Nazir Razak ready to leave CIMB Group?


June 30, 2018

Nazir Razak ready to leave CIMB Group?

http://www.malaysiakini.com

When an Outstanding Banker like Nazir Razak decides to leave before his term of office ends, there’s bound to be speculation. In this particular case, the man who is at the center of this Star newspaper report happens to be  the younger brother of  former Malaysian Prime Minister Najib Razak.

 

Image result for CIMB Banking Group in Cambodia

“In six years, we have expanded from two branches to 12 branches as well as 14 off-site self-service terminals. We presently have over $450 million in assets, making us the 13th largest commercial bank in Cambodia. We intend to be in Cambodia for the long term and we feel it is important to grow sustainably and to invest in developing our local talent pool. Regionally, CIMB Group is ASEAN’s fifth-largest universal bank. Over the past decade, the group has been one of the fastest-growing banks in the region”. Bun Yin, CEO of CIMB Bank, Cambodia

 

A Cambodian friend of mine who heads CIMB Bank operations (pic above) in Cambodia alerted me of this possibility a couple of days ago. My response was that he should not listen to rumours.  Chairman Nazir is well known in the Kingdom where CIMB Bank operates a very successful and profitable network of bank branches.

I am not privy to what is happening in the Malaysian corporate scene post May 9 GE-14. I have been away from the country since 2014.  But I hope that the impending departure of Chairman Nazir has nothing to do with politics.  Ideally, I would like him to either remain with the CIMB Group, or be given some key appointment elsewhere so that his talent,  professional  competence, reputation for integrity, and wide experience can be used for  the benefit of the New Malaysia.–Din Merican

 

Image result for CIMB Banking Group Chairman Nazir Razak

CIMB Group chairperson Nazir Razak will leave the banking group when his term ends next March, reported The Star today.

The youngest brother of former Prime Minister Najib Razak has informed the CIMB Board of Directors that he will not seek re-election as chairperson, a post he has held since 2014.

He has also served as CIMB chief executive officer (CEO) for 15 years. “He (Nazir) has told the board that he will leave and not seek re-election. The board is already searching for a successor,” said the source.

Malaysiakini has contacted Nazir for his response. Speculation has been rife that Nazir could leave earlier than March. The source however said thus far, there has been no indication of him being “told to go”. “He has not been called in by the Council of Eminent Persons (CEP) or anyone else,” the source was reported as saying.

 

The CEP is headed by former Finance Minister Daim Zainuddin, and was set up to advise the new Pakatan Harapan government on how to achieve its economic promises in 100 days as per its election manifesto.

CEP is also looking into the performance of government-linked companies (GLCs) and reviewing the appointments of key executives. Several CEO at GLCs as well as government-linked investment companies (GLICs) have already vacated their positions following the change in government.

Nazir is prepared to go earlier than the expiry of his term if he is told to do so, according to another source.

Complete Overhaul of Bank Negara is required


June 12, 2018

Complete Overhaul of Bank Negara is required

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Reform is not just about the legal framework in which the Bank operates, it is a wider matter of how the Bank is managed. It should be independent and apolitical since it is the custodian of our reserves.

COMMENT

By Geoffrey Williams@www.freemalaysiatoday.com

The recently announced Cabinet decision to accept Muhammad bin Ibrahim’s offer to step down as the Governor of Bank Negara Malaysia offers the new Pakatan Harapan (PH) government an early opportunity to review and reform Malaysia’s monetary system and restore confidence which has been dented by recent events. Personnel turnover like this is often seen as an indicator that a central bank is not independent and that the Governor and senior managers are hired and fired at the whim of the government.

Reform is not just about the legal framework in which the Bank operates, it is a wider matter of how the Bank is managed. This requires a review of the structure, conduct and performance of the Bank to manage perceptions amongst stakeholders outside of the Bank and particularly outside of Malaysia in the international financial community.

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One of the first reforms necessary is to end the Bank’s involvement in non-core activities. The Financial Education Hub (FEH), for example, which involved the purchase of 56 acres of land from the Government is a prime example. The Bank’s involvement in this project is at the core of the controversy surrounding the Governor’s resignation.

