Sunday, June 8, 2008

Where is the Corporate Social Responsibility?

This may seem to be a non-Buddhist piece. But if we don't apply our teachings into our everyday life, including at our work place, YES- this samsaric world - and if Buddhists only keep thinking of going to the forests and monasteries - we will have a world of non-Buddhists as CEOS and accountants and politicians... who may not be very capable of benefitting sentient beings as a practising Buddhist CEO with real Bodhicitta would. But then... practising Buddhists are not interested in such positions. And why should they, when the bliss of liberation is much better? Then again, is it possible to practise renunciation but still live in the samsaric world - actively saving sentient beings instead of being caught up in it? The answer is : YES, but not everyone can do this.

I view with utter disappointment the recent announcement by the government on the increase in petrol prices. The government had chosen an utter disregard for the welfare of the people by letting the people feel directly the impact of the reduction of subsidies. It seems bankrupt of ideas on how to deal with the increasing cost of fuel. With the recent increase as announced by our PM, many small and large businesses immediately revise their prices too and passing on the increase in costs to the end consumers, who are the ordinary folks who are normal wage earners. This is not right because the cost of the higher petrol has not set into their cost of raw materials and operations yet. For example, the hawkers are still selling their existing stocks of noodles. And they bought their goods at the previous prices. So, why should they increase their prices immediately? Who are we, especially the lower and middle class people, going to pass it to? My dear Prime Minister, our salaries do not increase by 40%!

Moreover these businesses who takes the opportunity to increase their prices, donot take into account the proportionate increase in their costs in determining the correct price they should increase. For example, petrol price increases by 70 cents per litre. Is it then right for the manufacturer of the packet of almond powder drink to increase it by 70 cents too? I read in the newspaper that the bus operators have increased their tickets by RM10 to RM15 each. For a bus with 26 setas, it means, an increase of RM260 per bus trip. I want to know whether their diesel or petrol consumption increases by that much for one bus trip. If not, why increase up to that much? And where are the cost accountants in these national issues? I feel that the accounting profession should take a more proactive role to advise the government on any better way to lessen the government subsidies and at the same time, ensure it is not passed only and solely to the rakyat to bear the burden. I am sure with their brains in dealing with numbers and figures on a daily basis, they should be the ones that can handle the difficult economic crisis better than to leave it solely to the politicians.

Tenaga Nasional Bhd (TNB) is among the first to revise their tariff rates. The bus operators have revised their rates. And I can understrand transportation companies need to revised their charges immediately, but should TNB? Has TNB’s higher costs (due to the new fuel prices) kicked into their manufacturing costs already? If every businesses increase their costs immediately even though the new higher costs have not taken effect into their operations or their raw materials, it is the ordinary folks on the street that have to bear the burden first, while these businesses maintain or increase their profit margins. Is it morally right? Why can’t business bear partially the burden too? Does the rakat have to bear 100% all the cost increases? Whatever happened to business/corporate social responsibility?

If we add up the chain effects of the fuel increases, and other increases that will follow, it may snowball to more than 100% increases in our total daily expenses. While we have to bear the burden large corporations such as Tenaga Nasional Bhd enjoy a 88% increase in its profits (based on their annual report for FY07). And yet, now they have revised their tariff rates. This latest move may only increase their profits further. And just who benefit from their enlarged cumulative net profits? These profits benefit only their shareholders, and I am sure not all of their employees are getting 88% increase in their salaries, are they? A rough survey of some of the largest public listed company will reveal to you that most of them enjoy hefty profits from financial year 2006 to 2007. I am unlike others who merely can criticise but nothing to show. If I have extracted the numbers wrongly from their annual reports, please correct me by all means.

in RM ' mil net profit after tax

Public List Co. FY06 FY07 % inc.
Genting Bhd 2,242.5 2,562.3 14%
Tenaga 2,161.7 4,067.6 88%
Telekom 2,068.8 2,547.7 23%
Maybank 2,834.5 3,252.8 15%
Petronas Dagn 511.1 646.6 27%
Sime Darby 1,204.2 1,597.4 33%
PPB Group 694.3 7,002.5 909%
YTL Corp. 1 ,190.4 1,434.3 20%
AirAsia 201.7 498.0 147%

TOTAL 13,109.2 23,609.2 80%

Yes, these corporations paid higher taxes with higher profits. However, what I am saying is that they still have enough financial ability to bear some of the burden of the increase in the costs of fuel and other cost. Is it possible that they exercise some corporate responsibility and absorb some of the increases and not pass it to the consumers? Is it possible that the government impose some social responsibility tax on these large corporations to cushion the government’s huge subsidies to the rakyat? In these tough times, what could be a more noble social responsibility than to help all levels of Malaysians, rather than exercising their corporate social responsibility on selected groups of people only? By helping all levels of Malaysians to subside the petrol subsidy, it will help prevent the chain effect of the price inflation. While the prices imposed by these large corporations on the consumers are easier to monitor since they are public- listed, can the Ministry of Domestic Trade check and monitor the increase of every essential daily items? And again, where are the accounting professional bodies? I think they should proactively analyse whether the increases of the daily essential items are reasonable or not as well as recommend measures for business to share and absorb some of the costs increases. Think about it.


My article above was to bring people's attention to the huge profits that some business (BIG & SMALL) are enjoying. Please be reminded that bosses of huge corporations and the business they run are two separate entities. This is different from sole proprietors such as the noodle sellers. Yes, of course, I know they do shoulder a lot of risks in running their business but the profits in the table I put up are not theirs. They belong to the shareholders of the company. As for small businesses, I do not have any complain of them passing on the buck to the end consumers, but think about this: compaanies donot have any feelings. They cannot shed tears. But we - ordinary people who have to bear the brunt of the crisis have tears and can feel pain, esepcially the lower and middle income group. Even our local hawkers next door passes the increasing buck to their consumers. That's my point. Any wage earners - low or high - are unable to pass it on to others, unless they have part-time businesses.

Thsi is not only true for my country. Other corporations world wide are also enjoying huigher profits. And it is their citizens who have to suffer. All the knowledge and brains of this world, but very little compassion on sentient beings. Is it a problem for private and public limited companies, especially those with huge profits to bear some of thehigher costs and not pass it totally to the end consumers?

I donot understand why some people could not understand a simple article. I guess that's why our country is in the situation it is now. Pathetic! Two other focus points of my piece are

1. Businesses, especially huge ones do have the financial capability to shoulder on some of these burden that the government had passed on to all wage earners. Wage earners - rich or poor are humans, whereas business are only non-living entities. Surely, a temporary increase in special corporation taxes - something like the windfall tax - in times of crisis is understandable. But it should be impose to beyond companies dealing only with crude palm oil. However, it doesnot have to be taxes. It can be in other forms, where they donot pass the buck to the human end consumers. For example, if their total increase in their raw materials add to 30%, companies can shoulder up to 15% and only pass to the end consumers the other 15% only. This is where the accountants should come into the picture. They can analyse and see how much higher cost of operations the company can absorb, without affecting the final profitability of the comapny.

2. The accounting professional bodies can and must take a more proactive role. The majority of accountants are supposed to be trained to be objective in their views based on analysis and facts. They are unlike politicians and economists. But I donot see them taking a visible role.

No comments: