X-Files – The Unanswered Qs

December 30, 2009

X-Files – The unanswered questions

Malaysians are waiting for 2010 with bated breath to find out if there are indeed answers to this year’s unresolved issues. Here are 10 unsolved cases of 2009. This list is by no means complete.

NONEAnwar’s fate hinges on Sodomy Trial II

Early this month, the Pakatan Rakyat opposition component parties finally took their partnership to another level by forging a common policy framework.

Political ideologies aside, the PKR-DAP-PAS allies managed to sit down to identify common areas to work on from where they could launch the bid to win power under the stewardship of opposition leader Anwar Ibrahim.

However, the future and fate of Pakatan remains under a dark cloud as Anwar himself is threatened by the impending sodomy trial – the second time he was slapped with a homosexual charge.It was supposed to be the trial of the year for 2009, but this did not take place after a series of court challenges mounted by the opposition leader.

The PKR de facto leader made numerous applications – from seeking more evidence to striking out the charge. Despite all this, the judgments were not in his favour.His trial is set to begin on Jan 25 and has been fixed for a month, but uncertainty still reigns as to whether the court would actually hear the celebrated case on the scheduled date as Anwar exhausts the remaining options – the appellate and apex courts – still open to him. Will Anwar go to jail for the second time? And what would happen to Pakatan if should that be the case?

NONEA new tax while the economy putters

The government desperately needs more money beyond what it can get from oil and income tax. Petronas has contributed 40 percent of the national budget over the decades but this is not going continue as the country run out of new oil fields to exploit.

Of the 12 million working population, only 1.8 million – or 15 percent – pay income tax. The rest are too poor to fall into that category. With the pro-business government slashing corporate tax from 40 percent in 1988 to the present 28 percent, a new tax is imperative.

Enter the goods and services tax (GST), said to be set at 4 percent and which will pour an additional RM1 billion into government coffers. But the catch here is the administration will need more than just RM1 billion to make up for the tax shortfall, so expect GST to be upped in the coming years.

Opponents to GST argued that it benefits the rich as it shifts the tax burden to the ordinary people. Instead of a new tax, they suggest the government to focus on cutting waste by cracking down on corruption and introduce open tenders for government projects.

Meanwhile, the government is targeting 5 percent GDP growth next year after shrinking an estimated 3 percent in 2009. To some, that’s a little too ambitious. Amidst a fall in foreign investment and in the country’s competitiveness, Prime Minister Najib Razak is set to announce a new economic model in February.

But Najib’s most immediate economic problem will be the implementation of the GST, which is up for parliamentary debate in March. For Malaysians, however, the question will be how much more will they be asked to fork out.

NONELingam tape case closed, or is it?

There was hope among some that the judiciary was on the mend with the appointment of a new chief justice, Zaki Azmi, and passing of the Judicial Appointments Commission Bill.

But all that fizzled out with its first acid test – the Perak constitutional crisis. That was followed the Tan Boon Wah versus MACC suit and Anwar’s many applications in his sodomy trial. While the High Court often ruled in favour of Pakatan, the higher courts overturned the decisions.

Worse still was that no apparent action was taken following the royal commission on the Lingam tape.The royal commission had recommended action against six individuals – former premier Dr Mahathir Mohamad, former chief justices Ahmad Fairuz Sheikh Abdul Halim and Eusoff Chin, senior lawyer VK Lingam, UMNO secretary-general Tengku Adnan Tengku Mansor and business tycoon Vincent Tan.

A year later, the authorities are still undecided whether to throw the book at those involved. Even the call from renowned lawyer Karpal Singh, who had volunteered his services to charge Lingam, on the attorney-general to grant him a ‘fiat’ was met with lukewarm response.As we enter 2010, don’t expect to much in the efforts to restore judicial independence.

NONEUncertainty in PAS as Nik Aziz flounders

There is little doubt that PAS spiritual leader Nik Aziz Nik Mat has helped bring together various factions in PAS. The esteemed religious scholar, who is notorious for issuing controversial statements, has been the bedrock of PAS strength. That is no longer true.

The 2008 general electoral triumph has split the party into two loose factions, with Nik Aziz strongly backing the Anwar Ibrahim-led Pakatan Rakyat against a pro-UMNO group.

