No Reason to celebrate 60th Merdeka Day


August 18, 2017

No Reason to celebrate 60th Merdeka Day

by Stephen Ng@www.malaysiakini.com

Image result for UMNO Flags

COMMENT | As we approach Merdeka Day, one thing is too obvious not to be noticed.

This observation that I make will answer the question I pose: “How can BN gain back people’s confidence after 2008?”

Sixty years have passed and BN has ruled the nation. This year is crucial as it may be the coming general election that will decide whether Malaysia will return to BN or see a change of government at the federal level.

Image result for Jalur Gemilang at half mast

On August 31, 2017–In stead of rejoicing, we Malaysians  mourn the state of our country. After 60 years of Merdeka, we are being colonised by corrupt and racist UMNO kleptocrats and their partners in MCA, MIC, Gerakan.–Din Merican

My observation is based on the mood of the people as we approach Merdeka Day. It is obvious that the flags are not flying. By now, most shops would be carrying the Malaysian flag and cars would be adorned with the Jalur Gemilang.

But, unless some arm-twisting tactics are used, by now the flags would be all over the place. Patriotism is not something that can be forced. It has to come from the people’s own sentiments.

Although patriotism has nothing to do with giving support to the government of the day, its absence can indicate the people’s sentiments and confidence towards those in the powers of corridor.

This year is the 60th anniversary since Malaysia achieved its independence from the British colonial government in 1957, yet Malaysians are generally lukewarm about the celebration this year.

Why are Malaysians not showing their patriotism?

It does not cost more than RM10 to purchase a Malaysian flag, but could it be that Malaysians are unwilling to fork out even that amount of money, not forgetting the additional 60 sen for the Goods and Services Tax (GST)?

After three years, by now, most Malaysians would have felt the burden of the GST on their rising cost of living.

Only a total reversal of the GST, which unfortunately Prime Minister Najib Abdul Razak said is impossible to implement, is the only way BN can gain the people’s confidence.

Pakatan Harapan said the moment they win the general election, they would remove the GST. So, why is BN saying it cannot be abolished?

Is it because the country has reached such a financial state that despite the oil money, the government would not be able to meet financial obligations without the income from GST collection?

All the “positive” reports aside, one needs to only read Tricia Yeoh’s open letter to Najib to realise how much of Najib’s speech at Invest Malaysia last month can be swallowed.

The truth is most people have a very negative economic outlook, with most saying that the country appears to be going nowhere. Malaysians are beginning to see the doom ahead of them with the latest report that in 2016, the country’s debt has hit RM908.7 billion or 74 percent of the gross domestic product (GDP).

This is one of the highest since the country achieved independence. To say it is no problem is something hard for even ordinary Malaysians to believe. Imagine you are earning RM10,000, but you have to service your loan for the RM7,000 that you have borrowed.

You may be living a lifestyle of someone earning RM17,000 a month, but how many people even earn RM5,000 a month? This is called “over gearing”.

If people smell that something is not right, they will panic to think that the country’s total foreign debts may show that we are in real danger of bankruptcy.

One explanation after another has been given. For example, everyone knows that it is the weaker ringgit that is contributing to the higher cost of foreign debts, but what is the BN government doing about controlling external debts?

What we are hearing about are the mega projects being carried out using borrowed funds. The East Coast Rail Link (ECRL) for example is to be built using money from a soft loan provided by China’s Exim Bank at 3 percent over a period of 20 years.

Anyone borrowing from the bank for a housing loan for that period of time will realise that it is not that rosy after all. The moment someone defaults on a loan, there will be penalties. The bank may even force the property to be auctioned off.

Would the RM55 billion soft loan place Malaysia under the control of a Chinese bank, hence, indirectly the Chinese government? No banks would loan any amount of money if it does not have the assurance that it is able to get back the money.

Besides, we all know that Keretapi Tanah Melayu (KTM) is not making any profit despite running the North-South corridor. What makes us think that the ECRL would be able to pay back the loan?

Political violence

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UMNO-Malay Unity, not National Unity

It is not only the financial aspect that people are worried about. No thanks to its past record, and people like Jamal Mohd Yunos and his Red Shirts, people seem to have the impression that UMNO is given the right to use violence.

Peace-loving Malaysians are no longer easily intimidated. The silent majority may not do much, but the sentiments are definitely not with UMNO when more political violence unfolds, whether linked to the party, its members, or otherwise.

They may not be outspoken, but they are waiting for the right moment to strike with another tsunami. This is my observation especially after Mahathir and his men abandoned UMNO.

