The Moral Imperative of Quality Education


November 28, 2017

The Moral Imperative of Quality Education

by Peter Mutharika

Image result for Peter Mutharika PM of Malawi

Peter Mutharika–President of Malawi

Poor countries like Malawi are doing what they can to improve educational quality and access. But there is only so much that a country with modest means can achieve, which is why global leaders, when they meet in Senegal early next year, must recommit to investing in the education of all children.

 

BLANTYRE, MALAWI – In September, I was among a group of world leaders who gathered in New York City to discuss ways to improve access to quality education. Around the world, hundreds of millions of children are either not receiving basic schooling, or are attending schools but not learning. We gathered to devise a way forward.

The crisis that I discussed with heads of state from France, Senegal, and Norway, along with leaders from the United Nations and global education advocates, is not an abstract problem unfolding in a distant land. It is a crisis that has reached my doorstep in Malawi. The challenge of education is one that my government, like many in developing countries, grapples with every day.

Image result for  Education in Singapore

Quality schooling is key to helping people contribute to the development of their communities and their countries. Without a properly educated populace, it would take decades for developing countries like mine to overcome the profound economic, social, and health challenges that we face.

As one of the co-conveners of the International Commission on Financing Global Education Opportunity – which brings together world leaders to mobilize support for solutions to the education crisis – I have long focused on how to improve educational access. Quality schooling is key to helping people contribute to the development of their communities and their countries. Without a properly educated populace, it would take decades for developing countries like mine to overcome the profound economic, social, and health challenges that we face.

To ensure that we do not fail our children, or our country, my government is investing heavily to build a strong and sustainable education system. We have steadily increased education spending, which has risen from 12.5% of the total domestic budget in 2010 to 21% in 2015. This represents one of the highest percentages among developing countries anywhere, and I hope that our example will encourage leaders elsewhere to devote at least 20% of their national budgets to education.

But there is a limit to what economically struggling countries like Malawi can do alone. To make real progress in education, the generous support of wealthier partner countries and global institutions is essential. The momentum we have generated can be sustained only if donor support remains strong.

Malawi’s education sector has benefited greatly from balancing increased domestic investment with external support. For example, more Malawian children are enrolled in primary school than ever before, and the rate of boys and girls completing primary education has increased dramatically, from 59% in 2007 to 80% in 2014. Adult literacy has also improved, albeit more modestly, from 61% in 2010 to 66% in 2015.

Still, Malawi falls far behind the rest of the world on a several key education indicators. Among the list of challenges we face are derelict schools, high pupil-to-teacher ratios, and significant gaps in inspection and oversight capabilities. These and other issues make it hard for teachers to teach and for students to learn.

Image result for rihanna education

GPE Global Ambassador Rihanna at the Élysée, Paris, July 2017

When Rihanna, the pop artist and ambassador of the Global Partnership for Education, visited Malawi in January and met with students and teachers, she put a spotlight on the promise of education. Our country has been fortunate to receive funding in recent years from bilateral donors and international organizations like GPE, which helps countries like mine increase educational quality and broaden access.

Since 2009, GPE funding has enabled Malawi to conduct long-term planning and data collection, and has brought domestic and international partners together for a common cause. GPE’s support has helped us build more facilities, overhaul our curriculum, improve access for girls, and train more educators.

It would not be an exaggeration to say that Malawi’s partnership with GPE has been transformative, which is why I am urging donor countries around the world to contribute generously to GPE at its upcoming financing conference in Senegal. By 2020, GPE aims to distribute more than $2 billion annually to help improve education in developing countries around the world.

Without GPE’s support, some 825 million young people risk being left behind without the education or skills to perform well in the workplace of the future. That could lead to growing unemployment, poverty, inequality, instability, and other factors that threaten not just individual countries or regions, but the entire international community.

Educating every child is a moral imperative and thus a universal responsibility. In today’s interconnected world, challenges and gains in low-income countries do not remain local.

When my colleagues and I met in New York on the sidelines of the United Nations General Assembly, we recommitted to solving the challenges of educational quality and access. We now need the rest of the world to join us in addressing this global crisis head-on.

 

The Robert Kuok Memiors: Devils’ to Friends


November 27, 2017

Devils’ to Friends – how China’s communists won over Malaysian PM Tunku; Hussein Onn clung to race-based politics

http://www.scmp.com/week-asia/opinion/article/2121058/devils-friends-how-chinas-communists-won-over-malaysian-pm-tunku

Former Malaysian Prime Minister, Tunku Abdul Rahman. File photo

COMMUNIST DEVILS? PLEASE, PRIME MINISTER

Malaysia has had six Prime Ministers since independence. I have known all six. The first, Tunku Abdul Rahman, had tremendous rhythm. He was a well-educated man, having graduated with a law degree from Cambridge. If you talk of brains, Tunku was brilliant, and very shrewd. His mother was Thai, and he had that touch of Thai shrewdness, an ability to smell and spot whether a man was to be trusted or not. Tunku was less mindful about administrative affairs. But he had a good number two in Tun Razak, who was extremely industrious, and Tunku left most of the paperwork to Razak.

Tunku was like a strategist who saw the big picture. He knew where to move his troops, but actually going to battle and plotting the detailed campaign – that was not Tunku. He’d say, “Razak, you take over. You handle it now.” In that sense, they worked very well together. In my meetings with Tunku, he demonstrated some blind spots. He had a bee in his bonnet about communism. One day, when we had become quite close, he said to me, “Communists! In Islam, we regard them as devils! And Communist China, you cannot deal with them, otherwise you are dealing with the devil!” And he went on and on about communists, communism and Communist China. I responded, “Tunku, China only became communist because of the immense suffering of the people as a result of oppression and invasion. I think it’s a passing phase.” He interjected, “Oh, don’t you believe it! The Chinese are consorting with the devil. Their people are finished! You don’t know how lucky you Chinese are to be in Malaysia.” I replied softly, “Tunku, as Prime Minister of Malaysia, you should make friends with them.”

Tunku Abdul Rahman had a bee in his bonnet about communism.

 

Years later, when Tunku was out of office, he was invited to China. Zhao Ziyang, then Premier, entertained him in the Great Hall of the People in Beijing. Tunku travelled with a delegation of 15 Chinese businessmen who were good friends of his. On his way to China, Tunku stopped in Hong Kong and I gave them dinner. Then on his way out of China, he stopped in Hong Kong and we dined again. I asked him for his impressions. All of his old prejudices had vanished! He didn’t even want to refer to them. He just said the trip had been an eye-opener. “They are decent people, like you and me,” he said. “We could talk about anything.” From then onward, you never heard Tunku claim that the Chinese Communists were the devils incarnate.

