Jomo: Whither the Malaysian economy ?


October 17, 2017

Jomo: Whither the Malaysian economy under Najib Razak?

http://www.malaysiakini.com

Image result for Finance Minister Najib Razak and the National Debt
Malaysia’s Worst Finance Minister Najib Razak–Fiscal Mess, Heavily in Debt and Lowest Reserves in Asia.

This interview with economist Jomo Kwame Sundaram, former Assistant Secretary-General for Economic Development at the United Nations, was conducted in August for publication in the run-up to the country’s next Budget for 2018 due to be announced next Friday.

Developed country status

Question: Malaysia is close to achieving developed country status and is growing at a reasonable pace. Why are you concerned then?

Jomo: Becoming a developed country involves much more than achieving high-income status. But even by reducing ‘developed country’ status to becoming a ‘high-income’ country, we are not quite there unless we resort to statistical manipulation, e.g., by using 2013 exchange rates, or by ignoring about a third of the labour force who are ‘undocumented’ foreign workers.

For example, the ringgit declined from RM3.2 against the US dollar in 2014 to almost RM4.5 before recovering to the current RM4.2! But then we continue to use the old exchange rate or purchasing power parity (PPP) to pretend that we are almost there. The only people we are cheating is ourselves.

Also, if we continue to grossly underestimate the number of foreign workers in the country, then the denominator for calculating per capita income goes down. Similarly, by excluding the lowest paid foreign workers, income inequality has been declining when their inclusion may give a different picture. Thus, we can reach supposed high-income status more quickly if we pretend there are only one or two million foreign workers, when even the minister admitted last year to about 6.7 million!

Seven million, mainly undocumented foreign workers in Malaysia comes to over a third of the country’s total labour force. Many of them work and live in far worse conditions than the worst-off Malaysian workers. We are thus dependent on a huge underclass, largely foreign, whom we are in denial about.

New Economic Model

What do you think of Prime Minister Najib Razak’s New Economic Model?

Jomo: Let us be clear about this. The New Economic Model, or NEM, is really a wish-list of economic reforms desired from an essentially neo-liberal perspective. That does not mean it is all good or all bad. It contains some desirable reforms, long overdue due to the accumulation of excessive, sometimes contradictory regulations and policies.

 

Although the NEM made many promises and raised expectations, most observers would now agree that it has rung quite hollow in terms of implementation despite its promising rhetoric. As we all know, the NEM was dropped soon after it was announced for political reasons, and has never been the new policy framework it was expected to be.

Turning to actual policy initiatives, to the current administration’s credit, it accepted the minimum wage policy and BR1M (Bantuan Malaysia 1Malaysia) idea, both long demanded by civil society organisations, and supported by many, mainly opposition parties. The minimum wage policy has probably been far more important than BR1M in improving conditions for low-income earners.

Premature deindustrialisation

The contribution of manufacturing to growth and employment has been declining in this century. Yet, you seem to be nostalgic for industrialisation when the leadership wants to move to tertiary activities.

Jomo: Sadly, instead of acknowledging the problem, ‘premature deindustrialisation’ is being cited as proof of Malaysia being developed although services currently account for most job retrenchments.

Indeed, Malaysia has been deindustrialising far too early, even before developing diverse serious industrial capacities and capabilities beyond refining palm oil and so on. We have abandoned the past emphasis on industrialisation, but have not progressed sufficiently to more sophisticated, higher value-added industries.

In Japan, South Korea and China, policies to nurture industrialists and other entrepreneurs to become internationally competitive, enabled these countries to grow, industrialise and transform themselves very rapidly.

We are suffering great illusions if we think we can leapfrog the industrial stage and go straight to services. We should not try to emulate Hong Kong because we are a different type of economy. Even Singapore has not gone the Hong Kong way and continues to try to progress up the value chain in terms of industrial technology.

We need to stop blindly following policies espoused by international institutions. GST (Goods and Services Tax) is a variant of value-added taxation, long promoted by the IMF (International Monetary Fund). To accelerate progress, we need to develop better understanding of the Malaysian economy – of its real strengths and potential, rather than assuming that the current mantra in Washington is correct, let alone relevant.

Middle-income trap

According to the World Bank and others, Malaysia is stuck in a middle-income trap. The argument is that the NEM as well as financial services development are needed to get out of it.

