Friday, December 17, 2004

Water Commission Abandoned

On May 21st 2004, it was reported that "The government had put on hold the privatization of water supply in some states until a regulatory body to monitor water management is set up.

“I urge on-going privatization schemes to hold on to your horses because without benchmarks, the Government will in the end, be left with something unmanageable,” Dr. Lim Keng Yaik told reporters in KL on the 20th May.

Dead serious about improving the quality of water supply and services in the country, the Government is moving to set up by the end of this year a commission to be the sole regulator of the nation’s multi-billion ringgit water sector.

"We hope to do it by the end of this year," Dr Lim told the New Straits Times (March 3, 2004, NST). "I have to implement the National Water Council decision of last year for the Federal Government to take over the management of water from the States." To facilitate the establishment of the proposed National Water Services Commission, new legislation or even constitutional amendments may be necessary," he said. The proposed commission will oversee water supply and related services in all States except Sabah and Sarawak.

On July 27, as reported in StarBiz, Dr. Lim was reported to say that the Government was not asking for the “impossible” when it asked water operators and independent power producers to renegotiate their terms of agreement under the current structure of its privatisation scheme. Water, Energy and Communications Minister Datuk Seri Dr Lim Keng Yaik said the Government was merely asking the players in these two sectors to consider a new holistic structure in the utilities segment to make it more financially viable. “Many banks have come forward to offer their expertise to finance such projects and this shows that utilities projects are bankable,” he told a seminar in Kuala Lumpur yesterday. The Government was expected to invest RM50bil over the next five years to improve water and sewerage services, he said, adding that the amount was a third of the total to be spent under the 9th Malaysia Plan. He said given the huge investment, it was the ministry’s objective to establish a new model for the utilities sector, which would attract private investment and enable the industry to be self-financing and able to deliver to consumers first-rate service at a reasonable tariff.

On August 6, a group of 15 organization and associations, headed by Selangor Malay Chamber of Commerce and SYABAS Chairman, Tan Sri Rozali Ismail submitted a memorandum, addressed to Prime Minister calling on the Government to speed up the privatisation of water supply, if it had decided to do so. It was handed to Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal during a dialogue with the Selangor Malay Chamber of Commerce here today. Tan Sri Rozali Ismail said frequent water supply disruptions, poor water quality, low water pressure and other forms of water supply problems had consistently affected consumers. Among the points raised in the memorandum was that consumers were now having to purchase individual water filters as a result of poor water quality. Another was that consumers do not want to hear continuously about financial difficulties and the hassles of government bureaucracies before any suggested solution is put forward. An example is the setting up of the National Water Commission. The time that would take for it to be set up has been used as an excuse for not implementing remedial works and integrated actions to solve the problems. Another point raised was that inefficient management and planning of water resources had contributed to the increased level of water lost through leaking pipes, burst pipes and rampant illegal supply connections. These are the factors why water is not a revenue earner. Rozali said if immediate steps were not taken to solve the problems, it would be the consumers who would suffer and subsequently their businesses would be affected in many ways. "Consumers are often informed of the problems causing the lack of water supply but they are not being solved," he said.

On the same day, The Star reported that Dr. Lim had gathered a group of industry players to voice their other concerns pertaining to the water privatization scheme. The water industry players have urged the Government to review some of the contracts awarded by some states, saying they are inconsistent with the current plan to centralise water supply operations in the country. They said some of the contracts were only awarded recently, but not through the Economic Planning Unit (EPU), which oversees privatisation projects. “There could be some irregularities in the way certain contracts were awarded and they should be reviewed in the spirit of creating a level playing field for all water industry players,” an executive with one of the companies told StarBiz. Such concerns were voiced by industry players during a series of meetings organised over the past week by the Ministry of Energy, Water and Communications. “Most players in the state are unhappy about how some of the water contracts were unequal with one company enjoying higher rates than the others,” the executive said, adding that in one instance, payments received by a water company from the state government were based on its total capacity rather than its actual production, as was the case with other water firms. The difference in contract pricing, he said, had resulted in a higher water bill for the state water body, Perbadanan Urus Air Selangor Bhd (PUAS), which had to pay for treated water it did not use. In the long run, such contracts would also disadvantage consumers, the executive said.

