Credit Rating Agencies can mislead

July 3, 2015

Credit Rating Agencies can mislead

by TK

We must all take the assessment of rating agencies with a pinch of salt. I am saying this not because Fitch recently changed the outlook of Malaysia from negative to stable. There are precedents to doubt the accuracy of rating agencies. In the US, rating agencies have been sued for giving inaccurate and doctored ratings. In Europe, some of the countries were given very high ratings before they finally collapsed.

FitchStabil macam mana? Tipu

Rating agencies are good at giving reasons after the facts. They tell us grandmother stories on why certain countries were bankrupt after the event happened. But they were useless at telling us before it happened.

Apparently, rating agencies have certain predetermined ways to look at an economy. They are happy when subsidies are withdrawn and GST introduced. They say this will reduce distortion and strengthen government finance and fiscal positions. But they conveniently ignore the need for prudent spending, wastage cuts and reduced corruption.

In Malaysia, one does need to be  analyst to know which is more important given our present circumstances. Sometimes I feel that they make decisions first before trying to find the reasons to justify them. They cite robust GDP growth and improvement in fiscal accounts to justify upgrades from negative to stable.

But who is certain on GDP growth going forward with the plummeting ringgit and diminishing current account surplus in the balance of payments? And how do we justify improvements in fiscal accounts when potential contingencies are looming on the horizon and oil prices remain anaemic?

Look, maybe Malaysia does not deserve a stable rating  at this stage, as  the outlook certainly is worrying and troubling given the many events unfolding.

A Momentary Respite for the Ringgit and Malaysian Stocks as 1MDB remains the No.1 Problem

July 2, 2015

A Momentary Respite for the Ringgit and Malaysian Stocks as 1MDB remains the  No.1 Problem

by Bloomberg

MalaysiaLooking Great from the Outside but Rotting Inside

A rally in Malaysia’s currency and stocks after the nation avoided a Fitch Ratings downgrade may be short-lived if it doesn’t clean up an indebted state investment company and reduce threats to its current-account surplus.

The ringgit will probably still weaken to 3.8 against the dollar by the end of this year, according to Credit Suisse Group AG and United Overseas Bank Ltd Malaysia would be among the most fragile nation’s in the region should a recovery in the euro area stall because of Greece, Credit Suisse says.

“Continued weakness in the ringgit is perhaps the best barometer of sentiment towards Malaysia and the ringgit continues to hover near its post Asian Financial Crisis peg of 3.80,” Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd, wrote in a note Wednesday.

“Malaysia continues to be caught in changing domestic and external cross-currents.”

Before Wednesday’s market rebound, foreign funds had been cashing out of the Malaysian stock market at the fastest pace in Asia this year, while the ringgit had weakened to the lowest level in a decade.

Investor confidence has been battered by growing scrutiny on Prime Minister Datuk Seri Najib Razak’s management of debt-ridden 1Malaysia Development Bhd (1MDB), as well as faltering export and state revenue after commodity prices slumped.

The challenge is to ease investor concerns quickly enough to prevent an exodus of funds whenever the US Federal Reserve starts to raise interest rates.

‘Adverse developments’

“Foreign investors will likely be uninterested in Malaysia until we see improvements in the negative factors” which include 1MDB and weak corporate earnings growth, said Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, which oversees about US$112 billion (RM421.58 billion). He spoke a day before Fitch affirmed Malaysia’s credit rating on June 30.

“It’s a maelstrom of adverse developments.” Malaysia has taken steps to pare down 1MDB’s debt of RM42 billion (US$11 billion) as of March 2014 and is winding down the company’s operations through possible sales of land and power assets. The government has explicit guarantees for RM5.8 billion of 1MDB debt, and Fitch said there is a “high probability that sovereign support for 1MDB would be forthcoming if needed”.

“Malaysia will need to better control its off-balance sheet liabilities and improve its governance standards,” Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore, said before the Fitch decision. “Having a public debt ceiling of 55% of GDP is pointless, if the limit is sidestepped with government guarantees and support letters.”

