Former Malaysian Finance Minister Daim Zainuddin–The Economy under Corrupt Najib Razak


December 22, 2016

Former Malaysian Finance Minister Daim Zainuddin–The Economy under Corrupt Najib Razak

Received via e-mail

Get rid of the feudalism mindset, especially among those who are the trustees of this nation. If the leader is wrong or has committed a crime, it is the fiduciary duty of the subordinates, particularly the civil servants, to take corrective actions, instead of being in cahoots to cover up the wrongdoings.–Tun Daim Zainuddin

Image result for suharto and lee kuan yew

I have been asked to share my thoughts on key structural issues facing the country, and what we can do about it. I am most reluctant to put my thoughts into words or share them with the public. Since my retirement, I have stayed away from public discussions as I prefer to spend my time travelling. But times have changed and we are facing a very serious crisis.

Clearly, there are important long-standing structural issues that may affect our march towards developed country status. These are related to education, the labour market, the government’s fiscal policy, inclusive growth and sustainability, among others.

However, what this country needs at this moment is much simpler but seems harder to solve. What we need to address now, which I have repeated so many times, is the chronic trust deficit. In order to overcome this deficit, we must first understand its origins. There are a few reasons why we are facing this trust deficit.

First, it is the lack of integrity, honesty and moral courage. The lack of good moral character seems pervasive among the elites in this country, especially among those in power. Corruption and bribery remain rampant, to the extent that cases of public money being siphoned off for private use or government servants stashing away obscene amounts of hard cash do not amaze us anymore. It is as though systemic corruption has taken a hold of us and our nation, and we have accepted it. The culprits must be punished. We should have no sympathy for them.

But in some instances, politically connected culprits were not brought to the courts fast enough. In the case of the Sabah Water Department, it has been nearly two months since the main officers were released on bail. This has given room for further speculation and abuse of the system. The same goes for the Ministry of Youth and Sports’ case. And, of course, who can deny the existence of the biggest elephant in the room pertaining to corruption and abuse of power?

It is worth being reminded that lack of integrity has disastrous consequences, and it extends beyond the damage to the current generation. Studies have shown how countries that are perceived to be corrupt tend to grow at a much slower rate than those that are corrupt-free and this has a negative impact on long-term growth. No one would want to invest in a country that does not respect the rule of law.

Lest we forget, the root cause of why a community or a nation succeeds or fails, why great civilisations or empires collapsed, always comes back to one reason — integrity or the lack of it.

Tun Daim Zainuddin (right) and author of ‘The Colours of Inequality’ Dr Muhammed Abdul Khalid during the launch of the book at the International Islamic University of Malaysia in Kuala Lumpur, November 11, 2014. — Picture by Yusof Mat Isa

Thus, solving all those structural issues will depend on ensuring the highest level of integrity among those in power. In fact, a nation’s survival and its success depend on the integrity of everyone, most crucially, its leadership.

The leaders must always uphold the highest level of integrity and not betray the trust assigned to them or take advantage of their position. Those with positions must remember that there is no honour in abusing their power.

Second, the lack of empathy and common sense among those in power plays a role in widening the trust deficit in the country. When the people are feeling the pinch of slower wage growth, higher cost of living with the removal of subsidies and weakening of the ringgit, we are pouring more than half a billion ringgit of the rakyat’s money into a public park. This is outright insensitive and mind-boggling when allocations for essential services, such as health and education, have been reduced. Yet, if the government is sincere about its concern about parks, why hasn’t it gazetted Bukit Kiara?

Third, expertise in oversight of the nation’s economy is seriously lacking. We proudly proclaim that our “fundamentals are strong”. But the economic growth is fuelled by debt. This is not sustainable. Government debt with its contingent liability has easily exceeded the debt limit. In fact, for next year’s budget, we have to borrow about 90% to finance our development expenditure.

For every RM1 we expect to collect next year, 98 sen will be spent on operational expenses, such as paying salaries, interest and subsidies, among others. This is not sustainable.

Household debt is already at an all-time high; in fact, it is one of the highest in the region. With lack of savings, our households are vulnerable to poverty. Our outstanding non-financial corporate sector debt is also high, about 105% of GDP as at end-2015, which is higher than the debt of emerging economies.

Yet, we are still proud to state that the economy is growing, and we are proud when the incoming president of US reportedly is impressed by our high economic growth. But the US is approaching full capacity as evidenced by falling unemployment and rising wages.

