The Unfolding of Najib’s Malaysia


February 10, 2015

Towers of Secrecy

Jho Low, Well Connected in Malaysia, Has an Appetite for New York

In early 2010, a young Malaysian financier named Jho Low began making some very expensive real estate deals in the United States.

First, a shell company connected to Mr. Low, famous back home for partying with the likes of Paris Hilton, purchased a $23.98 million apartment in the Park Laurel condominiums in Manhattan. Three years later, that shell company sold the condo to another shell company, this one controlled by someone even more prominent in Malaysia: the film-producing stepson of the Prime Minister.

A similar transaction was playing out on the other side of the country. Mr. Low bought a contemporary mansion in Beverly Hills for $17.5 million, then turned around and sold it, once again to the Prime Minister’s stepson. (Read a summary of this article in Malay.)

Mr. Low also went shopping at the Time Warner Center condominiums overlooking Central Park. He toured a 76th-floor penthouse, once home to the celebrity couple Jay Z and Beyoncé, then in early 2011 used yet another shell company to buy it for $30.55 million, one of the highest prices ever in the building.

At the time, Mr. Low said he represented a group of investors, according to two people with direct knowledge of the transaction. Mr. Low recently told The New York Times that he had not purchased the penthouse for investors, and that it was owned by his family’s trust.

One thing is clear: As with nearly two-thirds of the apartments at the Time Warner Center, a dark-glass symbol of New York’s luxury condominium boom, the people behind Penthouse 76B cannot be found in any public real estate records. The trail ends with Jho Low.

Jho Low Credit Illustration by Michael Hoeweler

Mr. Low, 33, is a skillful, and more than occasionally flamboyant, iteration of the sort of operative essential to the economy of the global superrich. Just as many of the wealthy use shell companies to keep the movement of money opaque, they also use people like Mr. Low. Whether shopping for new business opportunities or real estate, he has often done so on behalf of investors or, as he likes to say, friends. Whether the money belongs to others or is his own, the lines are frequently blurry, the identity of the buyer elusive.

Mr. Low’s lavish spending has raised eyebrows and questions from Kuala Lumpur to New York, where he has made a boldface name for himself as a “whale” at clubs like the Pink Elephant and 1Oak. The New York Post once called him “the mystery man of city club scene,” adding, “Speculation is brewing over where Low is getting his money from.”

One answer resides at least indirectly in his relationship, going back to his school days in London, with the family of Malaysia’s Prime Minister, Najib Razak. Mr. Low has played an important role in bringing Middle Eastern money into numerous deals involving the Malaysian government, and he helped set up, and has continued to advise, a Malaysian sovereign wealth fund that the Prime Minister oversees.

Now, that relationship has become part of an uproar gathering around Mr. Najib and threatening his already shaky hold on power. In Parliament, in political cartoons and in social media, Mr. Najib’s critics tend to argue that he is too close to Mr. Low.

Rosmah with Najib

Much of the concern, even in Mr. Najib’s own long-ruling party, involves questions about the Malaysian sovereign wealth fund. More broadly, though, the Prime Minister’s trappings of wealth and the widely broadcast tales of his wife’s outsize spending — the diamond jewelry, the collection of extravagantly costly Hermès Birkin bags — have become a focus of Malaysians’ rising unease with their government’s institutionalized culture of patronage and graft.

Tengku Razaleigh Hamzah

“We are very concerned,” Tengku Razaleigh Hamzah, a member of Malaysian royalty and an independent-minded elder statesman of Mr. Najib’s party, said in an interview in Kuala Lumpur last summer. “We want people of integrity to be up there.”

Increasingly, the glare turns to Mr. Najib’s stepson, Riza Aziz, and so to Mr. Aziz’s friendship with Mr. Low. With Mr. Low’s help, Mr. Aziz runs a Hollywood company that produced the films “The Wolf of Wall Street” and “Dumb and Dumber To.” He has spent tens of millions more on the homes in Manhattan and Beverly Hills, transactions that involved Mr. Low, The Times found.

“That’s a lot of money,” Sivarasa Rasiah, an opposition lawmaker, said of Mr. Aziz’s spending. He added, “Every U.S. report on him talks about family wealth. Family who?”

While Mr. Aziz has previously said he is personally wealthy, he declined to explain how he had acquired his money. Mr. Najib’s office, in a statement, said, “The Prime Minister does not track how much Mr. Aziz earns or how such earnings are reinvested.” As for the prime minister himself, the statement said he had “received inheritance.”

In a statement provided by a spokesman, Mr. Low, whose full name is Low Taek Jho, said he “is a friend of Mr. Riza Aziz and his family.” His real estate transactions with Mr. Aziz were made “on an arm’s-length basis,” he said, adding that he had never purchased real estate in the United States for the Prime Minister’s family or “engaged in any wrongful conduct regarding any financial matters for the Prime Minister and his family.”

At the Time Warner Center, The Times found, the 76th-floor penthouse, purchased through a shell company called 80 Columbus Circle (NYC) L.L.C., is one of at least a dozen that can be traced to people with close ties to current or former high-ranking foreign officials, or to the officials themselves.

According to one member of the condominium board there, while the board understood that the penthouse had been bought for investors, it did not ascertain their identities. At the Park Laurel, where Mr. Najib’s stepson owns, the board did not respond to questions about whether it had examined the financing of the purchase.

In fact, in-depth scrutiny of real estate deals is not required. International anticorruption organizations have criticized this lack of inquiry — not just by real estate brokers and condo boards, but by banks, lawyers and the federal government.

“People should ask the questions, ‘Why is it that this individual is bringing in millions of dollars into America, and how was it acquired?’” said Charmian Gooch, co-founder of Global Witness, a nongovernmental organization that works against corruption around the world.

The Making of a Financier

To mention Mr. Low in Malaysia is to conjure the image of a baby-faced young man in rimless glasses and a loose black V-neck, holding a magnum of Cristal and surrounded by celebrities. But if he is sometimes derided as a tabloid party boy who once flew a group of bottle girls from New York to Malaysia, the reality is that the clubbing life, for Mr. Low, was actually a way to build a booming business managing money for his friends.

“I think a relationship with an investor is not just about managing their money well,” he said in an extensive interview with The Star, a Malaysian newspaper, in 2010. “Although it is not in my job scope, but if my friend says he wants a flight urgently to somewhere or he wants a dinner reservation at a well-known place, I’ll do my best to make it happen.” He also said, “I am usually the concierge service that arranges everything, and thus my name is all over the place.”

Around George Town, on Penang Island, where Jho grew up, the Lows were seen as a family of somewhat deflated affluence, according to several businessmen who have known them for years. The father, Larry, was an executive for an investment holding company called MWE Holdings, but he split with his partner in the mid-1990s and faded from the local business scene. Still only a teenager, Jho, the youngest of three children, emerged as the family’s best hope for the future.

Riza AzizRiza (left) and Mr. Low (right)

There was money for education abroad, and in London, while attending the ancient and elite Harrow school, Mr. Low became friends with Mr. Najib’s stepson, Mr. Aziz, who was studying at the London School of Economics. He also grew close to Mr. Aziz’s mother, Rosmah Mansor, who stayed for months at a time in an apartment she kept there.

In college, at the Wharton School of the University of Pennsylvania, Mr. Low kept up his ties back home by running a Malaysian student group. But he also came to know the children of prominent Jordanian and Kuwaiti families. Even before graduating, he was managing money for what he later described as “my family and close Middle Eastern and Southeast Asian friends.”