Both the Governor and the Bank in its statement of 24 May 2018 have made clear that the transaction complied with all the governance requirements and relevant laws that govern the Bank but questions remain as to whether these regulations are sufficient to govern such transactions in the wider circumstances of the financial system and whether a central bank should be doing this sort of thing at all.

The specific functions of a central bank are to issue currency, manage the monetary system and national reserves, set monetary policy and act as the government’s banker and “lender of last resort,” anything else is non-essential. Bank Negara has enough on its hands with these core functions and to involve itself in property development, financial education and estate management has proved a step too far. Apart from distracting the Bank’s managers from core functions, activities of this type create the perception that the Bank’s decisions in financial regulation and supervision might be influenced by its own real estate investments and worse, that its independence might be compromised if these investments are related, directly or indirectly, to the financing of other government projects, such as 1MDB. There is an urgent need to end this perception by placing activities such as the FEH into a separate independent organisation and to change governance systems to avoid such issues in the future.

A second and related reform is to separate financial supervision and regulation from the Bank. In Malaysia, financial regulation is carried out by Bank Negara under the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA). These consolidate the supervision and regulation of the structure, conduct and performance of banks, insurance companies and other financial services providers into one authority. This is an onerous job and current international best practice suggests that it may be better to separate these functions into independent specialist authorities accountable to parliament not to the Cabinet or Prime Minister.

The FSA also gives the Bank wide powers which allow the Bank to assume control over the whole or part of the business, affairs or property of financial institutions under its supervision. This includes the power to manage such businesses or appoint any person to manage them on behalf of the Bank. These are wide powers which are arguably necessary in extreme circumstances but the exercise of such powers must be conducted with transparency, independence and accountability to parliament rather than to the government as is currently the case. This aspect must be reviewed in any reform of the FSA.

A third area of reform relates to the Monetary Policy Committee (MPC) which is responsible for setting interest rates. Although in principle the MPC is independent, which is considered essential to avoid manipulation of interest rates for political purposes, the current MPC has six internal officers of the Bank appointed by the Bank itself and two external members appointed by the Finance Minister. The balance of internal and external members should be reviewed and greater transparency in the appointment of members, as well as the terms of their membership, should be introduced including scrutiny by parliament.

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There also needs to be greater clarity on how the MPC decides on monetary policy and particularly how the forecasts are made so that the process and underlying assumptions of these forecasts, on which many government and private sector decisions rely, can be assessed independently. We also need to see the publication of detailed MPC minutes, as is routine for the MPC at the Bank of England, to take us beyond the current monthly Bank Negara Monetary Statement which amounts to little more than a press release with little or no substantive analysis.

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Recent events at Bank Negara have caused concern in many quarters and raise issues of the independence of Malaysia’s central bank at an operational level. Confidence, independence and credibility are essential to underpin the integrity of any financial system and when questions arise, such as those currently affecting Bank Negara, they are not solved simply by replacing the leaders and putting the, “right people,” at the helm. A thorough review and reform of monetary policy institutions and how they operate is needed and it is timely for the new government to begin this process.

Professor Geoffrey Williams is a Professor at ELM Graduate School at HELP University. He was also a member of the Bank of England Commission of HM Opposition (1999-2000) in the United Kingdom.

The views expressed are those of the author and do not necessarily reflect those of FMT.

It is time we act as Malaysians


June 8, 2018

It is time we act as Malaysians

by Dharm Navaratnam

https://www.malaymail.com

Image result for the hibiscus revolution

Malaysia’s National Flower–Symbol of Unity and Racial and Religious Harmony

It has been almost a month since the new Government of Pakatan Harapan has been in power and what a month it has been.

Almost immediately we have seen sweeping changes. For a start, meritocracy seems to have made a startling comeback. The initial cabinet of 10 has seen a multiracial makeup, where even such important portfolios of Finance and Communication and Multimedia, have been given based on merit and not on racial or religious makeup.

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We are Malaysians united for a better future

The position of Attorney General is also held by a non-Malay, the first time in more than 40 years. So while many have assumed that certain positions must be filled by a particular race, nothing in our Constitution alludes to that.

