Stop Squandering the People's Money

Yet another study – a cost analysis to be exact – will be carried out to determine if it is viable to send a second Malaysian into outer space.

Why is it that that the government seemed so intent on wasting public funds on grandiose projects, at a time when costs of basic necessities such as food and fuel are hurting the people deeply? Just recently, the 2nd Finance Minister announced that the government may not be able to keep to its budget deficit target. Isn’t this a clear sign that expensive expenditures that do not yield any economic or tangible social returns should be discarded straightaway? Why are we looking towards space when we are facing a potential socio-economic crisis on the ground?

First of all, I have no idea what the learned Minister meant by a cost analysis. Does he not know the costs of a ticket into space? It must have cost the Malaysian government at least USD25m, since that was what other space tourists, e.g. American billionaire Charles Simonyi paid for his space trip on board the Russian craft Soyuz. The Minister must have meant a costs-benefit analysis. Perhaps he realized it is extremely difficult to quantify the benefits side of sending a Malaysian into space, hence omitting the most important consideration of the equation.

If there is indeed any commercial benefits of the space “programme”, there must be hundreds of companies lining up to sponsor the trip in return for some work carried out in space. The reality is that there is little commercial value that can be extracted from this space programme as there is no long-term plan being spelled out.

What about national pride? Can we put a price on this? A blog suggested that assuming the programme benefitted 3 million Malaysians, the cost per person is minimal, and the Angkasawan programme is worth every penny. Can the 3 million Malaysian please come forward and identify themselves?

There are much cheaper and effective ways to get young Malaysians to be interested in space. If we want to have a Malaysian in space, lets do it the proper (albeit the hard way). Let a Malaysian astronaut do more than simply strap himself into the spaceship when it takes off and unstrapped himself when it lands. We want a Malaysian that truly qualifies as an Astronaut. And is USD25m a small price to pay to for national prestige? Perhaps. However, when we still have pockets of poverty that will face severe hardships with rising food prices, it is time to turn our dreamy eyes away from space and focus on thousands of Malaysians who have trouble standing on their own two feet. Please Minister, junk the costs analysis and let common sense prevail.

Open Tenders and Crazy Economics

I am very perplexed by a recent statement made by our Finance Minister. He opined that open tenders are not necessarily equitable, as it prevents financially-weak companies from competing. This is crazy economics.

A company with weak financial fundamentals (Company A) is likely to obtain a bank loan with higher interest rates (given the higher risk), vs. another one (Company B) with solid financial standing. This means for any project that Company A tenders for, it is going to demand a higher rate of return to compensate for its higher interest costs, which translates into higher tender price. This essentially means that it will lose to a lower bid by Company B if price was the only determining criteria.

Yet the Finance Minister is saying this is “unfair”. Is it fair to the tax-payers (if Company A was chosen) who will end up paying more, for say, a bridge, when some companies are willing to build it for less? The Government has no business to prop up companies by awarding plum projects to them, as it is akin to gambling with the rakyat’s money. What if Company A fails to deliver the project? Why take this risk when there are other companies who are far more reliable and cheaper?

Of course, there is nothing to prevent Company A from subcontracting the project to Company B, who can pull off the project with lower costs and hence price. Company A ends up with a profit by doing nothing, apart from securing the fat government tender. Company B gets the project it is fully qualified for in the first place, albeit from the “winning” bidder, and delivers. However, we, the tax-payers end up with a higher tab. Is this fair?

Ultimately, the Government, as custodians of the people’s money, must have the interests of the people in mind. So what if “only the strong and those with financial capacity” benefit from open tenders, if the people also benefits? After all, it is the rakyat that the Government is subservient to, not businesses. Equity to the People first, not companies!