Stop paying quit rent to Sultan of Sulu, it’s time to close the chapter

Safeguarding our territory: Malaysian troops moving into Tanduo village during an operation to flush out the armed intruders. — (Handout photo by Defence Ministry)

 

A major shift in Malaysia's position on the Philippine claim to Sabah is needed. 
 
THE Philippines Government officially announced their claim to North Borneo (now Sabah) on June 22, 1962. Despite numerous attempts to settle the issue, it still festers on, exemplified by the latest tragic events unfolding on the east coast of Sabah.

The Philippine claim is based on two documents dated Jan 22, 1878. By the first document, Sultan Muhammad Jamaluladzam granted (pajak) all his territorial possessions in Borneo (tanah besar Pulau Berunai) to Gustavus Baron de Overbeck and Alfred Dent Esquire as representatives of a British Company for a yearly payment/ quit rent (hasil pajakan) of five thousand dollars (Spanish dollars).

By the second document, the said Sultan appointed Overbeck as “Dato' Bendahara and Rajah of Sandakan” with the fullest powers of a “supreme ruler” (penghulu pemerintah atas kerajaan yang tersebut itu).

Descendants of Sultan Muhammad Jamaluladzam (the number cannot be ascertained, but is large), represented by the Kiram Corporation and the Philippine Government, have always claimed that this 1878 grant was a lease (pajakan) and not a cession as claimed by Malaysia. The continuous annual payment of the quit rent or cession monies of five thousand dollars (now RM5,300) to these descendants is cited as further proof of this contention. Based on these grounds, they claim, Sabah belongs to the Philippines/ the Sultan of Sulu's descendants.

Before discussing how Malaysia has been responding to this assertion and how it should alter its position drastically, a little bit of historical narrative is in order.

Without going too far back in time, it is suffice to say historical documents confirm that both the Sultanate of Brunei and the Sultanate of Sulu exercised political control over parts of present-day Sabah (there was no State or Negeri Sabah at that time) in the late 19th century. Brunei had defacto jurisdiction on the west coast from Kimanis to Pandasan, while Sulu ruled the east coast from Marudu to the Sibuku River. The interior was largely independent under local indigenous suku chiefs.

Both Sultanates, however, claimed dejure jurisdiction from the Pandasan on the west coast to the Sibuku River on the east. Both Sultanates were also in a state of decline. Brunei was suffering from internal decay while large parts of its territories were being swallowed up by the new state of Sarawak under the Brookes.

In the Philippine region, the Spanish authorities in Manila had been trying to subjugate the independent and powerful kingdom of Sulu for three centuries without success. In 1871, the Spaniards launched another exerted campaign to conquer the stubborn kingdom.

It was in this kind of environment that a number of European and American speculators became interested in obtaining territorial concessions from the two weak Sultanates for speculative purposes. Among them were Lee Moses and Joseph Torrey of America; and Baron von Overbeck and Alfred Dent who had formed a company called the Overbeck-Dent Association on March 27, 1877 in London for the purpose of obtaining land concessions in Sabah and selling them for a profit.

Overbeck and Dent acquired Brunei's jurisdiction over its Sabah possessions in five documents dated Dec 29, 1877 from the Sultan of Brunei and his ministers. After this, Overbeck sailed to Jolo where he also obtained the rights of the Sultan of Sulu in Sabah through two agreements concluded on Jan 22, 1878.

Why was Sultan Muhammad Jamaluladzan prepared to lease/ grant/ pajak his territories in Sabah to Overbeck and Dent? Sulu was on the brink of capitulating to the Spaniards and as such Sultan Muhammad was hopeful of obtaining some assistance from the Overbeck-Dent Association and possibly even from Britain. Placed in such dire straits, he was therefore not adverse to giving Overbeck and Dent territorial concessions in Sabah with some hope of salvation.

In the event, no such aid came either from the Overbeck-Dent Association or the British Government. Six months after the Overbeck-Dent grants were concluded, Sulu was conquered by the Spanish authorities on July 2 1878. With the fall of Sulu, the said Sultanate ceased to be an independent entity as it was incorporated as part of the Spanish colonial administration of the Philippines.

In 1898, Spain lost the Philippines to the United States by the Peace of Paris (Dec 10, 1898), which ended the Spanish-American War. The US ruled the Philippines till 1946 when independence was granted.

The sultanate ended when Sultan Jamalul Kiram II signed the Carpenter Agreement on March 22, 1915, in which he ceded all political power to the United States.

 

Carpenter, Governor of the Department of Mindanao and Sulu, Philippine Islands,  from 1913-1920, with the Sultan of Sulu, Jamalul Kiram II.

Meanwhile, in 1936, the US colonial administration of the Philippines abolished the Sulu Sultanate upon the death of Sultan Jamalul Kiram II (1894-1936) in the same year in an attempt to create a unitary State of the Philippines. Jamalul Kiram III is a self- appointed “Sultan” with a dubious legal status.

Now, coming back to the question of Malaysia's ongoing treatment of the claim, and why and how it should completely alter this position. Since the official announcement of the claim by the Philippine Government on June 22, 1962, Malaysia has been pursuing an ambivalent policy. On the one hand, it has persistently rejected the Philippines claim, but on the other it has compromised Malaysia's sovereignty by agreeing to settle the “dispute” by peaceful means (such as the Manila Agreement, Aug 3, 1963) and a number of other mutual agreements between the two countries.

