Stealing Money from the National Treasury is an Act of Treason


June 17, 2018

Stealing Money from the National Treasury is an Act of Treason–so, Najib Razak is a Traitor

by Mariam Mokhtar@www.asiasentinel.com

Image result for Najib is a CrookIt takes time, but Justice will come eventually to Najib Razak and Rosmah Mansor

 

 

93-year-old Dr. Mahathir Mohamad, who heads Malaysia’s reform coalition Pakatan Harapan, has lost no time in knuckling down to work. A week after he assumed office in the wake of the political earthquake of the country’s May 9 general election, he terminated the contracts of 17,000 political appointees as a drain on public expenditure.

The move was hailed by a public taken aback  by the numbers of people involved, although some are concerned that the shock and awe of Mahathir’s move would generate the same kind of guerilla underground that cropped up when Paul Bremer, the American proconsul in Iraq, disbanded the army and civil service in 2003. That played a major role in the eventual creation of the Islamic State which has terrorized Syria and Iraq for the past several years.

Nonetheless, the sackings are looked upon by Malaysia’s 31 million people as just the start of the cleanup of decades of appalling corruption. Police seized 72 bags alone of loot from deposed Prime Minister Najib Razak’s residence in the days after the May 9 election, of which 35 contained RM114 million (US$28.6 million) in cash in 26 different currencies. Another 35 bags contained jewelry and watches, and 284 boxes were filled with designer handbags including Ellen Birkin bags by Hermes that can cost upwards of US$200,000. The former Premier is not likely to go hungry. He is believed to have hundreds of millions more stashed overseas. Famously, in 2013 US$681 million appeared in his personal account at Ambank in Kuala Lumpur and almost immediately was moved overseas.

The biggest mess, of course, is the state-backed development fund 1Malaysia Development Bhd., from which US$4.5 billion is said by the US Justice Department to have disappeared in corruption and mismanagement. Mahathir has said the scale of corruption is even greater and has demanded a full explanation. The Finance Ministry, now under Lim Guan Eng of the Democratic Action Party, says Malaysia’s total government debt and liabilities exceed RM1 trillion (US$250.7 billion).

The number of no-bid contracts awarded to crony companies and government-linked companies – now termed by many to be government-linked crookedry – is overwhelming.

Mahathir for instance cancelled a high-speed rail contract from Kuala Lumpur to Singapore that cost RM70 billion which, with other government commitments including operating expenses over 20 years ran the total to RM110  billion. “Estimates are that in a proper open tender, the project could have been done for a maximum of RM25 billion,” said a well-placed business source in Kuala Lumpur.

Equally questionable is a contract for Malaysia’s Eastern Corridor Rail Line, awarded to a Chinese company at RM67 billion. The payment was time-based, not on a completion basis. As such, 40 percent of the total payment has been made while only 7 percent of the work has been completed. The project cost is widely believed to have been a subterfuge for Chinese help in paying off 1MDB’s massive debt.

Next is the Sarawak and Sabah gas pipeline, again awarded on time-based payments with 87 percent of RM9 billion paid and only 13 percent of the work completed.

Contracts such as these are aplenty. The gadfly website Sarawak Report reported on June 10 that a car rental company headed by an official with a Barisan-aligned party in Sarawak received a RM1.25 billion no-bid contract to install solar energy facilities for 369 Sarawak schools. The three-year contract, allegedly steered by Najib himself, has been underway for 18 months. Not a single solar power unit has ever been installed.

But beyond that, dozens of government-linked companies have been found to be paying exorbitant salaries to their executives. Malaysia has the fifth highest number of GLCs in the world, for which Mahathir himself must share the blame, since many came into existence during the 22 years he headed the government from 1981 to 2003.

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Many are household names – the national car project Proton, now peddled to China’s car company Geely; the national energy company Petronas, the electrical utility Tenaga Nasional, the electric utility Telekom Malaysia, the Tabung Haji Pilgrimage Fund, the Federal Land Development Authority, Malaysian Airlines, The Majlis Amanah Rakyat (Malay People’s Trust Council), the Sime Darby plantation and property conglomerate.

