Tun Daim Zainuddin and his Colleagues get down to business


May 13, 2018

Tun Daim Zainuddin and his Colleagues get down to business

KUALA LUMPUR: The newly set up Team of Eminent Persons meant business and wasted no time as they convened their first meeting soon after the announcement of its formation by Prime Minister Tun Dr Mahathir Mohamed.

Chaired by former Finance Minister Tun Daim Zainuddin (left), the meeting, which went late into the night, was also attended by three other members of the team, namely (from right) former Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz, former Petronas President and Chief Executive Officer Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram. Billionaire tycoon Tan Sri Robert Kuok was not present as he is currently overseas. Bernama Photo

No honeymoon period and prolonged post-election euphoria as the government is determined to restore the confidence of the people and investors after Pakatan Harapan’s unprecedented win in the 14th general election on May 9.

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The Prime Minister with Tun Daim Zainuddin and Tan Sri Rafidah Aziz

Chaired by former Finance Minister Tun Daim Zainuddin, the meeting, which went late into the night, was also attended by three other members of the team, namely former Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz, former Petronas President and Chief Executive Officer Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram.

Billionaire tycoon Tan Sri Robert Kuok was not present as he is currently overseas.

Speaking to Bernama after the meeting, Daim said the five-member team was briefed and deliberated on current economic situation, the national debt, the ringgit, Goods and Services Tax (GST) and fuel subsidies, amongst others.

“These are the major things. We are making the recommendations to the government. At the end they will decide,” he said.

Daim said the council would be calling the Public Private Partnership Unit (under the Prime Minister’s Department), related ministries and government-linked companies (GLCs) to brief them on various mega projects and the governance of GLCs, including Lembaga Tabung Haji, Majlis Amanah Rakyat and the Federal Land Development Authority.

“As for 1MDB, there will a special task force, I have identify those who can assist the probe into 1MDB. It would be under the purview of the Team which will submit the report to the government,” Daim said.

He said another pertinent issue that needed to be addressed quickly was the oversupply of office space and housing.

“Another example is the cost of security for schools. It cost more than the assets they’re guarding,” he pointed out.

Meanwhile, Daim said the team would hold meetings daily for 100 days, and in fact on some days, it would be a few times a day.

“I want this to finish this within 100 days. After that I want to sleep,” he quipped. –Bernama

 

Book Review: Dr Shankaran Nambiar –Malaysia in Troubled Times


May 11, 2017

Book Review: Dr Shankaran Nambiar –Malaysia in Troubled Times

by Tricia Teoh

“THE absence of good institutions and transparency in public undertakings, government procurement, and … the design of public policy has the potential to shake investor confidence” is how economist Shankaran Nambiar sums up the macroeconomic conditions of Malaysia.

In his latest book, Malaysia in Troubled Times, which compiles Nambiar’s articles in newspapers between 2014 and 2016, he deftly articulates his positions on issues. He grapples mainly with the question of “where is the economy headed towards”, which he asks numerous times across his pieces, an evident sign of his deep concern over the trends taking place in the country.

Nambiar articulates what many observers of Malaysian issues have struggled with: despite our economy not hitting negative growth, not being in danger of defaulting on sovereign debt and the fact that the central bank having adequate reserves to cover shortfalls, he states clearly that yes, indeed, we should still exercise great caution with respect to the Malaysian economy.

And why so? Various pieces indicate why observers should be worried – an outflow of foreign funds, the sharp decline of oil prices, which has in turn led to a growing federal fiscal deficit, and … “doubts on the efficacy of government linked companies”.

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When Malaysia is in trouble, follow Idris Jala and play the Guitar

The challenges facing Malaysia stretch beyond our borders, and here Nambiar wades through regional waters to help readers understand the dynamics behind the now-dead Trans Pacific Partnership Agreement, the Regional Cooperation Economic Partnership, and the Free Trade Area of the Asia-Pacific, which he highlights is indicative of China flexing its muscles in the region.

Malaysia, he says, “has a special, valuable relationship with China, which places it in an excellent position to help establish a stable security landscape in the region”. Of course, the “special relationship” we have with China would now be interpreted in a very different light today, given the many bilateral deals Malaysia has now signed with China. Apart from arguing for how ASEAN can build itself up as a stronger regional pact, it is also refreshing that he brings in Asean-India economic ties and goes on to push for greater Malaysia-India improvements in trade and investment, which apparently our neighbours Singapore and South Korea have put a lot more effort in than we have.

