After years of intense lobbying, the collusion of politicians and mega business has finally won. Malaysia and Singapore governments had finally inked the agreement to build a High Speed Rail(HSR) between the countries.
If you’re interested in professional business
commentary on this matter, please stop reading and go to http://www.kinibiz.com/story/corporate/4688/capitalland%e2%80%99s-danga-bay-deal-a-steal.html
or other business media.
Firstly, I cannot dispute that this project will be a GDP
booster on steroids. We could also at a stage that such a HSR link is the the
next logical step for both countries development.
People of different political divides will celebrate the supposed
HSR economic multiplier effect will give our economy a good kick in the ass.
Even the most harden Pakatan Rakyat might welcome some of the projected
economic benefits from this project (namely employment). If Mirzan or Mokhzani gets a huge piece of
the pie, our ‘Grand Malaysian Champion’ Dr Madey who is very anti-Singaporean
publicly will also rally the poor Malaysians to support this project.
I am assuming that our supposedly more technological advance
Singaporean counterpart will help eradicate all the shitty stuff normally
associated with tera Malaysian engineering projects. Also assuming there are no
political and complicated security procedures. And also assuming that the traffic
are smoother than a baby buttock from the HSR train stations to other parts of
these two countries.
There may be still many social and economic landmines ahead
for this project. Being just a closet socialist, I am neither an economist nor a
sociologist. Please spare a few minutes for my uneducated worries:
1)
Effects of Land Price Inflation
1a) The land moguls who had cornered strategic land cheaply
will become even richer (in an explosive way). One of the most extreme
lobbyists for this HSR is Frankie Yeo (YTL). He made no secret of his desire to
drive KL land price to those giddy heights of Singapore with this HSR being the
critical piece of his plan.
1b) It's all fine and dandy for these supposed entrepreneurs
to become more filthy rich. But what about the working class who are already
borrowing up to their nose just to buy a house in Puchong? Or maybe they can
just buy respirator device and borrow until they are fully submerged.
2) GDP Growth vs Real Wage Growth
2a) The cukongs and politicians will tell you not to worry .
'The rising tide will lift all boats'. One of the favourite propaganda among
capitalists and fascists . However,
there is a frequently omitted part that says 'When the storms come, the sampans
will get slammed onto the hull of the cukong battleships and later sliced up by
their propelars'. It is just another variation of the excuse for trickle down
economics.
2b) Trickle down economics is more of a dogma then a proven
methodology (or pedagogy? Sorry I am no graduate student). It never really
worked in Malaysia (or US, Mexico, China and maybe Singapore as well). If
trickle down had work, Malaysians would be having Swiss living standard by now
from all of Dr Madey’s long list of tera projects (Sorry, but cannot resist
taking a shot ex-PM Goh as well).
2c) RM362 per square feet for land anyone? Land only and may
be swampy one also.
Even without HSR, some lands are already priced out of the
ordinary folks. And what was our proposed minimum wage again? RM900 per month.
2d) The public and private sectors of both countries are
overly reliant if not addicted to growng their economies by inflating land price.
Many are still waiting for their real wage to get stimulated from all the
supposedly real real-estate hype.
3)FDI or Exportation of dirty jobs?
3a) Jobs, jobs and
more jobs . No doubt about it. Back to the earlier point. Theoretically
speaking, when demand for labour rises wages will tend to follow also. But if asset price rises at a faster rate,
then labour share of income/wealth will actually fall. Will the wages
eventually catch up and really get stimulated? Maybe I should be more patient.
After all, it is only a few decades since Merdeka.
3b) There seem to be
a trend in the wealthy parts of the world to dump some of their not so prime
population somewhere else.
3c) Don't get me wrong. I am not discriminating against the
people and the jobs involved. Singapore exporting their addiction to foreign
workers, housing and aging problems can actually create huge demand for
services and new employment in Malaysia.
3d) But knowing Malaysia as being even more addictive to
foreign workers, the rapid influx of more Singaporean demand may cause quite a
few complications here. Malaysia if you are not already aware, has an almost unresolvable
illegal (maybe some are kopi-o legal) foreign population problem.
4) Clawing Back Free Lunch
4a) Malaysians are already very familiar with land scam
modus operandi that dishes out free lunches to the cukongs and cronies. From
PKFZ, Kg Buah Pala, MIC Selangor
building, Sabah UMNO building, Tun Daim projects and many more.
4b) Malaysia sadly still doesn't have a sophisticated enough
legal and tax system to prevent these obscene profiteering from occurring again
and again. To introduce a Godzilla-esque project like HSR may lead to the
largest daylight robbery binge in Malaysian History.
