Malaysia’s Economic Report Card: Positive

July 26, 2017

Malaysia’s Economic Report Card:  “Malaysia is on the right course”, says Prime Minister Najib Razak

In delivering his keynote address at InvestMalaysia 2017 in Kuala Lumpur today (July 25), Prime Minister Najib Abdul Razak highlighted the economic transformation under his leadership.

He also launched a scathing broadside at the opposition coalition Pakatan Harapan, whose chairperson is his former mentor turned nemesis Dr Mahathir Mohamad.

Among others, Najib claimed that there has been a concerted campaign to send misinformation overseas to damage Malaysia’s economy for selfish political objectives.

“So if you receive these smears, or you read it in publications that do not check the facts properly, please beware,” he told his audience, comprising local and foreign investors.–www.malaysiakini.com

Full Text of Prime Minister Najib Razak’s Keynote Address (Salutations Removed)

Prime Minister Datuk Seri Najib Razak, addressing some 2,000 local and international investors attending the Invest Malaysia 2017 Forum–July 25, 2017

As the Prime Minister of Malaysia, I want to lay out the foundations needed for our nation to be counted among the very top countries in the world. We want that competitive edge, and to be a knowledge-based society – but we must always work towards those goals in ways that are sustainable, inclusive and equitable. No Malaysian must ever be left behind. All must participate and benefit from this amazing journey that we are on.–Prime Minister Najib Razak

Seven years ago, in 2010, I introduced our New Economic Model – right here, at Invest Malaysia. This model was designed to transform Malaysia into a high- income nation, and our country into a more inclusive, equitable and sustainable society, with no one left behind, opportunity made available for all, and the right fundamentals put in place to secure a stable and successful future.

We had a plan of reform – economic transformation and taking the tough but responsible choices. And it is clear today, that, aided by the hard work of millions of Malaysians, the plan has worked and is continuing to work.

Let the facts speak for themselves:

Between 2009 and 2016, Gross National Income has increased by nearly 50 percent, and GNI per capita using the Atlas method increased to US$9,850. Based on the World Bank’s latest high-income threshold of US$12,235, we have narrowed the gap towards the high-income target from 33 percent to 19 percent.

2.26 million jobs have been created, which represents 69 percent of the 3.3 million target we want to reach by 2020. Clearly, we are making the right progress towards those goals.

Inflation and unemployment have been kept low. We have attracted unprecedented levels of Foreign Direct Investment, which shows the confidence the world has in Malaysia.

But no wonder. For our growth has been the envy of the advanced economies, even during years of turmoil in the global economy. This year, the World Bank has upped their estimate. We are expected to record a rise in GDP of 4.9 percent, considerably higher than their earlier prediction of 4.3 percent.

Others have also increased their predictions – Morgan Stanley now says 5 percent, while Nomura’s forecast is for the Malaysian economy to grow by 5.3 percent this year. Only yesterday, the IMF has reviewed their forecast from 4.5 percent to 4.8 percent. And growth is expected to be higher next year. So we are on the right trajectory.

Other sets of figures support confidence in Malaysia. In the first quarter of 2017 our trade, for instance, recorded an increase of 24.3 percent – up to RM430.5 billion – compared with the same period last year.

In March, exports breached the RM80 billion mark for the first time. At RM82.63 billion, it was the highest monthly figure for Malaysian exports ever recorded.

The capital market increased by nine percent to a level of RM3.1 trillion in the first six months of this year, and now ranks fifth in Asia relative to GDP. It continues to attract wide interest from both domestic and foreign investors. In fact, in the equity market, there were net inflows of RM11 billion in the first half of 2017, compared with RM3 billion of net outflows during the whole of 2016.

The Malaysian bond market grew to RM1.2 trillion in 2016, while our Islamic capital market has recorded a hugely impressive average annual growth of 10 percent over the last six years, reaching RM1.8 trillion in June 2017.

Malaysia is also home to the largest number of listed companies in ASEAN. At US$29 billion, Bursa Malaysia also recorded the highest amount of funds raised in the last five years in any country in our 10-nation association.

And our currency, the ringgit, has been described by Bloomberg recently as, and I quote, “easily the strongest major Asian currency this quarter, climbing twice as much as the next best, the Chinese yuan”.

All of this can point to only one conclusion – our economy continues to prosper, and we are stronger than ever as a result of the reforms and the programmes the government has put in place.

