Bersih 4.0: Persuasion at a Premium

September 2, 2015

Bersih 4.0 Mattered

by Terence Netto

…[T]here’s a premium now on persuasion. Threats or coercion don’t work to convince people to do or not to do a thing. Absent persuasive reasons, you can’t make headway. You lose out, you have to retreat in embarrassment at your lack of persuasive power.–Netto

COMMENT After the gathering comes the reckoning.Now that the Bersih 4 gathering is over, the debate has begun on whether it all mattered.

It has in one respect: there’s a premium now on persuasion. Threats or coercion don’t work to convince people to do or not to do a thing. Absent persuasive reasons, you can’t make headway. You lose out, you have to retreat in embarrassment at your lack of persuasive power.

Take the ban issued on the eve of the gathering on the wearing of yellow Bersih 4 T-shirts and also the announcement that the protest was illegal.

Both the T-shirt ban and the march’s proscription had to slink away in embarrassment because of their lack of persuasive power.It must have been that even their enforcers were too abashed at the bans’ lack of cogency to want to impose them.

In Bersih 4’s immediate aftermath, the bans’ chief proponent, Home Minister Zahid Hamidi, is seen to appeal to journalists to help the BN persuade non-Malay voters in Selangor to vote for the BN.

That’s quite a turn from not so long ago when he was more likely to lament the “spin” he alleged some journalists working for web news portals constantly subjected whatever it was he said.

Bersih 2.0, the protest gathering’s organisers, has shored up the paradigm shift to persuasion by appealing to the rakyat who turned up for the march not to sit on their laurels now that they have made emphatic the point about the legitimacy of the people’s right to assemble.

Bersih 2.0 urged voters to persuade their MPs to vote for a no-confidence motion against the government of Najib Abdul Razak at Parliament’s sitting next month.

No doubt, voters, especially the marchers who came out on the first day to show their support for Bersih’s goals, will be encouraged to resort to that persuasion simply from discovery that the largely non-Malay turnout on the first day had spurred diversity in the second day’s turnout.

Good demonstration of persuasion

Talk about persuasion, there was a good demonstration of its power in the second day’s racially diverse turnout in comparison to the first day’s.

Clean Malaysia.2015

Possibly, nobody gave the persuasive force of a huge demo a bigger assist than former Prime Minister Mahathir Mohamed who appeared for six minutes on the first day and for an hour on the second.

His detractors argued that it was only tepid support he lent the gathering in a fleeting presence on the first day. As if to prove them wrong, Mahathir appeared for an hour on the second day.

Would he have done that if the crowds had not been bigger and racially diverse on the second day? Score another point for the power of legitimate suasion.

For persuasion to work, listeners must be sensitised to nuances into the actions and arguments deployed in the public square.In response to criticism that he had crossed over to the opposition, Mahathir argued that his two appearances at the Bersih protest were not in support of the NGO’s goals but that he was backing the people’s desire to see Prime Minister Najib Abdul Razak ousted by a vote of no-confidence.

He was careful to make the distinction between support for Bersih’s primary goal of electoral reform and its incidental one of removal of Najib from office.

The Bersih marchers are not going to quibble over these nuances; they were just glad to receive the backing of someone who hitherto had been an arch-foe of street demos.

Mahathir was compelled to make further distinctions, those between his anti-street demo stance of before and his current support for them.

He said his opposition of before was premised on the availability of channels for the expression of the people’s grievances against the system.He argued that such channels under Najib have been closed up and resort to street demos was the only available option.

Hence he, having for long chafed at the bit and found no recourse, could not help but make common cause with the street protesters of Bersih 4.

Nuanced distinctions

The thing about all this reasoning by Mahathir is that he makes them and in making them is constrained to make nuanced distinctions.This will compel aficionados of the Najib administration to do the same.

Already they are out to nab what they term as the ‘masterminds’ of the Bersih 4 gathering. They like to infer that there were ‘masterminds’ when all along the people behind the quest for electoral reform and for clean governance have openly displayed their bona fides.

Creating red herrings and chasing after ghosts are the weaknesses of those without persuasive cause and reasons.Bersih 4 has made the curtailment of their tenures easier by reason of their apparent lack of cogency.

Those against the no-confidence motion must ready their case; the other side has offered theirs backed by persuasive reasons.


