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Monday, April 8, 2013

'We beat Alam Flora wastage, Syabas' leakage next ( Malaysia Kini )

COMMENT The last thing anyone suffering extensively from the recent water cuts wants to hear is more excuses or people in power pointing fingers, blaming each other.
I won't pretend - this article has very clear views over who and what is behind these water cuts.
Nevertheless, the goal of this piece is more to argue - on the basis of empirical evidence, not mere rhetoric - that despite this unhappy mire, there is a light at the end of the tunnel.

It occurred to me recently that one of the best ways to understand and contextualise the water problems in 2013 is to look at the rubbish collection problems in Selangor in 2012.

How Selangor beat Alam Flora

In 2012, the time came to renegotiate the contract between Selangor's local councils and Alam Flora.
These contracts were ,of course, remnants of the pre-2008 BN Selangor government. 
Two characteristics played a significant role in bringing Khalid Ibrahim to where he is today - financially, professionally, and politically.
The first is the ability to recognise when something is unjust and unfair. The second is a burning desire to do something about it.

The Alam Flora contracts were exactly that: unjust and unfair.
For purposes of simplification, let's imagine: let's say ultimately, Ah Seng is the man who collects the rubbish from in front of your house.

The rubbish collection problems last year can be boiled down to this question: how many layers of contractors are there between the state government and Ah Seng?

The simple answer before 2012 was: far too many. Any business man knows, the more the contractors and subcontractors, the higher the costs - after all, everyone needs a slice of the pie, correct?

Khalid was not having any more of this.
There was a fair price to be paid, and damned if he was going to spend one cent more of the people's money than was actually needed to get the job done. He insisted that Alam Flora lowered their prices.
Arrogantly assuming that Selangor couldn't possibly do without them, Alam Flora then decided to take a hardline approach and started playing some high stakes poker - refusing to budge and declaring their intent to defend to the death their high prices. 
NONEKhalid said that in that case, thank you very much Alam Flora, your services will no longer be required.
He then directed all the local councils to directly take over rubbish collection duties with immediate effect. From now on, there was to be zero to one layer/s between Ah Seng and his paymaster.

The fallout and transition pains were serious. Added to the steep (re)learning curve local councils had to endure in dealing directly with rubbish collectors, there were numerous reports of sabotage - mounds of rubbish mysteriously appearing out of nowhere, rubbish collectors being intimidated by gangsters, and so on.

It seemed like someone was trying to force Khalid back to the negotiation table on his knees.

They had, however, another thing coming.

As he has done most of his professional and political career, Khalid stuck to his guns, put his faith in the high level of professionalism he insisted on from civil servants, and rode out the storm. 
segambut dap mp community problems 130208 garbageThere were casualties, no doubt. Even the most hardcore Pakatan Rakyat supporter can be expected to be in a foul mood when garbage is piling up on his streets.

Wavering however, was not an option - there was to be no alternative to success. Every day, various committees vigorously pursued solution after solution for the never ending multitude of problems that kept popping up.

It did not happen as fast as everyone would like, but that success did in fact come - today, we hear little to no complaints about rubbish collection. Things have gone back to normal.

Well, not completely normal - the state government saved a staggering RM 100 million a year by eliminating Alam Flora as a redundant middle man.

These savings were immediately pumped back to the rakyat by reducing assessment rates for low cost housing by 25% - substantial savings for low income earners. 
Syabas the next Alam Flora?

What lessons from the Alam Flora case can we apply to what's happening with Syabas?

The first is the similarities in the crony experience. Both Alam Flora and Syabas were companies that got fat when BN controlled both the federal and state governments.
Cronyism, inflated contracts, non-adherence to concessionaire terms became the order of the day, and fat cats got used to opulent lifestyles.

It may surprise some to learn that water privatisation is an exercise deemed by the BN themselves in 2006 to be a complete failure.

azlanThe federal government passed a law called the Water Services Industry Act 2006, which was intended to deprivatise water industries throughout the country.
This process was successfully concluded in a number of BN-held states such as Malacca and Johor.