Jomo: The idea of a ‘middle-income trap’ is due to Latin American and other countries uncritically following Washington Consensus prescriptions promoted by the Bank and the IMF. The promise is that following their prescriptions would lead to development.

Key elements of our own ‘middle-income trap’ are actually of our own making, e.g., by giving up so quickly on industrialisation. The prescriptions imagine we can somehow leap-frog to accelerate development without making needed reforms.

 

The NEM and current official development discourse emphasise modern services, especially financial services, for future growth. But why would investors want to come here rather than, say, Singapore? If they want lower costs, there are other locations.

To offer tax breaks or loopholes, or to make Malaysia a tax haven, the question again is why come here rather than Singapore.

And how much has the national economy really benefited from the Labuan International Offshore Financial Centre? Do we need to keep making the same errors?

Looking at other international financial centres, it is not clear that it will be a net plus for the country, and provide the basis for sustainable development suitable for an economy like ours. Remember, we are no Hong Kong.

Historically, we have been heavily dependent on foreign direct investment, not for want of capital, but for access to markets, technology and expertise. To make matters worse, over the last decade, foreign investors have taken a growing share in publicly listed companies, helped by the falling ringgit in recent years.

Arguably, foreign ownership of the Malaysian economy has never been as high since the 1970s. As large corporations are increasingly dominant, they have often crowded out small and medium-sized enterprises (SMEs) and other Malaysian firms.

Macroeconomic management

In his recent book, Dr Bruce Gale (author of ‘Economic Reform In Malaysia: The Contribution Of Najibnomics’) has praised current macroeconomic management.

Jomo: Well, Gale is a political consultant and needs to ‘cari makan’. He is not a serious macroeconomist the last time I checked, but should nonetheless be taken seriously because he reminds us that well-managed ‘public relations’ influence market and public sentiment, including credit and other ratings. He heaps praise on ‘conventional wisdom’ which remains very influential, even if wrong.

Gale’s book reminds us that ‘creative accounting’, involving the transfer of debt and liabilities to state-owned enterprises or government-linked companies, has enabled the government to limit the growth of mainly ringgit-denominated federal government debt by rapidly expanding federal government-guaranteed ‘contingent liabilities’.

His defence and justification for GST ring quite hollow as his premise is that the middle class has been evading income tax, whereas it is mainly the rich who have successfully done so, whether legally or otherwise.

Although he has been writing on Malaysia for over three decades, he appears to have selective amnesia, only giving credit to the prime minister and his late father, whom no one would grudge, while ignoring other prime ministers and finance ministers, in line with the new official narrative.

Malaysians worse off?

Earlier, you acknowledged that Malaysian economic growth has continued, albeit at a lower rate, over the last two decades. Yet, you also argue that Malaysians may have become worse off in recent years. That sounds contradictory.

Jomo: Moderate economic growth has continued since the 1997-1998 financial crisis. More recently, this has been partly due to foreign financial inflows, helped by unconventional monetary policies in OECD economies.

Between 2012 and 2014, most people, especially low-income earners, became better off, thanks to the introduction of the minimum wage, continued ‘full employment’ and higher commodity prices.

Since then, commodity prices have fallen, unemployment has been rising (especially for youth), the GST was introduced, and consumer confidence has fallen lower than during the 1997-1998 or 2008-2009 financial crises.

However, consumer sentiment in Malaysia has been negative for some time according to CLSA and MIER (Malaysian Institute of Economic Research). Indeed, according to Nielsen, the international polling company, it has been poor since 2013, and is now the lowest in Southeast Asia.

Food prices have generally continued rising, as transport charges – for tolls, trains, etc. – have been increasing again, with floating petrol prices. Meanwhile, lower commodity prices and climate change have reduced many farm incomes.

Official unemployment has gone up from 2.9% in 2014 to 3.5% in 2016, still commendably low, although there are concerns about high youth unemployment, especially among the tertiary educated.

Retrenchments have been worst for services, casting doubt on future employment prospects as the authorities rely increasingly on services for growth and jobs. With unemployment low, but rising, wage growth has slowed after the initial introduction of the minimum wage, while real incomes have been hit by higher prices and taxes.

Wage depression

You seem to imply that Malaysian wages have been artificially lowered.

