Congratulations. Dr Khalid


August 24, 2018

Congratulations. Dr Khalid

PM appoints Muhammed Abdul Khalid as economic advisor

   Dr Abdul Khalid and Hwok-Aun Lee

Economist Muhammed Abdul Khalid has been appointed as the economic advisor to Prime Minister Dr Mahathir Mohamad.

This follows Muhammed’s stint as the secretariat head for the Council of Eminent Persons (CEP), which has served past its 100-day tenure.

Muhammed is best known for his talk show appearances, where he explains economic issues in simple language.

In 2014, he authored the well-received “The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia” which illustrated how Malaysia’s wealth gap was widening in tandem with its economic success.

He was formerly a research head at the Khazanah Research Institute, chief economist with the Securities Commission and senior analyst with the Institute of Strategic and International Studies.

He has also held positions with the United Nations Development Programme (UNDP), United Nations Children’s Fund (Unicef) and United Nations Economic and Social Commission for Asia and the Pacific (Unescap).

The Penang-born economist was awarded a PhD with highest honours from the Paris Institute of Political Studies, better known as Sciences Po, and is the founder of big data firm DM Analytics.

His appointment will take effect on August 27.

NY Times Book Review: Looking Back@Crash of 2008


August 11, 2018

CRASHED

By Dr. Fareed Zakaria

How a Decade of Financial Crises Changed the World
By Adam Tooze
706 pp. Viking. $35.

Steve Bannon can date the start of the Trump “revolution.” When I interviewed him for CNN in May, in Rome, he explained that the origins of Trump’s victory could be found 10 years ago, in the financial crisis of 2008.

“The implosion of those world capital markets has never really been sorted out,” he told me. “The fuse that was lit then that eventually brought the Trump revolution is the same thing that’s happened here in Italy.” (Italy had just held elections in which populist forces had won 50 percent of the vote.)

Adam Tooze would likely agree. An economic historian at Columbia University, he has written a detailed account of the financial shocks and their aftereffects, which, his subtitle asserts, “changed the world.”

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If journalism is the first rough draft of history, Tooze’s book is the second draft. A distinguished scholar with a deep grasp of financial markets, Tooze knows that it is a challenge to gain perspective on events when they have not yet played out. He points out that a 10-year-old history of the crash of 1929 would have been written in 1939, when most of its consequences were ongoing and unresolved. But still he has persisted and produced an intelligent explanation of the mechanisms that produced the crisis and the response to it. We continue to live with the consequences of both today.

CreditTyler Comrie; Photograph courtesy of GSO/Getty Images

As is often the case with financial crashes, markets and experts alike turned out to have been focused on the wrong things, blind to the true problem that was metastasizing. By 2007, many were warning about a dangerous fragility in the system. But they worried about America’s gargantuan government deficits and debt — which had exploded as a result of the Bush administration’s tax cuts and increased spending after 9/11. It was an understandable focus. The previous decade had been littered with collapses when a country borrowed too much and its creditors finally lost faith in it — from Mexico in 1994 to Thailand, Malaysia and South Korea in 1997 to Russia in 1998. In particular, many fretted about the identity of America’s chief foreign creditor — the government of China.

Yet it was not a Chinese sell-off of American debt that triggered the crash, but rather, as Tooze writes, a problem “fully native to Western capitalism — a meltdown on Wall Street driven by toxic securitized subprime mortgages.”Tooze calls it a problem in “Western capitalism” intentionally. It was not just an American problem. When it began, many saw it as such and dumped the blame on Washington.

In September 2008, as Wall Street burned, the German Finance Minister Peer Steinbruck explained that the collapse was centered in the United States because of America’s “simplistic” and “dangerous” laissez-faire approach. Italy’s finance minister assured the world that its banking system was stable because “it did not speak English.”

 

In fact this was nonsense. One of the great strengths of Tooze’s book is to demonstrate the deeply intertwined nature of the European and American financial systems. In 2006, European banks generated a third of America’s riskiest privately issued mortgage-backed securities. By 2007, two-thirds of commercial paper issued was sponsored by a European financial entity.