The pro-UMNO faction, led by PAS president Abdul Hadi Awang along with his lieutenant Hasan Ali, sowed the seeds of discord within the three-party alliance with their idea of forming a ‘unity government’ with UMNO.

To compound the problem, Nik Aziz has personal issues of his own. He has been accused of practising cronyism in appointing his son-in-law Abdul Ariffahmi Ab Rahman as head of a strategic state government-linked company.

But this time around, Nik Aziz’ own faction – dubbed as “the Erdogan group” – has distanced itself from him. Even Nik Aziz’s most prominent and promising protégé Husam Musa is said to be not solidly behind the Tok Guru.

While everyone is watching Selangor closely – said to be the BN’s most susceptible target after the Perak putsch – something is apparently brewing in Kelantan. How this is resolved will determine not just PAS’s political fortunes, but UMNO’s as well.
NONECan BN reform itself?

In the wake of their dismal performance in the 2008 general elections, newly-minted Prime Minister Najib Abdul Razak proposed wide-ranging reforms to regain political support.

Graft remains a thorn in the flesh for Najib with UMNO’s many tainted leaders being let off the hook. Although Najib had vowed to clean up UMNO by ending its electoral quota system to curb money politics, a Herculean effort is needed on the corruption front.Meanwhile, its component parties – MCA and MIC – had both failed to heed Najib’s calls for reform. The BN’s failure is best encapsulated by UMNO Youth chief Khairy Jamaluddin’s remark that BN components no longer shared the same dream.

Meanwhile, Najib’s efforts to foster a transparent government threatens to fall flat should misuse and abuse of public funds remain ignored. Follow-up action on the recent reports by the auditor-general and the public accounts committee is clearly lacking.

Making public the National Key Result Areas (NKRAs) and Key Performance Indicators (KPIs) will not likely to impress if these initiatives prove unable to energise a lethargic public service which is filled with ‘Little Napoleons’.

Political will is essential for Najib to prove that his pledges are not mere rhetoric but firm resolve to restore an ailing party to its former glory. But has he got what it takes to deliver?

NONEWhat exactly is ‘1Malaysia’?

As is often the case with every new prime minister, there are the typical promises of reforms, better governance and a better Malaysia.

Najib’s started out with the often repeated call for a united Malaysia, this time through a platform dubbed ‘1Malaysia’. Eight months into his reign however, it is still unclear what Najib meant by ‘1Malaysia’.

Since his maiden speech after taking over from his somewhat languid predecessor, Najib offered a raft of slogans, presumably coined by international firm APCO Worldwide hired to help polish up his image. But 1Malaysia’s biggest enemy is Umno-owned Malay language daily Utusan Malaysia. The rag continues to run racist articles, some labelling Malaysians of Indian descent with the derogatory term of ‘keling’. This strikes a discordant note.

Most recently, the two-decade-old National Civics Bureau (or BTN) had also stirred up a controversy as some legislators from both sides of the divide, in a rare show of unanimity, urged it be scrapped or revamped.

How ‘1Malaysia’ can fit into age-old slogans of ‘Ketuanan Melayu’ and Malay’s special rights is yet to be seen. Or is this another cynical attempt to tailor different messages to different audiences?

PAS disunity over unity government

The idea a unity government was first floated by PAS president Abdul Hadi Awang last March but it received powerful opposition from party leaders especially party’s spiritual leader, Nik Aziz Nik Mat.

In what was an uncharacteristic airing of disagreement, the Kelantan MB blasted ‘problematic leaders’ such as deputy president Nasharuddin Mat Isa, secretary-general Mustafa Ali and Selangor commissioner Hasan Ali for insisting on holding the talks with Umno on the idea of a unity government.

He demanded that PAS hold an extraordinary general meeting (EGM) to get rid of these problematic leaders and replace Abdul Hadi as party president. Hadi responded by saying that the party had closed the door to talks to form a unity government.

Nik Aziz had also lashed out at party deputy president Nasharuddin Mat Isa, telling him to quit the party and join Umno, for supporting unity talks with its arch foe. Nasharuddin had earlier retained his deputy president seat against an onslaught from vice-presidents Husam Musa and Mohamad Sabu.