Publicly traded GLCs currently comprise 36 percent the market capitalization of Bursa Malaysia and 54 percent of the benchmark Kuala Lumpur Composite Index according to a study by the think tank Institute for Democracy and Economic Affairs. They employ 5 percent of the national workforce.  According to the study, government bailouts of GLCs have “resulted in a huge drain on the public purse.” They include RM1.5 billion for Proton in 2016 and RM 6 billion for Malaysia Airlines in 2014.

”One estimate suggests that around RM85.51 billion has been used to bail out GLCs over the past 36 years,” according to the report putting pressure on commercial interest rates as a result of recurring budget deficits that “may have been a separate factor operating to crowd out private investment, at the margin.”

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As an example of exorbitant salaries, the Transport Minister, Anthony Loke, told reporters that the executive chairman of the Aviation Commission (MAVCOM), retired Gen. Abdullah Ahmad, drew a monthly salary of RM85,000 (US$21,325). The figure is over four times the basic recorded salary of the Malaysian Prime Minister and is similar to the salary of millionaire CEOs of successful private enterprises.

Veteran journalist, R Nadeswaran, formerly of The Sun Daily, reported that his investigations into MAVCOM, an independent body established in 2015 to regulate economic and commercial matters relating to civil aviation, revealed that RM570,000 had been paid in directors’ fees, and a further RM770,000 on directors’ travel and accommodation.

More revelations have followed. One “former minister turned adviser” in Najib’s Prime Minister’s Office received a monthly wage of RM200,000 (US$50,177), which is about 10 times Najib’s official salary. Other “advisers” were paid from RM70,000 upwards per month in a country where per capita income on a PPP basis is RM26,900 annually.

Other ministries, together with the newly-revitalized Malaysian Anti-Corruption Commission (MACC), have been directed to investigate the various GLCs and political appointees  Apart from the allegations of huge bonuses and exorbitant salaries, it has also been alleged that officials of various GLCs collaborated with contractors to submit false claims for maintenance work. The MACC is investigating.

The almost daily revelations of cronyism and large-scale corruption have been described by one Malaysian as akin to “Chinese water torture,” when water is slowly dripped onto a person’s forehead and drives the restrained victim insane.

Loke’s disclosure also prompted the veteran MP, Lim Kit Siang, Mahathir’s onetime adversary turned ally, to demand transparency and public accountability in the wages of the heads of the GLCs. He proposed the implementation of a public website showing the perks, salaries and remuneration of all GLC heads and members.

Lim wanted to know how many of the heads of the GLCs are political appointees and how many of the UMNO/Barisan Nasional appointees have resigned since Najib lost power.

Malaysians responded swiftly to Loke’s report. One person multiplied Loke’s figure by the number of existing GLCs and was astounded by the money which taxpayers had to fork out for GLC directors’ fees. Who approved the salaries of the board members in this public regulatory body?

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A Foreign Friend In Cambodia asked me, “Din, is your recently pardoned felon running a parallel government?”  And I answered, “For Malaysia’s sake, I hope not.–Din Merican

Surprisingly, the revelations over the GLCs are in contrast to those by newly released and pardoned former Opposition leader, Anwar Ibrahim, the PM-in-waiting, who told a crowd in Perak that chief ministers should not rush to take action against GLCs, and to refrain from being vengeful.

“I have no problem with GLCs, if their performance is good and the Menteri Besar (Chief Minister) thinks it’s appropriate to continue, we accept (the continuance),” unless, he added, “that it was proven at the federal level,  there was wasteful overlapping and excessive payment of allowances to political figures.”

Malaysians demanding intense scrutiny of GLCs wonder what to make of the PM-designate’s remarks and actions.

Mariam Mokhtar is a Malaysia-based reporter and regular contributor to Asia Sentinel.

