Lee Kuan Yew was sui generis

March 29, 2015

Lee Kuan Yew was sui generis

by Terence Netto@www.malaysiakini.com

Asia’s generation of independence-gaining leaders knew little or nothing of how to get the economies of their countries going.

Lee-Kuan-Yew India’s Jawarharlal Nehru, Indonesia’s Sukarno, and Vietnam’s Ho Chi Minh succeeded in freeing their countries from the colonial powers, but their triumphs were Pyrrhic. The euphoria of independence turned out to as evanescent as morning dew, their countries falling away after gaining freedom, stymied either by the ethnic and religious hatreds that had long bedeviled them, or hobbled by the choice of growth-stifling economic systems, or worse, caught up as proxies in the Cold War rivalry between the West and the communist bloc.

Lee Kuan Yew and Singapore – the names are interchangeable as no founding leader has stamped his mark on his country like Lee did – avoided the fate of these countries and their larger-than-life progenitors.

From scratch in 1959 when Singapore became self-governing, Lee built up the city-state to become an an economic and technological cynosure. He did this through the practice of a capitalism that emphasised no corruption, hard work, meritocracy, low taxes and high savings. And he held the line on the utility of the English language for upward mobility.

The upshot was phenomenal: Singapore rose from an economy whose gross domestic product (GDP) was US$427 per capita in 1960 to US$55,000 in 2013. This increase is stupendous by any measure, more so considering Singapore is without natural resources save a good harbour.

Lee achieved this transformation via methods that scorned the Western view that democracy was the last word in human political development. He was harsh on opponents, jailing them without trial if not bankrupting them with libel suits, and his view of the press was that they should not presume to tell him how Singapore should be governed.

After the fall of the Berlin Wall in 1989, the historian Francis Fukuyama espoused the theory of the “end of history” owing to the triumph of “liberal democracy”. Fukuyama said that the natural wish of humans to be free from repression would eventuate in their choice of a liberal democratic system of governance.

Fukuyama saw that communism’s fall cleared the way for the flowering of a system that believed in limited government, respected individual rights, allowed for free and fair elections, and encouraged governance by informed consent of the governed.

That this theory does not enjoy traction in Confucian societies was suggested, first, by Park Chung-hee in South Korea and, then, by Lee Kuan Yew in Singapore, and, later still, by Deng Xiaoping in China.

A Preference for order over disorder

The reason why an authoritarianism that was not draconian fostered growth and order in these Confucian societies was because of the ethos inculcated by the ancient Chinese sage which instilled a preference for order over the disorder of uninhibited political competition, placed family and social obligations to the kin group above individual rights, and encouraged respect for authority if it was reasonably exercised.

In Confucian societies, a quasi-authoritarianism is no reason for resistance, provided there are opportunities for people to become rich, educated and industrious. Rights are secondary to obligations and order is valued more than individual fulfillment.

Lee Kuan Yew understood this ethos which was why he always maintained, in the face of criticism of his heavy-handedness, that he knew his society better than the critics of his methods. Implicit in Lee’s approach was his confidence that Singaporeans would  applaud his quasi-authoritarianism when they see its economic outcome: the transformation of a resource-bereft and vulnerable geographic crossroads into a world hub of transport and trade. Singapore’s GDP was US$1 billion in 1960; in 2013 it was US$298 billion.

SingaporeSingapore’s spectacular economic growth has made Lee’s advice on how to govern much sought after, especially among leaders of countries keen to transform their backward economies.

India has declared a day of national mourning and its Prime Minister, Narendra Modi, a devotee of the economic-growth-as-panacea school, will attend Lee’s funeral in the island-state today, surely a mark of his determination to emulate the Singaporean model of development.

Singapore’s phenomenal economic progress gave Lee the platform to advice even the big powers on matters of geopolitical and strategic interest, with the former US President Richard Nixon an admirer who wryly observed that the “engine was too big for the boat”, by which he meant Lee’s intelligence and ability ought to have had an impact on a widely beneficial scale than just the tiny island he led from obscurity to economic powerhouse.

This brings us to the inevitable question of the what-might-have-been had Lee and Singapore not been, in his words, “turfed out” of Malaysia in 1965. The whole question of Singapore’s merger and separation from its 1963 federation with Malaya and Borneo is so vexed a matter that even after a half-century the subject is suffused with emotion that hinders objective assessment.

