Malaysians are concerned with the Economy


January 19, 2017

Donald Trump aside, Malaysians are concerned with the Economy

by Martin Khor@www.thestar.com.my

As the new year gets underway, ordinary citizens are concerned about the rising cost of living, the ringgit’s low level and the outflow of capital.

Image result for Felda Global Ventures a messMaking Malaysia messy is his forte

WHILE Donald Trump’s inauguration as the new United States President will hog the headlines this week, it is the bread-and-butter issues that preoccupy the man and woman in the street as the new year gets into stride.

In Malaysia, a major talking point is the state of the economy. Three issues are worrying the ordinary Malaysian – rising prices, the fall of the ringgit and the outflow of capital. Each is an issue in its own right, but they are also all interlinked.

Inflation has become a hot issue because it is accelerating and will continue to do so. There are one-off factors influencing retail prices, such as the removal of the cooking oil subsidy, the weather affecting vegetable output or the slight recovery of the world oil price.

 But prices across the board are affected by the weakening of the ringgit since this increases the prices of imports.

Malaysia is very dependent on imports for a wide range of products, from food and household utensils to machinery and components for making cars, computers and all kinds of other goods.

As the most recent ringgit plunge started in mid November, prices of products that have high import content may not have fully risen yet because the shops are still clearing stocks bought earlier. But you can expect the new prices to kick in more and more.

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Irwan Siregar —  Fox in the  Malaysian Financial Hen House

The second issue is the ringgit decline itself, which has bad and good effects, with some sectors and people losing and others benefiting. The negative effects include:

  • Consumers having to pay higher prices for imported goods and services.
  • Traders and retail shops getting less business as the demand for the dearer imports goes down.
  •  Manufacturers and construction firms paying higher costs for parts and production inputs, which will translate into higher consumer prices and eventually higher house prices.
  • Parents with children studying abroad must fork out more ringgit even if the fees and hostel rent remain the same.
  • The Government and its enterprises and private companies that took loans in foreign currencies lose significantly as they have to spend more ringgit to service their loans.

Among the good effects:

  • Smallholders and companies exporting palm oil, rubber, petroleum and other commodities will receive more revenue in ringgit terms.
  • Local manufacturers exporting goods such as rubber gloves and furniture become more competitive as they can reduce their prices in foreign currency, or else they receive more in ringgit if they retain their international prices.
  • The tourism and hotel business should thrive since it’s cheaper for foreigners to visit Malaysia. Locals who now can’t afford to travel abroad may also spend their holidays in the country.

On balance, will the gains outweigh the losses? From a public perspective, this is unlikely as the higher cost of living will affect all Malaysians, especially the poor and middle classes, and the higher external debt repayment will affect the public and the economy overall.

The prospect of further depreciation of the ringgit also has a bearing on capital flows, the third issue. Malaysia is one of the countries most vulnerable to the shocks of foreign funds moving out, because so much capital was allowed to move in.

In recent years, a new type of vulnerability emerged when foreign funds were welcomed to invest in government bonds denominated in ringgit.

It was originally thought that foreign loans in ringgit would be safe as the borrower would avoid the foreign exchange risk, as contrasted with loans denominated in US dollars.

This is true but the sheer volume of bonds now owned by foreigners makes the economy vulnerable to large outflows in a short period.

Comparison is usually made between potential capital outflows and the level of foreign reserves. The reserves as at December 30, 2016 were US$94.6bil (RM424bil).

The total foreign debt outstanding was RM865bil at the end of September 2016.

Of this, offshore borrowing (in foreign currency) was RM472bil, and ringgit-denominated government bonds held by non-residents were worth RM211bil, according to Bank Negara data.

Some of the investors have a long-term commitment and not everyone will move in the same direction at the same time, but in recent weeks external conditions such as a rise in US interest rates (and anticipation of more rises in 2017) have prompted capital outflows from emerging economies, including Malaysia.

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The country also has high foreign participation in the stock market (22.6% in November 2016), and in recent months there has also been a net withdrawal of equities by foreigners.

November 2016 was a bad month, as foreigners withdrew from the country RM19.9bil of government securities, and RM4.2bil of equities, according to a report in The Star (January 7, 2017). The potential and probability of more capital outflows in 2017 is a factor weighing on the perception of the ringgit’s prospects.

A high trade surplus has previously acted as a strong buffer against potential large capital outflows. The trade and current account balances are still positive, but the surpluses have been declining.

Government measures could help, such as the requirement that exporters convert 75% of their ex­­port proceeds from foreign currencies to ringgit.