Jomo: Malaysians, in general, have higher incomes now than before. However, official numbers are misleading as we do not account for the massive presence and contribution of foreign labour, especially undocumented immigrant workers.

Their status has also served to depress wages for low-income Malaysian workers. Not surprisingly then, labour’s share of national income has gone down relatively.

This decline is not due to declining labour productivity, even if that may be the case. After all, higher labour productivity does not automatically raise workers’ incomes. Prevailing low wages retard technical change which would, in turn, raise productivity.

Thus, the unofficial low wage policy stands in the way of labour-saving innovation, such as mechanical harvesting, so necessary for development. We need a medium-term development strategy far less reliant on cheap foreign labour.

Consequently, wages and living conditions are too low, especially in agriculture. And even smallholder agriculture has been neglected by officialdom in Malaysia for some time, especially after Pak Lah’s (Abdullah Ahmad Badawi’s administration.

Fighting a jihad against middlemen was not only thinly disguised misinformed and misguided stunt intended to score ‘ethno-populist’ points, but also irrelevant to addressing contemporary challenges.

Shifting tax burden

How have recent tax reforms affected Malaysian households?

Jomo: Following the introduction of the GST in April 2015, tax revenue from households increased from RM42 billion in 2014 to RM67 billion in 2016, with GST more than doubling the contribution of indirect tax from RM17 billion to RM39 billion.

At the same time, income tax revenue has risen modestly from RM24 billion in 2014 to RM28 billion in 2016. On average, Malaysian households paid taxes of RM5,600 each, more than ever before.

Meanwhile, government subsidies and assistance have declined, falling from RM43 billion in 2013 to RM25 billion in 2016, with most food price subsidies removed between 2013 and 2016.

Inflation numbers

Official inflation numbers are low. Why does the public doubt official inflation numbers?

Jomo: There are many reasons why the public doubts official inflation numbers, but perhaps most importantly for the country’s open economy, the ringgit exchange rate dropped from RM3.2/USD to RM4.5/USD before recovering to RM4.2 recently.

People presume that a decline in the international value of the ringgit by about a quarter must surely have inflationary consequences.

The GST of 6% has been imposed since April 2015, directly affecting about half of household spending, with up to a fifth more indirectly affected. Again, this is expected to have affected the cost of living.

Price subsidies for sugar, rice, flour and cooking oil have been removed since 2013, raising prices by 14% to 31%. Meanwhile, transport – including fuel and toll – prices have risen on several fronts.

Hence, you can understand why people are sceptical.

Transformasi Nasional 2050 (TN50)

After announcing and then abandoning the New Economic Model, there is now much ado about an economic transformation agenda for 2050.

Jomo: The TN50 exercise has been broadly consultative, involving young people, which surely is a good thing. Unfortunately, as with BR1M, it has been used to mobilise political support for the regime before the forthcoming elections rather than open up a more inclusive debate about where the country is headed.

The conversation should be about where the country should go and how to get there. It is still unclear to what extent we are going beyond the usual feel-good, futuristic sounding clichés, but this should open up an important debate to give serious consideration to actually achieving the transformation.

 

The country is presently mired in a political crisis that has paralysed effective economic policymaking. Malaysia desperately needs a legitimate and consultative leadership to implement bold measures to take the country forward.

Many people in the country know what ails the economy, but we do not have the open discussion needed to really tackle the challenges the nation faces. For example, a free and independent media will not only improve the quality of public discourse, but also the legitimacy and acceptability of resulting public policy.

Yesterday: Jomo in defence of honest, constructive criticism

Malaysia: 2018 National Budget–Need for Greater Fiscal Discipline


October 5, 2017

Malaysia: 2018 National Budget–Need for Greater Fiscal Discipline

by T K Chua@www.freemalaysiatoday.com

Image result for Najib as Finance Minister

 

In a couple of weeks, the 2018 national budget will be revealed and a peek into the options and challenges awaiting us, is in order.

Beware of Off-Budget Agencies

FIRST, the budget is not what it used to be. Increasingly there are expenditures and commitments outside the purview of the budget but their impact may eventually impinge on government finance. These are off-budget agencies of which the revenues, expenditures and debts should be tabulated and presented as addendum to the budget.