Tun Razak. File photo

FRIENDS, NOT CRONIES

One thing I will say for Tunku: he had friends. His friends sometimes helped him, or they sent him a case of champagne or slabs of specially imported steak. He loved to grill steaks on his lawn and open champagne, wine or spirits. His favourite cognac was Hennessy VSOP. Tunku would also do favours for his friends, but he never adopted cronies.

When Tun Tan Siew Sin was Finance Minister, Tunku sent him a letter about a Penang businessman who was one of Tunku’s poker-playing buddies. It seems the man had run into tax trouble and was being investigated by the tax department, and he had turned to Tunku for help. In his letter, Tunku wrote, “You know so-and-so is my friend. I am not asking any favour of you, Siew Sin, but I am sure you can see your way to forgiving him,” or something to that effect.

Tunku would do favours for his friends, but he never adopted cronies

Siew Sin was apoplectic. He stalked into Tun Dr Ismail’s office upstairs and threw the letter down. “See what our Prime Minister is doing to me!” Tun Dr Ismail read the letter and laughed. “Siew Sin,” he said, “there is a comic side to life”. Ismail took the letter, crumpled it into a ball and threw it into the waste-paper basket. He then said, “Siew Sin, Tunku has done his duty by his friend. Now, by ignoring Tunku, you will continue to do your duty properly.” That was as far as Tunku would go to help a friend. Cronyism is different. Cronies are lapdogs who polish a leader’s ego. In return, the leader hands out national favours to them. A nation’s assets, projects and businesses should never be for anyone to hand out, neither for a king nor a prime minister. A true leader is the chief trustee of a nation. If there is a lack of an established system to guide him, his fiduciary sense should set him on the proper course.

A leader who practices cronyism justifies his actions by saying he wants to bring up the nation quickly in his lifetime, so the end justifies the means. He abandons all the General Orders – the civil-service work manual that lays down tendering rules for state projects. Instead, he simply hands the projects to a Chinese or to a Malay crony. The arms of government-owned banks are twisted until they lend to the projects. Some of these cronies may even be fronting for crooked officials.

Tunku was unnerved by the riots of May 13. After the riots he was a different man. Razak managed to convince him and the cabinet to form the National Operations Council, a dictatorial organ of government, and Razak was appointed its director. Parliament went into deep freeze. By the time the NOC was disbanded, Razak had been installed as Prime Minister. Tunku felt bewildered. He had helped the country gain independence and had ruled as wisely as he could, yet the Malays turned against him for selling out to the Chinese. In fairness to Tunku, he had done nothing of the sort. He was a very fair man who loved the nation and its people. But he knew that, if you favour one group, you only spoil them. When the British ruled Malaya, they extended certain advantages to the Malays.

Malay Sultans along with then Malayan High Commissioner Donald MacGillivray sign an agreement creating an independent Malaysia on August 5, 1957 in the official residence of the British high commissioner of Malaya. File photo

When the Malays took power following independence on 31 August 1957, more incentives were given to them. But there was certainly no showering of favours. All of that came later, after 1969. The riots of May 13, 1969, were a great shock to the system, but not a surprise. Extremist Malays attributed the poverty of many Malays to the plundering Chinese and Indians. Leaders like Tunku Abdul Rahman, who could see both sides, were no longer able to hold back the hotheads. The more thoughtful leaders were shunted aside and the extremists hijacked power. They chanted the same slogans as the hotheads – the Malays are underprivileged; the Malays are bullied – while themselves seeking to become super-rich. When these Malays became rich, not many of them did anything for the poor Malays; the Chinese and Indians who became rich created jobs, many of them filled by Malays.

ON PRO-MALAY POLITICS

I vividly recall an incident that occurred within a few months after the May 1969 riots. I was waiting to see Tun Razak when a senior Malay civil servant whom I knew very well came along the corridor of Parliament House and buttonholed me. He asked, “What are you doing here, Robert?” I replied, “Oh, I’m seeing Tun.” He snarled, “Don’t be greedy! Leave something for us poor Malays! Don’t hog it all!” I could see that, after May 1969, the business playing field was changing. Business was no longer clean and open. Previously, the government announced open tenders to the Malaysian public and to the world. If we qualified, we would submit a tender. If we won the contract, we would work hard at it, and either fail or succeed. I think eight or nine times out of ten we succeeded.

Don’t be greedy Robert. Leave something for us poor Malays! A senior civil servant friend

But things were changing, veering more and more towards cronyism and favouritism. Hints of change were there even before the riots. I was hell-bent on helping to develop the nation: that’s why I went into shipping, into steel – anything they asked of me. Even among the Malays there were those who admitted their weaknesses and argued for harnessing the strength of the Chinese. Mind you, that may have created more problems. If they had harnessed the strength of the Chinese, the Chinese would ultimately have owned 90 or 95 per cent of the nation’s wealth. This might have been good for the Malaysian economy, but bad for the nation.

Overall, the Malay leaders have behaved reasonably in running the country. At times, they gave the Malays an advantage. Then, when they see that they have overdone it, they try to redress the problem. Their hearts are in the right place, but they just cannot see their way out of their problems. Since May 13, 1969, the Malay leadership has had one simple philosophy: the Malays need handicapping. Now, what amount of handicapping?

The 1969 riots were a pivotal moment in Malaysian history. File photo

The Government laid down a simple structure, but the structure is full of loopholes. Imagine that a hard-working, non-Malay Malaysian establishes XYZ Corporation. The Ministry of Trade and Industry rules that 30 per cent of the company’s shares must be offered to Malays. The owner says, “Well, I have been operating for six years. My par value of 1 ringgit per share is today worth 8 ringgit.” Then the Ministry says, “Can you issue it at 2 ringgit or 2.50 ringgit to the Malays?” After a bit of haggling, the non-Malay gives way. So shares are issued to the Malays, who now own 30 per cent. But every day after that, the Malays sell off their shares for profit. A number of years pass and then one day the Malay community holds a Bumiputra Congress. They go and check on all the companies. Oh, this XYZ Corporation, the Malay shareholding ratio is now down to seven per cent. That won’t do. So the Malays argue that they’ve got to redo the shareholding again. Fortunately, the ministry usually acts as a fair umpire and throws out such unscrupulous claims.