The elections saw a fierce battle between the liberals and the fundamentalists for control of the party.The feud between the Erdogans and the conservatives will not go away anytime soon. It is unclear how this will pan out. But what is certain is that UMNO is waiting in the wings, ever eager to exploit the split in PAS.

Missing: RPK and PI Bala

Barely having warm his PM’s seat, Najib was again assailed by yet another damning allegation from private investigator P Balasubramaniam, who went missing after releasing two contradictory and controversial statutory declarations last year.

The private eye resurfaced this year with the explosive claim that he was offered RM5 million by Najib’s younger brother Nazim to retract his declaration linking the premier to slain Mongolian woman Altantuya Shaariibuu.

The public had expected an immediate and firm response from the famous brothers, but their hopes were dashed when Najib merely dismissed the allegation as “frivolous, while Nazim had “nothing to say”.Despite the response, the public was still interested in knowing what had actually transpired and whether Bala was telling the truth or all was simply the product of an imaginative over active mind.

Also gone missing is controversial blogger Raja Petra Kamarudin, who went into hiding early this year following a string of charges slapped on him for implicating a few prominent people, including Najib’s wife Rosmah, with the Altantuya murder.It is believed that he is in London but will continue to be active in writing his Malaysia Today blog. The two will remain the thorn in Najib’s side.

To whip or not to whip?

Conversion and religious issues again hogged the headlines this year. The Penang Syariah Court surprised many by allowing a woman to renounce Islam in March, giving a glimmer of hope that the right to religious freedom was finally being respected.

However, barely two months after the decision, Indira Gandhi sought a court injunction court to nullify her husband K Pamananthan’s conversion of their three children to Islam. After much ado from the Parliament that they will look into cases of children’s conversion, no concrete steps followed where the Law (Reform) Marriage Act was concerned.

Later, the religious authority struck again when the Selangor Islamic Council (Mais) seized the body of deceased film director Mohan Singh, insisting on conducting an Islamic burial rites because they claimed that he had converted to Islam.

The Shah Alam court ruled that he was a Muslim, indicating that the conservative judicial approach over issues related to Islam had won again.

The case of Model Kartika Seri Dewi Shukarnor, 32, further rocked the country when she was sentenced to be whipped six times and fined RM5,000 for drinking beer in public. She shocked the public even more when she agreed to the punishment and refused help from NGOs and women’s rights activist.

In November, the case of Banggarma highlighted how the Welfare Department had changed her life, when she claimed it had converted her to Islam when she was seven.

Also, Selangor PAS, Hasan Ali’s proposed ban on alcohol stirred some discomfort among non-Muslims as the Pakatan government was seen to be using religion to police the rakyat’s sins.

Finally, it seems like the kind of Islam you practise can get you on the wrong side of law. The arrest of former Perlis mufti Mohd Asri Zainal Abidin for giving a talk without ‘tauliah’ generated much publicity.

This is something that will never end. Expect more of this next year.

NONEStill no justice for the Penan

Eight months after the conclusion of a fact-finding mission, the report by the Ministry for Women, Family and Community Development released in September finally confirmed news reports of sexual exploitation of the Penans by timber camp workers.

But since then, no one has been brought to justice, while those have been victimised are now intimidated into keeping silent, raising some questions about Prime Minister Najib’s 1Malaysia policy.

To add insult to injury, the abuse has been repeatedly denied by the Sarawak state government, with the chief minister and his cohorts dismissing the Penans “good storytellers” and that the report was all “lies” generated by “NGOs”.

To their credit, the police made the arduous journey into the interior to gather further evidence about the alleged rapes, but they returned empty handed.

Even now hardly anything has been done to make it safer for the Penans, much less the children, who are continually exposed to sexual abuse as timber trucks remain the only way for them to get to school.

Are Penans part of the 1Malaysia concept?

Malaysian Maverick reviewed

December 29, 2009

Barry Wain’s Malaysian Maverick: A Gripping Account of Abuse of Power in the Mahathir Years

by Richard YW Yeoh

Barry Wain’s treatise on the Mahathir years is a gripping account of the 22-year long era that spanned the 1981-2003 years, a period characterised by unprecedented economic and physical development and rapid urbanisation and social change.