A Participant’s Perspective on Bersih 4.0

September 2, 2015

Dr Wong Chin Huat: A Participant’s Perspective on Bersih 4.0

by Dr. Wong Chin Huat@Facebook


The question most frequently asked on Bersih 4 is: why are they so few Malays? I do not buy the two most common answers: first, PAS does not participate and Harapan Baru does not have the clout; second, Malays are worried of violence and chaos.

For me, the answer is straightforward: the Malays feel politically vulnerable because three main Malay-based parties – first PKR, then PAS, now UMNO – are split while the Chinese are seemingly so united behind the opposition especially DAP.

Wong Chin Huat Bersih 4.0bMalaysian Malays at Prayers –Bersih 4.0

To discourage the Malays to join Bersih 4, one may just need to warn them: if Malays join in enthusiastically, then not only Najib will go, UMNO will lose power too and the now politically assertive Chinese will dismantle NEP and weaken Islam.

Against this backdrop, even if PAS has mobilised, Malay turnout will still be weak because of this anxiety. And “violence and chaos” cited in the Merdeka Centre is but the code word for the collapse of UMNO’s one-party state.

Will I blame our Malay friends who don’t join us? Of course not. Everyone has every right to want the country to be cleaner, freer and more democratic. That needs not have anything to do with ethnicity or religion.

Wong Chin Huat Bersih 4.0Sleeping on the Street for Bersih 4.0

I will not even blame them on their anxiety. Can people force themselves to not be anxious? Simply because the dismantling of UMNO’s one-party state is a colossal change, all of us need a soft landing, not only the Malays who have been told that they will be “bangsat” without UMNO.

Malaysia’s political system has been so winner-takes-all, with losers not only marginalised but often also persecuted. Clearly, this is the fear many UMNO members harbour.

We cannot have a smooth transition until we can convince fellow Malaysians in UMNO this: the party(-state) is over but UMNO can choose to transform itself into a competitive democratic parties — like Indonesia’s Golkar, Taiwan’s KMT and Mexico’s PRI.

It is more realistic to ensure you can come back after losing than insisting you will have lost.

In full recognition of the political reality, Bersih 2.0 makes it clear while pressing for Najib’s resignation is necessary for the institutional reforms we need, Bersih 4 is not a rally to end UMNO’s rule and will not force Najib out ala the Philippines’ People’s Power or Arab Spring.

Wong Chin Huat Bersih 4.0aResting at Bersih 4.0

We will end the rally peacefully tonight (August 30) with the Merdeka countdown.We aim to empower Malaysians so that independence is a psychological reality that they fear neither each other because of differences nor the authoritarian government.

If everything ends well tonight, this goal would have been achieved although the push for Najib’s exit remains an uphill battle.

Coming back to the low Malay turnout, while we certainly need to work harder to get more Malays to the streets, should we go this far to border lamenting: why are there so many Chinese? Should the Chinese feel sorry that there are too many of them?

It is time we break this myth that we cannot do anything legitimately until we get the all ethnic representation, or worse, in the right composition: 1 Malay, 1 Chinese, 1 Indian, 1 Sarawakian, 1 Sabahan, etc.

I slept on the pavement on Jalan Tuanku Abdul Rahman last night. It was like a refugee camp with many people — mostly in the illegal yellow Bersih 4  T-shirts — sleeping on not only the pavements, but also middle of the road. Some brought sleeping bags, some used newspapers as their mat, others just slept on the road.

Why did they sacrifice their comfort in bed? Many of them, like me, have booked hotel room for refreshing but chose to sleep on the streets just to show our yearning for change. Most of them were Chinese while there were also some Malays — middle-aged men, youth and a couple.

Woke up at about 6 am, I saw a good group of volunteers giving away free coffee, with placards printing “Tak mau duit kopi” and chantings: “minum kopi, tak mau duit kopi”. I was so moved by their creativity.

Have I forgotten to mention this? They were all Chinese. So were a bunch of volunteers I bumped into last night busy collecting rubbish — they were all Chinese too.

I examine my own anxiety which appeared since the beginning of the rally — that there were too few Malays. I ask myself: what’s wrong that most of them are Chinese? Should I feel sorry that some of my bedfellows on Jalan TAR are not Malays? Should I wish that some of the volunteers should not be there because they are not Malays?

