On Knowledge and statecraft


January 24, 2017

On Knowledge and statecraft

by Muhammad Husni Mohd Amin

http://www.thestar.com.my

Image result for Najib, Zahid Hamidi and Hishamuddin HusseinThe 3 UMNO Goons–Dr. Zahid Hamidi, Hishamuddin Hussein and Najib Razak. They do not qualify as Philisopber-Kings. They are Malaysia’s penyamun tarbus.

 

IN Plato’s Republic, the philosopher-king is a leader who loves and embodies the cardinal virtues of wisdom, temperance, courage and justice. Therefore, the community that produced him would dispense with the mechanisms of democracy meant to curtail misuse of power by corrupt politicians who preyed upon the masses because of their ignorance.

Former British Prime Minister Winston Churchill once said, “It has been said that democracy is the worst form of government, except all those others that have been tried.” This may only refer to the inadequacies of the present set-up in producing leaders who do not require constant oversight.

The leader reflects the people. The Prophet said, “As you are, so shall your leader be.” He also said, “Each of you is a shepherd (ra‘in) and each of you is responsible for his flock (ra‘iyyah)”.

The Arabic word ra‘iyyah, from which the Malay word rakyat originated, has its root in ra‘in, which also means guide, guardian or caretaker. In the worldview of Islam, both the leader and the people form a unity; they are like a single body.

The Prophet also prophesied the emergence of leaders (umara) who “will be corrupt but God may put much right through them”. Therefore, the people are obliged to be thankful when leaders do good and patient when the leaders commit evil.

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The Proof of Islam, Imam al-Ghazali, in his Ihya’ ‘Ulum al-Din (Revival of the Religious Sciences), stated that religion is established through the sultan, who is not to be belittled.

We should not justify a wrongdoing when it is proven, but our limited senses may often lead us to believe that no good may come out of the things we perceive as evil because we think evil is the absence of good.

While weed follows the cultivation of rice and there seems to be no good in growing weed, it does not stop us from planting and harvesting the rice.

A well-known Sufi figure, Fudayl ibn ‘Iyad, said, “If I had one supplication that was going to be answered, I would make it for the sultan, for the sultan’s well-being and righteousness means well-being for the land and its people.”

Another Sufi figure, Sahl al-Tustari, was once asked, “Who is the best among men?” He replied that it was the ruler, which surprised his inquirers because it was thought that rulers were the worst.

Sahl continued, “Don’t be hasty! God Most High has two glances every day: one is for the safety of the Muslims’ possessions and another for their bodies. Then, God looks into the Register of Deeds and forgives him all his sins (for his protection of both).”

But the precondition for forgiveness is that the ruler must protect both.The establishment and statecraft of our centuries-old Malay sultanates mirrored those in Islam’s civilisational epicentre, which in turn were modelled after the Prophet’s Medina.

While colonial rule modernised our country’s administration, it did not abolish the sultanates but merely interrupted them. However, colonisation also displaced the ulama’s traditional role in advising the Rulers.

It also severely impaired the ability to follow the Prophetic practice called shura in consulting scholars and learned men as well as the ability to recognise and acknowledge them properly. This is the reason for today’s greater need for checks and balances.

Even so, we are lucky to be blessed with a unique system that combines constitutional monarchy and parliamentary democracy. This is the time when rulers work closely with the ruled towards the common good.

While our Rulers do not interfere in politics, adherence to royal protocols should not conceal the fact that the Rulers are in the best position to decree the people so that they would choose the best stewards for the nation.

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UMNO is full of learned members –the dedaks led by Big Momma

The counsel of learned people is important in guiding a ruler’s politics because statecraft is like a knife in the kitchen – a housewife could wield the knife as a utensil or a burglar as a weapon.

Muhammad Husni Mohd Amin is senior research officer at Ikim’s Centre for Science and Environ­ment Studies. The views expressed here are entirely the writer’s own.

Ownership and Control in 21st century Malaysia


January 17, 2018

Ownership and Control in 21st century Malaysia

by Charles Brophy

http://www.newmandala.org/ownership-control-21st-century-malaysia/

Image result for terence gomez book

In a series of public lectures beginning in 2016, Professor Terence Gomez began to distil the findings of his latest research into corporate governance in Malaysia. The first finding was a marked reduction in the holding of private directorships by members of the ruling Barisan Nasional coalition. The second was a major growth in the influence and power of Government Linked Companies (GLCs; individual state-owned enterprises) and Government Linked Investment Companies (GLICs; state-owned investment vehicles) over the Malaysian economy.

What such findings did was to challenge typical understandings of “money politics”, and the relationship between politics and business, in Malaysia. The data pointed not towards the direct influence of the political class over private enterprise, but rather a growing centralisation of economic and political power in the Office of the Prime Minister and the Minister of Finance (an office which is today held concurrently), and the influence of the state over the economy through the GLCs and seven large GLICs. The resulting book, Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia, written alongside Gomez’s team of research assistants, has brought into the spotlight not only problems of political centralisation and GLC/GLIC governance reform, but also the effect of the very structure of the Malaysian economy on the country’s continuing prospects for development. (Disclosure: the author works for Gerakbudaya, the Malaysia/Singapore publisher of Prof Gomez’s book, but writes here in a personal capacity.)

