June 20, 2015
COMMENT:I am very skeptical about whatever Mr. Transformation Blues says on the state of our economy. He uses statistics with amazing ease in his rebuttal to Mr Pesek’s article. We know that statistics can be massaged for purposes for which they are intended. Malaysians are familiar with this kind of public relations exercise.
Minister Jala has been spinning too often and now has a serious credibility problem. Throwing statistics around will not change public perception about the Prime Minister’s mismanagement of the economy.
Let us face reality. The 1MD debt problem is like an albatross around our national neck. It has been badly handled by company and Treasury officials and the Prime Minister himself. Minister Jala should be providing the answer to what happened to the RM42 billion debt? Why has he not commented on it in his rebuttal? He must know that the issue has undermined public trust and investor confidence.
What transformation is he talking about when we know that our economy is up against some very serious challenges in the years ahead. For example, we are in the middle-income trap and I have not seen any attempts on the part of the Najib administration to deal with this major challenge. We are still a commodity export economy, dependent on palm oil and oil and gas.
We have been talking about a knowledge economy for as long as I can remember, yet we are unable to fix our standard of education from primary to tertiary level. Our Research and Development policy is shrouded in mystery.
We know that the Prime Minister is not providing the leadership the country badly needs since he is pre-occupied with his own political survival.
Minister Jala should be talking to ordinary people to get a better understanding of their situation and listening to economists who have contrarian views on our government’s fiscal policy, and development strategy as outlined in the 11th Malaysian Plan (2015-2020).
What is Minister Jala’s intention in making this point:
Because of our achievements, I was invited to share our experience at both Harvard and Oxford universities this year. At the Harvard Kennedy School of Government, I had the privilege to share Malaysia’s success story with government ministers from many countries. Last month, I was invited to share our experience with Russian ministers in Moscow.”
What success story is he telling his audience at Oxford and Harvard and the Russian Ministers in Moscow? Are they gullible? My readers and I on this blog are not.–Din Merican
In addition to the above, I wish to add my good friend Dr. Bakri Musa’s rebuttal to our Tranformation Blues Minister’s response to Mr. Pesek’s article as follows::
“The facts, however, are these. Between 2009 and 2014, Malaysian Gross National Income grew by 47.7 percent …”
Facts and figures by themselves mean nothing. What is the comparable figures for our peers – Taiwan, South Korea or even Vietnam. Not to mention Singapore or China. To quote the man, let me repeat again (… and one more time!), facts and figures must be put in proper perspective!
Oops! I forgot that our peers are now Nigeria, Pakistan, and Afghanistan in which case Jala’s figures are indeed impressive.Yes, our growth rate is higher than Japan, Western Europe and other advanced countries but those countries are already there, cruising at high altitude. Malaysia is still trying to take off and ascending. It cannot afford a low growth rate without risking a stall.
As for our devalued ringgit, Jala seems impressed by Zeti’s confidence rather than what the market is telling us. It is pathetic that Jala would consider his invitation to Harvard as an endorsement of the government’s policies. Jala should instead visit our universities and schools and discover how pathetic they are.
More important than what Jala tells those Harvard folks or how honored he was to be invited, what did Jala learn when he visited Boston and what lessons can he impart onto our local institutions. Or was Jala, like so many ministers on their “study” visits abroad impressed only with the glitz and ceremonies?–M. Bakri Musa
Transformation Blues Minister rebutts Bloomberg’s William Pesek
by Dato Seri Idris Jala@www.themalaysianinsider.com
When I read William Pesek’s latest commentary on Bloomberg View, I barely recognised the country he was writing about.
He starts by referring to Malaysia’s “underlying economic distress” and “prolonged slow growth”, which he says are caused by “race-based policies that strangle innovation, feed cronyism and repel multinational companies”.
The facts, however, are these:
1. Between 2009 and 2014, Malaysian gross national income grew by 47.7%.
2. Growth last year was 6%, and over the next four years the OECD predicts Malaysia will enjoy annual growth of 5.6%.
It would be perverse to characterise this as “slow”. By contrast, the Economist reported last month that “The European Commission is forecasting growth in 2015 of 1.5%, which would be the euro area’s best outcome since 2011.” A growth rate nearly four times that of some of the most advanced economies in the world hardly suggests “distress”.
3. Prime Minister Datuk Seri Najib Razak launched Malaysia’s Economic Transformation Programme in 2010. Let me highlight some key achievements:
- Third, as detailed in the World Bank’s Global Economic Prospects report 2014, Malaysia’s efforts at reducing poverty have been a great success, virtually eliminating absolute poverty to less than 1%. Since 2009, the income of the bottom 40 per cent households has increased by a compound annual growth rate of 12%, even higher than the national average of 8%. Inflation has been kept in check at only 2.4%. And through the implementation of minimum wage legislation, we have lifted 2.9 million people immediately out of absolute poverty.