Keep Budget Deficits under Control

SECOND, in all likelihood, the 2018 budget will be another year of deficits. This means there will be new borrowings or sales of government assets to finance the deficit. New borrowings mean more accumulated debts and more debt service charges going forward. When more is provided for debt service charges, less will be available for other operating expenditures.

THIRD, most government revenue has almost reached its limits unless income and expenditure continue to grow. In recent times, the government has been relentless in its enforcement efforts to extract the maximum from individuals and business establishments. Similarly, the implementation of the GST is in full swing. It is doubtful that the government will be able to cover more loopholes and tax leakages/avoidance cases or to increase further the GST rates at this stage.

If revenues are limited, the government will not be able to offer new expenditure programmes unless it incurs more borrowing and debt.

FOURTH, most expenditure programmes are “locked in”, stifling the government’s ability to look at the new impetus. The government’s commitments toward BR1M, civil service salaries and benefits, pensions, and debt service charges will continue to grow. This will leave little room for the budget to meet new challenges lurking in the horizon.

Watch the Expenditure Side of Things

FIFTH, the government has looked at the revenue side by introducing new taxes and by enforcing stricter compliance of existing taxes. However, this trend can’t go on forever. It is time to look at the expenditure side of things.

The annual audit report has given more than sufficient information on wastage, inefficiency and abuse of government allocations and expenditures. Sometimes corruption is due to allocations being too lavishly handed out. If government departments and agencies have too much money, the tendency is to be careless with the expenditures.

 

MALAYSIA ‘SCREWED UP’ BY WORST FINANCE MINISTER NAJIB – RESERVES THE LOWEST IN ASIA THAT MoF UNABLE TO PAY EVEN US$600 MILLION DEBT?

Who is the de facto Minister of Finance– Najib Razak or Handbag Rosmah Mansor? How did she spend the funds  allocated for her signature project Permata?

Stringent and optimal budget allocations do not have to affect output or service to the people, as was commonly claimed. We only need those responsible to work harder and be more careful with the money.

The National Budget is not a Mundane or routine exercise

I think it would be a big mistake if we continue to look at the budget formulation as a mundane or routine exercise. Some of the trends are obviously unsustainable. Even if we start to reverse or correct the trends now, it may take us many years to restore sustainability.

TK Chua is an FMT reader.

National Unity in Malaysia


August 5, 2017

Between The Lines: National Unity in Malaysia

Channel News Asia

What are the challenges of forging national unity in a post-colonial, multi-ethnic state? From Kuala Lumpur, our panel of Malaysian experts evaluates the country’s progress, and outlines the tasks ahead.

 

Image result for Channel Newsasia

 

COMMENT: Today, Malaysia is a divided nation led by a corrupt Prime Minister. Before unity can be restored, Najib Razak and UMNO kleptocrats and their surrogates in Barisan Nasional (namely MCA, MIC and Gerakan) and PAS must be removed via democratic elections. Otherwise, it is all talk, which is at best purely speculative and futile. The country is in a political crisis. Malaysians know that, but they are not willing to openly admit that their country is a dysfunctional state heading towards a financial crisis due to the 1mdb scandal, and high national debt and a weakening economic fundamentals.–Din Merican

Inline images 1

http://www.channelnewsasia.com/news/catch-up-tv/between-the-lines/national-unity-in-malaysia-9072398

Malaysians are forgetful


July 25, 2017

Malaysians are forgetful about scandals, that is why they keep coming back from Mahathir to Najib Razak

by R.Nadeswaran

http://www.malaysiakini.com

 

Forex, Maminco, Cowgate, Mara, FGV, 1mdb…what next?

 

COMMENT | Dr Mahathir Mohamed recited a sajak (poem) entitled ‘Melayu Mudah Lupa’ (Malays forget easily) at the 2001 UMNO General Assembly. After 16 years, is it still appropriate or does one word need to be changed?

Replacing “Malays” with the “Malaysians” would better describe how events and scandals of yesteryears have been consigned to the burial grounds and entombed.

But even the dead can be awakened for political expediency. After 30 years, the ghost of the foreign exchange market (forex) losses, said to run into billions of ringgit, has arisen from the grave – with hopes of it demonising the leading opposition figure, Mahathir.

