The Malaysian Insider on Political Leadership

February 6, 2015

The Malaysian Insider on Political Leadership

Nearly two years after the last Malaysian General Elections (2013), both the ruling and opposition coalitions are imploding – one with internal leadership crises and the other with public quarrels over policies.

In the ruling Barisan Nasional (BN), UMNO and MIC leaders past and present are tussling for influence and leadership, the MCA is largely irrelevant while Gerakan and PPP are absent.

Malaysia's opposition leaders hold hands at the end of their People's Alliance conference in Shah AlamJom Ubah Atau Boleh Belah

On the other side, Pakatan Rakyat’s (PR) DAP and PAS are crossing swords and PKR is just opposing everything with a street protest always a handy tool to keep it seen as championing a cause.

The big loser? Ordinary Malaysians. Never before has this country been so bereft of political talent, men and women of integrity, vision and empathy than today when it faces the twin crises of low commodity prices and currency.

daim-mahathirThe Power Brokers in UMNO

The best example of this fact is UMNO. Neither the Najib camp nor the so-called Dr Mahathir-Daim camp inspire confidence or hope among most Malaysians. Both are stuck to courting a Malay heartland, leaving other Malaysians feeling disenfranchised in their own country.

Right now, the supporters of Prime Minister and UMNO President Datuk Seri Najib Razak are in the midst of a psy-war against his critics, some resorting to the old party playbook of sex allegations and financial scandals to all-out cyber attacks.

While Tun Daim Zainuddin has been quiet, his former boss, Malaysia’s longest-serving Prime Minister Tun Dr Mahathir Mohamad, has turned up the ante by offering caustic comments about a leadership he no longer supports.

Najib as 1MDB advisorHis Leadership at Stake

For Najib, it is his leadership at stake. For Dr Mahathir and his supporters, it is UMNO’s fate at the next general elections as the party and BN have collectively lost more votes in the last two federal polls.

If the trend continues, UMNO’s nightmare of losing political and economic power to its former number two, Datuk Seri Anwar Ibrahim becoming PM, might come true. In short, that is the analysis of Najib’s critics who say his political and economic policies have exacerbated UMNO’s dwindling support.

The same is being played out in MIC, a party more concerned about itself than the shrinking Indian community it purportedly represents.But in a coalition of mainly racial silos, the MIC and the BN parties that represent everyone else except Malays now have even less clout than the second biggest BN party, PBB from Sarawak.

One would think that the PR pact would take advantage of the infighting within BN parties to move forward and attract even more support after their successful run in Election 2008 and 2013.

Instead, that success has been more of a bane than a boon for the three parties in PR. PAS were not on the same page with PKR on the Selangor state government leadership change last year.

Both PKR and DAP are at odds with PAS over its insistence to introduce Islamic criminal laws, or hudud, in Kelantan. And now PAS has opened up another front – quibbling about DAP’s local government election plans.

Their presidential leadership council remains only in name as they have not met since the Selangor impasse over removing Tan Sri Khalid Ibrahim as Menteri Besar last year.

Where does that leave Malaysians who face a year where purchasing power will be severely curtailed by a weak ringgit and the imposition of a consumption tax that will affect a wider pool of people than the more than one million registered taxpayers?

Where does that leave Malaysians facing a time when race and religion is taking over the public space for debate and discussions instead of issues of rule of law and good governance?

Where is the leadership and hope for Malaysians in the next few years to focus as a nation in a souring economy when its politicians are more interested in keeping their jobs and influence?

And in the short term, can Najib avoid the fate of his predecessor Tun Abdullah Ahmad Badawi who left office after incessant internal criticisms? And can PR escape the fate of its predecessor, Barisan Alternatif, that self-destructed over hudud?

The real question is, are there leaders out there who think more about Malaysia than just their time in office?

Social Policy and Race

February 6, 2015

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.


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.

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

Deepen your knowledge of short selling by reading the basic guide on Short Selling: Introduction.

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

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 and 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 (29 January 2015) and (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

Could Tengku Razaleigh be the Leader for UMNO and Malaysia?