Malaysia’s state developmentalism

Many of the GLICs have their origins in the period from the 1950s to the 1970s, and during this time came to play an important role in the project of state developmentalism. Gomez, however, marks the Asian Financial Crisis—and the political and economic crisis it produced—as a crucial moment in the emergence of GLCs and GLICs. With highly indebted, “too-big-to-fail” companies in the private sector bankrupted by the crisis, GLICs were mobilised by the government to bail them out. After Anwar Ibrahim’s failed challenge to the leadership of Prime Minister Mahathir Mohamad, GLICs were mobilised to appropriate the businesses of Anwar’s cronies.

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The growth of GLICs was then a means to resolve the contradictions and limitations of the political and economic development that arose under Mahathir. This was to continue during the fallout of the conflict between Mahathir and Daim Zainuddin—which saw the assets of Daim’s allies and proxies transferred to GLICs—and a program of bank consolidation which, in the name of rationalisation, drastically increased the role of government in the banking sector.

The growing importance of the GLICs to economic development seen in the attention paid to them by Malaysia’s next two prime ministers. Under Abdullah Badawi the GLC Transformation Programme was launched. It sought to have GLCs operate on a more commercial basis, divesting from non-core investments, offering higher dividend returns, cooperating more with the private sector, and internationalising their operations. Just as significantly, through the emphasis on the vendor system, they were to help link up Malaysia’s large SME sector with local and foreign supply chains.

When Najib came to power with his transformation agenda, he noted the way in which rent seeking and patronage was harming the economy. Through the New Economic Model he called for the reduction in the role of the state in business, an overhaul of the system of race-based affirmative action, and the reform and privatisation of GLCs. Nevertheless, pushback from prominent politicians such as Mahathir and right-wing Malay NGOs led to a reversal of this policy. By 2013, Najib had unveiled the Bumiputera Economic Empowerment (BEE) policy which, against the prescriptions of the New Economic Model, mobilised GLCs to promote “market friendly affirmative action” through the Bumiputera Vendor Development Programme. From 2009 onwards, Najib would increasingly tap GLCs to generate growth and infrastructure development, as well as to draw investments from foreign State Owned Enterprises (SOEs), particularly from China, which saw the state come to play an increasingly dominant role in the economy.

This about turn was more than anything rooted in the political legacy of the New Economic Policy, with its twin-pronged focus on state intervention to correct race-based distributional inequalities and to promote continuous economic development.

Ownership and control

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When James Puthucheary, from his cell in Changi Prison, embarked on his investigation into the structure and organisation of the Malayan economy, it was to the twin problems of ownership and control that he turned. Defined, he argued, by an uneven and unequal model of colonial development, the central economic problem of Malaya was not the role played by the Chinese middleman but the domination of foreign clearing houses and foreign capital over key areas of economic life. This structure was, he said, central to understanding the exploitation of the peasant as well as the limitations on the future development of the Malayan economy. To overcome this, Puthucheary would argue for a program of state intervention in the economy to mobilise the state to overcome existing inequalities and unevenness and to transform the dominant model of ownership and control.

Post-1969, intervention occurred under the New Economic Policy, but without reaching a fundamental resolution to the uneven patterns of ownership and control. While foreign ownership of the economy was reduced, this was largely undertaken without radically affecting major foreign interests in the economy. Malaysia’s development was to continue to depend heavily on foreign direct investment rather than domestic capital, ensuring that, unlike South Korea and Taiwan, Malaysia wasn’t to nurture domestic giants such as Samsung or Foxconn. Rather, the state, in alliance with wealthy tycoons, was to play an increasing role in the economy, maintaining a centralisation and inequality of assets and wealth, both through systems of selective privatisation and later through the GLCs.

More recently, one of the findings of Gomez’s research is the resurgence of foreign ownership in the Malaysian economy, with companies such as Digi, Nestlé, and British American Tobacco leading the list of Malaysian companies by market capitalisation, highlighting the continuing dependence and openness of the Malaysian economy. Meanwhile, in the realm of rural development, the focus was not on major land redistribution—which kickstarted economic miracles in South Korea and Taiwan—but more selective land distribution through FELDA and rural development schemes.

Central to Puthucheary’s analysis of ownership and control was the problem of national development, both in terms of the development of a nation out of the various races of Malaya and the mobilisation of the economy for the development and prosperity of such a nation. In similar terms, central to the critique of Gomez and others of the NEP has been its inability to promote such a meaningful and broad-based national development. Gomez’s research into relations between politics and business has been highly critical of the role of selective privatisation and bumiputera equity quotas in the promotion of money politics at the expense of meaningful economic development.