The enormous expansion of the global financial system had largely been a trans-Atlantic project, with European banks jumping in as eagerly and greedily to find new sources of profit as American banks. European regulators were as blind to the mounting problems as their American counterparts, which led to problems on a similar scale. “Between 2001 and 2006,” Tooze writes, “Greece, Finland, Sweden, Belgium, Denmark, the U.K., France, Ireland and Spain all experienced real estate booms more severe than those that energized the United States.”

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Credit Sonny Figueroa/The New York Times

 

But while the crisis may have been caused in both America and Europe, it was solved largely by Washington. Partly, this reflected the post-Cold War financial system, in which the dollar had become the hyper-dominant global currency and, as a result, the Federal Reserve had truly become the world’s central bank. But Tooze also convincingly shows that the European Central Bank mismanaged things from the start.

The Fed acted aggressively and also in highly ingenious ways, becoming a guarantor of last resort to the battered balance sheets of American but also European banks. About half the liquidity support the Fed provided during the crisis went to European banks, Tooze observes.

Before the rescue and even in its early stages, the global economy was falling into a bottomless abyss. In the first months after the panic on Wall Street, world trade and industrial production fell at least as fast as they did during the first months of the Great Depression. Global capital flows declined by a staggering 90 percent. The Federal Reserve, with some assistance from other central banks, arrested this decline. The Obama fiscal stimulus also helped to break the fall.

 

Tooze points out that almost all serious analyses of the stimulus conclude that it played a significant positive role. In fact, most experts believe it ended much too soon. He also points out that large parts of the so-called Obama stimulus were the result of automatic government spending, like unemployment insurance, that would have happened no matter who was president. And finally, he notes that China, with its own gigantic stimulus, created an oasis of growth in an otherwise stagnant global economy.

The rescue worked better than almost anyone imagined. It is worth recalling that none of the dangers confidently prophesied by legions of critics took place. There was no run on the dollar or American treasuries, no hyperinflation, no double-dip recession, no China crash.

American banks stabilized and in fact prospered, households began saving again, growth returned slowly but surely. The governing elite did not anticipate the crisis — as few elites have over hundreds of years of capitalism. But once it happened, many of them — particularly in America — acted quickly and intelligently, and as a result another Great Depression was averted. The system worked, as Daniel Drezner notes in his own book of that title.

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A trader on the floor of the New York Stock Exchange in February 2009. CreditJames Estrin/The New York Times

 

But therein lies the unique feature of the crash of 2008. Unlike that of 1929, it was not followed by a Great Depression. It was not so much the crisis as the rescue and its economic, political and social consequences that mattered most. On the left, the entire episode discredited the market-friendly policies of Tony Blair, Bill Clinton and Gerhard Schroeder, disheartening the center-left and emboldening those who want more government intervention in the economy in all kinds of ways. On the right, it became a rallying cry against bailouts and the Fed, buoying an imaginary free-market alternative to government intervention.

Unlike in the 1930s, when the libertarian strategy was tried and only deepened the Depression, in the last 10 years it has been possible for the right to argue against the bailouts, secure in the knowledge that their proposed policies will never actually be implemented.

Bannon is right. The crash brought together many forces that were around anyway — stagnant wages, widening inequality, anger about immigration and, above all, a deep distrust of elites and government — and supercharged them. The result has been a wave of nationalism, protectionism and populism in the West today. A confirmation of this can be found in the one major Western country that did not have a financial crisis and has little populism in its wake — Canada.

The facts remain: No government handled the crisis better than that of the United States, which acted in a surprisingly bipartisan fashion in late 2008 and almost seamlessly coordinated policy between the outgoing Bush and incoming Obama administrations. And yet, the backlash to the bailouts has produced the most consequential result in the United States.

Tooze notes in his concluding chapter that experts are considering the new vulnerabilities of a global economy with many new participants, especially the behemoth in Beijing. But instead of a challenge from an emerging China that began its rise outside the economic and political system, we are confronting a quite different problem — an erratic, unpredictable United States led by a president who seems inclined to redo or even scrap the basic architecture of the system that America has painstakingly built since 1945.

