Funding a foreign agenda

IN the midst of all the talk about integrity and democracy in Malaysia, a practice which is of tremendous significance to both has not received the attention it deserves. This is the funding of political parties.

Political parties are not keen on detailed scrutiny of their funding since it does not serve their interests.

Politically inclined NGOs have also not championed this cause partly because many of them are aligned to either the Government or the opposition.

And yet this is one area where there is an imperative need for greater accountability, transparency and honesty.

In this regard, the Malaysian parliament took an important step forward in April 2012 by accepting the proposal from a parliamentary select committee to allocate funds to political parties based on the quantum of seats secured by a party in the general election.

If political parties draw their funds from an independent public institution directly responsible to parliament and the state assemblies, the scope for electoral corruption may be reduced.

Wealthy individuals and corporations may not be in a position to influence elections and politics.

However, public funding of party and electoral politics need not preclude private financing of political party activities provided it is governed by strict rules of accountability and disclosure.

To ensure accountability, it may be necessary to register political parties under a separate law.

At the moment, they are governed by the Societies Act which covers a whole spectrum of civil society entities.

A law that is specific to political parties will also help to define their roles and responsibilities – including how they are funded – in a more transparent manner.

This has become even more urgent today because the forces that shape the role of a political party and its electoral performance are no longer confined to the domestic arena.

There are actors beyond our shores who have no qualms about sticking their noses into our politics.

Sometimes their local clients invite them to interfere in our affairs.

I had a taste of this in 1999 when I was deputy president of an opposition party, Parti Keadilan Nasional, now Parti Keadilan Rakyat.

A few weeks before the 1999 general election an emissary of the currency speculator, George Soros, came to see me in my office in Petaling Jaya about an alleged request from the de facto leader of Keadilan for funding for the party in the elections.

Apparently, the de facto leader’s trusted aide had got in touch with media mogul, Rupert Murdoch, on his boss’ behalf, about financial assistance for the party.

Murdoch in turn had passed on the request to his friend, Soros, who had sent the emissary on his behalf.

I told the emissary that Keadilan will not accept funds from foreign sources and there was no question of Soros or anyone else funding the party’s election campaign.

That evening I informed the party president about what had transpired at my meeting with Soros’s emissary and requested her to find out from the de facto leader, her husband (who was then in prison), whether there was any truth in what the emissary had conveyed to me.

According to the party president, the de facto leader had denied any knowledge of a request to Murdoch for funding and Soros’ involvement. I believed him and let the matter rest.

However, since 1999 a lot of evidence has emerged of funds from Soros’ outfits being channelled to organisations affiliated to, and associated with, the de facto leader and Keadilan.

A former Keadilan Youth leader has even sworn in the National Mosque that the party has received foreign funds.

In July 2011, a leader of Bersih, the coalition for clean and fair elections, admitted that her organisation had received money from Soros’ Open Society Institute (OSI) and the National Democratic Institute (NDI) which is funded by the US National Endowment for Democracy (NED).

There is no need to emphasise here that Soros and the NED have been hyperactive in numerous countries in almost every continent, in the pretext of promoting human rights and democracy when their real goal is the furtherance of the US foreign policy agenda.

 The NED for instance established in 1983 which operates in more than 90 countries has been rightly described by William Blum, a former US State Department official and author of Rogue State and Killing Hope as a “Trojan Horse.”

He observes that the NED does “overtly what the CIA had been doing covertly for decades, and thus, hopefully, eliminate the stigma associated with CIA covert activities.”

The NED “meddles in the internal affairs of foreign countries by supplying funds, technical know-how, training, educational materials, computers, fax machines, copiers, automobiles and so on, to selected political groups, civic organisations, labour unions, dissident movements, student groups, book publishers, newspapers, other media, etc.”

In the last 10 years or so the NED has carried out many of these activities in collaboration with the type of groups mentioned by Blum here in Malaysia.

Why is the NED which is funded entirely by the US government playing this game in Malaysia when the Malaysian Government, especially in the last few years, has gone out of its way to foster closer ties with the US?

In spite of the increasingly warm relations, there are elements in our foreign policy which do not blend with US interests.