Above all, Nambiar is a faithful believer of Keynes, whom he quotes several times in the book, saying that “positive expectations and ‘animal spirits’ spur aggregate demand and economic growth”, and that “at the moment it seems that the animal within the economy is wounded”. He cleverly works his critique of the economy through metaphors such as these, but stops short of blatantly dismissing any efforts being made by policymakers to improve the economic conditions of the country. He could also have done more in providing solutions to what he considers to be ailing our economy.

Despite the nuanced tone of his writings, it is clear that he harbours silent frustration with public policies and their implementation in Malaysia. Although the book focuses mainly on technical economic matters, Nambiar also ventures into “getting the big picture right”. He questions Malaysia’s dismal performance in the Programme for International Student Assessment (PISA) and Trends in International Mathematics and Science Study (TIMSS). He emphasises the importance of good public transport, education, human resource development and healthcare. And perhaps most importantly, he questions whether our politicians and policymakers are truly connected with the economy “as experienced by traders, technicians, taxi driver and executives”.

It is now almost two years after one of Nambiar’s pieces titled “Do we need to create scenarios for a future Malaysia?” and yet it seems even more imperative to do so today. With the elections near, this is what policymakers ought to do. And if they are not, then citizens ought to instead, and demand that their representatives pave the way for the right future to actuate.

An imagined future has to be one that, Nambiar argues, goes beyond motherhood statements like “being united in diversity and sharing a common set of values and aspirations” that he considers merely “dreamy visions of the future”. One has to concretely build scenarios based on concrete issues such as income distribution, incorporating input from a “constraint approach” (what are the stumbling blocks?) as well as a “global basis approach” (how does Malaysia fit into this matrix based on global trends?).
It is on this note that the book hits the nail hard on its head. Nambiar’s voice that constantly urges and pushes for the creation of the “spirit of this big picture” reminds us that simply, there is none of this presently that so inspires. His is a thoughtful, objective and incisive perspective of a nation that could be much more – and his desires for a better, more productive, wealthy Malaysia are evident.

Policymakers and politicians serious about addressing challenges to the Malaysian economy would benefit from a thorough reading of Nambiar’s book. They should also take heed of his advice that in thinking of the long-term, they must be “realistic about the present state of affairs”. This would be a good first starting point.

Comments: letters@thesundaily.com

Irate Expat takes on Penang’s Chief Minister Guan Eng over Traffic and Development


June 3, 2016

Irate Expat takes on Penang’s Chief Minister Guan Eng over Traffic and Development

by Predeep Nambiar

http://www.freemalaysiatoday.com

 Lim-Guan-Eng

Businesswoman from China raises concerns about development, saying ‘Why must Penang be like Singapore or Hong Kong? Penang must remain calm, beautiful’

Penang Chief Minister Lim Guan Eng spent five minutes calming down a frustrated expatriate who had complained about worsening traffic and uncontrolled development in the state.

Chinese national Sophia Zhou, vented her frustration at Lim as he was leaving the Golden Screen Cinemas in Gurney Plaza last night. Zhou, who has businesses in Europe, raised concerns about the need for an undersea tunnel and uncontrolled development in Penang.

Penang–Still Pearl of the Orient

Lim had just opened the Penang Le French Festival, accompanied by French Ambassador to Malaysia Christophe Penot. Lim, who appeared unfazed with her comments, calmly explained to her that with progress came development and the need for proper transport infrastructure.

“Do you know that The Aga Khan Trust has an agreement with the Penang government to develop our heritage city?The fact that they want to come here means they are confident that Penang can promise a sustainable development,” he said.

Zhou then related her experience when she first moved to Penang under the Second Home programme. “When we arrived five to 10 years ago, there were hardly any tall buildings around. Right now, everywhere there are buildings. Now you want to build a third bridge,” Zhou said.

To this, Lim said the government was keen on building a tunnel, and the third bridge remained an option if the Federal Government allowed it. Lim then told Zhou that the undersea tunnel would only be ready 12 years from now in 2027.

Zhou also queried why the contract and land was given to a Chinese company. Lim then explained to her that a Malaysian company won an open tender to build the tunnel.

It had been reported previously that the entire Penang Tunnel project was awarded to joint venture company Consortium Zenith-BUCG Sdn Bhd, which comprises Zenith Construction from Malaysia and Beijing Urban Construction Group (BUCG) from China.

Later, Zhou commented that the Penang Government should focus on building reliable public transport instead of roads. She suggested to Lim perhaps a subway (underground train system) could be built.

“I think public transport needs to be improved. I waited 40 minutes for a bus. Why don’t you build a subway? There are too many cars on the roads and we are often stuck in traffic.

