MALAYSIA–Parliamentary Approval for 2016 People’s Budget

November 17, 2015

COMMENT: The fight for change continues. The much anticipated move to reject Malaysia’s 2016 Budget did not materialise since the Opposition failed to garner biparisan support to defeat it. 128 votes in favour of it were convincing enough and our country is spared a fiscal crisis. It is  relief that our government can continue to function with money approved for its programmes in 2016.

While I have been critical of the Prime Minister’s misdemeanors, especially the USD 700 million that went into his personal bank, his lack of transparency and accountability on 1MDB, and his lavish spending ways, I am never comfortable at the prospect of our public administration and security services (defense and police) grinding to a halt at a time of global terrorism just because a disgruntled opposition is trying to use us Malaysians as pawns in their desire to cause the collapse of an elected government.

My message to our Prime Minister cum Finance Minister is that he must be be prudent and smart in spending our taxes. May I also remind him that every tax dollar spent must produce a satisfactory rate of return which is equal to the cost of our sovereign debt. Otherwise, we as citizens will be burdened with  more taxes. That is Fiscal 101 and pure common sense.

Confidence in our Prime Minister’s leadership may not return any time soon. However, if he comes clean on the 1MDB financial scandal, ceases using draconian laws against his critics and stops playing race and religion for his political ends by pandering to racist pressure  groups and religious extremists within and outside UMNO, there is a possibility for the ringgit to bounce back and for much-needed capital inflows to return. –Din Merican

by Arfa Yunus

http://www.freemalaysiatoday.com

Prime Minister Najib Razak may still have the support of Barisan Nasional (BN) lawmakers, evident from the success of the vote on Budget 2016 last night, says UMNO veteran Tengku Razaleigh Hamzah.

He said he himself, voted for Budget 2016 to go through despite talks of him being part of a movement to bring Najib down.Tengku Razaleigh, speaking to reporters at the Parliament lobby here today, said that he had voted in favour of the Budget as he “believed in the government’s plan for the year.”

He, however, was coy when asked if his vote meant that he also supported Najib as the nation’s Prime Minister.“No, that means we support the government programme for the (next) year (as) it was presented by the Minister of Finance, who is also the Prime Minister,” said the Gua Musang Member of Parliament.

“Why these questions? You decide for yourself ok,” he added, refusing to comment further. The UMNO veteran has been linked to a group allegedly led by former Prime Minister Dr Mahathir Mohamad, who aims to have Najib removed from his top post.

Budget 2016 passed the policy stage last night after successfully garnering 128 votes. All BN legislators present, including former Deputy Prime Minister Muhyiddin Yassin voted in favour of it.

This came as a surprise to most as both Razaleigh and Muhyiddin were rumoured to be on the list of seven UMNO leaders currently under the party’s watch for openly criticising Najib.

Sanity Check on the Malaysian Economy

November 4, 2015

by Wong Chun Wai

http://www.thestar.com.my

LET’S face it – there is a trust deficit in this country. Many Malaysians simply have little confidence in what the leaders tell us.It doesn’t help when certain media are seen as trying too hard to pander to the political leaders, resulting in greater distrust of the Government. Malaysians want to be convinced. It would not be wrong to suggest that they perceive that there are attempts by our politicians not to disclose the whole truth.

The country’s economy is surely not in the pink of health, what with the continuing downward pressure on the oil prices and the Govern­­ment having to depend on the collection of the Goods and Services Tax (GST) to pay, among others, the salaries of the 1.6 million government ser­vants.

Yes, the fundamentals are strong – as some of our politicians keep telling us – but the overall economy is still in choppy waters, and we need able hands to navigate us through. There is a picture of doom and gloom when you do a quick scan of the headlines and online commentaries. We are not well and fine but at the same time, we are not exactly in dire straits.

The 1MDB controversy won’t turn our grandchildren into maids and labourers, nor will it bankrupt the nation.

Our Employees Provident Fund (EPF) money will still be there for us. In fact, EPF is flushed with cash now that the Government has sta­ted it does not encourage the fund to pursue overseas investments.But Malaysians have every right to be worried and concerned. It is obvious that many of them want to know where the country is heading and how much lower we can go, buffeted as we are by global and domestic issues.