Complete Overhaul of Bank Negara is required


June 12, 2018

Complete Overhaul of Bank Negara is required

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

COMMENT

By Geoffrey Williams@www.freemalaysiatoday.com

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

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

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

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

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

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

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

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

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

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

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

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

Tun Daim Zainuddin and his Colleagues get down to business


May 13, 2018

Tun Daim Zainuddin and his Colleagues get down to business

KUALA LUMPUR: The newly set up Team of Eminent Persons meant business and wasted no time as they convened their first meeting soon after the announcement of its formation by Prime Minister Tun Dr Mahathir Mohamed.

Chaired by former Finance Minister Tun Daim Zainuddin (left), the meeting, which went late into the night, was also attended by three other members of the team, namely (from right) former Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz, former Petronas President and Chief Executive Officer Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram. Billionaire tycoon Tan Sri Robert Kuok was not present as he is currently overseas. Bernama Photo

No honeymoon period and prolonged post-election euphoria as the government is determined to restore the confidence of the people and investors after Pakatan Harapan’s unprecedented win in the 14th general election on May 9.

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The Prime Minister with Tun Daim Zainuddin and Tan Sri Rafidah Aziz

Chaired by former Finance Minister Tun Daim Zainuddin, the meeting, which went late into the night, was also attended by three other members of the team, namely former Bank Negara Malaysia Governor Tan Sri Zeti Akhtar Aziz, former Petronas President and Chief Executive Officer Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram.

Billionaire tycoon Tan Sri Robert Kuok was not present as he is currently overseas.

Speaking to Bernama after the meeting, Daim said the five-member team was briefed and deliberated on current economic situation, the national debt, the ringgit, Goods and Services Tax (GST) and fuel subsidies, amongst others.

“These are the major things. We are making the recommendations to the government. At the end they will decide,” he said.

Daim said the council would be calling the Public Private Partnership Unit (under the Prime Minister’s Department), related ministries and government-linked companies (GLCs) to brief them on various mega projects and the governance of GLCs, including Lembaga Tabung Haji, Majlis Amanah Rakyat and the Federal Land Development Authority.

“As for 1MDB, there will a special task force, I have identify those who can assist the probe into 1MDB. It would be under the purview of the Team which will submit the report to the government,” Daim said.

He said another pertinent issue that needed to be addressed quickly was the oversupply of office space and housing.

“Another example is the cost of security for schools. It cost more than the assets they’re guarding,” he pointed out.

Meanwhile, Daim said the team would hold meetings daily for 100 days, and in fact on some days, it would be a few times a day.

“I want this to finish this within 100 days. After that I want to sleep,” he quipped. –Bernama

 

Arul Kandak Kandangsamy and his 1MDB Bull


May 5, 2018

GE-14: 4 days to go to Polling Day, May 9, 2018. Vote Pakatan Harapan and resoundly reject corrupt Najib Razak and his UMNO-BN

Arul Kandak Kandangsamy and his 1MDB Bull

by P. Gunasegaram@www.malaysiakini.com

[youtbe=https://www.youtube.com/watch?v=mKwvK7SvUQw]

QUESTION TIME | 1MDB CEO Arul Kanda Kandasamy has launched a vitriolic, personal, and unwarranted attack against me which, of course, has no substance but let me deal with the most preposterous of his claims first – the so-called achievements he has made at 1MDB.

I have reproduced in full the “achievements” he claims since 2015 when he joined 1MDB in italics followed by my comments in each case:

1. Transparency: the company has become much more open, transparent and accessible, both to the media and to the public.

I wanted to roll around in laughter at this. Truth is, not one 1MDB annual report has been released since he came on board. Instead during his time, the auditor-general’s report on 1MDB was made secret under the Official Secrets Act, probably on his advice. He never told the government to make the report public.

These two documents are all that is needed to condemn or exonerate 1MDB.

2. Cooperation: full assistance and cooperation have been provided to investigators from Bank Negara, the National Audit Department, the Public Accounts Committee and the Royal Malaysian Police.

Did you have a choice, Arul? Are you not supposed to help investigations by the relevant authorities?  Would you not be contravening the law if you hid some things? So for you, abiding by the law is an achievement?