But growth alone is not enough. It needs to benefit the country and the rakyat. Despite registering positive growth, the number of unemployed in Malaysia keeps growing. Since early last year, the number of unemployed grew nearly 16%. Our graduates do not have jobs; a graduate engineer has to sell nasi lemak and the government seems proud of that!

Firms also are not hiring as before; the number of vacancies reported this year is the lowest in about a decade. In fact, the number of jobs created are mostly low to mid-skilled, and not high-skilled. Not surprisingly, the share of low-skilled workers in the labour force has increased while that of high-skilled workers has declined. This does not augur well for the country becoming a high-income nation. It is pointless for a country to achieve high income when the rakyat remains low income.

These are among the factors that lead to people losing trust in the government. What do we do then?

Image result for Daim and Najib

Household debt is already at an all-time high; in fact, it is one of the highest in the region. With lack of savings, our households are vulnerable to poverty. Our outstanding non-financial corporate sector debt is also high, about 105% of GDP as at end-2015, which is higher than the debt of emerging economies.

Yet, we are still proud to state that the economy is growing, and we are proud when the incoming President of US reportedly is impressed by our high economic growth. But the US is approaching full capacity as evidenced by falling unemployment and rising wages.

But growth alone is not enough. It needs to benefit the country and the rakyat. Despite registering positive growth, the number of unemployed in Malaysia keeps growing. Since early last year, the number of unemployed grew nearly 16%. Our graduates do not have jobs; a graduate engineer has to sell nasi lemak and the government seems proud of that!

Firms also are not hiring as before; the number of vacancies reported this year is the lowest in about a decade. In fact, the number of jobs created are mostly low to mid-skilled, and not high-skilled. Not surprisingly, the share of low-skilled workers in the labour force has increased while that of high-skilled workers has declined. This does not augur well for the country becoming a high-income nation. It is pointless for a country to achieve high income when the rakyat remains low income.

These are among the factors that lead to people losing trust in the government. What do we do then?

Two things need to be undertaken, one easier than the other. First, a new economic team must be assembled and empowered to fix the economy.

The rakyat and investors, both local and foreign, must have faith and confidence in those managing the economy. The members of this team must be professionals who are technically competent, with the highest level of integrity and dare to speak the truth. Lack of intelligence and incompetence cannot be compensated for by loyalty to the leader.

Indeed, the special economic team that was set up in August last year is a complete failure. It should be dissolved. Concurrently, the Prime Minister must let go of the Finance Minister’s post; this is bad governance.

Second, which is equally important, is to get rid of the feudalism mindset, especially among those who are the trustees of this nation. If the leader is wrong or has committed a crime, it is the fiduciary duty of the subordinates, particularly the civil servants, to take corrective actions, instead of being in cahoots to cover up the wrongdoings.

Bear in mind that political leaders who are elected by the rakyat to lead the government are basically the rakyat’s servants. They are merely given the mandate and power by the rakyat to lead the government and to rule on their behalf. Thus, the ability to be respectful and accountable towards the people who voted them in is paramount.

The leaders are not gods that must be obeyed. This clarion call is not new; nearly half a century ago, our great philosopher and sociologist, Syed Hussein Alatas, warned us of the danger: “…man in authority … expects the subordinate to be loyal and faithful in a manner that sometimes comes into conflict with the norms or ethics … he is supposed to be loyal under almost all circumstances, even if the circumstances violate the present values and philosophy of Malaysian society” (Feudalism in Malaysian society: A study in historical continuity. Source: Civilisations, Vol. 18, No. 4 [1968], pp. 579-592).

This requires, again, integrity and honesty, even if that means one is in the minority. Our first prime minister said it best: “If you think you are rich, there are many who are richer than you. If you think you are clever, there are more people cleverer than you. But if you think you are honest, then you are among the few and in this instance, it is best to be among the few.”

 

In dealing with the rakyat, whether on economic, social or political issues, honesty is really the best policy. Lies can only lead to more lies, and once the rakyat has lost faith in you, even when you are stating the truth, they will not believe you. You cannot fix the problems of the nation when there is a trust deficit.

In my experience during the 1986 and 1998 crises, I was upfront about the problems we faced but the people had the confidence to give us time and space to solve the problems. Without the people’s trust and support, it will be difficult to solve the economic problems, especially when it affects them. It is a partnership between government and the governed.