Corruption is being dealt with swiftly. Many prominent civil servants have been removed. The once toothless MACC seems to have found their teeth and are carrying out investigations on many prominent personalities including our former Prime Minister and his wife.

The level of  corruption is almost stupefying with new details of billions of ringgit squandered being announced with alarming frequency. It has been said before but bears repeating that what is indeed almost sickening is the fact that every hierarchy of the previous Barisan Nasional government did nothing to stop this corruption.

Were they all in cahoots or were they just too afraid of their own rice bowl? Was there really not even an iota of integrity in these politicians ?  How much money did members of our previous government siphon off?

There has been a massive shakeup in government institutions with the most recent being the resignation of the Governor of Bank Negara. Transfers or resignations include the Treasury Secretary General, the Chairman of Felda, the chairman of Tabung Haji, the Chief Commissioner of the MACC and the Chairman of the Higher Education fund. These resignations lend credence to the assumption that there was definitely corruption of some form or fashion.

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We reject this corrupt couple–Najib Razak and Rosmah Mansor

The former Prime Minister is crying political revenge which is really ironic when you consider the sacking of the then DPM, four ministers and also A-G Gani Patail when questions were raised about 1MDB back in July 2015.

To compound this further, some previous ministers are still trying to defend the previous regime’s  corruption. The fact that there are people still trying to justify and defend it is even more scary as they must brazenly think that we, the rakyat, are stupid.

You even have previous ministers accusing the current government of politics of hate when they were the ones who used to brandish a ‘keris’ and never took action when threats of another May 13th were made by UMNO extremist party members.

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Telecom Malaysia CEO and Astro CEO quit

The dominoes have started to fall in the corporate world as well where the CEO of Telekom Malaysia has resigned.  You have to wonder what is going through the minds of all the other CEOs of GLCs who made a video where they were singing the BN election slogan.

Freedom of the media has suddenly taken centre stage and I believe many newspapers and alternative media are having trouble coping with the amount of information that our  new Ministers are giving out.

There seems to be openness, honesty, transparency and accountability.  There also seems to be a willingness to accept criticism.  Something that was sorely missing before. I am sure that many reporters are having trouble digesting and filing reports with sufficient detail.

Such has been the level of reporting over the years that has been so controlled and so biased that many editors must surely be scratching their heads wondering how to report on certain issues.  The Government controlled media of TV1, TV2 and TV3 must also be going through a culture shock as those that were previously maligned or ignored are now part of the ruling party.

And the news is really happening fast and furious.  It’s almost a full time job following the news these days.  This seems to show that the new powers that be are doing their job.  With the availability of a much more free media, the Rakyat is closely monitoring the government.

The downside, however, is that almost overnight, everyone, especially on social media, seems to have become a financial expert, political analyst,  Harapan Manifesto expert and a Constitutional expert, among others.

This is where the state of our disunity springs to fore.  While everyone may be entitled to their own opinion, it has become a case where everyone believes that they are a subject matter expert when they are clearly not. Certain parties also seem to think that only their opinion is right.  When there is disagreement, caustic and vulgar language is used.

There has been the usual racial and religious outburst, except this time it is coming from members of the Rakyat and not the government. Why have a Chinese Minister of Finance? How can a supposed Islamist be the Education Minister?  How can the A-G be a non-Malay?

The Government has also stressed the importance of English. I wait for the outcry from detractors that Bahasa Malaysia should be the one and only language used.

To take it a step further, we have champions of race and religion calling for the defence of their rights. While these supposed champions are purportedly defending these rights, we have videos of some people calling for the death of members of their own religion just because they have a differing opinion. Death threats? Really? In the holy month of Ramadan?

Finally, there are police reports being made against every slight criticism or opinion that goes against the norm.  The police surely have more important things to do than investigate people for sedition. It is after all an archaic law that does nothing but stifle independent and free thought.

So while we have made great strides in changing our government through the ballot box, these are still early days.  The biggest problem is not with our government but with ourselves. We are to blame for the excesses and mismanagement that haves happened.