As journalists, we talk to many groups of people. From ordinary Malaysians trying to eke out a living to key officials in government sha­ping our current scenarios and experts who spend their days analysing the country’s state of the economy.

The rakyat have been expressing concern and while there are valid reasons for these concerns, their fears are sometimes misplaced and have come about because they are not aware of the facts and statistics.

At the same time, the Government and some experts have been consistently sharing data on the state of the economy. But no one is listening. Why is this so?

It doesn’t help when some politicians are seen to be shutting down intelligent discussion on contentious issues, including 1MDB, thinking a black-out of the issue, will see it blown away. But the reali­ty is that like the haze, it will just go away temporarily before returning.

To add to the mix, some households feel burdened by rising costs, which they see as being linked to the imposition of GST and the fall of the ringgit.To these households, it is a daily struggle to make ends meet. Of course, no one wants to believe in or listen to “facts” when their disposable income has shrunk. Thus, the Government appears ever more remote and out-of-touch with ordinary life.

We empathise with the seriousness and gravity of these concerns. It is important for the public to un­­derstand where the Government stands on the many key issues assail­­ing our economy at this juncture.

Hence, The Star has taken on the challenge of gathering views and insights of key government officials, including our Prime Minister, the ministers in charge of the economy and the Central Bank Governor and other external experts.

To focus on things we want to see improvement or change, sometimes it is best to get back to the drawing board and understand where the shapers of the economy stand on key challenges compared to how the person-on-the-street sees them.

We sent out e-mails to these key policy makers whose decisions affect our daily lives. We by-passed their aides and convinced them that we want “clear answers”.

So what we have in today’s issue of The Star are their e-mail replies. The readers should find time to read them fairly and decide if their answers are substantive and convincing.

If we are to move ahead in these difficult times, let us be fully aware of the facts and not be swayed by emotion and rhetoric.

Related story : 

 Does this character know what he is talking about?

MALAYSIANS are worried. Some of us think we are not getting the full picture. Is Malaysia facing an economic crisis or heading towards one?

Datuk Seri Najib Tun Razak: No, we are not in an economic crisis. In the last five years, my Govern­ment has taken tough and deliberate measures to implement economic reforms, al­­low­­ing the country to better cope with the current global economic slowdown.

The country’s fiscal deficit has been consistently reduced year-on-year since the Economic Trans­for­mation Programme (ETP) was laun­ched in 2010. The situation would have been worse if reforms only started now.

The country is on a more solid footing compared to the period of the Asian financial crisis in 1997. We have learnt from that episode. When the ETP was implemented, the fiscal deficit then was at 6.4%, but by end 2015, the deficit is projected to be at 3.2%.

 Even if it is unpopular and painful, sooner or later, people will rea­lise reforms we introduced back then have given us the latitude to face uncertainties. Imagine if the deficit today were at 6.4%, our po­licy options would be limited and we would be in dire straits.

We keep hearing our leaders telling us that all is “well and fine”. What do they mean by “strong fundamentals”.

Najib: Our GDP growth in the se­­cond quarter of 2015 was at 4.9%, bringing growth in the first half of 2015 to 5.3%. We have also diversified our economy, reducing our re­liance on oil and gas revenue, creating a more resilient fiscal environment.

Our economy continues to record trade and current account sur­pluses. The country’s labour market conditions are stable, with unemployment at 3.1% as of the second quarter this year. Inflation rate as measured by CPI for August also remained low at 3.1%.

Malaysia’s financial system is resilient. Domestic financial markets continue to function in an orderly manner to support the needs of the domestic economy.

But what needs to happen for our economy to strengthen?

Tan Sri Dr Zeti Akhtar Aziz: First, when the US Federal Reserve decides it is going to exit from the zero-bound. There is still uncertainty and it is generating volatility. The US economy is ac­­tually recovering and the recovery is strengthening. We are looking forward for them to exit from what has been termed as extreme and unprecedented mea­sures.