In a 2005 report, Gomez, alongside Lim Teck Ghee, was also to note how the focus on bumiputera equity had ignored the problem of the broad-based development of the Malay community and the growth of the country’s SMEs. He noted how within the SME sphere successful multi-ethnic business relations were being fostered outside of the scope of the NEP. In his latest book, Gomez has highlighted the role played by the concentration of economic control in the Ministry of Finance in disincentivising industrial growth and investment for fear of expropriation of business by the state—evidenced, he argues, by Malaysia’s premature deindustrialisation, and the growing dominance of the service sector within the Malaysian economy.

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Here the problem of the middle-income trap emerges as central to the contemporary pattern of ownership and control as outlined by Gomez—and thus the problem of the inner limits of modes of development, as proposed by Puthucheary, becomes restated. Today, can a political economy model defined by high levels of centralisation, and dominated by the interests of GLICs, provide the kind of broad-based economic development that can move Malaysia, and bangsa Malaysia, towards high-income status? Or is a new model of ownership and control required?

The new developmentalism in Southeast Asia

In an earlier co-edited volume, Government-Linked Companies and Sustainable, Equitable Development, Gomez and other scholars highlighted the growing importance of GLCs and SOEs in the aftermath of the 2008 economic crisis in challenging liberal capitalist understandings of economic development. Taking a broader view, Joshua Kurtlantzick has highlighted the contemporary resurgence of state capitalism within global political economy. Fundamental to this has been the growing importance of SOEs, from Petrobras in Brazil to Gazprom in Russia or Deutsche Bahn in Germany.

This tendency is becoming increasingly evident in Southeast Asia’s contemporary political economy.

In Indonesia, SOEs have formed the centrepiece of Joko Widodo’s developmental agenda, being mobilised to fill the gaps in the development of major infrastructure projects, where the private sector has been reluctant to invest in high-risk or capital intensive projects, while busying itself with rent-seeking behaviour. More recently, Danang Widoyoko has read the fall of former Jakarta governor Ahok as a struggle between Ahok’s SOE-centric development agenda—evident in the major land clearance projects in Jakarta—and politically-connected private interests who came to resent the increased role of SOEs in key economic sectors. The struggle in Jakarta was thus, on Widoyoko’s reading, a struggle between two factions of capital: state, and crony.

In the Philippines, Rodrigo Duterte has begun to pursue a similarly ambitious development agenda, headlined by massive infrastructure plans, under his “Build, Build, Build” program. Similar to the case of Indonesia, in the face of private sector inertia in infrastructure development the state has moved in to directly finance and organise such infrastructure projects both through the mobilisation of SOEs as well as through the promotion of public-private partnerships. The emphasis in the Philippines, however, is on the public sector’s leading projects through “Hybrid PPPs”, with projects then subsequently bid out to the private sector. Such a program relies heavily on Chinese official development assistance, with Duterte keen to see the Philippines integrated into China’s Belt and Road initiative.

In Thailand, control and reform of SOEs has been a point of struggle between the military and the followers of Thaksin Shinawatra. SOE reform has emerged as an important plank of junta policy, led by an attempt to form a strategic holding company capable of managing SOEs, similar to Singapore’s Temasek or Malaysia’s Khazanah. More recently, in response to a slowdown in the Thai economy, the government has ramped up spending through SOEs, in particular through a new series of infrastructure projects with the aim of boosting growth.

Yet this trend does not represent the re-emergence of a postcolonial developmental state, of the kind Puthucheary and his contemporaries examined. Instead, a new model is emerging, one which tends to blur the difference between the state and market, led by the growing importance of substantially commercialised GLCs, GLICs and SOEs.

 

If in the 1980s the emergence of “state corporatism”—with concepts such as Malaysia Incorporated—saw close cooperation between the corporate sector and the state, the growing importance of GLCs and GLICs has increasingly promoted parts of the state which do themselves function as corporate entities.  Such arrangements allow the state to assume the organisational effectiveness of the market-driven corporate organisation, in combination with the executive authority of the state and offering governments the ability to both financialise assets and render debts “off the books”.

Such strategies are not only economically useful, but also relevant in electoral terms in Southeast Asia. In the context of Indonesia, Eve Warburton has talked of the emergence of a new developmentalism, which places a developmental nationalism at the heart of the political arena—not dissimilar to the effect of Dutertenomics in the Philippines. In the Malaysian context Bridget Welsh has talked of a commercialisation of electoral politics, highlighting the importance of financial transactions emanating from the state and big business in the accrual of electoral support.

Image result for petronas twin towers

In both of these forms, GLCs and GLICs have emerged as central to electoral politics. In the case of Malaysia they have formed the direct vehicles through which the government can raise (or launder) campaign finances, and provide electoral groups with patronage resources during election periods. More generally, they have become vehicles to fill the gap created by the demise of the classic developmental state, exemplified by the establishment of GLC foundations from Yayasan 1MDB, to Yayasan Rakyat 1Malaysia and Yayasan Hasanah, and through the practice of corporate social responsibility. In the same way, GLCs are increasingly used as vehicles for policies of affirmative action or “sustainable” and “inclusive” development.