The Malays’ zeal to bridge economic gap with the Chinese bred ugly racism

It’s one thing if you change the rules once to achieve an objective agreed to by all for the sake of peace and order in the nation. But if you do it a second time, it’s robbery. Why is it not robbery just because the government commits it? And when people raise objections, it is called fomenting racial strife, punishable by three years in jail. As a Chinese who was born and grew up in Malaysia and went to school with the Malays, I was saddened to see the Malays being misled in this way. I felt that, in their haste to bridge the economic gap between the Chinese and the Malays, harmful short cuts were being taken. One of the side effects of their zeal to bridge the economic gap was that racism became increasingly ugly. I saw very clearly that the path being pursued by the new leaders after 1969 was dangerous. But hardly anyone was willing to listen to me. In most of Asia, where the societies are still quite hierarchical, very few people like to gainsay the man in charge. As in The Emperor’s New Clothes, if a ruler says, “Look at my clothes; aren’t they beautiful?” when he is in fact naked, everybody will answer, “Yes, yes sir, you are wearing the most beautiful clothes.”

THE EAR OF THE PRIME MINISTER

I made one – and only one – strong attempt to influence the course of history of Malaysia. This took place in September 1975 during the Muslim fasting month. Tun Razak, the second Prime Minister of Malaysia, was gravely ill with terminal leukaemia, for which he was receiving treatment in a London hospital. My dear friend Hussein Onn, son of Dato Onn bin Jafar, was Deputy Prime Minister, Minister of Finance and acting Prime Minister in Tun Razak’s absence. He was soon to become Malaysia’s third Prime Minister. I went to Kuala Lumpur and sent word that I wanted to have a heart-to-heart talk. On the phone Hussein said, “Why don’t you come in during lunch time. It is the fasting month. Come to my office at about half past one. There will be no one around and we can chat to our heart’s content.”

Hussein and I go back to 1932 when we were in the same class in school in Johor Bahru. Shortly afterwards, his father fell out with the then-Sultan of Johor and the family moved to the Siglap area of Singapore.

 

Malaysia’s third Prime Minister Hussein Onn. File photo

My father would often spend weekends with Dato Onn. Two or three years later, Hussein returned to Johor Bahru and we were classmates again at English College from 1935 to 1939. Hussein’s father, Dato Onn, did not have a tertiary education. But he read widely and was very well informed. He was a natural born politician, a gifted orator in Malay and in English. He was a very shrewd man with a tremendous air of fine breeding even though he was not from Malaysian royalty. When you were in his presence, you knew you were in the presence of someone great. Dato Onn would go on to found UMNO, the ruling party of Malaysia, and become one of the founders of the independent nation of Malaysia. He set a tone of racial harmony for the nation – and he practised it. Our families were close.

So, I went to call on his son, my old friend Hussein Onn in 1975. His office was in a magnificent old colonial building, part of the Selangor Secretariat Building. In front of it was the Kuala Lumpur padang, where, in the colonial days, the British used to play the gentlemen’s games of cricket and rugby. I climbed up a winding staircase and his aide showed me straight to his room. There was hardly another soul in that huge office complex. After greeting one another, I warmed up to my subject with Hussein very quickly. I said, “Hussein, I have come to discuss two things with you. One is Tun Razak’s health. The other is the future of our nation.” I said, “You know, Razak has been looking very poorly lately. We all know he has gone to London for treatment.” Hussein interrupted: “Tun doesn’t like anybody discussing his health. Do you mind if we pass on to the next subject?” I said, “Of course not.” I continued, “I had to raise the first subject because that leads to the next subject. Assuming Razak doesn’t have long to live – please don’t mind, but I have to say that – you are clearly going to become the new Prime Minister in a matter of months or weeks.”

“I’m listening,” he said. “Hussein, we go back a long way. Our fathers were the best of friends; our families have been the best of friends. In our young days, you and I always felt a strong passion for our country, which we both still feel. Whatever has happened these past years, let’s not go backwards and ask what has gone wrong and what has not been done right. Let’s look at the future. If there was damage done, we can repair it.”

Hussein listened patiently. I pressed on, “First, let me ask you a few questions, Hussein. What, in your mind, is the number of people required to run a society, a community, a nation with the land mass of Malaysia?” This was 1975, when the population was about 12.5 million. He didn’t reply. For the sake of time, I answered my own question. “Hussein, if I say 3,000, if I say 6,000, if I say 10,000, 20,000, whatever the figure, I don’t think it really matters. We are not talking in terms of hundreds of thousands or millions. To run a society or a nation requires, relatively speaking, a handful of people. So let us say six or seven or eight thousand, Hussein. And of course this covers two sectors. The public sector: government, civil service, governmental organisations, quasi-governmental bodies, executive arms, police, customs and military. The private sector: the economic engines; the engines of development, plantations, mines, industry.

Robert Kuok. File photo

“The leaders of these two sectors are the people I am referring to, Hussein. If we are talking of a few thousand, does it matter to the masses whether it becomes a case of racially proportionate representation, where we must have for every ten such leaders five or six Malays, three Chinese, and one or two Indians?” I continued, “Must it be so? My reasoning mind tells me that it is not important. What is important is the objective of building up a very strong, very modern nation. And for that we need talented leaders, great leadership from these thousands of people. If you share my view that racial representation is unimportant and unnecessary to the nation, then let’s look at defining the qualifications for those leaders.

“Number one, for every man or woman, the first qualification is integrity. The person must be so clean, upright and honest that there must never be a whiff of corruption or scandal. People do stray, and, when that happens, they must be eliminated, but on the day of selection they must be people of the highest integrity. Second, there must be ability; and with it comes capability. He or she must be a very able and capable person. The third criterion is that they must be hard-working men or women, people who are willing to work long hours every day, week after week, month after month, year after year. That is the only way you can build up a nation.”

I went on, “I can’t think of any other important qualifications. So your job as prime minister, Hussein – I am now assuming you will become the Prime Minister – your job will then be from time to time to remove the square pegs from the round holes, and to look for square holes for square pegs and round holes for round pegs. Even candidates who fulfil those three qualifications can be slotted into the wrong jobs. So you’ve got to pull them out and re-slot them until the nation is humming beautifully.”