We have been so caught up with defending our own rights based on racial and religious lines. It is time for all of us to get rid of our disunity and to focus on what we really are. Malaysians. Until and unless we can do that, we will never get very far.

*This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.

DAIM: We need to cleanse the system


June 4, 2018

DAIM: We need to cleanse the system

https://www.thestar.com.my/news/nation/2018/06/04/daim-we-need-to-cleanse-the-system-the-only-way-forward-is-to-get-rid-of-the-corruption-in-the-natio/

IN an hour-long interview, Tun Daim Zainuddin shared his views on politics, besides giving an insight into his relationship with some Malaysian leaders. Excerpts of the interview:

The Star: What are the biggest challenges for the Council of Eminent Persons (CEP)? Are you confident Malaysia can overcome the challenges, particularly corruption?

Daim: Malaysia has no choice. Corruption has permeated all levels in the government. We are now at a crossroad. Our only way forward is to cleanse the system and get rid of this malady that is afflicting this nation. In order to do that, political willpower will be the main criterion for success. And I am confident that this new Pakatan Harapan Government has the gumption to do just that.

People are watching. The biggest challenge for the council is the time frame. We are working hard to develop the best recommendations for the Government to chew upon, based on the 100-day promises laid out in the Pakatan manifesto during the election campaign. Can we overcome major challenges? We have faced two major economic crises before (in 1987 and 1998), and we overcame them.

Can Malaysia get back the stolen money and funds linked to 1MDB soon?

We know that there are monies frozen in a few locations around the world. We are talking in terms of billions. For a start, Singapore has agreed to repatriate whatever amount that is stuck there. I believe efforts are being made by the authorities to get back our money, which was originally stolen.

With the appointment of Lim Guan Eng as the Finance Minister, what can we conclude? Was it a political decision?

The fact that Pakatan won the popular vote and proceeded to appoint Lim of the DAP as Finance Minister says a lot about this new government. Obviously, the decision was also political, but it has a positive impact on the psyche of the nation. Now the people know that we mean business. There is no more room for tomfoolery or abuse.

That appointment has de-politicised the post, which is a good thing given that the Finance Ministry had often been used to reward UMNO loyalists in the past. Now the gravy train has stopped.

Lim is not the first Chinese to hold the post of Finance Minister. The appointment was made based on consultation with the various parties. Malaysians in general should accept his appointment based on his vast experience and knowledge, and not his race.

How can we ensure there is no more prized land sold by the Government to selected developers privately at very low prices?

The role of the mainstream media will become more important. For far too long the mainstream media in Malaysia had been timid and irrelevant. By exposing such scandals, it will certainly provide a check and balance in the administration.

During Najib’s time, mainstream media had failed miserably to protect the interest of the nation and the rakyat. The fourth estate is important. We must always keep an eye on any wrongdoing.

Will Barisan play an effective role as Opposition? Do you think UMNO has the capability to retake the Government?

For an Opposition to become effective, they need to have credibility. Right now what kind of credibility has Barisan got? If you don’t have it, people will find it hard to trust you. Up till today, there is no apology from any of the leaders in UMNO. They are still unrepentant. The stealers of 1MDB money are still in denial, claiming they had done nothing wrong.

Can UMNO rely on its youth wing to speed up the reformation process? It will be difficult, due to the fact that all of its youth wing, including its chief, defended 1MDB back then.

If they had read the US Department of Justice report, the Public Accounts Committee report and the Auditor-General’s report and yet still have the audacity to support the crimes committed, then they should not be the role models for the youths in Malaysia. They have shown no remorse. I doubt they can retake the Government with the current crop of leaders.

In order to have a vibrant and lively democracy, we need a strong Opposition. If UMNO realises this and makes the necessary changes, that will be their role.

Do you think Dr Mahathir will stay beyond two years?

In his interview with Financial Times last Monday, he stated it would be difficult for him to stay on as Prime Minister beyond the age of 95. But for now, I think everyone knows that he is committed to fulfilling the promises in Pakatan’s manifesto.

After all, he is the chairman of Pakatan. Above all, his greatest achievement is that the rakyat put their trust in him and have given him their support to get rid of (Datuk Seri) Najib (Tun Razak) and his kleptocracy government.