Domestic procurement

Najib chairs 1MDB’s advisory board and has resisted calls from former Prime Minister Tun Dr Mahathir Mohamad to step down as the country’s leader over the debacle.

Keeping the current account in surplus will also be key to boosting confidence in Malaysia, said Wellian Wiranto, a Singapore-based economist at Oversea-Chinese Banking Corp. With Southeast Asia’s third-largest economy running a fiscal deficit starting from 1998, Najib in January tried to pre-empt concerns about the possibility of a current-account gap as well.

He unveiled measures that may keep more money in the country including encouraging government-linked companies to invest domestically and increasing local goods and services in government procurement.

“Investors realising that Malaysia will not go into twin deficits is likely to lead to a recovery in the currency, international reserves and funds flow,” said Gerald Ambrose, who oversees the equivalent of US$3.6 billion as managing director of Aberdeen Asset Management Sdn in Kuala Lumpur.

A possible complication: this year, Indonesian and Malaysian governments and companies have sold more foreign-currency debt than they did in the whole of 2014 as a global bond rout pushes up yields and their currencies weaken. That raises concern it will become costlier for them to service foreign-currency debt as the dollar gains.

The ringgit fell to 3.7887 per dollar Monday, near the 3.8 level the currency was pegged at from 1998 to 2005. It closed 0.7% higher Wednesday after Fitch also raised its outlook on the sovereign to stable from negative.

Do Employers in Malaysia discriminate ?

July 1, 2015

Do Employers in Malaysia discriminate ?

By Lee Hwok-Aun and Muhammed Abdul Khalid (

For a Full Report read:

Lee Hwok AunDo employers discriminate by race? The question typically elicits immediate and impassioned reactions from opposing ends.

Of course companies discriminate, some assert. It’s a known – even accepted – practice: Q companies prefer to hire Q people. It’s too hard to find suitable candidates from the Q group. The public sector practices pro-X policies, so the private sector reciprocates by favouring Y. Everyone has an anecdote to support their case.

No way, others retort. Why would profit-minded firms hire based on identity? They are only out to get the best quality person for the job. It wouldn’t make sense to prefer one race over another. If Z applicants do not get opportunities, it’s because they are less qualified. Anecdotes are supplied too.

This verbal and anecdotal dueling never ends. Both sides have valid but not decisive arguments, though positions are often exaggerated by personal bias and emotional baggage. Resolving the debate, while trying to avert combustion, requires objective empirical enquiry across a large sample of employers and employees.

Let us first specify the context. Sometimes we speak in code, but face it, the predominant images of labour market discrimination that form in our minds pit Chinese-owned private sector businesses against Malay graduates and a Malay dominated public sector against the non-Malay workforce.

How do we detect whether employers privilege one group and exclude another? We could ask them how they recruit, or ask graduates about their experience finding a job. However, their answers will very likely be biased. Racially discriminating employers will likely not reveal their true intentions, while graduates who feel they have been discriminated may overstate their grievance or may not be fully informed about the circumstances behind their rejected applications.

What about the effect of quality? If Chinese graduates are preferred in the private sector and Malays in the public sector, is it because of race, or is it academic attainment, compatibility of person with organisation, or other factors?

In a recent study, Muhammed Abdul Khalid and I tried to disentangle these gnarled issues. We conducted a field experiment that observes real decisions made by employers on persons they call for interview. Instead of asking employers whether they discriminate, we sent fictitious Malay and Chinese résumés to real job advertisements, then recorded the ones that got called back for interview and compared those with the ones that did not get called.

We ensured that the Malay and Chinese applicants in our pool were similarly qualified. We controlled for quality, in the way that experiments isolate the effect of the determinant in focus by controlling for – in other words, taking away – the effects of other determinants.

Here’s how the experiment went. We generated a pool of fictitious résumés of fresh degree graduates – credible job applicants with invented names and addresses. Résumés were clustered by quality, based on cumulative grade point average (CGPA). Those with CGPA of 3.1 -3.9 were considered “above average”, and those in the 2.2-3.0 range we classified as “below average”. Those with higher CGPA tended to be more impressive in terms of extra-curricular activities, language abilities and other positively regarded attributes.