Other measures can be considered if the situation does not improve. For example, companies and funds, starting with government-linked ones, can be discouraged from investing abroad – for the time being at least.

Malaysia has ruled out more drastic measures such as capital controls and pegging of the ringgit.

Developments in these three economic issues will be closely watched, not least by the public whose pockets are affected, as the year progresses.

External events could improve the situation, such as if prices of Malaysia’s export commodities increase, or could worsen it, especially if the US raises its interest rates further and if Trump really pursues protectionist policies.

However, domestic policies to respond to the problems are crucial and there should be a comprehensive plan to tackle these issues, since they may persist as 2017 progresses.

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.

Former Malaysian Finance Minister Daim Zainuddin–The Economy under Corrupt Najib Razak


December 22, 2016

Former Malaysian Finance Minister Daim Zainuddin–The Economy under Corrupt Najib Razak

Received via e-mail

Get rid of the feudalism mindset, especially among those who are the trustees of this nation. If the leader is wrong or has committed a crime, it is the fiduciary duty of the subordinates, particularly the civil servants, to take corrective actions, instead of being in cahoots to cover up the wrongdoings.–Tun Daim Zainuddin

Image result for suharto and lee kuan yew

I have been asked to share my thoughts on key structural issues facing the country, and what we can do about it. I am most reluctant to put my thoughts into words or share them with the public. Since my retirement, I have stayed away from public discussions as I prefer to spend my time travelling. But times have changed and we are facing a very serious crisis.

Clearly, there are important long-standing structural issues that may affect our march towards developed country status. These are related to education, the labour market, the government’s fiscal policy, inclusive growth and sustainability, among others.

However, what this country needs at this moment is much simpler but seems harder to solve. What we need to address now, which I have repeated so many times, is the chronic trust deficit. In order to overcome this deficit, we must first understand its origins. There are a few reasons why we are facing this trust deficit.

First, it is the lack of integrity, honesty and moral courage. The lack of good moral character seems pervasive among the elites in this country, especially among those in power. Corruption and bribery remain rampant, to the extent that cases of public money being siphoned off for private use or government servants stashing away obscene amounts of hard cash do not amaze us anymore. It is as though systemic corruption has taken a hold of us and our nation, and we have accepted it. The culprits must be punished. We should have no sympathy for them.

But in some instances, politically connected culprits were not brought to the courts fast enough. In the case of the Sabah Water Department, it has been nearly two months since the main officers were released on bail. This has given room for further speculation and abuse of the system. The same goes for the Ministry of Youth and Sports’ case. And, of course, who can deny the existence of the biggest elephant in the room pertaining to corruption and abuse of power?

It is worth being reminded that lack of integrity has disastrous consequences, and it extends beyond the damage to the current generation. Studies have shown how countries that are perceived to be corrupt tend to grow at a much slower rate than those that are corrupt-free and this has a negative impact on long-term growth. No one would want to invest in a country that does not respect the rule of law.

Lest we forget, the root cause of why a community or a nation succeeds or fails, why great civilisations or empires collapsed, always comes back to one reason — integrity or the lack of it.

Tun Daim Zainuddin (right) and author of ‘The Colours of Inequality’ Dr Muhammed Abdul Khalid during the launch of the book at the International Islamic University of Malaysia in Kuala Lumpur, November 11, 2014. — Picture by Yusof Mat Isa

Thus, solving all those structural issues will depend on ensuring the highest level of integrity among those in power. In fact, a nation’s survival and its success depend on the integrity of everyone, most crucially, its leadership.

The leaders must always uphold the highest level of integrity and not betray the trust assigned to them or take advantage of their position. Those with positions must remember that there is no honour in abusing their power.

Second, the lack of empathy and common sense among those in power plays a role in widening the trust deficit in the country. When the people are feeling the pinch of slower wage growth, higher cost of living with the removal of subsidies and weakening of the ringgit, we are pouring more than half a billion ringgit of the rakyat’s money into a public park. This is outright insensitive and mind-boggling when allocations for essential services, such as health and education, have been reduced. Yet, if the government is sincere about its concern about parks, why hasn’t it gazetted Bukit Kiara?

Third, expertise in oversight of the nation’s economy is seriously lacking. We proudly proclaim that our “fundamentals are strong”. But the economic growth is fuelled by debt. This is not sustainable. Government debt with its contingent liability has easily exceeded the debt limit. In fact, for next year’s budget, we have to borrow about 90% to finance our development expenditure.

For every RM1 we expect to collect next year, 98 sen will be spent on operational expenses, such as paying salaries, interest and subsidies, among others. This is not sustainable.

