YTL BULLET TRAIN KL-SINGAPORE – 90 mins; ACCELERATES Country’s Economy; BENEFIT TNB & IPPs; Achieve 20% POWER Reserve REDUCTION Target

But will the YTL Bullet Train followed the Japanese or Korean Models? Or the German, French or Spanish ones? These trains are runing at 300 km/hr while the one proposed by YTL is at 216 km/h (325 km in 90 mins. With the historical opening of the express rail in April 2004, Korea has joined the league of France, Japan, Germany and Spain and entered into the super high-speed train era.

The above and below are models of Japan's
Shinkansen - a high speed inter city train with
running speeds of up to 300 km/h (186mph).
YTL Logo inserted

The above and below are models of the
Korean Bullet Train. With construction of
the Seoul ~ Busan KTX line, railway passenger
transportation capacity increased by
3.4 times YTL logo inserted

It looks like it will be a certainty that this Bullet Train would have the Government nod in the coming months. It has so much “icings” that the proposal would be difficult to reject. On the government part, its biggest attraction is it might help the government to realize the 20% Power reserve reduction target. Moreover its funding for this RM8 billion mega project is entirely “private finance initiative” type. But will YTL get it as the government is asking for other options.

In an interview with TV3 Exchange programme , YTL Corp’s MD Tan Sri Francis Yeoh said the proposed bullet train to Singapore would not only help accelerate the country’s economy but it would also help to benefit the energy giant TNB and the IPP producers. He `added that if approved, it should also help the government to realize the 20% power reserve reduction target.

He elaborated further “When the 9MP takes off the consumption of electricity would be enlarge substantially if all the projects go on stream. But this (Bullet Train) is yet another project that would consume electricity more.

“On another note the tariff charge paid by TNB to the IPPs between 14-17 sen per KWh is reasonable.”

He added TNB would have to find ways to reduce its debt burden of RM30 billion.

And this is Bernama’s report

“YTL To Submit Bullet Train Proposal Soon To The Government

KUALA LUMPUR, July 21 (Bernama) -- The YTL Group will submit a proposal containing the financial and engineering aspects on the RM8 billion bullet train project between Kuala Lumpur and Singapore to the government as soon as possible.

Managing director, Datuk Francis Yeoh Sock Ping, in an interview with TV3's "The Exchange" Friday, said he believed the project was viable and must start now.

"If we do not implement this and physically put it on the ground within five years, I think we could have lost a golden opportunity," he said.

Yeoh said it would take two years to iron out the process and another three years to build it physically, and this would be on fast-track basis.

Furthermore, he said, it would not be difficult to raise the financing which was considered a done deal given the viability of the project and YTL saw no problem finding serious fund managers and investors

Yeoh said the need to start the project fast was, firstly, the technology was cheap, the land cost currently affordable and it would be environmentally-friendly, running on electricity.

"Technology cost in South-East Asia is cheap. YTL was successful in building the ERL (Express Rail Link) which was considered the cheapest fast train in the world at RM5 million per kilometre as against an average RM150 million elsewhere," he said.

Yeoh said land cost given by the government, especially the corridors, were not expensive today and as a package, the government would pass this to the consumers, accounting for why the ERL charge from the city to the airport was only RM35.

"In the case of the fast train, the corridors to Singapore are not expensive as compared to the land cost in Europe which is higher than technology cost in order to avoid the development area.

"Also, as the train will run on electricity, the project will benefit Tenaga Nasional Bhd and the independent power producers," he said.

On whether the connection to Singapore would be a bridge or underground tunnel, he said, "we are not hostage to civil engineering or geography. We understand the complication of the present environment in discussions between Malaysia and Singapore. We would avoid some of these difficulties. We have a solution."

"If we can successfully negotiate with the Malaysian government, then we will have a chat with Singapore. I do not see any negative sign signal from Singapore on this project," he said.

On whether he foresees problems getting the approval from Singapore, Yeoh said: "I do not say it is going to be easy but I would say that geo-economics are more important than geopolitics especially when there is opportunity and there is the money to do it," he said.

And from

Singapore Business Times, July 20, 2006

YTL announces its plans first but other firms will be considered ; By PAULINE NG ;IN KUALA LUMPUR

PRIME Minister Abdullah Ahmad Badawi yesterday said that the government was open to the idea of a high-speed train service to Singapore and was seeking proposals from interested companies.

He said that property and utility firm YTL Corporation, which was the first to announce its plan for a high-speed line between Kuala Lumpur and Singapore, was not the only company that had pitched the idea to the government.

Mr Abdullah said he had not seen YTL's proposal. 'We are also requesting other companies to submit their proposals. Right now only YTL has submitted the proposal,' he said - without naming the companies.

Under the YTL plan, a train journey from Kuala Lumpur to Singapore, covering a distance of 325 km, would take just 90 minutes - rather than the seven hours or so taken by the present rail service.

http://business-times.asia1.com.sg/sub/news/story/0,4574,200855,00.html?

YTL rail project faces rough ride
It will have multiple ramifications, complicated by S'pore-KL ties

By S JAYASANKARAN IN KUALA LUMPUR ;Published July 6, 2006

ABOUT a year ago tycoon Francis Yeoh briefed Malaysian officials from the National Economic Action Committee, a government agency under the Prime Minister's department, on a plan to construct a high speed rail link between Kuala Lumpur and Singapore.

Mr Yeoh apparently raved about it saying it would transform economic ties between the two countries and that it would take two hours door-to-door to travel between the two cities. 'I came away pretty impressed,' said one businessman who had been invited for the briefing. 'I think it's a marvellous idea.'

It may be easier said than done. According to bankers familiar with the plan, Mr Yeoh had been hawking this project for some time now, even during the tenure of former premier Mahathir Mohamad but nothing came of it presumably because of the prickly bilateral relations that characterised the waning years of Dr Mahathir's tenure. 'We have been proposing this for eight years now,' Mr Yeoh told BT. 'Now that there is rapprochement, let's move forward because this is a great project. It's a no-brainer.'

Mr Yeoh is dusting off his old idea under a new banner: the Private Finance Initiative first articulated by Prime Minister Abdullah Ahmad Badawi in his recently released Ninth Malaysia Plan document.

He said as much to the New Straits Times earlier this week, saying that he would invite all relevant parties to invest in the special purpose vehicle that would fund and build the link. On his invite list: Malaysian Airline System, Singapore Airlines and the airport operators of both cities. Even so, the idea isn't about to take off any time soon.

'This kind of project has multiple ramifications whose impacts aren't known,' said a senior Malaysian government official. 'It will impact both airlines, it will impact the (North South) highway and it could impact the way people live. Singaporeans could live in Kuala Lumpur an vice-versa. There has to be a careful economic impact study conducted.'

Complicating the project further is the present uneasiness between the two countries over the replacement of the Causeway and KL's scrapping of the half-bridge project.

Mr Yeoh's plan calls for a dedicated new bridge to carry the high speed ink. Some officials fret that the new bridge could kill off the idea of replacing the Causeway altogether.

Mr Yeoh said that the project could cost as much as RM8 billion (S$3.5 billion) - 'It's about there, plus or minus'. But a consultant engineer contacted by BT said the figure was a 'guesstimate'.

Even so, there is no doubt that Mr Yeoh would be good for the money. His flagship YTL Corporation is flush and has a RM6 billion war chest.

Mr Yeoh declined to say if both governments had agreed to the project or were even considering it.

'I can't tell you that but if it did not go ahead, I would be very sad,' he said. 'It would be a tremendously missed opportunity for both sides.'

According to other sources, the Singapore government has received informal proposal from KL on Mr Yeoh's idea but they also say that Mr Yeoh has informally talked to several high-ranking Singaporean leaders about the link.

http://www.zoomfinance.com/zf/news/afxnews/afxnews.jsp?

MALAYSIA TRANSPORT MINISTRY SAYS UNAWARE OF YTL BULLET
TRAIN PROPOSAL - REPORT 06-Jul-2006 14:29:00

KUALA LUMPUR (XFN-ASIA) - The Ministry of Transport has not received any roposal on a bullet train service, deputy minister Tengku Azlan Sultan Abu akar was quoted by the New Straits Times as saying.

He said, however, it the ministry receives such a proposal; it will consider the feasibility of a bullet train service from the KL Sentral station to Singapore.

"It may have been proposed to other people but definitely not to the transport ministry," he said.

According to a report by the same paper yesterday, YTL Corp Bhd managing director Francis Yeoh said the company has proposed to the Malaysia and Singapore governments to build an 8.0 bln rgt high-speed rail link to neighboring Singapore.
____

..and from AP report
YTL Corp. to submit feasibility study on Malaysia-Singapore bullet train
Jul 6, 5:37 AM EDT

KUALA LUMPUR, Malaysia (AP) -- Malaysian conglomerate YTL Corp. will submit a feasibility study to the Transport Ministry soon on plans to build a high-speed bullet train link between Kuala Lumpur and Singapore, a top executive said Thursday.

YTL managing director Francis Yeoh said he has spoken to Transport Minister Chan Kong Choy, who wanted to know whether the bullet train link to cover the 325-kilometer (200-mile) journey in 90 minutes was possible.

"It is a feasible project. We will be submitting a detailed report on it soon," he told The Associated Press, but didn't give any timeframe.

Yeoh was rebutting comments by Deputy Transport Minister Tengku Azlan Abu Bakar who was quoted as saying in Thursday's New Straits Times that the ministry was not aware of YTL's proposal.

Yeoh told the AP on Wednesday that the company was already in talks with the Malaysian and Singapore governments, and hopes to begin construction in two years. The plan is to complete the estimated 8 billion ringgit (US$2.2 billion; RM8 billion) project in less than 5 years.

He said the company plans to raise funds for the project through the global capital market.

The Kuala Lumpur-Singapore link could connect with an express train from the Kuala Lumpur International Airport, which is also run by YTL, to the city train terminal, he said.

Singapore, located across the Johor Strait at the southern tip of the Malaysian peninsula, is connected with Kuala Lumpur by air, road and a diesel train on a meter-gauge track built in 1913 by British colonial rulers.

Flights between the two cities are 45 minutes long, while buses take about four hours to cover the distance on the modern North-South Expressway that runs the length of the country.

YTL's companies are involved in a range of businesses including power generation, real estate, and construction, cement manufacturing. It also owns several shopping malls, resorts and hotels such as the JW Marriott Hotel in Kuala Lumpur.

MORE Pics – MALAYSIA NON-BLOODIED PEACEFUL DEMO against ISRAEL Attacks led by UMNO Youth Vice Head – KHAIRY JAMALUDDIN

Check the latest post Sunday, Jul 23 06
NAJIB ARMS DEAL link High Performance Training Centre? – “A HOT Political and Diplomatic POTATO to the HIGHESET OFFICES in UK” but NOT in MALAYSIA?

The hovering Helicopter keeping an eye;
crowd below (burning the American flags)

Khairy Jamaluddin "We will go to Thailand, Phillipines and
other Asian Countries and the Middle East to ensure
youth internationally rise up against Israel"

"The memorandum that we send just now outline in no uncertain terms that we demand the immediate cessation of attacks by Israeli on Lebanon and on the Gaza Strip. We would like the United Security Council to pass a resolution to stop the Israeli atrocities. This is nothing short of murder. This is nothing short of genocide "

The crowd and the police playing their "parts"

The well orchestrated and government “sanctioned and approved” protest demonstration against the Israeli’s attacks was lead by UMNO Youth Vice Head Khairy Jamaluddin .

The crowd consisting of Barisan National component parties youth members gathered in front of the American Embassy in Kuala Lumpur following Friday prayers. The noisy shouting crowd carry placards condemning the “war” was as usual emotionally charged but well controlled under the watchful eye of the Police who gave them hand gloved treatment compared to the bloodied protest march in May on the Rise in Petrol price hike .

The leaders handing over the protest note (below) at
the American Embassy on Friday Jul 21 06

After Khairy’s fiery speech, a protest note was handed over to the embassy, he then led the group to the nearby British High Commission and the French Embassy in Jalan Ampang. But they were prevented from continuing to the nearby Chinese and Russian embassies.

This is the source of further aggravation, the two
missle launchers (below) that were located by
the Israeli (only after) the missles were
fired and subsequently imobilised
Hundreds of these missile rockets have been fired into Haifa

Below: Haifa in Israel has been subjected to hundreds of missile rocket attacks

Meanwhile the onslaut on southern Lebanon continues. Hundred of tanks (below) have been deployed to enter Lebanon to create a "buffer zone". Residents have been warn to move away.

Below: Bridges have been bombed out

Below: Major highways are also attacked and destroyed

With the airport also bombed out earlier, the only exit left is by the sea route if not going to Syria


More than 150,000 refugees have fled to neighbouring Syria and by sea to Cyprus 180 km by sea. The British have sent in the HMS Bulwark and evacuate British, Canadian and Australian citizens to the Limassol port in Cyprus.


Check out the latest post on the mega-project:
YTL BULLET TRAIN KL-SINGAPORE – 90 mins; ACCELERATES Country’s Economy; BENEFIT TNB & IPPs; Achieve 20% POWER Reserve REDUCTION Target

ANWAR IBRAHIM'S Exclusive INTERVIEW– 2nd PART – REVEALS MALAYSIA’S current PROBLEMS; Way BEHIND NEIGHBOURS; 4 NAMED in RM30 billon FOREX LOSS in 90's

Anwar names those responsible for forex losses

One of the four persons anmed is dead and gone, and the balance 3, 2 are his known political opponents that cannot be "beaten or overcome" and that can inflict retribution or vengeance.

Who are they?
Get a subscription, Malaysiakini needs your SUPPORT
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http://www.malaysiakini.com/news/54097

But are names and handles important? 'What is your name, each of you?' My name is also nameless. I have no name. You give yourselves names, because you believe they are important. Understand, our existence is nameless. It is NOT voiceless, but it is nameless. The names you take are structures upon which you hang your images . . . What you are cannot be UTTERED, and NO letter or alphabet can contain it. Yet, now you need words and letters, and names and objects. You want magic that will tell you what you are. I have had TOO many identities to cling to ONE name.

now the Q & A
Q&A: Yes, I could have done more; Arfa'eza A Aziz Jul 19, 06 1:50pm

Former deputy premier and Parti Keadilan Rakyat adviser Anwar Ibrahim reveals where the country went wrong and his economic vision in this second of a three-part exclusive interview with malaysiakini.

Malaysiakini: International Trade and Industry Minister Rafidah Aziz states that Malaysia is still an attractive destination as the first six months of 2006, the country has drawn in RM6.08 billion of FDI (foreign direct investment). But you claim otherwise.

Anwar: Rafidah is in a state of denial. This (information) is part of propaganda. You can have commitments in the range of RM10 billion but the fact is, FDI can only be real when the foreign companies come and operate (in the country).

So a company comes in with RM10 billion, they start in 2007 and end in 2020.
So when can we apply this amount (to the statistics)? It should be distributed evenly over those years but instead you (the government) put the entire figure immediately in the statistics. That is why when you asked if I regretted joining the government, I said 'no' because I learnt the tricks of the trade. You can't fool (me) with figures anymore.

Another issue of concern is confidence. We are not talking only about competition with China or India as investment destinations but also Vietnam, Thailand and to an extent even Indonesia. Look at our market capitalisation, actual investments of FDI in the country, the capital flight out of Malaysia.

How do you assess the confidence in the system? By looking at the statistics in toto. You cannot simply pick three or four companies and make a conclusion.

I would suggest that Prime Minister Abdullah (Ahmad Badawi) looks at this because it is a serious problem. Unemployment is high, there is an inflation problem and FDI is not coming in. You are not only postponing (resolving the problems) but, probably even not accepting the fact that we are in trouble. They continue to say that we are one of the successful Muslim countries in the world compared to Mali and Bangladesh - I wouldn't deny that we are doing much better than them.

But to get Malaysians to understand and not get sucked in by the propaganda, I ask them to look at the countries in the region: Malaysia, Singapore, Thailand, South Korea. Look at their positions in the 1970s, then in the 1980s and then in 2006. They have gone way ahead. They have double the success that we have achieved.

Now if I was asked to deal with it, I would say: first, we must accept the fact that although we are generally better than the weaker counties, we are losing to our competitors in terms of FDI, technology, etc. Then, we chart a programme. The Ninth Malaysia Plan was an exceptional opportunity for Abdullah to recognise this problem and say that it's time we deal with it. On this, he has failed miserably.

* What would Anwar Ibrahim's economic programme be like?

