The enigma of Malaysia’s high household income growth


November 6, 2017

The enigma of Malaysia’s high household income growth

 

Image result for Enigma of Income Growth in Malaysia
 Who is fudging the household income figures, if not this Prime Minister cum Finance Minister? Malaysians are a whiney lot.

 

Why does the official report of rising household income seem incredible and implausible? Is Income really stagnating, or is it flourishing but Malaysians are a whiney lot?

 

By Dr. Lee Hwok Aun@www.freemalaysiatoday.com

Statistics are meant to inform, but sometimes they confuse. Take Malaysia’s household income figures. We keep hearing complaints of stagnant incomes and difficulties coping with the rising cost of living. But since the release of the Household Income and Basic Amenities Survey Report 2016 last month, an official success story is making the rounds – all the way to the 2018 Federal Budget speech.

The speech celebrates the rise in median household income, calculated from the Household Income Survey (HIS), from RM4,585 in 2014 to RM5,288 in 2016. Simultaneously, average household income rose from RM6,141to RM6,958, or at an annual growth rate of 6.4%. In real terms – that is, accounting for inflation – income grew 4.3% per year. The rest of this article refers to growth rates in real terms, which more accurately reflect purchasing power.

By the government’s account, household incomes have been growing quite substantially. Yet the budget is stacked with lavish handouts and financial relief, as though income growth has been sluggish, insufficient. Granted, this is an election budget, but a clearly the proliferation of social assistance is also addressing areal groundswell of economic discontent.

Statistics should be validated by the reality they intend to measure. If the government reports that the Malaysian economy has grown by 10% this year, most of us would disbelieve that outright. It can’t be that high; the economy is not ballooning like the early- to mid-1990s! But looking at Malaysia’s steady international trade, investment and domestic consumption, visible construction projects, low unemployment, and economic conditions as a whole, the actual figure of about 5% GDP growth seems credible and plausible.

So why does the official report of rising household income seem incredible and implausible? Is Income really stagnating, or is it flourishing but Malaysians are a whiney lot?

An examination of empirical evidence exposes three enigmas in the official household income statistics, raising questions about the reliability of the government’s high growth report.

First, income gains of the past half-decade are driven by inexplicably rapid growth in the 2012-2014 period, during which real household incomes expanded8.2% per year – faster than in the booming 1990s (Figure 1). Furthermore, households in the bottom 40% (B40)enjoyed stupefying 14.6% income growth per year. Suchhyperrates are usually the exception but were supposedly the norm – during a time of modest 5.4% economic growth.

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Two years ago, when the 2014 Household Income Survey Report documented a spectacular fall in inequality from 2012 to 2014, I raised concerns that those results departed too far from reality (http://www.themalaymailonline.com/what-you-think/article/malaysias-spectacular-drop-in-inequality…-for-real-lee-hwok-aun, https://m.malaysiakini.com/news/315933). This phenomenal success bypassed attention. It was not mentioned in the 2016 Budget speech; the government was apparently not taking its own statistics seriously.

In releasing the 2016 income statistics, the government reaffirms the questionable 2014 calculations – without explanation. Of course, we might point to two outstanding policy shifts as income boosters: minimum wage, which came into full effect in 2014, and BR1M, introduced in 2012. Their possible effects cannot be ignored.

But upon examination, these turn out to be the second and third enigmas in the income statistics.Minimum wage and BR1M fail to explain the rise in household income.

The official household income statistics aggregate various income components (the proper term is gross household income):

  1.  Income from wages and salaries, also including allowances, bonuses
  2.  Self-employment: income through selling goods and services
  3. Property and investment income: land and property rent (including imputed rent of owner-occupied homes), interest, dividends
  4. Transfers received from public sources (BR1M, etc) or family members

A breakdown of these sources shows that the share of wages and salaries in gross household income has declined, while the share of property and investment income and transfers have increased (Figure 2). Therefore, it is most unlikely that minimum wage contributed to high overall income growth.

Image result for Hwok-Aun Lee Enigma of Income Growth

 

Furthermore, when we compute growth rates household wages and salaries, we find modest numbers for 2012-2014 and 2014-2016 (Figure 3). Happily, we can compare this particular finding with calculations from another data source. The growth of individual wages and salaries, based on the Wages and Salaries Survey data, registered similar rates. Minimum wage surely boosted wage growth to some extent, as indicated by the higher rate in 2014 when it took effect. But it fails to account for rapid household income expansion.