3. Massive debt reduction: 1MDB debts have been massively reduced from RM50 billion to RM31 billion.

Image result for Najib Razak and 1MDB

 

I already explained this in the last article I wrote. You did this by selling the power assets, extinguishing the bank loans. The sale simultaneously removes the loans from the books of the power companies. That’s nothing.

4. No short-term loans: all short-term loans and bank debt have been fully repaid with RM43 billion of long-term assets now fully backing RM31 billion of long-term debt.

The excess of assets over liabilities is simply because of the revaluation of land obtained cheaply from the government in the first place for both TRX as well as Bandar Tun Razak, not because you did anything, Arul.

However, it has been widely reported that the auditor-general said that US$7 billion of 1MDB assets could not be accounted for or verified – almost RM30 billion gone missing, evaporated into thin air. Where is the money Arul, you have not told us yet.

5. TRX a success: the Exchange 106 Tower in TRX will be the tallest tower in Malaysia upon completion in 2018. International investors such as HSBC and Prudential have collectively committed billions of ringgit to their headquarters in TRX. Lendlease, one of the most well-respected global property developers is in a joint venture with TRX to develop 17 acres of land.

 

TRX was a ruse for 1MDB to borrow money and then have it allegedly stolen by the kleptocrats. There is no evidence to show that any money borrowed went to TRX – TRX does not need RM30 billion for development – all it needs to do is to sell the land for others to develop.

6. 30,000 high-income jobs will be generated in TRX, upon completion, with RM3 billion being spent on infrastructure in and around TRX.

This is, again, a lie. If you have a building, people will work in it especially if you force them to move here, but that does not mean you created those high-paying jobs. Instead, by building so much of commercial space – too much – you will create excess and cause a glut in office supply. Go read the Bank Negara report on that, Arul.

7. Bandar Malaysia relocation completed: practically all of the eight new and upgraded bases for the air force and police with 1MDB as the developer and LTAT as the contractor are now completed thereby paving the way for the development of Bandar Malaysia.

Again, your bond money did not go into this project – it allegedly went into the pockets of your benefactors. All these could have been done without 1MDB and at much lower cost.

8. 200,000 high-income jobs will be generated in Bandar Malaysia, which will be a premier transport-oriented development and will house the terminus of the KL-Singapore High-Speed Rail link.

Again, this is a lie. High-income jobs are not being created. What happens is high-income earners will shift and work in this area, which is not the same thing. And you don’t need to lose RM40 billion in the process.

Want to know how to make RM90 billion from Bandar Malaysia? Read this article I wrote.

A dishonourable career

Now that the substance of this debate is over, we know that Arul, despite what he said, did not stick to the facts. Let’s move on to the vitriol and the personal attacks.

When I set up KiniBiz together with Malaysiakini in 2013, I was already 60 years old, and had been managing editor at The Star and group executive editor at The Edge. I had no desire to go any further than that in either organisation. Earlier I held other editor jobs and was head of equity research at local and foreign brokerages.

I lost money at KiniBiz, Arul, but I made no secret of the fact that KiniBiz was shut down – we announced it on the website. But it was not your money I lost or the country’s, and I am not defending someone else’s alleged robbery at 1MDB and thereby becoming complicit in that act the way you are.

I am proud that my team and I tried to do something about good business journalism in Malaysia, although we could not, at the time, make it financially viable for various reasons. We were the ones who broke the 1MDB story in March 2013 as you very well know. We helped uncover this story which you are so desperately trying to bury – and we won’t let you do that.

Image result for 1MDB Power Assets

This time, I am not going to mince my words about this excuse of a man who not only lacks, sorry, is devoid of, not only integrity and morality but intelligence. People tell me he is smart and a great debater but all I have seen demonstrated repeatedly is the stupidity and banality of the desperate, trying to cover up with words his lack of achievement.