So, a Royal Commission of Inquiry (RCI) has been set up and will soon start the proceedings, in the hope of establishing a host of facts. There’s certainly nothing wrong with this – perfectly legal. Using provisions provided in the Federal Constitution, the system allows Joe Public to have privy and access to the reasons for decisions to the commitments made by our leaders and their reasons for doing so.

But what can RCIs do? What does our government do with the findings? What happens after the findings? Will they bring about changes or will they be consigned to gather dust in some steel cabinet in Putrajaya?

There have been many, but let’s look back at just two. The first was on the VK Lingam video and the other was the RCI on illegal immigrants in Sabah.

V.K. Lingam–Vincent Tan’s Correct, Correct, Correct Lawyer–Fixing the Judiciary with Tun Ahmad Fairuz

In 2007, a five-man panel chaired by the former Chief Judge of Malaya, Haidar Mohamed Noor, examined a video clip allegedly of lawyer VK Lingam (photo) being involved in the manipulation of judicial appointments.

Subsequently, Lingam was barred from practising in 2015, but he has since challenged the decision of the Bar Disciplinary Committee, which found him guilty of interfering with judicial appointments. The case is scheduled to be heard next month.

In 2013, the former Chief Judge of Sabah and Sarawak, Steve Shim, chaired a five-man panel to investigate “Project IC”, in which citizenship was allegedly given unlawfully to illegal immigrants in Sabah during the Mahathir administration for electoral support.

‘Project IC probably existed’

After hearing 211 witnesses and recording more than 5,000 pages of evidence, the panel concluded that “Project IC” probably existed. It recommended the formation of a permanent secretariat, along with either a management committee or a consultative council, to address the issue of illegal immigration in Sabah.

But the immigrant problems still continue to prosper across the porous borders between Malaysia and The Philippines.

Against such backdrops, what would yet another RCI bring about? For a while, the proceedings will be the talk of the town, after which, it will enter into a sleep mode to be awakened when yet another scandal surfaces on our shores.

The Cowgate Scandal–The Gatekeeper got awa ,thanks to UMNO

Can someone update Malaysians on the National Feedlot Corporation (NFCorp)? On July 25, 2013, NFCorp chairperson Mohamad Salleh Ismail (photo) told a press conference that Japanese company, Kirimitonas Agro Sdn Bhd, had agreed to purchase its entire shares and related companies, and accordingly take over all the assets and liabilities, including the RM250 million loan with the Malaysian government.

Two weeks earlier, the then Finance Minister II Ahmad Husni Hanadzlah, told Parliament that the government had recovered RM79.9 million from the RM250 million it loaned NFCorp.

Ahmad Husni said the government also sealed NFCorp’s assets worth RM23.3 million – two pieces of land in Putrajaya, two units of real estate in Menerung Township Villa and three plots of land in Gemas.

“Out of the RM250 million, close to RM80 million has been received and RM170 million is yet to be received,” he said when winding up the debate for his ministry on the motion of thanks for the Royal Address in the Dewan Rakyat then.

Ahmad Husni said the Finance Ministry took three steps to resolve the NFC project controversy, namely bringing the case to court, taking over or getting back the amount owed and the assets, and finding a new company to continue the project.

And they drive around in their Porsches…

What happened to the real estate that was seized? Can someone give Malaysian taxpayers a status report on the case? After all, RM250 million belonging to the people was given in loans and surely, the least we can expect is some decent, truthful answers. No need for an RCI to tell us how the money for cattle breeding was used to buy luxury condos and property.

Almost two years ago, Mara, its associated companies and senior officials were caught with their hands in the cookie jar. They were involved in a multi-million ringgit scandal where buildings (student accommodation) in Melbourne were bought at inflated prices and the difference filtered down to some people’s pockets.

Police reports were made; the Malaysian Anti-Corruption Commission briefly detained a couple of people, and the Mara Chairperson was replaced. So, what happened to the investigations? Have the crooks been brought to book? Some of them are driving around their Porsche cars, acting as if nothing ever happened.

The construction of the Port Klang Free Zone (PKFZ) was the biggest financial scandal in the country prior to the emergence of an entity called 1Malaysia Development Bhd (1MDB). Six people were charged and all were acquitted. But, if no one is guilty, then the question is: Where did our money go?