Din and Kamsiah at Bersih4.0

No, why should all the good things they do be less good just because they happen to be in one ethno-religious category and not the other? Why? Aren’t we hypocritical if we let our pragmatism go mad to the extent that we judge one not by one’s behavior but by one’s colour or creed?

BERSIH'S demands5 Bersih Demands

I see two positive implications in the phenomenal Chinese turnout in the Bersih 4 rally, beyond their patriotism and sense of political efficacy.

First, most of them probably have not been exposed to Malay language and culture from indie musics, poetry reading to prayers in the open in such intensity. Many may have yet to remember not to blow their vuvuzela and chant during Muslims’ prayer time.

Some may have overlooked cultural sensitivity in their rejection of corrupt leaders. But this is a learning process, isnt?

Second, if Bersih 4 ends well and peacefully, this will set a precedent that grand rallies can be peaceful, inclusive and strengthening our nationhood, even when the ethnic composition of protesters is skewed.

There will be a long warfare of perception after tonight finale. On one end, UMNO’s mouthpiece will do their best to portray Bersih 4 as a Chinese plot to topple UMNO and sideline the Malays.

On the other end, naysayers will repeat the old tune that Bersih 4 is a failure because Najib will not resign after tonight. I urge all friends out there in Bersih 4 to tell your own story, best with powerful pictures worthy of thousand words.

We have two stories to tell to every other Malaysian whom we may encounter in daily life or on social media:First, the Bersih 4 rally is dominated, not by ethnic Chinese, but patriotic Malaysians.

Second, the Bersih 4 rally is  a great success, no by any means a failure, because we find hope and solidarity in each other.We are Malaysia.


The Unsung Heroes behind Bersih

September 1, 2015

The Unsung Heroes behind Bersih

And after that came Bersih 2 and  Bersih 3, and now, Bersih 4. But the Bersih that came after the 10th November 2007 Bersih march was not what we had in mind. It was not a political movement. It was neither pro-government nor pro-opposition. It was a reform movement, first for electoral reforms and then for political reforms.


by Raja Petra Kamarudin

RPKI did not write anything over the last one week because Malaysia was experiencing Bersih fever and no one really wanted to read anything that had nothing to do with Bersih. But then if you do write about Bersih people would expect you to write something pro-Bersih and in support of Bersih. Any article that does not ask people to come out in support of Bersih would be seen as anti-opposition.

So I thought better I do not write anything and allow Bersih to end first before writing, although a number of people did ask me why I am so quiet after sometimes coming out with three articles a day.

So, yes, people are still talking about Bersih till today. Many are analysing Bersih from this or that angle. So I, too, will write about Bersih, but not from the pro or anti angle. I will just write about…Bersih.

Bersih was first mooted in 2007 after the launch of the anti-Tun Abdullah Ahmad Badawi movement in 2006. Of course, it was Tun Dr Mahathir Mohamad who was behind that movement so understandably we did not get the support of the top leadership of PKR and DAP. The PAS leaders, however, did not seem to have much problems working with Dr Mahathir.

Soon after the 2006 ‘Get Badawi’ movement was launched, Dr Mahathir suggested that the pro-government and pro-opposition Bloggers unite. We had our first meeting at the Press Club attended by Bloggers from both sides of the political divide where we formed a committee. They suggested that I become the President but I declined. I suggested instead that Mahathir loyalist Ron should take that post but he, too, declined. So finally another Mahathir loyalist, Rocky, was appointed the President instead.

It was soon after that when PKR held its annual assembly in Penang, which I also attended but only as a ‘reporter’ and not as a delegate or party member. Azmin Ali took the stage and in front of hundreds of PKR delegates he shouted, “All those who are collaborating with Dr Mahathir can fook off!” Anwar Ibrahim was smirking as he looked at me, giving me a very clear message that that meant people like me who were now working with Dr Mahathir.

t was DAP leader Ronnie Liu, one of the ‘founding fathers’ of Bersih, who contacted me to ask me to get involved. They needed someone who could reach the palace because the plan was to march to the Agong’s palace to hand over a petition for electoral reforms. I then contacted the late Tunku Vic and asked him to also participate because I would need his help to talk to Istana Negara.