He could have made an honourable career in the financial industry but was duped and drawn in as the CEO of 1MDB to do his master’s bidding of engaging in systematic deception to deny the biggest kleptocracy the earth has ever known. No amount of money is worth that, Arul.

While Jho Low was until recently sailing around the world in a billion-ringgit yacht, enjoying the spoils of the 1MDB money, this man sits here and blithely says 1MDB did not lose any money. What a clown!

And if Pakatan Harapan wins this election, you will see this man flee from this country with his tail between his legs. He will not have the balls to stay and face the music. Which is why he is campaigning so hard for his political masters for it is also his own future that he is fighting for.

 

For us Malaysians, we will say good riddance and chalk up one more reason we should vote against this government which continues to allegedly steal from its people and appoints ball-carriers to important positions in government-linked companies, which is a sure way to ensure they fail.

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And if BN wins, you still lose Arul, because you lent your name to the biggest kleptocracy in the world and your support to an immoral, incompetent and corrupt regime. Your name will go down in the halls of shame but perhaps you don’t care about that, do you?


P GUNASEGARAM says the country is in danger when alleged thieves and their co-conspirators flaunt themselves in the open instead of being brought to account and locked up. 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.

Looking In On The Real Paul Ryan–The Retiring Speaker of House


April 19, 2016

Looking In On The Real Paul Ryan–The Retiring Speaker of  House

he mistake about Paul Ryan, the one that both friends and foes made over the years between his Obama-era ascent and his just-announced departure from the House speakership, was to imagine him as a potential protagonist for our politics, a lead actor in the drama of conservatism, a visionary or a villain poised to put his stamp upon the era.

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Paul Ryan, Party Man

 

This Ryan-of-the-imagination existed among conservatives who portrayed his budgetary blueprints as the G.O.P.’s answer to the New Deal, among centrist deficit hawks who looked to him to hash out their pined-for grand bargain, and among liberals for whom Ryan was the most sinister of far-right operators, part fanatic and part huckster — a Lyle Lanley with “Atlas Shrugged” in his back pocket, playing everyone for suckers while he marched the country into a libertarian dystopia.

It existed among the donors who wanted him to run for President, the pundits who encouraged Mitt Romney to choose him as a running mate, the big names who pressured him into the speakership. And it existed among anti-Trump conservatives, finally, who looked to Ryan to be the Republican of principle standing athwart Trumpism yelling stop.

But the real Ryan was never suited for these roles. He was miscast as a visionary when he was fundamentally a party man — a diligent and policy-oriented champion for whatever the institutional G.O.P. appeared to want, a pilot who ultimately let the party choose the vessel’s course. And because the institutional G.O.P. during his years was like a bayou airboat with a fire in its propeller and several alligators wrestling midship, an unhappy end for his career was all-but-foreordained.

This is not to say that he lacked principles. The frequent descriptions of Ryan as a Jack Kemp acolyte — a supply-side tax cutter and entitlement reformer and free trader who imagined a more immigrant-welcoming and minority-friendly G.O.P. — were accurate enough; there was no question that the more a policy reflected Ryan’s deepest preferences, the more Kempist it would be.

But even there, he came to those principles at a time when they were ascendant within the party — in the period between the supply-side ’80s and the late-1990s window when centrist liberals seemed open to entitlement reform. And then as Republicans moved away from them, tacking now more compassionate-conservative, now more libertarian, now more Trumpist, his resistance to the drift was always gentle, eclipsed by his willingness to turn.

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Thus the Ryan of the George W. Bush era cast votes for the pillars of compassionate conservatism, No Child Left Behind and Medicare Part D. Then the Ryan of the Tea Party era championed austerity, talking about “makers and takers” and tossing out the Ayn Rand references that persuaded many liberals that he was an ideological fanatic. But that Ryan gave way to Ryan the dutiful running mate, which gave way in turn to the more moderate Ryan of Obama’s second term, who negotiated a budget deal with Democrats and moved toward so-called “reform conservatism” in his policy proposals at a time when that seemed like that might be the party’s future.