Alternative visions

This process does not continue uncontested. In Malaysia, a debate is emerging regarding the role played by GLCs and GLICs, and around the role of the state in the corporate sector. The liberal Institute for Democracy and Economic Affairs (IDEAS) has called for government divestment from GLCs, particularly highlighting the tendencies for GLCs to crowd out private sector investment (to which one prominent GLIC responded at length). The G25, a group of Malay thought leaders, has called in a new report for a review of the economic efficacy and impact of GLCs and GLICs, urging the privatisation of non-strategic GLCs and the regulation of existing GLCs to turn them into a catalyst of private sector growth.

Image result for Felda

 

Political contestation has also emerged within UMNO over the management of GLICs. Members of Najib’s inner circle and UMNO Youth executive council member Rahman Hussin have accused Khazanah Nasional of underperformance resulting in low dividend returns and a lack of reinvestment into the Malaysian economy. This comes at a time when Khazanah prepares for a change of top management in 2019 amid calls for a new strategic direction.

The opposition coalition Pakatan Harapan used its 2018 Alternative Budget to note the contemporary problem of premature deindustrialisation, and argued for an industrialisation policy driven by SMEs. A key component of this is the privatisation of GLCs, to produce a more level playing field for private enterprise. To this end, Pakatan Harapan proposes to promote a better environment for FDI as well as incentivising domestic direct investments through tax cuts. Yet whether or not this will remain possible, and whether or not it would lapse into FDI-driven privatisation and liberalisation, remains an important question.

 

For his part, Gomez has noted the ability of GLCs to perform well and contribute towards economic growth. Yet he remains a critic of their centralised political control, and of their use as mechanisms for race-based affirmative action by a predatory state. Such a dichotomy is also applicable to many developing states: while SOEs can help resolve some of the contradictions of economic liberalisation and privatisation, and can act as engines for growth, their ability to act as engines of economic transformation—raising states up the economic value chain—remains more doubtful, as does their ability to produce broad-based and inclusive economic development.

Today this realisation is itself at the centre of ongoing processes of reform within the developmental state. Yet such projects of reform have been undertaken within the context of self-imposed limits, guaranteeing such reforms remain largely conservative: the resurgence of the developmental state in its contemporary form does not imply a substantial redistribution of economic power, let alone its democratisation.

The political power of labour has continuously been suppressed through a curtailment of labour organisation. Welfare policy has been restricted to hardcore poverty alleviation largely through micro-credit schemes and cash transfers, as against more robust responses to marketplace disadvantage. In the area of investment, the emphasis upon fiscal restraint and debt management has meant not only a lack of industrial investment programs, but also a lack of meaningful investment in education and skills, particularly through higher education reform. Similarly, while the rationalisation of the state apparatus has been a central theme for many governments, a more meaningful redistribution of public funds towards development and away from traditional power centres, such as the security sector or bureaucracy, has been ignored. Most importantly, the question of inequality has been constrained to the arena of populist politics, leaving the economic and political problems of unequal distributions of wealth, income, and opportunity unresolved. In short, the “revolution from above” has been particularly wary of any “revolution from below”.

Image result for Duterte's Reform of GLCs

This program of limited reformism has reproduced a limited model of development, one which a growing source of discontent. On the one hand a politician such as Rodrigo Duterte has been able to rise to power on an impatience with the outcomes of state-led reform, while on the other hand there has emerged a growing politicisation of current models of development in the form of growing labour activism, popular protests (such as those in Malaysia against GST and the TPP), as well the growth of political movements that place at the centre of their politics problems of labour, welfare, investment, state reform, and inequality.

What is needed today is a critique of contemporary processes of reform capable of exposing their limitations and contradictions, and which therefore lays the groundwork for a politics of development that brings into question contemporary patterns of ownership and control, and their effect on development. Terence Gomez’s critique of government–business ties in Malaysia’s current model of development, and their relationship to the rise of GLCs and GLICs, marks a particularly important step in this direction.

 

 

Noami Klein–NO is Not Enough


December 31, 2017

No is Not Enough

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My blogging friends, I want to end 2017 with this Naomi Klein interview. Here she talks about her latest book, No is Not Enough. Her focus is on the character and personality and branding of the 45th President of the United States, HE Donald J. Trump.  But her insights are also apply to leaders in countries like Malaysia (Najib Razak), South Africa (Jacob Zuma), Zimbabwe (Robert Mugage) and other corrupt and abusers of power.

It is not enough for us to say No; we must also make act to make regime change a reality. Zimbabweans and South Africans have acted. Now Malaysians must show the rest of the world that they can do the same. –Din Merican

2018: Year of Change for Better or Worse?


December 31, 2017

2018: Year of Change for Better or Worse?

by Dr. Lim Teck Ghee

As the year comes to an end the latest press statements from two civil society organizations – the National Association of Patriots ( NPA or Persatuan Patriot Kebangsaan) and G25 – provide renewed hope that the struggle for the freedoms and values of a robust democratic system will continue with key stakeholders providing overdue support.

Image result for Lim Teck Ghee
With scandals in his bag, Najib Razak needs to retain power and maintain the status quo. Keep praying Mr. Prime Minister.

