Malaysia suffers from RM7 billion in subsidy leakage every year as the result of diesel and petrol smuggling. Putrajaya is now looking into a new smart-card system to provide targeted fuel subsidies. – The Malaysian Insider file pic, July 15, 2014.
The brother of an Umno MP and a businessman close to Putrajaya are behind Fuelsubs House Sdn Bhd (FHSB), the frontrunner bidding for a fuel subsidy management project that is causing disquiet among party supporters.
Fuelsubs surfaced last month when smart-card maker Datasonic Group Bhd said it will pay RM10 million for a 30% stake in the company if it secured a letter of award from Putrajaya to implement the project, which has been presented to the Economic Council.
The principal owners of Fuelsubs are businessman Habibul Rahman Kadir Shah and Datuk Razali Merican Naina Merican, who is the brother to Kepala Batas MP Datuk Reezal Merican Naina Merican.
Habibul, who is close to Umno and the Prime Minister's Office, sits on the board of several companies, including Group Lotus PLC, which is owned by Proton Bhd, Felda Global Venture Bhd's Twin River Technologies Holdings Inc, and in March, was named to the board of the London-based Petronas Energy Trading Limited.
The other owners of Fuelsub are HKS Primatrix Sdn Bhd, which is also owned by Habibul, and his brother Zaid Kadershah, a telecommunications senior executive.
Their presence in the project is said to be causing disquiet among some quarters in Umno and pro-government bloggers, who called for transparency in the project to plug leaks in the subsidy programme.
Maybank’s research unit reported that Malaysia suffers from RM7 billion in subsidy leakage every year as the result of diesel and petrol smuggling to foreign countries.
The International Monetary Fund (IMF) estimated that the top 40% of Malaysians who fall in the high-income group enjoy 80% of the nation’s fuel subsidies.
A total of RM24.8 billion has been budgeted for fuel subsidies in 2014, but out of this, only RM3.5 billion is projected to benefit those in the low-income group after taking into account the leakage from fuel smuggling, which has led Putrajaya to consider the proposed fuel subsidy management.
Last month, Datasonic and Pos Malaysia Bhd, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, were reportedly joining up to bid for the project which Putrajaya said would be decided by the fourth quarter of 2014.
The proposed fuel subsidy rationalisation programme will utilise either the MyKad, fuel card and smart card, among others and could cost between RM200 million and RM1 billion to implement, according to reports.
The other bidders include MyEG Services Berhad, IRIS Corporation Bhd, ICASH Global Rewards Sdn Bhd, MOL AccessPortal Sdn Bhd and a company linked to a former minister.
But Pos Malaysia has denied teaming up with any firm for the project although it was involved in the one-off RM625 (car) and RM150 (motorcycle) fuel subsidy disbursement in 2008.
Pos Malaysia has a nationwide network of post offices which could provide logistics for
the proposed project, analysts say.
the proposed project, analysts say.
Datasonic rationalised the proposed stake in Fuelsubs as in line with its market expansion strategy and a good opportunity for future growth.
Last April, Datasonic announced it won a contract to supply four million new raw MyKad with 100% polycarbonate material and new security features to the National Registration Department (NRD) for six months from January 2015 for RM72 million.
The company will also supply 10 million MyKad with the same features to the NRD for two years from July 1 to June 30, 2016 for RM 220.2 million.
- TMI
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