How will the world handle this unexpected development? What will be its outcome? This is the current crisis that we will live through and that historians will soon analyze.

Dr. Fareed Zakaria is a CNN anchor, a Washington Post columnist and the author of “The Post American World.”

Follow New York Times Books on Facebook and Twitter, sign up for our newsletter or our literary calendar. And listen to us on the Book Review podcast.

 

A version of this article appears in print on , on Page 1 of the Sunday Book Review with the headline: The Aftershocks.

Jho Low’s Super Yacht –Equanimity– Back in Malaysia


August 7, 2018

Jho Low’s Super Yacht –Equanimity– Back in Malaysia

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https://www.asiasentinel.com/politics/low-taek-jho-yacht-malaysia/

The US$250-million super-yacht Equanimity, which led international authorities on a high-seas chase across half the world before it was seized by Indonesian authorities in February, is expected to be turned over to Malaysia at Port Klang’s Boustead Cruise Center, according to authorities.

Equanimity, launched in 2013 in a Netherlands shipyard, was the brainchild of the youthful financier Low Taek Jho, who at age 28 helped former Malaysian Prime Minister Najib Razak turn an obscure investment fund into 1Malaysia Development Bhd., which became the biggest scandal in Malaysian history, with US$4.5 billion missing to scandal and billions more lost to epic mismanagement.

Najib is now free on bail facing corruption charges, maintaining his innocence, although he is barred from leaving the country. The cherubic Jho Low, as the Penang-born Wharton grad was known in his playboy days, is nowhere to be found. He is listed on Wikipedia as having a fortune estimated at US$1.5 billion.

Jho Low’s lawyer, James F. Haggerty, said in a prepared release that the seizure of the vessel was “a violation of an Indonesian law and court decision by a politically motivated Malaysian government bent on advancing its own political agenda with little regard to existing court rulings or basic legal rights.”

Equanimity, Haggerty said, is owned by Equanimity (Cayman) Ltd and the company was already litigating the matter in Indonesia and the United States. In April, a US judge ruled the yacht could be transported to the US and into the Justice Department’s custody. However, that ruling has never been carried out.

“Mahathir has chosen to bring the asset illegally into a rigged Malaysian system manipulated by a man who only cares about his absolute political rule. It is ultimately justice that suffers,” the statement said.

Finance Minister Lim Guan Eng, the head of the Democratic Action Party, said the vessel would be auctioned off.

News reports in July had Jho Low fleeing Macau, which has been a bolt-hole on several occasions, for China in front of a series of search warrants issued across the planet over his part in the 1MDB scandal.  Malaysian police on July 9 said Macau authorities informed them by email that Low had left the gaming enclave.

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Najib Razak and his cell mate, Jho Low

“The e-mail did not specify when Low left Macau,” Malaysian National Police Chief Mohamad Fuzi Harun told reporters on July 11. “It is hard to trace him as he is believed to be using multiple passports.”

The US Justice Department, which called 1MDB the biggest kleptocracy case in the agency’s history, had been trying to find the yacht since 2016 to add it to the vast list of confiscations it had made in the United States of goodies bought with stolen 1MDB money. Equanimity’s crew turned off the transponders which would allow it to beam its position to satellites and sought waters where G-men couldn’t go, turning up sometimes in New Zealand, sometimes in Macau, sometimes off Korea.

But eventually it turned up in Bali, where the US alerted Indonesian authorities. Jakarta’s notoriously corrupt South District Court blocked the Justice Department’s move to seize the vessel, raising concerns that it might take to the high seas again.

But when the United Malays National Organization and Najib lost the May 9 general election, the game was up. Prime Minister Mahathir Mohamad announced on August 6 in a Facebook post that that “we are happy since the Equanimity yacht has been handed over to us by Indonesia.”