For too long most Malaysians – outside the political arena who are well positioned to resist the authoritarian political and religious forces seeking to kill off moderate positions on regressive and illiberal socio-economic policies and programs – have remained quiet.

They have been spectators or have stood outside the political process hoping that the long entrenched ruling government is truly committed to building a cohesive and inclusive nation where no ethic, religious, geographical or class grouping is denied their rightful entitlements. They have also expected the BN to be consistent in pursuing a genuine pluralism that can be the foundation stone for peace and progress in our multi-racial society.

Many among our elite have also remained passive in the belief that opportunistic and repressive, and what constitute the more dangerous and real, not imagined, anti-national forces can be countered by institutional stake players located in the executive and legislative branches; as well as by the other constitutional checks and balances.

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That these two organizations – NPA and G25 – whose service and loyalty to the nation is irrefutable and unimpeachable have come out openly on developments which the government is in denial or prefers to draw a curtain of silence over reveals the deep concern and despair of respected armed forces and civil service leaders with current developments; and their lack of faith that the BN leadership is up to the task of steering the nation in the right direction to a better future.

Losers of the NEP and Religious Extremism    

The NPA’s subject of concern is the New Economic Policy and its successor policies, and their impact on the ethnic composition of the armed forces. Calling on the government to increase the recruitment of non-Malays by 10 per cent annually, the NPA statement explained that it was giving its views as truthfully as possible on “some of these issues that are ultra-sensitive.”

In its opinion, a policy favoring Malays in promotion and discriminating against non-Malays has made the latter feel demoralized and marginalized. Coupled with an increasing Islamic culture, this has negatively affected esprit-de-corps and comradeship in multi-racial military units.

According to NPA President Brigadier-General (Rtd) Mohd Arshad Raji Arshad these factors have not only affected the military but also the police force and other public service organizations.

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3 Penyamun Tarbus with medals

BG Arshad noted that “the problems faced today are an outcome of the policies and decisions of our government of the past few decades … The problem is endemic, a cause-and-effect of the ‘unwritten’ rules and regulations of the past.”

He pointed out that “to solve the problem, we have to first recognize the problem. The intention here is not fault finding, rather to fully comprehend the grievances from the perspectives of the non-Malays, and help those in position make decisions for the betterment of our country.”

A critical but balanced and rationally-based independent position can be similarly seen in the statements of G25 on the socio-economic and religious controversies that have beset the nation in the last few years.

In its statement on the latest controversies relating to the influence of political Islamic ideology in the country and the effort by Malaysian Islamic Research Strategic Institute (Iksim), the government-supported Islamic think-tank, to censure and punish University of Malaya Professor Shad Saleem Faruqi  and G25 member, Noor Farida, for their views on religious radicalism,  G25 has noted that while it “recognises the fundamental rights of individuals and Islamic activists to advocate their beliefs of political Islam”, government officials and leaders need to reassure the public that the government does not agree with such views as they are contrary to the intent and purpose of the Constitution and the Rukunegara.

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To G25, it is “when the government leaders keep silent and pretend not to hear that the public gets worried whether the government is using religion for its own politics. It’s the official silence and apparent acquiescence that make locals and foreigners get the idea there is radicalisation of Islam in Malaysia.”

Standing up for all Malaysians

What is especially encouraging about the statements by these two Malay dominated organizations is not simply the commitment to what G25 describes as a “national ideology of tolerance and respect for the diversity and differences among Malaysians”. It is also their willingness to stand up for the rights and freedoms of “other” Malaysians.

One response by a Patriot member to criticism by the Defence Minister of the press statement of BG Arshad provides comfort that even if 2018 turns out badly for moderate and progressive minded Malaysians on the political and religious front, there will always be our true patriots to fall back upon.

This is what Major Mior Rosli wrote in his reply. It provides such a contrast to the saccharin sweet, vacuous and meaningless New Year messages that will soon flood our print media from the PR offices of the country’s political leaders.  His entire note should be required reading for all young Malaysians and those of us who have become cynical about developments in the nation:

“We, the veterans Armed Forces Officers and the ex-senior police officers are the real Patriots. More Patriotic than any of you, “power and kleptocracy” crazy politicians. Don’t ever belittle us. If there is a war to defend the soil, we will be the second or third liners behind the regular forces to defend this country. Please don’t mess us up with your political dreams. (capitals and exclamation marks omitted).”

Open Letter to Dr. Mahathir Bin Mohamad–Bank Negara Forex Losses


December 26, 2017

Open Letter to Dr. Mahathir Bin Mohamad–Bank Negara Forex Losses

by Second Finance Minister Johari Abdul Ghani

http://www.malaysiakini.com

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COMMENT | Dear Tun Dr Mahathir Mohamad,

Many of my friends who are readers of Tun’s blog, have contacted me for clarification regarding Tun’s latest writing entitled “Dear Mr Johari” on the issue of the speculative foreign exchange transaction.

At first, I told them that I have already said enough about the subject matter and I do not want to prolong the discussion on this issue especially since there is already an independent team at the Royal Malaysian Police (PDRM) investigating this matter.