It will require a historian of Olympian detachment to unpack the tangled strands and allow the judgmental chips to fall where they may. If history is the record of what one age finds worthy of note in another, that definition implies a changing standard which may not be as impressed with Lee’s achievements as they presently rate on history’s scales.

Late 20th century and early 21st century truisms about economic-growth-as-panacea may not hold for long as the idea of progress takes in a more comprehensive view of human beings finding fulfillment in civil society, unhindered by any idea that the state knows best.

If standards come to that, Lee Kuan Yew’s ratings will waver from its present lofty levels, but then he may contend that history’s scales are fairly bogus in any case and that what matters are the here and now.




Follow the Money

March 24, 2015

Follow the Money

by Tricia Yeoh@www.thesundaily.com

DG of Bank NegaraAT its annual report launch, Bank Negara Deputy Governor gave a relatively healthy assessment of the country’s economy. So glowing was the report, however, that several members of the audience felt compelled to ask his opinion of 1MDB, the proverbial elephant in the room.

He essentially responded by saying that “sovereigns” (meaning government-backed entities) are not monitored as closely as are “corporates” (meaning the private sector) in their respective issuance of bonds and similar financial instruments. This is presumably because a bond or debt obligation issued by a government authority is usually assumed as low-risk, given that they are backed by the taxing power of the said government.

What Bank Negara said was essentially correct, since its responsibility is limited to ensuring the stability of the Banking Sector. As long as 1MDB – which is a government entity, given it is wholly owned by the Finance Ministry – is able to pay back loans owed to local banks (like Maybank and RHB), then the Banking Sector is safe. But ay, there’s the rub.

As at March 2014, 1MDB’s accounts showed a whopping debt of RM41.9 billion. (Which is, by the way, just short of the entire 2015 budgetary allocation to the country’s development, totaling RM50.5 billion. It is also eight times more than what is allocated to safety and security in 2015, totalling RM4.9 billion).

Ultimately, if it is unable to pay off its multiple loans owed both locally and abroad, does it not mean that the government would have to cough up the sum? And this is already happening as events continue to unfold on a daily basis.

Most recently, Putrajaya confirmed RM950 million was given as a standby credit for 1MDB, which is basically when a fixed amount of credit is made available to the borrower as and when required for a given period of time. These are monies that could have been put to better use, surely.

Tengku Razaleigh HamzahWorse, frustration with the powers that be will surely grow if the additional RM5.6 billion revenues collected from the Goods and Services Tax (GST) that is about to be implemented are shown to be used for such unpalatable purposes. Just this week, former Finance Minister Tengku Razaleigh Hamzah said in Parliament that the people had the right to know if GST “benefited the country or (would be) used only to pay the interest to debtors and bondholders”.

In one of the many conversations I had recently on the “1MDB losses”, a friend reminded me of a joke that is hauntingly relevant. A woman invested RM100 into the bank, expecting her funds to be safe and secure. Upon finding out the money was gone, she screamed hysterically to the bank officer, “You’ve lost my money!” to which he politely replied, “Your money is not lost, ma’am. It’s just somewhere else.” Likewise, the question we ought to be asking ourselves is: Where did the money go?

That is something the Auditor-General’s office will have to answer as they dutifully scrutinise the accounts of the much talked-about entity over the next few weeks.

Even if some of these funds can be restored, the concern still remains: How should government finances remain sustainable over a long-term period? IDEAS, in a policy paper released this week makes some suggestions, pertaining to an existing but very little-heard of national trust fund called the Kumpulan Wang Amanah Negara (or KWAN).

The KWAN was set up in 1988 with the original intention of saving for the future, especially from our depleting national resources. However, its total wealth for all of its 26 years of existence comes up to only RM9 billion. This is a relatively meagre amount when compared with the Norwegian Global Pension Fund, which has more than double that amount despite having started later than the Malaysian KWAN. In fact, it only represents 1.5% of the total petroleum revenue accumulated over the last 26 years.

Although our dependence on the oil and gas sector has fallen slightly over the last few years, its revenues still contribute some one-third to our overall national income. Credit is due to the non-resource sectors (manufacturing and services), given their continual growth as a proportion of total GDP, which is encouraging.

But given the spendthrift tendencies of our government of late (our operational expenditure expanded on average 11% annually from 1971 to present, and more alarmingly by more than 20% in 2011), it is important to strengthen existing infrastructure.