Reforms in institutions are also required. We must take all necessary actions, including amending laws, to ensure the independence of judiciary and security institutions. Tolerance for dissent and differences in opinion and ideologies must be welcomed, and not prosecuted. These are the ingredients for a truly open and functioning democracy.

Failure to undertake these paramount reforms means we are moving away from prosperity. Otherwise, we all should be seriously worried about the future that we are leaving for our children and grandchildren.

Bear in mind that political leaders who are elected by the rakyat to lead the government are basically the rakyat’s servants. They are merely given the mandate and power by the rakyat to lead the government and to rule on their behalf. Thus, the ability to be respectful and accountable towards the people that voted them in is paramount.

The leaders are not gods that must be obeyed. This clarion call is not new; nearly half a century ago, our great philosopher and sociologist, Syed Hussein Alatas, warned us of the danger: “…man in authority … expects the subordinate to be loyal and faithful in a manner that sometimes comes into conflict with the norms or ethics … he is supposed to be loyal under almost all circumstances, even if the circumstances violate the present values and philosophy of Malaysian society” (Feudalism in Malaysian society: A study in historical continuity. Source: Civilisations, Vol. 18, No. 4 [1968], pp. 579-592).

This requires, again, integrity and honesty, even if that means one is in the minority. Our first Prime Minister said it best: “If you think you are rich, there are many who are richer than you. If you think you are clever, there are more people cleverer than you. But if you think you are honest, then you are among the few and in this instance, it is best to be among the few.”

 

In dealing with the rakyat, whether on economic, social or political issues, honesty is really the best policy. Lies can only lead to more lies, and once the rakyat has lost faith in you, even when you are stating the truth, they will not believe you. You cannot fix the problems of the nation when there is a trust deficit.

In my experience during the 1986 and 1998 crises, I was upfront about the problems we faced but the people had the confidence to give us time and space to solve the problems. Without the people’s trust and support, it will be difficult to solve the economic problems, especially when it affects them. It is a partnership between government and the governed.

Reforms in institutions are also required. We must take all necessary actions, including amending laws, to ensure the independence of judiciary and security institutions. Tolerance for dissent and differences in opinion and ideologies must be welcomed, and not prosecuted. These are the ingredients for a truly open and functioning democracy.

Failure to undertake these paramount reforms means we are moving away from prosperity. Otherwise, we all should be seriously worried about the future that we are leaving for our children and grandchildren.

Daim Zainuddin is former finance minister of Malaysia

18 thoughts on “Former Malaysian Finance Minister Daim Zainuddin–The Economy under Corrupt Najib Razak

  1. Seriously? He was the biggest crook and played along well with Mahathir failed industrialization, privatisation and education programs. He wants to talk about morals, integrity and poor expertise? Well, it does take those who messed it up to see the mess they made.

  2. Quote:- “I have been asked to share my thoughts on key structural issues facing the country….”

    LOL, I wonder who asked him….and more importantly, who will now listen, besides the person who asked of course.

  3. I would fully agree with the message above, that Diam2 Daim has put out.

    The messenger was the keeper of the Octo(b) Slush Fund and guardian of the BeEnd War-chest – and i won’t wanna begrudge him for that. A job is a job. After all, it ain’t easy to start, build and maintain banks in Africa and still have loads of dhobi for those Euro Babes to turn over. He’s definitely smarter than KleptoKing and minions. He wasn’t caught – locally nor internationally. His, and Octo’s proxies, remain the most Awesome businessmen hereabouts – except that ethnic Indian Malaysian tycoon who has a APB and outstanding arrest warrant out in India? Compare him with Anwar’s boys and you’d be right about jailbirds. Perpetrators of laundering.

    Some of you guys seem to be living in the perpetual past – and shooting whomever the messenger whom you deem as dirty rotten scoundrels. That’s your privilege. But remember to buy the DeLorean driven by McFly (now a Parkinson Disease afflicted Michael J Fox) – otherwise you won’t be able to return to the present. Perverts of Deleted funky ‘Justice’.

    Perhaps i forgive easily, but that’s because i always have His Grace in me – rightly or wrongly. So Diam2 Tun, carry on whacking the Kleptos who are hurting and bankrupting us here and now. Hopingly, the retired dogs doesn’t return to their own vomit.
    __________________
    CLF,

    Diam Daim saved Malaysia from two recessions, the last one being the East Asian Crisis (1998) that brought South Korea, Thailand and Indonesia to their knees. He knew how to manage our finances and the economy. We cannot take credit away from him. Unlike Najib, he is extremely careful about the national coffers. His comments and suggestions are valuable. –Din Merican

  4. Daim was an average Joe who made millions through political connections and later by participating in politics himself and becoming the Finance Minister. He is a clever crook and he is not to be trusted with his preaching of ethics and morals to others.