On the question of Israel and the struggle of the Palestinian people, Prime Minister Datuk Seri Najib Tun Razak continues to adhere to the principled policy of his predecessors.

He is not prepared to express concern for Israel’s “security,” unlike the leader of the Opposition who knows that “security” is the code-word that the Israeli elite and their supporters in the US and the West look for in assessing a leader’s attitude to Israel.

Neither has Najib shown any inclination to endorse the US agenda of containing China which in the context of East Asia is undoubtedly the US’ central preoccupation.

As the US projects itself as the pivot of the Asia-Pacific and, in the process, attempts to curb Chinese influence in the region, it wants to be absolutely certain that it has allies and not just friends in Asean.

And who can be a better ally than someone who not only sits on panels funded by the NED and Soros outfits but has also, over the years, developed strong ties with powerful personalities and lobbies at the very core of the ‘deep state’ in the US – the deep state that actually determines the direction of US foreign policy, regardless of who lives in the White House?

These are some of the fundamental issues that Malaysians should try to understand as they attempt to make sense of the Malaysian political landscape on the eve of the 13th general election.

For in the ultimate analysis what is at stake is our dignity as an independent and sovereign nation.
Protecting that dignity is part of the mission of Yayasan 1Malaysia.

DR CHANDRA MUZAFFAR Chairman, Board of Trustees
Yayasan 1Malaysia

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Falling foul of the tax law

Many tax offences arise due to failure to correctly discharge filing obligation

MOST of us would not ever think of cheating when we file our tax returns. This does not however mean that one cannot fall foul of the tax law. This is in part due to the fact that tax laws generally are amongst the most complex of a country's set of laws, and our own tax law is no exception.

Often it is not the complexity of the law that catches one out but simple failure to follow procedures, the most common of which involves keeping to set time frames, whether in the filing of returns, paying of one's taxes or providing information to the tax man.

Thus the instances when one can be in breach of the tax law are quite varied and extensive. All such breaches are serious offences, some more serious than others.

Our tax law adopts the declaratory system one is required to declare income via the filing of returns to the tax authority. Many tax offences arise due to failure to correctly discharge this filing obligation.

The most obvious offence is not filing a tax return, or not filing within the stipulated time frame.

An Inland Revenue Board officer helping taxpayers filing their submission

.

In filing the return, an offence is committed if the return filed is incorrect. A return would typically be incorrect if income is omitted or a lesser than actual sum is included. Likewise, more deductions claimed than one is entitled to would result in incorrect filing.

An innocent mistake may not be regarded as cheating but it is still an offence especially when it results in less tax being charged. Generally the severity of penalties varies with the level of the offence's blameworthiness.

An offence involving willful intent to defraud would be amongst the most serious, bringing about the prospect of imprisonment if convicted. Details of the range of penalties for various offences are listed on the official website of the Inland Revenue Board (www.hasil.org.my).

An offence of “not taking reasonable care” was introduced with the implementation of the self-assessment system. This is entirely justifiable as the filing of a tax return is in law the making of an assessment on oneself upon which tax becomes payable.

The aim is to ensure that a “degree of care or conscientiousness” is exercised in connection with the preparation and filing of a tax return. It is intended to prevent the adoption of a reckless or careless approach to the task and to penalise any breach where it results in tax underpaid.

Thus with this standard, claiming a deduction for a capital expense would constitute an offence of not taking reasonable care, even where its capital nature is not quite obvious. The law presumes that a reasonable person would seek to determine the true nature of the expense.

The “reasonable care” requirement was also introduced by Australia when it implemented self-assessment some years before we did. Since the standard is derived from the common law on negligence, features of the “reasonable care” standard adopted in Australia should apply equally to the Malaysian provision.

However, a taxpayer who fails to take “reasonable care” under the Malaysian law is liable to prosecution and, if convicted, is liable to a fine of not less than RM2,000 and not more than RM20,000 or to imprisonment for a term not exceeding three years or to both. This is in fact harsher than an offence of willful intent to evade tax.

There seems to be an obvious anomaly here as the offence of failing to take reasonable care does not involve bad intent, what lawyers would term mens rea. Australia treats the offence as amongst the least culpable of tax offences, certainly less so than intentional disregard of taxation law.