For instance, we propose that the KWAN governance mechanism needs to be made much more robust in the way the fund is managed, how deposits and withdrawals are regulated, and finally, how it is accountable to taxpayers.

Some of the key disciplines of a well-governed fund (as outlined by the Natural Resource Governance Institute and the Columbia Centre on Sustainable Interest) are that it should have clear and well-enforced objectives, fiscal rules, investment rules, division between the authority and various managers, and finally have regular and extensive disclosure to the public whilst ensuring independent oversight bodies exist.

Many of these governance mechanisms do not exist for the KWAN. For instance, the deposit and withdrawal rules are too general and need to be more quantifiably specific. Other oversight agencies ought to be brought in; currently only the Finance Ministry and Bank Negara are involved – parliamentary committees should also be included as an additional measure.

Finally, its reports should be publicly downloadable online and a website should be dedicated to publish all relevant details of the fund.

It is not just 1MDB or Pembinaan PFI or KWAN that must be examined closely; all other state-owned enterprises and funds (and there are many) ought to be monitored with a fine-tooth comb. The adage is true: it really is your and my money. As taxpayers, we should demand nothing less.

Tricia Yeoh is the Chief Operating Officer of a local, independent think-tank. Comments: letters@thesundaily.com

After 30 years of Hun Sen, where is Cambodia

March 19, 2015

After 30 years of Hun Sen, where is Cambodia

Hun Sen2015 marks 30 years in power for Cambodian Prime Minister Hun Sen, who became prime minister in January 1985 at only 33 years old. He has consolidated his power base through charismatic leadership, paternalism, coercion and a system of patronage.

There are mixed views on Hun Sen’s leadership. It is essential to understand the national context to conduct a well-balanced assessment of his achievements and shortcomings. Cambodia is a fragile country after nearly three decades of war and conflict. Social and political distrust, a potential source of political instability, remain deeply embedded in Cambodian political culture and society.

For Hun Sen, peace and security and socio-economic development occupy center stage in Cambodia’s domestic politics, with democracy and human rights coming in second.

The premier is one of the main architects of peace-building in Cambodia. His political career started with the Kampuchean United Front for National Salvation which, with the support of Vietnam, toppled the Khmer Rouge regime in January 1979.

At the end of the 1980s, as similar economic reforms were being pursued in Vietnam and Laos, Hun Sen chose to follow the free-market economic model. But Cambodia took a different political reform path from that of Laos and Vietnam after the 1991 Paris Peace Accords. Cambodia adopted a liberal, multi-party political system, incorporating the principles of democracy and human rights in its 1993 constitution.

Hun Sen has steered Cambodia towards peace and development, helping overcome the most difficult period in the country’s history, which included both the civil war and subsequent factional power struggles. In the late 1990s, he managed to dissolve the remaining Khmer Rouge forces and reintegrate them into the Cambodian Royal Armed Forces, marking the end of the civil war.

Pochentong International AirportPochentong International Airport, Phnom Penh

In the last two decades, Cambodia has enjoyed an average of 7.7 percent GDP growth. Cambodia is classified as a ‘high growth country’ by the World Bank. The poverty rate fell from 47.8 percent in 2007 to 18.9 per cent in 2012. But the development gap between urban and rural areas remains wide. In 2011, 91 percent of poor households were living in rural areas. Cambodia’s poor households are vulnerable to an array of shocks including natural disasters and water, food and energy security crises.

Hun Sen’s governance strategy revolves around three factors: political stability, development and promoting cultural identity. His ambition is to transform Cambodia into a middle-income country by 2030, and a high-income country by 2050.

Still, the prime minister’s leadership and legitimacy were critically challenged in the July 2013 general election when his Cambodian People Party (CPP) suffered a remarkable drop in popular support, losing 22 seats to the opposition Cambodia National Rescue Party (CNRP).

One of the reasons for falling support for the CPP is the chronic and rampant corruption within the government and the party. Corruption is the root cause of social injustice, human rights violations, the culture of impunity, the mismanagement of natural and state resources, widening income inequality, and the downgrading of social ethics and values.