Lim then said: “That is why we are building an LRT system. Subways are expensive.” The Chief Minister was then led off by Penot.

Zhou then addressed the media present, asking: “Why must Penang be like Singapore or Hong Kong? Why can’t it be what Penang is supposed to be? Calm and beautiful.”

 

WEF ASEAN 2016–Opening Plenary Shaping the ASEAN Agenda for Inclusion and Growth


June 1, 2016

WEF ASEAN 2016–Opening Plenary Shaping the ASEAN Agenda for Inclusion and Growth

Listen to Prime Minister of Malaysia. Don’t you think he should start with Malaysia first and get on with good governance? Right now, Malaysia is credibility is low. We want good and competent leaders. Otherwise, it is all empty talk. Prime Minister Najib Razak,just do not play with words.–Din Merican

Psychology matters a great deal


May 1, 2016

Psychology matters a great deal in determining shifts in the economy.

by Robert J. Shiller
“We don’t know whether any specific event — say, an unexpected spike in oil prices or a decline in the stock market — will help transform any of the current social stories into a truly virulent economic disruption. We don’t know what is coming or when. But history does tell us that human imagination can spontaneously transform discrete events into world-shaking narratives of unexpected colour and force.”– Robert Shiller –Nobel Prize Laureate in Economics 2013

Economists are good at measuring the past but inconsistent at forecasting future events, particularly recessions. That’s because recessions aren’t caused merely by concrete changes in the markets. Beliefs and stories passed on by thousands of individuals are important factors, maybe even the main ones, in determining big shifts in the economy.

That is likely to be the case again, whenever we next endure a global recession. Worries that a big downturn might be imminent seem to have abated, but they still abound. In April, for example, the International Monetary Fund reported in its World Economic Outlook that while very modest growth is likely this year, the world economy was in a “fragile conjuncture.”

It is therefore worth asking what actually sets off a real global recession. Most discussions focus on leading indicators — statistics about economic variables that have preceded recessions. While these kinds of correlations can sometimes be useful in forecasting, they provide little understanding of why major changes are taking place. Leading indicators don’t usually address ultimate causes, nor do econometric models that try to predict events.

In fact, it’s instructive to remember that global recessions have usually begun suddenly and been a real surprise to most people. As I have argued in this column and with George A. Akerlof in Animal Spirits (Princeton 2009), such events can largely be ascribed ultimately to contagious stories of wide significance. Basically, global recessions tend to begin when newly popular narratives reduce individuals’ motivation to spend money. Psychology matters a great deal.

The biggest recession of all, the Great Depression, began suddenly with the stock market crash of October 1929, as Christina Romer, former chairwoman of President Barack Obama’s Council of Economic Advisers, pointed out in a famous paper. Even before 1929 was over, she found, department store sales and automobile registrations had declined, indicating that consumer spending had already dropped sharply. But why?

Economists were alarmed by the crash, she found, and their warnings helped make consumers wary. But let’s not overestimate the importance of these economic forecasts: Most people never actually read them. They received their information from other channels.

Back then, immediately after the market crash, church sermons were a powerful influence. Congregations were told that many business people had behaved like gamblers and hucksters. Through these sermons and other word-of-mouth sources, moralising about the stock market crash spread, affecting mass psychology. Frederick Lewis Allen, in the epilogue to his 1931 best-seller Only Yesterday: An Informal History of the 1920s, wrote that cultural values changed after the crash: People began to dress more modestly, adopting a new formality and religiosity, reviving Victorian sexual taboos. It is reasonable to assume that many of these changes had an economic impact, mainly by discouraging spending.

Similarly in more recent downturns, broad cultural and social changes had big effects, too. Since World War II, there have been four global recessions, according to the International Monetary Fund, which defines such an event very specifically as negative global per capita economic growth over at least one year. In each case, these recessions lasted only one year, although relatively slow economic growth rates were also an issue in periods surrounding them. The recessions ended in 1975, 1982, 1991 and 2009.

As they had with the Great Depression, economists have cited concrete causes for these events. Oil has been named as a fundamental factor in each case, with price spikes blamed on the Yom Kippur war of 1973, the Iran-Iraq War beginning in 1980, the 1990-91 Persian Gulf war and rising energy demand in China and other emerging countries in 2008.

Broader social narratives are sometimes ignored, but they matter, too. Consider the recession of 1975. Along with oil prices, common ways of understanding and describing daily life also changed. The oil crisis was widely said to signal the end of an era of abundance. Lower highway speed limits were imposed to conserve fuel, and cars grew smaller. Americans were told to lower their home thermostats to 68 degrees. In large numbers, people began wearing sweatsuits, flannel leg warmers, thermal underwear and long johns. Among all this austerity, economist E.F. Schumacher’s 1973 best-seller Small Is Beautiful became a global morality lesson.