BN changed their position however, in Selangor after 2008. As usual, principles took a back seat to profits, and BN started singing a different tune.
Deprivatising the water industry in Selangor no longer became an option because it was seen by BN as surrendering a cash cow to someone who wasn't them. What ensued for the next 4 years was a stalemate. The existing laws make it such that Selangor cannot unilaterally take over Syabas, but also that Syabas cannot do very much without the approval of the state government. 

While unable yet to force the takeover, Khalid has also gone out of his way to block as much unethical profiteering by Syabas as possible - including by preventing absolutely unjustifiable hikes in water tariffs, which may have almost doubled by now otherwise.

Feeling the pinch, Syabas is clearly desperately missing the good old days, where it was easy to turn mind boggling profits at the expense of the rakyat and the state government.

NONEThat desperation has turned into desperate acts. As has been written before, when you control all the water taps, it's easy for directly or indirectly caused water cuts to conveniently happen at expedient times. I for one, am catching a whiff of bullying and intimidation.
Just like Alam Flora, Syabas looks like it wants to try a little hardball, and take a seat at that high stakes poker game.

No doubt, whenever water cuts happen, every BN politician and spinmeister will inevitably mention Langat 2 - as if this multibillion white elephant that will take years to finish will solve any of our current water problems.

Syabas and their BN sponsors have been whining about Langat 2 for years, swearing on their lives that it's not a waste of money or a kickback laced megaproject, but instead the only way to ensure enough water for Selangor.

Khalid's response? "The way Syabas mismanages everything, even 20 Langat 2's wouldn't solve our water problems."
Is there any reason he or the rest of us should mistrust Syabas or its management when it comes to question of what is and isn't a waste of money?

Firstly, Syabas' non-revenue water (NRW) stands at 33%. That means a third of the water it processes is unaccounted for and wasted (which would be just as high, regardless of new sources of raw water such as Langat 2).

Syabas has failed for years to bring this percentage down. How do other cities/states do in terms of NRW? Dhaka, Bangladesh - 29% (we should think about that, the next time we make fun of Bangladeshis), Eastern Manila - 11%, Germany - 7%, Denmark - 6%, and Singapore - 5%.

Syabas also spent millions of ringgit buying pipes from Indonesia. Sourcing such resources internationally was in the first place against the terms of the concession.
It did not help that these pipes were bought from an Indonesian company conveniently owned by the Syabas chairman himself.

NONEIf you have forgotten who that chairman is, you can always check the huge sign atop the Syabas headquarters, named - in grand Middle Eastern dictator style - after the chairman himself, Wisma Rozali (Ismail) (left).
This is the same ex- Umno Selangor treasurer who pays himself RM425,000 a month, and then claims that Syabas was not given enough money by the state government to fix its infrastructure. Khalid once remarked at a press conference: "If they have no money, they shouldn't be in business."
Indeed, to lend money to a company that has lost it consistently, you'd have to have the intelligence level of, well, the BN federal government.
Comparing the financial performance of Syabas and the federal government to that of the Selangor government, we see that Selangor has already completely outperformed them in every imaginable financial sphere - increase in financial reserves, elimination of debt, a balanced versus deficit budgets, as well as elimination of corruption, wastage and leakage.

Who would you rather have running the water industry?

No to bullying and intimidation

When it comes to business and public funds, Khalid Ibrahim is not the kind of man you want to have a staring contest with.

Just as it beat Alam Flora's wastage, the Selangor government has every intention of similarly beating Syabas' leakage.
Just like in the Alam Flora case, we may have to brace for a painful interim, but with a real hope of better water management for future generations.

NONEIn the meantime, the Selangor government knows, of course, that first and foremost, people must be supplied with regular water.
When water was cut, it was not accusations that were sent out first, but water trucks from neighbouring local councils.
Just like in the rubbish collection crisis, select individuals and committees were tasked to daily solution oriented responses to any crisis that emerged. When others try to force their hand, Selangor is ever ready to remind them that there are always other options available to the well-prepared. 
Ultimately, when what is at stake is the financial and natural resources that rightfully belong to the rakyat, as well as efficient, sustainable, and just management of the water industry for the good of our children and grandchildren, there will be no giving in to bullying and intimidation.

1 comment:

  1. Thank you this was quite informative. If I might add a suggestion - another formal font might be more suitable. And maybe a Facebook share link?