The subject of foreign exchange activities can sometimes be too technical a subject for the ordinary man on the street to understand, particularly in relation to the role of Bank Negara Malaysia (BNM) in the management of the country’s international reserves. However, I felt it best that I try to hopefully close the discussion by putting the matter in simple perspective for ease of understanding.

It is very important for the public at large to understand the difference between speculative foreign exchange activities and orderly management of the foreign exchange market. The speculative foreign exchange activity, to put it in simpler words, is a kind of “gambling” activity with the hope of quick returns.

The orderly management of the foreign exchange market, however, is very much different in that it is a facilitation of liquidity by BNM to market participants in the country for the purpose of mitigating imbalances with respect to the ringgit’s supply and demand in the market.

To put the matter in perspective, it was highlighted in an internal audit report prepared by BNM’s internal auditors dated January 21, 1994 that the Foreign Exchange Operation Division of the Banking Department in BNM was involved in voluminous foreign exchange trading activities, so much so that the monthly maturing buying and selling of foreign exchange transactions which amounted to an average of RM140 billion in 1992 had increased to a staggering RM750 billion in 1993!

The substantial portion of such transactions was very speculative in nature and did not reflect BNM’s mandate to maintain the orderly condition of the foreign exchange market as per Section 4 of the Central Bank of Malaysia Ordinance 1958.

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Malaysia’s Notorious Currency Trader who broke Bank Negara Malaysia, Nor Mohamed Yakcop

The said internal audit report also highlighted that the magnitude of such foreign exchange speculative transactions was considered very excessive given that the shareholders’ fund of BNM was only RM4.4 billion and the country’s international reserves were merely RM43.98 billion at that material time. These speculative activities had caused BNM to suffer foreign exchange transaction losses amounting to RM31.5 billion during the period under review.

The Audit Report also stated that the voluminous speculative foreign exchange trading activities that the central bank had undertaken during that time were carried out by the Foreign Exchange Division of the Banking Department of BNM, headed by its advisor/manager then, Nor Mohamed Yakcop, whom later became the Minister of Finance II of the country.

Transfer of shares

Because of the scale of these foreign exchange speculative activities losses, the government was forced to transfer its shares in Telekom and Tenaga Nasional Berhad (TNB) to BNM at the nominal value of RM1 per share and these shares were immediately revalued by BNM at RM22.10 per share and RM19.30 per share for Telekom and TNB respectively.

In addition, BNM had to dispose off its Malaysia Airlines (MAS) shares to a third party at the price of RM8 per share and MISC shares at RM10 per share to Kumpulan Wang Pencen in order to realise the gain. If these speculative foreign exchange losses were not real, the government would not have taken these drastic actions in order to cover the BNM losses at that material time.

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Members of Royal Commission on Bank Negara Forex Losses

BNM and the country have since come a long way, particularly in instituting the necessary reforms and checks and balances with regard to its foreign exchange forward transaction activities. As a result of these reforms, despite the volatility of capital flows and the ringgit in the recent period, our economy continues to remain resilient and BNM’s ability to safeguard the financial and economic stability remains uncompromised.

In fact, our international reserves have continued to strengthen ever since and as at the end of November 2017, the reserves amounted to US$101.9 billion and were able to support 7.5 months of retained imports. I have said enough on this subject and if the understanding of the truth is not the objective of the discussion, then there is nothing much I can say on this.

I wish Tun and family the very best of health and a very Happy New Year; may the New Year be peaceful and prosperous for all of us Malaysians.


JOHARI ABDUL GHANI is Finance Minister II.

The United States of America Is Decadent and Depraved


December 23, 2017

The United States of America Is Decadent and Depraved

The problem isn’t Donald Trump – it’s the Donald Trump in all of us.

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In The History of the Decline and Fall of The Roman Empire, Edward Gibbon luridly evokes the Rome of 408 A.D., when the armies of the Goths prepared to descend upon the city. The marks of imperial decadence appeared not only in grotesque displays of public opulence and waste, but also in the collapse of faith in reason and science. The people of Rome, Gibbon writes, fell prey to “a puerile superstition” promoted by astrologers and to soothsayers who claimed “to read in the entrails of victims the signs of future greatness and prosperity.”

Would a latter-day Gibbon describe today’s America as “decadent”? I recently heard a prominent, and pro-American, French thinker (who was speaking off the record) say just that. He was moved to use the word after watching endless news accounts of U.S. President Donald Trump’s tweets alternate with endless revelations of sexual harassment. I flinched, perhaps because a Frenchman accusing Americans of decadence seems contrary to the order of nature. And the reaction to Harvey Weinstein et al. is scarcely a sign of hysterical puritanism, as I suppose he was implying.

And yet, the shoe fit. The sensation of creeping rot evoked by that word seems terribly apt.