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Miranda Kerr–One of Jho Low’s Playmates

The 90-meter yacht is said in yachting magazines to feature a deck-level Jacuzzi, a sauna, helicopter pad, swimming pool, beach club, beauty salon, zero-speed stabilizers, gym, spa, elevator, movie theatre, tender garage, swimming platform, air conditioning, steam room, Turkish bath, beauty room, underwater lights and owner’s stateroom study, sleeps 26.  Registered in the Cayman Islands, it was at the center of a truly astonishing burst of excess by Jho Low, his Arab Gulf buddies and the Najib family that raised questions how they ever thought they would get away with it.

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The fund got underway in 2008. A couple of years later, Jho Low turned up in New York, buying magnums of Cristal Champagne and pouring it over the likes of Paris Hilton and other blondes. He buddied up with singer Lionel Ritchie and, with Arab friends who turned out to be heavily involved in fleecing 1MDB, staged a moveable feast across Broadway, making the notorious Page 6 of the New York Post, where celebrities go to be photographed.

Vast collections of jewelry, homes in New York and Beverly Hills, airplanes, paintings, a staggering panoply of loot has been sequestered by the US government, including the proceeds from two movies by the production company set up by Riza Aziz, the son by a previous marriage of Rosmah Mansor, Najib’s wife.

Although Malaysia authorities confiscated an astonishing US$193-233 million in jewelry, watches, handbags and other valuables from the Najib family’s homes, as much as RMB100 billion (US$24.8 billion) of funds linked to Najib and his wife, Rosmah are stashed in bank accounts outside Malaysia, according to a source quoted by Sarawak Report, which said much of that money is believed to be in Hong Kong bank accounts, after having travelled through German and Swiss banks.

That leaves the question of what’s become of Jho Low himself. It’s hard to believe Chinese authorities will have much patience with him.

Mahathir thanked Indonesian President Joko Widodo for his cooperation in returning the vessel.  Mahathir visited Jakarta in June.  Ties between Malaysia and Indonesia are close with Mahathir visiting Jakarta in June, his first official tour of the region.

Global Economy Vulnerable a Decade After


August 1, 2018

Global Economy Vulnerable a Decade After

Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC).

The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and related policy ‘spillovers’ exacerbating real economic volatility. It also revealed some vulnerabilities of the post-Second World War (WW2) US-centred international financial ‘architecture’ – the Bretton Woods system – modified after its breakdown in the early 1970s.

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Robert Triffin, the leading international monetary economist of his generation, had long expressed concerns about the use of a national currency as the major reserve currency. International liquidity provision using the greenback required the US to run balance-of-payments deficits, ensuring US monetary policy spillovers to the world economy while eroding confidence in the greenback.

The Bretton Woods system was under increasing strain from the late 1960s, as US President Johnson funded the increasingly unpopular Vietnam War by issuing debt, rather than through higher taxes. The system finally broke down when the Nixon administration unilaterally cancelled the US commitment to dollar (gold) convertibility in August 1971.

What emerged was a ‘non-system’ for Triffin. Since then, the US dollar, issued by fiat, has relied on the greenback’s own credibility and legitimacy to continue as de facto world currency.

Current ‘non-system’

In 1985, Triffin identified three systemic problems of the international financial ‘non-system’. First, “its fantastic inflationary proclivities, leading to world reserve increases eight times as large over a brief span of fifteen years” since the breakdown of the Bretton Woods system.

Second, “skewed investment pattern of world reserves, making the poorer and less capitalized countries of the Third World the main reserve lenders, and the richer and more capitalized industrial countries the main reserve borrowers of the system”.

Third, “crisis-prone propensities reflected in the amplitude” and frequency of financial crises such as the 1980s’ debt crisis causing developing countries’ ‘lost decades’. Other critics have identified further flaws.

First is the ‘recessionary bias’, due to the asymmetric burden of adjustment to payments imbalances. While deficit countries are under great pressure to adjust, especially when financing dries out during crises, surplus countries do not face corresponding pressures to correct their own imbalances.

Second is the cost of the perceived need of emerging and developing countries to ‘self-insure’ against the strong boom-bust cycles of global finance by building up large foreign exchange reserves and fiscal resources, especially after the 1997-1998 Asian financial crisis.