First, I would say look at the facts and deal with it. I am not suggesting that the country has totally failed. To the credit of past and present leaders, at least there is political stability. The country's economy is sluggish but not totally destroyed. But it is beginning to be quite critical for Malaysia now. If you accept that, the programme would be realistic.

Competition is a major issue to be addressed. Why did we lose our competitiveness? How do we regain it? One (of the problems) is the perception of the National Economic Policy (NEP). The perception is that everything has to do with (the) bumiputera (policy), which is not entirely correct. It has everything to do with corruption, not the bumiputera policy. It is an abuse of that policy because people use that to squander wealth ...to distribute billions for their family members and cronies.

So to my mind, the best way is to do away with it and have programmes that are more transparent. Do we then ignore the fate of the marginalised and poor? I say we don't. Countries that do not have affirmative action programmes do deal with these issues. These countries seem to be realistic in their policies, sustainable in their economy, which pave the way for poverty elimination, public housing, quality education for the urban and rural poor - these are issues I feel passionately about and I think we have to move (on them).

That would mean the dismantling of the current economic policy. But what did the Umno leaders - in particular the Umno Youth leaders - say to this? (They said) Anwar is getting too friendly with the Chinese, he is forsaking the very agenda that he (had once) supported. Of course, I supported the NEP in 1970 when I was 19. At that time, I saw that the Malays were so insecure. I saw that in my peers at the university. With the very few exceptions among the children of the bureaucrats, nobody had any success. So, (the NEP was) fair.

But then things have changed... not that Malaysia has done exceptionally better but we have tried. We had been successful in some things like social mobility, education standard and scholarships, but here we have to make some amends.

I always recite this good example based on my experience in Penang where I met a 19-year-old Chinese girl who scored 9A1s but failed to get a place in the local university. We told her: 'Sorry, this was the policy and that the quota had been met'. But what about this poor girl whose father is a petty trader and can't afford to send her overseas? This is the basic principle of justice that should transcend race. We as Muslims must actually appreciate this more because we talk about justice irrespective of race.

By doing this, I don't mean that I am willingly sacrificing the poor Malays. Recently, I spoke on education - about the government's disbursement of funds on primary education which is close to (the level of) those sub-Sahara ... African countries. In one go, you sacrifice the country's future generations and at the same time you don't cater for the marginalised groups in the rural areas, including in Sabah and Sarawak where the vast majority of rural folks are.

When you talk about the quality of education, you also touch on the mediocre leadership in universities. I addressed this (issue) to some 50,000 people - majority were PAS supporters and ulama (Muslim religious scholars). I asked, is there something wrong against Malay interests, or Islam, when you have 20 public institutions in the country and you have five Chinese vice-chancellors, or three or two Indians, or one or two non-Muslim bumiputera?

These are qualified people, and I challenged them (the crowd) to make sure that the universities excel in academic standards. Make sure that the Chinese, Indians and Malays are treated equally ... These are the things that we should do because only then we are presenting the case that we trust each other - the Chinese, the Malays and the Indians. But we don't seem to be able to do that. Of course, you can't expect, MCA, Gerakan or MIC to say or articulate anything about this.

* Why not?

It is not because they do not want to raise sensitive (issues) with Umno. My experience in the cabinet, (the non-Malay) leaders unfortunately don't take it (the issues) up ... even if the issues are not very sensitive to the prime minister. They won't say: 'We consider whether this brilliant Chinese academic could head this public university'. They wouldn't dare! But what will they ask for? (They ask) can we participate in the Klang Port privatization ?

· But there were questionable decisions made by you while you were finance minister. For example, the Bank Negara's foreign exchange losses in 1992-1994 where we lost, some say, up to RM30 billion. You were also the Bakun chairperson and the (Umno-linked) MRCB (Malaysian Resources Corporation Berhad) takeover was also during your time.

The (Umno-linked tycoon) Tajuddin (Ramli) court case... I am glad that it had surfaced because it explained a lot of things about those who were involved and those who were covering up the story. I am inconsequential in that decision.

As to the forex losses, I had to table it to Parliament. Not convincing, of course, because there was a limit to what I could do... given the circumstances then. I then had to advise (former Bank Negara governor, the late) Tan Sri Jaafar (Hussein) and (Bank Negara assistant governor) Nor Mohamed Yakcop (now second finance minister) to resign.

* Can you tell us exactly what happened then. Who told Bank Negara to go into forex speculation?

The law is quite clear. Bank Negara had the option to protect its resources and this is normal - it is not speculation as such but only to use a small amount of fund to trade in order to protect the reserves. That was the standard reply I had given, at the advice from the governor.

But then, I realised that I was not informed by the bank. I only knew from friends overseas. In fact, I knew from a Switzerland friend who told me: 'Look Anwar, Bank Negara's ringgit speculation was huge'. I told him that couldn't be as we needed to protect our reserves. But he told me that you (Bank Negara) were one of the top three. One of the top! I said (it was) impossible that we could be among (the countries) which have billions of dollars to speculate on forex.
The week later, I was in Hong Kong where an editor of the Far Eastern Economic Review asked me very bluntly: 'Look, are you giving a political reply because we have our sources to say that you're deeply involved'. I replied that I was not giving a political reply and I was giving a policy decision that we allowed for a small amount (to speculate) to protect the reserves and it was done completely by the central bank, and the minister of finance was not privy to it...

Then after the interview, he confided in me and told me that it was time for me to call the central bank. So I called. The governor was on his way to Iran with the prime minister. I asked him: 'I was told that we have a big problem', and he, of course, denied it. Nor Mohamed said it was only a small amount. I told him I did not believe that the business editor of the Far Eastern Economic Review would lie to me, and neither would I believe that my Swiss friend was lying to me. I needed a report.

He (Jaafar) then promised to give a report after he returned from Iraq. So he checked with Nor Mohamed who again denied (the problem). Then he went to Dr Mahathir and he came back and told me that he met the prime minister (who claimed that there was) no such problem. He (Mahathir) accused the foreign media and foreign interests of trying to cause disruption and lack of confidence in the system. But I still (told) Tan Sri Jaffar (to) say (that) I was not satisfied. Then Jaffar started to confide in me and he swore to God that he knew nothing.

* So it was Nor Mohamed who was responsible for the huge losses?

It was Nor Mohamad, Mahathir and Daim! That was the time I just came in (as finance minister). But I trusted Tan Sri Jaffar who did not know until I asked. He had genuinely thought that it was a small amount. By the time I got the picture, the problem was huge. We were talking about losses in the range close to US$10 billion. But, of course, the billions can still be saved because it is partly paper and partly real - you can never know until the audited account for that particular year comes out. So time was closing in for the accounts.

I got the figures and I told Dr Mahathir that I have no choice but to ask Nor Mohamed to leave. He said that it was not fair, this and that, but I persuaded him because under the circumstances Nor Mohamed could be charged. Mahathir said no, don't touch them, just let them go. I told him, I can't go on like this. How can I go and explain to the Parliament and say that these were the real losses and these were the people involved?

It is unfortunate for Tan Sri Jaffar because I rated him highly. He was a man with high integrity, strict, honest, incorruptible and he used to confide in me a lot and had been very helpful to me in advising me. He was supportive.

So they left. I had the then Bank Negara deputy governor meet me for an hour a day - solid briefing because this was too complex - (the) intricacies on forex trade, which was new to me. I had to really master the subject because I had to deal with Parliament. I called it the worst experience I have had. We had to cover the losses and I don't think Bank Negara was able to cover it.

Finally, when Dr Mahathir had the chance, he brought back Nor Mohamed (as economic adviser) because clearly they were in league (together). You are talking about a person who cost the country 10, 15, 20 billion ringgit of real losses and yet you (Abdullah) promoted him as (second) finance minister. Yes, we were good friends but we are talking about protecting the interests of the country.

* Was there any decision that you regret making?

Yes. You try your best but there were a lot of constraints. For example, if you look at the Education Act (1961). If you remember, once I had then (as the education minister) announced that I wanted to do a new education act. We had the draft bill ready. We invited the teachers' representatives - Malay teachers and (Chinese education movement) Dong Jiao (Zong) - everybody... they saw the draft because we wanted to repeal the controversial section 21(2) (the right of the education minister to close down vernacular primary schools), but I don't want to be seen as conceding to the Chinese.

Then Auku (Universities and University Colleges Act, 1971). The entire legislation was to be a new legislation. There was a draft and it was circulated. So people can't say that Anwar did not do it. It was there in the public domain. Then I was transferred to the Finance Ministry. (Subsequent education ministers) Sulaiman (Daud) and Najib (Abdul Razak) did not take it up.

Later, Najib took it up but then he had something else and kept the thing. I regretted because I could have pushed it (to be tabled and passed) faster. It was a controversial bill. Dr Mahathir didn't agree to repeal the Auku. He told me: 'Cannot, Anwar. It (Auku) is very important. Don't take it personally...' He was very kind in that sense... I had that advantage... in cabinet, he was never rough. He reserved (his iron fist) to the last...
* What about decisions when you were at the Treasury?

Even at the Treasury, sometimes with the best of intentions, the Treasury gave strong advice but I was not able to do it, like the airport you said I was appointed chairman of the (Kuala Lumpur International) airport, but only because the prime minister appointed me.
But it was known in the Treasury that we were against the proposal to (move the airport) to Sepang. We wanted to expand the facilities in (the then international airport) Subang because the cost would be 10 times less. This is not something that I am only saying now. Because prior to the cabinet (meeting), there is the economic strategic plan meeting where I proposed the option but then he (Mahathir) said it was important (to move to Sepang). So that was it.

And the Bakun (dam project in Sarawak) - I said that it would proceed after the evaluation by the EIA (environmental impact assessment) but Mahathir announced it before the evaluation was made. Some said that I should have been more firm but I wasn't. But if I had done that, I would have been sacked in 1993.
* Regarding the social and religious problems in Malaysia, you have suggested that the different racial and religious communities should start talking to each other. But there is no forum to provide that kind of necessary dialogue.

Yes. My worry is that the BN (Barisan Nasional) government tends to tolerate this conflict a bit because it serves to benefit them in the long run. If you look at the courses, which is under the Prime Minister's Department.BTN (Biro Tata Negara) It is clearly racist. Has any minister – Chinese minister - taken up this issue to re-look the curriculum?

Ask the students who attended these courses. Am I exaggerating or trying to mislead? Why do I take this up? It is just not another political (issue) for Keadilan, but we are talking about the next generation of this country. Anybody who does not seem to agree with them are American agents! Or pro-Chinese. You question the NEP - although I am very Malay and I want the Malays to succeed - I'm immediately put as pro-Chinese. Who does that? PM's Department professors!

* Do you think the BTN should be dismantled?

Either dismantle it or improve it. The intention was to get people trained in diplomacy, to understand the country. These are noble intentions. But it is then used as an Umno political apparatus. There are now racist messages! This is really dangerous. When I was in prison, I learnt from the prison guards who told me they cried because they were given facts on how much the Malays have lost and the Chinese are so greedy to make demands to dismantle everything that we Malays have.

This poor guy is innocent because he genuinely believed it. So I asked him who stole most of the APs (Approved Permits)? Was it Ah Chong or the Malays? Who decided to give Bakun to (tycoon) Ting Pek Khing? Then they started to realise that the (BTN) arguments were flawed. I don't know whether Abdullah is aware. I'd be surprised and disappointed if he doesn't. But if he knows, it is ethically and morally wrong for him to condone this.

I am not saying this because the BTN considers me public enemy No 1. There is no (BTN) course that had not abused me as to my alleged sexual misconduct - that is, of course, less now because the mufti (state religious adviser) have told them that they will go to hell if they make accusations without evidence - but I (continue) to be labeled as an American agent, CIA agent and also pro-Chinese.


Tomorrow: My future in the opposition

Now the BACKGROUND to this Forex SAGA; Speech by Lim Kit Siang


(Parliament, Wednesday, 12th July 2006) More than 12 years ago, in my speech during the debate on the Royal Address on April 11, 1994, I reiterated my call for a Royal Commission of Inquiry into the colossal Bank Negara foreign exchange losses as a result of speculation in the international currency markets from 1992-1994, with the losses cited as ranging from RM10 billion to RM30 billion.

The arguments I advanced for such a Royal Commission of Inquiry more than a decade ago are even more valid today. I quote:

“The Royal Commission of Inquiry should first determine the actual extent of the forex losses suffered by Bank Negara since 1992.

“I had said that for the two years of 1992 and 1993, Bank Negara’s forex losses could range from RM 16.5 billion to RM25.6 billion. The total forex losses could be more when we take into account the RM1.4 billion contingent liability for 1994 arising from forward forex commitments.

“Could there be other hidden and secret forex losses in the 1992 and 1993 Bank Negara accounts apart from those who had discussed?

“There could be. I will just give one possibility. Bank Negara had been accused for instance of dumping large amounts of Ringgit into the market in the closing days of 1993 to buy US Dollars, causing the Ringgit to fall steeply. That manoeuvre improved Bank Negara’s year-end financial position by raising the value of its currency and gold reserves in Ringgit terms.

“It is interesting to note that as of November 30, 1993, Bank Negara’s Gold and Foreign Exchange and Other Reserves including SDRs stood at RM60 billion, but within a month by December 31, 1993, it had shot up by RM16.4 billion to Rm76.4 billion – an hefty increase of 26 per cent in one month.

“Bank Negara’s Gold and Foreign Exchange and Other Reserves including SDRs stood at RM46.2 billion. If it had increased at 26 per cent per month, as happened in the one month of December 1993, Bank Negara’s Gold and Foreign Exchange and Other Reserves would have multiplied to the impossible figure of RM587 billion!

“It is therefore possible that the RM16.4 billion increase of Gold and Foreign Exchange and Other reserves could conceal forex losses, bringing total forex losses to over RM30 billion since 1992.

“The first task of the Royal Commission of Inquiry is to ascertain whether Bank Negara’s forex losses since 1992 could exceed RM30 billion.

“The second task of the Royal Commission of Inquiry is to ascertain whether there had been any financial malpractices and abuses in view of the inconsistencies and conflicting explanations about the colossal forex losses.

“It is ridiculous for Bank Negara to blame the late delivery of sophisticated computers for causing such huge forex losses. After all, how is it that Bank Negara can not only not lose money but make profits in the past without these sophisticated computers? And how is it that unsophisticated Central Banks of other countries which do not have sophisticated computers do not incur such colossal losses from forward forex operations?

“Thirdly, the Royal Commission of Inquiry should establish as to how the Bank Negara could incur such colossal losses.

“In fact, Anwar Ibrahim should be able to tell Parliament the size and details of Bank Negara’s foreign exchange losses, by releasing details on Bank Negara’s foreign transactions, the composition of its reserves, aspects of its intervention operations and its forward commitments in the various currencies.

“Last April, Jaffar said that to give details would be “show my hand to the market”, and that “There should be no problems in disclosing such information if the bank is lo longer in the foreign exchange business.”

“Anwar Ibrahim said the same thing in Parliament during question time on July 19.

“Now that Bank Negara had announced that it has ceased all forward transactions and that all positions had been unwound, Anwar Ibrahim should have no reason to refuse to furnish all these details about Bank Negara’s colossal forex losses to Parliament.”

As I said 12 years ago, Bank Negara was at the time insolvent – its liabilities exceeded its assets – and the Bank Negara Governor and its Board could have been suspended and the bank taken over if it had been a commercial bank.

Let me clarify that when I made these assumptions about Bank Negara forex losses as a result of foreign exchange speculation spree could be as high as RM30 billion, I did not get the facts and figures from thin air, but I had the able and expert assistance of a former topmost Bank Negara officer.

After more than 12 -14 years, the government has still failed to “come clean” on the colossal Bank Negara forex losses and the ghosts of the RM30 billion Bank Negara forex losses have not been exorcised – resurfacing only last week to haunt the present administration of the Prime Minister, Datuk Seri Abdullah Ahmad Badawi, testing its commitment to accountability, transparency, integrity and good governance.

Many other questions which I had raised over a decade ago remained unanswered and continues to haunt the corridors of power, viz:
• whether Bank Negara’s maximum exposure at the height of its forward foreign exchange speculation was in the region of RM270 billion, which was three times the country’s GDP and more than five times the country’s foreign reserves at the time; and
• whether at the height of the Bank Negara forex speculation spree, Bank Negara was so aggressive that it operated not only in US$50 million lots but there had also been occasions when Bank Negara operated with US$500 million in one call!