After college, many of his early business deals were based in Malaysia — helping a Kuwaiti bank purchase a high-rise complex called the Oval, and bringing Middle Eastern money into the country to finance a commercial zone in the south and a new financial district in the capital. By 2007, he had formed an investment group that included a Malaysian prince, a Kuwaiti sheikh and a friend from the United Arab Emirates who went on to become Ambassador to the United States and Mexico.

Two years later, he was pitching his idea for a Malaysian sovereign wealth fund. His plan was to invest public money for the public good through a fund tied to one of the country’s oil-producing states, and so he began wooing the Sultan of Terengganu, who was also Malaysia’s king under the nation’s rotating monarchy.

It was all about making connections, making friends. Success, he told The Star, is “attributable to being at the right place and right time and meeting the right people coupled with a trusting relationship.”

In April 2009, those ingredients all came together for Mr. Low. The stepfather of his friend Mr. Aziz became Prime Minister of Malaysia.

A Political Legacy

Mr. Najib, 61, has a deep pedigree in Malaysian politics. His father, Tun Razak, was the country’s second Prime Minister, in the 1970s. His uncle was its third. His cousin is now Defense Minister.

Mr. Najib has risen through the political ranks: member of Parliament at 23; Chief Minister of his home state (Pahang); Minister of Education, Defense and Finance; and Deputy Prime Minister.

The family is tightly intertwined with Malaysia’s leading politicalZaid party, the United Malays National Organization (UMNO), whose long hold on power owes much to its close relationship with the country’s business elite. That closeness, in turn, has helped engender a culture of corruption, said Zaid Ibrahim, a former minister of legal affairs and judicial reform who served alongside Mr. Najib. Inflated government contracts are the norm, widely accepted because recipients simply turn around and donate to the party, he said.

“You know why corruption is very high in Malaysia?” he said. “It’s because the party in power is synonymous with the state.”

ABOUT L.L.C.s

 

As The Times wrote in the first part of this series, while shell companies like limited liability companies and trusts can be used for secrecy, they are frequently used for other purposes, including avoiding exposure to lawsuits or double taxation. They are also used in multiparty real estate transactions. This was the case several years ago with family members of a reporter on this project, Louise Story. And they are used in inheritance matters and investment strategies.

That point was underscored in the State Department’s 2010 Human Rights Report, which said, “Officials often engaged in corrupt practices with impunity” and noted “a broadly held perception of widespread corruption and cronyism within the governing coalition and in government institutions.”

There have been no proven corruption allegations against Mr. Najib. However, he has been dogged by questions, seized upon by his political opponents, stemming from a long-running bribery inquiry in France involving submarines he commissioned from a French company while he was Defense Minister.

The French national police found documents showing that the submarine company paid more than $100 million to a company controlled by one of Mr. Najib’s close associates. In addition, one police document says, without elaboration, that Mr. Najib demanded money in exchange for a 2001 meeting in Paris.

Malaysian officials said the payments to the company controlled by Mr. Najib’s associate were for “support and coordination services”; the Prime Minister’s Office said he received no payments and did not demand any.

Mr. Najib, who earns an annual salary of about $100,000 as Prime Minister, has been battered by news media reports of his wife’s lavish spending. A notable episode involved the Birkin bags: A series of photos that went viral on social media in Malaysia showed Ms. Rosmah holding at least nine of the purses. They typically cost between $9,000 and $150,000 apiece.

Ariff Sabri, an aide to Mr. Najib from 2000 to 2004 who joined the opposition in 2012, said the Prime Minister kept “piles and piles” of ringgit bills stacked in his safe. And invoices and other documents obtained by The Times show millions of dollars in jewelry ordered for Ms. Rosmah in Hong Kong in 2008 and 2009 — diamond and emerald rings, and diamond, emerald and ruby bracelets.

The Prime Minister’s office said, “Neither any money spent on travel, nor any jewelry purchases, nor the alleged contents of any safes are unusual for a person of the Prime Minister’s position, responsibilities and legacy family assets.”

For some people who have long known Mr. Najib, the lavish lifestyle that appeared to evolve with his second marriage, to Ms. Rosmah in 1987, has been a surprising — even dismaying — turn for a modest technocrat.

Nazir RazakLast year, Mr. Najib’s younger brother, Nazir, wrote a newspaper column that tacitly jabbed at the current Prime Minister by praising the frugality of their father, a career government official who died in office at age 53.

When he and his brothers had asked for a swimming pool at the Prime Minister’s residence, Mr. Nazir wrote, “My father made it abundantly clear that while Seri Taman may be our home, the house belonged to the government and, hence, to the people. Anything spent on it would have to come from public funds, and there was no way he was going to allow the state coffers to be depleted on something as frivolous as a swimming pool. ‘What will the people think?’ he thundered.”

The Fund

Mr. Low’s business romance with Malaysia’s King, it turned out, was short lived. But the new Prime Minister, Mr. Najib, was happy to have a way to benefit the nation writ large, and the sovereign wealth fund soon morphed into a new one, called 1Malaysia Development Berhad.

A billboard in Kuala Lumpur for Malaysia’s strategic development company. Mr. Najib has faced questions about 1MDB. Credit Samsul Said/Reuters

Mr. Najib became Chairman of the board of Advisers of 1MDB, which calls itself a “strategic development company.” A close Penang friend of Mr. Low’s father became a director, and two of Mr. Low’s friends joined the staff. Mr. Low himself was not given an official role, but he is regularly consulted on its actions, according to three people who have had regular dealings with 1MDB but requested anonymity to preserve relationships.

In his statement to The Times, Mr. Low played down his role in 1MDB, saying that “from time to time and without receiving compensation,” he has given his views on various matters.

While Mr. Low has no official position with the fund, in 2012 it emerged in British court documents that he had presented a letter of support from 1MDB in his investors’ unsuccessful bid for the hotel group that includes Claridge’s. He also said the financing would be fully underwritten by Malaysian government investment funds, according to the documents.

Mr. Low and 1MDB also had dealings with an oil-drilling company called PetroSaudi International that had been founded by a Saudi businessman and a Saudi prince.

Soon after its creation, 1MDB invested $1 billion in a joint venture with PetroSaudi. A few months later, a PetroSaudi subsidiary purchased a Malaysian holding company, UBG, in which Mr. Low and his investors held a substantial stake, according to public records. News media reports did not say so, but corporate records reviewed by The Times show that a director of the PetroSaudi subsidiary was a close friend of Mr. Low named Geh Choh Hun.

PetroSaudi has told the Malaysian press that the deals were unrelated. And both men said Mr. Geh was not representing Mr. Low’s interest in the deal.

By 2011, 1MDB pulled out of the PetroSaudi joint venture. The proceeds, however, were not immediately returned to Malaysia. Instead, they ended up in a Cayman Islands company and managed by an investment firm that 1MDB only recently identified. The money was recently returned to 1MDB, the fund has said.

The Caymans maneuver has stirred an outcry even within Mr. Najib’s own party. “I don’t understand why the government carries on with 1MDB,” Daim Zainuddin, a former Finance Minister, said in an interview. “To me, it’s quite frightening because you don’t know what they’re doing,” he said, adding, “Why must government money be parked?”

There have been other criticisms as well — that the fund has taken on large amounts of debt and that some of its investments have benefited large donors to Mr. Najib’s party.