Such precautionary measures enabled emerging market economies to undertake strong counter-cyclical measures during the GFC. But they have huge opportunity costs as such reserves are generally held as presumably safe, liquid, low-yielding assets, such as US Treasury bonds.

Hence, Triffin complained that “the richest, most developed, and most heavily capitalized country in the world should not import, but export, capital, in order to increase productive investment in poorer, less developed, and less capitalized countries… [The] international monetary system is at the root of this absurdity.”

Reform appeals

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There were renewed calls for reform of global economic governance in the wake of the GFC, especially by the 2009 UN Conference on the World Financial and Economic Crisis and Its Impact on Development.

Governance reform of the IMF and World Bank should ensure fairer, more equitable representation of developing countries. This should improve the accountability and credibility of the Bretton Woods institutions, enabling them to better address current financial and economic challenges in the world.

The UN also called for a “multilateral legal framework for sovereign debt restructuring”. Without a fair, legally binding, multilateral sovereign debt work-out mechanism, developing countries remain vulnerable to private creditors, including vulture funds.

There were renewed hopes for trade multilateralism and early successful completion of the Doha Development Round of the World Trade Organisation (WTO), giving developing countries better access to external markets, seen as vital for balanced global recovery and development. The promise to keep international trade open echoed G20 leaders’ unfulfilled commitment to eschew protectionism.

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However, only a few of the modest promised reforms have been implemented, with limited changes in international financial governance, still dominated by G7 economies. After all, every financial crisis is followed by appeals for reforms, with complacency setting in with hints of recovery.

Less coping capability

Most developed country governments are now more heavily indebted than in 2008, when they bailed out large financial institutions, but failed to sustainably revive the world economy. Major monetary authorities do not have much policy space left after long pursuing unconventional expansionary policies.

Meanwhile, developing countries have been subject to increasing international integration, e.g., through global value chains, foreign financial institutional investments and increased short-term capital flows induced by the unconventional monetary policies of the US Fed, ECB and Bank of Japan, while debt-sustainability concerns for some are growing again.

These vulnerabilities have been compounded by growing trade protectionism, and dwindling precautionary reserve holdings of many developing economies as global trade has slowed. Even before President Trump’s election, developed countries had effectively killed the Doha Development Round, not least by opting for bilateral and plurilateral, instead of multilateral free trade deals.

Trump’s more explicit rejection of multilateralism in his efforts to eliminate major US bilateral trade deficits are now expected to further set back prospects for world economic recovery. Despite pious declarations to the contrary, most national policymakers typically turn from rhetoric about international cooperation to focus on domestic issues.

It has not been different this last time. A decade after the worst economic downturn since the 1930s’ Great Depression, the world economy remains vulnerable.

Anis Chowdhury, Adjunct Professor at Western Sydney University (Australia), held senior United Nations positions in New York and Bangkok.

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

 

Economic Pragmatism and Regional Economic Integration: The Case of Cambodia


July 12, 2018

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Economic Pragmatism and Regional Economic Integration: The Case of Cambodia

by Chheang Vannarith

Chheang Vannarith, Visiting Fellow, ISEAS-Yusof Ishak Institute, explains that “International economic cooperation and regional integration are key principles of Cambodia’s foreign policy.”

Asia Pacific Bulletin, No. 429

Cambodia’s foreign policy strategy has been chiefly shaped and driven by “economic pragmatism,” meaning the alignment of foreign policy with economic development interests. The Cambodian government’s two main approaches to regional economic integration are (1) transforming the international environment into a source of national development and (2) diversifying strategic partnerships based on the calculation of economic interests. International economic cooperation and regional integration are key principles of Cambodia’s foreign policy, which emphasizes shared development and win-win cooperation.

As a less developed country in the region, Cambodia has a strong interest in promoting and realizing a more inclusive, fair, and just process of regional community-building that narrows the development gap and implements people-centered regional cooperation. Linking regional integration with national economic policies is critical to sustaining dynamic economic development.  Key tasks include improving regulatory harmonization and harnessing and synergizing various regional integration initiatives.  It is particularly important to link ASEAN community blueprints with sub-regional cooperation mechanisms such as the Greater Mekong Subregion (GMS) program and Mekong-Lancang Mekong Cooperation (MLC).