We have to be patient and look forward, and when it happens, I believe it will contribute to stability and recovery.

Second, energy and commodity prices will recover from their current lows and conditions in China will stabilise. When all these happen cumulatively to include also a resolution on our domestic issues, we will see a recovery for a currency reflecting our fundamentals.

For more than five years now, we have had good growth and we are considered one of the best perfor­ming economies. Our macroeconomic fundamentals are strong, we have a solid banking sector and not at any period was credit growth disrupted.

Another reason why we have been deeply affected by the current global economic slowdown, aside from being an open economy, is because our financial markets are larger and more developed.

In fact, in South-East Asia, our bond market is the largest and this invites inflows. You can expect when there are reversals, we feel more pronounced movements in these flows and in the exchange rate.

If you actually retraced when currencies strengthened, the ringgit was one of the earliest to strengthen the most. Of course, given the re­versal now, it is also one that expe­rienced the most depreciation. We see more volatility and this is how it is going to be. Everyone has to ma­nage themselves to live in such an environment.

That is why we built buffers for our reserves and work hard to ensure our financial system is resi­lient in order to better withstand this. Businesses will need to do the same and households are not spared.

WHY is our ringgit dropping so fast and steeply, and is one of the worst performing in Asia? Is it due to the 1MDB issue, the political crisis or just the continuing drop in the price of oil?

Abdul Wahid: The best way to answer is the “3+1” explanation: three external challenges and one domestic.In terms of external challenges, first, there is a reversal of investment flow from emerging markets back to the US economy. Therefore, Malaysia as an emerging market is negatively affected. Second, we are still a net exporter of oil and gas, and with oil prices slumping, we are taking a hit.

Third, trade with China last year was at 14% of total trade, making China our largest trading partner. Malaysia is bound to feel the heat as Chinese growth moderates as part of its efforts to re-balance and for economic sustainability.

The one domestic challenge is our own domestic sentiments, which compound these external impacts on the ringgit.

Should we be concerned about our depleting foreign reserves?

Zeti: With respect to our reserves, we have had periods of falling reserves before. Foreign reserves have recently fallen from US$120-130bil to about US$94bil. As opportunities arise, we will rebuild them.

Even at current levels, reserves are equivalent to about 7.4 months of import cover, which is very healthy. Our reserves will increase as a function of our current account surplus, investment inflows and reversals of outflows to developed markets.

Looking at the current scenario, can Malaysians conclude that we will not get to high-income status by 2020 because of the weakened ringgit?

Datuk Seri Idris Jala: We are definitely still on track for high-income status by 2020. “High-income status” as defined by the World Bank is a moving target, as practically all countries experience some level of economic growth over time.

Nevertheless, Malaysia continues to grow faster than the world average. Thus, we have been closing in on the World Bank’s high-income threshold since 2010 (see chart 1).

Also, the volatility of exchange rates is a normal part of daily life. Over time, exchange rates will reflect the fundamentals of an economy and monetary policy. Ours are strong. Currently, short-term challenges are creating many concerns around what will happen between now and 2020.

My view is that we have to recognise that there are challenges ahead, and at the same time pursue good policies. I am convinced that if we continue to do that, we will get to Vision 2020 by the year 2020.

There are suggestions that we cannot let the slide of the ringgit continue and that capital control measures must be introduced at some point to protect the ringgit from weakening further. What is your take?

Najib: I would like to reiterate that we will not impose capital control measures or peg the ringgit despite the strong headwinds we are facing. Instead, my administration will shore up the domestic economy and continue to attract investments.

Some examples are the Kuala Lumpur mass rapid transit project, the Pan-Borneo Highway, the high-speed rail link between Kuala Lumpur and Singapore, and the Petronas oil and gas terminal project at Pengerang in Johor.

The depreciating value of the ringgit against the US$ must surely affect trade negatively. It is hurting a lot of businessmen.

Datuk Seri Mustapa Mohamed: With the current currency movements, there will obviously be winners and losers (see chart 2).