Perhaps in a democracy the distinctive feature of decadence is not debauchery but terminal self-absorption

Perhaps in a democracy the distinctive feature of decadence is not debauchery but terminal self-absorption

— the loss of the capacity for collective action, the belief in common purpose, even the acceptance of a common form of reasoning. We listen to necromancers who prophesy great things while they lead us into disaster. We sneer at the idea of a “public” and hold our fellow citizens in contempt. We think anyone who doesn’t pursue self-interest is a fool.

We cannot blame everything on Donald Trump, much though we might want to. In the decadent stage of the Roman Empire, or of Louis XVI’s France, or the dying days of the Habsburg Empire so brilliantly captured in Robert Musil’s The Man Without Qualities, decadence seeped downward from the rulers to the ruled. But in a democracy, the process operates reciprocally. A decadent elite licenses degraded behavior, and a debased public chooses its worst leaders. Then our Nero panders to our worst attributes — and we reward him for doing so.

“Decadence,” in short, describes a cultural, moral, and spiritual disorder — the Donald Trump in us. It is the right, of course, that first introduced the language of civilizational decay to American political discourse. A quarter of a century ago, Patrick Buchanan bellowed at the Republican National Convention that the two parties were fighting “a religious war … for the soul of America.” Former Speaker Newt Gingrich (R-Ga.) accused the Democrats of practicing “multicultural nihilistic hedonism,” of despising the values of ordinary Americans, of corruption, and of illegitimacy. That all-accusing voice became the voice of the Republican Party. Today it is not the nihilistic hedonism of imperial Rome that threatens American civilization but the furies unleashed by Gingrich and his kin.

The 2016 Republican primary was a bidding war in which the relatively calm voices — Jeb Bush and Marco Rubio — dropped out in the early rounds, while the consummately nasty Ted Cruz duked it out with the consummately cynical Donald Trump. A year’s worth of Trump’s cynicism, selfishness, and rage has only stoked the appetite of his supporters. The nation dodged a bullet last week when a colossal effort pushed Democratic nominee Doug Jones over the top in Alabama’s Senate special election. Nevertheless, the church-going folk of Alabama were perfectly prepared to choose a racist and a pedophile over a Democrat. Republican nominee Roy Moore almost became a senator by orchestrating a hatred of the other that was practically dehumanizing.

Image result for The Donald Trump in all of usAmerican voters disagreed with past Presidents. 2017 will be behind us soon. So the question is: Will  President Donald Trump be more presidential and can he behave like a global leader? He cannot be exclusively America First.–Din Merican

 

Trump functions as the impudent id of this culture of mass contempt.

Trump functions as the impudent id of this culture of mass contempt

Of course he has legitimized the language of xenophobia and racial hatred, but he has also legitimized the language of selfishness. During the campaign, Trump barely even made the effort that Mitt Romney did in 2012 to explain his money-making career in terms of public good. He boasted about the gimmicks he had deployed to avoid paying taxes. Yes, he had piled up debt and walked away from the wreckage he had made in Atlantic City. But it was a great deal for him! At the Democratic convention, then-Vice President Joe Biden recalled that the most terrifying words he heard growing up were, “You’re fired.” Biden may have thought he had struck a crushing blow. Then Americans elected the man who had uttered those words with demonic glee. Voters saw cruelty and naked self-aggrandizement as signs of steely determination.

Perhaps we can measure democratic decadence by the diminishing relevance of the word “we.” It is, after all, a premise of democratic politics that, while majorities choose, they do so in the name of collective good. Half a century ago, at the height of the civil rights era and Lyndon B. Johnson’s Great Society, democratic majorities even agreed to spend large sums not on themselves but on excluded minorities. The commitment sounds almost chivalric today. Do any of our leaders have the temerity even to suggest that a tax policy that might hurt one class — at least, one politically potent class — nevertheless benefits the nation?

There is, in fact, no purer example of the politics of decadence than the tax legislation that the President will soon sign. Of course the law favors the rich; Republican supply-side doctrine argues that tax cuts to the investor class promote economic growth. What distinguishes the current round of cuts from those of either Ronald Reagan or George W. Bush is, first, the way in which they blatantly benefit the president himself through the abolition of the alternative minimum tax and the special treatment of real estate income under new “pass-through” rules. We Americans are so numb by now that we hardly even take note of the mockery this implies of the public servant’s dedication to public good.

Second, and no less extraordinary, is the way the tax cuts have been targeted to help Republican voters and hurt Democrats, above all through the abolition or sharp reduction of the deductibility of state and local taxes. I certainly didn’t vote for Ronald Reagan, but I cannot imagine him using tax policy to reward supporters and punish opponents.

I certainly didn’t vote for Ronald Reagan, but I cannot imagine him using tax policy to reward supporters and punish opponents

He would have thought that grossly unpatriotic. The new tax cuts constitute the economic equivalent of gerrymandering. All parties play that game, it’s true; yet today’s Republicans have carried electoral gerrymandering to such an extreme as to jeopardize the constitutionally protected principle of “one man, one vote.” Inside much of the party, no stigma attaches to the conscious disenfranchisement of Democratic voters. Democrats are not “us.”