We have the Finance Minister and Economic Affairs Minister. Will their roles overlap?

The Economic Affairs Minister takes the place of the Minister in the Prime Minister’s Department in charge of the Economic Planning Unit (EPU). The Economic Minister does the planning and makes sure the project is implemented properly. He will monitor and supervise. The Finance Minister will look for money lah.

Meeting of minds: Daim (third from left) chairing a CEP meeting in Kuala Lumpur. Also present are Kuok (second from left) and (from right) economist Prof Dr Jomo Kwame Sundaram, former Petronas president Tan Sri Hassan Marican and former Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz. — Bernama

How is your relationship with Datuk Seri Anwar Ibrahim? Both of you were critical of each other in the past. Do you think he can be a good prime minister?

We have always been friends but politics is different. Anwar and I have known each other for a long time. I just want to mention I met him in prison numerous times. We discussed how to topple the previous government and with the support of the rakyat, we succeeded. We must stay united and deliver our promises to them.

Anwar had served in various ministries and his last post was Deputy Prime Minister. Nobody can run a government alone. A PM needs a Cabinet that supports him and honest civil servants with integrity. He also needs good, honest advisers and must never forget the rakyat. Anwar is aware of all these.

The reunion photos of you and billionaire Robert Kuok holding hands and hugging each other melted the hearts of many Malaysians. What can Mr Kuok contribute to the new Malaysia?

Robert Kuok is a dear family friend. I have known him since the early 1970s. My second son is working for him. Malaysians should be proud to have this distinguished man who answered the call of the nation to serve. He has many ideas and insight as to how Malaysia can move forward. I value his opinions given to the CEP.

You have said you will leave the council after 100 days of work. What have you set out to do and will you stay longer?

It is very tough to complete within the time given but we will try our best to achieve it. We are volunteers. We are not given a cent. There is no office given. We requested for some staff from EPU, Bank Negara, Attorney General’s Chambers, PNB, Sime Darby and Khazanah. We thank them for their support.

We know the rakyat’s expectations are very high. We are trying to meet the timeline so we work on Saturdays, Sundays and public holidays too. It is very important that all give their support to this Government. Don’t put obstacles in the way.

I plead to all to give their sincere support. But by all means, criticise if you feel the Government is not on the right track.

My role is just to help. I am not interested in anything else. After we deliver our report, I will play no more of a role. I want to write on the last general election but to do that I have to go away somewhere quiet.

When Pakatan won, it was the rakyats victory. We proved Malaysia boleh. If Malaysia can, the world too can get rid of corrupt, repressive and kleptocracy governments. We have shown the world how to do it.

The stock market seems to be volatile after Pakatan won. What is your advice to the investors in the stock market?

They did not expect Pakatan to win; the foreigners and the rating agencies.

Basically, in a capitalist society, they don’t mind corruption, as long as they make money. Of course, now they say they want a clean government, but before that they didn’t mind corruption because that’s the way to make money – easier and faster. The more money you have, the easier for you, because you have the money to bribe. As far as the capitalist society is concerned, that kind of government is good. They underestimated the will of the rakyat. The rakyat cannot accept this. They don’t want a corrupt government.

During your time in the Government, corruption was also quite rampant. You all didn’t take any action?

It happened, but not rampant. There was corruption, but now it is blatant.

Why are you close to the Prime Minister?

He is 12 years older than me. We went to the same school in the same village in Kedah. Our parents know each other. I always like to joke: from Kedah we have the same Yang di-Pertuan Agong serving twice, Prime Minister serving twice, Finance Minister serving twice. It must be the water we drink.

Will the report by the council be disclosed to the public?

Up to the Government. I have no right. I am only playing an advisory role. I will pass the report to the Government, the Prime Minister. The PM will brief the Cabinet. If the Cabinet decides to publish, then publish it.

I would prefer it to be published so that the rakyat know the actual situation when the Pakatan Harapan Government took over, the state of the country, in particular the economy and the financial position.

How much has been the nation’s total loss due to scandals and corruption?