The markets, the business community and companies like strength and stability. They want the certainty provided by a government that understands that the prosperity of its people is best served by being business-friendly, and that sovereignty is not compromised one inch by the record Foreign Direct Investment this government has secured.

No. It will help build the new Malaysia of the 21st century, and bring many benefits, from knowledge and skills transfers to a rise in the standard of living for the people.

The business community wants the certainty of knowing that the government is committed to the necessary reforms, and is committed to fostering a culture of entrepreneurship and to transparency, accountability, and good regulation.

On that note, I can announce that the government has, in principle, agreed to the establishment of an Integrity and Governance Unit at all GLCs, and state and ministry-owned business entities, under the supervision of the Malaysian Anti-Corruption Commission, precisely to strengthen the confidence all can, should, and do have in Malaysia.

The international business community knows that it has that certainty – with this government. Indeed, they are voting with their feet. HSBC is investing over RM1 billion to build its future regional headquarters in the Tun Razak Exchange, recognising Malaysia’s increasing status as an international financial and business centre.

Broadcom Limited, one of the world’s largest semiconductor companies with a market capitalisation of nearly half-a-trillion dollars, is going to transfer its Global Distribution Hub from Singapore to Malaysia in 2017, from where it will manage the group’s global inventory of RM64 billion a year.

Huawei, a leading global ICT solutions provider which serves more than one- third of the world’s population, has made Malaysia its global operation headquarters, data hosting centre and global training centre, with a total project cost of RM2.2 billion and employing more than 2,370 people.

Saudi Aramco is investing US$7 billion – that’s its biggest downstream investment outside the kingdom – for a 50 percent stake in Petronas’ Refinery and Petrochemical Integrated Development in Johor. That is the single largest investment in Malaysia, and shows the confidence Saudi Arabia has in our people, our technology, and our ability to be a strong partner with their most important business.

Others who are already here are expanding their operations. Finisar Corporation, a global technology leader in optical communications, will invest a further RM610 million in its operation in Perak – bringing its total investment in Malaysia to RM1 billion.

Coca-Cola has already invested RM1 billion in Malaysia since 2010. It announced in March an additional RM500 million investment to expand the size and production capacity of its plant at Bandar Enstek.

I could go on and on. The point is that the confidence and certainty global businesses have in Malaysia brings jobs, lifts wages and helps our workforce upskill.

It is this government that offers that certainty to businesses both in Malaysia and overseas. The opposition offers none at all. They are in chaos. Two leading members of one party can’t agree if the old opposition alliance still exists in the state of Selangor. “Yes, it does”, says one. “Oh no it doesn’t!” says the other. It’s like a Punch and Judy show!

And the latest leadership structure the opposition announced is farcical, sounding a bit like a return-to-work programme for old-age political pensioners!

It is also cynical and deceptive, with three leaders but no clarity on who has executive power among them, and DAP kept deliberately invisible despite controlling the opposition behind the scenes with the vast majority of their parliamentary seats.

As for their Prime Minister candidate, the opposition is so desperate that they are now trying to make the people believe it will be a nonagenarian – who isn’t even a member of parliament, and whose party has just one seat!

But the truth is that in a democracy numbers don’t lie, and DAP remains by far the most dominant party in the opposition. The DAP leader of the last half century is now hiding behind the man who jailed him, trying to deceive Malays into thinking that former leader is their interim candidate for Prime Minister.

Neither can the word of the opposition be relied on. Just recently, a leading member in one party said that, if Malaysia had such good relations with Saudi Arabia, why had the hajj quota not been increased? But it has! Twice this year, from 22,230 to 27,900 and then up to 30,200.

That’s another example of the benefits this government’s policies bring to the people of Malaysia – in this case, our foreign policy of forging friendship abroad, rather than holding grudges for decades, as that certain former leader still does.

But you won’t hear about the very real benefits from our engagement with Saudi Arabia, China, India or anywhere else from the opposition. In fact, they’ll tell barefaced lies about it, just as they have been feeding lies about the economy and stoking fears of economic disaster in Malaysia.

There has in fact been a concerted campaign to send such misinformation overseas to damage Malaysia’s economy for their own selfish political objectives. So if you receive these smears, or you read it in publications that do not check the facts properly, please beware.

It is not fair to the Malaysian people, and it’s not fair to the business community, both at home and abroad.

They, and you, deserve the truth. So let me tell you what a cross-section of respected international bodies has to say about this government’s record.

The OECD’s most recent economic assessment of Malaysia stated, and I quote: “Malaysia is one of the most successful Southeast Asian economies… thanks to sound macroeconomic fundamentals and its success in transforming its economy into a well-diversified and inclusive one.”