It is overall, a fair and independent account with meticulous cross referencing and footnotes albeit much information attributed to oral interviews to a handful of persons and perhaps lacking in corroboration. Many snippets are attributed to Abdullah Ahmad but many who know Dollah Kok Lanas might prefer to take his assertions with some pinches of salt.

It is nevertheless, essential reading for anyone interested in an authoritative précis of the Mahathir years and a well-documented one at that. Even to seasoned observers of Malaysian politics, this book is a very timely refresher. I noted some assertions that were news to me such as Anwar Ibrahim having graduated in Malay Studies with Honours. I remember it often repeated that Anwar spent five years on a three-year degree and eventually earned a general pass degree (or was this political propaganda that I took for fact?).

Or that Zaid Ibrahim was a former member of Aliran? The now-transformed Zaid was seen as a rather conservative fellow in his younger days and was founder president of the Malaysian Muslim Lawyers’ Association which took rather hardline positions under him in the 1980s so this is also a surprising revelation, if true.

Wain’s account of the 1985 Memali event when 14 members of an armed Muslim group were killed in a confrontation with Police omits the fact that Musa Hitam was in charge as acting prime minister.

Indeed, many observed that not a few hard situations were handled by Musa when Mahathir, by accident or design, was away overseas; a notable one being the Sabah constitutional crisis of 1985 when Haris Salleh and Mustapha Harun attempted to seize power to subvert Joseph Pairin Kitingan’s electoral success.

Mahathir appeared to some as being incapable of taking hard decisions where it might affect his standing as prime minister and these two events are often quoted as events that might have taken different turns had Mahathir called the shots.

Of course, we know now that Mahathir sanctioned the assault on civil society activists attending the November 1996 Apcet II conference in Kuala Lumpur that resulted in the conference being forcibly stopped by Barisan Nasional rioters (with the cooperation of the Police) and most of the participants carted to jail.

Mahathir kicked up a fuss

Another interesting reminder was Mahathir characterising China as a threat to Southeast Asia in his early years, this position was later to change to one where he asserted that China had never been a threat to others throughout its history as a nation.

There was considerable discussion of Mahathir’s early animosity towards the British but a very significant incident was missed. In 1981, Mahathir kicked up a fuss and caused the repatriation of a British envoy who had the ‘audacity’ of asserting publicly, (quite factually, to many observers) that British ‘blood, sweat and tears’ contributed much to Malaysia’s development as a nation.

There is also a repetition of the commonly-held view that the ruling coalition first lost its two-thirds majority in the March 2008 general election. In fact, the combined opposition first accomplished this in May 1969, which was, in many ways, a mirror image of the 2008 result.

Anwar’s trial was also described as the longest in Malaysian history. In fact, in recent court history, this dubious distinction belongs to the Irene Fernandez trial.

In discussing Malaysia’s first large financial scandal – the BMF (Bank Bumiputra Malaysia) case, it would have been interesting if the dismissal of Bank Negara’s second governor, Aziz Taha in 1985 was researched as Aziz was reputed to be a ‘no-nonsense’ official of the Tun Ismail Mohamed Ali genre and the circumstances of his dismissal at the height of the BMF scandal were never explained.

Many felt he was sacked for refusing to do something unconscionable. He was in turn succeeded by the late Jaffar Hussein, who was hand-picked by Mahathir from relative obscurity as a public accountant to head Malayan Banking, Malaysia’s largest bank. Jaffar of course was seen tainted by the currency speculation fiasco and resigned in disgrace from Bank Negara together with Nor Mohamed Yakcop as documented in the book.

Overall, ‘Malaysian Maverick’ is a very well-researched book that is difficult to put down once one started reading it. Highly recommended!

RICHARD YW YEOH is collaborations and governance director of the Research for Social Advancement (REFSA), an independent advocacy and publishing house. ‘Malaysian Maverick: Mahathir Mohamad in Turbulent Times’ is published globally by Palgrave Macmillan.

Anwar miliki pengaruh luarbiasa

December 29, 2009

Free Malaysia Today

Anwar Ibrahim memiliki pengaruh luarbiasa sebab itu banyak pemimpin UMNO dengkitermasuk ajen UMNO yang baru, Anuar Shaari

“Datuk Seri Anwar Ibrahim (gambar) adalah individu yang memiliki pengaruh luarbiasa, bukan sahaja di Malaysia, bahkan di seluruh dunia,” kata Pengarah Pilihan Raya Pusat Parti Keadilan Rakyat (KeADILan), Saifuddin Nasution Ismail.