Acknowledging these problems, Hun Sen set a comprehensive reform agenda after the 2013 elections. But concrete outcomes have yet to be seen. To fulfil the agenda and build his own legacy, Hun Sen must make major institutional changes. He must be innovative and consistent in fighting corruption and nepotism otherwise his reform policy will fail, further challenging his legitimacy and legacy.

Transformative and adaptive political leadership, effective and efficient bureaucracy, and popular support and participation are necessary if political and economic reforms are to succeed. Hun Sen’s government must further deepen the reform agenda by focusing on these three elements.

Hun Sen has, some say, adapted his leadership style too slowly to cope with Cambodia’s fast-changing social transformation. His authoritarian leadership is not popular, especially among young people. The majority of Cambodian youth aspire to change. At the party congress in February, CPP leaders added youth leaders to the Central Committee, resulting in 70 out of 545 members being under the age of 50, in a bid to gain support from Cambodia’s youth.

Hun Sen also takes a pragmatic approach towards foreign affairs. His core foreign policy objectives are to maintain national peace and security, further economic development, reduce poverty, and raise Cambodia’s image and prestige.

While he is pushing to diversify Cambodia’s strategic and economic partners, but there is currently still a tilt towards China. Economic and cultural ties define Cambodia–China relations. China is now Cambodia’s largest source of both foreign direct investment and development assistance.

Phnom PenhPhnom Penh Today

Cambodia has also engaged in promoting global peace and stability, sending more than 1,700 peacekeepers to different parts of the world under the UN framework and is actively involved in the global campaign to end landmines. It is taking a leading role in promoting the ‘responsibility to protect’ in Southeast Asia, and intends to build stronger partnerships with ASEAN and the UN to build the state’s capacity to protect its population from genocide and crimes against humanity, and from their incitement.

In the 30 years Hun Sen has been in power, Cambodia has made significant progress but key challenges remain.

Vannarith Chheang is lecturer of Asia Pacific Studies at the University of Leeds. This articles originally appeared n the East Asia Forum, a platform for analysis and research at the Crawford School of Public Policy at the Australian National University



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IMF fears emerging markets instability

March 18, 2015

IMF fears emerging markets instability


The Head of the International Monetary Fund (above) warned on Tuesday that emerging markets are set to face a renewed period of economic instability when US interest rates rise this year, forecasting a repeat of 2013’s damaging “taper tantrum” episode of capital flight and rapid currency depreciation.

The remarks by Christine Lagarde, given during a speech in India, come one day before Federal Reserve chairwoman Janet Yellen is expected to signal an end to the Fed’s policy of low-rates guidance on Wednesday, with global investors bracing for an initial rise in US rates as early as June.

The IMF chief said she feared that negative “spillover” effects from these increases would lead to a re-run of the crisis that hit developing economies such as India and Turkey nearly two years ago, following hints from then Fed chair Ben Bernanke about an early end to the institution’s bond purchasing programme known as quantitative easing.

“I am afraid this may not be a one-off episode,” Ms Lagarde said. “The timing of interest rate lift-off and the pace of subsequent rate increases can still surprise markets.”

Ms Lagarde spoke at an event in Mumbai alongside Reserve Bank of India governor Raghuram Rajan, who has warned repeatedly about the dangers to developing economies of ending loose monetary policy in America, Japan and other industrialised economies.

Developing economies have seen a surge in capital from the industrialised world over recent years, receiving $4.5tn of gross capital inflows between 2009 and 2012, according to IMF data, or half of all global capital flows during that period.

Ms Lagarde also warned that emerging economies faced a second risk from the recent strength of the US currency, with indebted companies that took advantage of low rates to borrow in dollars facing sudden and steep jumps in debt servicing costs.

India’s corporate sector, which is already dealing with concerns over corporate indebtedness and weak bank capitalisation, was “not immune to this vulnerability”, she said, noting that dollar denominated corporate debt had risen “very rapidly, nearly doubling in the last 5 years” to $120bn.

“The appreciation of the US dollar is also putting pressure on balance sheets of banks, firms, and households that borrow in dollars but have assets or earnings in other currencies,” she added.

Facing these twin threats, Ms Lagarde urged emerging market governments to enact economic reforms to raise growth, improve their current account positions and gradually liberalise financial markets.

The IMF head also called on emerging market central bank governors to prepare emergency measures to support under-pressure currencies and companies struggling with debt repayments.

“Temporary — though aggressive — domestic liquidity support to certain sectors or markets may be necessary, along with targeted foreign exchange interventions,” she said.