The government continues to service the loans taken by the developer. Even as this is written, the Port Klang Authority (PKA) owes the Treasury billions of ringgit. By the year 2051, PKA’s commitment will accumulate to RM12.4 billion. How is it going to get the money? As a regulatory body, its revenues are meagre. Did anyone think about an RCI to get to the bottom of the issue? Bottom line: The loan will be written off and we, the people, will have to bear that burden.

Image result for The Mother of All Malaysian ScandalsThank You MCA and MIC–Gua Tolong Lu, Lu Tolong Gua

There are dozens of other instances or issues that may not be of the magnitude of the forex losses but have made headlines that require some form of inquiry. The obvious one is the 1MDB, which has made headlines all over the world for the wrong reasons.

But does the government have the political will and determination to get the bottom of all these, especially the Mother of all Scandals?

 

Malaysia: Corruption is a Way of Life under Najib Razak


July 7, 2017

Malaysia: Corruption is a Way of Life under Najib Razak

by Rais Hussin@www.malaysiakini.com

Thank You, Mr Prime Minister for making Corruption a Way of Life–We are all corrupt today. Integrity is Arabic. Your political buddy Hadi Awang understands since he is Fake Arab.

Just half a year ago, Prime Minister Najib Abdul Razak urged those who were out of a job to resort to becoming a driver with ride-sharing app Uber. He further cited the example of an industrious female graduate who put bread and butter on the table by selling “nasi lemak” (coconut milk rice).

Fast forward to the eve of Hari Raya, and almost dramatically, the Malaysian economy was said to be growing at more than 5.6 percent, and rated the best Asian country to invest in, according to BAV Consulting and the University of Pennsylvania.

Now, something is obviously not right here. When the Prime Minister is experiencing a litany of alleged corruption and malfeasance scandals, exposed by the Wall Street Journal, New York Times and Washington Post not least, his spinners in Putrajaya and UMNO – including the equally tarnished Hadi Awang – claimed that there was an “American plot” to bring down the Malaysian government and its ostensible “Muslim or Islamic” leadership.

Image result for jho low 1mdbPenang born Financial Whiz –Not even his own can trust him

 

Two issues arise here: If the Malaysian government and party mouthpieces, including PAS and UMNO, ask the people to distrust the American media, why then cite American indices to showcase the growth of the country?

Now, if the reverse is true, that the statistics and revelations from America are indeed valid, why then ask Malaysians to reject them only when the issue revolves around 1MDB?

Obviously, the Malaysian Prime Minister and his spinners cannot get the facts right, and are nitpicking their way through a heap of ludicrous propaganda materials as they see fit. If there was anything related to corruption or malfeasance, out they went. When the numbers seemed to reflect their own spin, in they came, into the prime minister’s speech.

With a prime-minister-cum-finance-minister who cannot get the narrative right, why does Putrajaya even care what the people think?

But then they do. The election is coming. Come hell or high water, the 14th general election has to be called by the middle of 2018. The government can only enjoy a certain margin of advantage, if at all, only by lying through its teeth – the same way it has lied about 1MDB, Felda Global Ventures Holdings Berhad (FGV), incoming Chinese investments and even the infamous Saudi donation.

Barring a repeated narrative of falsehoods and deceptions through coordinated fake news dissemination, the prime minister and his cabinet cannot survive.

But what did the Prime Minister name in his Aidilfitri speech as the “five risks” facing Malaysia?

On geopolitics, Malaysia has clearly lost the plot. Instead of being fair and good to all great powers, Malaysia has become entrenched in China’s corner, at a time when China is behaving aggressively and assertively in the South China Sea.

When the US and members of ASEAN cannot trust Malaysia on our foreign policy – granted our tilt to the axis of Beijing – why does the government even want to mention geopolitics as a national risk to begin with?

Well, Najib had to. If not, he would have risked looking more irrelevant than ever. Despite claiming to be a golfing buddy of President Donald Trump, has Trump made any phone calls or extended any visits to Malaysia yet? No.

In fact, during the ASEAN Summit in April this year, Trump invited the Thai Prime Minister, the Singaporean Prime Minister and the Philippine President to visit the White House. But there was no invitation to Najib. In fact, when Trump spoke to President Rodrigo Duterte of the Philippines, he asked Duterte if China could be “trusted” to handle North Korea.