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BR1Mis the last big factor standing. The share of transfers in household income increased – so far so good.

Figure 3

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But the case for BR1M as an explanation for income growth soon crumbles. First, the BR1M payments are popularly known by the annual amounts paid, whereas household income is handled on a monthly basis. When investigating BR1M’s impact on household income, we must convert into their monthly amount. The problem with the BR1M explanation is that the quantum per month is so minuscule relative to household income per month. In 2012 and 2016, B40 household’s income averaged RM1,847 and RM2,848, while BR1M payments for households earning below RM3,000 per month, were RM42 and RM83 (RM500 and RM1000 divided by 12). BR1M accounted for only 2.3% and 2.9% of the household income of the B40, its principal recipients.

The second pertains to timing. BR1M was introduced in 2012 at RM500 per year, increased to RM650 in 2014, then RM1,000 in 2016. The big differences took place in 2012 and 2016, not in 2014. However, the huge leap in household income occurred between 2012 and 2014!

In light of these enigmas, discrepancies and gaps, the government’s household income calculations for 2014 and 2016 remain implausible and demand a fuller accounting, particularly to provide reasons for the unfathomably high growth in property and investment income and transfers received.

There are empirical grounds, not just anecdote or intuition, to question the veracity of the official statistics, and to restrain celebration of Malaysia’s purported achievements in raising household income.One can speculate some possibilities. Perhaps transfers have been over-counted, or imputed rent over-estimated. For those living in houses they own, the gross household income numbers include an imputed amount of rent – that is, an amount they would receive if they rented out the house. Imputed rent, although it is not actual income received, is a useful piece of information. But it is misleading to include imputed rent in household income and report the sum as an indication of purchasing power and material well-being.

The Department of Statistics must be commended for publishing increasingly detailed reports on the 2014 and 2016 Household Income and Basic Amenities Surveys, but the disclosures are still inadequate. In line with the government’s commitment to Open Data, the natural next step should be to make the raw datasets accessible, to facilitate collaborative and constructive work and arrive at a fuller comprehension and credible measure of this vital issue of household income.

Dr. Lee Hwok Aun, Senior Fellow,  Yusof Ishak Institute– ISEAS, Singapore

Malaysia: The Huff and Puff of Budget 2018


October 29, 2017

Malaysia: The Huff and Puff of Budget 2018

Image result for Najib and Zahid at Budget 2018Two Jokers in a Unity Pact to safeguard a kleptocratic and corrupt Malay-centric regime with 2018 Budget Proposals

 

COMMENT | Prime Minister Najib Abdul Razak and his team should learn how to manage public perception, than recycling year after year the same huffs and puffs that will just fade away after the general election.

Right after the election, we will again see the likes of minions Jamal Md Yunos (UMNO Sungai Besar division leader) and Gerakan Merak leader Mohd Ali Baharom (known also as Ali Tinju), veteran Abdul Rani Kulup, lecturer and Muslim convert Redzuan Tee Abdullah, Perkasa’s Ibrahim Ali, Isma’s Abdullah Zaik and extremists like Zakir Naik, becoming the heroes.

There will be others like the self-styled “Raja Bomoh” Ibrahim Mat Zin who hog the headlines. So far, Ibrahim has never been prosecuted despite appearing on the grounds of the Kuala Lumpur International Airport and making a nuisance of himself.

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To date, the investigation into the protest over a cross erected by a church in Taman Medan has not proceeded any further. What about the probe into people missing in action, such as Pastor Raymond Koh and several others? What about the death of Teoh Beng Hock and former customs officer Ahmad Sarbani Mohamed and the murder of banker Hussein Najadi?

What was the motive behind the killing of former Mongolian model Altantuya Shariibuu? Who was behind the Scorpene submarines scandal and after Abdul Razak Baginda was charged in France, why have investigations on the Malaysian side stalled? Who was behind the death of deputy public prosecutor Anthony Kevin Morais?

Instead of prosecuting people for their wrongdoings, we see the MP of Batu, Tian Chua agreeing to go to jail over a small matter which could have been solved at a personal level and coming out more as a hero of the people.