Since we used CGPA to indicate quality, we chose not to include foreign university graduates. Foreign universities, especially in English-speaking countries, are more highly regarded; holding a foreign degree thus corresponds with being a higher quality applicant. To remove this overlap with CGPA as the quality marker, we confined our applicant pool to graduates of local universities – both public and private institutions.

Our research assistants sent four applications to entry level online job advertisements for engineering and accounting positions, one for each combination of race and quality: above average Malay, above average Chinese, below average Malay, below average Chinese. In total, we sent 3012 resumes to 753 jobs in the private sector. We attempted to apply to public sector jobs as well, but unfortunately could not proceed due to insurmountable technical hurdles

We then recorded callbacks for interview, and observed whether résumés of one race are significantly more likely to be called, after controlling for quality. Just to be clear, let me state again the basic scenario we are scrutinizing: when employers evaluate job applicants that are comparable in all aspects except for race, are they more inclined to one race over the other?

We also compiled data on the companies to which we sent job applications, and derived a profiled for each company based on the group holding a majority of directorships and shareholdings and therefore most likely to exercise control. The main categories that emerged were Chinese-controlled, foreign-controlled (including foreign-local joint ventures), and Malay-controlled, with a smattering of Indian-controlled and mixed-controlled companies (where no group clearly exerted control).

Similar experiments have been conducted and validated around the world, notably in the UK, US, India, and France. All of them find the presence of discrimination, to varying extents, based on race, ethnicity, gender, or caste.

Ours is the first study in Malaysia employing this method. And what did we find? Race matters – a lot. Chinese applicants are much more likely than Malay applicants to be called for interview. Quality also matters, but much less so.

The numbers give us a better sense of our main findings. As shown in the first line of the table, Chinese applicants on the whole registered a callback rate of 22.1 – that is, for every 100 Chinese résumés sent to job ads, 22.1 got called for interview. For every 100 Malay résumés sent, only 4.2 got called for interview. The ratio of these callback rates indicates strong preference for Chinese graduates. For every Malay applicant that gets called, 5.3 Chinese applicants get called. Discrimination was significantly larger in engineering jobs than in accounting jobs.

The gap is smaller, but still large, for higher quality résumés. An above average Chinese applicant is 4.5 times more likely to get called than an above average Malay, while the corresponding ratio for below average Chinese and below average Malays is 6.5.

These findings robustly indicate that private sector employers discriminate in favour of Chinese fresh graduate applicants and against their Malay counterparts. This is not surprising, although the magnitudes probably exceed our hunches.

Resume quality Chinese  callback rate

(per 100)

Malay callback rate

(per 100)

Chinese callback rate per Malay callback rate
Overall 22.1 4.2 5.3
Above average 23.5 5.2 4.5
Below average 20.7

Since publicizing these findings in November 2012, two broad criticisms have recurred that are worth discussing here. The first criticism denies that discrimination could occur or tries to explain it away, based on personal or company experience. However, such views overlook important aspects of our research and the extent to which we control for quality.

We have noticed that people, especially employers, refer to scenarios or experiences of filtering out Malay applicants before the interview stage because their academic records, on average, fall short. Sadly but truly, the educational achievement gap between groups remains substantial at graduation from university.

However, this study precisely addresses the issue by ensuring that equivalent numbers of Malay and Chinese applicants attain high CGPAs. Our data show that even top of the class Malays, graduating with CGPAs above 3.6 from the more reputable local universities, are considerably less likely than even below average Chinese graduates to be called for interview.

Another criticism asserts that the study merely confirmed what we “already know” and is thus worth little. True, we may have already known that discrimination existed – but only from personal observation, experience, hearsay, or presumption. Now we have empirical proof, from sample of over 3000 job applications and 750 companies.

More importantly, though, let us not be too convinced and comfortable that we already know all there is to know on the matter. Indeed, we found out much more than we thought we knew. Within the Chinese and Malay applicant pools, personal characteristics besides race impact on the prospects for interview.