In December the Bank for International Settlements warned there was a risk of a potential repeat of the late-1990s emerging market crises because international banks had since 2008 increased cross-border lending into emerging economies.

By the middle of last year, according to the BIS, lending into emerging economies had risen to $3.1tn, most of it denominated in dollars.


1MDB is in financial distress–A.H.Manaf

March 17, 2015

1MDB is in financial distress: The Evidence is Clear for All to see, only Some don’t

by A H Manaf@www.themalaysianinsider.com

1MDB-The Scandal

In November 2014, I penned an article calling for the Auditor-General to conduct a public audit of 1MDB, highlighting the warning signs and “alarm bells” which alert us to the case for investigation.

Since then, events have unfolded rapidly and I wish to update my opinion based on subsequent reports that have come to light.

1. 1MDB took up a US$1 billion loan in October 2014 (reported in Reuters IFR). This was reportedly a one-year bullet loan with repayment due in full in September 2015 – we do not know the use of proceeds, assuming they were not utilised to reduce existing debt, the company has now incurred a substantial addition of RM3.7 billion in short-term liabilities (in this case due in six months) to its previous debt picture of RM42 billion as at March 2014.

Ananda KrishnanAnanda Krishnan

2. Repayment of an existing RM2 billion bridging loan was postponed from November to December and finally January 2015 culminating in reports that the loan was settled by businessman T. Ananda Krishnan.

Confusing statements have been issued as to the source of the loan repayment. However, there are strong indications in the FY14 accounts as to how management planned to repay this loan.

As explained in the notes to the accounts (pg 170), the RM2 billion bridging loan is to be repaid with either proceeds from a proposed IPO or from an equity commitment by Tanjung. The latter is described as “a Subscription Agreement with Tanjung under which Tanjung agreed to subscribe for equity in PIH of up to RM2.0 billion on the occurrence of certain events… which proceeds shall be used solely for the repayment or prepayment by PIH for any amount owing under the RM5.5 billion loan facility”. As we know, the IPO slated for calendar year 2014 never materialised.

3. Confirmed reports that the government provided a “standby credit” of RM950 million of which more than two-thirds have been drawn in the short duration of two weeks following the granting of this credit.

I do not distinguish between “standby credit” and “loan” when a substantial proportion has been immediately taken up. In view of the haste with which the credit was approved and subsequently disbursed it would be more appropriately defined as an “emergency state-funded loan”.

4. Surprisingly candid statements by Finance Ministry officials which Ahmad-Husni-Hanadzlahconstitute a public admission of 1MDB’s precarious financial position: Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah described the company’s finances and “gearing ratio” as “unsustainable” necessitating “an exercise to rationalise and consolidate its assets”. In other words, 1MDB’s excessive debt levels compel the sale of assets to service and repay these debts.

5. Reports that 1MDB is unable to proceed with the 3B power project. More recently, the MOF refers to the company’s intentions to “transfer the project” and other reports indicate TNB will step in as a partner.

6. The sudden resignation of 1MDBs CEO whose replacement, Arul Kanda, announced stark changes in business direction under the guise of “strategic financial review” involving the sale of assets, including “land assets which may be sold outright or partly sold through joint ventures”.

Riza and Jho LowWhat is their role in 1MDB?

In simple terms, 1MDB’s proposal to “monetise” assets means it is embarking on the sale and liquidation of company assets, Husni’s subsequent announcement that they expect RM26bn of debt to be settled through “monetising” land banks and future property earnings indicates the asset sale will be extensive.

All of the above point to a clear picture – what we are witnessing here is a company in acute “financial distress” suffering from unsustainable levels of “corporate debt overhang”.

Financial distress is implicated by the company’s inability to meets its financial obligation in a timely manner, in the case of 1MDB a sovereign entity it appears to only meet its minimum obligations with assistance from i. government-funded emergency loans ii. funds extended by a third-party whose legal obligations are referred to in the notes to the accounts.

The reported problems with the 3B project are classic symptoms of a company in financial distress – it is in the unenviable position of having to reject lucrative investment proposals because i. its extensive debt levels render it unable to raise additional funding ii. a substantial proportion of its current revenues and cash flow goes to servicing existing debt.

As reported, 1MDB has had to call off a RM8.4 billion sukuk financing earmarked for the 3B project (Reuters).