There will then be the same old issues again – the banning of use of the term “Allah” by non-Muslims; stateless Indian children; Chinese schools being threatened to be closed down; the likes of Abdullah Hussain’s book “Interlok” where Indians were called by names; and yes, a thousand and one issues that UMNO and its proponents would try to harp on.

Ordinary Malaysians like me are already fed up with all the polemics by now because the leaders have lost their credibility. A decision would have been made a long time ago.

We can only wait for the coming general election, when we will come out once again in droves like in the previous general election.

Outstanding problems

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That is why despite all the huffs and puffs of the budget, we know it will not bring the country forward. While we will take what is rightfully ours, most of us look at the 1MDB scandal as the bigger problem that Najib has failed to solve.

For a long time, the Chinese community have been harping on the need for more Chinese schools. However, the Ministry of Education has been moving snail-slow on approval of the Chinese schools.

Applications for a new school have gone into a “black hole”. When I showed the news about 10 new Chinese schools being greenlit by Putrajaya to the chairperson of the board of governors of the affected school, he merely said, “Year after year, election after election, it is nothing but empty promises”.

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Economist Ramon Navaratnam@ASLI Public Policy Studies

Chairperson of ASLI’s Centre for Public Policy Studies, Ramon Navaratnam, pointed out to me that Sekinchan has had the most productive paddy growers in the country.

“Yet, they are not given the incentives to become even more productive,” he said. “The government should focus on the strengths of each community and boost their productivity even further.”

Licenses for fishing are given to cronies when the fisherpeople themselves are unable to get more licenses. With these cronies and Ali Baba licence holders, the prices of goods rise. The real beneficiaries are not the fisherpeople themselves, but some cronies.

Likewise, I pointed out the plight of taxi drivers in this country. Although mostly Bumiputera, they too have been earning pittances. Now with Uber and Grab, who is most badly hit? Taxi licenses should not be given to a consortium, but to individual taxi drivers to motivate them to work even harder.

According to Ramon, budget proposals must address the “structural problems of low productivity, rising unemployment, inflation, the weak ringgit, the brain drain, sustainability and the fight against extremism and bigotry.”

As fellow columnist R Nadeswaran rightly put it, “The prime minister, his ministers and the government must stop treating Malaysians as fools by making all kinds of statements which more than not, appear like a page from Grimm’s Fairy Tales”.


STEPHEN NG is an ordinary citizen with an avid interest in following political developments in the country since 2008.

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

Singapore’s Prime Minister Lee gets a Rose Garden Welcome


October 26, 2017

Singapore’s Prime Minister Lee gets a Rose Garden Welcome from Donald Trump

by Howard Lee Chuan How

http://www.malaysiakini.com

ADUN SPEAKS | Singapore, a nation that is a fraction of our population and our geographical size, dealt Najib a diplomatic sucker punch on the international stage, without even mentioning the word Malaysia.

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Najib’s visit to the White House last month drew brickbats and comedy sketches for welcoming an undemocratic tyrant and a human rights violator. This is on top of the many references by various international media to Najib’s 1MDB scandal, casting Malaysia under a glaring spotlight of shame and ridicule.

Singapore Prime Minister Lee Hsien Loong visited the White House on Monday where he and US President Donald Trump had a working meeting in the Oval Office “over lunch” before witnessing the signing of a US$14 billion deal between Singapore Airlines and Boeing for 39 new planes.

It is estimated that the successfully signed and sealed Singaporean deal – as opposed to Najib’s one which he remains to be “working on” – is slated to create 70,000 jobs for the American people.

Yet, Lee did not deludedly offer to “strengthen the US economy” like Najib did. Instead, he spoke of Singaporean military assets and personnel being deployed to help in US disaster relief during the aftermath of hurricane Harvey.

Image result for Rosmah Mansor--Malaysia's Inspiration

Rosmah Mansor will inspire power UMNO-BN to GE-14 Victory since the Malaysian opposition is rudderless. 

As someone who is not a huge fan of Lee and his party, it pains me to admit that he did so with humility and grace. And to keep up the Malaysia-Singapore rivalry of “kiasu-ness” I reluctantly pronounce Singapore the clear winner against Malaysia.

Lee was also hosted by Trump to a bilateral working lunch together with his Vice President Mike Pence, several cabinet secretaries and senior White House players. On the other hand, Najib’s equivalent was an “Apprentice” style face-off, with a well-staged coldness and a well-rehearsed taciturn on the side of Trump.