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Samdech Prime Minister Hun Sen–Father of Cambodia’s Socio-Economic Development

The Cambodian government perceives regional integration as a means to further advance its national development interests. ASEAN, GMS and MLC are the main gateways for Cambodia to reach out to the region and beyond. The ASEAN Economic Community Blueprint 2025 aims to achieve five goals: (1) an integrated and cohesive economy; (2) a competitive, innovative and dynamic ASEAN; (3) enhanced connectivity and sectoral cooperation; (4) a resilient, people-oriented, and people-centered ASEAN; and (5) a global ASEAN. GMS operates under the principles of non-interference, consultation and consensus, mutual interest and equality, win-win cooperation, shared development, and common destiny. GMS gives emphasis to practical or functional cooperation, aiming at achieving concrete results in poverty reduction. MLC promotes regional connectivity, production capacity, cross-border economic cooperation, trade and investment facilitation, customs and quality inspection, financial cooperation, water resource management, agriculture, forestry, environmental protection, and poverty reduction.

In the Rectangular Strategy Phase III, issued in 2013, a five-year strategic development plan, the Cambodian government set out a vision that states, “by the end of the first half of the 21st century, Cambodia is to reclaim full ownership of its own destiny, while becoming a real partner in regional and global affairs.” It further states that Cambodia is now “actively integrating itself into the regional and global architecture, and playing a dynamic role in all regional and global affairs on equal footing and with equal rights as other nations.”

The Cambodian government stresses several key benefits of regional integration, including regional peace and stability, the development of both hard and soft infrastructure, energy and digital connectivity, free and effective movement of trade and investment, human capital development, the expansion of regional production bases and networks, and stronger regional cooperation and coordination in agricultural development. Strengthening regional cooperation — especially in the Mekong region in rice production and trade facilitation — would contribute to improving farmers’ standard of living. Creating an association of rice-exporting countries will strengthen the global position of the Mekong countries.

Although there have been remarkable achievements over the last two decades in forging regional cooperation, integration, and connectivity, there are several challenges that Cambodia needs to overcome. Those challenges include socio-economic inequality within the country and the region, weak institutions and governance, and the lack of national capacity in implementing regional projects. Income disparity within the regions and localities contributes to political instability, trans-boundary crimes, illegal labor migration, and human trafficking.

Institution-building based on good governance remains a key challenge to the effective implementation of regional policies. The national capacity of each member country of the GMS in transforming and integrating its regional development agenda into a national development action plan is limited. The lack of resources in realizing regional development projects requires more investment and participation from the private sector.

Local government plays a significant role in regional cooperation and integration. Recognizing the role of local government in socio-economic development, in 2008 the government adopted two Organic Laws and established a National Committee for the Democratic Development of Subnational Administrations. These measures are aimed at decentralizing power and creating a sub-national governance system. Delegating power and resources to local governments at the commune, district and provincial levels not only contributes to national development but also connects governments with neighboring countries, especially in the border areas.  For instance, the Cambodia-Laos-Vietnam Development Triangle was formed in 2002 to link 13 border provinces of the three countries.

A major challenge is that both the central government and local governments in Cambodia lack sufficient institutional capacity and resources to effectively implement the country’s regional cooperation and integration agenda which includes the budget infrastructure connectivity projects. It is therefore necessary to forge a closer partnership between the public and private sectors, especially in infrastructure development and connectivity.  Decentralization, delegating more authority to local governments, can facilitate public-private partnerships and stimulate national public administrative reform. Cambodia’s Ministry of Economy and Finance crafted a policy paper on public-private partnership for public investment project management, 2016-2020, which aims to “create an enabling environment for promoting the participation of the private sector and financial institutions in public investments.”