- First, in the last five years, annual investment growth has been 2.5 times more than in the preceding years. Each year, total investment reached a new record for Malaysia. The bulk of this investment is from the private sector. If the private sector has no confidence in Malaysia as alleged by Pesek, why would they put in record investment year on year under the Najib administration?
- Second, the country’s fiscal reforms are being successfully implemented, cutting Malaysia’s fiscal deficit for the past five years, while keeping public debt at only 53% of GDP.This level of public debt level is far lower than in many countries, such as the US, UK, France, Japan and Singapore.
4. We touched the lives of five million people through rural roads, electricity and water projects. This represents possibly the biggest government expenditure over a five-year period in the history of Malaysia. All of these were done in the name of inclusive economic development.
That should be enough to dispel the suspiciously negative picture Pesek paints. But let me address some of his other inaccurate accusations, too.
5 As for the alleged failure to “dismantle race-based policies that strangle innovation”, let me quote from a report in a respected international news organisation:
- “Malaysia eased rules governing overseas investors, initial public offerings and property purchases, peeling back decades of benefits to ethnic Malays. Foreign companies investing in Malaysia and locally listed businesses will no longer need to set aside 30% of their equity to so-called Bumiputera investors, Prime Minister Najib Razak said today. He also raised overseas ownership thresholds in the fund management industry and at local stockbrokers.” At Initial Public Offerings, “Publicly traded companies will no longer have to meet any Bumiputera equity requirement under today’s liberalisation measures.” If Pesek disagrees with any of the above, perhaps he might discuss it with his editors. The report was published, after all, by none other than Bloomberg.
- At another point, he writes that Najib has “deepened the economy’s reliance on oil and gas production”. The International Monetary Fund believes otherwise. The headline on its “Economic Health Check” report this March was: “Favourable Prospects for Malaysia’s Diversified Economy”.
6. Pesek rounds off his imaginative piece of writing by declaring that “the ringgit’s fluctuations are a decent summary of the country’s wayward course in recent years”.
Perhaps he would like to discuss this with Malaysia’s Tan Sri Zeti Akhtar Aziz, one of the most admired central bank governors in the world. She has repeatedly said that the ringgit is undervalued. Here is what she said recently: “When the oil price plummeted, the wrong perception of the degree of dependence of the Malaysian economy on the oil and gas sector led markets to think that we would be more affected than others. Of course, the ringgit is undervalued. It doesn’t reflect our underlying values, which are solid and strong.”
7. Pesek’s opinions do not seem to have a strong connection to the facts. He gives away his true agenda when writes that “Asia-based journalists have missed (Tun Dr) Mahathir Mohamad since he left office in 2003” and suggests “a return to old political leadership” is “urgent”.
It may be that nostalgia for the past and his distance from Malaysia have clouded his judgment, and led him to write an unsubstantiated hatchet job on the current prime minister in order to please a former Prime Minister about whom he gushes, his “mercurial governing style and fiery rhetoric made for great copy”.
He certainly seems to have changed his mind about Dr Mahathir. Only last year he wrote: “The insular and jury-rigged system of affirmative action, national champions and fat subsidies over which Mahathir presided now holds the economy back. The Malaysian leader also had a tendency to embarrass his nation on the international stage with his nutty anti-Semitic tirades.”
He concluded: “Malaysians must find fresh inspiration by looking forward, not back to 1990.” We agree. Why does Pesek now think we should look back to a system he described in such a derogatory manner last year?
8. Malaysia has undergone an impressive economic transformation under Najib and the country is on course to reach the goal of becoming a high-income nation by 2020 – as the figures and achievements I have mentioned above make clear.
Because of our achievements, I was invited to share our experience at both Harvard and Oxford universities this year. At the Harvard Kennedy School of Government, I had the privilege to share Malaysia’s success story with government ministers from many countries. Last month, I was invited to share our experience with Russian ministers in Moscow.
9. I wonder why it is that many countries and institutions can see the progress we are making, but Pesek chooses not see any of it? His latest outburst is consistent with a series of slanted articles that unfairly run down Malaysia and its leadership.
10. Differing opinions are bound to be expressed on Bloomberg View. The defence of “fair comment”, however, does not apply to getting facts so woefully wrong. We would hope that the editors at Bloomberg agree, and will correct or take down such a disgracefully biased and ill-informed article.
* Datuk Seri Idris Jala is CEO of Pemandu and Minister in the Prime Minister’s Department.