    To work one’s best and not steal from state coffers is a DNA to be expected from every PM of Malaysia and his Ministers. What the nation sees today is a tragedy of epic proportion.

    Tunku loved his people and cared for racial harmony. He was an open book and LKY poked fun at him and said he loved fast cars and slow horses. But he was non-corrupt. He died poor, relatively speaking. He wrote weekly columns for the Star newspaper titled “As I see it” (?) for a few years to help sustain himself. That tells a lot about the integrity of the man.

    Dr Mahathir is also a fairly clean man, who did not accumulate wealth for self through corrupt means, whatever his detractors may say. At 91 he is blessed with good looks, health, sharp mind and a drive to fight evil to transform the nation for the better. God does not endow every nonagenarian with such fine traits. The person has to be special and Mahathir is indeed one.

    These two have been remarkable Prime Ministers for Malaysia.

  5. Referring to the debate between the message and the messenger, who else is there to deliver what is needed in the here-and-now context (with credibility and integrity, etc., etc.)? Do we now have individuals in the caliber of Tun Dr. Ismail, Tan Sri Tan Chee Khoon and the like? Who?? It seems everyone nowadays has skeletons in their closets and speak thou shall not including us in this blog, hence the worth of our two cents shouts because Moses, Jesus, Mohammad, Buddha we are not. Who else??

  6. Talk is cheap.
    Practice on integrity and governance is invaluable, but difficult.

    Or was it really so difficult?
    Absolutely Not.
    It is because the intentions of the political leaders are bad and despicable in serving themselves first–all in the name of serving the people and country.
    It is because the leaders could get away with their blatant criminal misconduct (hundreds of billion were lost, squandered or stolen) without being punished or with just a tap on the hand.

    They lie, cheat and plunder while double talk , mislead, disinform the people into believing in what they propagate in falsehood and cover-up.

    In just 40 years,
    an ” Amanah, Bersih dan Cekap” sloganised government can turn into an institution peppered with “Money politics, Abuse of power, Corruption, Cronysm and Puppetry” and later blame it ENTIRELY on the present administration.

    An ” heinous” crime committed by those involved in the BMF 2.5 b Loan Loss and a loss of innocent life from BNM, was never thoroughly probed to find the real culprits behind the scandal. The public was “promised” a RCI, but it Never happen, despite many top ministers and government servants had call for it at that time.That is why I term this scandal as the ” MOTHER of all Scandals” that had followed till this day.

    So, can the Rakyat trust someone who starts talking about the ” trust deficit” that he and the likes, did Not practice?

    Btw, the easiest way to find out if the leaders had bad intention is for them to declare their assets before and after they had joined political parties or hsd become institutional leaders.

  7. Yup, Pak Din. 100% agreement. He was a businessman – probably able to trump Trump.

    He was the only Minister who lolled his head on the conference table when listening to humdrum ‘noise’ eructed by his officers. Mundane affairs like levies, custom taxes etc were sorta boring for him. Only corporate taxes and banking (since he was a corporate sorta chap) would perk him up. Sharp as a needle and didn’t suffer fools. He was diligent – only when he needed to be. His falling out with Octo was temporary as both were as mule-headed as each other. He was more often right than Octo, though..

    Yes, he took his fiduciary duties seriously and his grasp of math and economics was awesome. Fake stats seen for what they were – Intolerable. Very well read too, although he often times pretended to be ‘dopey’. Despite his size, he will wipe the floor with any of the incumbent Ministers and probably incinerate the present Fin-Min.

    With Kak Pidah and many of his UMNOb colleagues then, were much less overtly racist. Multitasking was not a problem to folks of your generation, my friend.

    Perhaps the poor legacy that this present bunch of goons inherited was the result of a generation of nincompoops – vainglorious, spoiled, thuggish, overly entitled morons nurtured by Dopey 4th Floor..

    As to why the civil service turned out to be almost a mono-ethnic entity, well.. that’s another long story.

  8. Oh please, don’t praise Diam Diam Daim too much. He had his failures too, remember the salt factory in Pahang and a few others. Why did he earned the Diam Diam title? He always keep his mouth shut and never shared any info with anyone. As Finance Minister he had info into the National wealth and was able to dip his fingers into it without much publicity. During his tenure how many projects were hijacked?