A controversy resulting in considerable bemusement arose in Australia recently where its Appeals Tribunal in a tax appeal ruled that a taxpayer in seeking the advice of an accountant had not taken reasonable care; he should have used the services of a lawyer. Understandably, this resulted in consternation and dismay amongst both tax accountants as well as tax lawyers for quite different reasons; the latter over concerns that their numbers are fewer in this specialism.

A further difference is that the Australian law requires both the taxpayer and his advisor to take “reasonable care”, whereas the “reasonable care” standard under Malaysian law applies only to the “person who advises or assist” the taxpayer but not the taxpayer himself. Why this is so is not clear.

The Australian “reasonable care” standard is coupled with the “reasonably arguable case” standard.

Where the law is unclear and there is room for a real and rational difference of position between two views, and the taxpayer adopts the view, which ultimately is seen to be wrong, he would in strictness have made an incorrect return.

In Australia, no penalty is imposed where a “reasonably arguable case” is made out.
This recognises that the intricacies of tax law often does mean that the taxpayer could be forced to take a contentious position, one where the arguments could go either way. If the weight of arguments is fairly balanced, imposing a penalty for taking an incorrect position would seem manifestly unfair.

Our tax authorities do exercise discretion in considering the question of penalties despite the absence of the equivalent Australian standard.

However, this does not detract from the fact that the taxpayer will always prefer to see his right spelled out in the law. On the basis of balance of rights, there seems to be no cogent reason why the “reasonably arguable case” standard should be left out from the Malaysian tax legislation.

Kang Beng Hoe is an executive director of TAXAND MALAYSIA Sdn Bhd.The views expressed do not necessarily represent those of the firm. Readers should seek specific professional advice before acting on the views.

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'Cliff' worries may drive tax selling on Wall Street

By Caroline Valetkevitch

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said. - Reuters

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China's prodigy whiz kid wants to quit school and a quiet life

Shaoyi: Is more comfortable expressing his ideas online.

 

Feng Shaoyi, a 10-year-old junior high school student, has become an online sensation for his micro blog posts about re-inventing education in the Internet era. 

FENG Shaoyi has been hounded by the media after his recent online post about his intention to quit school went viral on Sina Weibo, China’s answer to Twitter. It has attracted more than 7,000 comments and was forwarded more than 18,000 times.

The junior high school student has attracted so much attention because he’s too young to drop out. And his harsh yet insightful criticisms of the education system surprised many, especially considering he hasn’t reached his teens.

While many children his age aspire to become scientists like Einstein, Shaoyi argues that people with such “lofty ideals” are destructive to the planet. For example, Einstein’s theory of relativity led to the atomic bomb.

“My dream is to live with the girl I love. It doesn’t matter if I have to cut firewood and pick up rags for a living,” Shaoyi writes.

He claims that he wants to pursue his ideals right away instead of wasting time on “meaningless” homework and exams.

“What is the use of studying? Is it getting high marks and ranks to compete with my buddies for the limited places in top high schools?” the precocious boy writes.

Immediately after his remarks were posted, the media began telephoning Shaoyi’s father day and night. They also converged at the boy’s school in Zhuhai, Guangdong province, to pull him out of an ongoing class for interviews.

“I’m tired of interviews. It’s unscrupulous of some media to defame me,” Shaoyi tells China Daily.

He is referring to a report that quoted him as saying his actions are publicity stunts and that he enjoys seeing so many comments and an increasing number of followers.

“I didn’t say that,” Shaoyi says, grimacing while staring at the floor.

“I said it’s good that my posts have prompted people to reflect on the current school system. I wanted to attract the public’s attention to the contents of my postings, not toward me.”

Shaoyi turned up for the interview with China Daily dressed in colourful clothes, carrying a backpack and wearing a cap bearing the autographs of two of his idols from the aerobatics team of the Zhuhai Air Show.

On his micro blog, he’s outspoken, aggressive and sounds like an adult. For example, he slammed an official’s idea to invest millions to cultivate sorghum to attract tourists to Gaomi, Shandong province – the hometown of Mo Yan, Chinese Nobel Literature Prize winner.

