It’s the Economy, Mr. Najib, so don’t blink

August 31, 2015

It’s the Economy, Mr. Najib, so don’t blink

by Martin

FT Najib

TODAY(August 31) marks the completion of 58 years of Merdeka. On the economy, there is much to be proud of, with nearly six decades of generally good growth. One key reason is that the national economy has become well diversified. At Independence, Malaya was dependent on exporting just rubber and tin.

Through the years, more commodities including palm oil and petroleum were introduced and the raw materials were processed and manufactured, for example, into rubber gloves and furniture.

The manufacturing sector also diversified to include electronics. Construction has boomed and has high potential. There have been mistakes, too, along the way. Policies could have been better designed and implemented. And growth, though quite well-distributed, could have been more inclusive.

There are many regions and communities still left out of development. This Merdeka, we should resolve that those living at the bottom of the pyramid should receive the most attention and resources.

There is no reason why, 58 years after Merdeka, Malaysia cannot cater to the needs and interests of the poor and vulnerable. Despite the achievements, the economy is now facing what could be its greatest test. We are already inside the start of an economic crisis, and it will get worse before it gets better.

The fall in prices of petroleum and palm oil has rightly been blamed. Our economy is still reliant on commodities and thus affected by the booms and busts of the global commodity cycle, which turned downwards in the past couple of years. Even more important, Malaysia has also become dependent on another boom-bust cycle – that of global finance, the rapid inflows and outflows of funds.

This cycle is even more volatile and dangerous than the commodity cycle. Volatile because the flows can be huge and can change suddenly, and dangerous because the change can damage many parts of the system. There is a large body of literature on the dangers of global financial flows, when trillions of dollars of short-term funds go hunting for investment venues and modes in search of higher yield.

These funds choose Malaysia and other emerging economies to place many billions of dollars. When fundamentals or perceptions change, the funds move out.

Allowing the free flow of speculative funds is not a good idea. When too much comes in, effects include stock market and property price bubbles and currency appreciation.

And when the investors exit, there are other bad effects, as is now becoming evident. Foreign funds in the stock and bond markets are leaving the country. The ringgit has fallen more than 20% since a year ago, with expectations of further falls prompting further outflows. Local capital flight is also taking place.

Since the trade surplus has declined, it cannot fully offset the outflow of funds. Thus the overall balance of payments is now negative and this is reflected in the falls in the foreign reserves from US$132 bil (or RM424 bil at the exchange rate then) on August 29, 2014 to US$94.5bil (or RM356bil) on August 14, 2015.

Unless the investor mood reverses, there is potential ground for higher foreign outflows. The relevant foreign funds are in four categories: equities, bonds and deposits (denominated in ringgit) and loans to Malaysia denominated in foreign currency. Foreign investors have around RM300-400bil in the stock market. This year up to 31 July, they pulled out RM11.7bil from the stock market, according to MIDF Research. Foreign funds invested in bonds denominated in ringgit are high and falling fast. Foreigners own RM206.8bil of government and corporate bonds at end-July, down from RM226bil at end-2014 and RM257bil in July 2014, according to government data.

They also own deposits in Malaysian institutions of RM91bil as at end-March. Thus, there are RM600-700bil of foreign funds in the country as equities, bonds and deposits. If a sizable amount moves out, this would further drain the foreign reserves which stood at RM356bil on Aug 14.

On top of this, the public and private sectors also had RM399bil of external debt (of which RM157bil is short-term) denominated in foreign currencies as at end-March 2015, according to Bank Negara.

The country has thus become dependent on foreign funds and lenders to maintain their assets in and loans to Malaysia. The foreign reserves are still quite high, but has been declining and subject to future stress if outflows continue.

It is timely that an economic task force has been set up by the Prime Minister and it should examine all facets of the emerging crisis.

Should the country re-establish a currency peg? If this is done, there should also be controls on capital outflows, otherwise the fixing of the currency may not prevent and may instead cause further large capital outflows. The 1998-2000 policy measures that overcame the crisis were successful because they were done in combination: a fixed exchange system; control over certain types of capital outflows; and reflationary monetary and fiscal policies. One without the others would not have worked.