Dalam satu temuramah dengan Sinar Harian, Saifuddin berkata dakwaan kononnya Anwar pengkhianat orang Melayu oleh Anuar Shaari bukanlah serangan terbaru ke atas Ketua Umum KeADILan itu. “Sepuluh tahun lalu, Anwar pernah dikritik hebat oleh ramai pemimpin. Beliau dikatakan pengkhianat negara, dituduh ejen Amerika dan Yahudi, kononnya manusia paling terkutuk di negara ini serta banyak lagi,” terang beliau yang juga Ahli Parlimen Machang.

“Malahan kutukan sebegitu bukan dibuat oleh ‘orang sekecil’ Anuar tetapi orang yang jauh lebih besar iaitu di kalangan pemimpin UMNO dan Barisan Nasional,” katanya.

Saifuddin berkata, sepanjang Anwar berhadapan dengan umpat keji daripada mereka yang iri hati terhadapnya, Anwar tetap kekal dalam politik semata-mata hendak pastikan rakyat mendapat keadilan sewajarnya.

“Sehubungan itu, saya beranggapan serangan terhadap Anwar itu tidak akan melemahkan semangat atau menjejas imej Anwar tetapi menyerlahkan kebodohan Anuar sendiri, yang tidak mengikuti perkembangan pemimpin yang disegani ramai itu,” katanya.

Dalam wawancara dengan akhbar itu kelmarin, Anuar menuduh Anwar sebagai pemimpin Melayu pertama yang menolak Melayu sendiri.

Ketika parti (KeADILan) mula ditubuhkan dahulu, Anwar bersetuju bahawa parti itu sebagai parti pelbagai kaum berasaskan Melayu tetapi setelah Anwar keluar dari penjara, beliau mula meminggirkan teras Melayu itu dan berubah menjadi parti pelbagai kaum, kata Anuar.

Anuar Shaari merupakan bekas Setiausaha Sulit Anwar dari tahun 1996 sebelum melepaskan jawatan tersebut akibat krisis politik sehingga membawa kepada pemecatan dan penangkapan bekas Timbalan Perdana Menteri itu pada September 1998.

Teoh Beng Hock murdered, what’s next?



December 29, 2009

Dr.  Porthip  Rojanasunand  confirms that Teoh Beng Hock was murdered

Teoh Beng Hock  was murdered. Top Thai pathologist Dr Pornthip Rojanasunand (picture) has sufficient evidence to prove that he was killed.

The Parti Keadilan Rakyat organ, Suara Keadilan, reports in its latest edition that her forensic report will be presented at inquest  into Teoh’s untimely death on January 7, 2010.

The weekly quotes unnamed Health Ministry sources as saying that Dr. Pornthip reached her conclusion after a second post-mortem at the Sungai Buloh Hospital.

The report adds that Dr. Pornthip has made known her findings to all TBHock 1 relevant groups, including the Teoh Family and the Selangor Government  which commissioned her services.

The late Teoh (picture)  was the political secretary to Selangor executive councillor  Ean Yong Hian Wah. Yong is the Seri Kembangan Assemblyperson and a member of  DAP of the ruling  Pakatan Rakyat in Selangor.

On July 15, the Malaysian Anti-Corruption Commission (MACC), investigating allegations of misappropriation of state allocations, raided Yong’s office. Teoh was questioned as a witness at the Selangor MACC Office later that day.

At about 1.30pm the following day, a janitor found Teoh’s sprawled body on the fifth floor of the building. The coroner’s court allowed Teoh’s remains be exhumed on November 21 for a second-post mortem.

Earlier in October Dr. Pornthip told coroner Azmil Mustapha Abas that based on photographs of his remains, she was 80 percent sure that Teoh was murdered.

The second autopsy was witnessed by British pathologist Professor Dr Peter Venezis acting for MACC,  Dr Khairul Azman Ibrahim and Dr Prashant Naresh Samberkar.

Blurred Vision?

December 29, 2009


Blurred Vision?