Take Chinese proficiency, which is often divisive in discourses on graduate employment. Actually, it should be a more unifying issue. Our study finds that Malays who declare proficiency in Chinese language are more likely to be called for interview than Malays who do not. Chinese proficiency is also an advantage for Chinese applicants, of course.

We also found that type of university or tertiary institution makes a difference, but not entirely in line with common perceptions of “unemployable” public university graduates. Malays holding degrees from Universiti Malaya, Universiti Sains Malaysia, Universiti Kebangsaan Malaysia and Universiti Putra Malaysia – the major and more established public universities – enjoy better than average prospects for getting an interview.

The outlook for University Teknologi MARA (UiTM) graduates varies across job type. In engineering jobs, they are evaluated on par with peers from major public universities, but UiTM accounting graduates are viewed less favourably. On the whole, it is Malay graduates of private institutions who face the slimmest chances of getting called for interview.

Of course, this study would not be quite complete without examining if a hiring company’s profile affects job applicant’s chances. Well, it does, but it is not a simple, caricatured story of Chinese companies obstructing Malay entry. For accounting positions, Malays applying to Chinese-controlled companies are less likely to be called back, compared to Malays seeking work in Malay-controlled or foreign-controlled companies.

For engineering jobs, our results are most interesting. A foreign-controlled company is least likely to call a Malay applicant. However, a Malay engineering graduate has a better chance of getting an interview in a Chinese-controlled firm than a Malay-controlled firm.

We trust and hope our work has shed cool light on a heated and nationally vital subject. Undeniably, this study has limitations.

This research just examines discrimination in selection for interview, not the job offer stage, let alone employment and promotion, which impact further on our economy and society. Investigating discrimination at those levels is exceedingly more controversial and difficult, if not impossible, since it will involve research assistants posing in person as job candidates.

Nonetheless, our findings have broader implications. Our evidence of discrimination means that qualified Malay applicants are potentially being overlooked and excluded from job opportunities. Also, if discrimination occurs at this stage, it probably occurs at later stages as well – although the magnitude is likely to be less than what we observe in this study. Employers are more likely to discriminate at this early job application stage, because there is much less information about job applicants than employed personnel, and the process is impersonal and removed from scrutiny.

More importantly, though perhaps frustratingly for some readers, this research does not directly address the burning question: why do employers discriminate? We too would dearly like to know, but our chief objective was to probe and measure discrimination, and that’s made for a big enough project.

Before generalizing anecdotes or pondering why discrimination occurs, we ought to investigate its form and prevalence, and this field experiment has produced a careful, methodical and objective gauge of this phenomenon.

While we have not produced data to empirically inform why employers discriminate, we have highlighted the complexities of the problem and the need for further investigation.

Our findings demonstrate that factors not revealed in résumés have a major bearing on graduates’ selection for interview – whether related to attitude, compatibility of applicant with company, past hiring experience, or other factors and combinations of factors. Perhaps some employers expect Malay applicants to not socially fit into the company and hence do not bother calling them for interview. Perhaps they feel a need and justification for private sector to counterweigh the pro-Malay policies public sector. We cannot confidently evaluate these arguments without further study. Emphatically, we must not be hasty to blame the discrimination we detect on malevolent motives and racial stereotyping, prejudice or bigotry.

Clearly, there’s more work to be done in this thorny, fertile field. We hope that the cause will be taken up by the academic community, private organizations, governments,… indeed, all of society. These are shared problems demanding shared solutions.

*Dr Lee Hwok Aun is Senior Lecturer in the Department of Development Studies, Universiti Malaya. Dr Muhammed Abdul Khalid is now Research Fellow at Malaysian Institute of Economic Research 

The Ringgit down to a 10 -Year Low

June 29, 2015

The Ringgit down to a 10 -Year Low

By Elffie Chew, Bloomberg
The ringgit fell to a 10-year low as investors weighed whether Fitch Ratings would downgrade Malaysia and a worsening situation in Greece deterred risk-taking.