It was around that time that UMNO Youth organised a blood donation drive at the Kampung Baru mosque and I asked Ronnie to mobilise a group of DAP supporters, of course all Chinese, to go and donate blood at the mosque, which they did. I felt if DAP could bring along a group of Chinese to donate blood at Mukhriz Mahathir’s event in Kampung Baru that would be good for the planned cooperation between us from the opposition and those pro-government supporters.

We had a number of meetings leading to the 10th November 2007 Bersih march, some in a DAP chap’s house, Uncle Lee, and some in Ron’s house. I even brought along some UMNO supporters to the DAP meeting. Clearly Bersih was not an opposition effort but a joint effort between pro-opposition and pro-government people. Ron even arranged for someone to donate Bersih T-shirts and baseball caps.

The key to the whole thing would be to get His Majesty the Agong to agree to receive the petition from Bersih. And this was the work of Tunku Vic and Din Merican who made numerous phone calls to the right people to obtain the consent of Istana Negara. We made it very clear that Bersih was not a political movement but a non-partisan movement that was supported by opposition as well as government supporters, the UMNO supporters in particular. Basically it was a peoples’ movement with no political affiliations and one that was only interested in electoral reforms.

We eventually received consent from Istana Negara and were told that only ten representatives would be allowed to enter the palace. The rest, which we expected to number in the tens of thousands, would have to remain outside the palace gates. And with that the police, which had initially classified the planned march as an illegal gathering, reluctantly had to agree to let us march.

Bersih was now a movement officially recognised by the government and Istana Negara. We then sat down to prepare our list of electoral reforms that we wanted to hand to His Majesty the Agong.

On 10th November 2007, we marched to the palace but on reaching the palace gate we were told to wait outside and not go in yet. The palace representative came outside to meet us and said that our ten representatives are welcome to enter the palace and we replied that we had been told to wait because some of the party leaders were on the way.

The crowd that had been waiting for almost an hour began to get restless. Some walked up to me to ask what was going on. Is the palace now refusing to allow us in? No, I replied. In fact they came out to invite us in. But we had been told to wait for the party leaders.

Eventually the party leaders arrived and immediately took the petition from us and walked into the palace. After handing over the petition to the palace they came out and started making speeches. We could see that the police were becoming agitated because we had assured them that this was not going to be turned into a political rally.

After the party leaders finished giving their speeches we broke up and went home. The Bersih rally, which had originally been intended as a peoples’ march to the Agong’s palace to hand a petition calling for electoral reforms, had been turned into a political rally. Understandably Tunku Vic was not too pleased because that had more or less violated the trust that the Agong had placed in us when we assured His Majesty that this was not about politics but about electoral reforms.

After that, of course, came the 2008 general election, which could be said to be partly influenced by Bersih and the Hindraf rally that same month. It also cannot be denied that Pakatan Rakyat’s success was also because the pro-government and pro-opposition Bloggers united to send the same message to the voters, which is vote for change.

Never before in history had those from both sides of the political divide united under one cause.

2008 was the year when we came under the banner of Barisan Rakyat and not Barisan Nasional or Pakatan Rakyat. We even had our own poster. After the 2008 general election we decided to take the Bersih effort one step further. Bersih was about electoral reforms. However, to be able to see electoral reforms we need to first see political reforms. So we met, yet again, in Tunku Vic’s house together with Umno and DAP supporters to come out with a document that listed down what political reforms were needed.

Basically, electoral reforms would be part of or a component of political reforms. If we can see political reforms then electoral reforms would come as well. It is not enough we just see electoral reforms. We need more than that. We need political reforms first, which would include electoral reforms.

But by then those in Pakatan Rakyat no longer wanted to talk about this. They had already won five states and had denied Barisan Nasional its two-thirds majority in Parliament. They were confident that in the next general election in 2013 they would be able to win the federal government.

Those in Barisan Nasional, such as Dr Mahathir, also no longer needed to fight for reforms. Their only interest was to oust the Prime Minister and that had already been achieved. And that was the only objective they had in mind. Reforms were the excuse they were using just to get rid of the Prime Minister.

So we found that the fight for political reforms was no longer on the agenda of both sides of the political divide. So this meant electoral reforms would also no longer be on the agenda as well. And this meant we would need a third force if we wanted to achieve the reforms we were seeking. And this would have to be something that the civil society pushes for.