The committee should also consider whether it was wise to have recently liberalised the financial system so much, to now have such free inflows and outflows of funds. Excessive fund inflows and debts could have been limited in the first place, as done in some other countries. Local institutions should also not have been encouraged or allowed to invest so much abroad; now it is not easy to get them to reverse the flow.

The policies have resulted in high dependence on foreign funds, and the economy being susceptible to the stress of capital outflows. We shouldn’t welcome or attract all the funds that want to enter to do so, and then later bewail the fact that these same funds now want to exit when the economy cannot afford them to do so.

In any case, it is important to give priority to reviving the economy, which is now clearly under stress and already inside a crisis.


In the Spirit of Merdeka, fast forward Bersih

August 31, 2015

COMMENT:  I disagree with you,  Mr Ng.  Bersih 4.0 on August 29-30, 2015 is not “the nexus of negativity”. It is a gathering of thousands upon thousands of Malaysians who demand free and fair elections, and good governance. They choose to express their discontent with the Najib administration in a mature, orderly and peaceful manner.

Din and Kamsiah at Bersih4.0We were among the many Malays who were at Bersih 4.0 with fellow Malaysians

It is not a Malay versus the Rest affair. That is what Najib and his cronies, apologists, sycophants and paid spinners would have us believe. In stead, it is a clear demonstration that Malaysian people power is alive and can no longer be ignored.

Malaysian democracy is very much in vogue. This is the most positive development from Bersih 4.0  and the significance of Merdeka 58, not the expensive display of meaningless pomp, arrogance and defiance, and pageantry which I saw on television this morning.

BERSIH'S demands

Those who were at Dataran Medeka and its surrounds want positive change; they want a responsible and accountable government. Read the 5 Bersih demands carefully. Because Prime Minister Najib can longer be trusted, they want him to step down. That is Demand No. 6. And it was a simple and clear message delivered in a resounding way.

Najib lacks credibility and there is a crisis of confidence and capital and financial markets are reacting negatively by dumping our stocks and shares and selling the Malaysian ringgit. Until this leadership question is settled,  we face uncertainty which can lead to the worst economic crisis we have witnessed in 58 years.

solat at Bersih 4.0The Malays were there. Make no Mistake about this

How can you expect us to lay down our arms and celebrate when we know that Najib is corrupt and incompetent and the root cause of current political, social and economic problems. He cannot be trusted to focus on his duties.

Our Prime Minister is only interested in remaining in power and will stop at nothing to ensure he survives politically. And if he has to go down, he will take Malaysia with him. So, this struggle for change must be relentless; it must not stop until we succeed in our mission. Fast Forward, Bersih.

IGP Khalid A Bakar

Finally, I congratulate Bersih 4.0 organisers and the Royal Malaysian Police for ensuring public order. To the Inspector-General of Police, Tan Sri Khalid Abu Bakar,  I say “terima kasih daun keladi, kalau boleh macam ini lain kali”. –Din Merican

In the Spirit of Merdeka, fast forward, Bersih

by Scott Ng

Tunku QuoteA Timely Reminder to our Current Prime Minister: Stop Playing Politics with Race and Religion

For two days, Dataran Merdeka, the place where Tunku Abdul Rahman declared our independence from the British, was the focal point of the nation. The place that celebrates our country’s greatest achievement became the nexus of this country’s negativity, expressed not by those who were against the government, but also by those who viewed the protest as unpatriotic. And the rhetoric has been ugly, to say the least.

The accusations levelled at Bersih by pro-government media and bloggers and the cries of “Where are the Malays? Don’t they care about this country too?” from the protestors defined the worst of us. They represent the basest, most repulsive urge we have, the need to blame and demonise those who are different from us. That’s ironical, for sure, given how much we harp on what it means to be Malaysian in our multi-cultural society.

Today, however, is an occasion for all Malaysians. Without Merdeka, none of us would be where we are today, in this beautiful, often schizophrenic country that somehow keeps a hold on our heartstrings no matter what is going wrong. Without the bravery of our forefathers – Malay, Chinese, Indian, Orang Asal it matters not – there would not be the Malaysia that we call home.

There is so much hate and anger in the air that we have even forgotten to celebrate Merdeka this year. This is not to say that the rakyat are angry without reason. There are indeed many reasons to be angry right now, but we must not forget that fateful day 58 years ago that our forefathers won the right to self-determination, the right to live in a way only we Malaysians can live.