Most damaging of all is Malaysia's willingness to honour the clause in the 1878 Sulu grant pertaining to the payment of the annual quit rent or cession monies as Malaysia says, of RM5,300, to the descendants of the former Sulu Sultanate. To this day, Malaysia is still paying this quit rent, lending credence to the claimants' argument that the 1878 grant was a lease and not a cession and therefore it still belongs to them.

If Malaysia continues to follow this policy, there will be no end to this problem except to buy out the rights of the descendents of the Sultan of Sulu. But this course is fraught with danger as it will lead to further legal complications with the Philippines and even endless litigation with the descendants.

My proposal is that Malaysia should go by the laws of “effectivities”, as in the case of the International Court of Justice's (ICJ) judgement pertaining to the issue of sovereignty over the Sipadan and Ligitan islands, and the law of acts of a'titre de souverain as in the case of Pulau Batu Puteh. No title, however strong, is valid once the original owner fails to exercise acts consistent with the position of a'titre de souverain. The opposite is true, that is, the holder of the lease may not have original title but he ultimately gains permanent possession of the lease by virtue of continuous state “effectivities”.

In this case, the Sultan of Sulu and its successors including the Philippine government have failed to conduct any acts of a'titre de souverain since 1882, and so they have legally lost their title.

On the other hand, the successors of the Overbeck-Dent Association, that is the British North Borneo Company (1882-1946); the British Colonial Administration (1946-1963); and Malaysia, (from 1963) have been exercising continuous acts of a'titre de souverain for a period of 131 years.

Since we have all this evidence on our side, Malaysia should now take a new stand by totally rejecting the validity of the 1878 grants on the grounds of “effectivitie” and a'titre de souverain. It should also immediately stop paying the so-called annual quit rent or cession monies. This payment has always brought huge embarrassment to Malaysia and has in fact compromised its sovereignty.

We should also never agree to go to the International Court of Justice not because our case is weak (it is very strong), but because we don't want to trade the fate of sovereign territories and people through the judgment of any court, even the ICJ.

There's one more point that should be pondered upon. No country or state or nation which has obtained independence has ever paid ownership monies to its former masters. The 13 Colonies of America did not do so, India did not do so, the Federation of Malaya did not do so.

Sabah became an independent state on Aug 31, 1963 and decided to form the Federation of Malaysia with three other partners on Sept 16, 1963. It is strange indeed, if not preposterous, that a sovereign state is paying ownership or cession monies to certain people based on a colonial, pre-independence treaty that is 131 years old!

Comment by EMERITUS PROF DR D.S RANJIT SINGH

Emeritus Prof D. S. Ranjit Singh is Visiting Professor at the College of Law, Government and International Studies, Universiti Utara Malaysia (ranjit@uum.edu.my). 

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The Sultan of Sulu reclaims eastern Sabah, MNLF among invaders

The former Sulu Sultanate, a foreign problem in history that became Sabah's  

The Sultan of Sulu reclaims eastern Sabah, MNLF among invaders

 

Carpenter, Governor of the Department of Mindanao and Sulu, Philippine Islands,  from 1913-1920, with the Sultan of Sulu, Jamalul Kiram II.

 
THE Sultanate of Sulu was a traditional Islamic monarchy of the Tausug people that covered the Philippine provinces of Basilan, Palawan, Sulu and Tawi-Tawi in the Autonomous Region of Muslim Mindanao (ARMM) and the eastern part of Sabah.

It was founded in 1457 by religious scholar and explorer Sharif Abu Bakar, who assumed the title Sultan Shariful Hashim after his marriage to Paramisuli, a local princess.

He promulgated the first Sulu Code of Laws (Diwan) that were based on the Quran, and introduced an Islamic political institution and the consolidation of Islam as a state religion.

In 1675, the throne of what is now Brunei was disputed and the Sultan of Sulu was asked to settle the conflict, after which he was rewarded with North Borneo (now eastern Sabah).

In 1878, the Sulu Sultan leased North Borneo to the Europeans. The agreement stated that the lease was of their own free will and was valid until the end of time.

The sultanate received an annual cession payment that was equivalent to 5,000 Malayan dollars, which was increased to 5,300 Malayan dollars in 1903.

North Borneo was a British protectorate from the late 19th century until it became a crown colony.

It gained a brief period of independence before becoming part of Malaysia in 1963. From then, Malaysia paid RM5,300 as cession payment each year to the sultanate.

The former Sultan’s descendants did not retake the territory, instead, agreeing to accept the cession payment under the previous arra­ngement. This lasted until a few weeks ago.

The Sulu sultanate was also under the control of Spain, but the Spaniards in 1885 signed the Madrid Protocol with Britain and Germany, relinquishing any claim to North Borneo.

The sultanate ended when Sultan Jamalul Kiram II signed the Carpenter Agreement on March 22, 1915, in which he ceded all political power to the United States.

The Philippines, however, continued to recognise the sultanate as a sovereign entity until the demise of Sultan Mohd Mahakuttah A. Kiram in 1986.

There are now at least 11 claimants to the title Sultan of Sulu, including Sultan Jamalul Kiram III.