    As MoF and UMNO Treasurer he was able to divert projects to UMNO companies and these companies enjoyed preferential treatment. Despite that many failed e.g. Fleet group and the Merlin chain of hotels. Many utilities were privatized to UMNO controlled companies headed by Diam boys and when the financial crisis struck he saved them by having government agencies invest in the troubled companies and bailed them out.

    Meantime he amassed a fortune of his own but due to his Diam Diam, nobody knew about these companies, not even Che Det. The rest is history.

  9. Haha.. OM, just twisting his tail, that’s all..

    The salt venture kat Kuala Selangor, i thought? Got washed out by the rain.. Too much feng-shui applied. Bankrupt. Plastic venture oso died, but saved by sewer manholes and tiang talikom.. Too early and immature. Had to learn more from his sifus.

    He had an opportunistic business acumen. Like when he developed Maluri Holdings just when the NEP started. Or makan Indo-Suez Bank from the conflicted Frenchies and merged it with UMBC. Cold white knight indeed..!

    Yup, he used the NEP to the max, aided in no small part by Octo. The latter preferred Non-Bumi proxies though, and left the open field of Bumi duds for Diam2 who wanted to prove a point. Fail 2/3rds of the time. Many of his proxies, became instant feudal chiefs who prefer posh BMWs and palaces before they even made a single sen. That’s kampung entitlement.

    Was still heavily invested in the stock market when he was Fin-Min. Talk about nepotism, cronyism and opaque dealings and he’s the paragon example. However, failed businesses are ‘normal’ in the course of unfettered opportunism. Poor foresight, prudence, management and marketing skills.

    That my friend was another age. What we have now is total and blatant piracy, corruption at the highest level, hypocrisy and embezzlement. Also Fail, but this time takes the whole country to the cleaners. The National coffers are empty! So donations become ‘dedak’.

    Despite this, Nobody’s gonna to roll-back the NEP-like retarding policies. All that babbling of meritocracy is just hogwash!

  10. Message, what message?

    What’s so new in the “message?” Do we need an aging kleptocrat to tell us to beware of a younger kleptocrat? Frankly I feel insulted reading that self-serving, apologetic piece of sh..t

    I at least give octogenarian Mahathir, for all his faults, some credit because he is still fighting, not just talking. Join Mahathir in Bersatu and talk there where it really counts because how do you “…take all necessary actions, including amending laws, to ensure the independence of judiciary and security institutions…” unless you are in government?

    And you are in government only when you win elections, not travelling all over the World and enjoying your money the source of which is still in question since the 1980s.

    Daim is just another Ku Li.

  11. Btw Din,
    Daim should be among the last person to talk on integrity and trust.

    He was the finance minister from 1984- 1991 March. The forex speculation started during or before 1990 that caused the estimated RM30 b=(US $13b ER at that time)BNM Forex Loss, a big chunk of the country’ foreign reserves.

    As finance minister, he was primarily responsible for the scandalous loss , and as a result,a gravely depleted foreign reserves, which could NOT withstand the onslaught of the 1998 East Asia Financial Crisis.

    He, together with other top players, could be the cause rather the savior of the 1998 deep, long recession that followed .

  12. Wah..! So many angry blokes nowadays.. Not enough ethanol ah? Plenty ‘me better than you-isms’ hah? Go get a massage, okay?

    Heck. The cardinal rules in Business are simple. Never borrow if you can help it. If absolute need to, make sure there is sufficient backup. Do not speculate in ventures that one is unfamiliar with. Sovereign funds are sacrosanct and must be protected.

    For all of Octo’s, KuLi’s, Diam2’s and Anwar’s faults, misappropriations and misadventures, none can compare with the FUBARism by KleptoKing and minions, who borrowed in the guise of a strategic sovereign wealth fund run by a sepet fei chai of dubious providence. At least Khazanah Nasional was subjected to the Santiago Principles. 1MDB? It’s like sticky rice stuck to your feet. Deliberate Fraud and Embezzlement. That’s the difference.

    Do not vomit ad nauseum, cuz some of us were there and watched with awesome wonder. Yup, all of ‘us’ have sticky feet!

  13. Oops CLF, too much salt got me rusty over the years. Kuala Selangor it is. Wah long time didnt hear about Bank D’Indochine and that Untuk Melayu Bagi China Bank UMBC ha ha. Now his son is partner with Gan fmly at Reliance.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s