The best brains come in all shades and colours, all religions, all faiths. “We do not have all the expertise required to build up the nation,” I added. “But with hard work and a goal of developing the nation, we can afford to employ the best people in the world. The best brains will come, in all shades and colours, all religions, all faiths. They may be the whitest of the white, the brownest of the brown or the blackest of the black. I am sure it doesn’t matter. But Hussein, the foreigners must never settle in the driving seats. The days of colonialism are over. They were in the driving seats and they drove our country helter-skelter. We Malaysians must remain in the driving seats and the foreign experts will sit next to us. If they say, ‘Sir, Madame, I think we should turn right at the next turning,’ it’s up to us to heed their advice, or to do something else. We are running the show, but we need expertise.
You’re going to be the leader of a nation, and you have three sons, Hussein … your eldest son will grow up very spoiled

“You’re going to be the leader of a nation, and you have three sons, Hussein. The first-born is Malay, the second-born is Chinese, the third-born is Indian. What we have been witnessing is that the first-born is more favoured than the second or third. Hussein, if you do that in a family, your eldest son will grow up very spoiled. As soon as he attains manhood, he will be in the nightclubs every night because Papa is doting on him. The second and third sons, feeling the discrimination, will grow up hard as nails. Year by year, they will become harder and harder, like steel, so that in the end they are going to succeed even more and the eldest will fail even more.”

I implored him, “Please, Hussein, use the best brains, the people with their hearts in the right place, Malaysians of total integrity and strong ability, hard-working and persevering people. Use them regardless of race, colour or creed. The other way, Hussein, the way your people are going – excessive handicapping of bumiputras, showering love on your first son – your first born is going to grow up with an attitude of entitlement.” I concluded, “That is my simple formula for the future of our country. Hussein, can you please adopt it and try?” Hussein had listened very intently to me, hardly interrupting. He may have coughed once or twice. I remember we were seated deep in a quiet room, two metres apart, so my voice came across well. He heard every word, sound and nuance. He sat quietly for a few minutes. Then he spoke, “No, Robert. I cannot do it. The Malays are now in a state of mind such that they will not accept it.”

He clearly spelt out to me that, even with his very broad-minded views, it was going to be Malay rule. He was saying that he could not sell my formula to his people. The meeting ended on a very cordial note and I left him. I felt disappointed, but there was nothing more that I could do. Hussein was an honest man of very high integrity. Before going to see him, I had weighed his strength of character, his shrewdness and skill. We had been in the same class, sharing the same teachers. I knew Hussein was going to be the Malaysian Prime Minister whom I was closest to in my lifetime. I think Hussein understood my message, but he knew that the process had gone too far. I had seen a picture developing all along of a train moving in the wrong direction. During Hussein’s administration, he was only partially successful in stemming the tide. The train of the nation had been put on the wrong track. Hussein wasn’t strong enough to lift up the train and set it down on the right track.

The train of the nation had been put on the wrong track. The capitalist world is a very hostile world. When I was building up the Kuok Group, I felt as if I was almost growing scales, talons and sharp fangs. I felt I was capable of taking on any adversary. Capitalism is a ruthless animal. For every successful businessman, there are at least 10,000 bleached skeletons of those who have failed. It’s a very sad commentary on capitalism, but that is capitalism and real capitalism, not crony capitalism. Yet, I’ve always believed that the rules of capitalism, if properly observed, are the way forward in life. I know that, having been successful, I will be accused of having an ‘alright Jack’ mentality. But I am just stating facts: capitalism is a wonderful creature – just don’t abuse its principles and unwritten laws.

Robert Kuok, A Memoir will be available in Hong Kong exclusively at Bookazine and in Singapore at all major bookshops from November 25. It will be released in Malaysia on December 1 and in Indonesia on January 1, 2018

On Republican Tax Bill


November 4, 2017

The Donald Trumps Stand to Gain Millions from the Republican Tax Bill

 

Watching Paul Ryan and his Republican colleagues struggling to finish writing their long-awaited tax bill over the past few weeks brought to mind an adage attributed to Al Smith, the street-schooled New York politician who served four terms as governor, during the nineteen-twenties: someone is going to be cheated; the question is who. The Republicans—having committed to huge tax cuts for corporations, unincorporated businesses, and very large estates, while also pledging to help out middle-class households—were in a bind. According to some reports, they were trying to fit five trillion dollars’ worth of tax cuts into the $1.5 trillion allotment they had pencilled into their budget for 2018.

You don’t need to have gone beyond eighth grade, which is where Smith completed his formal education, to know that this was a tricky task. The size of the math problem helps explain why the bill unveiled on Friday morning by Ryan, the House Speaker, and Kevin Brady, the chairman of the House Ways and Means Committee, was so long (three hundred and thirty-six pages), complicated, and filled with the kind of accounting that would have fit in at Enron. But, despite its complexity, the basic thrust of the bill is straightforward: the Donald Trumps of the world get caviar; the ordinary person gets peanuts; and future taxpayers, who will bear the burden of all the new debt issuance necessary to finance the package, get shafted.

In announcing their bill, both Ryan and Brady claimed that a typical middle-class family, with two kids and about fifty thousand dollars in earnings, stood to save close to twelve hundred dollars in taxes. (To be precise: $1,182.) “This plan is for middle-class families who are living paycheck to paycheck,” Ryan said. The owner of a small business that makes sixty-two thousand dollars a year would save more than three thousand dollars, Ryan added.

Image result for Donald Trump the Tax Reformer

Donald Trump–The Tax Reformer–Making America’s Rich richer while the ordinary person gets peanuts; and future taxpayers get shafted.

Figures like these demand close scrutiny. In reducing marginal tax rates, doubling the standard deduction, and expanding tax credits for children and other dependents, the bill would benefit many middle-class households. But abolishing personal exemptions could hurt middle-class families who have a lot of children. As could eliminating the deductions for state and local taxes, health-care expenditures, and student-loan interest.

The treatment of state and local taxes, and the new limits the bill would place on mortgage-interest deductions, appear to be targeted at households in blue states, such as New York and California, which have high taxes and expensive real estate. No surprise there: it’s partisan politics. Other aspects of the bill would affect households everywhere. Unlike the tax cuts for corporations and other businesses, the tax cuts for families are temporary: after five years, they expire.

Without taking factors such as these into account, it is hard to reach any firm conclusions about what the bill means for middle-class families. (In the coming days, various tax experts will make some assumptions and produce over-all distribution tables.) But, in gauging how the legislation would affect corporations and very wealthy people, we can be definitive: they will benefit hugely. Despite the fact that the bill keeps the top rate of income tax at 39.6 per cent, it represents a big giveaway to the rich, particularly the very rich.

How so? The measure shifts the burden of taxation in the U.S. from corporations, which are largely run and owned by rich people, to households. It cuts the top rate on “pass through” business income—the sort of money generated by sole proprietorships, investment partnerships, and S-corporations—from 39.6 per cent to twenty-five per cent. And it phases out the estate tax, which falls most heavily on the largest estates, starting in 2024. Indeed, according to an analysis by the Committee for a Responsible Federal Budget, fully three-quarters of the over-all tax cuts in the bill are directed at businesses and large estates.