Household debt is already at an all-time high; in fact, it is one of the highest in the region. With lack of savings, our households are vulnerable to poverty. Our outstanding non-financial corporate sector debt is also high, about 105% of GDP as at end-2015, which is higher than the debt of emerging economies.

Yet, we are still proud to state that the economy is growing, and we are proud when the incoming president of US reportedly is impressed by our high economic growth. But the US is approaching full capacity as evidenced by falling unemployment and rising wages.

But growth alone is not enough. It needs to benefit the country and the rakyat. Despite registering positive growth, the number of unemployed in Malaysia keeps growing. Since early last year, the number of unemployed grew nearly 16%. Our graduates do not have jobs; a graduate engineer has to sell nasi lemak and the government seems proud of that!

Firms also are not hiring as before; the number of vacancies reported this year is the lowest in about a decade. In fact, the number of jobs created are mostly low to mid-skilled, and not high-skilled. Not surprisingly, the share of low-skilled workers in the labour force has increased while that of high-skilled workers has declined. This does not augur well for the country becoming a high-income nation. It is pointless for a country to achieve high income when the rakyat remains low income.

These are among the factors that lead to people losing trust in the government. What do we do then?

Image result for Daim and Najib

Household debt is already at an all-time high; in fact, it is one of the highest in the region. With lack of savings, our households are vulnerable to poverty. Our outstanding non-financial corporate sector debt is also high, about 105% of GDP as at end-2015, which is higher than the debt of emerging economies.

Yet, we are still proud to state that the economy is growing, and we are proud when the incoming President of US reportedly is impressed by our high economic growth. But the US is approaching full capacity as evidenced by falling unemployment and rising wages.

But growth alone is not enough. It needs to benefit the country and the rakyat. Despite registering positive growth, the number of unemployed in Malaysia keeps growing. Since early last year, the number of unemployed grew nearly 16%. Our graduates do not have jobs; a graduate engineer has to sell nasi lemak and the government seems proud of that!

Firms also are not hiring as before; the number of vacancies reported this year is the lowest in about a decade. In fact, the number of jobs created are mostly low to mid-skilled, and not high-skilled. Not surprisingly, the share of low-skilled workers in the labour force has increased while that of high-skilled workers has declined. This does not augur well for the country becoming a high-income nation. It is pointless for a country to achieve high income when the rakyat remains low income.

These are among the factors that lead to people losing trust in the government. What do we do then?

Two things need to be undertaken, one easier than the other. First, a new economic team must be assembled and empowered to fix the economy.

The rakyat and investors, both local and foreign, must have faith and confidence in those managing the economy. The members of this team must be professionals who are technically competent, with the highest level of integrity and dare to speak the truth. Lack of intelligence and incompetence cannot be compensated for by loyalty to the leader.

Indeed, the special economic team that was set up in August last year is a complete failure. It should be dissolved. Concurrently, the Prime Minister must let go of the Finance Minister’s post; this is bad governance.

Second, which is equally important, is to get rid of the feudalism mindset, especially among those who are the trustees of this nation. If the leader is wrong or has committed a crime, it is the fiduciary duty of the subordinates, particularly the civil servants, to take corrective actions, instead of being in cahoots to cover up the wrongdoings.

Bear in mind that political leaders who are elected by the rakyat to lead the government are basically the rakyat’s servants. They are merely given the mandate and power by the rakyat to lead the government and to rule on their behalf. Thus, the ability to be respectful and accountable towards the people who voted them in is paramount.

The leaders are not gods that must be obeyed. This clarion call is not new; nearly half a century ago, our great philosopher and sociologist, Syed Hussein Alatas, warned us of the danger: “…man in authority … expects the subordinate to be loyal and faithful in a manner that sometimes comes into conflict with the norms or ethics … he is supposed to be loyal under almost all circumstances, even if the circumstances violate the present values and philosophy of Malaysian society” (Feudalism in Malaysian society: A study in historical continuity. Source: Civilisations, Vol. 18, No. 4 [1968], pp. 579-592).

This requires, again, integrity and honesty, even if that means one is in the minority. Our first prime minister said it best: “If you think you are rich, there are many who are richer than you. If you think you are clever, there are more people cleverer than you. But if you think you are honest, then you are among the few and in this instance, it is best to be among the few.”

 

In dealing with the rakyat, whether on economic, social or political issues, honesty is really the best policy. Lies can only lead to more lies, and once the rakyat has lost faith in you, even when you are stating the truth, they will not believe you. You cannot fix the problems of the nation when there is a trust deficit.