The Prime Minister’s Office said that 1MDB was run by professional managers, and that many blue-chip companies do business with funds registered in the Caymans. The criticisms, it added, “need to be examined for political motivation.”

A year ago, the accounting firm KPMG refused to sign off on 1MDB’s financials, according to Nur Jazlan Mohamed, Chairman of Parliament’s Audit Committee. KPMG declined to comment for this article. The fund, which described the parting as amicable, found a new auditor: Deloitte.

Mr. Nur Jazlan, a member of Mr. Najib’s party, said the Deloitte blessing gave him comfort. “They wouldn’t sanction the accounts if there was a problem,” he said. Still, he acknowledged that “conditions are fertile” for fraud, given the scant oversight of 1MDB.

“Yes, they make money, but should they make more money?” Mr. Nur Jazlan said. Yet as long as 1MDB shows a profit, he added, it is unlikely that there will be any serious inquiry into whether money went missing. “Money makes money,” he said. “You can basically hide a lot of things in there as well. Then, the party doing scrutiny of management is the board, which is appointed by who? And chaired by who? The Prime Minister.”

Luxury Home Purchases

The year before Mr. Low showed up at the Time Warner Center, the New York news media reported the $23.98 million purchase of an apartment in the Park Laurel, a few blocks away on West 63rd Street.

The purchase, the reports said, had been made by a shell company on behalf of two residents of Switzerland — Peter Edward Chadney and Simone Cécile von Graffenried Simperl. Those reports were mistaken. The Swiss “buyers” were actually Rothschild bankers. The real party behind the shell company was Mr. Low, whose spokesman acknowledged to The Times that the condo had been bought by a trust benefiting his family.

Nearly three years later, the Lows sold it to Mr. Aziz’s shell company for $33.5 million in cash — a 40 percent appreciation.

The sale involved a string of shell companies. In one spot on the property transfer, Mr. Aziz is listed as the “sole director” of Sorcem Investments, a British Virgin Islands company that was behind the shell company that bought the Park Laurel condo.

The transfer of the Beverly Hills house from Mr. Low to Mr. Aziz was even more opaque.

After Mr. Low’s shell company, 912 North Hillcrest Road (BH) L.L.C., paid $17.5 million for the home — 11,573 square feet, with five bedrooms, 10 bathrooms, private gardens and a glowing pyramid in the reflecting pool — his trust sold ownership of that shell company to a corporate entity controlled by Mr. Aziz, both men acknowledged to The Times.

Legally, however, the property itself never changed hands. The same shell company appears as owner in the public property records of Los Angeles County. It is as if nothing ever happened.

Mr. Aziz confirmed that he owned the New York condo as well as the Beverly Hills house, which is undergoing extensive rebuilding.

Mr. Low said the transactions were done at fair market value. He sold the Beverly Hills property, he said, because he had found another nearby. That house cost $39 million.

Back in New York, the Time Warner Center was a natural destination because friends of Mr. Low already owned apartments there. There was also a prominent Malaysian — the brother of Syed Mokhtar al-Bukhary, a major beneficiary of government contracts and a generous backer of Mr. Najib’s political party.

With the penthouses on the top five floors of the north tower came wraparound views — the Catskills far off to the northwest, the Statue of Liberty just beyond the southern tip of Manhattan, and Central Park right next door. Mr. Low went to view Penthouse 76B with a retinue of women and told people involved in the deal that he would pay $30.55 million — all cash, as in his other real estate purchases.

One member of the condominium board and another person with direct knowledge of the deal said they believed that Mr. Low was buying for a group of investors. One of them recalled Mr. Low saying that a main investor was the family of Prime Minister Najib.

In its statement to The Times, the prime minister’s office said Mr. Najib had no financial interest or any agreement related to any Time Warner condominiums.

Mr. Low’s statement said that the condo was owned by his family’s trust and that he and other family members “stay there from time to time when they are in New York.”

The professionals who helped Mr. Low buy the Time Warner condo included the same Rothschild bankers as in the Park Laurel condo transaction, as well as John Opar, a lawyer at Shearman & Sterling, who did not respond to inquiries. One of the bankers, Ms. Simperl, said she could not discuss the client, who in the same time period briefly owned a $33 million condo at the Trump International, across the street from the Time Warner Center.

Janice Chang, the broker the Douglas Elliman firm identified as representing the buyer, said, “We work with a lot of people; sometimes we know them and sometimes we don’t.” She added: “They’re very confidential. We try not to pry.”

Hello to Hollywood

Mr. Aziz’s film company, Red Granite Pictures, was largely unheard-of when it took over the financing of “The Wolf of Wall Street,” announcing its intentions with a party at the 2011 Cannes Film Festival, complete with a fireworks extravaganza and concert by Kanye West. The Hollywood Reporter called it “an audacious hello to the movie industry.”

Neither of its founders had the kind of résumé that reflected the experience, or the income, to bankroll a movie company. Mr. Aziz, now 38, had been a junior-level banker at HSBC. His partner, Joey McFarland, was a small-time investor from Kentucky whose entertainment-business apprenticeship included booking paid party appearances for celebrities like Ms. Hilton.

All of which led to a certain amount of curiosity in Hollywood about who was financing Red Granite.Over time, the accounts seemed to change.

Interviewing a job candidate early on, Mr. Aziz said the financing came from “sovereign wealth,” according to two people with knowledge of the conversation.

When Irwin Winkler, an executive producer of “The Wolf of Wall Street” inquired, he was told that Red Granite had “a backer in Malaysia,” he recalled in an interview. He was introduced to the backer, and it was Mr. Low. “He’s the face, as far as I could see, of the financing,” Mr. Winkler said.

At the film’s December 2013 premiere party at the Roseland Ballroom in New York, several people said, Mr. Low had been introduced to them as the financier. He is thanked in the film’s credits.

The Malaysian explanations ended about a year ago, after Red Granite’s financing became the subject of persistent questions, especially from The Sarawak Report, a London-based news site that focuses on Malaysia.

Mr. Low says he has not put money into Red Granite or its films. And last summer, a new money man emerged. In an interview with The Times for an article on Red Granite, Mr. Aziz said the principal backer was Mohamed Ahmed Badawy al-Husseiny, chief executive of an Abu Dhabi government-owned company, Aabar Investments, that has done deals with Mr. Low. Mr. Aziz noted that “The Wolf of Wall Street” had received New York tax breaks. He said there were other investors, but recently declined to identify them. “There is no Malaysian money” in Red Granite’s films, he said.

Even so, both Mr. Low and Mr. Husseiny have been involved with Malaysian government funds, including 1MDB.

Mr. Husseiny’s company, Aabar, had been a partner with Mr. Low in the failed Claridge’s bid that was backed by 1MDB. Aabar has also done business with affiliates of a company called SRC International, which was spun off from 1MDB and is now owned by the Ministry of Finance.

Aabar also did a deal with a company outside Malaysia that SRC had helped create, according to two people involved with the transaction. Money from that deal was then set aside to be paid out to other corporate entities. That money was described as consulting fees for Mr. Husseiny and Mr. Low, the people involved said. Similar arrangements existed in other SRC deals, they said they were told by people at SRC.

SRC’s Managing Director, a friend of Mr. Low named Nik Faisal Ariff Kamil, said that to the best of his knowledge, neither Mr. Low nor Mr. Husseiny had received fees from deals involving SRC or its affiliates. Mr. Low said that he had not consulted for SRC International Sdn Bhd, the Malaysia-based SRC.

