school character.

Mishaps in defence

Mr Speaker, Sir, I would like to end my speech by mentioning the problem we all face. The 2001 budget allocates about RM 7 billion for defence compared to about RM 6 billion in the 2000 budget. This attracts attention. Naturally, we want to know what is the purpose of the ministry increasing the allocation.

The Defence Minister (Dato' Seri Najib) said that during the economic crisis, the defence allocation did not increase. However, now it is asking for more to buy sophisticated weapons. He talks about buying submarines. He has not indicated the origin, the number, the price and the schedule. The Peninsula is a guerilla country and we have problems of long shorelines, South China Sea and islands especially those in East Sabah. The minister believes that with modern equipment, the number of men can be reduced.

From the point of view of defence and security, we need quality, discipline and commitment by members of the armed forces and police. Since the end of the Communist guerilla war in December 1989, our armed forces have been in a peaceful environment. How do we instill quality, discipline and commitment in peacetime? The ministry has to take these into consideration. It is no good asking for RM 7 billion, if our armed forces do not have quality, discipline and commitment.

Not only that, we can see in our military bases including air force MIG fighters and other sophisticated weapons are exposed on airfields. This is peace time. We are not afraid of people attacking - no missiles landing on Malaysian airfields. I hope that the Defence Minister review the safety of all our military equipment. We have spent billions on sophisticated warplanes such as MIG and F-5. We have to keep them safely. We should have a special place to keep them. I hope that with the RM 7 billion allocations we can protect our warplanes well.

Mr speaker, Sir, recently three events make us anxious about our security….

Deputy Speaker (Dato' Mohamad bin Abdullah): Th Honourable for Pendang,, yes.

Dato' Haji Fadzil bin Md Noor: Thank you Mr Speaker and the Honourable for Kepong. I would like to get his view on aircrafts bought by Malaysia from United States of America. In the last few years, they have been basking in the desert of Arizona, America.

Dr Tan Seng Giaw: Skyhawk.

Dato' Fadzil: Skyhawk. Thank you.

Dr Tan: Yes, the Honourable for Pendang is right. There are a number of Skyhawk bought from America through Foreign Military Sales, FMS. Unfortunately, these are not suitable for us. In over 20 years, we have bought some equipment through FMS. In fact, Skyhawks have been used by the US Navy. They are then sold to Malaysia secondhand. These are not suitable: a few have crashed. They are now in Arizona desert. They are a loss to us. The ministry must learn a lesson from this purchase. Let us not repeat the mistake.

The three events I meant just now…..(members pounding on the tables)

Deputy speaker: someone has arisen, the Honourable for Kinabatangan.

Mr Moktar bin Radin: can I ask a little?

Dr Tan: You want to ask about Sipadan or Pandanan?

Mr Maktar: No. About security.

Dr Tan: Security is the worse in East Sabah (laughters)

Mr Moktar: Enter (Can I speak), yes.

Deputy Speaker: Yes. Security.

Mr Moktar: Thank you Mr speaker and the Honourable for Kepong. It has to do with Defence Ministry with the allocation of RM 7 billion. Does the Honourable agree that RM 7 billion are too little if (we) compare with the needs for the security and other countries. We have to be ready in the face of threats from our neighbours. We know that our neighbour is an informer (tali barut) or agent of big countries. Then, does the Honourable agree that the allocations for security should not only be RM 7 billion, maybe increase another 50% or 100% to ensure national security and also security of Kepong, not to be attacked by bad element from outside? Thank you.

Dr Tan: Mr Speaker, Sir, the Honourable for Kinabatangan or 'Cinamatangan', I don't understand the meaning. He suggests we close down all schools in Sabah, all offices and concentrate on defence, buying aircrafts, submarines, if possible, aircraft carrier because we want to compete with others on defence. We want to have our own missiles to fight a war and so forth. If this is the case, we close all schools and hospitals, all facilities and we don't build roads in Sabah. Nevertheless, other states are not interested in doing so.

Mr Moktar: Mr speaker, I have never said so.

Dr Tan: That is what you have just said (implied).

Mr Moktar: We ask one thing, he answers a different thing.

Deputy speaker: the Honourable, it doesn,t matter.

Mr Moktar: ( the Honourable for) Kepong. This is really confusing. The thinking is pressured (terkepong). (laughters)

Dr Tan: This, you should not say.

Deputy Speaker: The Honourable (Kinabatangan), (Kepong) only added that. (Kinabatangan) did not indicate the closing of different thing (schools, etc). (Kepong, do you) agree with giving more money to defence)?

Dr Tan: Where does he (Kinabatangan) find the money (RM3.5 to 7 billion)?

Deputy Speaker: Try to find. The Government finds. The Honourable (for Kepong), carry on.

Dr Tan: We have RM 18 billion for education. He (the Honourable for Kinabatangan) wants another RM 5 billion for defence. Where does he get the money? Ask the Finance Minister? Mr Speaker, this is the problem.

