Final year Dissertation, AQS4270, Part 2

Salam and dear all, The following tips might be useful: 1. Establish a framework of objectivity 2. Do not impose your ideas / values on the subject. Let the evidence determine the shape of the investigation 3. Be very knowledgeable about what others (the experts) in the field think of the subject. Identify problems they raised, assess whether the problems raised are critical, examine whether their views are consistent or otherwise, then seek answers as to why, and assess if some aspects of the problems being raised can be investigated by you within the context of your intended research 4. As you become more aware of the subject, your interest will naturally increase… irrespective of the topic 5. See your supervisor on a regular basis, discuss and explain your views, inform him of your problems, highlights to him your areas of concerns, etc. 6. Adhere to the agreed timetable of tasks/meetings 7. Adhere strictly to the University’s rules and regulations on the preparation and submission of dissertation 8. There is no short cut; by occasionally seeing your supervisor with loose sheets of paper will not help… on the contrary such actions lead to more damage to the overall progress of the research. Put words on paper (not in your mind) and see how your research progresses Wassalam.

Transparency in government procurement

Salam and dear all, It has been reported that the Minister in the Prime Minister's Department Datuk Seri Nazri Abdul Aziz has called for the government to make public tender awards. He made the suggestion in effort to introduce transparency, to combat corruption and therefore instill public confidence in the way in which the business of public sector procurement is conducted (see report in http://www.nst.com.my 30th July 2009). 1. I consider the suggestion made by the Minister is most appropriate. 2. In fact, some form of public notification on the processes of tendering in the public sector is currently being practiced. For example, posting tender advertisements in major newspapers, displaying a list of tenders received and opened immediately after the time but on the same day of closing of tender by the office calling the tender on their noticeboards, i.e. by listing the tendered prices in the order of the tenders being opened but without the names of the respective tenderers. 3. In some cases, and almost always in the case of open tenders for projects funded by the international funding agencies such as the World Bank, public opening of tenders is the norm. 4.In a typical public opening of a tender, the office calling the tender will announce the date, venue and time a tender is to be opened. Members of the public are allowed to observe the entire procedures of tender opening: opening the tender box, announcing names of tenderers, their tender prices and durations, bid bonds if any, etc. Students, the above notes, especially on transparency, combating corruption and public confidence in the procurement of public sector projects could form basis for your final year u/graduate dissertation projects. Interested students may see me for discussions. Wassalam.

Interest rate stays at 2%

Salam and dear all, It has been reported that Bank Negara Malaysia (BNM) is maintaining its benchmark interest rate at 2%. 1. What is benchmark interest rate? The BNM's benchmark interest rate is the basis for banks in Malaysia to decide on their lending rates. 2. In addition, BNM also reported that the country's economic situation is improving with indicators such as industrial production index and retrenchment of worker showing a slower rate of decline. 3. Furthermore, factors such as the government's stimulus package, lower costs of borrowing, lower rate of inflation are indicators suggesting that Malaysia's domestic economy is improving. 4. In the context of the construction industry (specifically on procurement) with the benchmark interest rate staying at 2% the costs of construction (business) remained low and demands for property might pick up. Wassalam. Source: http://biz.thestar.com.my, 30th July 2009.

PFI in Malaysia

Salam and dear all, On 2nd March 2009 I participated in a workshop on PFI. The workshop was organized by the Faculty of Architecture, Planning and Surveying, UiTM Shah Alam. During the workshop I was appointed facilitator for group 2 (finance). The key findings of group 2 include:

Understanding the concepts of PPP and PFI

1. Malaysia introduced ‘Privatization’ and the ‘Malaysian Incorporated’ in the 1980s. These policies are seen as the foundation of PPP in Malaysia.
2. PFI was introduced in Malaysia under the 9^th Malaysia Plan (2006-2010).
3. PPP is not a new concept for it has long been practiced before the 1980s, for e.g. the supply of electricity by a private company in Perak and the tolled Slim River to Tanjong Malim trunk road (in the 1960s and 1970s respectively).
4. The current PFI in Malaysia is considered a ‘misnomer’ for it does not transfer all risks of a project to the private sector. The characteristics of the Malaysian PFI indicate that most of the risks are still in the hands of the public sector (see the 9^th Malaysia Plan).

Answering the questions on PFI (in the Malaysian context)

1. What are the financial options?

i) Conventional banking, ii) Islamic banking, iii) bond market, iv) public issue of shares.

2. Financial sector mature and ready to handle PPP?

Yes, based on the market’s ability to fund privatization projects since the 1980s but it is the question of size i.e. how much? and the need for transparency and clear guidelines on PFI.

3. Current credit crunch affects PPP?

Yes, in terms of a potential need for more PPP kind of projects as the government may not be able to afford investing in newer infrastructures but confidence of the financial and private sectors may not be good; they might adopt the ‘wait and see’ kind of attitude.

4. Drivers of PPP in Malaysia?

Mostly the government (as seen in the 9^th Malaysia Plan) but the private sector has a fair share in initiating projects that could be delivered through PFI.

5. Government reforms / policies?

i) Clear guidelines or even law on PFI is required, ii) more transparent PFI transactions, iii) public participation and iv) capacity building (training).

6. Subsidy for the private sector to uptake PPP projects?

May be difficult to give subsidy (given the current political, economic and social environments) but some forms of longer term fiscal and monetary policies may be possible (e.g. better tax regime and cheaper costs of borrowing money).

PFI financial modeling

Aspects to be included in the model are: i) Costs i.e. construction, financing and O & M, ii) interest rate, iii) IRR, iv) duration of the concession, v) government’s assistance and guarantees, vi) public attitudes, vii) PEST, viii) unitary charges.

Acknowledgement:

UiTM, IIUM, Workshop organizer, members of group 2, speakers, facilitator and all participants.

Wassalam. p.s. I am in the midst of publishing a book entitled Understanding PFI (with specific reference to Malaysia). Insyaallah, the book will be out in September 2009.

CPI Index June 2009

Salam and dear all, According to the Department of Statistics Malaysia (http://www.statistics.gov.my) the Consumer Price Index (CPI) for the period January-June 2009 increased by 2.5% when compared with the same period last year. A summary of the movement of the main groups are:

• Notable decreases: Transport - 5.3 per cent; Clothing & Footwear - 0.8 per cent and Communication - 0.5 per cent.
• Notable increases: Food & Non-Alcoholic Beverages + 7.2 per cent and Housing, Water, Electricity, Gas & Other Fuels + 1.6 per cent. Other increases were Alcoholic Beverages & Tobacco + 8.2 per cent; Furnishings, Household Equipment & Routine Household Maintenance + 4.4 per cent; Restaurants & Hotels + 4.0 per cent; Miscellaneous Goods & Services + 3.5 per cent; Education + 2.6 per cent; Health + 2.5 per cent and Recreation Services & Culture + 1.0 per cent.

The link between CPI and the construction industry is a potential topic for a dissertation. Wassalam. Source: http://www.statistics.gov.my