If evidence is required, check the transcript for the monosyllabic replies by Trump to Najib’s assertions. Not to mention, Trump’s tightly folded arms being perfect textbook material for the study of body language to show defensiveness and/or impatience.

As if the difference wasn’t already stark enough, and Malaysia hasn’t lost enough face yet, there’s more. Whilst Najib was denied even the customary photo with the president in front of the Oval’s fireplace under George Washington’s portrait, Lee had a joint press conference with Trump at the Rose Garden where they mutually reaffirmed bilateral ties, pledged continued reciprocal cooperation on several fronts, and flaunted their diplomatic flirtations.

Metaphorically speaking, the G20 summit in Hamburg was their “first date” of this “Bromance of two Kingdoms”. This joint press conference at the Rose Garden was their second date in which Trump invited Lee for drinks at his ‘crib’.

For all intents and purposes, according to some Singaporean officials, this trip was nothing but a self-introduction exercise by Lee to Trump before the ASEAN Summit in the Philippines in a few weeks. However, we have just been informed of Trump’s decision to miss the ASEAN Summit; so the third date is postponed, it seems.

This makes it even more painful to stomach for a Malaysian, to see that Singapore punches several weight categories above Malaysia. This is despite the historical fact that it was Malaysia who kicked Singapore out the federation, forcing Singapore into premature independence.

 

Ultimately, Najib’s failed publicity stunt to exonerate himself of the 1MDB scandal simply did not work. It actually did him more harm than good considering the badly staged, badly performed bad choreography that Malaysians and the rest of the world saw of Najib’s visit to “his golfing buddy” and “friend”.

It is painful to watch Lee, the leader of a country equally as undemocratic as ours, afforded such treatment of respect and appreciation, while our own Najib was at best tolerated, and at worst humiliated, when making the same move a month ago.

However, it would be even more painful if, after the next general elections, the Kleptocrat-in-Chief that is MO1 remains in power.

The only remedy to cure that pain is a clear-cut victory by Pakatan Harapan; it may even recover the “face” that Najib has lost us over the years.


HOWARD LEE CHUAN HOW is the state assemblyperson for Pasir Pinji.

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

 

Malaysia’s Finance Minister’s free spending ways and the national debt


October 24, 2017

Malaysia’s Finance Minister’s free spending ways and the national debt

by Jomo Kwame Sundaram and Raisa Muhtar

http://www.malaysiakini.com

Image result for Malaysia's Free Spending Finance Minister

COMMENT | Malaysia has a problem with debt. Government debt is about 53 percent of GDP, just below the already increased 55 percent debt-to-GDP ratio threshold. The big jump in such government debt from 41 percent in 2008 to 53 percent in 2009 followed the last change of Prime Ministers.

Recently, the government has been borrowing from abroad at an unprecedented pace. The latest level has been attributed to the increased domestic debt of RM15.8 billion and additional foreign debt of RM2.2 billion last year.

Also, by encouraging Malaysian investors, both private and public, to invest abroad, and by sharply increasing borrowings and portfolio investments from abroad, the country has unnecessarily become much more vulnerable to international financial volatility and instability.

Contingent liabilities

Contingent liabilities refer to debt commitments related to government guaranteed loans. With contingent liabilities growing rapidly, the overall consolidated public sector debt-to-GDP ratio has risen to 68 percent of GDP.

These have risen sharply, with government-guaranteed liabilities rising to RM195.7 billion, or 15.2 percent of GDP in 2016, from 12.8 percent in 2011, an increase by almost a fifth. Observers are concerned that pre-election ‘projects’ are causing a new debt spike in 2017.

An unexpected shock to growth, an increased interest rate in the West (e.g., with the end of ‘quantitative easing’ [QE]) or the sudden exit of foreign portfolio investments would all threaten the Malaysian economy due to its greater self-induced vulnerability.

Most current contingent liabilities abroad have been accrued after the last prime minister’s tenure. Abdullah’s reduction of the budget deficit bolstered the country’s debt ratings, making it cheaper for the federal government and government-linked companies (GLCs) to borrow overseas at a time of QE-induced low-interest rates in the OECD economies.

Such debt has more than doubled since Prime Minister Najib Abdul Razak took office in 2009, as government-related entities borrow abroad to fund infrastructure projects and ventures such as 1MDB. This is quite unprecedented as most new foreign borrowings have not been invested in ways likely to generate foreign exchange earnings.