By Datuk Dr. Mohamed Ariff

Malaysia is in search of new drivers of growth that would lift the economy into the league of high-income countries, somewhat in sync with Vision 2020.  A burning question in the minds of many is whether Malaysia can arrive at Vision 2020 on time.

Much would depend not only on the pace at which the economy will move from now on but also on the definition of “high-income” economy, which keeps shifting. Since developed country status is measured by per capita gross national income (GNP) in constant prices, factors such as population growth, exchange rates and price levels would also matter significantly.

The goal post, in benchmarking terms, has been shifting, with the average per capita income in high-income countries rising from US$19,098 in 1990 to US$37,572 in 2007, while the minimum high-income per capita has risen from US$7,620 to US$11,455 correspondingly.

Vision 2020 was designed on the premise that the economy would grow at an average rate of 7.0 per cent per annum from 1991 onwards. But growth has slowed down considerably after the Asian financial crisis of 1997-98 to an average of 5.5 per cent (1999-2008).

Malaysia’s growth trajectory has deviated from the Vision 2020 growth path. According to estimates, the projected gross domestic product (GDP) of RM525 billion for next year will fall short by 24 per cent from the initially envisaged level of RM694 billion. In other words, the shortfall in aggregate income next year will amount to a hefty RM169 billion.

The gap between the actual growth trajectory and the Vision 2020 track will widen, if the economy were to grow at a slower pace of 5.4 per cent per annum between 2011 and 2020. At this rate, Malaysia’s per capita income will rise to US$15,340, slightly above the projected new minimum benchmark of US$14,818, by 2020.

Thus, although Malaysia can technically get into the high-income club in 2020 by garnering an average growth of 5.4 per cent, it would still fall short of the original Vision 2020 target of US$17,000 per capita.

In real GDP terms at constant 2000 prices, aggregate income would rise to RM887 billion in 2020 (assuming that the economy will grow at 5.4 per cent per annum) which however would be way below the Vision 2020 target of US$ RM1.37 trillion, a shortfall of RM479 billion or 35 per cent.

To reach the Vision 2020 target, the economy will have to grow, between 2011 and 2020, at an average annual rate of 7.0 per cent, which is clearly a tall order. Understandably, the Government’s focus seems to have shifted from Vision 2020 to “High Income Economy”. It is on this basis that the Economic Planning Unit (EPU) seems to be working on a target of 5.5 per cent annual growth under the Tenth Malaysia Plan.

Malaysia’s estimated potential growth has been shrinking from 7.0 per cent in the late eighties to 6.5 per cent in the early nineties to 5.5 per cent now, as the country has been losing its competitive advantage vis-à-vis the newcomers, including China and Vietnam, in labour-intensive assembly manufacturing. The high growth rates of 8-9 per cent seen prior to the Asian financial crisis were evidently unsustainable, as these were input-driven, and not productivity-driven.

Vision 2020 was certainly a great marathon idea, but it unfortunately started off with the wrong foot, running the marathon race like a sprint at high speed. No wonder, the economy collapsed in 1998 under the weight of the financial crisis.

This is not to deny that rapid growth was necessary, but there was a policy failure to ensure that rapid growth was driven by steady productivity gains, which would have made it sustainable. Instead, the authorities took the shortcut by allowing foreign workers to come in droves, in an attempt to maintain the country’s competitiveness based on a low-wage regime (and not merely to meet labour shortages in the so-called 3D – “difficult, dangerous and dirty” – jobs).

Herein lies the paradox of Malaysia trying to keep wages low (to remain competitive) and wanting to be a developed country, missing the point that labour costs would have stayed low, despite rising wages, if there were productivity gains.

In the absence of the massive influx of foreign workers, wages would have risen and employers would have resorted to labour-saving technology to boost productivity (to rein in labour costs). Malaysia would then have automated and moved up the value chain through industrial upgrading. Alas, Malaysia took the wrong turn in the early 1990s.

Ironically, the long-term vision was undermined by a shortsighted growth strategy, which was pursed single-mindedly with a high premium on short-term growth at the expense of long-run goals. Malaysia had inadvertently shot itself in the foot.