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Jamal Ikan Bakar Yunos and his Red Shirts on a rampage?

The answer to my question, “How BN can gain back people’s confidence?” therefore requires more soul-searching on the part of BN leaders, including those from Sabah and Sarawak.

If flying of the Jalur Gemilang is any indication of the people’s sentiments, it is time for some serious discussions at the higher level.

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

Malaysia Practises KorekEconomics


June 12, 2017

Malaysia Practises KorekEconomics (Dig-Economics)

by Rais Hussin Mohamed Ariff

http://www.malaysiakini.com

Image result for najib razak

Finance Minister Najib Razak–The Proponent of KorekEconomics

COMMENT | The history of taxation is synonymous with the rise of the state. When kings and warlords could not go on plundering and pillaging the people, they switched to taxation to prevent the farmers and settlers from avoiding the punitive measures.

By soft pedalling on the extraction, the state was born. Mancur Olson, an economist, referred to the state as the evolution from the “stationary bandit”. Paul Collier, at Oxford University, spoke of the logic of using the state to collect rents systematically, rather than to steal sporadically and in a spurious manner too.

In Malaysia, under the current administration, the two concepts that separate stealing from collecting taxes have been collapsed into one. Both are two sides of the same coin.

By introducing the tourism tax, for example, it seems to be aimed at foreign tourists. Yet, does anyone remember “Cuti-Cuti Malaysia?” This is an ongoing campaign that encourages Malaysians of all ages to travel within the country.

Yet, the moment you do, any five-, four- or three-star hotels you stay in means you would incur an additional cost that will go to the current administration. This ranges from RM 20 per night in a five-star hotel to RM 5 per night in a three-star hotel.

Thus, it doesn’t matter if you are a high-end traveller or a low-end traveller. The administration of Prime Minister Najib Abdul Razak is there to extract a portion of your hard earned income that you have set aside for a family holiday.

Digging deep for ‘korek economics’

Image result for najib razak

In other words, in addition to the goods and services tax (GST), your income tax and potentially the service tax too, the government wants to put its hands into your pockets. And they will dig deep to get what they want, in what can only be known as “korek economics”.

“Korek economics” is not based on collection. It is driven by the degree to which the Malaysian economy has become ruined, or “koyak” in Malay, the lingua franca of Malaysia.

In 1MDB, Malaysians are now saddled with, allegedly, a debt in excess of RM44 billion. When the debt of other government-owned companies are taken into account, the debt is easily more than 80 percent of the GDP.

Not forgetting the on-budget and off-budget debts. Off budget debts are debts created through bond issuance by an entity wholly owned by the government, with guarantees by the government.

Debts like the astronomical ECRL project, which is priced at an inflated price of RM55 billion and funded through debts from China. With an estimated three percent interest rate, seven years deferred payment and 240 months of repayment instalment, it will cost the government or the taxpayers a whopping sum of RM99.6 billion!

If we use the East Coast passenger load to find the breakeven ticket price one way from KL to Kota Bahru, it will cost a whopping RM3,586 one way, the same price for a return economy class air ticket to Siberia, Russia. Get the point?

Not happy with the revenue drawn from GST, the Malaysian government has offered a mere 15 percent discount to more than half a million graduates who remain unable to pay back their PTPTN loan. This harms the ability of the graduates to live an ordinary life. Given the youth unemployment is three times the national average, they seem to resign to the fact that they are in hopeless zone.

Thus, the process to “korek” Malaysia has not merely happened in the heart of Kuala Lumpur, where a hole is dug deep, without any structures on it, but it is proliferating across the whole country. Welcome to Curi-curi Malaysia.


RAIS HUSSIN MOHAMED ARIFF is a supreme council member of Parti Pribumi Bersatu Malaysia (Bersatu). He also chairs the Bersatu Policy and Strategy Bureau.

 

Malaysia-China Relations: Not China but we are the financially irresponsible and reckless nation


April 4, 2017

Malaysia-China Relations: Not China but we are the financially irresponsible and reckless nation

by P. Gunasegaram@www.malaysiakini.com

Image result for Chinese investments in Malaysia

Malaysia’s sudden, new-found amour with China in a plethora of business deals worth hundreds of billions, coming in the wake of the 1Malaysia Development Bhd (1MDB) scandal where RM40 billion is already at risk or  wasted, is tremendously worrying.

The huge amount of China borrowings that will accompany such deals, with delayed payment for up to seven years in some cases, will put the country in grave economic danger in the future as many of the infrastructure projects are not viable.

If some of the projects do not raise enough cash flow to start repaying the massive borrowings by the time payments are due, a great strain will be imposed on the country’s financial position and may even result in it becoming unable to meet its obligations, leading to default.