MNLF elements among invaders

PETALING JAYA: The Sulu invaders are not officially recognised by any group other than the self-styled Sulu Sultanate and its supporters, said Universiti Pertahanan Nasional Malaysia Professor Dr Aruna Gopinath.

“This is just a name this group has decided to create and call themselves by so that they can come and attack us.

“The bigger threat is if other militants join this group under the banner of the south Philippines and try to attack us as well,” said Aruna, an expert on Philippine history, politics and security.

Some of the Sulu fighters were possibly trained by the Moro National Liberation Front (MNLF) led by Nur Misuari before they broke away from the group.

She explained that many of the armed militants in southern Philippines used to be members of the MNLF, from which many breakaway groups later emerged with most of them belonging to the Suluk or Tausug ethnic group, which the MNLF once represented.

“Some among the so-called Sulu army could have had combat experience during their previous stint in the MNLF before they broke away. They do have some degree of skill and are not mere marauders as there appears to be some quite capable people on the ground,” said Aruna.

She said that when Misuari became MNLF head he clamoured for secession but the Philippine Government insisted on autonomy as the only option.

While Misuari accepted, another leader Hashim Selamat did not and broke away with his supporters to form the Moro Islamic Liberation Front (MILF).

When the MILF later realised that secession was not the answer it agreed to negotiate for greater autonomy with the Philippines, a process Malaysia is helping to broker.

The MILF, said Aruna, is currently the biggest armed group in the southern Philippines with a standing army of more than 200,000.

She said the MNLF no longer has a large army because apart from the MILF breakaway, other splinter groups also emerged later including the Abu Sayyaf and the Rajah Sulayman militant group.

Aruna said many youths in the troubled region join armed groups due to endemic poverty.

“Parts of the south do not even have piped water and proper roads and the MNLF and MILF soldiers I've interviewed said they basically joined because they were hungry, so poverty is a driving factor.”

Universiti Utara Malaysia Emeritus Professor Dr Ranjit Singh said that aside from the sultan's supporters, some among the Sulu terrorists could also be followers of the many local warlords in the region.

“However, since there is no Sultanate of Sulu at present, and with so many claimants to the throne, an officially recognised army does not exist,” he said.

Sources: The Star/Asian News Network

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The former Sulu Sultanate, a foreign problem in history that became Sabah's  

SABAH STANDOFF, invaders from the Philippines shoot dead!

At least 14 people have reportedly been killed, after Malaysian police ended a standoff with nearly 200 members of a Filipino Muslim group.

Malaysia’s Foreign Affairs Ministry says police launched an assault on a coastal village in the eastern Malaysian state of Sabah early on Friday morning.

The village of Lahad Datu had been occupied by a group led by Agbimuddin Kiram, a brother of the head of a Filipino Muslim royal clan. The group from the southern Philippines landed in the coastal village on February 9th, claiming the territory as their own.

They cited documents from the late 1800s to back up their claim. The owner of the house where Kiram stayed was killed, and the Filipino group was reportedly chased towards the sea.



Najib: All-out action will now be taken against the intruders

Datuk Seri Najib Tun Razak said he was saddened by the deaths in the shootout at Tanduo village in Lahad Datu, because there had been bloodshed despite the Government's attempts to prevent it.

Expressing his sadness over the deaths of two police commandos who were killed and the three who were injured, the Prime Minister said the group of Sulu gunmen had opened fire at the security forces.

He said that with the deadline for them to leave now over, all-out action would be taken against the intruders, who had caused the deaths of the policemen.

“I have given the full mandate to Inspector-General of Police Tan Sri Ismail Omar and Armed Forces Chief Tan Sri Zulkefli Mohd Zin to take whatever action is deemed necessary,” he told a press conference.

“They have been given full powers. It is up to them and the ground commanders can take action.

“There will be no compromise; either they surrender or face the consequences.”

Najib said security had been strengthened and the intruders totally surrounded, adding that vessels of the Royal Malaysian Navy were patrolling the sea to prevent them from escaping.

“What is important now is that whatever means must be used to cripple the group,” he added.

Najib said he had received reports that 12 people from the armed group were also killed in the exchange of fire.

Source: Asia News Network

Related post:

Filipinos’ Sulu militant group in Sabah must leave Malaysia today 

Filipinos’ Sulu militant group in Sabah must leave Malaysia today

Muslims at the Golden Mosque in Quiapo district of Manila on Saturday express their support to Sulu Sultan Jamalul Kiram III and followers who are Sabah in press for their claim. DANNY PATA

LAHAD DATU: Malaysia has extended the deadline for the Sulu armed group to move out of Tanduo village and return home to today, following a request from the Philippines.

The Philippine Government had earlier asked for the deadline to be set for Tuesday to allow them to persuade Sultan Jamalul Kiram III to order his brother Azzimudie Kiram and the armed group of more than 100 to get out of Tanduo village in Felda Sahabat 17 where they have been holed up since Feb 9.

The request was made to Foreign Minister Datuk Seri Anifah Aman by his Philippine counterpart Albert del Rosario after the expiry of the Friday deadline.

Anifah, however, told The Star that he had conveyed the decision on the new Sunday deadline to Rosario.