We now know that Bank Negara’s multi-billion ringgit forex losses was because of Mahathir’s nemesis, George Soros who had betted in favour of the British pound against Bank Negara.
The time has come for full and total disclosure of the RM30 billion Bank Negara forex losses as to how these so-called “paper losses” as described by government leaders had triggered off other mega-financial scandals like the RM1.8 billion MAS-Tajudin privatization scam – the purported “national service” of Tajudin Ramli in 1994 to buy MAS shares to help out Bank Negara (which owned the MAS shares) which was hit by the multi-billion ringgit forex losses.

Were the major players in this scam performing a national service or were involved in a national betrayal?

At the time when I raised the Bank Negara forex losses in the House, the then Prime Minister, Dr. Mahathir said the forex losses came from “profits made in forex dealings in preceding years” while the then Finance Minister, Datuk Seri Anwar Ibrahim, that the Bank Negara forex losses were mere “paper losses”.

Former premier Tun Dr. Mahathir Mohamad is now an advocate of accountability and transparency, declaring that Official Secrets Act should not be used to hide untruths. He should be taken at his word, and all secret documents on the Bank Negara forex losses of 1992-1994 should be declassified so that Malaysians can finally know the truth of what is probably the biggest mega-financial scandal in the nation’s history.

Anwar may not be in the loop at the time although he was Finance Minister, with regard to whatever “overriding agreements” Mahathir and his then loyal economic adviser, Tun Daim Zainuddin, devised with other corporate high-flyers to salvage Bank Negara, but Anwar has now the opportunity to throw light of what he knew about the colossal Bank Negara forex losses when he was Finance Minister and how these “paper losses” had triggered off other mega-financial scandals like the RM1.8 billion MAS-Tajudin privatization scam.

Before I end, let me quote from a 1995 book on international high finance, The Vandal’s Crown by Gregory J. Millman to illustrate why Parliament even today should take a serious attitude on the Bank Negara forex scandal:

"Using all the resources a central bank commands - privileged information, unlimited credit, regulatory power, and more - Malaysia’s Bank Negara became the most feared trader in the currency markets. By trading for profit, Bank Negara committed apostasy against the creed of central banking. Instead of working to ensure global financial stability, Bank Negara repeatedly shoved huge sums of money into the most vulnerable market situations in order to destabilize exchange rates for its own profit" (p.226)

"(Bank) Negara operated behind a thick veil of secrecy. The bank seldom spoke publicly about its controversial trading activities. Yet it was increasingly clear to foreign exchange traders that Bank Negara’s operations in the foreign exchange markets went far beyond simple self-defense. It became the most awesome currency trader in the world." (p. 227)

"(Bank) Negara’s market manipulation was so egregrious that one American central banker said, ‘If they tried this on any organized exchange in the world, they’d go to jail.’ However, in the unregulated international currency markets, there were neither police nor jailers. The only rule was the rough justice of the vandals, and it was this rule that eventually brought (Bank) Negara down.

"In 1992, (Bank) Negara took on a large pound sterling position, apparently expecting Britain to maintain the discipline required by the European Exchange Rate Mechanism. It was a bad economic and political judgement. (Bank) Negara lost approximately $3.6 billion when Britain withdrew from the ERM, letting sterling collapse. The next year, (Bank) Negara lost an additional $2.2 billion. By 1994, Bank Negara was technically insolvent and had to be bailed out by an infusion of fresh money from Malaysia’s finance ministry." (p.229)

folks Final Part Interview: is now available; 5pm , Jul 21 06

ANWAR IBRAHIM’S EXCLUSIVE INTERVIEW–Final – PERILS SUPPORTING DR MAHATHIR; COLLABORATION - PAS, PKR & DAP; BETTER Muslim Non-Muslim UNDERSTANDING

ANWAR IBRAHIM’S EXCLUSIVE INTERVIEW–Final – PERILS SUPPORTING DR MAHATHIR; COLLABORATION - PAS, PKR & DAP; BETTER Muslim Non-Muslim UNDERSTANDING

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Anwar: Dangerous to back Dr Mahathir ; Arfa'eza A Aziz Jul 20, 06 12:16pm

Former premier Dr Mahathir Mohamad's attack on the current administration is not a licence for the opposition to pledge their support for him, said former deputy prime minister and Parti Keadilan Rakyat adviser Anwar Ibrahim.

In an exclusive interview with Malaysiakini last week, he said it was dangerous to "endorse a person subscribing to an authoritarian rule" despite the spat between Mahathir and Prime Minister Abdullah Ahmad Badawi benefitting the opposition.

"I think Mahathir is doing a service (in criticising the government) by opening up a little democratic space...I think it has helped us immensely not only PAS but also myself and the opposition. But we have to draw the line."

Anwar said he made this point clear during a recent meeting with PAS leaders, some of whom have been openly supporting Mahathir. This has caused some discomfort to the Barisan Aletrnatif (BA) alliance between PKR and PAS. "I had a long discussion with (PAS president Abdul) Hadi (Awang) and central working committee member) Mustafa Ali, I (told them) the perception of backing Mahathir is not right."

"What they said was the party was willing to accept Mahathir if he admitted his wrongdoings and made amends. But do you think he is going to do that?" quipped Anwar, who was sacked by Mahathir in 1998.

"But if he does say: 'I was wrong on this, on that, and please forgive me', I would certainly forgive him. In fact, I may even be prepared to withdraw my civil suit against him."

On June 24, PAS' deputy president Nasharuddin Mat Isa, vice-president Husam Musa and Youth chief Salahuddin Ayub were seen attending an open talk by Mahathir.

Will he return to his old seat?

In the two-hour interview held at Malaysiakini's office in Bangsar Utama, Anwar said while he was not optimistic about bringing the disparate opposition under one roof, there should at least be a common agenda.

"I had several discussions with PAS and DAP separately and the general consensus is that they will continue to work separately with me and PKR. To me, this is something very positive."

He said although DAP was not keen to engage PAS, it did not object to PKR continuing its discussions with the Islamic-based party.

Anwar was also unsure whether he would return to his Permatang Pauh seat - now held by his wife PKR president Dr Wan Azizah Wan Ismail- in the event he was allowed to participate in active politics.

He said the grassroots in the constituency have expressed their views that they preferred Wan Azizah but the matter had yet to be finalised, adding that there were proposals for him to run for a multi-racial constituency

Commenting on the religious debates which arose following the death of Everest climber M Moorthy, Anwar said he had been approached by both Muslim and non-Muslim organisations who asked for his views to find a solution.

After talking to the two groups, he was surprised by the extent of prejudice, misinformation and disinformation that they had against each other.

According to him, the government's lack of commitment to provide a solution worsened the situation.He said the authorities were not taking the effort to get the conflicting groups to understand their differences.

"When you get them to talk you'd be surprise the extent of prejudice, misinformation or disinformation among each other. It is shocking that this is happening in this country..."



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Q&A: Bridging the Muslim-non-Muslim divide Arfa'eza A Aziz Jul 20, 06 2:01pm

In the final of a three-part interview, former deputy prime minister and Parti Keadilan Rakyat adviser Anwar Ibrahim argues that effective leadership is needed to bridge the growing gulf between Muslims and non-Muslims in this country.

Malaysiakini: Now that you're back in Malaysia for good, where do you see yourself in the next five years?

Anwar: I have never been good at that. In 1997, I did not project or anticipate what would happen in 1998. The projection when I was in prison in 1998 - in terms of when I was going to be released - was never correct. But after all that, I'm here...

So far, I am quite pleased with the response (from the people) although I think it's a lot to get a minimum understanding (among the opposition parties) and to get Keadilan (PKR) to focus despite the normal brewing tensions over the leadership issue. But generally, I think the spirit is very high. The major problem is, of course, media penetration because they (the grassroots) don't know (of the developments in the party). Every time I meet (the people), they will ask: 'Oh you're back. Are you back (for good)?'
And I say: 'Yes, I am back' (laughs). This is really difficult.

* You said recently that you're being considered for the United Nations secretary-general post. So are you really committed to the opposition or are you going to leave Malaysia again?

I have said some comments to that effect...The problem is that the discussions (on the UN sec-gen post) involves presidents, prime ministers and foreign ministers. The discussion has been going on for the past six months, more serious now with non-governmental organisations and the UN apparatuses. So, I don't think it's polite to be so dismissive (in rejecting the option). Most of them asked me to give it serious thought, or at least to consider the option.

To my colleagues here in the Keadilan (PKR), DAP and PAS leadership, I have stated that my commitment is here. They asked why don't I state a categoric rejection or denial. I told them I don't think that would be polite. I am not saying that it would be easy for me (to get the UN post) in the event I
choose to run, but I think it is a serious proposition. But in the discussion with party leaders, I have made it clear that I am ready to work here. But they can't expect me to be so dismissive ... but I have not come
to the stage that I would give it (the UN sec-gen post) serious consideration.

* PKR is facing some problems with a few party leaders quitting - the latest being Abdul Rahman Othman, who resigned as treasurer. There is also the concern that (party president and Anwar's wife) Dr Wan Azizah (Wan Ismail) is not capable to run the party.

All political parties have problems but ours is a democratic party, and ours is an opposition party so our problems are highlighted. But I think in the last year, more so in the last six months, I have been quite hands on with the party. I am not saying that the entire leadership agrees with me but I have set the agenda. For example, some disagree with my position on the NEP (New Economic Policy) or my moderate view on Islam and to persuade our friends in PAS to downplay their rhetoric on the Islamic state. To make it clear that our struggle has its principles, not to think you just use (ex-prime minister Dr) Mahathir (Mohamad) to attack (Prime Minister) Abdullah (Ahmad Badawi)...I mean, the political game can continue but the principle stand must be clear. Some disagree and they leave.

(PKR) deputy president Dr Syed Husin (Ali) is not a very popular figure in the country and does not have the necessary support, but I have high regards for him as he has made a consistent stand, cannot be bought, incorruptible, intellectually profound...I think he should have a place (in the party). Some chose to disagree and challenged (Syed Husin) to which I disagreed. And I was prepared to campaign for Syed Husin, which I don't normally do, and in fact I did not do for the other posts. I don't think these are big problems. I think we are more cohesive now.

Azizah did her part but I think she never wanted that position. She was able to hold it (the party) together. To me, she's a great listener, she's a great redeeming figure, she has more patience, she doesn't raise her voice to scold leaders...I do. Although they can disagree, I have strong views and
I make sure people hear them.

I am confident, we have problems but running a party ... if you are a businessman and you get involved in the party, you lose your contracts, so you leave, then maybe you get additional contracts...But I'm not discussing Abdul Rahman Othman, who has been a close family friend and has strong views
on many issues including the issue of leadership, which includes the issue of Syed Husin. But I thought the challenge was really unnecessary and unfortunate.

Everybody knows that before the (Keadilan-PRM) merger, there was an undertaking (for no contest). Syed Husin was the president. He withdrew to become deputy so that Azizah can take over as president. This is standard decency. Yes, this is a democratic party but there are certain ethical rules. It's not wrong for you to challenge but it is not right ethically because you gave your word.

There was consensus in the party; there was endorsement for the merger. Today we merge, tomorrow the president of that party that we merged with in view of our numerical strength, we kick him out to become just another executive member. Is that ethically correct? No. These issues happen but
since this is a democratic party, I wish them well. After all, we have seen this many, many times. People who want to run the party their way and they can't have it.

I may sound very strong here. We have a president, Azizah, who takes a more conciliatory approach than me, and we have Syed Hussin who has remarkable experience and holds a strong position on a number of issues. Then, we have other leaders representing several roles, religious issue, NGOs, etc, which means I amended a lot from the way I was running Umno which was actually (the) wrong (way). In Umno, I just have to say 'I feel strongly' (and) 'this is the way' and everybody sokong (support) Daulat Tuanku! (Long live the King!) Period! That was easier. But (PKR) is a democratic party.

I have been to Penang recently when Tony Beh crossed over from MCA and I told him, 'Tony, when you go out you must explain why you joined Keadilan (PKR)'. He said never throughout his political career as a MCA leader for the past 20 years has he seen such an open discourse on issues involving
race and religion. We must understand what the non-Muslims think and vice-versa. I thought what he said was remarkable. So I told him you must repeat that view when you meet the people.

* Some people say that your decisions are heavily influenced by two or three people close to you.

Of course, I know the accusations...in fact, I can be very specific – they are talking about my former staff. I work like a family and my staff is like family. You listen to them, you have access but now in the party, other people have access too. And because my former staff are no longer my staff, they have to go through my present staff to get appointments and now they are complaining and they realise how difficult it was for the others to get an appointment! But I consider that (the accusation) as an insult because they underestimate my wisdom and experience.

Of course, I listen (to the people close to me) but my interest is for the party and the bigger agenda. And I know there are people alleging that Anwar listens to only one or two. But it is a manifestly unjust (allegation). Those within the party know I have disagreed and overruled many proposals. I have expressed my strong views. The people who are close to me know this.

But finally, I judge people in terms of their work commitment. People make allegations many times before - 'you gave instructions from prison'. How many times can I give instructions from prison in a week? I do (write) letters or proposals. But it was really difficult to smuggle the communication outside. But the perception is that I continue to give instructions and therefore bypass the party leadership. I have strong views but otherwise the whole conduct of the party is starkly different from what I am doing, which means to some I have a lot of influence but not total, which is good because I won't behave like a dictator even if I wanted to.

* You have tried to bring PAS and DAP together but there has not been much success there.

Ideally, we should be seen as one formidable, cohesive force as an opposition.

* Are you confident you can bring them together?

I am not too optimistic but I am confident that the common agenda will be accepted in terms of reforms, independence of the judiciary, freedom of conscience and expression. But the devil is in the details of the common agenda...But we do have a common agenda. I had several discussions with PAS and DAP separately and the general consensus is that they will continue to work separately with me and Keadilan (PKR). To me, this is something very positive.

But I did convey to PAS, for example ... the role that (Opposition Leader Lim) Kit Siang and other DAP leaders played in terms of holding the opposition's effective voice on issues of good governance, corruption, accountability...I told them (PAS) that they (DAP leaders) need to be recognised. You may not have to agree with them on the issue of religion but they have played a role.

Similarly when I spoke to DAP, I told them, 'Look at the experience of most Muslim countries, we have no option but to continue to engage because we don't hold the American view in engaging lateral actions while no engagement is done with people they don't like'. So I told DAP that you don't want to
engage (with PAS) but I need your understanding to allow me to continue engaging with PAS. And to some extent we have been quite successful. To be fair to PAS - whose statements on certain issues I frankly do not share - but generally the policy framework by (party president Abdul) Hadi
(Awang) and its top leadership, they are willing to engage and be conciliatory and bend backwards on the Islamic state issue. I believe if the party is willing to be accommodating on such a fundamental issue ... that they can somehow maneuver and adjust, (then) I think it is worth to be in the opposition.

* If you are to run in the next election, which seat would you go for? Will you return to Permatang Pauh, which is now held by your wife?

Certainly not the city of Kuala Lumpur! (laughs) I should try Kubang Pasu (Mahathir's former seat). If given a chance - well, I have this crazy idea - I would like to test a truly multiracial constituency. Permatang Pauh in a sense is multiracial but it has 60 percent Malays. Azizah has been representing them well and when I go back and start lobbying, they tell me they want Azizah to stay, particularly the ladies.

* So you're leaving the seat to her?

I don't know. But then, I think she goes back there regularly and there are on-going talks. But I have discussions with young professionals - Malays, Chinese and Indians - who believe that I should seriously consider a multiracial seat where there are 60 percent Malays, 30 percent Chinese...I said, I don't know whether there are such seats...

* Some say you are losing influence in PAS based on recent developments where the Islamic party has been supporting Mahathir because they want to speed up (Deputy Prime Minister) Najib's (Abdul Razak) appointment as prime minister. The party believes this would shut all doors for you to return to Umno.

It is good that you say that I am losing influence in PAS because it makes me feel humble. I have no presumptions about my influence. You are right because it is difficult when you deal with the parties. I had a long discussion with Ustaz Hadi and (central working committee member) Mustafa Ali, I (told them) the perception of backing Mahathir is not right.

What they said was that the party was willing to accept Dr Mahathir if he admits his wrongdoings and makes amends. But do you think he is going to do that? (laughs) But if he does say: 'I was wrong on this, on that, and please forgive me', I would certainly forgive him. In fact, I may even be prepared to withdraw my civil suit against him.