Already, the involvement of China state-owned firms in 1MDB-related projects such as buying power assets and taking stakes in property development ventures have raised legitimate fears that some of these may involve quid pro quo arrangements in other deals which may benefit Chinese firms.

In other words, putting it bluntly, Malaysia may be giving China plum deals in return for help in covering the hole of over RM30 billion in 1MDB. More on that later but first, here’s a list of some mega deals made.

1. Purchase of 1MDB’s power assets for RM9.83 billion cash in November 2015.

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The purchase was made by China General Nuclear or CGN, putting power assets which were purchased from Malaysian private hands into a China state company. That rubbishes any claim that 1MDB was a strategic development company. The price was considered inflated, leading to speculation that other projects will go to China to compensate for this.

2. Purchase of 1MDB land for RM7.4 billion.

Less than two months later, on New Year’s Eve in 2015, 1MDB sold a 60% controlling interest in Bandar Malaysia to a consortium comprising Iskandar Waterfront Holdings and China Railway Engineering Corporation, a China state company. The latter holds a 40% stake in the venture. This is a highly questionable deal surrendering control of one of 1MDB’s two flagship projects to others, including a China company, when there is enough local property development expertise. It lends credence to there being a quid pro quo deal with China.

3. China is expected to get high-speed rail project costing RM40-80 billion.

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The high-speed rail project between Kuala Lumpur and Singapore is expected to go to a China firm despite international tenders being planned. Interestingly, the Kuala Lumpur terminus is at Bandar Malaysia.

4. The RM55 billion East Coast Rail Link (ECRL) project announced in November 2016.

China will both fund and build this project which has a seven-year delayed payment provision. Essentially a double-tracking project linking the east coast states with the west, there has been no economic viability study on it. There are genuine fears that the construction cost is terribly overstated and it is unviable.

5. A proposed RM200 billion port development in Port Klang.

China is supposedly in the running for this massive project if it does see the light of day. This is a long-term project which again may be unnecessary considering the number of ports being developed concurrently now.

6.The RM42 billion Melaka Gateway project in September 2016.

This includes four islands – three man-made, in a RM30 billion deal with China companies – a port, a bulk-and-break terminal, ship building and ship repair, mixed development, shopping complexes, ferry terminals, marina and so on. Where is the demand for these going to come from?

7. The RM400 billion gross development value Forest City off Johor.

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This massive development on four man-made islands, which may eventually house 700,000 people, is being developed by a China company, effectively in a joint venture with the Johor Sultan. Considering that it is a property development which local players could easily have undertaken, what is the rationale for bringing in yet a Chinese company into this?

Not for altruistic reasons

There are more. Prime Minister Najib Abdul Razak, after a visit to China in November, came back with memoranda of agreement for RM144 billion worth of projects. That list includes ECRL and the Melaka Gateway projects but not the others, which means there are several more projects worth tens of billions of ringgit.

What is very alarming about these projects is their dubious economic value, leading to strong suspicion that they could well be related to covering a hole of over RM30 billion in 1MDB – the Auditor-General’s Report on 1MDB reportedly says US$7 billion could not be accounted for.

In fact, the Financial Times of the UK reported in December that 1MDB is preparing to make a repayment with Chinese assistance to Abu Dhabi’s state-owned fund in settling a US$6.5 billion (RM28.6 billion) dispute over an alleged breach of contract.

The move to begin repaying what 1MDB owes Abu Dhabi’s International Petroleum Investment Company (IPIC) was confirmed by two people familiar with the matter, the FT said.

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Najib Razak and Big Momma

China has been approached as a source of funds for 1MDB, the FT said, citing three people with knowledge of the matter, one of whom said Malaysia would swap assets for financing.

China is of course not doing all of this for altruistic reasons but to further its own interests. First, it aims to get work for its companies and sometimes its own people – it sends in its own workers for many projects.

Two, if countries are unable to repay their debts, then more assets will have to be handed over to China and the affected countries become ever more indebted and linked to China in other ways, furthering China’s aim of strategic and military influence, as this article titled ‘China’s debt-trap diplomacy’ eloquently points out.

As a small country, Malaysia has been rather adept at playing the role of the nimble kijang or deer which keeps itself from getting crushed when elephants fight. But 1MDB’s problems may be leading us down a path which is even more dangerous than the garden path the so-called strategic development company led us up on earlier.

P GUNASEGARAM says throwing good money after bad is a lousy deal which only the desperate make. Email: t.p.guna@gmail.com.

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.