In a response from his lawyer, Mr. Husseiny did not answer questions about SRC. His investment in Red Granite, he said, was “personal money.”

Discontent at Home

Najib and Obama in HawaiiGolf Diplomacy back fired at Home

Just before Christmas, while visiting Hawaii, Mr. Najib played golf with one of his international allies — President Obama.

It was “golf diplomacy,” the Prime Minister said when he was criticized in Malaysia for golfing while the country suffered through its worst flooding in many years.

It was also the continuation of Mr. Najib’s long effort to draw his country closer to Washington. Earlier last year, Mr. Obama made an official visit to Malaysia, the first by an American President since 1966. Afterward, he and Mr. Najib said they would “elevate” relations to a “comprehensive partnership” of political and economic ties.

A White House spokesman did not respond to inquiries about the president’s relationship with Mr. Najib.

Even as Mr. Najib’s diplomatic standing has risen — Malaysia was recently elected to a two-year seat on the United Nations Security Council — his political star has been falling back home.

anwar_ibrahim2Mr. Najib has positioned himself as a forward-looking moderate. Yet on issues ranging from the freedom of political speech to longstanding laws that favor the Malay majority over the country’s ethnic minorities, he has not made good on promised reforms that would run afoul of his more conservative opponents. One long-running case that has rankled critics at home and abroad is his government’s prosecution of a leading opposition figure, Anwar Ibrahim, on sodomy charges; a ruling on Mr. Anwar’s appeal is expected any day.

In the 2013 elections, the opposition won the popular vote for the first time in more than four decades. Mr. Najib kept his job only because the allocation of seats in Parliament was weighted to favor rural areas, where his party’s coalition was strong. Within hours of the announcement, crowds filled the streets of Kuala Lumpur in protest.

One of the toughest areas for Mr. Najib’s party was Mr. Low’s home state, Penang.

In the weeks leading up to the vote, Mr. Low helped a newly formed group, the 1Malaysia Penang Welfare Club. The club gave out free food and beer, as well as “lucky draw” tickets for bicycles and other prizes, and Mr. Low flew in musicians like Busta Rhymes and Ludacris for what was described as a nonpolitical concert.

The club’s leader was Mr. Low’s close friend, Mr. Geh, who said the mission of the group was charity. But opposition figures in Penang said the prizes and concert were aimed at recruiting votes for Mr. Najib’s party.

“Jho wanted to show that he could call the shots in Penang,” said Lim Guan Eng, the chief minister and an opposition member.

In the end, the governing party won only a quarter of the parliamentary races in Penang, and Mr. Lim was re-elected.

Since then, Mr. Najib’s standing has grown only more precarious, as criticism has spread from the opposition to factions of his own party.

Over the summer, former Prime Minister Mahathir Mohamad, who led the country for 22 years and retains considerable influence, publicly denounced Mr. Najib and called on him to reform 1MDB. And while speculation that Mr. Najib would be pushed out at the annual party congress in November proved unfounded, weeks later, an official from his party called for a police investigation of 1MDB and said he would file a complaint against the Prime Minister if no action was taken.

In January, 1MDB officials responded to the controversy by appointing a new President, a banker named Arul Kanda. The appointment created its own flurry of questions.

In 2008, as Mr. Low was working to bring Middle Eastern money to Malaysia, he helped a Malaysian bank, RHB Capital, raise money from the Abu Dhabi Commercial Bank, where Mr. Arul soon became an executive. The next year, Mr. Arul joined a board of RHB.

In mid-January, the Malaysian press reported that Mr. Arul said that any insinuations about connections to “certain individuals” were unfair. “My C.V. should speak for itself,” he said.

An Evolving Image

Last September, Mr. Najib traveled to the United States for the opening of the United Nations General Assembly. He and his wife usually stay at the Time Warner Center when they are in New York, and they did so this time as well — at the Mandarin Oriental Hotel.

Mr. Low was in town, too — for a Social Good Summit sponsored by his foundation, featuring speakers like Melinda Gates, Ed Norton and Alicia Keys — and he and the prime minister engaged in a bit of a pas de deux at the Mandarin Oriental: Mr. Najib arrived in the hotel lobby with his entourage and went upstairs; within minutes, Mr. Low followed for what he later described as a “courtesy social call.” Less than 10 minutes later, the two men came downstairs and took separate exits from the building.

Lately, Mr. Low has been emphasizing that he is investing his family’s money and no longer managing money for investors and friends. He has been broadening his family’s business portfolio, making high-profile deals with the Abu Dhabi Gvernment and other Middle Eastern investors. In 2012, his family joined a group that bought EMI Music Publishing for $2.2 billion, and the next year, it was a principal investor in the $660 million purchase of the Park Lane Hotel in New York.

After portraying himself for years as a friend of people with money — and saying in the 2010 interview with The Star that he came from a “fairly O.K. family” — he has started to say that he was born with it himself. Last fall, he did an interview with The Wall Street Journal, which reported that his grandfather had made a fortune in mining and liquor investments in Thailand. The Journal’s account — which said the Low family had a $1.75 billion fortune and called Mr. Low a “scion” — was immediately picked up in Malaysia.

As befits the modern scion, Mr. Low has lately begun trading in another asset class: contemporary art. His entry into the art market has generated buzz both for his youth and for the fact that he has become such a significant force so fast. Last summer, he made the ART news list of the world’s 200 leading private collectors.

The art market is even more opaque than real estate, so that list is based not on actual sales data but on the assessments of people in the industry who know about collectors’ holdings. According to two people familiar with Mr. Low’s activities in the art world, though, he has taken a liking to pop art.

“Inserting a Jho Low at the top of the market — who buys pictures over $20 million, $30 million, $40 million — it swings the market,” one of them said.

To the public, of course, the purchaser is anonymous. But among the purchases Mr. Low has been involved in, they said, are Jean-Michel Basquiat’s “Dustheads,” for $48.8 million.

Asked if his family owned the painting, Mr. Low said he “did not purchase ‘Dustheads’ artwork on behalf of any investor.” Asked about his involvement in the art market, he replied, “The Low family is interested in fine art.”

 

Social Policy and Race


February 6, 2015

http://epolicy.blogspot.com/

Social Policy and Race

by Etheorist

When the government institutes correction policies on the basis of race, the government has introduced racism as a matter of state policy. State policy becomes racist. When racism is made “official”, it becomes “acceptable” for politicians to become racist while denying they are racist because they really did not mean to be racist as racism has crept slowly but surely into his or her consciousness.–Etheorist

Everybody relies heavily on their ethnicity and background to identify themselves, to give themselves a sense of identity, a sense of belonging.

In everyday dealings, it is not unusual for people to refer to each other by their background or ethnicity, as a way of trying to place each other in context for further engagement.

dayak-headhunter

Problems appear when insecurities come in. If a race is afraid that they will be marginalised, they will call attend to themselves in order for some proactive solutions to be made to their particular benefits. This is on the assumption that society at large would not care for them. This may not be entirely true. But this assumption immediately brings into the picture a sense of victimisation. They want the government to institute “corrective” policies to help them.

When the government institutes correction policies on the basis of race, the government has introduced racism as a matter of state policy. State policy becomes racist. When racism is made “official”, it becomes “acceptable” for politicians to become racist while denying they are racist because they really did not mean to be racist as racism has crept slowly but surely into his or her consciousness.