But in person, his chubby cheeks and childish voice give away his age. In contrast to his posts, his demeanour is sombre and pensive.

His answers to many questions are: “I don’t know how to answer the question”, or, “I don’t want to talk about it”.

As he puts it: “I’m more comfortable expressing my ideas online in forums and weibo, and while chatting with my friends on QQ (an instant messaging service popular in China). I’m inspired only when I sit in front of the computer.”

The boy didn’t tell his father in person about his intention to drop out of school but, instead, added his father’s micro blog account in his message to catch his attention.

Shaoyi has impressed many readers with his knowledge. In addition to musing about Einstein and Mo Yan, he also left incisive comments on current affairs, including China’s crisis of confidence in charity and the popularity of dating and job-hunting reality TV shows in the country that reflect the difficulties Chinese face in relationships and employment.

His online postings reveal he’s a military enthusiast who’s well-versed in the different generations of China’s carrier-borne fighter planes. Many were also surprised to read the 10-year-old’s analysis of the differences between Obama and Romney.

“I’ve acquired all the extra knowledge from the Internet. Schoolteachers didn’t teach us that. They’re busy feeding us what’s in the textbooks,” Shaoyi says.

“Teachers think we kids know little about things like the US presidential election. But, in fact, many of my friends and I learned about it online.”

The inquisitive student usually turns to the Internet, rather than to his teachers, for answers to questions that pop up when he reads textbooks.

He once embarrassed his Chinese teacher by asking why some dinosaurs had feathers.

“The teacher didn’t know the answer. I searched for it on the Internet on my own, afterward,” Shaoyi recalls.

“The Web satisfies my curiosity better than school.”

Du Fang, Shaoyi’s favourite Chinese teacher during his primary school years, admits teachers are increasingly pressured to know more than their core subjects because students are exposed to a wide range of online information.

“If I fail to answer a question raised by my student, I will tell him or her that I’m not almighty,” Du says.

“As a teacher, I am here to guide them to distinguish between good and bad, and true from false, so they can make good use of online information.”

Shaoyi’s father, Feng Yingang, agrees the Internet can’t replace scholastic education.

“My son still needs guidance to sift through information on the Internet and build his knowledge base. He is like a kung fu lover, who learns all kinds of martial arts moves but lacks the internal strength to master them,” Feng says.

“It would be great if the schoolteachers can guide my son.”

Shaoyi also admits that he has difficulties digesting the glut of online information.

“I will enjoy school’s lessons better if the teachers can discuss hot issues related to the subject and tell us what materials we can refer to better understand these issues,” the boy says.

“But teachers just regurgitate textbooks’ texts.”

Shaoyi says some textbooks are outdated. For example, he owned his first cell phone at three and is able to download pictures with smartphones. But his computer science textbook covers basics like search engine use.

He also complains about junior high’s heavy study load.

During his primary school days, classes were over at 4.30pm, and he had time for his hobbies. But in junior high, he leaves home at 6am and classes end at 6pm. He goes home and does homework until 10pm.

“School life seems to be all about classes, homework, exams and rankings. Students who score well in exams are called good students, while those who don’t ask teachers questions during the 10-minute break between classes are labelled bad students,” Shaoyi says, crossing his arms and scowling.

Between mumbles, he reveals his aspiration is to become head of state so he can make everyone happy.

He says he doesn’t talk about his dream because everyone seems more concerned about how important it is to get into a top high school, then a top university and, finally, find a good job.

He doesn’t believe this is the ideal route.

Shaoyi writes on Sina Weibo: “Almost everyone in China will say there’s something wrong with you if you tell them your life ambition is to become president, but people in the US would encourage you.”

Whiz kid wants a quiet life

Feng Shaoyi and his father, Feng Yingang, in Zhuhai, Guangdong province.

Feng Shaoyi completed his primary school education within three years, rather than the typical six.

The 10-year-old even had time during those three years to act in TV dramas.

The boy claims that in primary school, he was able to finish reading a textbook in five hours and only needed the same amount of time to memorize a whole chapter, which took his teachers a whole week to teach.

His wish is to be homeschooled and only go to school for exams. Feng says he can ask his dad or surf the "powerful" Internet for answers if he has questions.