From a trade perspective, it is a net positive for Malaysia. That said, for individual companies it mostly depends on your input cost – whether input is domestically sourced or imported and which market you sell your goods to. Anecdotally, when we talk to multi-nationals in the electrical and electronics sector, for instance, on balance we find they are starting to see a positive impact.

Consumers, people who travel abroad, those with children studying abroad – they will lose and feel the pinch and pressure now. But on balance as a country, in the medium to long term for exports in this case, there are some upsides to be enjoyed.

Jocelyn is back with her take on Politics

October 31, 2015

Malaysia : Jocelyn is back with her take on Politics

by Jocelyn Tan

http://www.thestar.com.my

The current state of politics in the country is marked by a troubled ruling coalition and an opposition in disarray.

In a Hamlet’s Dilemma

TAN Sri Muhyiddin Yassin is still getting used to life in the slow lane. It will never be the same as walking in the corridors of power but there have been some visible side benefits.

The UMNO Deputy President gets enough sleep these days, he has shed some weight, his complexion has improved and he looks better than when he was the Deputy Prime Minister.

A former aide said Muhyiddin is trying to keep a low profile and avoid talking unnecessarily but invitations to speak keep coming in. And everywhere he goes, people seem to expect him to comment on the “elephant in the room,” that is, the 1MDB issue.

He also gets the sense that some people out there think he will take on Najib for the top post but those who understand the nature of UMNO politics would know it is not quite possible for now or in the near future.

No one understands it better than Tun Dr Mahathir Mohamad and that is why he wants UMNO to throw out Najib rather than get someone to challenge him for the UMNO presidency.

Dr Mahathir has been hammering away at Najib since August last year – yes, it has been that long. The most recent hammering session took place at a press conference to condemn the use of Sosma or Security Offences Act on two of Dr Mahathir’s supporters.

The former Premier also managed to get among others, Muhyiddin, UMNO Vice-President Dato’ Seri Shafie Apdal and Gua Musang MP Tengku Razaleigh Hamzah to join him at the press conference. The pro-Mahathir segment hailed it as an anti-Najib alignment of notables, and it was in a way.

It was the first time that Muhyiddin and Shafie had appeared publicly with Dr Mahathir since their sacking. As for Tengku Razaleigh, everyone knows there is no love lost between him and Dr Mahathir, and seeing them together was a new development.

The reaction to these big names coming out against Sosma has been mixed. Part of it had to do with the contradictory nature of their action. Muhyiddin and Shafie were part of the Cabinet that created Sosma while Dr Mahathir had used the ISA on political opponents in his heydays. Their past coloured their new sense of outrage.

“I respect Tun Mahathir but the trouble is that almost everything he accuses Najib and the government of, he had done when he was in power – detaining people without trial, bailouts, mega projects. He even joined a street demonstration,” said Dato’ Alwi Che Ahmad, the assemblyman for Kok Lanas in Kelantan.

Dr Mahathir’s quest to topple Najib has become very personal, emotional and all-consuming.

When he first began raising questions about the 1MDB scandal, many people in UMNO believed he was doing it for the well-being of the party and country. Like him, the thinking segment of UMNO also wanted answers.

But one year down the road, many of them think it has morphed into a battle of wills and egos, that it has become less about the party and country than about Dr Mahathir’s habit of always getting his way.

“We may be wrong but that is what it looks like to us. I am really worried,” said Alwi who was a former political secretary to Tun Abdullah Ahmad Badawi.

The 1MDB issue has dented Najib’s image especially in the eyes of the urban middle class. There has been explanation after explanation but those who actually understand the issue are not buying it, while those who find the whole thing too complicated have switched off.

And all this while, Dr Mahathir is playing the inimical role of pouring curry power to the bubbling pot.

Waiting and Hoping to be delivered  the Premiership on a Silver Platter

Najib’s popularity rating has slipped to 44%, down from 48% earlier this year although analysts say that it has more to do with public dissatisfaction over GST and the cost of living as surveys have shown that 70% of Malaysians are clueless about what the 1MDB issue is about.

Najib is also struggling with the fact that his coalition has only 5% support from the Chinese.

