By Anil Netto,
Lately, officials have been stretching the definition of ’subsidies’ and playing around with words – which is why Idris Jala’s figure for total ’subsidies’ last year (RM74 billion) is vastly different from the Treasury’s (RM18.8 billion).
We are now told that a lot of the regular government spending on essential services for the people (which is the responsibility of any decent government and funded by taxpayers’ money) are ’subsidies’ which distort the market, blah-blah-blah.
Okay, you want to talk about subsidies, let’s talk about subsidies…
What happens when the government provides assistance to corporations either in cash (public money) or in kind? Then the government and their media refer to these handouts as incentives, tax allowances, soft loans, grants, special funds … anything but ’subsidies’, which is actually what they are! Of course, where the situation is dire, there are the rescue packages, compensation for cost over-runs, and the infamous bailouts (all using public money of course without being referred to as ’subsidies’).
I was flipping through the pages of The Edge (7 June) and came across this: did you know that Proton would have been “firmly in the red in the last three of five years without a government R&D grant booked as operating income”?
For FY2008, Proton made a net profit of RM184.5 million, but according to The Edge, its Annual Report showed it received a grant amounting to RM193.7 million for the year. If not for this “grant”, the firm would have made a loss of RM9.2 million.
For FY2010, Proton posted a net profit of RM289 million. But the firm received grants totalling RM143 million in the last two quarters, which was about half of its net profit for the year.
These days, the focus by BN leaders and their media is all about the “subsidies” given to the rakyat. Why don’t they talk about the subsidies given to corporations?
In Proton’s case, such subsidies coming from government/public funds (that’s our money) are helping to keep the firm afloat.
If you want to talk about market distortions, then these R&D grants are distorting the real financial performance of this car manufacturer. These government grants would be better invested in public transport instead of a firm promoting private vehicle ownership.
More cars mean more tolled highways, which the rakyat not only subsidise (by forking out ever-increasing tolls) but in some cases pay tolls that add up to several times the highway investment cost, resulting in large profits for the concessionaires. So who is subsidising whom?
The other interesting news is that former Proton CEO Tengku Mahaleel has reportedly received a cool RM5 million out-of-court settlement from Proton. “It is understood that the decision to settle with Mahaleel this time was influenced by Proton adviser Mahathir, who has taken on a more active role in Proton since the resignation of (chairman) Azlan,” noted The Edge.
Another development not widely known is that two independent directors – both of them members of Proton’s audit committee – have reportedly resigned.
Proton is also reportedly considering selling a stake in Lotus to the Lotus CEO and his management team as a form of incentive. According to the Edge, the board had received a bid from a Chinese national offering three times the price – but turned it down because it says Lotus is not for sale to outside parties.
Anyway, this is just Proton. What about all those other companies receiving subsidies?
What I am going to do in the next few days is try and compile a little list of corporations receiving subsidies out of public funds whether in cash or in kind. Then maybe we might get a different picture of who the big subsidy recipients are.
Care to help me compile this list in the comments section below?
Lately, officials have been stretching the definition of ’subsidies’ and playing around with words – which is why Idris Jala’s figure for total ’subsidies’ last year (RM74 billion) is vastly different from the Treasury’s (RM18.8 billion).
We are now told that a lot of the regular government spending on essential services for the people (which is the responsibility of any decent government and funded by taxpayers’ money) are ’subsidies’ which distort the market, blah-blah-blah.
Okay, you want to talk about subsidies, let’s talk about subsidies…
What happens when the government provides assistance to corporations either in cash (public money) or in kind? Then the government and their media refer to these handouts as incentives, tax allowances, soft loans, grants, special funds … anything but ’subsidies’, which is actually what they are! Of course, where the situation is dire, there are the rescue packages, compensation for cost over-runs, and the infamous bailouts (all using public money of course without being referred to as ’subsidies’).
I was flipping through the pages of The Edge (7 June) and came across this: did you know that Proton would have been “firmly in the red in the last three of five years without a government R&D grant booked as operating income”?
For FY2008, Proton made a net profit of RM184.5 million, but according to The Edge, its Annual Report showed it received a grant amounting to RM193.7 million for the year. If not for this “grant”, the firm would have made a loss of RM9.2 million.
For FY2010, Proton posted a net profit of RM289 million. But the firm received grants totalling RM143 million in the last two quarters, which was about half of its net profit for the year.
These days, the focus by BN leaders and their media is all about the “subsidies” given to the rakyat. Why don’t they talk about the subsidies given to corporations?
In Proton’s case, such subsidies coming from government/public funds (that’s our money) are helping to keep the firm afloat.
If you want to talk about market distortions, then these R&D grants are distorting the real financial performance of this car manufacturer. These government grants would be better invested in public transport instead of a firm promoting private vehicle ownership.
More cars mean more tolled highways, which the rakyat not only subsidise (by forking out ever-increasing tolls) but in some cases pay tolls that add up to several times the highway investment cost, resulting in large profits for the concessionaires. So who is subsidising whom?
The other interesting news is that former Proton CEO Tengku Mahaleel has reportedly received a cool RM5 million out-of-court settlement from Proton. “It is understood that the decision to settle with Mahaleel this time was influenced by Proton adviser Mahathir, who has taken on a more active role in Proton since the resignation of (chairman) Azlan,” noted The Edge.
Another development not widely known is that two independent directors – both of them members of Proton’s audit committee – have reportedly resigned.
Proton is also reportedly considering selling a stake in Lotus to the Lotus CEO and his management team as a form of incentive. According to the Edge, the board had received a bid from a Chinese national offering three times the price – but turned it down because it says Lotus is not for sale to outside parties.
Anyway, this is just Proton. What about all those other companies receiving subsidies?
What I am going to do in the next few days is try and compile a little list of corporations receiving subsidies out of public funds whether in cash or in kind. Then maybe we might get a different picture of who the big subsidy recipients are.
Care to help me compile this list in the comments section below?
1 comment:
Do you know that what is the important of subsidies? It's a way to make a company grow. It's same as investing your money. Goverment invest their money inside Proton to flurish their R&D. Do you know how hard to design a car? I'm not talking about making a scatch of a car on paper but I'm talking about the technologies to make a car. How to bend a metal to make it looks like a curve of a wind, how to improve engine performance and to make it capable to be used for another 10 or 20 years, how to combine plastics and metals to make it stand the heat of engine and the weather. All of these need funding. And gov only give a little bit of their support. Btw, this R&D subsidies not only for GLC or Malaysian company only but for EVERY company in Malaysia who put their R&D department in Malaysia. Government want locals to think, not just make things. A lot of company in Malaysia just know how to produce a product but don't start R&D to create even a better product. And for a big company, loss is normal. 9 million loss? it's nothing. If you are a business man you will know that looking at loss is not the way to make business. Comparing the loss within a certain period is the way to measure a company capability. BTW everybody knows about the subsidies given to Proton. If you didn't know and surprised, means that you living inside a cave, not knowing what happening around you. So, you don't have to find about other companies. we already know about the subsidies. Every company mentioned their received amount in the paper.
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