“We are hoping the stand-off will end peacefully with the latest deadline,” he said, echoing Home Minister Datuk Seri Hishammuddin Hussein's statement that he wanted the two-week stand-off to “end sooner than later” without bloodshed.

Hishammuddin told reporters in Kluang that the extended period would not be too long as his ministry would leave it to the security forces to conduct an operation to end the stand-off.

He said the Tanduo incident was different from the country's past experience with armed groups such as Al-Maunah, Abu Sayyaf and Jemayah Islamiah as this group claimed to be descendents of the Sulu sultanate.

However, he said the country's sovereignty and the pride of the Sabah people must not be taken for granted.

The priority of the armed forces was to defuse the situation without bloodshed as it could affect Malaysia's good relationship with the Philippines, he said, adding that the preparation for the deportation of the Sulu group “is in the final stage”.

As the Philippine Government tries to persuade the Sulu Sultan to take their Sabah claim demand to a diplomatic level, the Kiram family has been adamant and had asked Azzimudie's group to stay put in Tanduo.

Although emissaries have been negotiating with Azzimudie, the political pressure in Manila has been mounting on President Benigno Aquino and his Cabinet to resurrect the long dormant Sabah claim following talk that the Oct 15 peace deal with the Moro Islamic Liberation Front had left out the Sulu sultanate as well as Nur Misuari's Moro National Liberation Front.

To help defuse and bring the stand-off to a peaceful conclusion, Philippine Defence Secretary Voltaire Gazmin said he and his Malaysian counterpart, including the armed forces of both countries, were closely coordinating their actions and exchanging information.

Gazmin said the Philippine military had enforced a naval blockade in the Sulu Sea to prevent undocumented Filipinos from entering Sabah as reports emerged that other groups from southern Philippines were poised to help Azzimudie's gunmen.

Stating that the Sulu group was pursuing its Sabah claim the wrong way, Gazmin revealed that six navy ships and a transport vessel were on standby in Tawi Tawi, about a 15-minute fast boat ride to Tanduo village.

By P.K. KATHARASON, MUGUNTAN VANAR and MOHD FARHAAN SHAH The Star/Asia News Network

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The Philippines broken ranks with Asean

HIGH STAKES: In its zeal to take on China's claims in the South China Sea, the Philippines has alienated itself
 

The official map of the Philippines labels the South China Sea as the West Philippine Sea and includes Sabah.

By  initiating an arbitral proceeding against China, the Philippines has upped the ante in the South China Sea. Manila says it is left with no choice but to take Beijing to arbitration after exhausting all remedies. However, many see Manila's action as a desperate act -- a publicity stunt to regain international prestige following the Scarborough Shoal fiasco in April last year.

Manila's request for an arbitral award opens up a can of worms, especially when its Regime of Islands claim (to the Kalayaan Islands and Scarborough Shoal) under its 2009 Baseline Law is contestable under international law.

Incidentally, its new official map that has renamed the South China Sea as the West Philippines Sea has re-incorporated Sabah, which is sure to reopen old wounds.

People who live in glasshouses should not throw stones, as they will expose not only the throwers' hypocrisy but also vulnerability.

No one doubts that Manila is fed-up with Beijing's intransigence. Lately, the Philippines has mounted diplomatic and political offensives in the South China Sea in a hope to get the United States and the international community to sanction China. Unfortunately, following a rebuff by Washington, the offensive failed to undermine China, the Goliath who was close to former president Gloria Arroyo, now under house arrest.

As a domestic political agenda, Manila's unilateral legal proceeding is likely to be futile again. Its success record in international arbitration has been dismal. For example in 1927, the US, acting on behalf of Manila, failed to convince judge Max Huber that the island of Palmas belonged to the Philippines. The judge awarded the ownership of the island (now known as Miangas) to Indonesia, although the island is within the 1898 Treaty of Paris Limits.

In October 2001, the Philippines sought permission to intervene as a non- party in the case involving the sovereignty of Pulau Ligitan and Pulau Sipadan. the International Court of Justice (ICJ) rejected (14 to 1) the request.

China, the world's second largest economy and a permanent member of the United Nations Security Council, has said no to arbitration proceedings. Without its consent, it is unlikely for the tribunal to act; furthermore, the tribunal may lack jurisdiction to hear the case.

Manila has insinuated that Beijing can no longer hide behind its declarations under Article 298 of the UN Convention on the Law of the Sea (UNCLOS). In 2006, China declared, "it does not accept any of the procedures provided in Section 2 of Part XV of United Nations Convention on the Law of the Sea with respect of all categories of disputes...", including sovereignty issues.

Manila says this proceeding against China is not over sovereignty. Yet, the notification statement implies the contrary.

Manila wants the proposed tribunal to determine the legality of China's nine-dash line of 1948 and to determine the legal status of 10 features that China has occupied in the South China Sea (mainly in the Spratlys) as either "islands or rocks". These issues are jurisdictional in nature. The nine-dash line relates to jurisdictional and sovereignty issues.

The Philippines brings the case to the tribunal under UNCLOS. Those familiar with jurisdictional claims in the South China Sea are aware of the nine-dash line, published in 1948. This means the line has preceded UNCLOS by thirty-four years; UNCLOS came into force in 1996.

The only way for UNCLOS to have jurisdiction over the case is to give it a retrospective power, which arguably constitutes an abuse of rights and goes against the legal principle of good faith (Article 300 of UNCLOS).