* Do you feel that Mahathir is riding high with his attacks against Abdullah, which have even attracted opposition supporters, because you are not entering the ring?

It's not that I'm not entering the ring. I (spoke on current issues to) 40,000 people in Dungun (Terengganu) and 80,000 people (elsewhere) but these were not reported in the media except for malaysiakini. All these issues like what I said about the bridge in detail - the notes on the point of
agreement, the issue of Agusta and Proton - I think I gave a more balanced account of the problems.

I think Mahathir is doing a service (in criticising the government) by opening up a little democratic space. People are (discovering) that not everything is right (because) here is a party leader to whom people rushed to kiss his hands and (believed) what he said was true all the way, correct and perfect, and suddenly everything is wrong with him. I think it has helped us immensely not only PAS but also myself and the opposition. But we have to draw the line.

But then, it is not about helping us but trying to get the public to understand the issues. I think it is very dangerous if we decide to endorse a person who subscribes to authoritarian rule. It is an issue of principle. People then ask, 'does that mean you are supporting Abdullah?' I say I talk about policies, corruption and mismanagement.

* We are facing many inter-religious issues including the jurisdiction between the syariah and civil courts, the issues of conversion.

Among many Muslims there is a genuine, real fear and insecurity about liberal Muslims who are trying to derail the Muslims.

* The Perak mufti claimed that 40,000 Muslims here have left the religion and this caused some alarm in the Muslim community. Do you feel such statements could increase the fear among Muslims?

It is believed that there are initiatives taken by people who are perceived to be not friendly of the religion. But to my mind, I agree that it shows the lack of effective leadership. There was the (Everest climber) M Moorthy case which could have been solved in a week, by calling the Muslim groups and non-Muslims to ask them about their concerns, which are basically to protect the jurisdiction of the syariah court and at the same time allow non-Muslims to refer their case to the civil court.

To me, it is quite straight forward. It is not easy, of course. It was an important test case for me as well since I had to meet Muslim groups and non-Muslim groups and then back again before finally getting some consensus...so that you don't extend the debate beyond the normal contentious issues. I do not deny that there will be, from time to time, contentious issues but never so serious.

About the issue of conversion - I don't know the many cases and instances (from which) the mufti got the figures he had given. But I was told that a large number of those (who converted) were people who had embraced Islam recently and decided to leave. But of course, to Muslims once you embrace
you understand your commitment although the process of embracing Islam is not necessarily satisfactory for a number of reasons. I don't deny that some conversions were for monetary gains, promotions, but I would say that if this is the concern of the mufti then we should try and engage the relevant people in the government and find out the details.

We should find out if the cause is due to a general moral decline and degradation in the country which affects all religions. We have to deal with it. I believe strongly in the role of religion in one's personal life and I am a believer. I will always be a devout (Muslim). But I don't believe that we should be extremely anti against those who do not subscribe fully to the religion. There must be some sort of midway that we (can reach to) respect the differences.

* You said that you met with both Muslim and non-Muslim groups. Are you an informal mediator between the two?

I am not presumptuous of my role and neither do I want to be brought into the issue. But I do recognise that if nothing is done, it will not augur well for the country.

* What should be done then?

We should have an effective leadership. Not a dictator, but a leadership that listens and meets the people to discuss the contentious issues. Like the Moorthy case, it was a clear example. If you left this aside you will create such enmity and ruckus. If you ask specifically what each group wants, you will find that it is something consistent to what we have been believing. But once you leave, the dialogue will be too extreme, everybody will get angry. But we have to deal with this.

* On one hand, you have the Muslims' insecurity and on the other, the non-Muslims' fear over the increasing Islamisation.

That is precisely my point. You allow people to speak for cross purposes. And there is not enough effort, serious genuine effort to get them to appreciate the differences. I conveyed this to the Muslims after I talked to the non-Muslim leaders. 'They are saying that they are feeling insecure that you are taking the Indians and paying them money to convert to Islam.' Of course, they denied.

And the Muslim groups in turn claimed that there is an on-going (effort) where many young Muslims are given scholarships and put into hostels where they are forced to convert and be baptised. I told them that firstly we have to accept that there is no compulsion in conversions. And then you give specific instances of these alleged forced conversions. When you get them to talk you'd be surprise the extent of prejudice, misinformation or disinformation they have (for and about) each other. It is shocking that this is happening in this country

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Anwar: A plot to bring back Dr M Arfa'eza A Aziz Jul 18, 06 1:36pm [extracts]

Parti Keadilan Rakyat (PKR) adviser Anwar Ibrahim said the on-going attack against Prime Minister Abdullah Ahmad Badawi could be a plot to bring former premier Dr Mahathir Mohamad back to the helm.

"I don't preclude the possibility of a plan that this huge challenge is to bring back Mahathir...," said the former deputy prime minister in an exclusive interview with malaysiakini.
[...]

"Certainly there is a racist connotation there or the message is that the Chinese (continue to be a threat)... and therefore you need a strong leader to make amends and to chart a clear policy to protect the interests of this country before surrendering to whomever, and in this case, (deputy prime minister) Najib (Razak)."
[...]


http://www.malaysiakini.com/news/54045

Q&A: Najib too 'guarded and calculative' Arfa'eza A Aziz Jul 18, 06 2:23pm

In this first of a three-part exclusive interview with malaysiakini, Anwar Ibrahim - who was once No 2 in Umno - said Deputy Prime Minister Najib Abdul Razak was too "guarded and calculative" to take advantage of the on-going crisis within the ruling party.

Malaysiakini: Former prime minister Dr Mahathir Mohamad has continued his onslaught against his successor Abdullah Ahmad Badawi. Will he ever stop?

Anwar: Knowing him, once he decides (on something) he (will be) very focused, very determined - for either the right (or) wrong reasons. But once he has made up his mind, he will be committed to it. He thinks he can go for the jugular - whatever it means - against Abdullah. I think it is going to be a sustained and concerted effort on his (Mahathir's) part. And he has some supporters not only among the veterans but also at Umno's grassroots level. And they (Mahathir and his supporters) have the resources... they have hundreds and millions of ringgit at their disposal. I think it's going to be rough turbulence ahead.

* Some believe that Mahathir is winning the battle so far. Do you think this is a fair assessment?
I think those who are generally critical of the government would want to accept these sort of analyses or assessments. But I don't share this at all, because those who have been critical of Mahathir know that he has been given more than two decades - even in the last few years of his reign - to make amends. But he has failed.
He destroyed the institution of civil societies, and this is a major crime. And I don't think that by taking up the bridge issue or Proton, he can make amends to his crimes. I spoke to some of his strong supporters or aides - as you know, I keep my options open by talking to these quarters - and they seemed very optimistic, encouraged by the resounding support given, including by some opposition leaders.
But I think it is not really realistic to expect that Umno members are going to turn up in big numbers against Abdullah. But having said that - and I have made this clear before - he (Mahathir) has the right to speak. I think it is good that Malaysiakini gave him that interview.

We support the principle of free media. Whether we agree or disagree is something else. I believe that the issues he had raised have not been well-discussed. He talked about the bridge... I have always said that when you discuss the bridge, you must start from the "points of agreement" (POA).
Never mind the (issues of ) water, MSA (Malaysia-Singapore Airlines) that was done prior to Mahathir. But the notes in the POA was signed by Daim (Zainuddin) on the instructions of Mahathir. And that went against all government rules and procedures. (It was) not cleared or sanctioned by the AG (attorney-general) (and there was) no record at the Treasury.

I took it up when I became finance minister, and that was when I got into initial trouble with Daim because ... (I) made strong views against (the signing of the POA). But this was not discussed (by Mahathir now) Also, there is the fact of (Mahathir) using subtle racist innuendos. Not only (he raised the issue of) nationalism but (he) also (spoke) against the Chinese and Singapore (whom he claimed are) trying to act tough against the Malay leadership and that they (the Chinese leadership in Singapore) should be taught a lesson.

* So you think there is a tinge of racism in how Mahathir dealt with the bridge issue?

Yes, clearly. That is why you have some nationalists reacting very strongly (to the bridge issue). This is Singapore, our neighbour - setting aside that it is a difficult neighbour - but still the subtle racist undertones to my mind is very irresponsible on his (Mahathir's) part. On the project itself, I don't know how anyone in his right mind in this modern times, can even consider of unilaterally proceeding with a project which involves another country, short of going to war.

But here, Abdullah had also failed as he was unable to deliberate (on the issue) at length. (First) he went ahead (to allow the crooked bridge project to proceed) after having orchestrated a massive campaign against Singapore. And then what did he do? He withdrew (the bridge project). Although it was the right decision, it reflected the incompetency of the government. And they (the government) are not explaining.
Proton is not a new issue. In 1996-97, the Treasury conducted a study on all forms of direct and indirect subsidies (to Proton) and the amount was RM8 billion. It was no longer sustainable even at that period. So we want to discuss about (MV) Agusta? Fine, but you have to explain... What about the issue of APs (Approved Permits)? Whose decision was it (to issue APs)? Who was benefitting from it? It is not only (Minister of International Trade and Industry) Rafidah (Aziz)'s family and (her) cronies. Mahathir included too. And (this happened) for decades. Was it ever raised by the cabinet? I would challenge them. It was considered OSA (Official Secrets Act)...

* So you think that Mahathir is a hypocrite.
Hypocrisy is crudely put, but I would certainly say gross inconsistency.

* You mentioned that Mahathir had committed major crimes. Do you think that he should go to jail for what he did?
I always believe that crooks, the corrupt, the dictators and those who squandered money and destroyed the country... they must pay. At least, the public is aware that you don't go out safe with hundreds and billions of ringgit at your disposal.

* What about Daim Zainuddin?

The way things are unraveling... it is good. I had taken it up in 1998 with evidence, documents and letters but there was no investigation under (the instruction of) Mahathir. We are not talking one or two million, we are talking about hundreds of millions. A billion from that particular (Umno-linked tycoon) Anuar Othman - of course, I had said RM600 million then because I had to be conservative in the amount as they would accuse me of exaggeration.

Another billion through (then New Straits Times Group owner) Realmild - which was my general perception - but then I gave evidence that 70 percent was held in the personal holding of Mahathir. Of course if asked, they would say that it belonged to Umno. That was how I came up with the RM8 billion figure. So most of it involved Mahathir and of course, Daim.

* Are you saying that Umno owns RM8 billion?

Well, Mahathir held it with Daim and they claimed (to be holding it) for Umno. But I don't believe that. Even if it was Umno's, I have asked them to explain how (the money was raised). I was the deputy president but no notes were given, no records were given. No one tabled anything to the political bureau... I'm not complaining because I am out of it, but they have to explain. Some amount may be deemed to be reasonable. Some company may donate here and there but...

* So not all has been accounted for?

None. What I said about the letters by (Umno-linked tycoons) Tajuddin (Ramli), Wan Azmi (Wan Hamzah) in the earlier (court) applications, and in the case of (Umno-linked companies) Hati Budi and Realmild... none was accounted for.

* Umno has a treasurer who keeps track of the party coffers and yet you're suggesting that there is a lot of money unaccounted for?

Well, that was the system under Mahathir. One can imagine all the states - they have their own system.

* So each state Umno has a separate account?

Yes, but a smaller account under the party's name. Like in Penang when I took over, there was no money but when I surrendered it, there was money...about RM1 million. Interestingly enough, every time there is a change of mentri besar or when there is a change of ketua perhubungan (state liaison chief), there will be no money left in the account... so that is the system. But I must say here as far as Permatang Pauh and Umno Pulau Pinang, they were very transparent and can be checked as every single donation for the elections was recorded.

* Many feel that Mahathir's open criticism against Abdullah also holds the message for Deputy Prime Minister Abdul Najib Razak to challenge the current leadership.

Obviously Najib has taken the position to support Abdullah although (it was done) not with very strong or convincing statements. But then Najib has always been known to be guarded and calculative. He is never known to have strong views. We would probably have to consult (Najib's wife) Rosmah on her views too (laughs). but I don't foresee this sort of challenge.

This is my personal view... Najib has always been seen to follow this feudal tradition... he's not the new liberal Malay except for the facade... I think he will continue to be supportive. But notwithstanding that, Mahathir has gone to the ranks and now going to Kelantan.

I think people are just curious... after all, many grew up with Mahathir and he is the only prime minister they had ever known... he has strong influence and people would want to know his views. I read the letters in malaysiakini and you can see that some people are strongly influenced by what he said. They feel that he has the experience as he has been there and that he knows what you don't know.

* Is it fair to blame Abdullah?

I don't think it is fair. I am not trying to provide or make excuses for Abdullah, who has failed to explain the situation. As the prime minister, you (Abdullah) cannot say that my style is not combative. He doesn't even have to be combative... all you have to do is explain the facts.

People want to know what went wrong, what was the problem - not only with the bridge and the APs. Mahathir said we used to have a lot of money, we had Agusta, and that Proton had RM1.8 billion in cash... you don't need an accountant to tell you that the company may have, for example, RM1 billion but the liabilities is RM8 billion... that shows that the company is in trouble. I don't understand why the government has so much difficulty in explaining this. As I said, I don't want to enter the fray... I prefer to continue with the reform agenda.

* Let's assume that you're Najib, what would you do?

That is the worst assumption one can make (laughs). Based on my experience as Mahathir's deputy, during the time when he (Mahathir) had some problems... what I did was give clear support on issues. I would also go back to the cabinet and hold special meetings to discuss the contentious issues. We would then talk to the party operators and party activists to explain things and get things cleared up. That was what we did.

We didn't just say: 'Saya menyokong' (I support the leadership) and leave it at that. I don't think it works that way. He (Najib) has expressed his loyalty (to Abdullah) which means that he is not prepared to make any deal with Mahathir. But on the quiet, messages were sent and negotiations took place - based on the information that I have - but I don't think he is prepared to go beyond that. From my experience, I would pledge loyalty and then I would go back to the party activists and operators on the strategy to take to defend the policy or to support the leader.

That has not happened and that is why there is so much commotion and turmoil on the ground. There is a speculation that Mahathir and his people are actually trying to weaken Abdullah so that he would not perform well in the next general election. This would eventually hasten his departure, allowing Najib to take over. Certainly that is the plan now. The challenge would be quite effective and the message to the Umno grassroots is that they should expect the opposition to perform better. Well, I am quite happy with that assertion. But is the plan to get Najib immediately as the prime minister? I don't preclude the possibility that this huge challenge is to bring back Dr Mahathir...

* Are you saying there may be a plan to bring back Mahathir as prime minister?
Yes, as prime minister. Remember, the whole basis of his (Mahathir's) criticism is not one or two policies but that the leadership has lost its focus. (Mahathir is contending that) the Malays cannot feel secure under the present leadership. He is contending that (under the current leadership) our (the Malays') interests are not protected and that interests have been sold to a foreign country, and in particular to Singapore.

Certainly there is a racist connotation there or the message is that the Chinese (continue to be a threat)... and therefore you need a strong leader to make amends and to chart a clear policy to protect the interests of this country before surrendering it to whomever, and in this case, Najib.
* If Najib eventually succeeds as prime minister, how would his administration be different from that of Abdullah's?

He has some level of sophistication and the facade of a modern establishment. But in terms of substantive departure of policies, I don't see that would happen. The general concern is the economic policy that caters for welfare of the majority in terms of distributive justice, economic policies that could garner the participation of all communities, and supportive of the plight of the poor - both urban and rural - among whom the majority are Malays.

Of course, this is a bone of contention here. But the shift of focus of an economic policy from racial equation and NEP (National Economic Policy) to my mind is critical for this country and critical for the Malays. I don't believe that he (Najib) is prepared to change this particularly when he sees that this is his father's (the late prime minister Abdul Razak) agenda and his duty is to implement them.

As for his take on other policies, for example, the issue of corruption. to the credit of Abdullah, he has been very strong in his rhetoric to fight corruption but not his deeds... but Najib is even lacking in that focus.
* Do you think that Najib's leadership would take us back to the bad old days of Mahathir?

Najib is more of a consensus person. I don't think objectively he would be as crude and tyrannical as Mahathir. But he subscribes fully to all the draconian laws, control of the universities and the media. He has nothing to show despite being among the first leaders who had been exposed to western education, especially on issues of human rights

* What is your advise to Abdullah in facing the turbulence ahead?
That would be unsolicited advice (laughs).