In my experience during the 1986 and 1998 crises, I was upfront about the problems we faced but the people had the confidence to give us time and space to solve the problems. Without the people’s trust and support, it will be difficult to solve the economic problems, especially when it affects them. It is a partnership between government and the governed.

Reforms in institutions are also required. We must take all necessary actions, including amending laws, to ensure the independence of judiciary and security institutions. Tolerance for dissent and differences in opinion and ideologies must be welcomed, and not prosecuted. These are the ingredients for a truly open and functioning democracy.

Failure to undertake these paramount reforms means we are moving away from prosperity. Otherwise, we all should be seriously worried about the future that we are leaving for our children and grandchildren.

Bear in mind that political leaders who are elected by the rakyat to lead the government are basically the rakyat’s servants. They are merely given the mandate and power by the rakyat to lead the government and to rule on their behalf. Thus, the ability to be respectful and accountable towards the people that voted them in is paramount.

The leaders are not gods that must be obeyed. This clarion call is not new; nearly half a century ago, our great philosopher and sociologist, Syed Hussein Alatas, warned us of the danger: “…man in authority … expects the subordinate to be loyal and faithful in a manner that sometimes comes into conflict with the norms or ethics … he is supposed to be loyal under almost all circumstances, even if the circumstances violate the present values and philosophy of Malaysian society” (Feudalism in Malaysian society: A study in historical continuity. Source: Civilisations, Vol. 18, No. 4 [1968], pp. 579-592).

This requires, again, integrity and honesty, even if that means one is in the minority. Our first Prime Minister said it best: “If you think you are rich, there are many who are richer than you. If you think you are clever, there are more people cleverer than you. But if you think you are honest, then you are among the few and in this instance, it is best to be among the few.”

 

In dealing with the rakyat, whether on economic, social or political issues, honesty is really the best policy. Lies can only lead to more lies, and once the rakyat has lost faith in you, even when you are stating the truth, they will not believe you. You cannot fix the problems of the nation when there is a trust deficit.

In my experience during the 1986 and 1998 crises, I was upfront about the problems we faced but the people had the confidence to give us time and space to solve the problems. Without the people’s trust and support, it will be difficult to solve the economic problems, especially when it affects them. It is a partnership between government and the governed.

Reforms in institutions are also required. We must take all necessary actions, including amending laws, to ensure the independence of judiciary and security institutions. Tolerance for dissent and differences in opinion and ideologies must be welcomed, and not prosecuted. These are the ingredients for a truly open and functioning democracy.

Failure to undertake these paramount reforms means we are moving away from prosperity. Otherwise, we all should be seriously worried about the future that we are leaving for our children and grandchildren.

Daim Zainuddin is former finance minister of Malaysia

5 ways to really ruin an economy


November 29,2016

After Brexit: 5 ways to really ruin an economy–Any resemblance to the Malaysian situation is purely coincidental

https://intheblack.com/articles/2016/08/08/5-ways-to-really-ruin-an-economy?utm_source=Taboola&utm_medium=cpc&utm_content=3&utm_campaign=KCtrial

By Jason Murphy

 

The UK’s exit from the European Union may slow European growth over the next two years – but to truly and deeply wound an economy requires more dramatic strategies.

Image result for malaysia a failed state

No-one yet knows what will be the full economic impact of Brexit, the surprise British vote to leave the European Union. The British pound quickly fell by approximately 10 per cent, and share and bond prices dropped too. It’s less clear what will happen to the “real economy” – production, consumption and jobs. Whatever happens to the UK, though, should be kept in perspective. Even if the UK economy contracts by a percentage point or two, it will be a long way from the worst economic disasters of recent years.

To produce true economic disaster, you need to do something more misguided than deciding to leave an economic bloc. Here are five ways to really ruin an economy.

Price controls – Venezuela

To the late Venezuelan President Hugo Chavez, inflation looked easy to solve: issue a law that made it a crime to sell at high prices.Introducing the 2011 Law for Fair Costs and Prices, Chavez spoke about tortillas – priced at B7.50 at government supermarkets, they sold for up to B40 at private stalls. This could not stand – the price control law was “to advance the struggle against the injustices of capitalism,” Chavez said.Venezuela had a history of price controls. For a time a litre of petrol, for example, cost just US$0.01 under subsidy (which, not surprisingly helped spark a boom in smuggling fuel out of Venezuela).

The Law for Fair Costs and Prices didn’t use subsidies. It lacked anything more than government say-so. Shortages of food and other basic supermarket goods spread, black markets thrived, riots followed.