The unfortunate omission of the applicable law under Article 38 of the ICJ Statute in the notification statement has significantly weakened Manila's position.

I also find it puzzling for Manila to ask the tribunal to "require China to bring its domestic legislation into conformity with its obligations under UNCLOS".

On the diplomatic front, Manila has garnered zero support from the claimant parties.

Their silence results possibly from disagreement with the manner the Philippines handled a vital matter in the light of Statement on Asean's Six Point Principles on the South China Sea of July 20 last year.

Moreover, Manila's objection in May 2009 to the Joint submission to the UN Commission on the Limits of the Continental Shelf is still fresh in the minds of Hanoi and Kuala Lumpur.

Is Manila telling the world that it has broken ranks with Asean?

The way forward is not to break ranks but to mend fences with China.

by Dr BA Hamzah New Straits Times

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Malaysia celebrates 55 years Merdeka, a truly independence at retirement age?

Ugly two sides of a coin

Merdeka Day used to bring Malaysians together for one big do, but politics has changed all that
 

National colours, in droplets: The Malaysian flag, or Jalur Gemilang, is reflected in thousands of raindrops on a windscreen of a car during a rainy day in Kuching. It’s Aug 31 — Malaysians from all across the nation are flying the Jalur Gemilang with pride as they celebrate the 55th Merdeka Day. This photo is taken close up with a 90mm macro lense. —ZULAZHAR SHEBLEE/The Star

TODAY, Aug 31, is Merdeka Day. It’s usually an occasion celebrated with parades and speeches remembering heroes in the struggle for indedependence, marked by the singing of patriotic songs and much flag-waving.

The celebrations also generally include groups of participants in colourful traditional costumes to remind us of our rich cultural heritage and diversity.

It should be a time of reflection on what nationhood means for Malaysia and how we want our country to move forward, a time of celebrating together as Malaysians with no regard to race, religion or political affiliation.

Unfortunately, we live in such a politically-charged atmosphere, with the impending 13th general election looming over us, that even National Day has turned into an occasion for petty squabbling and the inevitable politicking.

The official theme of Janji Ditepati (Promises Fulfilled) has been met with derision by the Opposition, who claim it is an empty slogan as many Government promises have not been fulfilled.

For their part, Pakatan Rakyat leaders have said they will skip the official celebrations for their own state-level one, complete with their own theme of Senegara, Sebangsa, Sejiwa(One Country, One Nation, One Soul).



So, instead of uniting the people as befits Merdeka Day, the celebration has been split along partisan lines.

Public reaction seems to range from indifference to disdain. We’re grown weary from waiting for the polls to be called and it’s hardly surprising if people are skeptical of the endless campaigning.

Meanwhile, there’s the important matter of what Merdeka Day means for Sarawak and Sabah. On this day in 1957, it was the Federation of Malaya which gained independence from the British. Sarawak became independent on July 22 1963 and Sabah on Aug 31 1963, shortly before Malaysia came into being on Sept 16 1963.

Some quarters have raised the point that today’s celebration has no relevance to Sarawak and Sabah, and that Malaysia Day on Sept 16 should be the rightful National Day.

Coupled with this is the tricky question of whether Malaysia is 55 or 49 years old, depen-ding on whether the birth of the nation is deemed to be in 1957 or 1963.

We’re in the peculiar position whereby Malaya became independent on Aug 31 1957, but the country of Malaysia was formed on Sept 16 1963 through the merger of Malaya, Singapore (which left in 1965), Sarawak and Sabah.

For Sarawakians and Sabahans, Sept 16 is the more meaningful date because it commemorates the birth of Malaysia, a nation of which we are a part. Peninsular Malaysians need to understand this and realise why Sept 16 is important to us here.

On our part, we should accept that Aug 31 is likewise an important date for the peninsula. However, since Sept 16 is Malaysia Day, it should be given equal, if not greater prominence, than Aug 31 as a truly national celebration of our coming together as a country.

Nevertheless, as we celebrate National Day today, let us be reminded of the Proclamation of Independence read out by Tunku Abdul Rahman in 1957. It ends with the hope that the newly-independent nation “with God’s blessing shall be forever a sovereign democratic and independent state founded upon the principles of liberty and justice and ever seeking the welfare and happiness of its people and the maintenance of a just peace among all nations.”

In line with this, the Christian Federation of Malaysia’s Merdeka Day message is a timely call for Malaysians to forge ahead and invest in building a progressive and better country for all.

“In this celebratory occasion let us dream a new dream for all Malaysians. We pray to Almighty God that He will grant us a new vision of Malaysia for ourselves and all our children. We are a nation truly blessed with so much potential in our multi-ethnic, multi-cultural and multi-religious communities.

“Let us mutually share all our resources, our wealth and opportunities and be a model nation to the nations around us. We can begin to do this by loving God and our neighbours as ourselves. Let us be responsible citizens of our beloved Malaysia. Let us care for those in need like the orphans and widows. May we meet the needs of the marginalised and others left by the wayside. In concert, let us jointly prosper our neighbours first.

“As Malaysians we step forward together in unity and harmony for all Malaysians and not pay heed to the strident voices of some with their narrow interests,” it said.