I won’t mention figures. I don’t want to shock everybody, but it is depressing. Every (government) agency that we called, we will go through the account. We find shocking news. We are doing what we can to stop the bleeding immediately.

Do they listen to you?

You think they won’t listen to me? (laughs)

You are not the boss. How do you know that they will take your advice?

It doesn’t matter. As far as I am concerned, I will inform the minister in charge. I stop the bleeding first, if not they will bleed till death. You lose a lot of blood, you will die.

Are the economic fundamentals of the country still intact?

The Central Bank said fundamentals are still intact, everything is intact. If fundamentals are intact, what has gone wrong?

People don’t trust the Government. So there is trust deficit. The new Government has tried to restore confidence. You can do it very quickly but the depressing news is coming out.

Why is the Government not instituting charges against Datuk Seri Najib Tun Razak?

I don’t want to disclose all these things. We are going to complete our investigation very soon. When the investigation is not completed yet, you cannot charge people. The people’s expectations on us are high, but cannot disclose. Let the authorities complete the investigation.

Western investors used to shun Malaysia because of the 1MDB scandal. Is there any indication they are coming back?

The US-Asean Business Council came to see me. They want us to go to America. I have not told Tun Mahathir.

They are very excited with the news that we are going to have a clean government and there will be reforms in the institutions. They said they are coming back. It is better for us to go and see them and explain to them.

Tun Mahathir is going to Japan. Japan is very excited too.

In China, in spite of everything, the Ambassador said since the new Government took over, their businessmen have invested RM1.2bil.

What we want is genuine investment bringing in new technologies, creating employment. It will help the country and the investors can make money.

Singapore has shown interest. That will instil confidence. Singapore companies have been talking about joint ventures with EPF. They came and met me. I said go ahead. I am busy. They should go and ask the Government. They came to see me because I know them.

PM of India dropped in. There is tremendous interest. But we are busy for the time being. When the Cabinet is fully formed, the trade minister can handle it.

You didn’t tell them you are retired?

I told them I am retired. But I can open doors, facilitate meetings between them and MITI (Ministry of International Trade and Industry).

Is our debt really over RM1 trillion?


May 29, 2018

My Message to Finance Minister Lim Guan Eng is this: You are no longer in the Opposition. You are a Cabinet Minister with a vital portfolio. Behave like one, the sooner the better; it is for the good of your reputation and your integrity as our new Finance Minister.

Image result for Tun Tan Siew Sin and Tun HS Lee

You should take Tun  H.S. Lee, and Tun Tan Siew Sin as your role models. Both men were not in the habit of giving press  conference on Malaysia’s finances. In recent times, Tun Daim Zainuddin was the quiet one. If I can recall, TDZ hardly spoke to the media. He was only heard when he was delivering his budget speech.

As Finance Minister, you  should know that what you say and do is market sensitive. It undermines investor confidence and Malaysia’s image.

“There is no need to demonise and put down the previous BN government at every turn in what are sometimes dubious ways. It is time to do what is needed and portray things in an accurate manner as possible to reflect the truth as far as that is possible. After all, the elections ended over two weeks ago.”--P. Gunasegaram

I have a lot of respect for Guna, who I know well over many years. He is one of the best analyst from Malaysia, known for his critical and incisive commentaries on business and financial issues.

His views in this article, Minister Lim, should be taken seriously. I know Najib Razak made a mess of our national finances when he was doing the job before you. He is being investigated for his malfeasance. Let the Rule of Law take over.–Din Merican

Is our debt really over RM1 trillion?

A QUESTION OF BUSINESS | The starting point of this debate was when Prime Minister Dr Mahathir Mohamad said the national debt was more than RM1 trillion without defining what the components of the debt were. Naturally, this caused a lot of confusion. Was the previous government lying about the debt figures?

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“We have found that our finance (status) eroded significantly (to the extent) we are having problems in (repaying) our debts, which have increased to a trillion ringgit,” according to a Malaysiakini report.

“This has never been done by us before […] if previously our debt stood below RM300 billion, now the debt has exceeded RM1 trillion,” Mahathir said during his first monthly assembly as head of the Prime Minister’s Department in Putrajaya.