The MSCI Asia Pacific Index declined for a fourth day as Greece imposed capital controls and shut lenders Monday to avert the collapse of its financial system. Fitch, which ranks Malaysia at A- with a negative outlook, the fourth-lowest investment grade, will review its assessment before the end of June, Andrew Colquhoun, head of Asia Pacific sovereign ratings in Hong Kong, said last week. The country is “more than 50 percent likely” to be downgraded, he said in March.

“Concern’s over Fitch’s action continues to weigh on sentiment,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. “The external risk-off environment sparked by Greece also doesn’t help.”

The ringgit dropped 0.4 percent to 3.7830 a dollar as of 9.13am in Kuala Lumpur, data compiled by Bloomberg show. It fell to 3.7843 earlier, the weakest since July 2005, and has lost 7.5 percent this year in Asia’s worst performance.

Fitch’s Colquhoun cited Malaysia’s worsening trade balance and concern about the ability of 1Malaysia Development Bhd, a state investment company, to meet its debt obligations, when he warned of a downgrade in March. Exports fell 9 percent in May from a year earlier, following a 8.8 percent decline in April, according to a Bloomberg survey before data due July 3.

Malaysia’s government bonds fell. The yield on the five- year notes rose two basis points to 3.65 percent, while that on the 10-year securities was steady at 4.04 percent, according to data compiled by Bloomberg.


Transformation Blues Minister rebutts Bloomberg’s William Pesek

June 20, 2015

COMMENT:I am very skeptical about whatever Mr.dato-din-merican Transformation Blues  says on the state of our economy. He uses statistics with amazing ease  in  his rebuttal to Mr Pesek’s article. We know that statistics can be massaged for purposes for which they are intended. Malaysians are familiar with this kind of public relations exercise.

Minister Jala has been spinning too often and now has a serious credibility problem. Throwing statistics  around  will not  change public perception about the Prime Minister’s mismanagement of the economy.

Let us face reality. The 1MD debt problem is like an albatross around our national neck.  It has been badly handled by  company and Treasury officials and the Prime Minister himself. Minister Jala should be providing the answer to what happened to the RM42 billion debt? Why has he not commented on it in his rebuttal?  He must know that the issue has undermined public trust and investor confidence.

What transformation is he talking about when we know that our economy is up against some very  serious challenges in the years ahead. For example, we are in the middle-income trap and I have not seen any attempts on the part of the Najib administration to deal with this major challenge. We are still a commodity export economy, dependent on palm oil and oil and gas.

We have been talking about a knowledge economy for as long as I can remember, yet we are unable to fix our standard of education from primary to tertiary level. Our Research and Development policy is shrouded in mystery.

We know that the Prime Minister is not providing the leadership the country badly needs since he is pre-occupied with his own political survival.

Minister Jala should be talking to ordinary people to get a better understanding of their situation and  listening to economists who have contrarian views on our government’s  fiscal policy, and development strategy as  outlined in the 11th Malaysian Plan (2015-2020).

What is Minister Jala’s intention in making this point:

Because of our achievements, I was invited to share our experience at both Harvard and Oxford universities this year. At the Harvard Kennedy School of Government, I had the privilege to share Malaysia’s success story with government ministers from many countries. Last month, I was invited to share our experience with Russian ministers in Moscow.”

What success story is he telling his audience at Oxford and Harvard and the Russian Ministers in Moscow?  Are they gullible? My readers and I on this blog are not.–Din Merican

In addition to the above, I wish to add my good friend Dr. Bakri Musa’s  rebuttal to our Tranformation Blues Minister’s response to Mr. Pesek’s article as follows::

“The facts, however, are these. Between 2009 and 2014, Malaysian Gross National Income grew by 47.7 percent …”

Facts and figures by themselves mean nothing. What is the comparable figures for our peers – Taiwan, South Korea or even Vietnam. Not to mention Singapore or China. To quote the man, let me repeat again (… and one more time!), facts and figures must be put in proper perspective!

Oops! I forgot that our peers are now Nigeria, Pakistan, and Afghanistan in which case Jala’s figures are indeed impressive.Yes, our growth rate is higher than Japan, Western Europe and other advanced countries but those countries are already there, cruising at high altitude. Malaysia is still trying to take off and ascending. It cannot afford a low growth rate without risking a stall.