It also called for justice and righteousness to be upheld and for friendship, unity and harmony to be strengthened in the country.

May this be our prayer and hope for Malaysia as we celebrate this Merdeka Day.

ET CETERA By SHARON LING

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Malaysian 13th General Election Pow-wow, Register as voters now!

On the edge of our seats

The whole country is getting fidgety as Malaysians await the 13th general election.

IT’S an extended silly season. Everyone is ultra sensitive and every event or statement is examined with a fine toothcomb for any underlying political message.

Hardly a day goes by that a politician does not let fly a missile at one opponent or another. From cows, condos to sex tapes, no one and nothing is spared.

One would have thought that after months of this, politicians would have run out of ammunition, and from the quality of the rockets being shot out, they are close to scraping the bottom of the barrel.

Everyone is so tense that even the recent reduction in RON 97 by 10 sen is seen as an indication that the polls is near.

By my vast experience of having covered the past five general elections, the polls should have already been here, gone and dusted. But this time round, Prime Minister Datuk Seri Najib Tun Razak seems intent on dragging out the silly season for as long as he can.

His opponents have joined him by declaring that Selangor and Penang would not hold their polls together with the national elections. Selangor MB Tan Sri Khalid Ibrahim had declared that his government would definitely not follow if it is held this month.

A June general election does not seem likely now (for some unexplainable reasons, the country has never held a general election in the month of June). So does this mean that Selangor will now follow suit if it is held next month?

No way, says Khalid’s boss Datuk Seri Anwar Ibrahim who wants Selangor to go the full distance (sometime in April next year). The games of the silly season continue.

One senior Barisan Nasional official enquired with a party worker recently how things were going and was shocked at the reply he got.

“Boss, we are all very tired. We have been on war footing since October and we do not know how much more we can take,” said the party worker.

Some of the candidates-designate from both sides, who have been campaigning quietly since January, are quietly complaining that they are running out of funds and at the same time cannot do anything about raising money from supporters.

“What am I to tell my supporters? No party will announce its candidates so early for fear they may be bought over or of sabotage,” said one aspiring candidate.

This is why some Umno stalwarts are calling on the leadership to start naming the potential candidates so that they can “be properly introduced” to the branches and avoid any sabotage.

This, I suspect, will also allow these people to make use of the official party machinery which means it will be less taxing on his or her personal resources which can then be reserved for the actual polling and campaign period.

This 13th GE will be a watershed election for Malaysia and every seat will see tough fights. “The mother of all battles” was how one senior journalist described the coming polls.

Unfortunately, like all things that are anticipated with such great expectations, I fear it will fall short of everyone’s outlook. GE 13 can’t help but disappoint because we are expecting so much from it.

Prior to last week, when it became obvious that the polls would not be in June or July, everyone seemed resigned to the election being held in September.

But then came Najib’s announcement that Budget 2013 would be tabled on Sept 28.

One could almost hear the groans of frustration going up all over the place. The so-called experts are now even suggesting November or January as the new dates.

One Cabinet Minister even pointed out that Tun Dr Mahathir Mohamad held the 10th general elections in exactly the same manner.

Dr Mahathir tabled the budget in October 1999, allowed the Lower House to debate the budget, but before it would be passed, he went to see the King and had Parliament dissolved. He took his Budget as his manifesto for the polls.

This senior Cabinet member said outright that Najib would do exactly the same because it proved to be a masterstroke by Dr Mahathir to defeat his foes then.

This conversation with the minister took place a month ago, long before Najib announced his Budget date.

So does this mean that the polls will be in October?

If statistics are anything to go by, it is unlikely to be held then because only the 1990 GE was held in the month of October (Oct 21 to be exact).

The following are the exact dates of the past 12 elections.
1st GE - Aug 19, 1959;
2nd GE - April 25, 1964;
3rd GE - May 10, 1969
4th GE - Aug 24 and Sept 14 1974;
5th GE - July 8, 1978;
6th GE - April 22, 1982;
7th GE - Aug 3, 1986;
8th GE - Oct 21, 1990;
9th GE - April 25, 1995;
10th GE - Nov 29, 1999;
11th GE - March 21, 2004; and
12th GE - March 8, 2008

Hopefully, someone out there can find a pattern from this list of dates and then correctly predict the polling date that Najib is holding so close to his chest and does not look likely to reveal any time soon.

Those claiming to know the man’s plans said we should examine Najib’s speech during last year’s Malaysia Day on Sept 16.

“He made many promises there. Once he has fulfilled all those promises, I am sure he will call for the elections,” said one of them.

The polls cannot come fast enough for most of us because we want to get back to some real work.

WHY NOT?
By WONG SAI WAN

> Executive editor Wong Sai Wan has been on election footing since 2010 and will be glad when it comes.

EC: Register now and you can vote in September

KOTA KINABALU: Malaysians who are eligible to vote should register this month to qualify to vote in the general election if it is held in September.

“If they register in the second quarter of this year, they will be able to vote if the election is held after August,” Election Commission deputy chairman Datuk Wan Ahmad Wan Omar said yesterday after briefing 30 officials from 15 political parties in Sabah about electoral regulations.

There are about a quarter million Sabahans above the age of 21 who have yet to register while about 3.6 million eligible voters nationwide have not registered.