4b) At least introduce some initiatives for more
comprehensive RGPT and land tax structure. Current RGPT is only applicable for
the first 5 years after real-estate acquisition. They are not a big deterrent
against obscene profiteering. More taxes sound sounds counter-intuitive, but
please remember that it will always be difficult to put those slicker than
Brylcreem cheating cukongs and cronies in jail.
4c) So the 2 taxes mentioned above can at least claw back
some of the ill-gotten gains and use it to fund public services. Proper land
tax schemes can also have some democratic effect by deconsolidating capital
from the hands of mega corporations and federal agencies in the capital cites.
4d) These taxes can help reduce the amount of hard earned
money and easily borrowed money being capture as rent into the private pockets.
Personally I see land as a natural resource similar to water and air. It should
not be monopolised or oligopolised by cukongs and cronies.
5) Financing
5a) Contrary to what most people think, this sort of projects
is not funded by rich private entrepreneurs. Sure Frankie Yeoh might throw in a
big stash of money from his own pocket. But most often these cukong
corporations will just borrow billions of electronic money created from overseas
(mainly offshore tax haven). And they will use Malaysian government guarantee
as collateral.
5b) The other financing method would be government running bigger
deficit through internal borrowing. Which might not be a bad thing but feared
by general public (especially Pakatan supporters).
5c) The billions borrowed will be spent very fast on
acquiring land from cronies, commission (halal and non-halal) and subsequent construction
cost. We can only assume that a seemingly feasible project like this will
generate enough revenue to payback those offshore banks right.
5d) The rate of paying back depends the passenger volume.
HSR are different from MRT and LRT. The distance and local economies that such
project spanned varies tremendously. So it is very difficult to compare this with
other HSR projects in other nations.
5e) For PM Lee to compare our HSR to that of London and Paris
is rather vague to me. Maybe Singaporeans enjoy a Parisian way of life but
Malaysians certainly do not speak Queen's English anymore. There is a huge
purchasing power divide both countries and those in Western Europe. We
certainly cannot compare this HSR with Guangzhou-Shenzen link that spans 2300km
and billions of people.
5f) The technology involved are not only expensive but can
vary greatly in terms feature and maintenance cost. Will the appropriate
overseas rail contractor be chosen? Can the average Malaysians or perhaps
Singaporeans afford the ride on such trains?
5g) Malaysia's only HSR so far is ERL by none other YTL. It
was supposedly the cheapest HSR in the world. http://www.ytl.com.my/erl.asp
But still it to be needs to be subsidised by the Malaysian
government. http://www.thesundaily.my/news/604621
RM35 per ticket is not cheap even for Singaporeans.
6) True Business viability
6a) How about 2nd Link then? The last major engineering
joint venture between the two governments. After more than a decade of
ulu-ness, the area is at least booming now. Probably sustainable in the long term
if political obstacles are overcome.
6b)Anyone remember Dr Madey Multimedia Super Corridor.
Everything was in place buildings, infrastructure and research funding. It took
off briefly, landed quietly and pretty quiet till today.
6c) Infrastructure projects will boost GDP numbers no doubt.
However a balance qualitative approach is needed to create a high value added
business sector to complement the general economy. Both countries are struggling
to innovate out from their low labour cost oriented economy.
6d)Malaysia seems to be going back to the basics. Natural
resource and agriculture are slowly regaining the limelight after being
overshadowed by Dr Madey rapid-fire industrialization crusade. Singapore has
some success in the niche technology areas. However such early successes has
not prevented Singapore economy from being more and more financialised.
6e) A good read on the effects of infrastructure investment
at various stages economic development can be found here.
http://econsmalaysia.blogspot.sg/2012/10/japans-lost-decades-not-quite.html
7) Fundamental Economic Problems and Organic Growth.
7a)Sure we want improvement of living standards that this HSR
project will probably bring. But we should also be focusing on how to prevent
projects like this from making worse more fundamental economic problems. Such
as managing foreign population, a more sustainable wealth/income gap and
profits going offshore. A good read on how goodies are shipped out of the
economy by MNC (maybe even GLC also).
7b) Irregardless of this HSR success or failure, common
folks like us are going to repay the debts incurred by taxes or more
borrowings.But do we get some real influence on the design, land acquisition,
tendering process and concession terms.
7c)If not, can our supposedly elected governments, trusted
banks and mega contractors do a good job in channeling these borrowings to good
use and minimizing leakage? The more mega the projects are the more likely it
is to be less democratic.
7d) The governments of both countries are seen as
increasingly shaky in their relevance and mandate. An alternative would be
putting more reforms into these intuitions before embarking on probably the
biggest infrastructure in history for both countries.
A slower but more manageable organic economic growth(coupled
with tax reforms) may not be anyone cup of tea. But maybe a few billion
Ringgits less in leakages .
(And shit, I am starting to write in point form like Dr
Madey)
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