Neither the death of Chavez nor the collapse in oil prices that once made Venezuela viable has put an end to the policies. In May 2016, CNN reported that the country was not just running out of food, medicine and electricity but even lacked toilet paper.

According to the World Bank, 2016 will be Venezuela’s third consecutive year of shrinking GDP, and 2017 is forecast to be its fourth.

Debt – Greece

Greece’s problems were that it was allowed to build debt for too long, and that it was unable to adjust when it needed to do so. It joined the European Economic Community (later the European Union) in 1981, adopted the euro as its currency, and for years funded growing budget deficits at low rates as a member of the eurozone. The deficits pushed up Greek government debt; by 2010 it was reported at 120 percent of GDP, double the supposed Eurozone limit. But the real level of debt, audits found, was almost 150 per cent.

Analysts and foreign officials began to ask questions that ought to have been asked earlier. Greece’s annual government fiscal deficit – the gap between spending and revenue – was revealed to be larger than official statistics were letting on. It was by then in fact one of the highest in the world.

Such a situation would normally trigger a currency devaluation. As an EU member, however, Greece could not devalue – a problem which made its situation far worse. The EU eventually offered bailout funds in return for a series of 13 increasingly severe austerity packages. Gross domestic product, which reached US$354 billion in 2008, dropped to US$195 billion by 2015 and fell again in early 2016, according to World Bank reports.

The Greek unemployment rate – which was 8 per cent in 2008 – now sits at 23 per cent. The combination of high public debt and the country’s inability to adjust to changed circumstances has made Greece a byword for debt-driven economic mismanagement.

Self-sufficiency – North Korea

North Korea trades very little, boasting it is “self-sufficient”. The “self” part is these days mostly true, but the “sufficient” part is debatable.

The end of the Soviet Union was substantially less welcome in North Korea than in, say, Europe. The true reality of self-sufficiency was about to dawn, with terrible consequences. It is estimated that North Korean GDP fell by more than half in the decade after 1990, from around US$2700 per person to less than US$1000 in 2000.

This period, known officially in North Korea as The Arduous March (and named after a story of Kim il-Sung leading guerrilla fighters against Japan) included a famine that is estimated to have killed between several hundred thousand to several million people.

This is not to say self-sufficiency has been devoid of successes. North Korea is a leader in production of Vinylon. Invented by a scientist who defected from South to North Korea, Vinylon is a fabric produced from locally-sourced limestone and used in clothes, shoes, bedding and rope.

You can’t eat it, however. According to the World Food Programme, “one in every three children remain chronically malnourished or stunted” in North Korea. The country has recently allowed small-scale private business in an attempt to rebuild its economy.

Lack of property rights – Zimbabwe

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Robert Mugabe

Zimbabwe was never rich. But the lesson of meltdowns is you don’t need to climb high to start your plunge. In 1982, Zimbabwe’s GDP per capita was US$1060; by 2008 it was just US$300, according to the World Bank.

The reign of Robert Mugabe – elected Prime Minister in 1980 and President in 1987 – has had many economic policy errors, but two stand out.

The first is redistributing farmland via violence. In 2000 an existing program to move land from white to black ownership with compensation was trampled by a state-sanctioned land seizure program that helped create a famine.

The second error was the 2005 destruction of homes and businesses belonging to opposition supporters.

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Malaysians should do the Murambatsvina on Najib Razak, God’s chosen Prime Minister (Zahid Hamidi)

Operation Murambatsvina (“Clear the Rubbish”) was an attempt to clear illegal slums, the government says. The UN says it was politically motivated, coming shortly after an election at which the opposition did well.

The World Bank in its published overview says these and other crises between 2000 and 2008 “contributed to the nearly halving of its gross domestic product (GDP), the sharpest contraction of its kind in a peacetime economy, and raising poverty rates of more than 72 per cent, with a fifth of the population in extreme poverty.”

Lack of security over your possessions will never spur much in the way of investment, and with rich white and poor black alike at risk, Zimbabwe is going from bad to worse. In 2016, with Mugabe aged 92, Zimbabwe’s economic problems are said by the IMF to have “deepened” and activity is “severely constrained”.

Poor investment – Nauru

Perhaps the greatest swan dive on this list is that of Nauru. The world’s smallest independent country in terms of both population and land area, it was during the 1970s and 1980s the world’s richest, in per capita terms.

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Courtesy of its phosphate rock reserves, the country of 10,000 grew fat (quite literally – a 2007 World Health Organization report (PDF) identified 94.5 per cent of its residents as overweight). Nauru mined its tiny landmass like there was no tomorrow, digging up its dwindling phosphate reserves in the 1980s when prices were high.