But that’s not all. The bill also repeals the alternative minimum tax, which was designed to ensnare rich people with clever accountants and a lot of sheltered income. In doing so, the bill creates enormous incentives for engaging in tax-evasion schemes, particularly the conversion of highly paid employees into unincorporated businesses.

To understand how all this could work in practice, it might be helpful to consider the case of a single very rich taxpayer (or non-taxpayer): Donald Trump himself. As I noted back in September, when the central proposals of the G.O.P. plan were already public, Trump stood to benefit in three different ways; that analysis has now been confirmed.

First, consider the abolition of the A.M.T. According to Trump’s 2005 tax return, parts of which were leaked earlier this year, he paid $38.4 million in federal taxes on income of $152.7 million, which means that his effective tax rate was about twenty-five per cent. But $31.3 million of his payment went to cover his A.M.T. liability. If there hadn’t been an A.M.T., he would have paid just $7.1 million, or about five per cent of his taxable income. To look at it another way, if this tax bill had already been in effect, Trump would have seen his tax bill reduced by more than eighty per cent.

Because Trump owns hundreds of unincorporated businesses, he also stands to be a big beneficiary of the new flat rate on pass-through income. In his 2005 tax return, he declared $67.4 million in income from “rental real estate, royalties, partnerships, S corporations, trusts, etc.” Since pass-through income is currently taxed like salary income, income of this sort would theoretically be subject to the 39.6-per-cent top rate. In actual fact, Trump offset much of this income by itemizing a huge, unexplained loss that was probably carried over from the early nineteen-nineties. But when those carryovers eventually run out, as they probably have by now, Trump will have a great deal of pass-through income to pay tax on. Thanks to the Republican bill, he’d pay a rate of just twenty-five per cent.

Finally, there is the abolition of the estate tax. To be sure, Trump may have already taken precautions to avoid the estate tax, by, for example, setting up specialized family trusts. But if he lived another ten years and then left his heirs, say, two billion dollars of unsheltered assets, then, under the current system, they would face a federal tax bill of eight hundred million dollars. Under the Republican bill, that liability would disappear.

The tax affairs of very rich people are all differently arranged, of course. But in some ways Trump’s finances are fairly typical. He earns most of his income from businesses. He already exploits the tax system to the max. And he has benefitted enormously from the great asset-price boom of the past twenty years. On Thursday afternoon, he said the Republicans were giving the American people a “big, beautiful Christmas present.” For some reason, he didn’t explain that the biggest presents, by far, would be handed out to people like him.

‘Minister of Finance Inc’ – A Political Economist’s Study of Minister of Finance Incorporated and GLICs in Malaysia–Terence Gomez


September 30, 2017

‘Minister of Finance Inc’ A Political Economist’s Study of Minister of Finance Incorporated and GLICs in Malaysia–Terence Gomez

by M Krishnamoorthy @www.malaysiakini.com

 

Dr. Terence Gomez, in his latest book, “Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia”, traces the government’s role in the corporate sector. He provides an assessment of Malaysia’s new political economy, with a focus on ownership and control of the corporate sector.

Gomez, who is a Professor of Political Economy at Universiti Malaya, is also the author of “Politics in Business: UMNO’s Corporate Investments”, a pioneering publication in 1990, which traced how UMNO secured a huge equity interest in Malaysia’s corporate sector.

 

In “Minister of Finance Incorporated”, Gomez (photo above) and his team of researchers offer another pioneering assessment of Malaysia’s corporate sector, though their focus is now government-linked investment companies (GLICs), a type of state enterprise that has long prevailed in the economy but has not been analysed.

Gomez argues that corporate power is now concentrated in these GLICs that are ultimately controlled by the Minister of Finance. Interestingly, Gomez admits that these GLICs are well-managed by highly qualified professionals, though these people can be subservient to the dictates of the Minister of Finance.

By focusing on the GLICs, “Minister of Finance Incorporated” ignites interesting debates about the role of the government in the economy, an issue that requires thoughtful consideration given their dominant presence in the corporate sector. Through in-depth research, novel insights are provided into this question of government ownership and control of corporate Malaysia.

This review is presented as a question-and-answer dialogue with the author, to draw attention to this study’s major findings. Much of what is outlined below is from this book.

The Interview

Professor Gomez, in your latest book, “Minister of Finance Incorporated”, what are your major findings?

Malaysia’s political economy has undergone a major transition since the 1990s that has escaped public attention.

Corporate power has shifted from UMNO and well-connected businessmen to the government. Huge business groups controlled by the government have emerged, seen in the dominance that a mere seven GLICs have over the corporate sector.

During this transition, one extraordinary outcome was the removal of UMNO, its members and the business associates of party leaders as owners of publicly-listed government-linked companies (GLCs).

 

UMNO now has direct equity ownership of only one quoted company, the media-based Utusan Melayu, while no UMNO member figures as a major corporate player.

UMNO’s absence from the corporate sector has major implications. The power nexus involving politics and business has fundamentally shifted at the federal level.

If this political-business nexus once involved numerous powerful UMNO politicians who had enormous influence over the corporate sector, economic power is now concentrated in the Office of the Minister of Finance.

Who are the GLICs?

Seven institutions have been classified by the government as GLICs. These are the Minister of Finance Incorporated (MoF Inc), the government’s holding company, which participates actively in corporate manoeuvres and owns a diverse range of firms known as government-linked companies (GLCs).

The sovereign wealth fund, Khazanah Nasional Berhad, is policy-based and implements major plans, including venturing abroad to support the government’s business internationalisation effort.

 

 

The investment trust fund, Permodalan Nasional (PNB, or National Equity Corporation), is portfolio-oriented, though with a policy agenda to redistribute wealth more equitably between the nation’s ethnic groups.

Two savings-cum-pension-based funds, the Employees’ Provident Fund (EPF) and the Kumpulan Wang Persaraan Diperbadankan (KWAP, or Retirement Fund Incorporated), are portfolio-based with an equity interest in a vast number of companies.

Lembaga Tabung Angkatan Tentera (LTAT, or Armed Forces Fund Board) is also a savings-cum-pension-based fund but is active in the management and development of large businesses in various sectors.

 

 

Lembaga Tabung Haji (LTH, or Pilgrims Fund Board), though portfolio-based, has an organic form of enterprise development, active in the development of Islamic-based products and services.

How are these GLICs owned and controlled?

The Ministry of Finance sits at the apex of a complex business group structure comprising its holding company, MoF Inc, as well as other GLICs, quoted GLCs and a huge number of unquoted private firms.