Najib himself must have assumed that such a question could have been posed to him, as he has been trying to position himself as an insider on China. But, wait, something is not right here. If Najib is an insider on China, as he likes to claim, how did he invite Wanda Group to invest in Bandar Malaysia, only to see Wanda Group being investigated for financial irregularities?

And, if Najib is such a savvy insider on China, why are there illegal Chinese trawlers and fishing vessels still operating in the waters off Kelantan, Terengganu, Pahang, Johor, Sabah, and Sarawak?

It would have been better if Najib did not place geopolitics at the top of the risks Malaysia currently faces. After all, Najib’s impotence in issues ranging from 1MDB to Malaysian fishing rights has been as clear as night and day since 2009.

As for the threat of Islamic State, Najib affirmed that Malaysia is one of the safest countries in the world, ranked well within the first fifty. But with more than 160 Malaysians fighting in Iraq and Syria, and several others already fighting in Marawi in the Philippines,  how safe can Malaysia be when the shores of Sabah and Sarawak could be easily breached?

In fact, there have been numerous cases of kidnappings off the coast of Sabah and Sarawak, all of which have hit families without the means of paying the ransom. Several families have had to go down on their knees in opposition rallies – not government rallies – to beg for donations to rescue their loved ones who have been kidnapped.

Additionally, when a recent ransom was paid for four Sarawakian hostages, Inspector-General of police Khalid Abu Bakar claimed ignorance about the money collected for the ransom.

When Defense Minister Hishammuddin Hussein, Najib’s own cousin, could not resolve any of the issues above, he was appointed as a special functions minister in the Prime Minister’s Department in charge of Islamic State.

When the shares of FGV went under, former Minister in the Prime Minister’s Department Idris Jala was brought in to look into the issue. Instead of resolving it, Idris Jala took to declaring that he only needed six days to find a solution. Six days came, and went, and again no solution was presented. But did the Prime Minister hold him accountable? No.

If this is a normal country, it is only “normal” by Najib’s own “Jho Low” standards. This is how Jho Low went missing with a vessel named “The Equanimity”.

Does the Prime Minister even know what “equanimity” means? Well, it means mental calmness and composure.

With a prime minister who allegedly allowed someone who graduated from the University of Pennsylvania’s Wharton School of Business to steal billions from Malaysia, it is no wonder that he still looks up to Wharton’s rankings. In other words, one can borrow heavily, and steal from Malaysian coffers, and not be punished at all. With a prime minister like Najib, who needs enemies?

The real challenges the nation is facing now are corruption, malfeasance, abuse of power, the destruction of democratic institutions, and the complete eclipse of integrity. Corruption used to be a fact of life in Malaysia. Now it is a way of life.

 

Can Mahathir’s return save Malaysia?


July 6, 2017

Can Mahathir’s return save Malaysia?

by William Pesek*

http://asia.nikkei.com/

Bold change is needed to restore Malaysia’s competitiveness

Image result for doctor in the house

Malaysians, Keep your cool. Dr.Mahathir is around to save you from Najib Razak

Malaysians could be excused for wondering if they are stuck in a time warp as Mahathir Mohamad rails against a sinister force wrecking an economy he spent two decades building.

But times have changed. The last time 31 million Malaysians witnessed this spectacle was 1997, and the target was billionaire investor George Soros. Today, the former prime minister is denouncing the current one, Najib Razak. And in a delicious twist of irony, even Soros shares Mahathir’s misgivings about Najib’s willingness to burn down one of Southeast Asia’s most promising economies just to stay in power.

Image result for doctor in the house mahathir

Malaysia’s 92 Year Old Comeback kid

Might this headline-grabbing tussle change policies that are undermining Malaysia’s living standards? Unfortunately, the probable answer is “no.”

Mahathir, 91, says he “may be forced to consider” abandoning retirement to rescue Malaysia from corruption scandals and neglect. Among the problems: since 2009, Najib has broadened affirmative action policies that benefit the ethnic Malay majority at the expense of productivity, deterring foreign investment. The state fund Najib created, 1Malaysia Development Bhd (1MDB), is the subject of money-laundering investigations from Singapore to Zurich to Washington.