January 29, 2015

Could Tengku Razaleigh be the Leader for UMNO and Malaysia?

by Terence

Tengku Razaleigh HamzahThe Leader for UMNO and Malaysia?

 COMMENT With the UMNO President under dire threat from a proven career-stopper, with his Deputy as quiescent as an extinct volcano, a No 3 impaled on a sword he helped forge, a No 4 disqualified by dynastic and graver caveats, and a No. 5 stymied by geography, who will the party or, what is more accurate, its overlords turn to as interim saviour before a new and younger cast of leaders is rung in?

The answer may be Tengku Razaleigh Hamzah, provided of course he acquiesces to conditions imposed by the career-stopper. It is not that this scenario is being discussed with any great enthusiasm in political salons, but if the description of the state of the top leadership situation in UMNO is accurate, then conditions are conducive for the drafting of Ku Li, as he is popular known, to the post he has long coveted.

Mahathir-Vs-NajibThe Battle Royale

In August last year Prime Minister Najib Abdul Razak was served with an eviction notice by Dr Mahathir Mohamad, a ‘stop-work order’ that is reckoned to carry greater weight than an order of mandamus our civil courts have issued in recent times in child custody fights. In short, it is an order the evictee cannot mess with.

The Prime Minister has tried to do a Houdini but the financial crisis portended by the looming failure of the sovereign wealth fund, 1Malaysia Development Berhad (1MDB), and, now, the spiriting out of the country of one of two cops convicted of the murder of Altantuya Sharribuu bodes the direst threat to his longevity in office.

Speculation is rife as to who helped murder accused, Sirul Azhar Umar leave the country – before the Federal Court delivered final judgment in the case – for the relative safety of Australia.

Australia is bound by its opposition to the death penalty to preventing Sirul’s return to face the gallows in Malaysia for a murder for which there was no motive and where the Federal Court’s guilty verdict is a resolution that does not solve the mystery of why the victim was killed and in so brutal a manner.

The word is that if Sirul talks, this mystery of the Mongolian woman’s murder that has puzzled the country from the time it occurred in late 2006, will unravel. His mother, Piah Samat, has already intimated that her son feels betrayed at what she said he thought was something he did as duty.

altantuyaShe continues to haunt us

In other words, that mystery of Altantuya’s murder remains to be resolved and the tendrils radiating from Sirul’s direction hold promise of more light that may be shed on the matter.  There’s no telling what names will sink with the unravelling of this mystery.

A dash for the lifeboats?

But matters of this nature tend not to arrive at catastrophic denouements; sanity would compel a dash for the lifeboats by those most threatened by Sirul’s potential disclosures.

General fatigue at the shrill partisanship that has beset the nation over many years, high anxiety at the anaemic condition of the economy, and deep foreboding over worsening racial and religious ties amongst the citizenry would combine to make the commencement of an interim premiership by Ku Li highly probable within six months.

Of course, there would be conditions imposed by the career-stopper but at 78, Ku Li would not be fazed by them, especially if it means that a way must be paved for Mukhiz Mahathir to gravitate to the top. But this trail would not entail a bar for Khairy Jamaluddin on the grounds it would be healthy for UMNO to place a younger set on an upwardly mobile trajectory.

Ku Li will be two years older than Nelson Mandela when the latter began his presidency of South Africa, perhaps the oldest start by a new leader of a country but a start nevertheless by someone who has always believed that it is his manifest destiny to lead the country.

The past five years Ku Li has spent in going around the country, furnishing audiences with reasoned disquisitions on the economy, and on the post-Independence history of the country and society, were aimed precisely at holding himself out an inclusive leader to steer the country out of the doldrums he had warned it was backing into.

His sometime adversaries and allies may now admit that in our current fraught economic and social conditions, he is the prescription that the times warrant.

Note: Razak Baginda’s Interview in the Malaysian Insider: .

[Razak said, …” I have said this hundreds of times, I don’t even know how to say it anymore. Najib never knew the woman. Najib is innocent. If you all think there is a connection, where is the evidence? Let’s not forget that in any situation like this, there are a lot of opportunists out there. We have seen this so many times.”]

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

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.