That started alarm bells ringing and raised legitimate questions about whether there was obfuscation of government figures. This was fueled further when Lim Guan Eng in his first press conference as Finance minister confirmed what Mahathir had said.

He said this was revealed during the discovery exercise when all relevant departments were able to start consolidating their accounts and numbers, The Star reported.

“Previously, certain files were not accessible by certain people and therefore, consolidations were not available,” he said in his first press conference as the Finance Minister on Tuesday (May 22). This seemed to imply new figures after consolidations.

But when markets started to fall and former Prime Minister and Finance minister Najib Razak said the new figures “will just unsettle the financial markets, alarm the credit rating agencies and investors’ confidence in our institutions, such as our Bank Negara Malaysia”, Lim gave a breakdown (see table).

The total figure of RM1,087.3 billion (RM1.087 trillion) was given as debt and liabilities. The official government debt was given as RM686.8 billion which is about 6% higher than the figure of RM648 billion given in the Accountant-General’s report for 2016. Presumably, these are the figures for end-2017 which have not been publicly released yet. This is 50.8% of the GDP (gross domestic product – sum of goods and services produced in a year) and lower than the officially announced ceiling of 55%.

“However, let me emphasise that the obligations and financial commitments of the federal government are unchanged before May 9 and after elections today. The only change is that the new federal government has decided to call a spade a spade,” Lim clarified further. This implied that the official debt figure was correct, clearing up earlier confusion it may have been wrong and doctored.

The next line shows government guarantees. The Accountant-General’s report routinely included these as part of contingent liabilities and therefore it is not a new thing. There were concerns about contingent liabilities even during Mahathir’s previous tenure as Prime Minister from 1981-2003.

Lim explains this thus: “In addition, the government is already committed to paying for government guarantees for various entities that are unable to service their debts. This amounts to RM199.1 billion (14.6 percent of the GDP).

“The committed government guarantees would include entities such Danainfra Nasional Bhd (RM42.2 billion), Govco Holdings Bhd (RM8.8 billion), Prasarana Malaysia Bhd (RM26.6 billion), Malaysia Rail Link Sdn Bhd (RM14.5 billion) as well as an estimated RM38 billion for 1MDB.

Image result for prime minister mahathir mohamad

“Based on the two items above, the federal government debt would amount to RM885.9 billion. This represents the 65.4 percent of the GDP as highlighted by Prime Minister Dr Mahathir Mohamad yesterday.”

PPPs can be problematic

Lim should know that this is not included when the ratio is calculated in international debt figures. But, yes, government guarantees and contingent liabilities should be taken into account in assessing the overall debt picture correctly.

The next one that Lim includes is lease payments under public-private partnerships (PPP) of RM201.4 billion. But is this fair?

Here’s what Lim says: “However, in addition to the above, the federal government is also committed and obligated to make lease payments (including rental, maintenance and other charges), for a whole list of ‘Public-Private Partnership’ (PPP) projects such as the construction of schools, hostels, roads, police stations, hospitals, et cetera.

“The lease commitments which were designed specifically to circumvent the federal government guarantee and debt limits amount to RM201.4 billion (14.9 percent of GDP).’

This does not seem to be in the public domain. I tried looking for the official figures in the Accountant-General’s 2016 report but could not locate them. Yes, there are indications that this may have been on very favourable terms to those who obtained them but it is a legitimate means of reducing the government’s balance sheet practiced now in many countries around the world.

Essentially under these arrangements, the private sector undertakes a project, for example, constructing a government office. In return, the government commits to paying rent for, say, 20 to 30 years. While borrowings reduce, as a result, the government’s operating expenditure rises.

Even if including PPP as debt is considered to be the right approach, it will be inaccurate to take into account the full repayments as debt obligations, as payments are made over long periods and include interest charges. Instead, it should be the capital expenditure incurred if the government has to undertake the projects. Damansara Member of Parliament Tony Pua, who seems to be assisting Lim in these matters, puts PPPs entered into by the previous government at around RM63 billion in value.

There is no denying that PPPs can be problematic. A problem arises if the private sector investors get too high a return, and the government suffers as a result. PPPs will not be classified as debt under most classifications. But, yes both guarantees and PPPs should be taken into account in the overall assessment of the debt and liabilities situation of the government.