“Corporate debt overhang” often leads to a vicious downward spiral. In 1MDB’s particular case, the loss of 3B has serious repercussions on its short-term financial position, too, because its debt reduction proposal is based on the IPO of its energy subsidiary Edra (claimed by the MOF to be slated for June or July 2015) which presumably would be significantly enhanced by the inclusion of a lucrative new power project.

Other symptoms of “corporate debt overhang” include excessive cost of borrowings when a company struggles to raise further financing to fill its operating gaps.

The notes to 1MDB’s FY14 accounts detailing interest on borrowings (pg 122) show this to be the case: for example a RM1 billion “junior Islamic debt” drawn down in 2014 incurred a whopping annual interest rate of 18.1%.

Therefore, I must disagree with the Second Finance Minister’s contention that the recent emergency government loan to 1MDB “does not in any way constitute a bailout” because bailouts are only extended to “a failed organisation”.

He added that “the company was facing cash flow problems not due to management problems”. Successful companies plan their business operations, funding requirements and timescales responsibly, regardless of any possible returns that lie in the future, a company’s failure to plan to meet its short-term obligations invariably leads to bankruptcy.

This brings us to my next point about “going concern”, the fundamental principle upon which financial statements are prepared.

With the next financial year end March 2015 only two weeks away, I fail to see how 1MDB’s external auditors Deloitte can continue to rely on the appropriateness of this assumption without an explicit guarantee by the company’s shareholders, the MOF, that it will meet the company’s financial obligations.

In short, 1MDB can no longer be considered a “going concern” (an entity ordinarily viewed as continuing in business for the foreseeable future) without financial support from the Ministry of Finance i.e. the government.

I highlight this point of interest in view of widespread public concerns about possible “government bailouts” of 1MDB. Indeed in order to sign off the accounts of the company on a going concern basis, the external auditors would expect a letter from the shareholders, MOF, stating its explicit commitment to provide the necessary financial support to 1MDB.

The alternative would be for the financial statements to be prepared on a non-going concern or “break-up” basis.

Parallel to these developments is the startling revelation in blog and press reports claiming 1MDBs links with fraudulent and criminal activities (The Sarawak Report, The Sunday Times UK. The latter claims to have “seen” relevant email evidence).

In my previous article, I analysed publicly available information which signals “alarm bells” or “red flags” suggesting the possibility of irregular or fraudulent activities indicated by 1MDB’s frequent changes in external auditors, multiple and inexplicable late filings, unusual revaluation policy which served to mask its balance sheet insolvency, as well as the mysterious circumstances of the origins of the notorious US$2.3 billion Caymans funds.

ambrin-buangThe AG: His findings on 1MDB eagerly awaited

Significantly, the revelations in these blog and press reports have culminated in an instruction to the Auditor-General (AG) to conduct a public audit of 1MDB, an engagement I had called for more than four months ago.

Notwithstanding the possible conflict of interest arising from the instruction given by the Prime Minister who is also the Finance Minister and Chairman of 1MDB’s advisory board, I welcome this move of a public audit and hope the AG will undertake his heavy responsibilities with independence and credibility.

Critically the task requires a forensic audit (a specialised branch of audit which plays a crucial role in investigating suspected financial fraud and misappropriation of assets) with assistance from external specialist forensics if necessary.

For a methodical approach demonstrating credibility to the public, deadlines and time frames should be established, as well as clear terms of reference for the audit which should be made publicly available. These are crucial to allay public fears about the efficacy and intent of the public audit. The terms of reference should include but not be confined to the following:

  • determine adherence to principles of corporate governance by 1MDB’s board and management;
  • assess all evidence to determine any incidences of corporate malfeasance;
  • determine the authenticity and validity of a number of 1MDB’s controversial transactions and the extent of potential prejudice the company may have suffered through such transactions .This includes the joint venture with Petrosaudi; portfolio investment in offshore Caymans funds; the bond issue via Goldman Sachs; the option agreement with Aabar and compensation thereof relating to the proposed IPO; the joint venture with Aabar undertaken by 1MDBs former subsidiary SRC involving RM4 billion EPF funds, including investigating the reasons for and circumstances surrounding the transfer of the company’s ownership to the MOF; and,
  • quantify the magnitude and timing of 1MDBs current obligations and likely restructuring and financing cost.