The Micronesian country’s wealth was legendary, and it made attempts to diversify. Nauru bought commercial properties in Australia and the USA, and started its own airline. Among its investments was a West End musical about Leonardo da Vinci. On opening night, much of the cabinet of Nauru was in attendance. The musical (titled Leonardo the Musical: A Portrait of Love, and running for four hours) was short-lived, and so was Nauru’s status as a wealthy country.

Exactly where the incredible wealth went remains unclear, but Nauru’s eventual net debt – hundreds of millions of dollars owed all over the world – was not. Nauru is now impoverished and dependent on foreign aid.

In 2014, Sydney University geosciences professor, John Connell, told the Financial Times newspaper that mass emigration might be the only long-run solution.

Nationalism in Malaysia in Extremis


November 17, 2016

The Edge logo

Nationalism in Malaysia in Extremis

by Dr. Ooi Kee Beng

Image result for Hidup Melayu

Malay Nationalism or Tribalism ala Ku Kluk Klan

One thing that shocked me when I first went to Sweden for my studies 35 years ago was how dirty a word “Nationalism” was in Western Europe. This reaction, I realized, was very much a reflection of how the concept was positively implanted in my mind while a schoolboy in Malaysia; but it also demonstrated how greatly human experiences can differ in different parts of the world.

More importantly, it revealed to me how strongly we are intellectually captured by the language use of our times and our location.

But the Swedes are very proud of their country, so how come nationalism is frowned upon so badly? The same thing applied throughout Europe, at least until recently. Excessive immigration over the last two decades, coupled with declining economic fortunes and waning self-confidence has buoyed the ascendance of ultra-rightists groups in all countries throughout the continent.

So why was Nationalism so despised? Europe is after all the home continent of the Nation State.

For starters, Europe was always a place of endless wars often fought ostensibly for religious reasons between feudal powers. The arrival of the Nation state ideology helped to lower the frequencies of these tragedies, but only to replace it soon after with non-religious types of rationale for conflict. The American Revolution and French Republicanism added the new phenomenon of “government by the people”. The French case also brought into the equation the Left-Right Dimension that would define politics and political thinking for the next two centuries.

This conceptual division between Popular Mandate and Elite Rule expressed sharply the rights of common people on the one hand, and the role of the state on the other. Once this gap was articulated, conflating the two poles anew became a necessary task.

The three major articulations in Europe of this mammoth mission to bridge the divide and achieve a functional modern system were Liberal Democracy, Communism and Fascism. While the Anglo-Saxon world championed the first, Stalin’s Soviet Union perfected the second and Adolf Hitler developed the third to its insane conclusion. In Europe, it was basically these three actors who fought the Second World War.

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Malay Tribalism in Action

In Asia, Japan’s brand of state fascism ran riot throughout the region, rhetorically championing nationalism in the lands it took from the European colonialists.

While the National Socialism of the Third Reich died with Hitler, Fascism lived on in Franco’s Spain until 1975 and Nationalist Communism of Stalin continued in Eastern Europe until the early 1990s.

Nationalism in the rest of Europe after 1945 came to be understood with disdain as the longing of the Nation State for purity and autonomy taken to pathological lengths. It is after all always a defensive posture, as is evidenced today in its return in the form of right-wing anti-immigrant groups.

Image result for Hidup Melayu--Najib Razak

Maruah Melayu dijual ka-Cina untuk membela masa depan politik Najib Razak–Jualan Aset 1MDB

In Malaysia, nationalism was—and for many, still is—the most highly rated attitude for a citizen to adopt.There are obvious reasons for this, given the historical and socio-political context in which Malaysia came into being. Constructing a new country out of nine sultanates, the three parts of the Straits Settlements, with Sabah and Sarawak on top of that, was a more daunting task than we can imagine today. Furthermore, the contest was also against other powerful “-isms”, especially Communism and Pan-Indonesianism. These threatened to posit what are Malaysia’s states today in a larger framework, and would have diminished these territories’ importance and uniqueness.

Putting a new regime in place of the retreating British required a rallying idea; and what better than the very fashionable image of a new nation to whom all should swear allegiance. Malayan nationalism was thus born.

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For Inclusive, Liberal and Progressive Malaysia–Escaping the Nationalism Trap

It is no coincidence that the path to independence became much easier after Malaysia’s major political party, UMNO, decided under Tunku Abdul Rahman to change its slogan from the provincial “Hidup Melayu” [Long Live the Malays] to the inclusive “Merdeka” [Independence].