No, the official debt figure is still RM648 billion, not RM1 trillion. But if you include other figures, then the effective debt obligations might rise to as high as over RM1 trillion. Even for this, the contingent liabilities figure of RM199 billion is already in the public domain and analysts, including those who do ratings, have taken it into account.

Unless the Pakatan Harapan government has solid evidence to show national accounts are tampered with, they must not make statements which may make the public, including investors, conclude otherwise. It confuses, it throws up uncertainty and makes people lose confidence in the economy.

There is no need to demonise and put down the previous BN government at every turn in what are sometimes dubious ways. It is time to do what is needed and portray things in an accurate manner as possible to reflect the truth as far as that is possible. After all, the elections ended over two weeks ago.

https://www.ft.com/video/ea69ce82-ec13-4faa-aa16-45a45339335f?tagToFollow=c27e47f1-9be7-354c-a817-e79bfd535725


P GUNASEGARAM hopes that now polls are over, cyber-troopers will contribute in a real, responsible and reasoned way to discussions about our future instead of saying let those who run the government decide. That’s how we got into a mess in the first place. And please stop the personal insults and obscenities. E-mail: t.p.guna@gmail.com.

Honesty Beats ‘Tact’–Sarawak Report


May 25, 2018

Honesty Beats ‘Tact’–Sarawak Report

http://www.sarawakreport.org/talkback/honesty-beats-tact/

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New Finance Minister Lim Guan Eng would do well to remember he is no longer an opposition politician, as while his vocal tell-all approach on the 1MDB scandal certainly wins points for honesty, it is having the opposite effect on investors…

Instead, the writer said it only risked leaving investors with an “uncertain fiscal outlook”.

“Investors are uneasy about things getting out of hand. Already, foreigners have sold out on the nation’s stocks for 13 consecutive days.

“For Lim to declare in his first press conference that government debt has exceeded one trillion ringgit ($251 billion) because of a sly public bailout of 1MDB gets him full marks for honesty, but not for tact.

Mukherjee’s opinion also ran in line with that of Najib, who warned his successor that revealing the nation’s debt level at RM1 trillion without providing adequate details would only alarm the credit rating agencies and investors’ confidence.

Meanwhile, Arul Kanda today said he is mulling legal action against Lim, as the former felt the claims made against him by Lim were unfair and did not accurately represent his answers to the ministry.

Our comment

To suggest that it is better for the Finance Minister to continue to lie ‘tactfully’, in order to gull investors is preposterous.

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Finance Minister Lim Guan Eng is off to a good start by being honest about Malaysia’s Finances

The run on stocks came after investors realised they had put money into Malaysia based on lies by the previous Prime Minister cum Finance Minister and an administration that failed to stand up to his autocratic power.  Some have been panicking to hear that Malaysia’s economic position is not the rosy picture that Najib had deceitfully pretended it was.

More fool them. Wiser investors had already seen through the blatant dishonesty, which was the reason why the ringgit plunged in 2015 after the 1MDB scandal. The recent partial recovery owed to currency manipulation and false assurances by Najib.

What sort of foundation is deceit towards building future prosperity and why should this new government continue with the cover-ups and thereby inherit the blame for Najib’s excesses?

 

As the new Finance Minister and his team set proper standards of openess and honest management in Malaysia, confidence and investors should soon come back.  Thanks to Najib’s legacy the transition may be tough in the immediate future, but the smart money ought to return soon enough.

The fundamentals for the future are being laid to bring long-term confidence back to Malaysia and that has to start with a frank assessment, followed by steps to ensure efficient and transparent governance (see, for example, the minister’s home state of Penang).  That is what investors like to deal with, not lies.

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Adei, Thamby Arul, it is time for  you and your Board colleagues to own up to the truth–1MDB is a financial mess. The burden is Malaysia’s. It is quite known in civil society that you were engaged by Najib Razak to lie on his behalf.

 

As for Arul Kanda, nothing would amuse Malaysians more than to see him attempt to sue the Finance Minister for suggesting he has been telling lies.