First, Mahathir must be given the right to speak although he had never understood that right because to him the rights of others must never be recognised. But I would also say that you (Abdullah) must respond and give detailed explanations on the issues, be it the bridge, APs, Proton, corruption and the issue of funding government resources
Secondly, Abdullah had spoke clearly on his position on the separation of powers. I think he has to honour that because people have supported him on that position that he had taken, and he must do it. He has to control the alleged excesses committed by members of his family and knowing him well from my younger days he has a strong and sincere feeling for the people and I don't believe that he has lost it. But people don't make judgment on your attitude or noble intentions but on your deeds. And the (Abdullah's) deeds, to my mind, are disappointing. I don't imagine him making major reforms but I did not imagine that he would be this bad.

* Is Abdullah incapable of doing what he had pledged? People are wondering especially after recent allegations of his son and son-in-law in their alleged government-related businesses.

His family is already in a very comfortable position, so he should put a stop to it. Even if they are capable, brilliant and have legitimate rights but these are sacrifices that leaders must make. Leaders must be clear on this.


Tomorrow: Bank Negara's multi-billion forex speculation


Read the 2nd Part INTERVIEW
ANWAR IBRAHIM’s Exclusive INTERVIEW – 2nd PART – REVEALS MALAYSIA’S current PROBLEMS; Way BEHIND NEIGHBOURS; 4 NAMED in RM30 billon FOREX LOSS in 90's

880 BROAD Spectrum New PROJECTS in 9MP worth RM15 billion – Datuk Seri ABDULLAH – 455 are government PROJECTS; Rest PRIVATE SECTOR Initiatives

Datuk Seri Abdullah Ahmad Badawi announced
880 new projects worth RM15 Billon to be tendered out under 9MP

PM Abdullah announced in a statement 880 new projects worth RM15 Billon to be tendered out under 9MP. Out of the total 455 are government projects while the rest is from private sector initiatives. This is only an initial list and additional list would be announced from time to time.

Details from Bernama, July 18, 2006 18:39 PM

KUALA LUMPUR, July 18 (Bernama) -- Prime Minister Datuk Seri Abdullah Ahmad Badawi on Tuesday announced that 880 new development projects worth RM15 billion under the Ninth Malaysia Plan would be tendered out soon.

The initial list of projects include the construction of 450 primary and secondary schools, roads, bridges, projects to increase water supply and the building of the integrated transportation terminal at Gombak in Selangor, he said in a statement issued from the Finance Ministry at Putrajaya.

Abdullah, who is also Finance Minister, said the road project is from Padang Besar to Kayu Hitam, the bridge would be between Semporna and Pulau Bum Bum in Sabah and the water project in Terengganu.

He said the government was aggressively pursuing programs and projects under the 9MP just a month after the plan was approved by Parliament.

While the list of projects announced was the initial list, he said the government would announce additional lists from time to time, after having obtained the required information from the respective ministries.

He said all ministries and agencies together with the Works Ministry have been directed to act quickly to come out with the project design and tender document so that projects could be implemented as soon as possible.

At the same time, "I want the entire government machinery to ensure that all other development projects approved under the 9MP are implemented quickly so that the people can benefit as desired by the government," said Abdullah.

The details of the tenders would be advertised in the local papers as well as on the government's website (www.gov.my), Works Ministry's website (www.kkr.gov.my) and the website of the Construction Industry Development Board Malaysia or CIDB (www.cidb.gov.my).

The list of projects can be obtained from the website of the Prime Minister's Office (www.pmo.gov.my), Ministry of Finance (www.treasury.gov.my) and Economic Planning Unit (www.epu.jpm.my).

He said a Programme and Project Management (PPM) methodology would be used by the Implementation Coordination Unit and the National Implementation Directorate to monitor the projects concerned.

The main feature of the PPM methodology would incorporate the best practices and process for the planning and implementation of these projects.

This includes ensuring that projects would be completed within reasonable costs and a fixed timeframe.

PPM would also develop a proven method to assess the effects and outcome accurately to ensure the programmes and projects implemented achieve their objectives.

"As the chairman of the National Implementation Action Body, I will monitor the implementation of these projects," the Prime Minister said.

And from Bloomberg
Malaysia to Implement 15 Billion Ringgit of Projects(Update 2)

Updated : 18-07-2006 Media Story By : Soraya Permatasari and Stephanie Phang

July 18 (Bloomberg) -- Malaysia plans to start implementing projects valued at about 15 billion ringgit ($4.1 billion) as it boosts government spending under its five-year development plan.

The 880 projects, which were announced by Prime Minister Abdullah Ahmad Badawi on his Web site today, include building 450 schools, as well as roads and bridges. The government will also invite bids for water supply projects in Terengganu and an integrated transportation terminal in Selangor.

Prime Minister Abdullah is aiming to bolster the economy with a 200 billion ringgit development budget for the 2006 to 2010 period announced in March as record oil prices threaten global demand for Malaysia's exports this year.
The nation in March announced an 18 percent increase in public development
spending in the current five-year plan.

Comments by Lee Heng Guie, an economist at CIMB Securities Sdn

``There are signs that external demand will be moderating, so you have to take control on the internal driver of growth,'' said Lee Heng Guie, an economist at CIMB Securities Sdn. ``One way is looking at the public spending side, that you hope will spill over into the private investment, construction, services and manufacturing.'' On Time
Abdullah will chair a national implementation body to monitor the projects, to ensure they are completed on time and at appropriate costs, he said. The prime minister has also instructed the relevant government agencies to speed up the design and tendering of the projects.

``I want the entire government machinery to ensure all the other development projects under the Ninth Malaysia Plan will be implemented quickly so the people will benefit from them,'' he said.

The government will announce more projects from time to time, Abdullah said in the statement. The tender for the projects announced today will be carried out in ``the short term,'' he said.

The relatively small size of the projects announced today, averaging 17 million ringgit each, will allow them to be implemented quickly and benefit a large segment of the economy, Lee said.

The Baku dam ready in 4 years time?

Since taking over as prime minister in 2003, Abdullah has moved away from large scale infrastructure projects such as the 9 billion ringgit Bakun hydroelectric dam started by the previous administration in favor of smaller projects that he says are aimed at enhancing the quality of life for Malaysians.

Cancellations

In December 2003, less than two months after Abdullah took over as prime minister, he postponed a $3.8 billion rail project awarded by predecessor Mahathir Mohamad's government to Malaysia Mining Corp. and Gamuda Bhd., saying the country needed to prioritize projects and rein in its budget deficit.

``Given that these are smaller projects, they will have a higher multiplier effect,'' Lee said. ``Given that external demand is slowing, government induced spending will be the key driver of growth next year.''
Lee expects Malaysia's economy to expand 5.6 percent next year, from 5.3 percent in 2006. The government may announce bigger projects in its 2007 budget announcement in September, he said, estimating a government spending budget of about 40 billion ringgit for next year.

and from Malaysia Business news
Malaysia unveils state projects worth US$4.1 bln
Updated : 18-07-2006 Media : Reuters

KUALA LUMPUR, July 18 (Reuters) - Malaysia on Tuesday unveiled $4.1 billion worth of state projects to help ginger up its economy and defuse criticism that a prime ministerial plan to develop the country was big on concept but short of details.

The government sought tenders for 880 projects, mostly schools and roads, that form the first major tranche of projects envisaged in a $54 billion, five-year development plan that Prime Minister Abdullah Ahmad Badawi launched in April.

"The government will announce the lists of other projects from time to time," Abdullah said in a statement published on the Website of his office, which listed projects said to also include water supply networks and a transport terminal.

Abdullah, in power since late 2003, has drawn stinging criticism from his predecessor, Mahathir Mohamad, for scrapping major state projects, including a bridge to neighbouring Singapore, initiated by Mahathir's administration.

Some businessmen have complained that state projects were hard to come by in Abdullah's administration, and Tuesday's plans could help remedy their woes. Mahathir ruled for 22 years, making him Malaysia's longest-serving premier.
He handpicked his successor, and still commands support within the ruling party, the United Malays National Organisation (UMNO), which Abdullah now heads.

Shares of firms considered likely to snare some of the work on offer have surged in the months since the plan was announced, although Abdullah gave little detail on specific projects at the time.

Attention has focused on construction companies such as state-controlled UEM World (UEMW.KL: Quote, Profile, Research), whose share price has almost doubled since mid-March to stand at 1.68 ringgit by close of trade on Tuesday.

Investors are also keen on MMC Corp (MMCB.KL: Quote, Profile, Research), which has risen 34 percent since mid-March, ending Tuesday at 3.22 ringgit and (UEMU.KL: Quote, Profile, Research), UEM Buildersup 40 percent since the middle of March, and standing at 1.23 ringgit on Tuesday.

read the lastest posting on Anwar Ibrahim Exclusive interview with M'siakini
pleanty of SAVVY REVEALATION

DOWJONES Predictions in ABDULLAH NEW 9MP projects; BROAD SPECTRUM, NONE for Johor, PENANG Bridge; MAIN Beneficiaries UEM World and UEM Builders

As our PM Datuk Seri Abdullah is annoucing the details of the goodies in the 9MP, a great deal of information is possibly already privy to selected influential leading providers of independent investment research and MorningStar (Dowjones) is no exception.

They have predicted announcements covered a broad spectrum, no projects for southern Johor state, and UEM World and UEM Builders would be the main beneficiaries. Or these are just common sense guess? Check these out with actual ones coming out today.

Perhaps they have missed out the role role of Petronas, see their Masterplan for the eastern corridor below.

the following Dowjones news is available from here

Malaysia PM To Announce New Devt Projects Tuesday -Spokesman
07-17-06 05:07 AM EST

KUALA LUMPUR -(Dow Jones)- Malaysian Prime Minister Abdullah Ahmad Badawi will announce Tuesday millions of dollars of development projects open for tender aimed at helping Malaysia become a developed economy by 2020, a government spokesman said Monday.

In addition to boosting the economy, the move could also allay concerns that Abdullah isn't paying enough attention to the economy, analysts say.

Unveiled in March, Abdullah's MYR220 billion five-year development plan focuses on improving infrastructure, developing poorer states and finding new sources of growth so the economy can expand an average 6% annually between 2006 and 2010.

"The projects to be announced tomorrow cover a broad spectrum," said the spokesman, who declined to be named or to provide specific details.

He dismissed market talk, however, that the announcement will include projects to develop southern Johor state, which neighbors Singapore, saying those projects will be unveiled later.

The move follows concerns that Malaysia's gross domestic product will miss the government's 6% growth forecast for this year, as overseas demand for goods and services has been slow.

It also follows stinging attacks on the government by former Prime Minister Mahathir Mohamad that have raised fears Abdullah - who is also the finance minister - is too preoccupied with politics to pay enough attention to the economy.

Abdullah's blueprint is short on the grandiose projects that have been the hallmark of previous such plans. Instead, it focuses on improving existing infrastructure, waterways and sewage systems.

It also adds new highways and bridges in congested urban centers such as Penang, where most of the country's key electronics and electrical manufacturing is located. It places stronger emphasis on developing commercial-scale agriculture to turn Malaysia into an agricultural exporter from being a net importer.

Shares of government-linked UEM World (1775.KU) and UEM Builders have risen sharply in anticipation that the two companies will gain from further government spending.

-By Hasan Jafri, Dow Jones Newswires; 603-2692-5254;
hasan.jafri@dowjones.com ;-Edited by Paul Baylis
____

and from Bernama

Petronas Drawing Up Masterplan For Eastern Corridor; July 17, 2006 19:33 PM

KUALA TERENGGANU, July 17 (Bernama) -- Petronas, which has been given the task of developing the Eastern Corridor covering Kelantan, Terengganu, Pahang and Northern Johor, is drawing up a masterplan for the region.

The projects to be implemented by Petronas in the corridor are separate from those approved under the Ninth Malaysia Plan (9MP), said Minister in the Prime Minister's Department Datuk Seri Effendi Norwawi. He said this to reporters after giving a briefing on the 9MP projects for Terengganu to Menteri Besar Datuk Seri Idris Jusoh, state executive councillors and senior government officials Monday.

It was the fifth briefing in a series he is giving to state governments which he expects to complete by the end of next month.

Effendi said Terengganu could achieve a growth rate of eight per cent annually during the 9MP period if all projects were implemented successfully.

Terengganu has been allocated RM7.4 billion under the 9MP.

see latest posting on 9MP announced Projects, Reports & Comments from Blomberg, Malaysian Business News

INDONESIAN TZSUNAMI Kills at Least 86 on JAVA ISLAND, hardest hit: PANGANDARAN and nearby CILACAP after EARTHQUAKE 7.2

The boats are all smashed up by the tzunami

Above: an aerial view of the beach

The afternath of the tzunami destruction

The destroyed houses

Above: The destruction of the beaches and the debris after the Tzunami

Below: The destruction wrecked on the buildings in the coastal towns

The body bags of the victims being tagged and collected

Above Fishing boats pushed to dry land by the Tzunami

The displaced people at a loss and wandering

the aftermath of the Tzunami surging waters

Aerial views of the destruction to the coastal towns and villages

Update 2 Jul 19 , 2.30 am
Deat toll risen to 339; and 601 or more still missing
Worst hit area Pangandaran beach - 181 killed, 85 still missing
and in Cilacap, 89 killed and more than 70 missing.

Most of those killed are local Indonesians, but a Pakistani and a Swedish nationals and 3 Dutchmen were also reported killed

and from
Deutsche Presse-Agentur; Java tsunami death toll increases
Tuesday, 18 July 2006, 13:28 GMT

The death toll from a tsunami that struck the Indonesian island of Java has risen to at least 339, health ministry officials say. Another 136 people are reported missing around Pangandaran, the worst-hit area.

The tsunami was triggered by a 7.7 magnitude undersea earthquake that struck off Pangandaran on Monday afternoon, causing a 2m-high wave. Indonesian troops have arrived to help with the search for the missing and assist the hundreds of injured.

At first light, rescuers were confronted with the sight of bodies in the branches of trees, and in the rubble of smashed hotels and houses. Boats and cars were washed inshore by the water and the streets were littered with debris.
______________________________________

I saw enormous waves engulf our beach and sweep away cars and boats. - Eyewitness Elan Jayalani
______________________________________

Survivors spoke of a wall of water and a loud roar.

"When the waves came, I heard people screaming and then I heard something like a plane about to crash nearby, and I just ran," Uli Sutarli, a plantation worker who was on Pangandaran beach, told Reuters news agency.

A Belgian tourist said he was in a beachside bar when the wave hit. "I saw this big cloud of dark sea water coming up to me," he said.

Missing

In addition to the dead, about 450 people have been injured and around 52,700 people have been displaced, a spokesman for Indonesia's health ministry told the French news agency AFP.

Hospitals were said to be packed with the injured seeking treatment and people searching for their relatives.

Body bags and other essential items have begun to arrive, and relief aid such as tents and food are being sent for the thousands of people who have fled their homes.

The UN's World Food Programme said it was sending 15 metric tons of noodles and high-energy biscuits to the survivors.

A number of foreign nationals were believed to be among the injured.
Sweden's foreign ministry said two Swedish children from a family on holiday
in the area were believed to be missing.

Exact figures for the numbers of dead are contradictory, but Vice President Jusuf Kalla said the toll was expected to rise in coming days.

Warning

Rumours that another tsunami was about to hit had people fleeing their homes in the early hours of Tuesday.
______________________________________
By Achmad Sukarsono
JAKARTA (Reuters) - Lack of funds has crippled the creation of a tsunami warning system, leaving earthquake-prone Indonesia without a single working detection buoy, an official said on Tuesday, a day after a tsunami killed over 270 people.

No sirens alerted residents in Pangandaran beach the worst-hit area of Monday's tsunami, after a 7.7 magnitude quake struck 180 km (112 miles) offshore in the Indian Ocean.
Edi Prihantoro, an official at Indonesia's Ministry of Research and Technology that oversees a national warning project, told Reuters the southern Java area had no system to warn people of coming waves.

Indonesia deployed two tsunami buoys last year off Sumatra island, part of a five-year project to install similar detectors all around the world's largest archipelago. But when asked how many of them were operational, Prihantoro said: "None."

"We need at least 22 buoys to cover all of Indonesia. We have received two from Germany and they were deployed months ago. However, both of them are damaged now," he said.
Both have since been removed from the sea and one of the damaged buoys is sitting in a warehouse in west Sumatra awaiting repairs.

Geneva - Early warning systems worked well in alerting people to the earthquake and tsunami which struck the island of Java on Monday, according to UN officials.
'The early warning functioned well and was issued in time to warn Nicoba Island and even Australia,' said a spokesperson for the Office for Co-ordination of Humanitarian Affairs, OCHA. 'The response had been very quick,' she added.