But already in that transition, one can see the problem that Malaysia still lives with today. Is Malaysia the political expression of the prescriptive majority called “Melayu” [later stretched to become “Bumiputera”], or is it the arena in which the multi-ethnic nation of “Malaysians” is to evolve?

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Nationalism in essence, and most evidently so in its narrow ethno-centric sense, is defensive and fearful, and understood simplistically and applied arrogantly very quickly show strong fascist tendencies. The issue is therefore a philosophical one.

What Malaysia needs today, is to accept the regional and global context that sustains it, and work out as best it can a suitable balance between Popular Mandate and Elite Rule which is clearly less belaboured and less painful than the cul-de-sac alleyway it has backed itself into.

OOI KEE BENG is the Deputy Director of the Institute of Southeast Asian Studies (ISEAS–Yusof Ishak Institute) and the Editor of the Penang Monthly (Penang Institute). He is the author of the prizewinning The Reluctant Politician: Tun Dr Ismail and His Time (ISEAS 2006).

Minister Rahman Dahlan –A Financial Ignoramus


November 17, 2016

Minister Rahman Dahlan –A Financial Ignoramus

by TK Chua

http://www.freemamalaysia.com

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As an “economics minister”, we expect more comprehensive and professional answers from Rahman. Many can become politicians, but only very few can be economics ministers.–TK Chua

I was not a fan of Dr Mahathir Mohamad when he was Prime Minister. But a major part of my working life was under his premiership. I was resentful of Mahathir when I saw that many of the things he did was in favour of big time business people. He had his blue-eyed boys who often turned out to be disastrous. He too embarked on projects that did not turn out well. But hindsight is always perfect. Everything is relative.

When we assess the performance of a government or its leadership, rarely do we do so based on a single factor. More often than not, it is a combination of failures from which a tipping point is reached.

When Mahathir criticised the “China deal” and the East Coast Rail Line (ECRL) project, it was just one of the many issues confronting Malaysia today. How the people look at the government is not solely determined by this single criticism alone. Hence, even if Minister Abdul Rahman Dahlan has successfully rebutted Mahathir’s criticism, the view of the people may not have altered much. There are still numerous other unanswered issues that have remained protracted and controversial.

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But even within the confines of the China deal and the ECRL project, there are numerous other questions that we could have asked.  First, when Rahman claimed China’s “soft” loan was favourable to Malaysia, he must have assumed China was a simpleton we could take advantage of. It is nice to eat something soft, but be careful of the bones embedded in it. It is almost a cliché when I say there is no free lunch in this world.

Second, the Minister claimed that the soft loan was denominated in the ringgit and so it posed no foreign exchange risk. But what about repatriation of interest charges and profits by Chinese companies? The loan may be denominated in the ringgit, but repatriation of profits and interests may drain our reserves since the rail project has no forex earning capacity.

Third, why the urgency to embark on the ECRL project when government finances are less than conducive? When we borrow, more so from external sources, for an infrastructure project, the justification must be respectable. Does the east coast region suffer from transportation capacity problems right now? Even the existing highways are half empty there.

Fourth, the minister claimed “transfer of technology” when the ECRL project is implemented. I think herein lies our problem – when we are incapable of doing anything worthwhile, what we need is to go on talking about it. Seriously, if Malaysia needs transfer of technology to lay the rail track, we know that this term has been overused and abused.

As an “economics minister”, we expect more comprehensive and professional answers from Rahman. Many can become politicians, but only very few can be economics ministers.

TK Chua is an FMT reader.

 

Foreign Policy: Najib courts China


November 12, 2016

Foreign Policy: Najib courts China and Abandons traditional ties with the United States and its allies

by James Chin

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Najib Razak on Ego Boosting Jet setting Trip to China

Malaysia’s scandal-plagued Prime Minister is finding old friends in Beijing after wearing out his welcome in the West. James Chin looks at whether this is a path more ASEAN countries are likely to follow. 

The Malaysian Prime Minister, Najib Tun Razak, last week took his third official visit to the People’s Republic of China. These sort of official trips do not normally attract much attention, but this one is generating prominent coverage in highly influential newspapers such as the New York Times, Washington Post and Financial Times.

The reasons are obvious – Najib’s arrival comes immediately after the controversial visit of Rodrigo Duterte, the new Filipino president. Duterte made a series of pronouncements in Beijing that caught the Americans off-guard, including his comments about a “separation” from the United States. Many were surprised by Duterte’s statements given that before touching down in Beijing, he was criticising China for its aggressive behaviour in the South China Sea. In fact, the Philippines took China to the International Court of Arbitration over the issue.