Image result for Najib Razak

Malaysia’s Infamous Prime Minister Najib Razak is feeling the political heat

The 1MDB fiasco accelerated Najib’s slide from Mahathir prodigy to nemesis. Mahathir rarely misses a chance to demand Najib step down over disclosures that some $700 million found its way into the prime minister’s pockets (Najib denies any wrongdoing and claims “personal donations” from Saudi Arabia, whatever that means). Soros, a U.S. citizen, appears equally aghast. According to emails released by WikiLeaks, Soros lobbied the U.S to disassociate itself from Najib even as Washington engaged with Malaysia to negotiate the Trans-Pacific Partnership trade deal.

But would a return to Mahathir’s firebrand ways really help? He deserves considerable credit for transforming a tropical backwater into an Asian tiger with some of the region’s most impressive skylines. But Mahathir’s 22-year tenure that ended in 2003 was marred by authoritarian leanings, media intolerance and insular industrial policies like building national car brand Proton. His impolitic tirades found a global audience in 1997 and 1998 when he, bizarrely, blamed Jews — Soros, especially — for a plunge in Malaysia’s currency. His capital controls and jailing of his pro-capitalism deputy prime minister drew admonitions from around the globe.

There is also what Mahathir’s return says about today’s Malaysia. For one thing, it speaks to the dearth of young leaders to replace the old warlords. For another, the opposition is too feckless to provide Mahathir a plausible route back to the premiership. His old party, United Malays National Organisation, is also Najib’s, and it has held power for more than six decades. Barring a critical mass of party elders tossing Najib to the curb, which is highly unlikely, Mahathir would have to find another way in.

The wild card here is that Mahathir`s battles with Najib prod the government to do its job, not just dole out patronage. The main task is increasing competitiveness. When Mahathir left office, Malaysia ranked 37th on Transparency International’s corruption index. By 2016, it had slumped to 55th place. Since Najib took over in 2009, Malaysia has also lost ground in the productivity and efficiency scales — ranking 21th in competitiveness by the World Economic Forum then and 25th now. Najib’s team is big on splashy conferences to tout success in raising Malaysia’s game, even though the facts belie the claims.

The battle-scarred Mahathir is just as charismatic as Singapore’s Lee Kuan Yew in his post-leadership incarnation. Some pundits argue Mahathir could act as a Trojan horse, attacking Najib’s stranglehold from inside. Yet even if Mahathir outmaneuvered Najib and reclaimed the crown, there is no guarantee things would change course significantly. To do so would be to water down the policies and laws that kept Mahathir in power — ones Najib is now using to cling on.

Only bold change will ensure Malaysia thrives in this Asian century. Its neglect of Chinese and Indian minorities, for example, is self-defeating economic apartheid. It encourages many of Malaysia’s best and brightest to flee to Singapore or Hong Kong and increases the relative attractiveness of Indonesia, the Philippines and Vietnam for foreign executives.Bold change is needed to restore Malaysia’s competitiveness.

The 1MDB scandal continues to do considerable damage to the Malaysian brand. And while 1MDB replaced Malaysia Airlines losing a Boeing 777 in the global headlines, the two incidents are not completely unrelated. The bungled search for flight MH370 — and the opacity and cluelessness of the official response in the weeks following the disappearance in 2014 — exposed a political system unaccustomed to basic accountability. Malaysia’s clumsy response to 1MDB followed a similar pattern, offering insights into how a resource-rich nation with reasonable growth rates could be ensnared in the middle-income trap.

Instead of scrapping antiquated race-based quotas for hiring and business contracts and getting the state out of the private sector, Najib doubled down on 1971 — the year his prime minister father introduced this “New Economic Policy.” In 1991, Mahathir tried to augment it with a “National Development Strategy,” but Malaysia has done much more strategy-spinning than ensuring development keeps pace with Asian peers now pulling away from Najib’s economy.

Asia-based journalists long missed Mahathir’s fiery rhetoric and mercurial style. I was in that Hong Kong ballroom 20 years ago when he complained bitterly about the “rape” of Malaysian markets by Soros and his ilk. And let us face it, Najib brought this wrath on himself. Entertaining as he is, though, Dr. M is a wildly imperfect messenger for what ails the economy. The time warp Malaysians should fear as Mahathir and Najib exchange blows is one that takes living standards backwards.

*William Pesek is a Tokyo-based journalist and author of “Japanization: what the world can learn from Japan`s lost decades”. He is a former columnist for Bloomberg.