On December 9, StarBiz reported that the Government has awarded the privatization of the management of water supply operations in Selangor, Kuala Lumpur and Putrajaya to Puncak Niaga group and Kumpulan Darul Ehsan Bhd.

On December 16, Dr Lim Keng Yaik was reported to say that “Klang Valley’s six million water consumers must be prepared for a 15% tariff hike in a year’s time.

Thus conclude the episode of National Water Services Commission Plan that most likely will not come into fruition, after all the HUHA...

Tan Sri Rozali had won and Dr. Lim can now think of retirement.

For the past many months since the loud proclaimation that the National Water Commission must be set up before the finalization of the water privatization scheme and the firm and unwavering stand of Dr. Lim, I thought, Malaysia now has ONE MINISTER who dares to stand tall and firm and will see his vision through reality. I stood by him, believing that he would not budge, that he is fully convinced that the Water Commission was what we need to resolve the long-term water problem and to set the standards for all other Ministers to Benchmark.

Alas, for whatever reason, either political pressure or self-weakness, the supposedly firm and courageous Minister falls, hard into the garbage bin.

PUAS $1 billion problem is no big deal for the government if they wanted to inject those money into PUAS. The Government can just get EPF to pay by way of issuing Government securities to EPF. So, the excuse that PUAS is in critical and dire straits is paranoid. The truth is, Politcal Maneuvering and Kelptorism.

It concludes that, we actually do not have a man strong enough to stand tall and willing to stretch his neck out, if necessary to be chopped, for the sake of his Vision, Mission and Objectives in the best interest of the Rakyat.

At such, the loser is not keng Yaik, but the Rakyat who will have to pay 15% extra in one year time and thereafter, .....only you can predict the outcome, the price of privatization.

God cannot help those who can't help themselves - the Rakyat!

God certainly help SYABAS ....and it's truely Syabas to Rozali.

Thursday, December 16, 2004

"5 Class F Contractor can becomes 1 Big A" says Samy Vellu

Samy calls 40,000 Class F Contractor to merge into 8,000

Datuk Seri Samy Vellu has suggested that the 40,000-odd Class F contractors merge into about 8,000 companies to bid for major government projects. He said it would be difficult for contracts to be given to individual Class F contractors. “We want to help the Bumiputra contractors but they also need to have vision and merge to get the projects,” Samy said.

I had the opportunity to talk to a few Class F contractors on this matter to see their reaction to the suggestion. The reaction are that:

As Class F contractors, they are short of funds and even if 5 were to merge into 1 as suggested, it would only equal to one bigger poorly financed contractor and they would still be unable to compete with the big boys who had the resources and connections. If 5 of them merge, and try to tender for a big contract, say, Class A or B, (for contracts that are $10 million and above), the performance bond alone would amount to $500,000 for a $10 million contract (5% of contract sum), of which they will not be able to afford. Class F contractors are companies below $10,000 paid up capital and 5 of them will add up to $50,000 paid up (and the paid-up had been fully utilized for setup of office and administration).

It can only be viable merger if the government will waive the performance bond and advance payment bond. That, the Government had to decide if they are absolutely sincere to help the Class F contractors.

Apart from the above issues, the main problems with current Class F contractors is the lack of projects for the 40,000-odd contractors. Big or mega projects are awarded to gaint contractors who would not sublet to Class F contractors due to lack of experience and resources. At such, they had to depend on small projects of which the income from their project will not suffice to cover their expenditure.

If the Government wants the Class F contractors to succeed, there is a need to look into the funding of their operation and providing free training and guidance to them over a period of time so that they will grow in their knowledge and competencies, at the same time, make a little extra money to feed their family, and hopefully, any extra cash leftover, will be used to increase their working capital.

Would the Government be willing to provide the needs of these contractors, or are they going to keep talking and suggesting solutions that are insidious?

Cakap Boleh, Bikin Tak Boleh. 1+1+1+1+1 = 1 Big F

Monday, December 06, 2004

Sarawak Bridge Projects Delayed

Two bridge projects in Sibu and Lundu have been delayed for far too long.