MoF Inc is the “super-entity”, given its enormous influence over the corporate sector through its substantial ownership and control of the other GLICs and the financial sector, comprising Malaysia’s leading commercial banks. Through its ownership of these commercial banks, the government can control the economy indirectly by acting as a lender to private firms.

However, MoF Inc’s vast network of business interactions constitutes only one part of the government’s complex system of control over the corporate sector. State governments have a similarly sizeable interest in the corporate sector.

In this system, the Board of Directors are important. Directorships function as a primary avenue through which the government can dictate decision-making within GLICs and GLCs.

Our comparison of ownership and directorate patterns in 1996 (prior to the 1997 currency crisis) and 2013 revealed a new phenomenon.

 

Only a small number of UMNO members remain as directors of these government-owned enterprises. These findings are particularly astonishing as Umno remains a party riddled with money politics, patronage and rent-seeking.

How did Malaysia get to this point?

Three major events have contributed to these transitions where the Prime Minister and GLICs have emerged as economic powerhouses. The first was the implementation of the New Economic Policy (NEP) in 1971, which allowed these enterprises to gradually acquire a major presence in the corporate sector.

The involvement of the GLICs in the corporate sector diminished with the active promotion of privatisation from the mid-1980s. With this spate of privatisations, major enterprises fell under the ownership and control of UMNO and well-connected businesspeople.

The second defining event was the 1997 currency crisis and the momentous intra-elite political feuding that ensued the following year. The GLICs’ bailout of ailing well-connected companies and their takeover of firms associated with ousted Umno leaders led to their re-emergence as major actors in the corporate sector.

 

The third defining moment was when reform of the GLICs and GLCs was initiated by Dr. Mahathir Mohamad in the late 1990s, though actively implemented by Abdullah Ahmad Badawi (photo) from 2003. Najib Abdul Razak continued these reforms when he took office in 2009 as Prime Minister.

The current concentration of economic power in the office of the Prime Minister is particularly salient because when Najib took office in 2009 he voiced his intention to transfer GLCs to the private sector, arguing that the private sector should function as the primary engine of growth.

Unlike Mahathir, Najib appeared personally uninterested in business as a government tool for economic and corporate development when he came to power. Najib, however, soon came to realise the significant economic influence that the GLICs have over the corporate sector.

Why was this type of corporate control structure created?

This complex system of ownership and control of the corporate sector is not one that was designed or envisioned by ruling elites.

In fact, since the 1980s, all Prime Ministers – Mahathir, Abdullah and Najib – have persistently advocated privatisation of the GLCs on the assumption that these enterprises would function far more effectively and productively if under private ownership.

Even when the NEP was conceived, the plan was to transfer corporate equity acquired by the GLICs to bumiputeras, in order to redistribute wealth more equitably among the ethnic groups.

When Mahathir’s vision of creating business groups led by corporate captains was dismantled by the 1997 currency crisis, the GLICs and GLCs were deployed to bail out well-connected ailing, debt-ridden enterprises.

 

When a bitter feud ensued between Mahathir and his Minister of Finance, Anwar Ibrahim, over these bailouts, Anwar was ousted from public office and his business allies lost control of their corporate assets.

When a similar feud ensued between Mahathir and Daim Zainuddin, Anwar’s replacement as minister of finance, companies controlled by his allies and UMNO were channelled to the GLICs. Having had persistent feuds with his trusted allies who he had appointed as Minister of Finance, prime minister Mahathir then took charge of this ministry.

The new structure of Malaysia’s political economy has also arisen out of the need for the UMNO President to reduce the influence of party warlords.

UMNO’s major businesses now under the GLICs include media companies that own the major newspapers, The New Straits Times and Berita Harian, as well as TV3, the party’s cooperative KUB, the huge construction-based UEM Group, the hotel-based Faber Group (now UEM Adgenta) and the Bank of Commerce, now a part of Malaysia’s third largest banking enterprise, CIMB Group. Control of these companies ultimately falls under MoF Inc.

If UMNO members once had many sources of patronage, what is the situation now?

UMNO members now have only one source if they wish to obtain access to federal government-generated economic concessions. This is profoundly problematic in terms of public governance as the minister of finance concurrently holds the position of prime minister, a situation that does not prevail in democracies.

In this governance structure, there is the possibility of checks and balances being deeply undermined, opening space for abuse of power that can have serious implications on the economy and the corporate sector.

Who is accountable for the running of the companies?

The board of directors of these companies are accountable. While most of these directors are professionals who manage the GLCs in a productive manner, since they are appointed by the minister of finance, they can be compelled to follow his dictates.

There are also serious concerns in some GLICs. In LTH, a number of its directors, including its chairperson, are UMNO members who are elected representatives but hold no position in government. LTAT is led by Lodin Kamaruddin (photo), a longstanding close business associate of Prime Minister Najib.

 

There is sufficient evidence that these GLICs could be vulnerable to political interference unless sufficient oversight measures and institutional reforms are introduced to ensure they are well-insulated from such abuse.

In the boards of directors of the GLICs and GLCs, what has also increased is the number of former bureaucrats. These ex-civil servants, like the professional elite, have no political influence. However, they also appear to function as mere figureheads.

The most influential decision-makers are the chairpersons of these boards and the managing directors who, when necessary, take the cue from the Minister of Finance, further indicating his overwhelming influence over the corporate sector.

There is evidence of “inner circles” among the GLICs. One inner circle revolves around Nor Mohamad Yakcop, until recently the deputy chairperson of Khazanah. Professional managers groomed by him lead the GLICs and GLCs.

An inner circle is also evident in the media sector. An obscure private firm, Gabungan Kesturi, controls the leading media enterprise, Media Prima, along with PNB.

The directors and shareholders of Gabungan Kesturi are Shahril Ridza Ridzuan and Abdul Rahman Ahmad, both groomed by Nor Mohamad. Shahril is the CEO of EPF, which also owns a huge interest in Media Prima. Rahman was appointed the CEO of PNB in 2016.

The use of private companies like Gabungan Kesturi obscures the identity of the ultimate shareholder, the Minister of Finance, as well as the extent of the state’s control over major media companies.

Did our leaders groom and place executives in GLICs for their vested interests?

Daim Zainuddin (photo) groomed and placed professionals he had trained as executives and owners of companies associated with UMNO.

 

A similar practice of grooming young professionals as executives and CEOs emerged in the late 1990s after well-connected firms came under the control of the GLICs. Professionals trained by Nor Mohamed took over the management of these enterprises.

However, while Nor Mohamad and Daim groomed and placed professionals in control of major quoted enterprises, their reasons for doing so differed.