Barisan Rakyat-2007Barisan Rakyat not Pakatan Rakyat

And that, of course, was when we came out with the idea of a civil society movement that we called the Malaysian Civil Liberties Movement or MCLM. But that is a story I have told many times so no need for me to repeat myself.

And after that came Bersih 2 and  Bersih 3, and now, Bersih 4. But the Bersih that came after the 10th November 2007 Bersih march was not what we had in mind. It was not a political movement. It was neither pro-government nor pro-opposition. It was a reform movement, first for electoral reforms and then for political reforms.

But I suppose that is something that can now never be achieved. Anyway, to me, the unsung heroes who made Bersih back in 2007 a success were Tunku Vic, Ronnie Liu, Din Merican, Ron, Uncle Lee, Jad, and many more from UMNO, DAP, PAS and PKR, Bloggers included, who put aside their political differences for the sake of seeking reforms.



Mahathir–The Game Changer for Bersih 4?

September 1, 2015

Malaysia: Mahathir–The Game Changer for Bersih 4?

by Scott Ng

mahathirbersih-4The Game Changer for Bersih 4 or a Free Rider?

Mahathir Mohamad’s presence at last weekend’s Bersih rally marked a watershed moment in Malaysian politics. Perhaps it was not the watershed moment Bersih was looking for, but it was of singular significance nonetheless, considering the less than illustrious history Mahathir has had with street demonstrations, something many felt compelled to point out.

Up till that point, Bersih 4 had been impressive, but lacking the needed impact to turn heads in Putrajaya. The crowds were well-disciplined and jovial, everything was proceeding as planned, but there was no spark to ignite the moment, unlike previous Bersih rallies, where turmoil defined the protests as some of the most significant in Malaysian history.

There was also the matter of the crowd’s racial composition, as the low Malay turnout led to government mouthpieces spinning Bersih 4 into a Chinese-DAP movement as opposed to a truly Malaysian one. The full spectrum of Malaysian colour needed to be on its most extravagant display, but it fell short and Najib celebrated another victory as media headlines painted the day’s procession as a largely tame event.

Then the rumblings started. Mahathir will be at Bersih. Tun M is coming. He’s coming when we need him. And sure enough, Mahathir appeared out of the blue, causing a media frenzy that shot Bersih back into significance. Although he left as quickly as he came, he had ignited a spark for Bersih. Immediately, Najib’s damage control team went into overdrive. They accused Mahathir of being a hypocrite and traitor, having betrayed Umno by having the sheer, unmitigated gall to step foot among the rabble rousers. How dare he consort with the enemy, they screamed.

Mahathir would make his intentions known the next day as once again, word spread of his impending arrival at the rally, this time accompanied by photos of him and his wife making their way to the crowds along with former law minister Zaid Ibrahim. And sure enough, he came and delivered a speech from the steps of Central Market.

In his speech, Mahathir made four very bold statements that may lay the foundations for future protests. One, he emphasised that he was at the rally for the people, placing importance on people power in the effort to oust Najib. Two, he announced that all UMNO MPs had been bribed by Najib, along with all of Umno’s division chiefs. Three, he proclaimed again that Najib’s RM2.6 billion did not come from the Arabs, but from 1MDB. Four, he told everyone to keep demonstrating, saying it was one of the last resorts in their attempt to be rid of Najib.

Mahathir’s presence changed the perception that Bersih 4 was a “Chinese thing” and legitimised Bersih and all future rallies as avenues to oust Najib, regardless of the intentions or agendas of the organisers. As an elder statesman, his words carry more weight than the voice of the multitudes, especially to the Malays.

Bersih 4.0 in Jalan Tun Perak

Despite all this, some, including some people in Bersih, felt that it was an apt time to make Mahathir account for his past sins. Yes, his sins are numerous, and yes, there are people who cannot forgive him. He paved the way for Najib to act the way he does.

You can hate him all you want, you can criticise and you can mock, but do not pretend that you did not need him. He came when you needed him the most, deeply aware that some people in the crowd despised him.