We are therefore vigilant that politicians who have influence of policies are enlightened as to what is good for society and that state policy must be good and beneficial for all citizens. We do not allow politicians to behave or speak without thinking about the larger implications for the whole society. Especially, when a section of society is being bamboozled for the benefit of another section.

It is difficult enough to try to help. But it is not acceptable to try to help by down others. The “proactive” racist policy of the state has turned into a blatant racist policy against a specific race. Not intentionally, but somehow an innocent policy has morphed into a mutation.

I would put the blame squarely on unenlightened politicians or wannabe politicians who are desperate for votes and use to race card to clinch their positions. It in incredible to see in the country how policies are made consistently to exclude the participation of a genuine home-ground “non” group while at the same time welcoming foreigners of all kinds to invest and to work and to live. This explicit segregation is the elephant in the room. It does not help if the government of the day gives excuse for racists while asking those who are being victimised not to bring up the matter anymore.

The correct action is to sack the politician who makes racist remarks. It is not OK for politicians to garner support by playing the race card. In day-to-day private conversations, race will be an inevitable subject for discussion as well as for sharing, especially on cultural matters. But race should not be a subject for public discourse or definitely not for policy.

Who is Ismail Sabri?


February 6, 2015

Who is Ismail Sabri? Until his true colors were known Din MericanYrecently, he is just a mediocre UMNO Minister in Najib’s cabinet who is there to make up the numbers. He got his attention by being a racist. People who know him think he should have been out of the cabinet long ago.

Sabri, a lawyer, is from Pahang, yet he does not represent the typical man from the state. I have many Pahang friends who are smart, honest, hardworking and non-racist. Then why is he a Minister?

It is plain to see that Sabri was chosen by our Prime Minister to do his bidding not because he is competent. Sabri’s latest snafu confirms that you do not need to have special skills to be a member of Najib’s team. All you have to do is to hone in your ampu bodek skills and you can and, indeed, prosper and are protected.

Is it any wonder why Najib defends him with the endorsement of his cabinet colleagues. Paul Low, who is Minister in the Prime Minister, should be able to tell you how to be a Minister and survive. We know that  it is now part of the UMNO culture to be self-serving and corrupt. Even MACC has to think many times before investigating an UMNO Minister.

We should realise that the backbone of the Malaysian economy, despite the NEP, is the Chinese community. We must be courageous enough to acknowledge their contributions to the economic development of our country for generations. The Chinese are Malaysians like you and I.

So let us avoid blaming them if our policies to promote Malay entrepreneurship have failed. What happened to FAMA, RISDA, and MAJUIKAN? Rather than antagonise them with racist rhetoric, let us engage them so that we can learn how to survive in business without having to go to business school. People like Ismail Sabri must go, not defended.  Din Merican

Ismail Sabri

Who is Ismail Sabri Yaakob?

by  Koon Yew Yin@www.malaysiakini.com

COMMENT: Now that the Cabinet has cleared Ismail Sabri Yaakob, the Agriculture and Agro-based Industries Minister, for his allegedly race-inciting hate comments on Facebook, I would like to suggest that he be given leave from his position to undergo a course in Business Economics 101.

This is because, quite apart from his racist mindset, he is the man who was earlier responsible for the plastic fish box controversy when he was Domestic Trade, Cooperatives and Consumerism Minister, as a result of which fish prices shot through the roof for a period of time.

He was also the man behind the fiasco concerning school bus operators who were provided with short notice to buy new buses to replace old school buses. This was a move from which he had to back down when the bus operators threatened a shutdown of services.

In the kopitiam when the government new policies were first announced, besides the public anger, there was much speculation on who would benefit from these measures which would raise prices of fish and school transportation. Certainly not the fishermen or school bus drivers. Perhaps the companies providing the plastic boxes or school bus distributors? Perhaps their runners?

Ismail Sabri’s public service

On second thoughts, I think that the Minister does not need to undergo any business course. This is because, if the blogsphere is to be listened to, he does seem to know a lot about business, especially unreasonable profits and monkey business .

Thus a reader in one of the more respectable pro-UMNO blogs operated by (Dato) Ahirudin Atan, or more popularly known as ‘Rocky’s Bru’, had in July 2012 penned the following advice for other readers on Ismail Sabri:

Bro Rocky, get the scoop on Companies Commission of Malaysia’s tales of corruption, abuse of power and lies brokered by Sabri.  Comment made at 6.25 am, http://www.rockybru.com.my/2012/07/ismails-witch-hunt.html

This is a cryptic comment from an insider who appears to know a lot more than he has put on record. Even if we may not think much of the titillating comment, at least it is still out there for the whole world to read and ponder. This is in contrast to the Minister’s Facebook comments on Chinese traders which have been erased since he now claims that he was not directing his comments only at Chinese traders!

On his side though, we have a prominent columnist in one of the news daily claiming that Ismail Sabri has never dabbled in race and religion since the columnist knew him seven years ago. The columnist also says that Ismail Sabri’s colleagues in law school speak well about him. Well, perhaps the columnist is right but then he may be wrong, and we may be seeing the Minister in his true colours now.

So instead of sending the Minister back to business school or to a course on ‘basics of political integrity’ from which many think he is unlikely to learn anything, I suggest that the best thing for detractors to do is to uncover the full record of his service or his disservice to the nation as the case may be.

Let’s put the political correctness aside and hang out the dirty laundry in the public arena so all Malaysians can know the true quality of the leaders that we have.

KOON YEW YIN, a retired chartered engineer, is a philanthropist.

The Chinese Century


February 6, 2015

The Chinese Century

Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.

© M. Garfat/MGP (Feather), © Gino’s Premium Images (Leaves), both from Alamy; © Cary Anderson (Wing), © Michael Nolan/SpecialistStock (Eagle’sHead), © Aaron Joel Santos (Bamboo Forest), all from Aurora Photos; © Getty Ellis/Globio/Minden Pictures/Corbis (Panda and Grass); Photo Illustration by Vanity Fair
SOFT POWER For America, the best response to China is to put our own house in order.

joseph-e-stiglitzWhen the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history.

Comparing the gross domestic product of different economies is very difficult. Technical committees come up with estimates, based on the best judgments possible, of what are called “purchasing-power parities,” which enable the comparison of incomes in various countries. These shouldn’t be taken as precise numbers, but they do provide a good basis for assessing the relative size of different economies. Early in 2014, the body that conducts these international assessments—the World Bank’s International Comparison Program—came out with new numbers. (The complexity of the task is such that there have been only three reports in 20 years.) The latest assessment, released last spring, was more contentious and, in some ways, more momentous than those in previous years. It was more contentious precisely because it was more momentous: the new numbers showed that China would become the world’s largest economy far sooner than anyone had expected—it was on track to do so before the end of 2014.

The source of contention would surprise many Americans, and it says a lot about the differences between China and the U.S.—and about the dangers of projecting onto the Chinese some of our own attitudes. Americans want very much to be No. 1—we enjoy having that status. In contrast, China is not so eager. According to some reports, the Chinese participants even threatened to walk out of the technical discussions. For one thing, China did not want to stick its head above the parapet—being No. 1 comes with a cost. It means paying more to support international bodies such as the United Nations. It could bring pressure to take an enlightened leadership role on issues such as climate change. It might very well prompt ordinary Chinese to wonder if more of the country’s wealth should be spent on them. (The news about China’s change in status was in fact blacked out at home.) There was one more concern, and it was a big one: China understands full well America’s psychological preoccupation with being No. 1—and was deeply worried about what our reaction would be when we no longer were.