Such government spending is needed to sustain growth, but all too often, has been abused to fund large-scale projects for crony companies (‘jobs for the boys’) with ‘kickbacks’ for key decision makers. The growing burden of such debt is inevitably borne by taxpayers.

PPPs: Public risk, private gain

Malaysia’s relatively high contingent liabilities include those due to public-private partnerships (PPP) where the government or GLCs bear the bulk of the risk, while the lion’s share of profits typically goes to the crony private partner.

DanaInfra Nasional Bhd (MRT), the company created to fund infrastructure projects, recently recorded a 43 percent spike in such liabilities!

Meanwhile, contingent liabilities associated with 1MDB’s default in August have been estimated at 2.5 percent of gross domestic product (GDP). According to Moody’s Ratings Services Vice-President Christian de Guzman, 1MDB, which defaulted after missing a bond repayment deadline, raised the risk for contingent liabilities the government is exposed to, increasing the cost of government debt from abroad.

Recently, Malaysian authorities established the Fiscal Risk and Contingent Liability Technical Committee to evaluate the government’s fiscal risks and to propose appropriate measures to address them. After failing to meet previous targets, the authorities have promised, yet again, to achieve ‘near-balance’ for the federal budget by 2020.

But such promises may not have renewed confidence, especially as the deployment of borrowed funds by 1MDB and some other GLCs has not convinced the market that public finance management in Malaysia is improving irreversibly.

JOMO KS and RAISA MUHTAR are Malaysian economic researchers.

Najib Razak’s Gua Tolong Lu, Lu Tolong Gua Survival Economics


October 22, 2017

Malaysia’s Economic Policy--Najib Razak’s Gua Tolong Lu, Lu Tolong Gua Survival Economics

by MP Liew Chin Tong@www.malaysiakini.com

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MP SPEAKS | The suffix “-nomics” is a popular media term to denote a certain type of economic idea or just a form of ridicule against political rhetoric.

“Najibnomics” is an attempt to show off Najib’s set of clearly articulated economic ideas to drive the nation forward. But is it even real?

On October 27, 2017, Prime Minister Najib Abdul Razak in his role as finance minister will present his ninth Budget to the Parliament.

Najib took over from Abdullah Ahmad Badawi as Finance Minister following a tense negotiation on September 17, 2008.

The 2009 Budget was presented by Abdullah on August 29, 2008. Najib then succeeded Abdullah as prime minister on April 3, 2009.

The only time Najib was close to articulating a framework was during the launch of the now defunct (and discredited) “New Economic Model” on March 31, 2010, a year into his premiership.

Image result for dr jomo kwame sundaram

In a recent interview with Malaysiakini, Professor KS Jomo (photo) had this to say about the New Economic Model:

“Let us be clear about this. The New Economic Model, or NEM, is really a wishlist 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.”

I share Jomo’s sentiment that NEM was more or less a wishlist from the neo-liberal perspective. But at least there was a plan.

New Economic Model, RIP

Three key takeaways from NEM are worth noting.

First, Malaysia could no longer depend on just capital investments, be it foreign or local, or having more foreign unskilled labour. What is required is productivity through innovation.

Second, social inclusiveness was one of the three key pillars in the NEM. The other two being “high income” and “sustainability”.

“Inclusiveness” is World Bank’s shorthand for “inequality”. Even in 2010, it has been identified that inequality is one of the major concerns that the Malaysian economy has to confront.

Third, NEM argues that more economic decision-making powers should be devolved to state and local governments, and not concentrated in the hands of the central government.

Worse still, economic decisions are increasingly concentrated in the hands of Najib himself, bypassing the cabinet entirely.

The key recommendations of NEM are listed as follow:

Not that I agree with NEM entirely, but, again, there was a framework and a plan.

Less than three months after the launch of NEM, Najib presented the 10th Malaysia Plan, prepared by the Economic Planning Unit of the Prime Minister’s Department, in June 2010.

NEM was prepared by a group of senior economists with relatively broad-based consultations with the wider society.

The Malaysia Plan has become a bureaucratic routine. The two documents – NEM and the 10th Malaysia Plan – did not seem to “talk” to each other.Najib has no conviction. He has no clear idea of which ideas to adopt. As soon as NEM was launched, it was shuttered prematurely – after protests by some right-wing Malay groups.