Malaysia and the Philippines have overlapping claims with China in the South China Sea and both countries are unhappy with China’s de facto policy of building islands for military use in the disputed waters and using Chinese coast guard vessels to harass fishermen from their countries. It’s well-known that Chinese coast guard vessels regularly sail within 50 miles of Bintulu, the gas-rich town in Malaysian Borneo. Malaysia has sent several diplomatic notes to Beijing on the matter.

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Selling Malaysian Assets to cash rich China for political survival while the Malaysian Ringgit takes a beating against the Greenback (Rm4.5 to 1 Usd)

Despite this, Najib has just signed multi-billion dollar deals in Beijing, including the purchase of Chinese-made military equipment for the first time in Malaysian history. Chinese state-owned enterprises will also buy into key Malaysian assets and provide funding for new infrastructure projects such as a new railway line.

Even more surprising was his interview with Xinhua, Beijing’s official mouthpiece, in which he said he was seeking closer military ties. In an editorial in The China Daily, Najib was quoted as saying former colonial powers should not lecture nations they once exploited as colonies, a clear reference to the West.

So, the question is, are we seeing a tilt in Malaysian foreign policy to China from the previous pro-Western position? The short answer is “Yes”, as long as Najib is in power.

Malaysian insiders will tell you that this was the only position Najib could have taken in light of recent events. To understand Najib’s move, one must look towards domestic politics.

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Malaysia’s Watchdogs

For the past four years, Najib has been mired in a massive corruption scandal called 1MDB. The story is complicated, but suffice to say that there is credible evidence that huge amounts of money, in the region of US$10 to 15 billion, was scammed off 1MDB, a sovereign wealth fund, and part of the amount, in the region of US$1 to 2 billion, allegedly ended up in Najib’s personal bank account. Earlier this year, the US Department of Justice’s Kleptocracy Asset Recovery Initiative filed court action to recover more than US$1 billion in assets tied to 1MBD. The Department named Najib’s stepson and indirectly named Najib as “Malaysian Public Official No 1” in the proceedings. Several other countries such as Singapore, Switzerland and Luxembourg are also pursuing money laundering charges related to 1MDB. The consequence of all these legal actions is that Najib is longer welcome in Western capitals and some are calling on the US administration to ‘distance’ itself from Najib. Prior to the scandal, Najib could boast that he was the only Asian leader invited to golf with Obama in Hawaii, the President’s home state.

Related to the political fallout is investment from the West. The ringgit has fallen more than any other currency in the region against the US dollar in the past three years. It is obvious that a major part of the reason for this is a lack of confidence in the Najib administration. To restore confidence in the economy and kick-start foreign direct investment, Najib can only turn to one country: China.

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China has the money to invest heavily in Malaysia, but more importantly, it does not care about Najib’s alleged corruption allegations or governance issues. For the Chinese, the bigger picture is the ongoing rivalry with the US for influence in the ASEAN region. The Chinese see the US as trying to block their influence by pursuing the Trans-Pacific Partnership Agreement and pushing ASEAN to collectively confront China over the South China Sea. China has consistently refused to deal with ASEAN on the South China Sea issue, insisting that the solution lies in bilateral negotiations between the claimant countries. China also scored a victory-of-sorts when many ASEAN countries signed up for the China-founded Asian Infrastructure Investment Bank despite the US openly lobbying against it.

China’s investments, including buying 1MDB assets, will allow the controversial company to partly square its accounts and the shortfall from the missing money.

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The added bonus for Najib is that he can show the domestic Malaysian audience that the “next” Superpower, China, will give him a red carpet treatment even if the West has side-lined him over the corruption allegations. Najib and the Chinese are also going to great pains to remind the international audience that it was Najib’s father, Tun Razak, Malaysia’s second prime minister, who opened-up diplomatic relations with China. Thus, according to Beijing, Razak’s son Najib, easily qualifies as China’s “old friend”. In turn, Najib has described China as a “true friend and strategic partner”.

With such “old friends” who needs the meddling West with its “lectures” on good governance, human rights and corruption?

The long-term winner in the current saga will be Beijing. As the south-east Asian region becomes more and more dependent on China for its development funds, tourism and trade, more and more ASEAN countries will start to tilt towards Beijing. This is especially true if Donald Trump becomes President on Tuesday.

Professor James Chin is Director of Asia Institute, University of Tasmania. He is also a Senior Fellow at the Jeffrey Cheah Institute in Malaysia.

This article is published in collaboration with Policy Forum — Asia and the Pacific’s leading platform for policy discussion and analysis.

http://www.newmandala.org/najibs-china-legacy/