However, the Indonesian Red Cross reported that local people had fled after being alerted by the cries of neighbours.
'We felt the earthquake and then later we saw families moving away from the sea, screaming tsunami, tsunami,' said Pak Limin. He fled his home in one of the worst hit areas at Pangandaran in West Java with his daughter in search of safer ground.

Stockpiled supplies left over from international appeals for the December 2004 Tsunami in Indonesia would be used, OCHA confirmed. UN staff on the spot had been mobilised and the response had been very quick.

At least 245 people are thought to have died, according to local officials, when waves two metres high swept inland triggered by the 7.7 magnitude earthquake.
The figure may still change as rescuers work their way through the debris. Up to 40 000 may have been forced to leave their homes though many were now returning. Around 60 per cent of the population was thought to be in need of help.

**********************************************
Update 1 July 18 06: as of 6pm local time, the Indonesian Health Ministry has announced the death toll as 327 people killed (with at least 4 foreigners) , 430 injured in the southern and central part of Java island. 150 persons are still missing and 52,700 people have been displaced by the surging Tzunami waters

and from ABC (Australia Broadcasting Corp)
Update: Tuesday, July 18, 2006. 7:34pm (AEST)
Devastating tsunami ... at least 300 now feared dead.

Devastating tsunami ... at least 300 now feared dead. (AFP)

Australia survivor tells of 5-metre tsunami

Australian survivors of a devastating tsunami on Java's south coast say that up to six waves struck the area yesterday.

At least 300 people are now feared dead and many remain missing.

Indonesia's health ministry crisis centre says that Swedish, Japanese, Dutch and Saudia Arabians are among the hundreds wounded by the tsunami.

Australian survivor Graham Mulligan was today sifting through the rubble of his bay surf shop in Batu Keras, west of Pangandaran.

"The first we knew of the tsunami was a roar," he said.

Adding that he and his surfing mates watched as fishing boats were thrown into the air in the bay, which is a popular surfing spot for Australian tourists.

Mr Mulligan said there were about six waves, the second was the biggest, about four or five metres high, he said.

The surf shop businessmen say they will not leave but are committed to rebuilding.

No tsunami warning system buoys were in place when an undersea earthquake caused the massive waves to strike the coast.

Seismologists say that because the undersea earthquake was not as powerful and covered a smaller physical area than 2004's Boxing Day's tsunami, the triggered waves did not have the same destructive force.

But survivors are wondering why a proposed tsunami early warning system was not in place along Java's coast, given it is as vulnerable to undersea earthquakes as the island of Sumatra, where Indonesian authorities say two early tsunami warning buoys are now in place.
Assistance

Foreign Affairs Minister Alexander Downer says Australia has sent two representatives to Indonesia to assess what might be done to help victims of the tsunami.

Mr Downer says an Australian Defence Force officer and an AusAid staffer are heading to the affected area.

Mr Downer says Australia has also raised concerns with Indonesian authorities about rumours that some prisoners with links to the Bali bombings were caught up in the tsunami.

"So far they have not been able to either confirm or deny any of the rumours," Mr Downer said.

"That's not to say that three Bali bombers have been drowned or have been affected by the tsunami, we simply just do not know at this stage and we're endeavouring to find out."


REPORT from AP

By IRWAN FIRDAUS; The Associated Press Monday, July 17, 2006; 5:11 PM

PANGANDARAN, Indonesia -- A tsunami crashed into beach resorts and fishing villages on Java island Monday, killing at least 86 people, leaving scores missing and sending thousands climbing trees or fleeing to higher ground to escape.

As darkness fell at least 30 bodies were piled up at one clinic near the coast, including several children covered in white sheets, and thousands of terrified residents set up camp in the hills overlooking the sea.

Regional agencies issued bulletins Monday saying a 7.7-magnitude earthquake that struck 150 miles off Indonesia's southern coast was strong enough to create a tsunami. But they did not reach victims on Java, which was spared by the devastating Asian tsunami of 2004, because the island has no warning system in place.

The hardest-hit area appeared to be Pangandaran, an idyllic beach resort on the southern coast popular with local and foreign tourists. People shouted "Tsunami! Tsunami!" as the more than 6-foot-high wave approached, some climbing trees or crowding into inland mosques to pray, witnesses said.

Boats crashed to shore, some slamming into hotels, and houses and restaurants were flattened along a 110-mile stretch of the densely populated island's southern coast.

Jan Boeken, from Antwerp, Belgium, said he was sitting at a bar when his waiter started screaming.

"I looked back at the beach and saw a big wall of thundering black water coming toward us," said the 53-year-old, who escaped with minor cuts to the head and knees. "I ran, but I got trapped in the kitchen, I couldn't get out. I got hit in the body by debris and my lungs filled with water."

The Indonesian Red Cross, police and district officials said at least 82 people were killed and 77 others were unaccounted for, most in Pangandaran and nearby Cilacap. El-Shinta radio reported four other deaths.

"We are still evacuating areas and cross-checking data," Red Cross official Arifin Muhadi told The Associated Press.

Most of the victims were believed to be Indonesians, but at least one Swedish tourist was being treated for injuries at a hospital near Pangandaran and his two sons, 5 and 10, were missing, said Jan Janonius, a Swedish Foreign Ministry spokesman.

A witness told el-Shinta he saw the ocean withdraw 1,500 feet from the beach a half-hour before the powerful wave smashed ashore, a typical phenomenon before a tsunami.

"I could see fish jumping around on the ocean floor," Miswan said. "Later I saw a wave like a black wall."

Local media reports said the wave came as far 900 feet inland in some places. Buildings sit close to the beach in Pangandaran.

Pedi Mulyadi, a 43-year-old food vendor, said he was waiting on the beach for customers when the wave struck, killing his wife, Ratini, 33. The pair were clinging to one another when they were swallowed by the torrent of water and pulled 300 feet inland, he said.

"Then we were hit, I think by a piece of wood," Mulyadi said. "When the water finally pulled away, she was dead. Oh my God, my wife is gone, just like that."

Roads were blocked and power cut to much of the area. Damage and casualties were reported at several places along the 110 miles of beach affected, officials and media reports said.

"All the houses are destroyed along the beach," one woman, Teti, told el-Shinta radio. "Small hotels are destroyed and at least one restaurant was washed away."

Indonesia has installed a warning system across much of Sumatra island but not on Java. The government has been planning to extend the warning system there by 2007.

Java was hit seven weeks ago by a 6.3-magnitude earthquake that killed more than 5,800 people, but was spared by the 2004 tsunami that killed 216,000 people, nearly half of them in Indonesia's Aceh province.

The May earthquake did not affect the part of the island hit by Monday's tsunami, which was spawned by a quake that struck deep beneath the Indian Ocean 150 miles southwest of Java's coast.

The quake struck at 3:24 p.m., causing tall buildings to sway hundreds of miles away in the capital, Jakarta. The strength of the temblor was revised upward from magnitude 7.1 after a review by a seismologist, the U.S. Geological Survey said. The quake was followed by a series of powerful aftershocks.

After the quake, the Pacific Tsunami Warning Center and Japan's Meteorological Agency issued warnings saying there could be a tsunami in the Indian Ocean. The tsunami struck Java about an hour after the quake and its effects could be felt as far as Bali island and near Australia's Coco Islands.

Indonesia is on the so-called Pacific "Ring of Fire," an arc of volcanoes and fault lines encircling the Pacific Basin.

see also last post...

EARTHQUAKE 7.2 hits INDONESIA Island– epicenter 220 miles South JAKARTA (TALL Buildings swayed 2 mins); 2 metre TZUNAMI – 5 Killed in BEACH RESORT

see latest post (Jul 24 06)

INDONESIA EARTHQUAKE (Jul 23 06) - 6.6 - Sparks TZUNAMI Scare; CHINA EARTHQUAKE (Jul 22 06) 5.1 Struck SW Yunnan Province; Death Toll Risen to 22

EARTHQUAKE 7.2 hits INDONESIA Island– epicenter 220 miles South JAKARTA (TALL Buildings swayed 2 mins); 2 metre TZUNAMI – 5 Killed in BEACH RESORT

A powerful 7.2 Richter Scale Earthquake (epicenter at 220 miles south of Jakarta, according to CNN ) hit Indonesia and sending a 2m high Tsunami crashing onto a beach resort on a Java island killing at least 5 people and causing extensive damages to hotels and houses.

Tall building as far as the capital city Jakarta swayed for 2 minuses. It happened at 3.24pm (1824 AEST) approximately 4.19 pm (Malaysian time). Witnesses said people rushed to the hills in Pangandaran (South west town in Java island, see above) to escape the tsunami.

There was another 6.1 aftershock 2 hours later. The Pacific Tsunami Warning Centre although it issued an earlier bulletin warning of a possible tsunami, gave a VERY INACCURATE prediction

and from the Sydney Morning Herald, July 17, 2006 - 7:46PM

An earthquake with a preliminary magnitude of 7.2 triggered a tsunami warning on Monday on Indonesia's Java and Sumatra islands and Australia's Christmas and coco islands, tsunami and meteorological agencies said.

The earthquake, which hit at 3.24pm (1824 AEST) caused tall buildings to sway in Jakarta and at least one other city on Java Island for around two minutes, witnesses said.

"There is a possibility of a destructive local tsunami in the Indian Ocean," Japan's Meteorological Agency said in a statement, adding that if triggered, waves should start reaching shores in the region within an hour.

However, the Pacific Tsunami Warning Centre although it issued an earlier bulletin warning of a possible tsunami, said that based on historical data there was no threat it would be destructive or widespread.

There were no immediate reports of injuries or damage in Indonesia or on Christmas Island.

"We haven't felt anything," Katrina Bird, a tourism official on Christmas said by telephone.

Indonesia is prone to earthquakes because of its location on the so-called Pacific "Ring of Fire," an arc of volcanoes and fault lines encircling the Pacific Basin.

A massive 2004 Indian Ocean tsunami killed at least 216,000 people - nearly half of them in Indonesia's Aceh province.

from Cnn

The quake had a magnitude of 7.2, and was centered 220 miles south of Jakarta in the Indian Ocean, according to the U.S. Geological Survey's National Earthquake Information Center Web site.

and from Ireland on line
Two-metre tsunami damages homes on Java; 17/07/2006 - 11:14:14

A two-metre tsunami has damaged homes and an hotel on Java island, witnesses have told a local radio station.

An earthquake with a preliminary magnitude of 7.2 triggered a tsunami warning earlier today on Indonesia's Java and Sumatra islands and Australia’s Christmas and Cocos islands.

The earthquake, which hit at 3.24pm (9.42am Irish time) caused tall buildings to sway in the Indonesian capital Jakarta and at least one other city on Java Island for about two minutes.

“There is a possibility of a destructive local tsunami in the Indian Ocean,” Japan’s Meteorological Agency said in a statement, adding that if triggered, waves should start reaching shores in the region within the hour.

The Pacific Tsunami Warning Centre issued a similar bulletin.

There were no immediate reports of injuries or damage in Indonesia.

The Japanese and Pacific tsunami warning centres did not give the depth of the quake, but local media reports quoting Indonesian officials said it was more than 18 miles below the ocean floor.

Indonesia is prone to earthquakes because of its location on the so-called Pacific Ring of Fire, an arc of volcanoes and fault lines encircling the Pacific Basin.

A massive 2004 Indian Ocean tsunami killed at least 216,000 people – nearly half of them in Indonesia’s Aceh province.

On May 27, a magnitude-5.9 earthquake devastated a large swath of Java Island, killing more than 5,800 people.

.......10.00pm .more updates as the news filtered in

and the AFP report released by Bernama at 20.23 pm

Five killed after tsunami hits Indonesia; July 17, 2006 20:23 PM

JAKARTA (AFP) - Five people have been killed when waves hit buildings on the south coast of Indonesia's Java island after a strong undersea quake triggered a tsunami alert, Indonesia's president said.

"Based on reports I have received, five people have been killed," President Susilo Bambang Yudhoyono told reporters. "The search is ongoing for those who are still missing." "It is important to take care of the dead and the injured," he said Monday.

Yudhoyono urged residents in coastal areas to move to safe places.

"We call on people to evacuate vulnerable areas. There have been at least five aftershocks," he said, adding that military and rescue teams had been dispatched to the disaster zone.

Witnesses said waves hit buildings and houses on the south coast following the earthquake measured by the national geophysics agency at 5.5 on the Richter scale.

"Waves suddenly came and we ran to the hills. Four people from my group are still missing," said a woman who gave her name as Teti, and who said she had been accompanying Dutch tourists when the waves hit.

"Many small hotels were destroyed," she told ElShinta radio. "Hotels on the beach front of Pangandaran... the front parts are hit. Boats have been thrown into hotels," she said.

She told the radio that she saw three dead bodies being collected by residents. Pangandaran is on the south coast of West Java province.

Another resident said the damage was "very bad." "Children were crying and many are injured," he told ElShinta. Local military chief Asep Kurniadi said waves were as high as three meters (about 10 feet).

"The tide wasn't too long and now water has returned to the normal level," he said from the West Java town of Garut.

The earthquake at 3.19 pm (0819 GMT) also rattled the capital Jakarta. An aftershock measuring 5.3 on the Richter scale followed about an hour later.

and the AP reports filed at 8.25 am EDT
Quake Triggers Indonesian Tsunami; 5 Dead

By CHRIS BRUMMITT Associated Press Writer ;Jul 17, 8:25 AM EDT

JAKARTA, Indonesia (AP) -- A powerful earthquake sent a 6-foot-high tsunami crashing into a beach resort on Indonesia's Java island Monday, killing at least five people and causing extensive damage to hotels, restaurants and homes, the president and witnesses said.

People ran up a hill to escape the wave on Pangandaran beach in west Java, a woman who identified herself only as Teti told el-Shinta radio station.

"All the houses are destroyed along the beach," she said. "Small hotels are completely destroyed and at least one restaurant was washed away."

President Susilo Bambang Yudhoyono told reporters that at least five people were killed.

The tsunami followed a quake that struck deep beneath the Indian Ocean 150 miles southwest of Java's western coast at 3:24 p.m. local time, causing tall buildings to sway as far off as the capital Jakarta.

The earthquake had a preliminary magnitude of 7.2, the U.S. Geological Survey said. It was followed by a 6.1-magnitude aftershock two hours later.

Transport Minister Hatta Radjasa said he had heard reports about a tsunami striking two seaside towns, and urged people living on Java's southern coast to move inland in an orderly fashion.

"Everyone should move from the beach," he told el-Shinta.

The earthquake had triggered a tsunami warning on Indonesia's Java and Sumatra islands and Australia's Christmas and Cocos islands. "There is a possibility of a destructive local tsunami in the Indian Ocean," Japan's Meteorological Agency said in a statement.

The Pacific Tsunami Warning Center issued a similar bulletin.

Indonesia is prone to earthquakes because of its location on the so-called Pacific "Ring of Fire," an arc of volcanoes and fault lines encircling the Pacific Basin.

The 2004 Indian Ocean tsunami killed at least 216,000 people, nearly half of them in Indonesia's Aceh province.

On May 27, a magnitude-5.9 earthquake devastated a large swath of Java Island, killing more than 5,800 people.

WRITTEN ACCOUNTS by Reme Ahamd and Leslie Lopez on POWER TUSSLE IN MALAYSIA -WHAT LIES BEHIND the STANDOFF in KL? & their PHOTOS

Both of them seem too have the conclusion that Najib would assume the throne sooner than expected but Abdullah wanting a place in Malaysian history and he deserves it very much would most unlikely throw in the towel so easily.

PM Abdullah speaking to his Supporters on his "home coming"
and his message: (See below for more pics.)
“I was surprised by this barrage of supporters. But thank God I am well now and my voice is better and my health is better. After this I have to get back to work. We will announce the measures and projects for the 9MP on Tuesday.”

So we expect more fireworks in the weeks and months ahead when the battle cry
gets louder. Meanwhile we look forward to his Tuesday's announcement

TRANSCRIPT of Reme Ahmad S'PORE GLOBAL FORUM Talk : Dr MAHATHIR vs Datuk Seri ABDULLAH and other KEY PLAYERS - NAJIB & ANWAR IBRAHIM

was posted earlier on and available from

Transcript- Reme Ahmad

Here is the WRITTEN ACCOUNT by Reme Ahmad found at

http://straitstimes.asiaone.com/STI/STIMEDIA/sp/gforum/2.html

WITH former prime minister Tun Dr Mahathir Mohamad seemingly intent on shoving his successor out of office, political manoeuvring by the key players in Malaysia looks set only to intensify.