As for our devalued ringgit, Jala seems impressed by Zeti’s confidence rather than what the market is telling us. It is pathetic that Jala would consider his invitation to Harvard as an endorsement of the government’s policies. Jala should instead visit our universities and schools and discover how pathetic they are.

More important than what Jala tells those Harvard folks or how honored he was to be invited, what did Jala learn when he visited Boston and what lessons can he impart onto our local institutions. Or was Jala, like so many ministers on their “study” visits abroad impressed only with the glitz and ceremonies?–M. Bakri Musa

Transformation Blues Minister rebutts Bloomberg’s William Pesek

by Dato Seri Idris

Guitar Playing Singer Idris JalaRebutting with Pemandu Statistics

When I read William Pesek’s latest commentary on Bloomberg View, I barely recognised the country he was writing about.

He starts by referring to Malaysia’s “underlying economic distress” and “prolonged slow growth”, which he says are caused by “race-based policies that strangle innovation, feed cronyism and repel multinational companies”.

The facts, however, are these:

1. Between 2009 and 2014, Malaysian gross national income grew by 47.7%.

2. Growth last year was 6%, and over the next four years the OECD predicts Malaysia will enjoy annual growth of 5.6%.

It would be perverse to characterise this as “slow”. By contrast, the Economist reported last month that “The European Commission is forecasting growth in 2015 of 1.5%, which would be the euro area’s best outcome since 2011.” A growth rate nearly four times that of some of the most advanced economies in the world hardly suggests “distress”.

3. Prime Minister Datuk Seri Najib Razak launched Malaysia’s Economic Transformation Programme in 2010. Let me highlight some key achievements:

  • Third, as detailed in the World Bank’s Global Economic Prospects report 2014, Malaysia’s efforts at reducing poverty have been a great success, virtually eliminating absolute poverty to less than 1%. Since 2009, the income of the bottom 40 per cent households has increased by a compound annual growth rate of 12%, even higher than the national average of 8%. Inflation has been kept in check at only 2.4%. And through the implementation of minimum wage legislation, we have lifted 2.9 million people immediately out of absolute poverty.
  •  First, in the last five years, annual investment growth has been 2.5 times more than in the preceding years. Each year, total investment reached a new record for Malaysia. The bulk of this investment is from the private sector. If the private sector has no confidence in Malaysia as alleged by Pesek, why would they put in record investment year on year under the Najib administration?
  •  Second,‎ the country’s fiscal reforms are being successfully implemented, cutting Malaysia’s fiscal deficit for the past five years, while keeping public debt at only 53% of GDP.This level of public debt level is far lower than in many countries, such as the US, UK, France, Japan and Singapore.

4. We touched the lives of five million people through rural roads, electricity and water projects. This represents possibly the biggest government expenditure over a five-year period in the history of Malaysia. All of these were done in the name of inclusive economic development.

That should be enough to dispel the suspiciously negative picture Pesek paints. But let me address some of his other inaccurate accusations, too.

5 As for the alleged failure to “dismantle race-based policies that strangle innovation”, let me quote from a report in a respected international news organisation:

  • “Malaysia eased rules governing overseas investors, initial public offerings and property purchases, peeling back decades of benefits to ethnic Malays. Foreign companies investing in Malaysia and locally listed businesses will no longer need to set aside 30% of their equity to so-called Bumiputera investors, Prime Minister Najib Razak said today. He also raised overseas ownership thresholds in the fund management industry and at local stockbrokers.” At Initial Public Offerings, “Publicly traded companies will no longer have to meet any Bumiputera equity requirement under today’s liberalisation measures.” If Pesek disagrees with any of the above, perhaps he might discuss it with his editors. The report was published, after all, by none other than Bloomberg.
  •  At another point, he writes that Najib has “deepened the economy’s reliance on oil and gas production”. The International Monetary Fund believes otherwise. The headline on its “Economic Health Check” report this March was: “Favourable Prospects for Malaysia’s Diversified Economy”.