Some have called this Mahathir’s repentance. Perhaps it really is his repentance for hand picking what many consider to be the worst Prime Minister in Malaysian history. Perhaps removing Najib is the last goal he needs to achieve so that he may rest a little easier when he goes off for his long sleep. If the old man wants to repent, who are we to stop him or mock him?

Mahathir changed the game for Bersih and the people. He repainted the battle lines as no longer being a case of “DAP/the Opposition against UMNO,” but a case of “The rakyat versus Najib.” Whatever you think of him, Mahathir came through for the people last weekend. Perhaps we should be focusing on that a little more.

BERSIH 4.0: A Pathetic Response from Prime Minister Najib Razak

September 1, 2015

BERSIH 4.0: A Pathetic Response from Prime Minister Najib Razak

by Anisah Shukry

Published: 31 August 2015 3:13 pm| Updated: 31 August 2015 4:48 pm

Von MisesAn Apt Message of Shameless Najib Razak

Prime Minister Datuk Seri Najib Razak’s dismissal of Bersih 4 rally goers last night was pathetic and showed that he was in a state of denial over the extent to which Malaysians were unhappy with him, former diplomat Dato’ Noor Farida Ariffin has said.

The group of prominent Malays, or G25, spokesman said Malaysians turned out in full force over the weekend to demand answers from the government, and he would do well to heed them instead of shrugging them off as “shallow-minded”.

“It’s really pathetic. If they are wise, they would listen to the people.But instead, they are in a sheer state of denial and accusing us of all sorts of things,” said Farida, who had also attended the rally in her personal capacity.

“He made a speech so contrary to the facts of what was happening on the ground. They are just in total denial of reality.If I were him, I would listen to the people and really do something about accepting and instituting changes that the people are demanding.”

During his Merdeka Day message last night, Najib said the rally was unwise, shallow-minded and showed a lack of national spirit.

He said the government rejected any form of street protests that disrupted public order, adding that it did not reflect maturity.

But Farida said today that instead of insulting the protesters, Najib and his administration should have been grateful that the thousands who gathered near Dataran Merdeka were peaceful.

She said the rally yesterday proved Malaysians were not interested in a violent overthrow of the government, but were merely voicing out their views.

Farida added that reports of a low Malay turnout were far from the truth, even though she conceded the Chinese made up the majority of the rally goers.

“There were more Chinese than Malays, yes, but it’s not true there were no Malays at all. They came in full force. There were so many makcik, pakcik, youths – I took pictures with young Malay girls in tudung.”

She said that the absence of rural Malays should not be interpreted as a sign that the country’s largest ethnic group supported Najib. “Rural Malays couldn’t turn up because they couldn’t afford to. During previous rallies, PAS was involved, it put them in buses, brought them into the city.

“They can’t afford the trip to Kuala Lumpur on their own, the overnight stay. It doesn’t mean they are apathetic or don’t care.”

She said she was happy with the rally and the police’s restraint, and declared it a success. “What was so amazing was that people were so well-behaved and good-natured. There was very little police presence. In spite of the baking hot sun, people didn’t lose their cool. They cheered, the mood was party-like – it was more like a carnival.Many of us couldn’t even hear the speeches, but people cheered on anyway,” said Farida with a laugh.

bersih4.0xBersih 4–A Resounding Success

When asked whether her presence at the rally meant G25 wanted Najib to resign, Farida said she and other members of the group who attended were there in their personal capacity.

She added that she was there to demand answers from the government over the state of the country and the 1Malaysia Development Berhad (1MDB) scandal.

“We want answers. We are very unhappy with rapid endemic corruption, allegedly by our leaders.We are fed up with the loss of confidence in the ringgit, what is happening with the economy, we are concerned about 1MDB.”

The two-day gathering, which ended last night, was not only to demand that Najib step down but also for institutional reforms. – August 31, 2015.

It’s the Economy, Mr. Najib, so don’t blink

August 31, 2015

It’s the Economy, Mr. Najib, so don’t blink

by Martin

FT Najib

TODAY(August 31) marks the completion of 58 years of Merdeka. On the economy, there is much to be proud of, with nearly six decades of generally good growth. One key reason is that the national economy has become well diversified. At Independence, Malaya was dependent on exporting just rubber and tin.

Through the years, more commodities including palm oil and petroleum were introduced and the raw materials were processed and manufactured, for example, into rubber gloves and furniture.