The ruling coalition is not in a good place at this point in time. However, UMNO, despite its liabilities, is still able to pull its weight but the same cannot be said of its partners in the peninsula.

Barisan Nasional is more dependent than ever on Sabah and Sarawak and the outcome of the forthcoming Sarawak state election will have huge implications for the survival of Najib.

The irony is that the opposition pact is in no better shape. It is stuck in a mess of its own making.

The opposition parties have regrouped as Pakatan Harapan but it does not have the full support of PKR. Some PKR leaders support the new pact while others want to continue working with PAS.

A Challenge to PKR’s Wan Azizah

PKR Deputy President and Selangor Mentri Besar Azmin Ali is behaving as though Pakatan Harapan does not exist and his administration is still operating as Pakatan Rakyat.

The fiasco over their Parliamentary motion of no confidence against Najib exemplified the disarray. They had been talking about it to all and sundry for months but there did not seem to be any coordinated effort.

When the motion was submitted by an MP from PKR, DAP threatened to boycott it unless a new motion was tabled by Opposition Leader Datuk Seri Dr Wan Azizah Wan Ismail.

This Parliament meeting was the first time that opposition MPs were coming in as Pakatan Harapan. The no-confidence motion bid would have been a moral victory for the new pact but they tripped. Instead of embarrassing Najib, it exposed their own internal rifts.

Lim Kit Siang suspended

The Barisan side then turned the tables against them and moved a motion to suspend Lim Kit Siang for remarks made about the Speaker. The vote count on Lim’s suspension also showed who has the numbers – 107 Barisan votes against 77 from the opposition bench. To save face, the opposition claimed they were in secret discussions with Barisan MPs to move the no-confidence motion against Najib. But it was so clearly another “Sept 16” kind of ploy and it is no longer amusing.

“We’ve got to choose again in a few years’ time. Barisan is in deep water but there is no viable opposition. Who is there to vote for?” said a Malay executive from a public-listed company.

It is a rather bizarre state of politics. The opposition claims it is ready to govern Malaysia, yet is unable to take advantage of the troubles of the ruling coalition.

Despite being cast out of the opposition pact, PAS still has the numbers given the 60,000-strong crowd at its “green rally” in Kota Baru last week. The collection from the crowd that evening was a staggering RM237,000.

“The numbers basically mean that PAS will survive under Tuan Guru Hadi,” said Roslan Shahir, the former press secretary to Dato’ Seri Hadi Awang.

The PAS rally also coincided with the 25th year of PAS rule in Kelantan and Hadi summed it up well when he claimed that nowhere else in the world has a government by an Islamic party survived this long.

The next night, the PAS president told a ceramah in Tumpat, Kelantan, that renown Islamic scholar Dr Yusof al-Qaradawi had informed him that it was haram (forbidden) for the PAS breakaway group to form a new party to go against an existing Islamist party.

It was a damning verdict because Sheikh al-Qaradawi, as he is known, is a big name in the Muslim world. Choosing Tumpat to deliver the news was quite deliberate – the MP for Tumpat Dato’ Kamaruddin Jaffar had quit PAS to join PKR.

His party recently scored another moral victory when the Federal Court threw out a bid by Gerakan politicians to challenge the constitutionality of the Hudud Bill passed by the Kelantan Government.

The Budget meeting of Parliament will take off in earnest now that Najib has unveiled his Budget for 2016. It is going to be a long, hot and highly politicised meeting.

There is talk of the opposition attempting to vote against the Budget as a means of registering their protest against Najib. But sabotaging a Budget is rarely a good idea because it will lead to a government lockdown, deprive government servants of their salaries and jeopardise amenities and services for the rakyat. And all because politicians are out to play politics and score politi­cal points.

The two-party system has brought about greater checks and balances in government. Unfortunately, it has also ushered in an unprecedented degree of politicking and a culture of quarrelling and fault-finding.

Traits like basic goodness, kindness and common sense that one sees on the ground seems to get translated into mean-spirited and irrational politics by practitioners. And it is seen in those determined to stay in power as well as those eager to attain power.

It is so debilitating, it is the primary cause of political fatigue among ordinary Malaysians and it should stop.