His father, Feng Yingang, who works as the sales director of a Shanghai-headquartered chemical company, believes it's unrealistic for him to find the time to tutor his son at home.

"My son wrote the online application asking to quit school to relieve stress, and to seek my attention and comfort. He didn't even know what quitting school really meant until I talked to him," the father says.

"He didn't mean he wanted to drop out. He just wanted a break."

Feng's father believes his son is still adapting to junior high. The boy feels stress about failing his first English examination, he says.

"I can understand why junior high teachers focus so much on grades and rankings," the dad says.

"It's because students need to score high marks to get into high school, which isn't guaranteed by the compulsory nine-year education policy."

He never submitted the leave application that he had completed for his son.

The boy says he still plans to study hard and end up in a good high school and university. "I was just asking for more freedom and a more relaxed studying environment," he says.

"I posted the message online because I believe school education could be improved if more people demand change after reading it."

But the public spotlight's sudden glare has proven too much for the boy.

He says he wants to "study and live a quiet life", and pay no heed to the comments about him - be they praises or criticisms.

"He may end up more stressed out if he really leaves school to study at home: All eyes will be on him, monitoring his performance," says Feng Yingang, who has requested that the teachers at his son's junior high school turn down media requests.

Du Fang, Feng Shaoyi's primary school teacher, was also cautious when talking about the boy.

"(He's) sometimes clever, sometimes mature and sometimes childish," she says.

She made these comments while in Beijing for training. "He's special to me," she says.

"To protect him, I can't say more until I return to Zhuhai and talk to him about his thoughts. After all, he's just a kid."

By Xu Jingxi www.chinadailyapac.com 
xujingxi@chinadaily.com.cn

Malaysian PR1MA to bring affordable homes to the working class

IT is an initiative that has been long waited for. It's been reported that from today households, that earn between RM2,500 and RM7,500 a month, can register to buy affordable homes under the Perumahan Rakayat 1Malaysia (PR1MA) scheme.

Some 80,000 homes will be built and based on the number of cities PR1MA homes will be constructed, it should be well spread out in the country.

The need for affordable housing shows that having the means to buy a house is no longer the concern of the poor. Young and middle income families are increasingly being squeezed in their ability to buy a home.

A survey conducted in 2009 showed that 850,000 people or 35% of people surveyed within that income bracket were not home-owners. The scary thought is home prices have escalated since 2009 and if the survey was conducted now, the percentage could be higher.

With prices now being fixed at between RM100,000 and RM400,000 for each home, the band gives home buyers some certainty in knowing that the price of homes will be fixed.

The 80,000 homes that are going to be built by PR1MA would cater for less than 10% of the people within the income bracket who do not yet own a house. The number of homes being built I presume will only be the start of a more comprehensive programme that should see PR1MA, other governmant agencies and state agencies take on the role of the supplier of affordable homes.

Based on a previously published question and answer, PR1MA will not provide financing to applicants to buy a home. They will need to arrange for their own financing but there will be a list of panel bankers where a housing loan can be obtained from.

Its important that the interest rate being charged for loans to buy affordable homes be capped at a decent level. Mortgage calculators show that should successful balloters for homes priced at RM400,000 receive a full loan based on the price of the house, and are charged a fixed interest of 4% per annum, then it will cost them about a quarter of their monthly household income if the collective wage of the household is RM7,500 per month.

The monthly repayment for a RM100,000 house for those earning RM2,500 a month and charged the same interest on a full loan will be 19% of the monthly pay packet.

Given that the intrinsic value of the PR1MA homes should be higher if they are built on prime Government land, then the collateral value of the homes should be more than the value of the loan, hence reducing the need for such homebuyers to cough out a 10% downpayment to buy such homes.

In fact, both PR1MA and the state governments should work together to identify further land for future projects as providing a roof over the heads for Malaysians should never be made a political issue. Plus, its important for the PR1MA homes to be more than concrete public housing. There should be amenities and green spaces to make the environment more appealing to future home owners.

Acting business features editor Jagdev Singh Sidhu wonders what the price of those PR1MA homes will be after the moratorium period to sell them has ended.

MAKING A POINT By JAGDEV SINGH SIDHU
The Star

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