Just for today, it is time to lay down arms. In the name of those who came before us, and those who sacrificed for us, this is a day to celebrate.

This day exemplifies the will of Malaysians to live a life as free as anyone else in the world, on our own terms. This day represents the end of oppression, the end of coercion, the end of having our voices ignored. It is a day of freedom and emancipation. If we do nothing else, we should be shouting Merdeka from the rooftops to reinforce the fact of our independence, and to bring to mind what we struggled against as a people.

If only just for today, let us be undivided by ideological, communal, or political lines. Let us just be a people who finds themselves on the cusp of something tremendous and who must reconnect with the same spirit that once made us great. As Merdeka leads to Malaysia Day, we must keep up our faith in what makes us who we are, and hold fast to the spirit of Merdeka, to the dream of a nation of equals, working together for the success of our grand experiment.

Red Shirt UMNO Goons may cause trouble at BERSIH4.0

August 27, 2015

Red Shirt UMNO Goons may cause trouble at BERSIH4.0

by Asiasentinel Correspondent

UMNO Red Shirt GoonsUMNO Goons

The threat of violence by an UMNO-linked coalition of goons against demonstrations set for August 29-30 raises the risk that the party is willing to spill blood in its campaign to save Malaysian Prime Minister Najib Razak’s job.

Jamal Md. Yunos, a 41-year-old minor tycoon who says he owns 25 companies is also head of the Kuala Lumpur Petty Traders Action Council, which held a rally on August  25 to threaten violence against anti-Najib protesters. That was followed a day later when he said his “red shirt” followers would train with machetes and swords.

Yunos claims to be seeking peace in the country. He ran in 2013 to become an UMNO division chief in response to a call by Najib to bring younger leaders into the party. He remains a strong UMNO figure said to be aligned with several cabinet ministers.  The fact that he is an UMNO stalwart raises questions whether the party is behind the threat to intimidate protesters.

Certainly Najib has pulled out all the other stops in his attempt to forestall investigations and protests over how US$681 million appeared in his personal accounts in 2013, only to have US$650 disappear out a few months later into a private account in Singapore, which was almost immediately closed, an indication that the money has gone somewhere else. Najib is also under fire over his stewardship of the badly mismanaged 1Malaysia Development Bhd., a state-backed investment fund that now faces at least RM27 billion worth of unfunded liabilities, much of it believed to have been stolen.

Spreading scandal

Although Najib has sacked or neutralized almost all of the investigators working on the two scandals, Swiss authorities have opened investigations into money laundering.  Complaints have also been filed in the UK and France, asking for probes into banks that handled the funds. Although he has hinted at “foreign conspiracies” out to break up Malaysia’s parliamentary democracy, he has offered no proof.  A threat to sue the Wall Street Journal for an article that ran more than a month and a half ago has not materialized.

However, the Prime Minister has continued to raise the temperature on race relations in the country, telling UMNO division leaders that Malays and UMNO would be “bastardized” if the party is driven from power – read by most people as a shot across the bow at the Chinese-dominated opposition Democratic Action Party, perhaps the most effective unit in the three-party opposition Pakatan Rakyat coalition.  Given Malaysia’s decades of delicate race relations since murderous riots in 1969, his comments are regarded as troubling if not frightening to the country’s 22 percent Chinese minority.

Bring in the clowns

With or without Yunos’s Red Shirts – a parallel to Thai anti-government protesters against royalists who wore yellow, as the election-reform NGO Bersih does — it is unlikely that the planned weekend Bersih rally will uproot any UMNO support despite the anticipated – or rumored – presence of such former UMNO leaders as former Prime Minister Mahathir Mohamad and sacked Deputy Prime Minister Muhyiddin Yassin.  Previous rallies prior to the 2013 general election, which were said to have attracted anywhere between 50,000 and 100,000 protesters, only resulted in the jailing of protest leaders.

On August 25, about 160  “red shirt” demonstrators held what by all appearances was a clownish demonstration of “martial arts,” beating each other with wooden poles and smashing roof tiles while imitating the sounds tigers are said to make.

Yunos told reporters he expects 30,000 activists to demonstrate against the rally called by Bersih, which is scheduled for Kuala Lumpur, Kota Kinabalu and Kuching in East Malaysia. Organizers say they hope to bring out 100,000 activists demanding that Najib leave office.