Works Ministry parliamentary secretary Datuk Yong Khoon Seng said the Government wanted to ascertain the reasons for the delay.

Datuk Seri Samy Vellu will visit and inspect both the RM96 million Durin bridge project in Sibu and the Batang Kayan bridge project in Lundu to find out the causes of the delay.

The Durin project started in 1999 and was supposed to be completed in 2003. The completion date had been extended to December next year (2 years delay???) due to the difficulties of piling works caused by strong river currents.

The Batang Kayan project was supposed to be completed in 2002. It was submitted that the tender price was too low and the contractor could not continue with the project.
Does any of my students knows of or are involved with these projects? Please tell me what happens!

Friday, December 03, 2004

The Third School without roads in Johor Bahru

SMK Mutiara Rini 2, located near Taman Mutiara Rini in Johor Bahru was supposed to have opened in 2002 was unable to take in students as there was no access road leading to the school. The school has yet to be connected with electricity and water supply. This the the third school in Johor who does not have access road. The other was SMK Tanjung Puteri Resort and SK Tanjung Puteri Resort which had been ready for 3 years. In both the later cases, the developer did not have the funds to build the roads.

Millions had been spent to built schools but are unfit to function.

Did we had a Ministry of Education and is there a Monitoring and Control system within? Or, did they had a Reactive System - i.e., attend to the problem as it arise (or as we receive complaints)?

Pak Lah says the Government will use KPI to measure performance. Does the Government knows:
WHAT to measure, HOW to measure, WHEN to measure, WHERE to measure and WHY measure???

The fundamentals of Performance Measurement System (PMS) is that the design of the performance framework that measures:

what we cannot do,
what we didn't do,
what we won't do, and
what we have yet to do.

The design analysis of the PMS is based on the WHYs of it. It should incorporate the Six Thinking Hats.

It must emcompass the evaluation criteria together with the design of the monitoring and tracking system of:

how we are going to get them (the performance),
when will we get them, and
what is the acceptable level of competency and efficiency.

In essence, it means we measure what was not performed and what that was performed which are below par-excellence, but that which need to be performed to an appropriate level within the system to be successful. It will also deal with the people within the system who consistently fails to achieve them over a period of time which is target-set and predefined by the management. The relative use of Benchmarking is not to set similar standards as your competitor, but to use the competitors performance level as a guide to achieve competitive advantage and sustainability of performance over a predefined period of time, i.e. before your competitors starts to overtake you in your game plan.

The system should also be Dynamic, NOT Static.

The system cannot, and should not be generic in form, that is, you cannot measure everyone with the same criteria - same standard evaluation criteria and same expectation.

Everyone in the company is an asset of different value and cost, acquired at a specific price, to perform a specific level of functions and an expected level of efficiency and competence. An asset (Human Capital) acquired at a low price cannot be expected to performed at the same level of another asset which is acquired at double the price. In another word, we pay for quality and we expect the minimum quality results. Similarly, if we pay peanuts, we should expect monkeys.

At such, the design of any PMS has to be dynamic to ensure fairness and reasonableness, and justify investments in Human Capital Management. At the same time, the system must also provide a channel for the asset (employees) who have the talent, capacity and capability, and the energy to produce performance beyond their current assignment and excel beyond it.

Thus, the dynamic system must have sensors and actuators to capture and recognize these potentials, groom, educate and train these potential people, and provide the necessary infrastructure, tools and techniques that are necessary for them so that they would work their way to achieve excellent results and productivity beyond their assigned level of responsibilities, to an optimum level of performance and productivity.

With this excellent results, it will translate to optimum Return of Investment for the organization and the shareholders, and at the same time, these assets (people) are rewarded accordingly. The appropriate Reward System will motivate the people to continually seek improvement and ensure the organization's sustainable performance and results.

One additional point to note is that, the system must be designed to ensure the appropriate integration of the various functional managers and communication needs that addressed the necessary cooperation and co-working with each other, that which is necessary for the achievement of the ONE Corporate Mission, Goals and Vision.

The Motto is: "Together, We Succeed, Divided, We Fail - and the Competitors WINS!"