In a sense, the “High Income Economy” is a watered-down version of Vision 2020, as Malaysia has to settle for a lower GDP (RM887 billion instead of RM1.37 trillion in real terms) and a lower GNP per capita  (US$15,340 instead of US$17,000) in 2020.  Nevertheless, if all goes well, Malaysia can still join the league of developed nations by 2020 with a per capita income higher than the projected minimum  (US$14,818) for this category. All this would make sense, only if high income is linked to high productivity.

But, it is wrong to look at developed status purely in terms of dollars and cents. There is much more to it than simply GNP per capita: quality of life, economic freedom, human rights, human development, rule of law, social justice, meritocracy, best practices, and pollution-free environment, to mention a few. In these terms, we have a long way to go.

Datuk Dr. Mohamed Ariff is the executive director of the Malaysian Institute of Economic Research (MIER) and Emeritus Professor of Economics, University of Malaya, Kuala Lumpur, Malaysia

MIER’s Ariff: 2010 will be a tougher and more challenging year

December 29, 2009

2010 will be tougher and more challenging year, says MIER’s Datuk Dr. Mohamed Ariff

Come 2010, the Malaysian economy is expected to face tougher and more challenging times following concerns that the United States may be heading for a double-dip recession.

Malaysian Institute of Economic Research (MIER) executive director Datuk Dr Mohamed Ariff Abdul Kareem said all available evidence clearly showed that Malaysia was out of recession.

The country would register positive growth in the fourth quarter of this year, and this would probably continue into 2010, he told Bernama in an interview. “Initially, we thought it’ll be something like minus three to minus four per cent growth for this year. Now, looking at the numbers of the third quarter and the subsequent monthly data, we think the growth for this year will be in the region of minus two to minus three per cent,” he said.

For 2010, he anticipated the growth to be closer to four per cent. However, he said, 2010 would be a challenging year. Although the global economy was moving out of the recession, it was not completely out of the woods, he added.

“There are worries that the growth momentum that we are seeing now — not only in Malaysia but everywhere else — is somewhat fragile because the growth that we are seeing in the United States and Europe and some other countries are very much driven by fiscal stimulus packages,” Mohamed Ariff said.

He said that to keep the momentum going, these countries would probably need another dosage of fiscal stimulus. “But the question is, can these countries afford to have another round of fiscal stimulus? Many also think that that may not work in the first place. There are concerns of that sort that suggest there may be double dip in the United States in the first half of next year,” he said.

If that were to happen, he said, obviously there would be a lot of knock-on effects on other countries which United States has a good trade and economic connection. Other concerns, he said, were the possibility of asset bubbles especially in China and many countries in East Asia and rising inflation.

“These asset bubbles may really cause problem if they were to breed sometime this year,” he  added. He said that another worrisome factor was that all these countries had been printing money this year to finance part of their deficits.

“This extra money printed actually has not translated into higher prices because of repressed demand conditions. But once economy starts to recover, demand will begin to recover, there is a strong possibility of inflation re-emerging.

“If inflation were to rise, countries like Australia and Europe which are very sensitive to inflation numbers, may jack up interest rates. And if they jack up interest rates, then I think it will scuttle the growth process,” he said.  Dr. Ariff said Malaysia would probably not raise interest rates even if Europe would do so and Australia had already done it.

“The recovery that we see in Malaysia is very fragile. You are talking about four per cent growth only and this is way below Malaysia’s potential growth of 5.5 per cent. So, the economy cannot afford to have a high interest rate regime at this point in time,” he said. “Malaysia had to keep its interest rates relatively low to stimulate both consumption and investment”, he added.

He said the country’s growth might reach its peak early and decelerate thereafter should the United States run into a double dip contraction in the first half of 2010, in which case Malaysia would have to put in some kind of stimulus package.

“There are already indications of the volatility,” he said, adding that Japan had shown some kind of deceleration after a positive growth in the third quarter. Mohamed Ariff said Malaysia might need another RM8 billion to support what it had done before but introducing another stimulus would increase the government’s budget deficit since revenue was falling.

In a way, this is a difficult time. I don’t think now is a cause for celebration. We are out of recession but we are going to be stuck in a slow, sluggish growth for at least two more years. We don’t really actually see the full growth trajectory until the year 2012. Until then, we will have to struggle or wrestle with this sluggish growth,” he said.