6. Pesek rounds off his imaginative piece of writing by declaring that “the ringgit’s fluctuations are a decent summary of the country’s wayward course in recent years”.

Perhaps he would like to discuss this with Malaysia’s Tan Sri Zeti Akhtar Aziz, one of the most admired central bank governors in the world. She has repeatedly said that the ringgit is undervalued. Here is what she said recently: “When the oil price plummeted, the wrong perception of the degree of dependence of the Malaysian economy on the oil and gas sector led markets to think that we would be more affected than others. Of course, the ringgit is undervalued. It doesn’t reflect our underlying values, which are solid and strong.”

7. Pesek’s opinions do not seem to have a strong connection to the facts. He gives away his true agenda when writes that “Asia-based journalists have missed (Tun Dr) Mahathir Mohamad since he left office in 2003” and suggests “a return to old political leadership” is “urgent”.

It may be that nostalgia for the past and his distance from Malaysia have clouded his judgment, and led him to write an unsubstantiated hatchet job on the current prime minister in order to please a former Prime Minister about whom he gushes, his “mercurial governing style and fiery rhetoric made for great copy”.

He certainly seems to have changed his mind about Dr Mahathir. Only last year he wrote: “The insular and jury-rigged system of affirmative action, national champions and fat subsidies over which Mahathir presided now holds the economy back. The Malaysian leader also had a tendency to embarrass his nation on the international stage with his nutty anti-Semitic tirades.”

He concluded: “Malaysians must find fresh inspiration by looking forward, not back to 1990.” We agree. Why does Pesek now think we should look back to a system he described in such a derogatory manner last year?

8. Malaysia has undergone an impressive economic transformation under Najib and the country is on course to reach the goal of becoming a high-income nation by 2020 – as the figures and achievements I have mentioned above make clear.

Because of our achievements, I was invited to share our experience at both Harvard and Oxford universities this year. At the Harvard Kennedy School of Government, I had the privilege to share Malaysia’s success story with government ministers from many countries. Last month, I was invited to share our experience with Russian ministers in Moscow.

9. I wonder why it is that many countries and institutions can see the progress we are making, but Pesek chooses not see any of it? His latest outburst is consistent with a series of slanted articles that unfairly run down Malaysia and its leadership.

10. Differing opinions are bound to be expressed on Bloomberg View. The defence of “fair comment”, however, does not apply to getting facts so woefully wrong. We would hope that the editors at Bloomberg agree, and will correct or take down such a disgracefully biased and ill-informed article.

* Datuk Seri Idris Jala is CEO of Pemandu and Minister in the Prime Minister’s Department.

Bank Negara: No Politics, Please

June 19, 2015

Bank Negara: No Politics, Please

gabenor bank negara malaysiaCustodians of Monetary and Financial Stability

Bank Negara Malaysia (BNM) has reiterated that the current movement of the ringgit is affected by both global and domestic economic developments.

In a statement, the central bank highlighted its neutral stance on politics, noting it “has never been and will not be drawn into any political agenda”.

“Global developments would include investor expectations relating to monetary policies of major central banks, and the trends in crude oil and gas prices. Domestic factors include concerns about government-linked entities and ratings related issues,” it said.

BNM said that uncertainty on any of these issues contributed to the ringgit’s volatility.

“While external developments are beyond the control of any open economy, every effort needs to be undertaken to bring about resolution to the domestic issues that confront our economy.

“Once these issues are resolved, the performance of the currency is expected to be consistent with our sound economic fundamentals and growth prospects,” it said.

The statement titled “Misreporting on the ringgit” comes hot on the heels of Deputy Finance Minister Datuk Ahmad Maslan’s claim that BNM had listed former prime minister Tun Dr Mahathir Mohamad as one of three key reasons for the depreciation of the ringgit.

The ringgit weakened against the US dollar by 1.29% to trade at 3.7090 yesterday. Year to date, the ringgit has weakened 6.08%.

BNM said it remains focused on its role and mandate in maintaining monetary and financial stability, and to support sustainable economic growth. –



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