Let’s jump to the most recent global recession, the one of 2009. Oil prices, subprime mortgages and the freezing up of the financial system after the collapse of Lehman Brothers were all important factors. But why did we have a global recession? The transformation of distinct events into a broad global slowdown occurred through a variety of mechanisms. Reports about financial misdoings, the possible collapse of venerable institutions, rising unemployment caused by advanced technology — all of these affected the psychology of spending.

Where does this leave us now? No single narrative seems to have enough compelling force at the moment to engender a downturn as big as the last one. Many people have been borrowing from older narratives of risk and vulnerability while trying to understand the current economy. Oil prices have been slumping, not soaring, but there are significant worries about outsourcing, downsizing and globalisation, along with deep concerns about rising inequality, refugee and immigrant flows, and what has been called secular stagnation of the economy. Political candidates on both the left and the right have been spinning charged and sometimes disruptive narratives about these issues.

We don’t know whether any specific event — say, an unexpected spike in oil prices or a decline in the stock market — will help transform any of the current social stories into a truly virulent economic disruption. We don’t know what is coming or when. But history does tell us that human imagination can spontaneously transform discrete events into world-shaking narratives of unexpected colour and force.

 

Indonesia launches ‘big bang’ liberalisation


February 12, 2016

Indonesia launches ‘big bang’ liberalisation

by Avantika Chilkoti in Jakarta

Indonesia has announced plans to liberalise rules on foreign investment in a number of industries, as President Joko Widodo strives to jump-start growth and draw investors to Southeast Asia’s largest economy.

Facing criticism over creeping protectionism and regulatory flip-flops, the government has announced a big overhaul of the so-called “negative investment list” — a highly sensitive catalogue of sectors in which foreign investment is limited.

A total of 35 industries were removed from the list on Thursday, including film, tourism and restaurants, in what economists are referring to as a “big bang” move that could drive efficiency and competitiveness in local industry.

“This policy is not about liberalisation, it is to encourage economic modernisation,” Pramono Anung, cabinet secretary, told reporters.

 In certain sectors foreign groups will still be unable to wholly own businesses but they will be able to invest alongside local partners. Investments in the e-commerce industry above Rp100bn ($7.3m) will also be free from restrictions, in a move that has been closely watched in recent months as Jakarta’s start-up scene has blossomed.

“The extent of creative destruction created by e-commerce is unprecedented,” Sofyan Djalil, Minister for National Development Planning, told the Financial Times in an interview last month. “On one hand we have to protect family shops but on the other hand we have to enter this new reality — I think smart policymakers have to find a mixed policy.”

The announcement is the latest in a series of reform packages from Jakarta since September, including changes to the national minimum wage and new streamlined licensing processes for large infrastructure projects.

“It’s definitely a step-up compared to the policy packages you saw before — these were relatively small-scale,” said Euben Paracuelles, an analyst at Nomura. “From the signalling standpoint I think this could cement what has been changing slowly from protectionist sentiment to a little more market friendly [sentiment].”

 Elected on a promise of reviving growth and pushing through pro-business reforms, President Widodo has so far developed a reputation for inward-looking policy and growing protectionism. Last year, for example, foreign businesses expressed alarm over suggestions that expatriate workers would be required to pass a language test to work in Indonesia, while import duties were raised sharply on a range of consumer goods.

Yet the president is now looking to foreign investment to boost growth as commodity prices remain weak and economic growth in the resource-rich market slowed to a six-year low in 2015.

Since shaking up his cabinet in August, in particular, Mr Widodo has launched a big reform push. Trade minister Thomas Lembong has led a marked pivot in economic policy. Following his appointment in August, the Harvard-educated former private equity executive has moved away from protectionist rhetoric and Indonesia has expressed interest in joining the Trans- Pacific Partnership.

 Foreign direct investment was up 19 per cent year on year in 2015 to Rp365.9tn ($27.3bn), according to official data, with a spike in the last quarter when sentiment improved markedly.

This week’s announcement comes amid rising concern for foreign investors in the country, which has a population of 250m and is an important market for many multinational groups.

 In the past week Swedish furniture group Ikea lost a legal battle against a small local furniture business claiming the Ikea trademark. Harley-Davidson, meanwhile, has pulled out of the country following the introduction of new import tariffs and luxury goods taxes that have squeezed business.

 Additional reporting by Taufan Hidayat in Jakarta