Then came the 2016 election, in which Ryan temporarily resisted Trump and then surrendered lest he break the party (which a party man could never do), and after that the Trump administration, in which Ryan has obviously steered Trump toward standard Republican policies — but has just as obviously been steered as well. Most of Ryan’s past big-picture goals (entitlement reform, free trade, minority outreach) are compromised or gone, and while he attempted Obamacare repeal and achieved a butchered version of corporate tax reform, he’s accepted spending policies that make a mockery of any sort of libertarian or limited-government goal.

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If you look at all this and see an obsessive ideologue working tirelessly for Randian ends, I think you’re being daft. But it’s equally daft to see this as the story of a great visionary brought low by Trump. The truth is that Ryan probably could have thrived as a legislator in a variety of dispensations: As a Reaganite if he’d been born early enough; as a Kempian or compassionate conservative if the late-1990s boom had continued; as a bipartisan dealmaker in a world where his base supported compromises (the blueprints he drew up with Democrats like Ron Wyden were usually interesting); as some sort of reform-conservative-inflected figure under a President Rubio or Kasich.

But in a dispensation where the G.O.P. was leaderless, rudderless, yawing between libertarian and populist extremes, he was never the kind of figure who could impose a vision on the party — nor would he would break with the party when it seemed to go insane.

Instead, he only knew how to work within the system, which because the system had turned into a madhouse meant that his career could only end where it ended this past week: in a record of failure on policy and principle that he chose for himself, believing — as party men always do — that there wasn’t any choice.

Nicholas Kristof is off today.

I invite you to follow me on Twitter (@DouthatNYT).

Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.

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A version of this article appears in print on , on Page SR11 of the New York edition with the headline: Paul Ryan, Party Man. Order Reprints | Today’s Paper | Subscribe

 

Voodoonomics: How successive governments impoverished Malaysians


March 15, 2018

Voodoonomics: How successive governments impoverished Malaysians

by P. Gunasegaran@www.malaysiakini.com

A QUESTION OF BUSINESS | At least two ways – both very wrong in the longer term – were used to support the export sector in Malaysia in believing that growth through exports was the right thing for a developing country like Malaysia.

Even though there was economic growth, which means more wealth was created, there was impoverishment too. But how could that be? Basically, those who were rich got richer and those who were poor got poorer.

How did the government achieve export competitiveness over the years? Through two measures. First, they reduced the number of things Malaysians generally could buy by opting for a policy which weakened the ringgit. And two, they imported poverty by allowing the uncontrolled import of cheap labour.

Both improved Malaysia’s competitiveness not by raising productivity, although there was some of that, but by cutting down the cost of labour through the import of cheap labour (imported poverty) and lowering the relative value of the currency or currency depreciation, effectively lowering costs in US dollars.

Let’s look at these measures in turn.

1. Currency Depreciation

The ringgit fell in value from around as strong as around RM2.2 to the US dollar in 1980 to around RM4.0 now. The US dollar appreciated by over 80% during the period and the ringgit lost over four-tenths of its value relative to the US dollar.

Consider what that does: if an imported food item cost US$1, it was RM2.2 in 1980. But it rises to RM4 now, an increase of some 82%. But consider it now from the exporter’s perspective: If he sells something for US$1 overseas now, he gets RM4 versus RM2.2 then, again 82% more.

Unless he shares this benefit equitably with the worker – and in practice, he does not – a depreciated currency is a subsidy to exporters and a tax on workers because everyone depends on imported goods and even services for a good part of what they consume. Think in terms of food, clothing and buying from foreign chains.

While a depreciated currency improves the appearance of export figures in ringgit terms, it is still not a long-term solution for the betterment of people because it directly impoverishes a major part of the public by reducing their purchasing power – the amount they can buy with the ringgit.

2. Importing poverty through cheap foreign labour

The next major stupid move successive governments did was to import cheap labour from overseas. Until today, this is largely from Indonesia, Philippines, Bangladesh and India.