Tun Mahathir has said there are several issues with the current administration that he is not happy about - apart from those he has raised. So apparently there are more attacks to come.

He has blasted the Abdullah administration for cancelling the Johor Causeway bridge, on the issue of Approved Permits for imported cars and concerning Proton and its future. Last weekend, he upped the ante by hinting that Prime Minister Abdullah Badawi has handed some of his powers to a coterie of young officers, including son-in-law Khairy Jamaluddin.

Tun Mahathir is now expected to reveal other issues over coming weeks to undermine PM Abdullah.

At the moment, it is very difficult for PM Abdullah to fight fire with fire for fear that he will be seen as ungrateful of the man who put him on the throne.

But government ministries and agencies are expected to reveal alleged mismanagement and wrongdoings during Tun Mahathir's 22-year rule.

If in previous months officials of the Abdullah administration have been using kids' gloves in revealing these issues out of respect for 82-year old Tun Mahathir, a more vigorous response and even those damaging to him are now expected.

Some of the alleged scandals of the Mahathir era are expected to be brought to life again by a man who just months ago was a nearly forgotten leader, ex-deputy premier Anwar Ibrahim.

Datuk Seri Anwar has already filed court papers in a case involving Tun Mahathir containing mouth-watering details of alleged shady deals during Tun Mahathir's administration.

The battle is for the hearts and minds of Malaysians and especially for Umno leaders.

From the Mahathir side, they will basically be asked to decide whether PM Abdullah and his men are mismanaging the country, and should be replaced.

From the PM's side, Malaysians will be asked to state that PM Abdullah should be allowed to continue, because most of his troubles today are in fact inherited from his predecessor and he has to clean up the house.

Amid all this, one leader who is trying to keep his head below the turbulent weather but whose role will become more crucial in coming days is Deputy Prime Minister Najib Razak.

He has openly said he is behind PM Abdullah, and aides say he will not budge from this position.

Still, that has not stopped speculation that the 53-year-old politician - whom Mahathir said was his favourite to be PM - might be tempted, or perhaps forced by events, to shift if the going gets tougher for PM Abdullah.

Other top leaders are nervously watching, concerned that the gathering storm will spare few politicians.

TRANSCRIPT of Leslie Lopez S'PORE FORUM Talk : What LIES BEHIND the STANDOFF between Dr Mahathir and PM Datuk Seri Ahmad Abdulah in KL
was first posted and available at:

Transcript - Leslie Lopez

Here is the WRITTEN ACCOUNT by Leslie Lopez found at

http://straitstimes.asiaone.com/STI/STIMEDIA/sp/gforum/1.html

Malaysia's Mahathir Mohamad's harsh public attacks over policy issues have presented Prime Minister Abdullah Ahmad Badawi's nearly three-year-old administration with its most serious political crisis.

Dr. Mahathir's public admonishment of the Mr. Abdullah's government has put the business community on edge and raised concern that it could trigger a spilt in the ruling United Malays National Organisation, or UMNO, party.

But the deepening rift between the two politicians isn't just about policy differences and personality clashes.

At stake in this gripping political drama is a clash over what values should shape future ethnic Malay/Malaysian society.

Over the last two decades, Dr. Mahathir has aggressively imposed his vision of modernisation on his Malay race with the state playing a central role in economic development.

And to push his agenda, Dr. Mahathir was left with little choice but to adopt placing a very autocratic style,strict limits in the independence of key institutions.

In the process, he created a culture where Malays, and much of Malaysia, identified with a strong leader who could dispense patronage in a protected economy.

The vision Mr. Abdullah espouses is anchored in the thinking of Malaysia's political elite before Dr. Mahathir assumed power; one that places a premium on values such as egalitarianism, democracy and a sense of fair-play.

Mr. Abdullah's reform agenda, which includes bringing more independence to watchdog agencies, and pushing for greater transparency in the police force and the awards of large contracts, clashes directly with the systems and practices that have been established during the last two decades of Dr. Mahathir's premiership.

That's why this fight isn’t just a clash between the current and former premiers. It also includes wide swathes of Malaysia's establishment that is resistant to change.

Dislodging Mr. Abdullah, however, won't be easy.

But there are concerns that Dr. Mahathir, Malaysia's redoubtable strongman who has survived numerous challenges to his leadership during his 22 years in power, could inflict some serious political grief on Mr. Abdullah in coming months.

One potentially destabilising issue is political succession in Malaysia.

The 66-year-old Mr. Abdullah and Dr. Mahathir are considered to be from the same political generation, and many UMNO members believe that the next leadership succession, which would pave the way for deputy premier Najib Abdul Razak, should take place sooner to make way for the party next generation of leaders to move up the political ladder.

Several analysts say that Dr. Mahathir's political agitation against Mr. Abdullah would fit in nicely for those seeking to push forward the succession timetable.

MORE Pics of his home coming,

Where have all the big guns in UMNO gone? Samy was reported to be away in his
hideout at Sungei Siput and Dr Lim K Y was "too sick" to attend?

Read the latest posting (Jul 17 06)
7.2 Earthquake & 2 m Tzunami; 5 killed

MPs ATTACK Air ASIA in Parliament; CEO TONY Fernandes response to Criticism; TRANSPORT Minister; Datuk CHAN K C defends LIFTING FLOOR Prices for MAS

Fong Po Kuan (MP Batu Gajah)
"I boarded Air Asia flights and between 2-3 times and I saw flies. Stewardesses sprayed perfumes, but still I saw flies. Why is this happening?"

Datuk Badruddin Amiruldin (MP Jerai)

"The Air Asia CEO simply criticized the government and MAS even scolding the government for granting MAS the right to offer discounts. He acts like a gangster and he is a big headed person"

Datuk Mohd Alwi Che Ahmad (MP Kerteh)
"The advertisement is perfect. Whose fault is it? Is it the
people who advertised or the agencies that allowed such
advertisements? Whose fault is this?
Should we allow this to continue?"

Datuk Bung Mokhtar Radin (MP Kinabatangan)
"Flights tickets are sold as low as RM10. But when I called
they claimed the tickets have been sold out. If you make
the booking one year in advance, you will get tickets.
I think the government and the people
are duped by Air Asia. It is a daylight robbery"

MP Sekijang
"The tickets are not cheap actually. That is we don’t want the rakyat to be cheated and victimized. If the matter can be corrected why can’t we do that?"

Air Asia took center stage in Parliament on Wednesday’s afternoon sitting with MPs questioning why the budget carrier received special treatment. MPs also charged that Air Asia fares are actually expensive contrary to the advertised fare. Flights are frequently rescheduled and prices of food sold during flight are exorbitant.

Datuk Tony Fernades, CEO Air Asia response to the criticism

“I think people are happy with our product, of course it should be better. We are four year old we don’t received any subsidy. We had to do this all on the back of our own growth. And we get better and better and I think that the general opinion is that if we are not a good product, 20 million people would not have flown with us.”

And what did our Tranport Minister said?

"So we take note of all that and convey these to the relevant airlines, Air Asia or MAS so we will take the necessary steps to make sure service levels of all these air lines are up to level"

Support for Government 's descision to abolish the the floor ceiling prices for MAS.

He denied that the government’s original plan to allow MAS to reintroduce domestic air fare discount was helping the national carrier. It was part of the rationalizing plan.

"I don’t want to enter into a public debate with anybody but as I have said yesterday, this is a cabinet decision and made in the interest of the people. He is also prepared to meet Air Asia CEO Tony Fernandez for discussion if he so requested"

The government decision has already impacted the share market. Shares of Air Asia felled to the lowest in 1-1/2 years after the government stuck to its decision to allow MAS to offer discounts on domestic routes.

Air Asia shares fell 4.3 % to RM1.32 noon the lowest since Nov 2004. The shares have declined 10.8% since Monday whilst the MAS shares have gained 0.4% to RM2.86 noon and gained 2.1% since Monday.

AirAsia's shares have taken a beating since Monday after national carrier Malaysia Airlines announced that the government had authorised it to offerdiscounted fares on domestic routes.

The stock extended its losses yesterday, falling to RM1.38 from RM1.41 on Tuesday.

Under an agreement from Aug 1, MAS will give up the bulk of domestic routes to Air Asia . MAS was given 22 routes and told to charge the full fares The decision has now been changed and MAS is set to have a price war to cut fares. The government says the decision will create more level playing field for both air lines. At the end of today’s trading Air Asia was amongst the ten most active stock closing at 1.30.

Report on
AirAsia to protest to Cabinet;By M.KRISHNAMOORTHY

PETALING JAYA: AirAsia will take its grouses to the Cabinet next week on the lifting of the floor price for Malaysia Airlines, which the low-cost carrier deems is unfair competition.

Its chief executive officer Datuk Tony Fernandes said he was shocked at MAS’ announcement of the lifting of the minimum prices and the three new domestic routes it was going to fly after Aug 1.
“At no point was it agreed for MAS to allow discounted fares or supersavers, because the rationalisation process was to keep two different markets,” he told reporters.

“This is shocking and we are surprised that MAS is announcing this and not the Government, as agreed earlier. We hope to seek clarification from the Cabinet on these new routes and the subsidy of RM1bil.

“This is being paid by the taxpayers and we are not getting any subsidy when both airlines are listed on the stock exchange.

“We understand MAS has made a presentation to the Cabinet and we would like to give our side of the story for the betterment of the aviation industry in Malaysia.”

It was reported yesterday that MAS had been given permission to continue offering discounted fares on domestic routes, and the Government had also decided that the national carrier should also fly the Johor Baru-Kuching, Kuala Lumpur-Tawau and Kuala Lumpur-Sandakan routes which were deemed to have a high volume of business travellers.

Fernandes said MAS was not allowing AirAsia to compete on a level playing field and the unfair competition may force it to tie up with two foreign carriers, which had approached AirAsia for interlining into Malaysia.

“It is unfair to subsidise MAS when we do not get the same rights like the national carrier to fly to Singapore and other international destinations,” he said, adding that AirAsia has only been given five exclusive domestic routes, which it had already started.

They are Johor Baru-Kota Kinabalu, Johor Baru-Kuching, KL-Sandakan, KL-Tawau and Kota Kinabalu-Miri.

“If MAS does not want to work with us, they can have all these five routes,” he said.

“The national carrier also has several advantages over us, like several international routes, a privelege we are not given.”

Fernandes explained that the Transport Ministry, MAS and AirAsia had met for two years and worked out details of a fair plan and it would be unfortunate to see the plan not working out as envisioned by the Government.

“The Government wanted two strong airlines, MAS and AirAsia, to work together for the progress of the aviation industry in the country, regionally and internationally, and the Government had no intention to see wasteful competition,” he added.

and here is the latest AP report carried in the Sunday Star (Jul 16 06)
Clouds loom over Malaysian budget carrier AirAsia's future

KUALA LUMPUR, Malaysia (AP): It has been blue skies for Malaysia's no-frills carrier AirAsia since it begun flying five years ago, but dark clouds are looming on the horizon.

AirAsia, a top pick of foreign investors since it was listed in November 2004, is losing its shine as high fuel costs, weaker-than-expected profits, huge capital commitments and increasing competition threaten its growth, analysts say.

Its share price plunged 12.2 percent last week to 1.30 ringgit (US$0.36; euro0.30) on Friday -- the lowest level in 1 1/2 years -- after the government said it would allow rival Malaysia Airlines to offer discounts on domestic routes.

Some brokerages have downgraded the stock to a "sell'' amid concerns the move may trigger a price war and hurt AirAsia's earnings.

Foreign investors hold 45 percent of AirAsia, the region's largest budget carrier in fleet size.

"In the volatile airline industry, it is difficult to maintain a market darling status for too long,'' said Peter Negline, aviation analyst with JPMorgan Securities in Hong Kong.

"We believe AirAsia is about to lose this as its poor earnings track record, high oil prices, lackluster franchises, large capital expenditure program and increasing domestic competition all hit the company,'' he said.

AirAsia has grown phenomenally since it started operations in January 2002.

Profitable from Day 1, it now has more than 1,600 employees and flights to more than 100 destinations in eight Southeast Asian nations, China and Macau.

Signaling Chief Executive Tony Fernandes' big ambitions, the airline signed an agreement last year to buy 60 new Airbus A320s over the next five years for nearly US$4 billion (euro3.3 billion), with the option to buy another 40 of the same aircraft.

It also has two 49 percent-owned subsidiaries in Indonesia and Thailand. But soaring fuel costs have hurt AirAsia's profits. In the 2005 financial year, the carrier posted a net profit of 111.6 million ringgit (US$31 million; euro26 million) in its Malaysian operations, 30 percent below its official target.

In March, AirAsia received a boost after winning rights to take over the bulk of domestic air services from Malaysia Airlines from Aug. 1 under government efforts to help the national carrier cut losses and become profitable again by 2007.

Under the revamp, Malaysia Airlines will serve just 22 out of 118 local routes and was told to charge full fares.

But the joy was short-lived when the government made a U-turn in policy this month, allowing Malaysia Airlines to cut fares and setting the stage for a price war with AirAsia, which has protested the move.

Transport Minister Chan Kong Choy last week said the government made the decision to create fair competition and a "level playing field'' between the two airlines.

Despite dropping many routes, Malaysia Airlines still services the most lucrative markets and can now effectively compete with AirAsia in its economy class segment, analysts say.

"AirAsia has reached a crossroad,'' said Muhamad Khair Mirza, aviation analyst at AmSecurities. "It is operating in an environment that is not conducive to its growth.''

The immediate hurdles for AirAsia are to meet large financial commitments, balance its growth and profit target, and overcome competition from Malaysia Airlines, he said.

"AirAsia is no longer a growth earnings story. It can become a market darling again only if the government, or a local white knight, comes in to revive its fortune,'' he said. "Otherwise, the stock will remain lackluster.''

JPMorgan's Negline said the national carrier had been viewed as a "weak cousin'' of AirAsia but it is becoming a formidable foe thanks to major restructuring that has involved laying off staff, reducing capacity and selling noncore assets.

On the other hand, AirAsia may be growing too fast and faces new pressure, he said. "The low-cost carrier model thrives on simplicity, but AirAsia's business is becoming increasingly complex,'' he said.

AirAsia risks getting "indigestion'' from excessive expansion, new fleet addition and cash-flow burdens as high oil prices hit earnings, Negline said.

AirAsia chief financial officer Raja Mohamad Azmi Raja Razali said investors are disappointed by the government's about-turn but the company is still profitable and its cash-flow remains healthy.

"Perception has turned negative because investors fear the domestic air rationalization will hurt our business but fundamentally, nothing has changed,'' he told The Associated Press.

"There are growing pains from time to time but we will manage it in our stride. We are not slowing down in our growth, it's business as usual.''

Rising oil prices pose a big challenge but the airline could further raise its fuel surcharge and hedge its fuel requirements to cope with it, he added.

Update: 17th Jul 2006,
UUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

AirAsia May Get Easier Access to Fly Overseas Routes(Update 2)

Updated : 17-07-2006 Media : Bloomberg; tory By : Chan Tien Hin

(Adds share price in the fifth paragraph.)

July 17 (Bloomberg) -- Malaysia's government will include AirAsia Bhd. in its bilateral talks for easier access to overseas routes, a move that will hasten plans of Southeast Asia's largest budget carrier to fly to India and China.

The Malaysian government will also sent up a committee to monitor the domestic aviation industry to prevent ``predatory'' pricing after state-owned Malaysian Airline System Bhd. was allowed to offer cheaper fares on some domestic routes, AirAsia, based outside Kuala Lumpur, said in a statement today.

Malaysia gave these concessions to AirAsia after the government earlier this month removed the floor prices for Malaysian Airline on some domestic routes, a move opposed by the discount carrier. The government's decision to include AirAsia in bilateral air talks will allow the airline to soon gain access to India and China where negotiations for rights tend to take long, the carrier said.

``The government has reaffirmed its commitment to AirAsia's future and we anticipate some very positive developments in terms of domestic airports and foreign route access,'' AirAsia said in an e-mailed statement today.

AirAsia shares tumbled 12 percent to a 20-month low since July 10 when the government allowed Malaysian Airline to offer cheaper fares on some domestic routes. AirAsia shares fell 1 sen, or 0.8 percent, to 1.29 ringgit, at 9:11 a.m. local time on Malaysia's stock exchange.