Budget 2015-2016–Temporary Relief for Prime Minister Najib Razak

October 24, 2015

Najib Razak and Deputy Prime Minister Zahid Hamidi in Dewan Rakyat–Budget 2015-2016, October 23, 2015–Kuala Lumpur, Malaysia

Prime Minister Datuk Seri Najib Razak could score massive political points and make up for lost support through Budget 2016 that was clearly tailored to appease Barisan Nasional’s (BN) vote bank, analysts said.

Tabling Budget 2016 in the Dewan Rakyat yesterday, the embattled leader announced a raft of policies that catered to demographics crucial to the ruling bloc ― low income earners, the youth and rural voters in Sabah and Sarawak, which is facing state elections next year.

“The budget appears targeted to support the lower income households which would bear the brunt of the economic pressures,” Ibrahim Suffian, Director of independent pollster Merdeka Center, told Malay Mail Online.

“This can be seen in the increase in BR1M (Bantuan Rakyat 1 Malaysia), minimum wage and small business loans. Incidentally this is also the group that BN relies on for political support.I think it will certainly help the PM and ruling party. He has not let them down,” the political analyst added.

Najib is currently facing strong backlash over the rise in living costs following the introduction of the Goods and Services Tax (GST) and cuts on key subsidies, but pundits believe several pivotal moves like increasing cash handouts, boosting spending for rural infrastructure in East Malaysia, and raising civil servant salaries could mitigate public anger.

Najib announced an increase of RM50 for BR1M cash aid recipients yesterday, with households with a monthly income of RM3,000 and below to receive RM1,000, and households earning between RM3,001 and RM4,000 monthly getting RM800.

Single individuals aged 21 and above with a monthly income not exceeding RM2,000 would receive assistance of RM400, up from RM350.

UiTM political analyst Samsu Adabi Mamat said while next year’s Budget may not be the grand winner for Najib in his effort to regain voter confidence, the one-year financial plan had all the right ingredients to put the prime minister on the right trajectory by the time the 14th general election is due by 2018.

“The budget reaches to all layers ― the young, the rural voters, the civil servants which total at 1.6 million. They receive higher wages, better pensions and some may even get BR1M…it may not improve his image altogether now, but it is the start,” he told Malay Mail Online.

Samsu added that Najib still has ample of time to work on overturning the negative image dogging his administration through similar tactics, with two government budgets left to table before the next national polls.

Budget 2016 allocated a special assistance of RM500 to the 1.6 million-strong civil service that is considered another crucial vote bank for BN.

Najib also announced setting the minimum starting salary in the public sector at RM1,200 a month, which will benefit 60,000 civil servants, and improving 252 schemes of service, which will benefit 406,000 civil servants. The new policy is expected to cost the government RM1 billion.

International business newswire Bloomberg noted that the budget’s focus underscores the political and economic challenges Najib faces in keeping the nation on track to achieve high-income status by the end of the decade.

The plunge in oil prices and a slowing global economy is hurting export earnings and government revenue, while Najib faces calls to step down amid the controversy surrounding 1Malaysia Development Berhad (1MDB) that has spooked foreign investors.

Analysts pointed out that the BN chairman is also facing a litmus test in the Sarawak state elections, which is likely to be held early next year. The Najib administration’s preference to placate hardline Muslims in conflicts with the Christian minority has made the Umno president less popular in the Eastern Malaysian state, which has a significant Christian population.

This explains Najib’s focus on Sarawak in Budget 2016. Some RM26 billion has been allocated for programmes in Sabah and Sarawak together with the promise of zero toll for the new Pan Borneo Highway, a move that Deputy Prime Minister Dato’ Seri Dr Ahmad Zahid Hamidi had readily admitted was aimed at winning the Sarawak polls.

Ibrahim said while the opposition, which made significant gains in the last Sarawak state elections, would likely try to capitalise on national issues like the financial scandals and worsening racial ties caused by government policies, Najib’s incentives would likely hold strong over the electorate. “Of interest is the line items for Sabah and Sarawak; I think it will take the wind out of the opposition’s sails there,” he said.