Minimum wage and BR1M

While NEM was ostensibly killed by right-wing groups, the actual killer was Idris Jala’s Performance Management and Delivery Unit (Pemandu).

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Idris Jala–Malaysia’s Super Bullshitter

Najib’s then supposed economic troubleshooter Idris Jala packaged some of NEM ideas into the “Economic Transformation Programme” (ETP) which focused on the so-called high-impact “Entry Point Projects” (EPP).

Between 2009 and 2011, Najib was telling the investor community that he intended to “liberalise” the Malaysian market, with rules for some 27 sectors relaxed.

Beyond that, he neither articulated any coherent economic ideas nor pushed for significant reforms apart from proposing a minimum wage and the cash handout programme 1Malaysia People’s Aid (BR1M).

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Only Raja Petra Kamaruddin wants him to stay because he is a beneficiary of Najib’s Gua Tolong Lu, Lu Tolong Gua Policy

The opposition and the trade unions had long called for the implementation of the minimum wage. Najib agreed to implement minimum wage in the hope to take the sails out of the opposition’s wind.

BR1M was even more interesting. The then Pakatan Rakyat policy committee, of which I was a member, announced in July 2011 that it planned to focus the “bottom 60 percent” with a comprehensive set of economic reforms.

Najib’s government answered Pakatan Rakyat’s plan with BR1M to pacify the bottom 60 percent.

Making rating agencies happy

Post-May 2013 general election, the Prime minister’s focus was on pacifying the rating agencies.

The emerging markets suffered sudden currency slides in May and June 2013 in what was termed a “taper tantrum” as the US Federal Reserve indicated its intention to scale back monetary easing.

Rating agencies panicked and started to look at the weaknesses of Asian economies.

Najib’s knee-jerk reaction was to form a “fiscal policy committee” which has a membership almost identical with the weekly “Majlis Ekonomi” (Economic Council) meeting that bypasses the proper full cabinet deliberation on economic matters.

The fiscal policy committee committed to keeping the deficit at three percent and eventually achieving a balanced budget in 2020.

To this end, subsidies were cut, government services were slashed and the Goods and Services Tax (GST) was recommended in the 2014 budget speech (presented in 2013, the first Budget after the last general election).

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From then on, Najib’s economic policies were reduced to ensuring that the rating agencies were happy and the government has sufficient revenue to pay for its excesses. Nothing about refashioning the economy or any long-term vision.

It’s all about Najib’s survival

The year 2015 was probably Najib’s annus horribilis. Oil prices dropped dramatically since October 2014, and as a consequence, the ringgit plunged too.

From March 2015 onwards, details of the 1MDB scandal emerged and subsequently, in July 2015, details about the “donation” into Najib’s personal account surfaced.

Najib sacked then Deputy Prime Minister Muhyiddin Yassin, then Attorney-general Abdul Gani Patail and then Rural and Regional Development minister Shafie Apdal (now in Jail) on July 28, 2015.

In September 2015, in order to deal with the trust deficit, a special economic committee (JKE), which included Nazir Razak (right in photo), Najib’s respected banker brother, was formed to advise the government on economic policies.

There is reason to believe that the JKE no longer meets. Even if it has met, Najib has no time for any views. By now, it is about his survival and nothing else.

Since late 2015, the government has decided on the propaganda line that the Malaysian economy is doing very well under Najib, and whoever claims otherwise is bordering on economic treason or sabotage.

Minister in the Prime Minister’s Department in charge of the Economic Planning Unit (EPU) Abdul Rahman Dahlan, who also doubles as BN strategic communications director, typified this approach.

The government is no longer prepared to listen to the grouses of ordinary Malaysians who suffered the triple blows of GST implementation, the stiff depreciation of ringgit and government austerity (cuts to subsidies, health, welfare and education funding).

“There is no crisis!” So Najib and his associates believe. There are even court jesters who sing praises of the wonders of “Najibnomics”.

Image result for Najib  Don't Worry, I will be gone soon

But just like the emperor with no clothes, at some point, probably at the ballot box, the voters will call his bluff. By then, perhaps many of us will realise that Najib has had no serious economic policy for the past nine years as finance minister and more than eight years as Prime Minister.In the end, it’s all about “Nothing-nomics”.

LIEW CHIN TONG is the MP for Kluang and DAP national political education director.

 

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.