Of course, in many ways—for instance, in terms of exports and household savings—China long ago surpassed the United States. With savings and investment making up close to 50 percent of G.D.P., the Chinese worry about having too much savings, just as Americans worry about having too little. In other areas, such as manufacturing, the Chinese overtook the U.S. only within the past several years. They still trail America when it comes to the number of patents awarded, but they are closing the gap.

The areas where the United States remains competitive with China are not always ones we’d most want to call attention to. The two countries have comparable levels of inequality. (Ours is the highest in the developed world.) China outpaces America in the number of people executed every year, but the U.S. is far ahead when it comes to the proportion of the population in prison (more than 700 per 100,000 people). China overtook the U.S. in 2007 as the world’s largest polluter, by total volume, though on a per capita basis we continue to hold the lead. The United States remains the largest military power, spending more on our armed forces than the next top 10 nations combined (not that we have always used our military power wisely). But the bedrock strength of the U.S. has always rested less on hard military power than on “soft power,” most notably its economic influence. That is an essential point to remember.

Tectonic shifts in global economic power have obviously occurred before, and as a result we know something about what happens when they do. Two hundred years ago, in the aftermath of the Napoleonic Wars, Great Britain emerged as the world’s dominant power. Its empire spanned a quarter of the globe. Its currency, the pound sterling, became the global reserve currency—as sound as gold itself. Britain, sometimes working in concert with its allies, imposed its own trade rules. It could discriminate against importation of Indian textiles and force India to buy British cloth. Britain and its allies could also insist that China keep its markets open to opium, and when China, knowing the drug’s devastating effect, tried to close its borders, the allies twice went to war to maintain the free flow of this product.

Britain’s dominance was to last a hundred years and continued even after the U.S. surpassed Britain economically, in the 1870s. There’s always a lag (as there will be with the U.S. and China). The transitional event was World War I, when Britain achieved victory over Germany only with the assistance of the United States. After the war, America was as reluctant to accept its potential new responsibilities as Britain was to voluntarily give up its role. Woodrow Wilson did what he could to construct a postwar world that would make another global conflict less likely, but isolationism at home meant that the U.S. never joined the League of Nations. In the economic sphere, America insisted on going its own way—passing the Smoot-Hawley tariffs and bringing to an end an era that had seen a worldwide boom in trade. Britain maintained its empire, but gradually the pound sterling gave way to the dollar: in the end, economic realities dominate. Many American firms became global enterprises, and American culture was clearly ascendant.

World War II was the next defining event. Devastated by the conflict, Britain would soon lose virtually all of its colonies. This time the U.S. did assume the mantle of leadership. It was central in creating the United Nations and in fashioning the Bretton Woods agreements, which would underlie the new political and economic order. Even so, the record was uneven. Rather than creating a global reserve currency, which would have contributed so much to worldwide economic stability—as John Maynard Keynes had rightly argued—the U.S. put its own short-term self-interest first, foolishly thinking it would gain by having the dollar become the world’s reserve currency. The dollar’s status is a mixed blessing: it enables the U.S. to borrow at a low interest rate, as others demand dollars to put into their reserves, but at the same time the value of the dollar rises (above what it otherwise would have been), creating or exacerbating a trade deficit and weakening the economy.

For 45 years after World War II, global politics was dominated by two superpowers, the U.S. and the U.S.S.R., representing two very different visions both of how to organ­ize and govern an economy and a society and of the relative importance of political and economic rights. Ultimately, the Soviet system was to fail, as much because of internal corruption, unchecked by democratic processes, as anything else. Its military power had been formidable; its soft power was increasingly a joke. The world was now dominated by a single superpower, one that continued to invest heavily in its military. That said, the U.S. was a superpower not just militarily but also economically.

The United States then made two critical mistakes. First, it inferred that its triumph meant a triumph for everything it stood for. But in much of the Third World, concerns about poverty—and the economic rights that had long been advocated by the left—remained paramount. The second mistake was to use the short period of its unilateral dominance, between the fall of the Berlin Wall and the fall of Lehman Brothers, to pursue its own narrow economic interests—or, more accurately, the economic interests of its multi-nationals, including its big banks—rather than to create a new, stable world order. The trade regime the U.S. pushed through in 1994, creating the World Trade Organization, was so unbalanced that, five years later, when another trade agreement was in the offing, the prospect led to riots in Seattle. Talking about free and fair trade, while insisting (for instance) on subsidies for its rich farmers, has cast the U.S. as hypocritical and self-serving.

And Washington never fully grasped the consequences of so many of its shortsighted actions—intended to extend and strengthen its dominance but in fact diminishing its long-term position. During the East Asia crisis, in the 1990s, the U.S. Treasury worked hard to undermine the so-called Miyazawa Initiative, Japan’s generous offer of $100 billion to help jump-start economies that were sinking into recession and depression. The policies the U.S. pushed on these countries—austerity and high interest rates, with no bailouts for banks in trouble—were just the opposite of those that these same Treasury officials advocated for the U.S. after the meltdown of 2008. Even today, a decade and a half after the East Asia crisis, the mere mention of the U.S. role can prompt angry accusations and charges of hypocrisy in Asian capitals.

Now China is the world’s No. 1 economic power. Why should we care? On one level, we actually shouldn’t. The world economy is not a zero-sum game, where China’s growth must necessarily come at the expense of ours. In fact, its growth is complementary to ours. If it grows faster, it will buy more of our goods, and we will prosper. There has always, to be sure, been a little hype in such claims—just ask workers who have lost their manufacturing jobs to China. But that reality has as much to do with our own economic policies at home as it does with the rise of some other country.

On another level, the emergence of China into the top spot matters a great deal, and we need to be aware of the implications.

First, as noted, America’s real strength lies in its soft power—the example it provides to others and the influence of its ideas, including ideas about economic and political life. The rise of China to No. 1 brings new prominence to that country’s political and economic model—and to its own forms of soft power. The rise of China also shines a harsh spotlight on the American model. That model has not been delivering for large portions of its own population. The typical American family is worse off than it was a quarter-century ago, adjusted for inflation; the proportion of people in poverty has increased. China, too, is marked by high levels of inequality, but its economy has been doing some good for most of its citizens. China moved some 500 million people out of poverty during the same period that saw America’s middle class enter a period of stagnation. An economic model that doesn’t serve a majority of its citizens is not going to provide a role model for others to emulate. America should see the rise of China as a wake-up call to put our own house in order.

Second, if we ponder the rise of China and then take actions based on the idea that the world economy is indeed a zero-sum game—and that we therefore need to boost our share and reduce China’s—we will erode our soft power even further. This would be exactly the wrong kind of wake-up call. If we see China’s gains as coming at our expense, we will strive for “containment,” taking steps designed to limit China’s influence. These actions will ultimately prove futile, but will nonetheless undermine confidence in the U.S. and its position of leadership. U.S. foreign policy has repeatedly fallen into this trap. Consider the so-called Trans-Pacific Partnership, a proposed free-trade agreement among the U.S., Japan, and several other Asian countries—which excludes China altogether. It is seen by many as a way to tighten the links between the U.S. and certain Asian countries, at the expense of links with China. There is a vast and dynamic Asia supply chain, with goods moving around the region during different stages of production; the Trans-Pacific Partnership looks like an attempt to cut China out of this supply chain.