Malaysian Airline will hand over more than 90 of 118 mostly unprofitable domestic routes to AirAsia from Aug. 1, part of a three-year business plan aimed at helping cut its losses this year and return to profit next year.

Shares of AirAsia were downgraded to ``sell'' from ``neutral'' by OSK
Research Sdn. analyst Christopher Eng on July 10, saying the reintroduction
of competitive pricing on domestic routes has ``direct bearing'' on earnings
of AirAsia.

Malaysian Airline's Boeing Co. 737-400 aircraft leases will also be
readjusted to market rates, removing ``the final traces of subsidies''
enjoyed by Malaysian Airline, said AirAsia. The move ``showcases the
government's serious drive for a level playing field to all parties,'' the
company said.

Other concessions include allowing AirAsia unrestricted freedom to access
any domestic routes, the discount carrier said.


MALAYSIA TO SET UP COMMITTEE TO MONITOR PREDATORY AIR
FARE PRICING - UPDATE 17-Jul-2006 08:35:00

KUALA LUMPUR (XFN-ASIA) - The government will set up a committee to monitor instances of predatory pricing in the domestic aviation market, AirAsia Bhd said in a statement.

It said that after recent discussions with the government, it was decided that the planned rationalization of the domestic air market will guarantee a level playing field for all parties involved.

Earlier the government announced that it would allow Malaysian Airline System(MAS) to offer discounted fares on domestic routes. The news pressured AirAsia's stock price.

Apart from the government undertaking to set up the committee, AirAsia said it will now have unrestricted freedom to access any domestic routes and the budget airline is now equally incorporated into the governments bilateral negotiations for access to other countries.

"We are happy and extremely comfortable with the outcome of this discussion with the government," chief executive officer Tony Fernandes said in the statement.

Under the new arrangement, Fernandes said AirAsia will soon have access to fly to India and China, among other routes.

"Previously, AirAsia was in the waiting list for this scarce commodity and negotiations tend to take forever. With this newly attained equal status for bilateralnegotiations, we are confident that we will be able to penetrate
into India and China smoothly," Tony Fernandes said in the statement.

It said that the government has also promised to monitor the usage of 650 mln rgt payout MAS receives from its parent company, Pernerbangan Malaysia Bhd, which is intended to be used for staff severance.

Boeing 737-400 aircraft leases entered into by MAS will be readjusted to market rates, according to the statement.

These items represent the last subsidies previously enjoyed by MAS. Their removal shows the government's determination to provide a level playing field, it added.

"With all of the above, AirAsia is in a far better position post August 1 than ever in its entire history. We are thrilled with the prospects and benefits that this arrangement brings us... AirAsia enters 2007 in its best shape ever," Fernandes said in the statement.

The company said it will hold a news conference tomorrow to announce further details of the government's plans for the budget air industry.
____


Taking AirAsia higher
July 17 2006

QUESTION: You labelled the decision to allow MAS to reintroduce discounts as unfair and as not giving AirAsia a level playing field to compete in. Last week, the Government said the decision was final and fair. Can you live with this?

Fernandes: Of course we can. You know, the Malaysian Government has been great to us. Let's be real about it. We can live with whatever. We are blessed with an opportunity. There are not many countries where two non-entities ... we were just two guys (he and Kamarudin) in the music business and banking who got an opportunity to own a national airline and go
to where we are.

We are lucky to be in this country that does promote entrepreneurs. Not everything is perfect of course. But on our side of the camp, we want everything because we are in a global marketplace competing with top competition like Singapore and we want to have the most resources so we can show the Singaporeans that we are the best.

I've always believed that Malaysia is better than Singapore, and so that's what drives us. We want to have as much opportunity and as much cash to be able to drive and become the best low-cost carrier in Asia, and not be distracted by domestic squabbles.

Kamarudin: The key issue here is this, we believe that we will be able to grow on merit. Over the years we have worked on our own to try to build up the company.

The current issue, it's not about flaws. What we were trying to avoid is predatory pricing, which we faced over the last five years, because it (MAS) was fully subsidised. Going forward, there's always that concern.


Q: What was the outcome of your meeting to clarify issues with the Government?

Fernandes: The Government said in no way does it condone predatory pricing, and will be keeping a very close eye on that. That was what we have always wanted. As long as that mechanism is in place, we are thrilled.

Also, the Government will give us access to routes we can't get and there will be a fair sharing of those routes. China and India access will be given to us and that will be mammoth to our bottom line. We are very thankful to the Government for closing up that gap in route allocations. Coupled with allowing us to operate in internal East Malaysia and the opening up of two new hubs in Kuching and Kota Kinabalu.

The story on route allocation is also coming to an end and that is tremendous to us.


Q: Don't you think that AirAsia has come a long way from its humble beginnings? Come August 1 it will be able to fly domestic routes alongside MAS.

Fernandes: Well, we have our views. The first thing I want to say is that we are in a much better position than we ever were. This (being allowed to fly certain domestic routes previously monopolised by MAS) is a huge victory for AirAsia. But the market hasn't fully digested the announcement (to allow MAS to reintroduce discounts on domestic routes). Prior to this, AirAsia was competing against a fully-subsidised domestic airline. Whatever losses that were made were picked up by Penerbangan Malaysia Bhd (PMB). There was no
real financial drive to make it profitable.

We still feel there are areas that can be levelled out. But we will be patient, and whatever transpires in the next few days, it will be a good start for us.

Aviation is a phenomenally-regulated industry and there are many ways the balance is being tipped. I suppose we went for the jugular. In some ways we wanted everything to be settled from day one.

You can understand having gone through four years of this. We saw an opportunity for the first time ... everything could be settled. But we are not guys who will cry over spilt milk. The last shock to us was Subang airport. We fought very hard and lost. The next day we bounced back.

We fought, we lost; no point crying over spilt milk. We will come back. As my CFO always says, nothing comes easy for AirAsia. But that is also the special thing about AirAsia.

I think that by struggling, we have become smarter and have found ways around our problems.


Q: Do you fear that MAS may be able to sell tickets cheaper than you now that they can offer discounts on domestic airfares?

Fernandes: From the cost perspective, I don't think so. But the issue here, we don't know. They may not call it subsidy; they may call it compensation under the Widespread Asset Unbundling (WAU) exercise. And then you talk about the leasing of the aircraft from PMB, there're so many things that are not known to us.

So some of these factors could be used to lower the cost. These are our concerns. It's not that we object. The Government has been supportive in the past, and continues to be very supportive. However, in this situation we have had to voice our concern. The objective is to seek more clarification from the Government.


Q: What is unclear to you about the Government's move?

Kamarudin: From what we gather from the Transport Minister's report is that the Government wants basically free competition and all that. So now we have asked the Government whether for this free competition that they want, whether everything is in place to ensure this free competition.

Fernandes: We're a market-driven company. We have always believed in the market, otherwise we wouldn't be here. We have never objected to new airlines. We have never objected to anything that is market- driven.

If you see in our press statements over the last five years, we have never once had a complaint against MAS on international (routes). Even there, it is not a level playing field, but life's too short. We are a market- driven company. We don't believe that anyone should be given subsidies.

We believe that market should stand on its own and decide whether we are good or not.

We've struggled all the way, from two planes. Nobody believes that someone
is not behind us, that two guys could pull this off.

We've had to put up with a lot of that kind of questioning. I think we have done Malaysia proud and we've done it on our own two feet, and we've inspired hundreds of young people who are thinking that if those two guys can do it so can we.

We can't fail. There's no bailout for us. If we fail, we're history. So we fight. We are responsible for 4,000 employees now. I take that very seriously.

Isn't Malaysia better with AirAsia? Where was MAS' low fares before us. We have liberated air travel and made it more competitive.

We have to be aggressive. We don't have anybody else. If we fail, that's it. We don't have a Khazanah to turn to and so we have to fight, and we have been fighting for five years.

If we fail, it's gone, while a state enterprise has a recourse. It is the same in any country. Malaysia is not unique in that.


Q: So where is AirAsia heading after this?

Fernandes: The company has never been as strong. We've just taken delivery of our eighth Airbus, our load factors are at a record level, our Thai and Indonesian affiliates are doing great, it's going to be a record month for us.

The new Airbus has been introduced fantastically, we've moved into the low-cost terminal. Of course it's not perfect, but we're pretty happy with it.

So operationally, it's business as normal.

I think we need to do a little bit of work to let the market understand that this (subsidy issue) is nothing. The mass market supported us when MAS was fully subsidised. Business is as normal as far as we are concerned. We've got great staff and we musn't be distracted by a lot of outside noises.


Q: How are your new aircraft orders looking as business expands?

Kamarudin: As far as the aircraft is concerned, that is one of our major concerns. We have made massive aircraft acquisitions because we believe that we will be able to grow with the domestic routes. We are talking about tourism, but we have also promoted small businesses. Our country with a population of 25 million will now be exposed to a 500-million market. So
small businesses will be able to do their business not only in Malaysia, but also be able to promote their products elsewhere in the region with the liberty of cheap fares.

Because of all these things and the future growth potential, we embarked on massive aircraft acquisitions. We have taken delivery of eight Airbus planes and getting another one almost every month, and certain months we will have two.

The financing has been structured in such a way that we'll get the most efficient way of financing, in terms of the hedging of the interest rates, etc.

What concerns us now is that because of this perception (that subsidies for MAS to discount fares may hurt AirAsia), the financier may be looking at whether we will be able to sustain the growth. We are confident that we will be able to, but all these unnecessary concerns give additional headaches.


Q: AirAsia has come in for some strong criticism in Parliament, from everything to misleading advertising to flight delays. What is your response?

Kamarudin: We don't mind criticism, but we hope it's fair and substantiated. Not baseless. We hope that the Parliament acknowledges the huge contributions we have made to the country. We have carried 20 million people and many of them never dreamt of flying and many of them are their constituents.

We are a common man's airline and when we walk the streets we are thanked.

Since all this press, we have received 22,000 letters of support from all over Malaysia thanking us and saying they support us.


..and the latest UPDATE from AWSJ

Budget Airlines Hit Rough Patch As Costs and Competition Climb
By CRIS PRYSTAY, July 24 06

SINGAPORE -- Stiff competition and high fuel costs are creating turbulence for Asia's fledgling budget airlines -- and their shares.

Five years ago, Asia's first budget carrier, Malaysia-based AirAsia, took to the skies, followed by a slew of similar airlines in India,Singapore, Thailand and Indonesia. The new airlines broke up de facto monopolies in some countries and enticed many first-time flyers with fares that often cost little more than a bus ticket.

But now, those new players are feeling growing pains.

Kuala Lumpur-listed AirAsia's profit for the quarter ended March 31 fell 44% because of high fuel costs and steep fare cuts after a pricewar with Malaysia's state-controlled full-service carrier, Malaysia Airlines. India's two listed budget carriers -- Air Deccan and Spicejet -- are competing with other new low-cost airlines in a price war that, combined with high fuel costs and aviation-infrastructure weaknesses -- including a shortage of landing bays -- has left most in the red. The shares of all three listed budget operators have taken a beating.

"The sector has run into some head winds," says Peter Harbison, director of Sydney-based Centre for Asia Pacific Aviation, a consulting company. Part of the problem is that regional routes are still doled out by governments, which often favor national airlines. Meanwhile, leasing costs have doubled in the past four years, and fuel costs have tripled.

"Liberalization hasn't happened that fast, and a whole array of costs have gone up -- fuel, pilots and leasing costs. I think 2007 could be a tough year," Mr. Harbison said.

That hasn't kept new competitors from piling into markets like India, where passenger numbers are growing 25% a year as the economy booms. India now has three low-cost carriers operating -- Air Deccan, GoAirlines (India) and Spicejet -- and another, IndiGo, has ordered
100 planes and will start flying in August. Two more companies say they will start up low-cost carriers within the next year.

The competition means it is hard to get landing spots at India's airports, and expensive to find staff: 30% of Air Deccan's pilots were hired outside India.

All this has hammered the stock prices of Spicejet and Air Deccan, which is the brand-name for parent company Deccan Aviation Ltd.

Deccan Aviation, which listed on the Bombay stock market in June, had to extend its initial-public-offering period and ratchet down its IPO price to attract investors. Even so, its shares fell 33% from their IPO price of 148 rupees ($3.17) a share on the first day of trading,
and are now trading at 66.70 rupees. A slump in India's stock market was part of the problem, but the uncertain outlook for the budget-airline sector -- and the fact that Deccan Aviation is still unprofitable -- contributed to the weak debut, analysts say.

Spicejet only recently inched into profitability. In April, the company announced its first-ever quarterly profit, of 43 million rupees, for the December-to-February period. Still, Spicejet's shares have dived 43% in the past six months, and closed at 41 rupees Friday.

Investors should steer clear of India's budget carriers, even at their current low prices, many analysts warn. "We're going to see consolidation over the next three to five years," predicts Arun Kejriwal, director of Kejriwal Research and Investment Services in Mumbai. "There's no point in buying these shares at this point in time. Clients should wait until these airlines start reporting profits -- and see where the industry is headed."

Asia's largest low-cost carrier, AirAsia, serves domestic and regional routes from Malaysia, and operates separate joint-venture low-cost airlines in Thailand and Indonesia. It is the only listed low-cost airline in Southeast Asia, and the only one with a profitable track record. But analysts are divided on whether investors should buy AirAsia's shares.

AirAsia's shares got a boost in March, when the Malaysian government announced it would restructure the country's ailing state-controlled flag-carrier, Malaysia Airlines, and handed AirAsia over 90 of Malaysia Airlines' domestic routes -- many of them loss-making.

The company's stock has slumped 24% since May 1 on news of slower earnings growth. The fall accelerated after July 10, when the government announced that it would allow Malaysia Airlines to offer discounted fares on core domestic routes it still retains. Investors
worry that AirAsia will face future price wars against a revamped and revitalized local competitor. AirAsia shares ended Friday at 1.33 ringgit (36 U.S. cents).

"The business is growing, but [AirAsia's] stock has been something of a market darling and I don't see the fundamentals to justify that," says Peter Negline, a Hong Kong-based analyst at J.P. Morgan. He has had a "sell" rating on the stock for more than a year.

Mr. Negline says AirAsia's past success in Malaysia had been aided by ineffective competition from Malaysia Airlines, but that has changed. The Malaysian government -- which effectively took over ownership of Malaysia Airlines' domestic operations in a prior restructuring in
2002 -- has soaked up the airline's losses for years. But under a new restructuring plan, which kicks in Aug. 1, Malaysia Airlines will take responsibility for its own financial performance on both international and domestic routes.

"I think we're going to see a much more tense environment between AirAsia and Malaysia Airlines than we've seen in the past," Mr Negline says. "[Malaysia Airlines] has been very much the weaker party, but I think the competitive environment has shifted dramatically," now that the flag carrier has been restructured and it has shed its loss-making routes. AirAsia, meanwhile, could be stuck with Malaysia's least profitable domestic routes.

AirAsia executives argue that Malaysia Airlines' new mandate is good news. "MAS now has to be run commercially," Tony Fernandes, AirAsia's founder and chief executive, said in an interview. "As long as there's no free money coming into MAS -- and I'm confident in that -- MAS will have to price fares so they're profitable." He contends that AirAsia can turn a profit on routes that Malaysia Airlines couldn't, because if its lower-cost model -- and will counter high fuel prices by raising fuel surcharges, which are currently much lower than other
regional airlines.

Some analysts still like AirAsia. "My philosophy is the same: The lowest-cost contenders are going to win at this game," says Chin Lim, an analyst at Morgan Stanley in Singapore. He likes the fact that AirAsia has stuck to a true low-cost model with no frill services.

Malaysia has also recently agreed to grant AirAsia routes to China and India. "That's a good trade-off" for taking on domestic routes that might be tough to wring a huge profit from, Mr. Lim says. He has a "neutral" call on the stock. "But I think the price has come down to a
point where it's looking very attractive," he says.

Mr. Negline thinks otherwise. The entire budget airline sector in Asia, he argues, has still to prove itself to investors. "The low-cost carrier sector [in Asia] still hasn't shown it deserves a seat at the table," he says.

Read the latest posting (Aug 05 06) on AirAsia:

AIR ASIA Soars HIGHER; EXPECTED 67% PASSENGER Rise 2007; NEW Flights to CHINA, INDIA , PELAMBANG, PEKANBARU; MAS Fares Hike Irks TRAVELLERS