Raja Dato' Ahmad Zainuddin bin Raja Haji Omar (the member from Larut, Johor): Point of information.

Deputy speaker: The Honourable (from kepong), (the Honourable from) Larut stands.

Dr Tan: I would like to finish (my speech).

Raja Dato' Ahmad Zainuddin: A little bit only. I would like to help the Honourable (from Kepong).

Raja Dato' Ahmad Zainuddin: Thank you. The Honourable just mentioned closing down Chinese schools and so forth to fulfill the desire of the Defence Ministry. I would like to ask whether the Honourable agree to closing Chinese schools also. What is your view? I am confused.

Dr Tan: He (the Honourable from Larut) has his own agenda. I did not say closing down Chinese schools. I said schools and hospitals because we need money for these. If the money is used to buy aircrafts and submarines only, we don't have enough money (for other things). That is what I mean.

Anyway, the kidnapping events in Sipadan and Pandanan attracted more attention. This is important. However sophisticated the equipment is, we cannot solve the problem of Philippine rebels trespassing our islands to kidnap our people and foreigners who are vacationing there. Sophisticated equipment such as MIG warplanes cannot get to the islands and stop the marauders. We require the army and the police personnel with caliber there to defend our country.

Raja Dato' Ahamad Zainuddin: I would like to assist the Honourble (from Kepong) only.

Dr Tan: I would like to finish. What else (have you got)?

Raja Dato' Ahmad Zainuddin: Point of information. Does the Honourable (from Kepong) agree with the lack of equipment in this country so that other countries including our neighbour can colonize us.

Dr Tan: The Honourable from Larut (Johor). When Perak football team won the (Malaysia) Cup, he showed off on television (with the team). (Laughters).

Deputy speaker: The Honourable (from Kepong) why do you mention a different thing again. (Laughters).

Dr Tan: That. He ran from Larut to Perak. This is the problem. He says that his wife is from Perak. He only depends on his wife.

Mr Speaker, the kidnappings in Siapdan and Pandanan make us worried about our security. Are we capable of looking after the security of East Sabah shores and islands? We have to think seriously about it. Not only about shores and islands…..

Deputy speaker: The Honourable, someone stands up.

Mr Moktar: Point of information. The question of Sipadan. I would like to help.

Dr Tan: Don't close hospitals and schools.

Mr Moktar: This is on Sipadan. Thank you the Honourable. Since the recent abduction in Sipadan and Pandanan, these island are more well known to the world. At the same time, there are hundreds of thousands of applications by tourists to visit the islands. Then, the Honourable agree that the abductions have helped advertised Sipadan island, the result being that our country is benefiting from tourism.

Dr Tan: Mr speaker, this is a topsy-turvy statement. It originates from topsy-turvy thinking. Fortunately, 21 victims from Sipadan….

Mr Moktar: (Stands)

Deputy Speaker: don,t worry, let the Honourable answer first.

Mr Moktar: I see that he does not look at the facts. Since Sipadan island…..

Deputy Speaker: the Honourable (Kinabatangan), let him answer first.

Mr Moktar: .. kidnapped from there, hundreds of applications from foreign tourists to go there. Then, where is the topsy-turvy? Maybe, the thinking from Kepong is topsy-turvy.

Deputy speaker: Enough the Honourable.

Dr Tan : His (the Honourable Kinabatangan) attitude is again in the opposite directions. (Laughters). Mr Speaker, sympathy to the 21 kidnapped victims from Siapdan and three from Pandanan. If they can be substituted by the Honourable Kinabatangan, it would be better. (Laughters). Fortunately, with the cooperation and efforts from all concerned, they have been released. We all pray that this type of incident will not recur. If we want publicity or advertisement for Sipadan, Pandanan and other places, we can go through other channels such as CNN, not kidnapping that is not the best way.
Mr Speaker, Sir, not only our islands, our military camps (have problems). We are no longer in a state of war, no guerilla war, members of the armed forces are not so ready for our defence in terms of discipline, commitment and strategy. For example, on 2 April 2000, there was arms heist at the 304 Territorial Army Batallion, Gerik (Perak) - the Sauk incident. There are a few questions. The incident occurred between 2,30 a.m. to 4.30 a.m.. We understand that the incident at Pos Kuala Lui was only known at 12.00 midday on the same day. We cannot accept this. There are military intelligence and police special branch. There are police stations nearby, in Kampong Kuak and Sauk. These are near Gerik which is about 45 minutes of drive by car to Keroh, the border with Thailand. From Gerik to Sauk , only one and a half hours's drive. This is a security problem.

Deputy Speaker: Someone stands, the Honourable for Hulu Terengganu.