The manufacturing sector also diversified to include electronics. Construction has boomed and has high potential. There have been mistakes, too, along the way. Policies could have been better designed and implemented. And growth, though quite well-distributed, could have been more inclusive.

There are many regions and communities still left out of development. This Merdeka, we should resolve that those living at the bottom of the pyramid should receive the most attention and resources.

There is no reason why, 58 years after Merdeka, Malaysia cannot cater to the needs and interests of the poor and vulnerable. Despite the achievements, the economy is now facing what could be its greatest test. We are already inside the start of an economic crisis, and it will get worse before it gets better.

The fall in prices of petroleum and palm oil has rightly been blamed. Our economy is still reliant on commodities and thus affected by the booms and busts of the global commodity cycle, which turned downwards in the past couple of years. Even more important, Malaysia has also become dependent on another boom-bust cycle – that of global finance, the rapid inflows and outflows of funds.

This cycle is even more volatile and dangerous than the commodity cycle. Volatile because the flows can be huge and can change suddenly, and dangerous because the change can damage many parts of the system. There is a large body of literature on the dangers of global financial flows, when trillions of dollars of short-term funds go hunting for investment venues and modes in search of higher yield.

These funds choose Malaysia and other emerging economies to place many billions of dollars. When fundamentals or perceptions change, the funds move out.

Allowing the free flow of speculative funds is not a good idea. When too much comes in, effects include stock market and property price bubbles and currency appreciation.

And when the investors exit, there are other bad effects, as is now becoming evident. Foreign funds in the stock and bond markets are leaving the country. The ringgit has fallen more than 20% since a year ago, with expectations of further falls prompting further outflows. Local capital flight is also taking place.

Since the trade surplus has declined, it cannot fully offset the outflow of funds. Thus the overall balance of payments is now negative and this is reflected in the falls in the foreign reserves from US$132 bil (or RM424 bil at the exchange rate then) on August 29, 2014 to US$94.5bil (or RM356bil) on August 14, 2015.

Unless the investor mood reverses, there is potential ground for higher foreign outflows. The relevant foreign funds are in four categories: equities, bonds and deposits (denominated in ringgit) and loans to Malaysia denominated in foreign currency. Foreign investors have around RM300-400bil in the stock market. This year up to 31 July, they pulled out RM11.7bil from the stock market, according to MIDF Research. Foreign funds invested in bonds denominated in ringgit are high and falling fast. Foreigners own RM206.8bil of government and corporate bonds at end-July, down from RM226bil at end-2014 and RM257bil in July 2014, according to government data.

They also own deposits in Malaysian institutions of RM91bil as at end-March. Thus, there are RM600-700bil of foreign funds in the country as equities, bonds and deposits. If a sizable amount moves out, this would further drain the foreign reserves which stood at RM356bil on Aug 14.

On top of this, the public and private sectors also had RM399bil of external debt (of which RM157bil is short-term) denominated in foreign currencies as at end-March 2015, according to Bank Negara.

The country has thus become dependent on foreign funds and lenders to maintain their assets in and loans to Malaysia. The foreign reserves are still quite high, but has been declining and subject to future stress if outflows continue.

It is timely that an economic task force has been set up by the Prime Minister and it should examine all facets of the emerging crisis.

Should the country re-establish a currency peg? If this is done, there should also be controls on capital outflows, otherwise the fixing of the currency may not prevent and may instead cause further large capital outflows. The 1998-2000 policy measures that overcame the crisis were successful because they were done in combination: a fixed exchange system; control over certain types of capital outflows; and reflationary monetary and fiscal policies. One without the others would not have worked.

The committee should also consider whether it was wise to have recently liberalised the financial system so much, to now have such free inflows and outflows of funds. Excessive fund inflows and debts could have been limited in the first place, as done in some other countries. Local institutions should also not have been encouraged or allowed to invest so much abroad; now it is not easy to get them to reverse the flow.

The policies have resulted in high dependence on foreign funds, and the economy being susceptible to the stress of capital outflows. We shouldn’t welcome or attract all the funds that want to enter to do so, and then later bewail the fact that these same funds now want to exit when the economy cannot afford them to do so.

In any case, it is important to give priority to reviving the economy, which is now clearly under stress and already inside a crisis.