Clean Malaysia.2015

Yunos’s most recent star turn was in May 2012, when a group of retired soldiers joined a protest he had organized in front of the home of Ambiga Sreenevasan, the former head of Malaysia’s Bar Council, to drop their pants at her. He and a group of traders also held a “burger protest,”   claiming losses of up to RM200,000 due to a rally she had organized as then-head of Bersih.


“All of our participants have been informed of the possibility of assaults and they volunteered to participate because we just want peace in our country,” Yunos told reporters, adding that his group would call off its rally if Bersih canceled its protest.

Malaysian Police have taken increasingly draconian steps against critics, arresting 16 students on August 25 for a sit-in near parliament and charging them under Article 124B of the penal code, a nebulously worded amendment against actions detrimental to parliamentary democracy, which carries a potential sentence up to 20 years in prison. Over the weekend, police jailed another 29 people for attempting a protest at a shopping center. That is in vivid contrast to police inaction against Yunos’s demonstration in front of a Sogo department store in which his followers openly threatened violence.

Time to welcome Timor Leste into ASEAN

July 31, 2015

Foreign Affairs


COMMENT: Friends of Timor Leste welcome this initiative by the Jokowi administration to push for the country’s admission into ASEAN. There are no grounds to postpone this decision and one hopes that come November 2015 ASEAN summit in Kuala Lumpur ASEAN leaders will welcome Timor Leste as a full and equal partner.

It is commendable that Indonesia, a former occupier of this little island nation, should take the initiative to raise the matter at the forthcoming August 2015 ASEAN Foreign Ministers meeting in Kuala Lumpur. This will be seen as a final reconciliation move and as formal endorsement of Timor Leste as a sovereign and independent nation state by Indonesia.

I remember  being in Dili several years ago when the question of Timor Leste’s admission into the ASEAN community was the sole agenda for the forum organised by the Malaysian Institute of Economic Research Institute. At the time, Timor Leste was protected by a UN Peacekeeping Force which included a contingent from our Royal Malaysian Police.

There was consensus among forum delegates that Timor Leste’s membership in ASEAN should be a non-issue. We, however, agreed at the time that their officials should use the interim period to learn more about ASEAN processes and work on a campaign to convince their own citizens that ASEAN would be good for their country. I was impressed with these officials for their commitment to and understanding of ASEAN.

I am now glad that the opportunity has come to admit Timor Leste. I am sure that we can look forward to welcoming the people of this beautiful island nation into our community in Kuala Lumpur at the  November 2015 ASEAN Summit. I thank President Jokowi Widodo, Foreign Minister Retno Lestari Priansari Marsudi and officials of the Indonesian Foreign Ministry for this important initiative. Timor Leste deserves our support and encouragement. –Din Merican

ASEAN: Time Leste as 11th Member –A Welcome and Timely Move

ASEAN Community 2015

The Indonesian delegates would raise the issue of membership of Timor Leste in ASEAN during the 48th ASEAN Foreign Ministers’ Meeting in Kuala Lumpur early next month, an Indonesian official said in Jakarta today.

The Indonesian government would persistently attempt to include the new nation into the ASEAN membership, China’s Xinhua news agency reported MI Derry Aman, Director at the Indonesian foreign ministry, as saying.

“Indonesia will raise the issue of Timor Leste membership in ASEAN (at the meeting). It is time for the ASEAN member countries to consider the membership of Timor Leste,” he said at his office.

Indonesia is the first country giving support to the membership as the new nation is located in the Southeast Asia region, according to Aman.

“Indonesia’s commitment is clear that Timor Leste will be an ASEAN member country in the future,” he revealed.

A study on the readiness of Timor Leste on the membership has been carrying out which will determine whether the new nation will be accepted into the Asean membership, according to him.

– Bernama

Foreign Affairs: Obama Stay Clear of Najib’s Malaysia

July 29, 2015


Foreign Affairs:  Obama Stay Clear  of Najib’s Malaysia

by Charlie Camp6ell

Washington is having serious trouble finding dependable allies in Southeast Asia

Obama Najib GolfStay Away from Tainted Malaysian Prime Minister

The U.S.’s “rebalancing” toward Asia has two main pillars: being a counterweight to China and securing a free-trade deal called the Trans-Pacific Partnership. If Washington is to succeed on both fronts, it needs as many friends in the region as it can win. The U.S.’s newest ally is Malaysia, this year’s chair of the 10-member Association of Southeast Nation, collectively a growing market, and, on the surface, a modern, democratic, Muslim country.