Mr Haji Muhyidin bin Haji Abd. Rashid: Point of information. Thank you, Mr speaker. I agree with Kepong that what happened there was a strange thing. Then, if we base on the Honourable Kinabatangan's statement that what happened in Sipadan and Pandanan is to promote the islands (for tourism), is it possible that what occurred in Sauk and Jenalik Hill was a drama to promote the places. What is the view of the Honourable (for Kepong)?

Dr Tan: We must find some other ways to introduce Sauk and Grik. These are in the Chenderoh constituency. They must be developed. But, we pick other methods.

Mr Moktar: Point of information.

Deputy Speaker: Wait, he is answering.

Dr Tan: This is far from East Sabah. It is in the North of the Peninsula.

Mr Moktar: (I) can also (talk).

Deputy speaker: will you give way?

Mr Moktar: I am attracted by the comment of the Honourable (for Hulu Terengganu) just now. Then, if it appeared to be a drama, I would like to suggest that the Honourable go to Jolo (southern Philippines island), may be he can dramatize there. I suggest that he tries. What is the view of the Honourable for Kepong?

Dr Tan: Don't play-acting anymore. If you don't understand military matters and not fluent in them, do not touch on them again. This is a serious problem. For those who understand military matters, they know that there are standing operative procedures in military camps. (What is more), Gerik is in a forward position, it is very difficult to enter the camps. During the debate at the committee stage 9on defence), I shall elaborate how difficult it is to get into a camp. We have no time now.

Furthermore, how could a group, perhaps 15, trespassed the camp and take away over 100 M16 rifles and heavy support weapons. These weapons are kept in armscote and locked up in racks.

Deputy Speaker: (the honourable for) Sri Gading (Johor) woud like to have point of information.

Dr Tan: There is no time. I am going to end.

Deputy Speaker: Yes, Sri Gading.

Dr Tan: I am finishing.

Deputy speaker: Yes, the Honourable is not giving way.

Deputy Speaker: He is not giving way.

Dr Tan: Is the Honourable (for Sri Gading) fluent or expert in military camp security?

Datuk Haji Mohamad bi Haji Aziz ( Sri Gading): Yes.

Dr Tan: Fluent?

Deputy Speaker: Yes, please Sri Gading/

Datuk Haji Mohamad: Thank you Mr speaker, and my colleague from Kepong. I feel that the problem of Sauk as brought up by the Honourable for Kepong, (or does he agree?) stop it straightaway because this is connected with national security and the (incident) sacrificed lives. This is a court case. Don't politicize it in this august House. It is better that we wait for the court judgement. Thank you.

Dr Tan: Mr speaker, Sir, I don,t want to touch on the court case. I am only discussing security. Mr Speaker also knows it clearly. I am debating standing operative procedure. What have we got to do in the for ward position. This is not a (military) secret. If you really want to point this out, then the Defence Minister himself had a public demonstration to put M16 rifles into the Pajero (four-wheeled drive jeep). That was subjudice.

Here… I am not dealing with subjudice. I am only talking about security matter, not personalities in the Sauk incident. I am only talking about how we can make use of the RM 7 billion allocations to improve defence and security. (The Honourable for) Sri Gading, we ought to go back to think about it deeply: how do we together improve the weaknesses in the Malaysian defence and security.

It is not possible for a person or a group to enter the camp in a forward position. If this type of incident happens especially as big as this, the commanding officer or the brigade commander or the division commander must be taken off the post immediately. The Defence Minister must think whether it is his responsibility when there is such a serious weakness in our security. Since it is not easy for any group to get into the camp, there might be an inside job: the camp was taken over by our enemy.

I cannot accept that this type of incident could happen. I know only a little bit of military matter. Because of that, I…

Deputy Speaker: Yes, Kuala Terengganu.

Dr Syed Asman bin Syed Ahmad Nawawi: Thank you, Mr Speaker. What has been mentioned by the Honourable for Kepong is a serious matter that must be looked at by all. I would like to say that there were at least 15 contradictions as reported by the press in the Sauk incident.

Let me read one: news carried by the Star on 6 July 2000 about P. Ramlee song. First, The Star on 6 July said: "The army carried out sporadic firing at 12.50 a.m. but the deviasionists replied with a P. Ramlee song believed to be played on the cassette player for about three minutes." Contrarily, The New Straits Times on July 2000 carried thus: "commandos also use a rather of bit of psychological tactic P. Ramlee songs were played and shot fired repeatedly into the sky as a warning to the criminal, there were no way out."

The Honourable, this is serious, contradictions between the major papers, The Star and The New Straits times. This touches on the credibility of our armed forces, our defence.

Dr Tan: Mr Speaker, naturally there are disparities in various reports. Because we respect the court, we do not mention the details. However, we should pay attention to our security, how together we can improve the weaknesses in military camps, shores and islands.

During the July session in the House, I proposed a motion under the Standing Order 18 on the Sauk incident. The Speaker said that the Government would like to present a White paper on it. When will the Government present the White Paper?

I

Dr Tan Seng Giaw