Wan Ahmad said there were 946,638 registered voters in Sabah and 258,943 eligible voters have yet to register.

“I hope they will register now,” he said, adding that if everyone registered, Sabah would cross the one million mark and could reach 1,205,581 registered voters by September.

He also said there were very few people, who had come forward to clarify the position of some 13,000 dubious voters when they exhibited the names for three months.

“We believe many of these people are dead and their families did not report the deaths to the National Registration Department. We can't remove their names, so it remains in the rolls until their next-of-kin have not come forward to clarify it.

“That's why sometimes you get cases of someone with an age of 120 who is still in the roll.

“We cannot remove it as we are not empowered by law to delete such names,” he added.

Wan Ahmad also said they would be setting up 31 mobile election enforcement teams to check on offenders for Sabah and Labuan's 26 parliamentary constituencies.

He said there would be two teams each in Kota Kinabalu and Sandakan while each constituency would have a team, comprising an election officer, a police inspector, a local authority official and representatives of contesting parties.

By MUGUNTAN VANAR vmugu@thestar.com.my 

Malaysia's Minimum wage’s benefits and effects

Minimum wage’s benefits are plenty

I HAVE been waiting for a reason to talk about a pizza delivery man I met in a lobby of an condominium while waiting for a lift to arrive. It was in the evening and he was delivering pizza to one of the residents. I struck a conversation about his job, his salary and his aspirations, and got enough from the chat to get his views that the decent salary he was making was insufficient.

The young man claimed he was making RM2,200 a month whizzing through traffic, despite the weather, to send piping-hot pizzas to customers from between 10am and midnight.

He said that after sending back money to his parents in Pahang and paying for his lodging and expenses to live in Kuala Lumpur, the salary was just not enough. Furthermore, the job was wearing him down and he wants to do something else, but is finding it hard to get a new skill with the demands of his current job and the obligations he has.

His story will resonate with many others who are struggling to make ends meet, and whatever little assistance they get will surely be welcome. That small bit of help though came for millions of Malaysians by way of a new minimum wage the Government announced on April 30.

Workers in Peninsular Malaysia were promised a floor wage of RM900 a month and those in Sabah, Sarawak and Labuan RM800 a month. The minimum wage will take effect six months from the time the law is gazetted to allow industries to make adjustments to comply with the new law. Non-professional services companies with fewer than five employees will be given a further six months to make their adjustments.

The higher minimum wage will benefit a reported over three million private-sector employees and the net effect economists have calculated is a negligible increase in unemployment and a small drop in investments.

Economic growth and the investments that will take place and the promise of new jobs will be more than enough to offset those small impediments.

One drawback many can expect is higher prices. You can bet employers will pass on the higher staff costs to customers, but the quantum should be kept in check given the competition that exists in business.

The benefits, though are plenty.

The higher wage that almost a third of the workforce will benefit from will be a boost to the economy, which in recent years has been driven by consumption.

The higher wages will also manifest in other benefits for workers. A higher base salary will mean higher contributions to the Employees Provident Fund (EPF) and the extra will go some way to shore up the retirement savings of many Malaysians.

Companies will see an increase in their payments to the EPF, but with productivity having risen 6.7% per year over the past 10 years and companies making a lot more money than before judging by profits announced by listed companies and tax collection by the Government, they can afford to pay a little more for their workers without diving into bankruptcy.

With a third of the workforce soon enjoying a higher base salary, the increased income will go some way to satisfy the requirement of banks under the new responsible lending guidelines.

Under the new loan criteria, banks will look at the basic salary and decide whether a person can afford a loan. With higher salaries, maybe that will be enough for low salaried people to qualify for a loan to get the small car or home they need.

The minimum wage will help those in need. It might help those like the pizza delivery man if the minimum salary together with allowances are fixed. It is a start that many Malaysians will be thankful.

● Deputy news editor Jagdev Singh Sidhu needs to get a lucky charm ahead of this weekend's FA Cup final.

Minimum wage effects manageable

Effects of the minimum wage policy are expected to be manageable and unlikely to have a significant impact on companies, with rubber glove manufacturers seen to be the hardest hit, analysts said.

UOB KayHian Research head Vincent Khoo said there will be no significant wage rise for most listed companies, especially given the flexibility for the floor wage to include allowances and benefits, hence no wage restructuring is required.

"However, small and medium enterprises in particular, may still be impacted by higher overtime and there may be an upward cascade effect for some listed companies."

In terms of sector, he said glove manufacturing remains the most impacted but the effect should be significantly softened with the incorporation of some allowances into wage calculations.

"Minimum wages would lower industry profits by as much as over 10% as a significant portion of the industry's staff force earn only RM600 to RM700 a month before allowances and benefits."

Consumer companies emerge as the winner as overall demand for fast-moving consumer goods should improve with higher disposable income among low-wage earners.

"We expect manufacturers to raise product prices during the implementation grace period to maintain profitability," Khoo said.

Affin Investment Bank economist Alan Tan said: "The direct effect of a minimum wage increase will result in increases in the relative prices of goods produced. However, even if minimum wages were to lift prices (especially in low-wage industries), we expect the inflationary impact to be manageable, as the minimum wage is set at a relatively low level, which will not raise production costs and overall price level significantly.

"Overall, we expect the broader economic effects of minimum wage in the country on company profits, prices, and inflation, to be manageable and unlikely to have a significant impact on the economy."