Another example: the U.S. looks askance at China’s incipient efforts to assume global responsibility in some areas. China wants to take on a larger role in existing international institutions, but Congress says, in effect, that the old club doesn’t like active new members: they can continue taking a backseat, but they can’t have voting rights commensurate with their role in the global economy. When the other G-20 nations agree that it is time that the leadership of international economic organizations be determined on the basis of merit, not nationality, the U.S. insists that the old order is good enough—that the World Bank, for instance, should continue to be headed by an American.

Yet another example: when China, together with France and other countries—supported by an International Commission of Experts appointed by the President of the U.N., which I chaired—suggested that we finish the work that Keynes had started at Bretton Woods, by creating an international reserve currency, the U.S. blocked the effort.

And a final example: the U.S. has sought to deter China’s efforts to channel more assistance to developing countries through newly created multilateral institutions in which China would have a large, perhaps dominant role. The need for trillions of dollars of investment in infrastructure has been widely recognized—and providing that investment is well beyond the capacity of the World Bank and existing multilateral institutions. What is needed is not only a more inclusive governance regime at the World Bank but also more capital. On both scores, the U.S. Congress has said no. Meanwhile, China is trying to create an Asian Infrastructure Fund, working with a large number of other countries in the region. The U.S. is twisting arms so that those countries won’t join.

The United States is confronted with real foreign-policy challenges that will prove hard to resolve: militant Islam; the Palestine conflict, which is now in its seventh decade; an aggressive Russia, insisting on asserting its power, at least in its own neighborhood; continuing threats of nuclear proliferation. We will need the cooperation of China to address many, if not all, of these problems.

We should take this moment, as China becomes the world’s largest economy, to “pivot” our foreign policy away from containment. The economic interests of China and the U.S. are intricately intertwined. We both have an interest in seeing a stable and well-functioning global political and economic order. Given historical memories and its own sense of dignity, China won’t be able to accept the global system simply as it is, with rules that have been set by the West, to benefit the West and its corporate interests, and that reflect the West’s perspectives. We will have to cooperate, like it or not—and we should want to. In the meantime, the most important thing America can do to maintain the value of its soft power is to address its own systemic deficiencies—economic and political practices that are corrupt, to put the matter baldly, and skewed toward the rich and powerful.

A new global political and economic order is emerging, the result of new economic realities. We cannot change these economic realities. But if we respond to them in the wrong way, we risk a backlash that will result in either a dysfunctional global system or a global order that is distinctly not what we would have wanted.

Tong Kooi Ong is not a currency speculator


February 2, 2015

COMMENT:  Most of those who have attacked Dato Tong may notdin2 understand what short selling, be it currency or share, is about. In simple terms, it is  the sale of a currency or security that is not owned by the seller, or that the seller has borrowed.

Short selling is motivated by the belief that the exchange rate of a currency, say the ringgit, or price of a security will decline, enabling it to be bought back at a lower price to make a profit.

Short selling may be prompted by speculation, or by the desire to hedge the downside risk of a long position in the same security or a related one. Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders who are familiar with its risks (adapted from http://www.investopedia.com)

Deepen your knowledge of short selling by reading the basic guide on Short Selling: Introduction. http://www.investopedia.com

Is Dato Tong is currency speculator? I know he is not. He is a well-known security analyst and an entrepreneur with a Midas touch. He is also an astute investor and a builder of businesses.  I knew him from my days in Cambodia in the 1990s.  I met him when he visited Phnom Penh with some of my friends to identify business opportunities. He then owned a bank, and was a property developer and an equity analyst with a solid reputation. A currency speculator has a different mindset.

His attackers have chosen the wrong guy to heap the blame for the recent dismal performance of the ringgit. It is time we look seriously into our economic and fiscal and monetary policies before we find scapegoats for our policy failures. It is sad to note that our leaders are not prepared to deal with reality. Surely, we can manage our affairs better.

While it is true that the strength of the US dollar “may be due in part to the strengthening of the US economy and the expectations of an interest rate hike, following the end of the US quantitative easing since October 2014″, I add that the lack of investor confidence in our economy for 2015 and our worrying political climate are influencing sentiments on our stock market and undermining the ringgit.–Din Merican .

Tong Kooi Ong: I am not shorting the Ringgit

http://www.kinibiz.com/story/exclusive/141171/i-am-not-shorting-the-ringgit-says-edge-owner-tong.html

Businessman  Dato’ Tong Kooi Ong (pic below) has denied allegations that he is shorting the Ringgit, saying recent blog postings claiming he has taken a short position against the national currency are “malicious lies”.

Dato Tong Kooi OngThe Businessman with a Midas Touch

In a statement today, Tong said he had never shorted any currency or equity, being a value investor, and stated that he does not feel crashing the Ringgit is possible.

“I do not believe it is even remotely possible to break Bank Negara or crash the Ringgit. The foreign exchange reserves of the country are in excess of USD110 billion,” said Tong, whose businesses include the Edge Group, today. “The current account of the country is in surplus. Non-Ringgit borrowings are very low. I have gone on record with the above statement, both in my speeches and in the articles I wrote. Again, this is a matter of record.”

The blog postings were carried on malaysianexpose.wordpress.com and kronismemahathir.wordpress.com and timestamped January 29 and 28 respectively, though no author was named.

On Friday, January 30, Bernama quoted Prime Minister Najib Abdul Razak as saying that should allegations of individuals attempting to capitalise on the current pressure on Ringgit to sabotage the economy be true, relevant government agencies should gather evidence and take action.

The following day Bernama quoted Deputy Finance Minister Ahmad Maslan as urging Bank Negara Malaysia, the Malaysian Communications and Multimedia Commission and other relevant agencies to investigate claims that individuals are speculating on the Ringgit for personal gain.

“I hope MCMC and BNM will investigate the matter and if there is any truth in the allegation, the perpetrators must be brought to justice,” Ahmad was quoted as telling reporters yesterday.

Tong’s statement is reproduced in full below:

I refer to the malicious lies and fabrications against me in the blogs I refer to the malicious lies and fabrications against me in the blogs malaysianexpose.wordpress.com (29 January 2015) and kronismemahathir.wordpress.com (28 January 2015).

I vehemently and absolutely deny the accusations. I did not at any time short the Malaysian Ringgit.

I am an equity analyst, besides being an established entrepreneur. I am a value investor. I have never shorted currencies or equities. I acquire and build companies, create value for shareholders and create employment through ideas and innovation. My track record speaks for itself.

I am certain Bank Negara Malaysia will be aware if there is such a heinous crime. Bank Negara has not contacted me and I pledge to cooperate fully with Bank Negara if my assistance is needed at any time.

As a Malaysian, I too am against economic saboteurs. I support the Prime Minister’s call that those who sabotage the country’s economy must be brought to justice.

Personally, I do not believe it is even remotely possible to break Bank Negara or crash the Ringgit. The foreign exchange reserves of the country are in excess of USD110 billion. The current account of the country is in surplus. Non-Ringgit borrowings are very low. I have gone on record with the above statement, both in my speeches and in the articles I wrote. Again, this is a matter of record.