Finally, the tax cut is an exercise in willful blindness. The same no doubt could be said for the 1981 Reagan tax cuts, which predictably led to unprecedented deficits when Republicans as well as Democrats balked at making offsetting budget cuts. Yet at the time a whole band of officials in the White House and the Congress clamored, in some cases desperately, for such reductions. They accepted a realm of objective reality that existed separately from their own wishes. But in 2017, when the Congressional Budget Office and other neutral arbiters concluded that the tax cuts would not begin to pay for themselves, the White House and congressional leaders simply dismissed the forecasts as too gloomy.

Here is something genuinely new about our era: We lack not only a sense of shared citizenry or collective good, but even a shared body of fact or a collective mode of reasoning toward the truth.

We lack not only a sense of shared citizenry or collective good, but even a shared body of fact or a collective mode of reasoning toward the truth

 A thing that we wish to be true is true; if we wish it not to be true, it isn’t. Global warming is a hoax. Barack Obama was born in Africa. Neutral predictions of the effects of tax cuts on the budget must be wrong, because the effects they foresee are bad ones.

It is, of course, our president who finds in smoking entrails the proof of future greatness and prosperity. The reduction of all disagreeable facts and narratives to “fake news” will stand as one of Donald Trump’s most lasting contributions to American culture, far outliving his own tenure. He has, in effect, pressed gerrymandering into the cognitive realm. Your story fights my story; if I can enlist more people on the side of my story, I own the truth. And yet Trump is as much symptom as cause of our national disorder. The Washington Post recently reported that officials at the Center for Disease Control were ordered not to use words like “science-based,” apparently now regarded as disablingly left-leaning. But further reporting in the New York Times appears to show that the order came not from White House flunkies but from officials worried that Congress would reject funding proposals marred by the offensive terms. One of our two national political parties — and its supporters — now regards “science” as a fighting word. Where is our Robert Musil, our pitiless satirist and moralist, when we need him (or her)?

A democratic society becomes decadent when its politics, which is to say its fundamental means of adjudication, becomes morally and intellectually corrupt. But the loss of all regard for common ground is hardly limited to the political right, or for that matter to politics. We need only think of the ever-unfolding narrative of Harvey Weinstein, which has introduced us not only to one monstrous individual but also to a whole world of well-educated, well-paid, highly regarded professionals who made a very comfortable living protecting that monster. “When you quickly settle, there is no need to get into all the facts,” as one of his lawyers delicately advised.

This is, of course, what lawyers do, just as accountants are paid to help companies move their profits into tax-free havens. What is new and distinctive, however, is the lack of apology or embarrassment, the sheer blitheness of the contempt for the public good. When Teddy Roosevelt called the monopolists of his day “malefactors of great wealth,” the epithet stung — and stuck. Now the bankers and brokers and private equity barons who helped drive the nation’s economy into a ditch in 2008 react with outrage when they’re singled out for blame. Being a “wealth creator” means never having to say you’re sorry. Enough voters accept this proposition that Donald Trump paid no political price for unapologetic greed.

The worship of the marketplace, and thus the elevation of selfishness to a public virtue, is a doctrine that we associate with the libertarian right. But it has coursed through the culture as a self-justifying ideology for rich people of all political persuasions — perhaps also for people who merely dream of becoming rich.

Decadence is usually understood as an irreversible condition — the last stage before collapse. The court of Muhammad Shah, last of the Mughals to control the entirety of their empire, lost itself in music and dance while the Persian army rode toward the Red Fort. But as American decadence is distinctive, perhaps America’s fate may be, too. Even if it is written in the stars that China will supplant the United States as the world’s greatest power, other empires, Britain being the most obvious example and the one democracy among them, have surrendered the role of global hegemon without sliding into terminal decadence.

Can the United States emulate the stoic example of the country it once surpassed? I wonder.

Can the United States emulate the stoic example of the country it once surpassed? I wonder.

The British have the gift of ironic realism. When the time came to exit the stage, they shuffled off with a slightly embarrassed shrug. That, of course, is not the American way. When the stage manager beckons us into the wings we look for someone to hit — each other, or immigrants or Muslims or any other kind of not-us. Finding the reality of our situation inadmissible, like the deluded courtiers of the Shah of Iran, we slide into a malignant fantasy. 

But precisely because we are a democracy, because the values and the mental habits that define us move upward from the people as well as downward from their leaders, that process need not be inexorable. The prospect of sending Roy Moore to the Senate forced a good many conservative Republicans into what may have been painful acts of self-reflection. The revelations of widespread sexual abuse offer an opportunity for a cleansing moment of self-recognition — at least if we stop short of the hysterical overreaction that seems to govern almost everything in our lives.

Our political elite will continue to gratify our worst impulses so long as we continue to be governed by them. The only way back is to reclaim the common ground — political, moral, and even cognitive — that Donald Trump has lit on fire. Losing to China is hardly the worst thing that could happen to us. Losing ourselves is.

*James Traub is a contributing editor at Foreign Policy, a fellow at the Center on International Cooperation, and author of the book “John Quincy Adams: Militant Spirit.”

The United States of America Is Decadent and Depraved