However, CIMB Research said higher wages will release pent-up consumption, albeit with some inflationary impact.

"Our view is that an appropriate minimum wage could over time achieve a big push, which is moving the low-wage, low-consumption and informal labour market to a high-wage, high-consumption and formal labour market."

For rubber glove makers, HwangDBS Vickers Research said staff costs would increase by 17-22% while earnings could fall by 5-19% .

"We expect the additional staff costs to be passed to customers over time, but in the immediate term, we expect earnings and margins to be dampened."

It said Hartalega Holdings Bhd is the least affected while Top Glove Corp Bhd would be most affected.

"Based on our estimates, Hartalega's salary costs could rise by RM10 million a year, an increase of 17% and this would lower the 2013 estimated net profit by 5%. For Top Glove, staff costs could rise as much as RM39 million (an increase of 22%), denting 2013 earnings by 19%. Meanwhile, we estimate Kossan Rubber Industries Bhd's annual salary costs to increase by RM18 million (a rise of 17%) and net profit to fall by 13%."

However, it said that if fixed allowances or cash payments are allowed in the calculation for minimum wages, the impact will be softened.

It maintained a hold on Top Glove at a target price of RM4.80 and Hartalega (RM7.70) and Kossan (RM3.30).

Affin Investment Bank said rubber glove makers have indicated that they will most likely reduce or re-categorise certain allowances to help offset the increase in their workers' basic salary.

Ee Ann Nee
sunbiz@thesundaily.com

Glove makers to gain from wage rule in long run

PETALING JAYA: While the new minimum wage will dent glove makers’ earnings in the near term, it is expected to be beneficial for the industry in the long run, CIMB Research said.

“It will encourage glove makers to reduce their use of low-skilled labour and improve their manufacturing processes by using more advanced technology and methods.

“Also, we believe that wage inflation will make the smaller glovemakers less competitive and catalyse consolidation in the sector. This will strengthen the positions of the large glove makers, favouring those with more efficient processes such as Hartalega (Holdings Bhd),” the brokerage said in a note to clients.

On Monday, Prime Minister Datuk Seri Najib Tun Razak announced the details of the country’s wage floor for the private sector, with the monthly benchmark set at RM900 for Peninsular Malaysia and RM800 for Sabah, Sarawak and Labuan.

This translates to an hourly rate of RM4.33 and RM3.85 respectively.

Some analysts say the new minimum wage rule may encourage glove makers to reduce their use of low-skilled labour and improve their manufacturing processes by using more advanced technology and methods.

The policy applies to all workers in the private sector, save for those in domestic services, but it will only take effect six months after the Minimum Wages Order is gazetted.

The law, which will be reviewed every two years, affords some flexibility to employers as they can absorb a certain amount of allowances and fixed cash payments in calculating the new wages.

According to CIMB Research’s forecasts, the minimum wage could shave some 1% to 7% off glove makers’ financial year 2013 core net profit, but the brokerage has kept its “neutral” rating for the sector and estimates for the companies under its coverage as they may yet find ways to mitigate the impact of higher staff costs.

Other research houses have also maintained their ratings pending further clarification from the companies and the actual gazetting of the law.

Among the glove makers, Hartalega is the least affected by the setting of a wage floor due to its highly automated production facilities and high margins relative to its peers.

“We believe Hartalega will emerge the strongest from the higher wages as its operations are already lean and management is working hard to further automate its manufacturing process.

“With the highest margins (lowest post-tax cost base), technologically advanced manufacturing process and an aggressive eight-year expansion plan, Hartalega has the most wiggle room in the sector to price gloves competitively and gain market share,” CIMB Research said.

Management was aggressively working on further automating the stripping and packaging portions of its manufacturing process to reduce the use of low-skilled labour and optimise operating expenditure, it added.

CIMB Research said Top Glove Corp Bhd would be the hardest hit as a result of low margins and an oversupply for its gloves that could take two to three years to work off.

“We believe it would be challenging for management to pass on the cost of the minimum wage to customers. This would put further pressure on margins and Top Glove’s high-volume low-price model.”

Top Glove shares have reflected this, with the counter losing 13 sen, or 2.72%, to RM4.65, making it one of the day’s top losers.

In contrast, Kossan Rubber Industries Bhd and Supermax Corp Bhd dipped one and two sen respectively to RM3.24 and RM1.87 yesterday, while Hartalega was unchanged at RM7.80.

For Supermax, CIMB Research said the manufacturer was ramping up nitrile production to 53% of capacity by financial year 2013. This could help curb rising staff costs, the brokerage added, as the cash cost of producing nitrile gloves was 20% lower than natural rubber.

Kossan, meanwhile, is poised to tap on the growth in China, where glove usage is a mere two gloves per person per annum versus 50 in Europe and 96 in the United States. Kossan entered the market in financial year 2012 via its 53%-owned Cleanera HK Ltd.

Moving forward, HwangDBS Vickers Research expects the additional staff costs to be passed on to customers over time.

Affin Investment Bank, in a report, also noted that Top Glove had previously said it would likely pass on 80% to 90% of the higher costs by increasing prices, which could prompt other glove makers to do the same. - The Star Business

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Malaysia's minimum wage, and its implications