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Phnom Penh, Cambodia

To enhance Cambodia’s competitiveness, and thereby to improve the depth and quality of its participation in regional economic integration, Prime Minister Hun Sen said at the GMS Business Summit in Hanoi in March 2018 that it was necessary to strengthen efforts in regional economic integration and connectivity through prioritized areas of finance, economy, e-commerce and cross-border trade.

The seize the opportunities arising from fourth industrial revolution and digital integration in ASEAN the Cambodian government is focusing on four pillars.  According to a speech by Prime Minister Hun Sen at the 2018 Cambodia Outlook Conference in Phnom Penh, these are:

(1) Developing a skilled workforce by emphasizing education in science, technology, engineering, and mathematics (STEM) and technical and vocational training, supporting linkages between education and enterprises, and creating a national accreditation system.

(2) Promoting a research and development network, a high-quality physical infrastructure, and a public-private partnership mechanism to support the establishment of research and development, the facilitation of information sharing and technology transfer, and the penetration of foreign markets.

(3) Further strengthening institutional, policy and regulatory frameworks by bolstering the implementation of intellectual property law, related regulations, and other regulatory frameworks in order to encourage and support entrepreneurs and scientists to innovate and sell their technology products and services.

(4) Inspiring public participation in the science and technology sector, promoting public awareness of the importance of STEM, and nurturing the talents of its population.

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Young and Better Educated Cambodians

As a small and open economy, Cambodia has taken a proactive approach in promoting regional integration based on the principle of win-win cooperation.  The government has taken measures to diversify the sources of growth by investing in knowledge-based economy and strengthen public-private partnerships. However, the lack of institutional capacity at both national and local levels remains a key constraint.

Cut out middlemen and save billions – and the rakyat


June 19, 2018

Cut out middlemen and save billions – and the rakyat

by P Gunasegaram
QUESTION TIME |Coming in the wake of the decisive election victory for Pakatan Harapan, the Ramadan bazaar scandal in Jalan Masjid India, Kuala Lumpur is a clear indication of the kind of corrupt patronage middlemen deals that the coalition has to face and overcome as it moves forward.

 

Such deals where political clout is used to dish out projects to essentially middlemen who subsequently just palm it off to others for huge profits is one of the major forms of leakage the economy is currently facing.

Most of the projects may be small but the same process is repeated in large contracts too where the company that gets the project oftentimes does not have any expertise in the project area and simply gets in partners from elsewhere, earning a fat commission in the process for basically doing nothing but getting the project in.

If the government had long ago stopped such middlemen from profiteering at the expense of nation and rakyat, we would be in much better shape now. But instead, such deals worsened with outright kleptocracy, using 1MDB to first borrow funds and then steal from it. It is now incumbent upon Harapan to bring about such a change, nothing less.

The Ramadan bazaar is an excellent case study of middlemen pilferage and how politicians and authorities facilitated it. According to the exclusive report by Malaysiakini, a Bersatu party leader used political connections via a DAP MP who issued a “letter of support” for the Ramadan bazaar in the heart of Kuala Lumpur.

‘Letter of support’

The Bukit Bintang Bersatu Youth chief, Mohd Noorhisyam Abd Karim, secured approval from Kuala Lumpur City Hall (DBKL) to organise the bazaar with this “letter of support” from DAP Bukit Bintang MP and DAP treasurer Fong Kui Lan. A letter from DBKL to Mohd Noorhisyam, which had gone viral on social media, showed that 80 lots were approved for nine days for RM6,238.

This included a payment of RM180 per lot (RM20 per day) for licensing, space and cleaning fees for the bazaar which stretched from the Mydin hypermarket in Pudu to Masjid India. In the Ramadan bazaar case, the government got a little over RM6,000, while the middleman allegedly could have pocketed RM400,000 from the sale of the 80 lots at RM5,000, each making an incredible 66 times his initial outlay.

This is classic UMNO-style patronage politics at its worst which worrisomely, has infected Harapan so early in its term of office. It has to get rid of this forthwith if it is to make plenty of savings from procurement contracts and get revenue for the government directly instead of much of it going to middlemen.

