Unity government? No, thank you

Let us go straight to the point. All the talk about political parties setting aside their differences to form a unity government is not in the public interest. What does a unity government mean? It means political parties coming together to form a cartel that will protect their interests and not the interests of the public at large. A cartel equals monopolistic power, which means the people will not have a choice of parties or alliances to vote for. It is no different from, say, all the hyper markets like Tesco, Giant and Carrefour coming together to forge a “united hypermarket coalition”. Once that happens, they will not compete with each other but will collude and fix prices to generate exorbitant profits for themselves at the expense of the consumers.

In economics, it is called an oligopoly. In politics, the term is oligarchy. Both have the same effect of concentrating power in the hands of a small group at the expense of the rest of the country.

The outcome of the March 8, 2008, general election is the creation of a competitive two-party political system. This can only be good for the country because politicians and political parties now have to govern better and behave better because voters now have a genuine choice.

But some politicians and political parties want to go back to a near monopolistic or one-party system because they want to go back to their old ways. They do not want to have to be more accountable to the people. They cannot stand to live in fear of being thrown out because voters now have a choice and do not fear throwing out a government that is arrogant and corrupt and does not deliver its promises to the people.

Just as we do not support monopolies in business, we also do not support a one-party system, whether it is one that is dominated by the Barisan Nasional or Pakatan Rakyat.

After 52 years of independence and the slow evolvement of our democratic system, Malaysians finally have a competitive political system that puts real power in the hands of the voters rather than being concentrated in the hands of a few politicians and political parties. Let us not throw that away so quickly because some politicians are not comfortable with it.

Generous borrowing

Eyebrows were raised when Berjaya Sports Toto Bhd (BToto) shares bucked the market’s selling spree last Tuesday. Thanks to its generous dividend amounting to about 30 sen cash and one treasury share for every 14 held, BToto inched up higher to close at RM5.25 even as the Kuala Lumpur Composite Index shed 17 points.

The question that arises is whether it is the right thing for the company to be generous in paying dividends through borrowings. BToto received a credit line of up to RM380 million to part-fund its payout. The sum is 92.6% of its RM410.5 million net profit for the year ended April 30, 2009.

Cynics see BToto’s dividend coinciding with the fact that its parent and sister company Berjaya Land Bhd possibly needs funds to pay bondholders. BLand, by virtue of its 51.35% stake in BToto, will be the biggest recipient of the dividend payout. But is there a real conflict of interest here? Has the BToto board favoured BLand over its other minority shareholders?

Whatever the critics may say, the over-riding matter is that the dividend payment goes to all shareholders — whether big or small. One obvious proof of this is that analysts are hailing the stock as a “buy”.

As such, even if the effect of BToto borrowing money to make a bigger payout benefits BLand, minority shareholders are not wronged so long as BToto continues to be well run. After all, the flipside to the conservative stance of not borrowing money is to have a “lazy” balance sheet, where a firm’s managers do not fully leverage the strength of its books to deliver the maximum returns to shareholders.

Alarm bells should ring if, for instance, BToto directors over-leverage its books or decide to buy unproductive assets at premium prices. As long as BToto sticks to its core business, there is no harm done.

Is there a difference?

Finally, the amount Terengganu received in oil royalty has been revealed. In reply to a question in Parliament, Prime Minister and Finance Minister Datuk Seri Najib Razak revealed that the state received a total of RM15.17 billion between 2000 and June 2009.

Out of this, RM6.86 billion was channelled to the state directly while RM8.31 billion was spent by federal ministries and agencies on projects in the state. The money went to projects such as Taman Tamauddun Islam in Pulau Wan Man, rebuilding Pulau Duyong and upgrading Kuala Terengganu Airport. Conspicuously missing from the list was the Monsoon Cup, which could have come from the allocation given to the state.
Whatever the case, the lack of transparency over how the money was spent is said to be one of the factors that cost former Menteri Besar Datuk Idris Jusoh his job. But has anything changed, even with the new Menteri Besar Datuk Ahmad Said?

Based on the figures divulged, during Ahmad’s tenure, Terengganu would have received RM1.02 billion in oil royalty. It is not clear if any of the money was handled by federal agencies or ministries.

But going by developments since March 8, 2008, the oil royalty has gone straight to the state. Nevertheless, irrespective of who got the money, does anybody know where it has gone to or on what projects it has been spent?

The picture is still hazy. So, has anything changed?

This article appeared in The Edge Malaysia, Issue 760, June 22-28, 2009