In the 1980s, this happened in the plantations affecting mainly Indian Malaysians who were displaced from the estates due to cheap Indonesian legal and illegal labour. Soon, this imported cheap labour spread into all areas, heavily depressing labour wages, affecting all Malaysian labour including Malays.

Was wealth ever created?

How terribly short-sighted! While developed countries were importing skilled and white-collar workers from developing countries, Malaysia, still very much a developing country then (and still is despite what others say), was importing cheap labour from other countries, depressing wages of a large section – probably as much as 50% – of its own workforce.

What kind of a madness was this that at the same time inhibited improved productivity by opening the tap to cheap labour and delayed the invention and adoption of new processes to reduce labour input while improving productivity per person through training and automation?

Till this day, when employers complain of labour shortage, it irritates one to see imported labour at car parks, for instance, being used to hand out parking tickets even after the process has been automated at the entry points.

Drive further in and you see others directing traffic and blowing loudly on whistles. The price of labour is so cheap that imported labour is used for such menial tasks. Are Malaysians so illiterate that they can’t read and follow signs?

As if the whole situation is not ridiculous enough, government officials and ministers regularly regurgitate garbage by saying that labour imports are necessary because Malaysians do not want to do these jobs. Pay them enough and Malaysians will do the job. Perhaps the ministers should send their daughters and sons to do this kind of work for a pittance.

And as many millions of workers are imported, a thriving business sanctioned by the government sprouts up living off the blood and sweat of workers and exploiting employers by making both parties pay ridiculous amounts for legal import, driving them towards employing illegal workers.

One may ask, what then is the alternative? If you want a broad section of the public to get richer and more affluent, the only way is to create wealth for everyone.

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That means improving the overall productivity or output per person so that he or she deserves a higher wage. Not by creating wealth for some and impoverishing most via currency depreciation and depressing wages.

Ah, yes but how do you do that? There is only the hard way. First, improve the quality of education for all and focus on the right kind of education which will make people employable.

Next promote the kind of industries which will increase the dollar value of output per person and ensure that productivity gains drive wealth creation, not cost-cutting.

Third, ensure that as much as possible of the resources go towards improving educational opportunities and building the necessary infrastructure for continuing productivity improvements with as little leakage as possible.

How much of this has been done since independence? Little.

The frightening part

According to Khazanah Research Institute’s (KRI) ‘State of Household Report’ dated November 2014 and Employees Provident Fund (EPF) data on individual incomes which includes salary or wages, overtime payments and bonus in 2013:

  • 96 percent of active EPF members earned less than RM6,000 a month
  • 85 percent less than RM4,000
  • 62 percent less than RM2,000

That’s a telling figure – 62 percent of workers earn less than RM2,000 a month. How can many of them live comfortably with such an income, especially when they have children to support?

Meantime, the median monthly salaries and wages per month for individuals was RM1,700 in 2013 (see chart below). That means half of all workers get this much or less, KRI explains.

And what does an illegal Indonesian worker earn in a month these days? In March, there are 27 working days including Saturdays on which they typically work as well. Industry employers say Indonesian illegal workers cost RM70 a day, casual, that means not contracted. Multiply that figure by 27, we get RM1,890 for the month of March.

Now, the frightening part is that this is more than the RM1,700 median salary for Malaysia which means that 50% of Malaysians earn less than casual Indonesian workers!

Clearly, the majority of the country lives in poverty. Income gains for the wage-earner have not gone up enough. And for a country like Malaysia with abundant resources and which once had the highest income in Asia after Japan, that reflects a failure of government.

If one needs an example of successful economic development, you just need to look across the Causeway which started pretty much from where Malaysia did and look where it is now with the adoption of the right policy mix coupled with an incorruptible government.

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The currency–the Singapore Dollar– is now valued at three times Malaysia’s against about parity in 1980 and its per capita income is among the highest in the world.

We are not saying that Singapore is the perfect state but in terms of economic development, they have beaten us by far and continue to do so.


P GUNASEGARAM still hopes that sometime in the future (perhaps soon?) there will be a government not only of the people but for the people. E-mail him at t.p.guna@gmail.com

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