All of the above will necessitate extensive work to (i) trace the flow of funds and other assets. (ii). construct a detailed chronology in order to understand and trace complex sequence of events of the company’s various transactions iii. identify relevant persons to interview, and conduct and document the interviews without fear or favour.

The interviewees should include current and previous management, current and previous members of the board of directors and advisory board, current and previous external auditors, any other persons including external advisors and associates who may be directly involved in the company’s transactions under investigation and any other persons who may be directly implicated by corporate malfeasance and fraudulent activities.

In view of the international nature of the company’s transactions and flow of funds and assets, the AG needs to assess the possibility of early referrals to criminal authorities to facilitate cross-borders investigations.

Assistance from and cooperation with PDRM, its overseas counterparts, Bank Negara and other relevant authorities will be essential.

In other words Tan Sri Ambrin Buang, good luck! The nation is depending on you to conduct this complex and critical undertaking with courage, integrity and professionalism.

* A.H. Manaf reads The Malaysian Insider.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.



Wise Up Mr. Prime Minister and Governor Zeti

March 13, 2015

Wise Up Mr. Prime Minister and Governor Zeti

by Ng Kee Seng


Zeti and NajibNajib and Najib walking on a tight rope

QUICK TAKE: Much have been written and debated about the fast weakening of the Ringgit in the global forex markets but the federal government has been oblivious  with regard to the concerns raised by Malaysians.

Have Prime Minister cum Finance Minister Datuk Seri Najib Razak and Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz responded with clarity and seriousness on the Ringgit’s free fall?  No.Thus far, they have just provided lip-service assurances that “all is dandy” and that Malaysians have nothing to worry about.

Of course, the duo have nothing to worry about as they continue to warm their chairs in their ivory tower. Either they are just plain incompetent about economics and the effects on the man-in-street or just couldn’t-care-or-less.

If they are competent and truly caring, they would not just continue to pay lip service or use semantics to try to cajole Malaysians who continue to struggle against inflation to put food on the table daily for their loved ones.

By April 1, and it is no April Fool’s joke, when the Goods and Services Tax (GST) hits Malaysians and the country, the rural and urban poor will not only face economic and financial nightmares, even the middle-income Malaysians and the young executives who joined the workforce in the last decade will suffer.

Isn’t it clear to Najib and Zeti that Malaysia’s ballooning economic and financial woes afflicting Malaysians cannot be dealt with effectively without checking the slide of the Ringgit? No amount of reduction in oil prices or electricity tariffs is going to reduce the cost of goods and services i.e the cost of living.

Have Najib and Zeti even tried to explain in detail and seriously why is the Ringgit weakening so rapidly? And have they really explained the country’s monstrous federal debt?

Global oil prices started to slide rapidly in the Q4 last year and  the Ringgit has been the worst performing currency in Asia against the US dollar or greenback. The Ringgit hit a six-year low to close at 3.60 to the greenback on January 20, the lowest since April 2009.

Remember the fear, worries, economic and financial woes when the Ringgit plunged to RM3.80 to the dollar? That happened after then Finance Minister and Deputy Prime Minister Datuk Seri Anwar Ibrahim was sacked by then Prime Minister Tun Dr Mahathir Mohamad in 1998.

The Ringgit has been sliding, and continues to slide in the global forex since crude oil prices began their plunge in the second half of last year, losing some 6.5 per cent of its value.  Has the UMNO-led Barisan Nasional federal government learnt anything from the global financial crisis which began with the US subprime crisis six years ago that triggered a banking crisis and led to an overall global slowdown which took its toll on export dependent nations.

With the Ringgit having depreciated significantly against the greenback, aren’t Najib and Zeti worried of another 1997-1998 Asian Financial Crisis or another 2008–2009 global financial crisis?  Aren’t Najib and Zeti worried about the Ringgit hitting RM3.80 against the greenback? Aren’t Najib and Zeti worried about Greece II and its potential effects on the global economies?

And all Zeti has to say to Malaysians is: “The ringgit’s weakness does not reflect Malaysia’s current fundamentals which are still strong.”

Najib and Zeti can say and claim all they want about how all is fine and dandy in Malaysia but they are surely not fooling anyone sweating out in the street with butter and bread issues. And when the economic and financial squeeze becomes unbearable, guess who will lose their jobs?