Yesterday's posting [read back here] on Carlyle entry into Malaysia via Middle East and American confidence that TPPA will be signed in December are serious matters.
Carlyle's move is deceptive and gullible Malaysian could be hoodwinked into believing the country is getting flow of investment from Muslim brothers in the Middle East. Knowing so well that Arab are difficult lots. When it comes to money, there is no Islamic brotherhood sentiment.
The American statement confirmed our posting, "New twist to the American TPPA manouvre." Dato Najib commented that he did not see the TPPA be signed in December. But, the Americans are confident that the Salt Lake City special meeting that is to today till Sunday, 24th will be successful.
It means the American planned arm twisting, conniving, and horse trading manouvre on the chief negotiators will work. It could mean Malaysia maybe willing to compromise on something in exchange for something else.
Although it is a consolation that our negotiators have been steadfast in our demand and we've wrote an article "Restoring trust in Government" in early September, this is the stage we fear most. In the past, Malaysia had traded "horse radish" for auto concession in the Japanese FTA.
The area we should worry is on the investment chapter term. Most of the attention is on trade but the real McCoy for the American is investment and in particular financial services.
Unhindered entry to invest and divest in all the global market is a US$900 billion business. That is accaording to one private estimate. The multiple of real economy to the 'financial' economy is high in US but significantly lower in the rest of the world.
And, it is in the area of investment where they tie up and take away a country's sovereignty using strange legal process and requirements. The case study on the devastation of American's free flow of investment is in the US-Peru FTA. There is an example in Kemaman.
More on that in a later posting.
In Salt Lake City, horse trading could see Malaysia compromise to accept certain terms imposed by the American and supposedly they accept certain terms of ours.
Bear in mind that in the TPPA negotiation, the American is offensively making demands for their MNCs' interest. Malaysia and few other countries tend to be defensive to naught this and that or playing delay tactics.
What will Malaysia compromise?
Before answering, let's see recall back the issues. The area of negotiation are as follows:
The ares numbered 14 till 21 are areas not discussed in other trade negotiations be it FTA or multilateral trade groupings.
Compromise in Intellectual Property Right is not likely to happen because it is basically the American against the rest of the "TPPA countries." Furthermore, there are thousands of issues raised and it will hinder the signing in December. It is the IPR documents that was leaked by Wikileak.
From the list, there was a tip-off that government will compromise on Procurement. It is an area ACCCIM like to see the relaxation and many non-Bumiputera does not want to see any such preferential treatments to Bumiputera.
Some shallow politicians could just agree in order to get Chinese votes out of the believe that ACCCIM can influence and deliver. Remember we wrote here at the end of "businessmen disguising as lawmakers, policymakers, and politicians."
Few of them are strongly in favour of TPPA. No need for us to repeat the name of the bearded one. Logically, there must be some form of self interest motivation to compromise on the honey pot of government procurement.
The issues in summary is seldom explained enough, thus one would think it is only about procurement. So let's pick up from Bantah TPPA open letter here and extract the part on procurement, below:
Government Procurement & SOE: Under this provision the government has to allow companies from the TPPA countries to participate in government tenders beyond certain thresholds and without imposing offsets. It was announced on 1st August by MITI that the thresholds5 have been agreed at about RM23 mil for construction projects and at about RM 600,000 for non-construction bids in the long run. Beyond the thresholds we will be prohibited from allowing preferences for locals or set aside for Bumiputera or to otherwise pursue other socio-economic and national objectives.These "businessmen disguising as lawmakers, policymakers, and politicians" may see a loss in the compromise on procurement but it is a move that will politically endear the government with businessmen, and non Malays. The impact from politically indifferent and larger majority of young voters is likely to be minimal.
There are no provisions for thresholds for Malaysian state-owned enterprises (SOEs or government-linked companies). Thus, all procurements by SOEs would have to be opened to all foreign companies from TPPA countries. To illustrate this, Petronas for example, will have to open every single tender for both construction and non-construction services to foreign companies from TPPA countries, and will thus not be allowed to exercise preferential treatment for local and/or Bumiputera vendors, suppliers, etc.
The concept of National Treatment – which requires all foreign investors to be treated no less than local companies – would be in force. Consequently, SOEs and EPPs (companies and projects under the ETP) which invariably are recipients of some form of Government’s assistance (grants, soft-loans, subsidies) may be penalised for such assistance when in competition with foreign companies from TPPA countries.
In return, the suspicion is that they will get the prime pieces in the SOE (or as we called GLC to emulate Singapore) that have to be sold off or closed up. It may not be quite noticeable and the sell off could be seen as a usual privatisation process like the sales of Avenue to ECM Libra, attempt to sell off MAS to Air Asia, and many others.
The lucrative ones will be those that have some form of monopoly or competition like utility companies. Also, there will be companies in duopoly or licensed businesses like telco, etc.
Remember our posting on the cigar and wine bar, The Escobar here and here?
Well ... there seems to be a work-in-progress. Read below:
Workers Unions, Associations Urge Energy Commission Not To Split TNBThe public discussion will be on whether one should break-up TNB and create a competition. After all, even in one state in the US, one can find several power companies.
KUALA LUMPUR, Nov 14 (Bernama) -- Four Tenaga Nasional Berhad (TNB) workers unions and associations on Thursday urged the Energy Commission (EC) not to carry out the proposal to split the national utility company into five separate entities.
"The EC's announcement has caused a great deal of uncertainty among the staff. We ask those who intend to split the company to respect our request and not play up the issue anymore. We're prepared to defend TNB in any way we can," the group said in a statement here.
The group were comprised of the TNB Executives Association, TNB Staff Merger Union, Tenaga Nasional Junior Officers Union and the TNB Safety Unit Association.
On Nov 8, a local daily reported that the EC had proposed for TNB to be split into five different entities under the Incentive-based Regulation to enhance the efficiency of its operations and better monitoring of each business unit.
The group have also sent a letter to the EC today to inform it of their intention to visit the commission soon to obtain further clarification.
There will also be another emotional public discussion on an impending tariff hike which is due. Since property assessment is up after no adjustment 21 years, it will strengthen their argument for tariff hike. .
Our concern is: Could it be a fire sale in preparation of TPPA?