The facts are that almost every currency in the world is currently falling against the USD (United States Dollars). This is due in part to the strengthening of the US economy and the expectations of an interest rate hike, following the end of the US quantitative easing since October 2014. Further, many countries in the region as well as Europe are depreciating their currencies and lowering their interest rates to promote growth.

I am currently unable to ascertain the individual(s) who is (are) responsible for the malicious lies against me, and what their intentions are. I will pursue legal course of action once I am able to identify those responsible. Making up such lies is beneath human decency.

Thank you.

Tong Kooi Ong

On the state of the Malaysian Economy


January 28, 2015

MY COMMENT: It is true that we need to be rational about things, but we also need to be realistic. The issues raised by my good friend Guna in his article have the potential of putting our economy in crisis.

What if 1MDB defaults on its loans? The Malaysian government will have to step in since it has apparently guaranteed lenders that it will stand by 1MDB. What happens to some major Malaysian banks (and other financial institutions) which are heavily exposed to this GLC? I am afraid taxpayers will be have to bear the burden of any bailout. But I sincerely hope we have do not have to come to that stage.

Tun Ismail Mohamed AliHow long we can run persistent fiscal deficits without the risk of  down grading  our sovereign rating, which means our borrowings will cost taxpayers more? The ringgit’s decline against the US dollar and the Singapore dollar is the worst I have witnessed in recent years. Does that not tell us that markets are concerned about our economy and our management of it?

Are we not experiencing current deficit  in our balance of Tan Sri Aziz Tahapayments given the substantial drop in  the crude oil price and export earnings from palm oil and rubber, and massive capital outflows? Because of cheap ringgit, won’t our imports cost more? Isn’t that inflationary?

Bad politics maybe but I would like to think that it is bad economic management that is a matter of serious concern. Furthermore, it is better to prepare our citizens for bad times ahead so that they are not deluded into thinking that our economic fundamentals are sound. Are they I wonder?

Tan Sri ZetiThe Governor  Bank Negara Malaysia, Tan Sri Zeti Aziz,  keeps saying that we have adequate reserves to deal with any eventuality. I remember when I was  Secretary of the Bank in the 1970s  the late Tun Ismail Mohamed Ali telling my colleagues and I that his greatest worry was the level of reserves for the ringgit. To him it was never enough since the ringgit could be subjected to massive currency speculation.

For Tun Ismail, it was important that we manage our economy well, balance the budget, and be prudent in our use of public funds. His successor, Tan Sri Aziz Taha, too shared the same concern.

It is time for us to be cautious and prudent, and for our government to restore public and investor confidence in the way we deal with our finances and manage our economy. –Din Merican

On the state of the Malaysian Economy

by P Gunasegaram@www.malaysiakini.com

QUESTION TIME: Granted we have lots of problems in the country and tonnes of wastage. We overpay for contracts, we have a strategic investment fund which has gone amuck and is investing willy nilly with borrowed money, we have a looming disaster in the form of RM30 billion at risk in a private finance initiative gone wrong and we have loads of patronage.

Does this necessarily mean that the economy is in crisis if we put all this together with a weakening ringgit and oil prices which have fallen off a cliff? Does this mean this year will be a disaster and one of gloom and doom for Malaysia?

It is tough to do but this is when we need to be rational about things and assess economic conditions with a cool head, separating this to some extent from the sad state of politics in the country which leads to a whole host of economic concerns.

Let’s just take a couple of the most serious concerns and examine them in some detail to see what gives. First, the weakening ringgit which was at its lowest levels in six years. But why was it low six years ago – early 2009 to be precise?

Yes, it was when the world financial crisis (WFC), caused by the subprime mortgage issue in the United States was raging. It was biting hard at that time after it surfaced in 2008. And what were the pundits predicting, especially those who had huge funds at their disposal to make their predictions come true, at that time?

Yes, a weak ringgit (to be fair not just the ringgit but currencies of other countries as well which had open markets) because the funds were going to repatriate money back to the US where it will be needed. And also because these countries will have problems with their exports to the US whose purchasing power will fall.

Also, you have a strange situation of the US dollar strengthening against currencies of those countries whose economies were in much better shape than the US. Is that sustainable? No. Is the analysis smart? No. Was that done for a trade then? Highly likely because that was a smart if crooked way to influence markets and if you did it first, you can make a lot of money.

As it turned out the US undertook the biggest exercise of printing money in history through quantitative easing 1 and 2 by buying government bonds from investors and injecting money into the system, driving interest rates down next to nothing.

The excess funds flew out of the US finding a home in countries like Malaysia where stock market returns were better and interest rates were higher. And yes, you guessed it, Malaysia’s currency appreciated against the US dollar to levels not seen since the Asian financial crisis (AFC) of 1997/98. And so did the currencies of many other countries.

Now, it seems, because of falling oil prices, Malaysia’s budget deficit as a proportion of GDP (gross domestic product – sum of goods and services produced) is likely to increase – by all of 0.2 percentage points to 3.2 percent from, a projected 3.0 percent last year, as the prime minister pointed out two days ago.

Poor outlook for the ringgit

Malaysian ringgit
These and slowing growth are the main reasons for the outlook for the ringgit to be poor this year, along with the stoppage of money-printing by the US. Such arguments have resulted in a weak ringgit (also other currencies as well but the ringgit has weakened more than most), the weakest seen in six years. And continued capital outflows are supposed to result in persistent weak demand for ringgit. But will that situation prevail?

According to the government, as announced by the PM, given a new forecast price of US$55 per barrel for oil (instead of US$100 previously), the revenue shortfall will increase by RM5.5 billion to RM13.8 billion. To compensate for this, the government has proposed to cut operating expenditure by RM5.5 billion.

But let’s look at what the oil price fall will do. First, it increases the disposable income available to the public which helps to boost the demand in the economy by increasing consumer spending. The government estimates disposable income to increase RM7.5 billion.

Second lower oil prices and a depreciating ringgit reduces costs of producers and makes them more competitive in international markets, which does help to push growth up. While as a net exporter of oil and gas, Malaysia can expect export proceeds to decrease because of the oil price fall, this is mitigated by other factors.

On balance, the impact on the Malaysian economy is minimal. Growth will come down to about 4.5 percent to 5.5 percent from 5-6 percent, which is still pretty respectable by world standards. Government finances will suffer slightly but not by a lot.

By any reckoning of what one means by a crisis, and using as yardsticks the 2008-9 WFC and the 1997-8 AFC, Malaysia is quite far from an economic crisis as are most countries in the region, despite being a net exporter of oil and gas.

So why is the ringgit weakening? I reckon it is the same reason why it weakened in 2009 – a trade, perhaps a few trades, basically. When it becomes obvious that Bank Negara Malaysia, with foreign exchange reserves approaching RM500 billion, is quite willing and able to deal with massive capital outflows, it should move back up again as speculative selling of the ringgit diminishes.

My conclusion – despite all the bad things happening in the country – the wastage of public funds, 1Malaysia Development Bhd, Pembinaan PFI Sdn Bhd, poor decision making and a whole host of other things – the economy is not in crisis now although it could be lot better if these things were properly handled.

That does not mean that we can continue with all those bad practices which we have accumulated over the decades. If we continue with them and add on to them instead of turning against them, it will be inevitable that we will have not just an economic crisis but a national crisis of epic proportions not long from now! Let’s turn back from this path of doom quickly before it’s too late.


P GUNASEGARAM is founding editor of business news portal KiniBiz.