As Minister of Finance, Daim, also UMNO’s Treasurer and a longstanding businessperson, appeared intent on securing enormous control over the corporate sector to serve his vested business interests. The professional-managerial team groomed by Nor Mohamed was not necessarily trained to manage the GLICs and GLCs.

What are the possible repercussions of this ownership and control mechanism?

Through this pyramiding system, with the Minister of Finance at the apex, the GLICs and GLCs can be subjected to considerable abuse. This pyramiding system allows the minister to secure numerous political and business benefits from the GLICs and GLCs, as well as abuse them.

It is noteworthy that MoF Inc has ownership and control of controversial companies such as 1MDB and the National Feedlot Corporation (NFC).

The GLIC-based business groups have control over companies through majority equity ownership, which accords them significant voting rights. This has serious implications for minority shareholders, and the economy, in the event of abuse of the companies.

Our study noted that the EPF appears to have been forced to take control of RHB Capital from a firm linked with the former Chief Minister (and now Governor) of Sarawak, Abdul Taib Mahmud (photo above ). This financial institution has long been an enterprise that has come under the control of a number of well-connected people and GLCs.

Politics evidently matters, influencing how these enterprises are run. Policies also matter as they shape the different ways in which these institutions are managed.

There can be a link to between politics and policies, especially redistributive policies and enterprise development strategies when determining how these enterprises are employed.

After his party fared badly in the 2013 General Election, Najib announced that contracts and other concessions would be channeled through GLICs and GLCs to bumiputeras, justified by his new ethnically-based affirmative action policy that targeted this ethnic group. This was evidently to consolidate the political support of this ethnic community. 

What reforms are required to deal with this issue?

These powerful GLICs are a clear manifestation of high concentration of corporate ownership in the state. This concentration of corporate wealth is justifiable only if GLICs are managed in an accountable and transparent manner.

Inevitably, to inspire confidence among private investors, political reforms are imperative to enforce stringent institutional checks and balances by independent oversight institutions.

 

The technocratic professional elite at the epicentre of this GLIC-GLC network can remain, but must be subjected to close scrutiny by parliamentary action committees led by the Opposition. And the Prime Minister cannot also serve as the Finance Minister since it is an obvious case of conflict of interest.

Twenty years on: The Asian Financial risis and Asian Monetary Fund (AMF)


September 28, 2017

Twenty years on: The Asian Financial risis and Asian Monetary Fund (AMF) 

David Nellor

http://www.eastasiaforum.org

 

Image result for 1997 asian financial crisis

Proposals for an Asian Monetary Fund (AMF) dominated corridor conversations at the 1997 IMF–World Bank annual meetings in Hong Kong. The Asian financial crisis had erupted a few months earlier and was engulfing the region.

The United States vetoed the idea, framing the proposal as the ‘IMF versus AMF’ where any type of AMF would undermine the IMF’s central role in the global financial system. Twenty years on, the circle has been closed, with the IMF launching a framework for collaborative action with regional arrangements.

 

Arguably, at that early stage of the crisis, the US position was not unreasonable. The mood of Asian finance officials was one of denial. Set against the backdrop of the Asian miracle, it was inconceivable, they thought, that self-inflicted policy distortions — quasi-fixed exchange rates combined with independent monetary policy — as well as compromised financial sector supervision helped drive the crisis. The idea of unconditional financing — not tied to reform — that would avoid reform was, they thought, a defendable proposition.

Still, the push for an AMF did suggest gaps in the global and regional financial architecture. What followed was a struggling ASEAN seeking to catch up, stop gap consultative groups like the Manila Framework Group, and a sequence of ad hoc parallel financing arrangements from the ‘Friends of Thailand’ to Indonesia’s so-called ‘second line of defence’.

The crisis broke on 2 July 1997. By late July, plans led by Japan and in cooperation with the IMF were underway for a regionally based meeting on Thailand. This informal grouping hosted by Japan in Tokyo on 11 August, became the ‘Friends of Thailand’. The concrete outcome of the meeting was a series of financial commitments by seven countries and the multilaterals, with the United States notably absent. The absence of the United States was perhaps shaped by congressional dissatisfaction with the Clinton Administration’s financial support of Mexico, which had been provided directly by the US Treasury without congressional approval during Mexico’s 1994 crisis.

Almost remarkably, this rushed US$17.2 billion collaborative financing arrangement was the regional success story from a sequence of ad hoc efforts to provide funding to mitigate the consequences of the crisis. The support was structured as a series of bilateral arrangements between Thailand and each country. Each drawing under these agreements was triggered in parallel with Thailand’s drawings under the IMF supported program. Commitments were credible as they were both conditional and fulfilled step by step.

By contrast, Indonesia’s more than US$40 billion package — including an US$18 billion ‘second line of defence’ through bilateral support — failed. The enormous scale of the funding, especially at that time, was intended to be a ‘shock and awe’ approach signalling to financial markets that stability was assured.

Some thought the second line would never need to be drawn and perhaps commitments were made with that expectation. But markets saw through this and in short order sufficient questions arose about the willingness of countries to follow through on commitments. This triggered uncertainty at best and arguably made the situation worse.

Image result for 1997 asian financial crisis

The South Korean experience of international support was different. The concentration of external debt through the South Korean banking system enabled the coordination of a relatively effective capital control mechanism, creating a window to develop a market-based debt restructuring in the first half of 1998. Here the US Federal Reserve played a leading role, along with other central banks, supported by the technical contributions of IMF and South Korean officials.

Asia’s leaders were unanimous in supportive statements about the need for a regional crisis response mechanism including funding. Yet there were issues that continue to pose a challenge for the credibility of arrangements, such as the ASEAN+3 Chiang Mai Initiative, today. Lee Kuan Yew, while not opposed to an AMF, cautioned that such an arrangement would need to do more than provide funding that might enable crisis countries to avoid essential reform. He went on, ‘I do not see any Asian group of governments in the AMF strong enough to tell … President Suharto, “You will do this or we will not support you”. If you don’t say that and you support him, that’s money down the drain’.

The Manila Framework Group was established in a November 1997 meeting as the direct result of the failed AMF discussions in Hong Kong. It would serve as a surveillance forum of 14 APEC economies meeting regularly and on an ad hoc basis through to the end of 2004. It played an important role by, for example, triggering a June 1998 Tokyo meeting with the G7 to respond to destabilising global currency moves. The G20 would also start in the aftermath of the Asian financial crisis.