In April 2014 U.S. President Barack Obama paid an official visit to Malaysia, the first sitting President to do so in decades, and, later in the year, played golf with Malaysian Prime Minister Najib Razak when both were on holiday in Honolulu. This November, Kuala Lumpur will host the next East Asia Summit and Obama is due to attend.

But recently, all the news coming out of Malaysia is negative. After becoming embroiled in a corruption scandal, Najib on Tuesday sacked his Deputy and Malaysia’s Attorney-General in an apparent purge of critics. British Prime Minister David Cameron is facing a domestic backlash for pushing forward with a visit to Kuala Lumpur this week despite the snowballing controversy.

Here are five reasons why Obama might want to break from Cameron by giving Najib a wide berth.

  1. 1MDB — A Wall Street Journal report has alleged that Najib’s personal bank accounts received nearly $700 million in March 2013 from 1Malaysia Development Berhad (1MDB), a government-owned development fund. Najib has protested his innocence and threatened legal action against the Journal. “I am not a thief,” Najib told Malaysian media on July 5. “I am not a traitor and will not betray Malaysians.” The Police, the local anticorruption agency, the Attorney General’s office and the central bank are investigating the allegations. On July 8, the police raided 1MDB’s office in Kuala Lumpur and took away documents. Even before the latest news, 1MDB was an embarrassment for Najib, who chaired the fund’s advisory board as debts of $11.6 billion were accrued. Such are the suspicions of malfeasance that former Prime Minister Mahathir Mohamad, who ran the country from 1981 to 2003 and has long been considered Najib’s mentor, has repeatedly called for his protégé’s resignation over 1MDB’s alleged mishandling.
  2. Anwar Ibrahim — Najib’s main political rival is once again in prison for a sodomy conviction. Human Rights Watch deemed his five-year sentence handed down Feb. 10 to be “politically motivated proceedings under an abusive and archaic law.” This is the second time Anwar has been jailed for sodomy.
  3. Hudud — Stoning for adultery and amputation for theft are not the kind of punishments meted out by the progressive state that Malaysia purports to be. Yet Najib’s United Malays National Organisation (UMNO) is supporting attempts to introduce hudud Islamic law in the Pan-Malaysian Islamic Party’s (PAS) heartland state of Kelantan, where nightclubs are forbidden and men and women are designated separate public benches. Why is UMNO supportive of recognizing hudud under federal law? Largely because PAS is part of a three-party Pakatan Rakyat coalition that is UNMO’s chief challenger. The other partners — Anwar’s Keadilan, or People’s Justice Party, supported by middle-class, urban Malays, and the Chinese Malaysian–backed Democratic Action Party (DAP) — are strongly against hudud. Many analysts accuse UMNO of cynically fostering a radical Islamic bent to widen rifts in its political opponents.
  4. Shaariibuugiin Altantuyaa — In 2002, when Najib was Defense Minister, a $1.25 billion contract was signed to purchase two Scorpène submarines from French firm DCNS. Altantuyaa was a Mongolian woman who, knowing French, facilitated negotiations as a translator, and then allegedly attempted to blackmail Abdul Razak Baginda, one of Najib’s aides with whom she was also having an affair, for $500,000 over “commission” payments he had allegedly received. Two policemen posted to Najib’s bodyguard detail were convicted of murdering Altantuyaa on October. 18, 2006. Najib denies any involvement.
  5. Prevention of Terrorism Act — Najib campaigned on scrapping the controversial Internal Security Act (ISA) but then immediately replaced it with the equally sweeping Prevention of Terrorism Act (POTA) and Security Offences (Special Measures) Act, or SOSMA. The POTA includes practically the same powers as ISA, including two-year detention without trial, and was dubbed a “legal zombie arising from the grave of the abusive [ISA]” by Human Rights Watch. Najib also vowed to repeal the similarly maligned Sedition Act but reneged after his election in 2013. In fact, in April his government extended the maximum jail term under the Sedition Act from three to 20 years.

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