Fong, while admitting he issued the “letter of support”, told Malaysiakini that Mohd Noorhisyam promised him that no money would be collected. “He promised they would not collect money and they would not obstruct the shops. I gave him a support letter to help hawkers who could not get a license from DBKL,” said the five-term MP.

Fong also denied receiving a cut from Mohd Noorhisyam or his associates.

Meanwhile, DBKL hawker licensing and development department director Anwar Mohd Zain told Malaysiakini that City Hall was unaware that Mohd Noorhisyam was allegedly charging exorbitant fees for the bazaar lots.

Mohd Noorhisyam has since denied the allegations against him and told Malaysiakini that he had not taken any money from traders.

Still, there is vital explanation required. Why does DBKL have to issue lots through a third party? Why does Bukit Bintang MP Fong need to issue a “letter of support” to a middleman, when he could have done it directly to DBKL? What is the role of Mohd Noorhisyam in all these, especially when DBKL could have issued the lots directly to traders through a bidding cum draw?

Nefarious activities

If true, such an outlandish profit came from the poor stallholders who were trying to make some money during Ramadan but whose profits would have been massively scaled back by the RM5,000 they had to shell out for the nine-day period, equivalent to a massive RM555 a day.

That shows the nature of the greed of these unscrupulous people who during the holy month of Ramadan, fleece RM400,000 of their own kind who are poor and struggling to make ends meet. Where is their moral and religious conscience?

Think of things like these repeated many thousands of time all over Malaysia at local and district levels and the billions pilfered or lost. Think of all the hassle that people who are trying to make a living with small businesses suffer at the hands of enforcement agencies such as DBKL scattered throughout the country.

Think of all the bribes they have to pay and the harassment they get even if they are fully compliant with all council regulations and think of all the rules and regulations flouted by those who “pay” the authorities regularly.

Think of all the revenue that the government, state and local authorities can raise if they directly, properly, efficiently and cleanly allocate precious resources without resorting to politically-connected businesspersons and those willing to grease palms.

Harapan now controls seven out of 11 state governments in the peninsula while Sarawak and Sabah are already in the hands of parties now friendly to Harapan. Together they can draw up and implement measures throughout the country to ensure that everything is run in the interest of the rakyat and the government – and profiteering is no longer allowed at any level via middlemen.

Indeed, those who are involved in such nefarious activities must be brought to book and the weight of the law brought to bear upon them without discrimination from the largest to the smallest projects.

 

For those states still ruled by parties other than Harapan, the call should be made to follow the example of the other states in the award of all contracts and for all procurement. If they don’t, the warning should be issued that the police and the MACC will be on the lookout for any malpractices and will bring miscreants swiftly to the book.

Proper procedure

This does not mean sidelining bumiputera entrepreneurs and companies but ensuring that they really are that and not acting as middlemen for others and that they actually have the capacity to undertake projects and that they are actually needed to do the job.

Genuine bumiputera contractors who bid for the job could be given a small price advantage as part of the continuation of affirmative action programmes and other advantages, much like what some government agencies currently did for bona fide bumiputera contractors in the past.

This is not an abandonment of Malay rights or privileges provided for under the constitution but actually a reinforcement of that through a proper procedure which weeds out profiteering that only benefits middlemen at the expense of real bumiputera entrepreneurs as it was with this Ramadan bazaar incident.

Harapan has a responsibility to ensure that incidents such as this Ramadan bazaar spectacle never happens anywhere again and that all blood-sucking middlemen are removed forthwith from the scene. Doing so would not only save the country billions of ringgit but ensure that the rakyat benefits from the proper use and allocation of scarce government resources.

We did not vote in Harapan for another new crop of leeches coming up to suck the nation and the rakyat dry. Such notions must be suitably disabused by quick action over the Ramadan bazaar case to bring to account everyone involved – politician, middleman and the overseeing authority.

Otherwise, Harapan is going to lose credibility pretty fast.

 


P GUNASEGARAM says that being in government is more onerous than being in opposition. He hopes fervently that Harapan will rise to the occasion and not succumb to the habits of old. E-mail: t.p.guna@gmail.com.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.