ASEAN was a participant but not a driver when the crisis broke. Its most concrete response came a few years later when, along with the ASEAN+3 countries, the Chiang Mai Initiative was launched in 2000. It was a modest first step especially as operational modalities remained to be defined for at least a decade and only in 2016 was there a ‘dry run’ to test the Chiang Mai Initiative’s capacity to respond to crisis.

Indonesia’s hastily developed Deferred Drawdown Option, with multilateral and bilateral support during the Global Financial Crisis, was another ad hoc instrument showing that gaps in the regional financial architecture persisted well into the 2000s.

Twenty years on, the IMF has spelled out plans for how to make the global financial safety net more effective through collaboration with regional financial arrangements — an outcome that seemed remarkably distant in the midst of the Asian financial crisis.

David Nellor is a Jakarta-based consultant. He was based in Asia for the IMF throughout the Asian financial crisis and participated in discussions on regional arrangements.

 

ADB Predicts Stronger 2018 for Developing Economies


September 28, 2017

ADB Predicts Stronger 2018 for Developing Economies

by  http://www.asiasentinel.com

Image result for ADB Predicts Stronger 2018 for Developing Economies

 

Asia’s developing economics have performed better than forecast earlier, according to the latest assessment by the Asian Development Bank in its mid-term review of the 2017 Asian Development Outlook. Some further slight improvement is forecast for 2018. However, much depends on external circumstances which have largely driven better-than-forecast 2017 performance.

Image result for Malaysia's Economic Outlook 2018

Among Southeast Asian countries, Malaysia’s public finances look less healthy than most of its peers.

 

Most notable has been a strong pickup in electronics exports after a weak 2016. This has been the main driver of the sharpest growth pick, Malaysia, where the forecast for GDP growth for the full year has been raised by a full percentage point to 5.4 percent, with electronics and palm oil exports as drivers plus consumption growth driven by higher wages.

Malaysia’s economy had appeared to shrug off negative effects of the sharp fall in the ringgit in 2015-16, though there was an inflation spike. Now stable, the currency seems unlikely to rebound much further unless the current account surplus surges. The ADB’s one and rather understated caveat looking ahead is the government deficit, which has surged to over 5 percent of GDP against an official target of 3 percent. Much of the government debt is foreign owned. A tax increase is necessary before long, the outlook warns.

Among Southeast Asian countries, Malaysia’s public finances look less healthy than most of its peers. Government deficits in the Philippines, Indonesia and Thailand are all around 2 percent of GDP as revenues have been rising almost fast enough to accommodate increased infrastructure spending. Progress in the Philippines in particular has brought investment up to 25 percent of GDP. This is not the result of a particularly strong 2017 but of a continuing surge since 2012. However, ambitious further spending on infrastructure will be dependent on revenues, and on progress in implementing public/private partnerships (PPPs).

Image result for Philippines Economic Outlook 2018

 

In theory, according to the development outlook, the Philippines has an advanced framework for such projects, but few have been realized. Much too will depend on the progress of proposed tax reforms and whether the reforms have a positive net impact on revenues and investment. Private sector credit growth will also have to slow down after an 18 percent leap this year.

The development outlook is silent on the costs of rebuilding Marawi City after the recent battle but will inevitably set back other spending. It also avoids mentioning foreign investor disquiet over President Rodrigo Duterte’s drug war and threats of martial law. Meanwhile a continuing rise in remittances up 8.7 percent in the first half of 2017 is underpinning consumption and feeding through to the food processing and building materials sectors of manufacturing.

While manufacturing in the Philippines is performing adequately by its own modest standards, Indonesia’s manufacturing sector is a drag on an economy continuing to jog along at 5 percent growth. The development outlook’s 2017 forecast is unchanged at 5.1 percent despite a fall in the current account deficit and increased government spending on infrastructure which could push the budget deficit close to its 3 percent of GDP ceiling. Inflation remains low by local standards at 4 percent. Foreign investment has been flowing strongly but its impact on manufacturing remains modest and investment in mining is restrained by policy uncertainties.

The ADB outlook warns of the need to maintain flexible exchange rate policy to absorb possible shocks from international markets, be they commodity prices or interest rates.

Slightly higher GDP growth is forecast for 2018 partly to a spending boost from the Asian Games to be held in Jakarta and Palembang but there is not much sign of the 6.5-7.0 percent growth which Indonesia should be able to achieve.

Image result for Thailand's Economic Outlook 2018

Thailand should in principle be able to do a lot better than its 3.5 percent growth. Tourism, agricultural prices and other exports have done well and created a massive current account surplus of 8.5 percent of GDP this year and probably over 6 percent in 2018. The surplus has underpinned a strong currency and inflation below 1 percent. But private investment remains very weak, reflecting political and other uncertainties.

Although Thailand’s own population increase is now almost static, workers from Cambodia and Myanmar continue to undergird the labor force and Bangkok’s service industries to benefit from growth in Myanmar and Vietnam. But capital is leaving for better or safer projects elsewhere. Government infrastructure spending will continue to rise. The budget deficit, now 2.8 percent of GDP, has room to rise as government debt is only 32 percent of GDP. But, though the development outlook doesn’t say so,  the traditionally conservative finance ministry is likely to keep a  rein on spending regardless of the pronouncements of the political leaders.

Image result for Singapore's Economic Outlook 2018

Fiscal conservatism can also go too far in Singapore, suggests the ADB’s outlook in one of its rare critiques of government. It states: “policy makers should consider placing a high priority on reining in persistent current account surpluses, which are primarily the product of an unusually high savings rate. Even a modest adjustment to this perennial macroeconomic imbalance would boost domestic demand and raise the economy’s potential growth rate. To this end, the government has ample resources for fiscal expansion.”

Image result for Vietnam's Economic Outlook 2018

Fiscal austerity remains a necessity in Vietnam.

Fiscal austerity however remains a necessity in Vietnam. This year the government deficit will be about 4 percent of GDP but with total debt over 65 percent there is scant room for a surge in public spending and a repeat of past cycles of inflation and devaluation.

There is pressure for more spending to offset what has been a slightly disappointing year so far, with GDP growth likely to be 6.3 percent against an earlier 6.5 percent projection with a small pickup in 2018. Vietnam has been hit by declining coal and oil output and prices partly offsetting strong manufacturing growth driven by foreign investment, and tourism. However both may ease off in 2018. The currency has been firm despite a small deterioration in the current account, and inflation is only around 4.5 percent.

Failure to resolve old non-performing loans remains a drag on the financial sector. There has been no consolidation in the banking sector and sale of equity by state firms has been slow despite a buoyant stock market driven in part by foreign portfolio flows.