We are ranked second in ASEAN in the World Bank’s Doing Business Report 2017 – and 23rd overall, among 190 economies globally.

We were ranked second among the Southeast Asian nations in the World Economic Forum’s Human Capital Index 2016, up one place from last year’s third spot.

We are ranked third among 190 economies, worldwide, for Protecting Minority Investors, by the World Bank Doing Business Report 2017.

The World Economic Forum’s Global Competitiveness Report 2016-2017 ranks Malaysia fourth among 138 economies for Strength of Investor Protection.

We rank eleventh out of 125 countries in the Venture Capital and Private Equity Attractiveness Index, by the IESE Business School in Spain.

The ratings agency Fitch recently reaffirmed our A- rating and stable outlook.

And a recent survey by BAV Consulting and the Wharton School at the University of Pennsylvania declared Malaysia to be the “best country to invest In”. It said, and I quote, “Malaysia is the clear frontrunner in this ranking, scoring at least 30 points more than any other country on a 100 point scale.”

There is clear international unanimity that Malaysia is on the right course, and the figures and accolades I have reported to you today are the direct results of this government’s steering of the economy through uncertain and choppy global waters.

IMF reported that the resilience of our economy was due, and I quote, to “sound macroeconomic policy responses in the face of significant headwinds and risks”. And these sound policies are the reason why they said that: “Malaysia is among the fastest growing economies among peers.”

And lastly, the World Bank has shown that it agrees as well. In its latest report, issued just last month, it said that the government’s “macroeconomic management has been constantly proactive and effective in navigating near-term challenges in the economic environment”.

It concluded, and I quote: “The Malaysian economy is progressing from a position of strength.”

Does that really sound like the Malaysian economy is failing, and that we are in danger of going bankrupt, as the opposition would have you believe?

I think the World Bank, the OECD and the IMF know what they are talking about – and I’m sure, ladies and gentlemen, that you do too.

We have only arrived at that position of strength because we put in place a far-reaching economic plan; and because we have been unafraid to take the tough decisions to build up the resilience of the Malaysian economy.

We have diversified government sources of income, including reducing reliance on oil and gas revenues from 41 percent in 2009 to 14 percent today. Given the huge drop in the price of oil, just imagine how we would be suffering if we had not done that.

We also needed to widen the tax base, and so, in common with around 160 other countries, we introduced a goods and services tax, or GST. It was not popular, but it was the right thing to do – as every reputable economist has confirmed.

GST has helped us in our determination to steadily reduce the deficit – we are on course to reduce it to three percent this year, from 6.7 percent in 2009 – and GST has been crucial to retaining our good assessments by the international ratings agencies.

Yet the opposition says they would abolish it. Tell me, from where exactly would they produce the RM41 billion collected in GST revenue last year? Out of a hat?

If GST was abolished, it would not just be a matter of a revenue shortfall. The deficit would rise from 3.1 percent to 5 percent. Our ability to fund the construction of schools, hospitals and other essentials would be affected.

Government debt would rise above our self-imposed level of 55 percent of GDP. Our sovereign credit ratings would then be downgraded. Lending costs for all, such as loans for personal use, for business and for housing, would increase. The people would suffer, and they would suffer directly.

One of Malaysia’s prominent independent analysts, the Director of Economics at the Institute of Strategic and International Studies Malaysia, had it right when he said the idea of getting rid of GST was, and I quote, “preposterous” and “economically nonsensical”. “I don’t think anyone in their right mind would want to do that,” he said.

It is another example of what the opposition do when faced with tough decisions: they seek the easy or the populist way out, regardless of whether it makes sense or is even possible. They are not being straight with the Malaysian people.

This government, however, will always be straight with the people and we will always do right by the people. We will always put their interests first, from economic welfare to security. Even if it is not the most popular thing to do, we will not hesitate – because it is the responsible thing to do for the country.

This is also one of the reasons I am not very popular with that certain nonagenarian. Under his leadership many corners were cut, and the Malaysian people had to pay a very high price so that a few of his friends benefited, even when symbols of national pride had horrendous and catastrophic decisions inflicted on them.

But I say to you now that under this government, we are cracking down on crony capitalism. No more sweetheart deals. No more national follies kept going to stroke the ego of one man. No more treating national companies as though they were personal property.

Because it is the people who suffer, and we will not tolerate a few succeeding – and not on their own merits – while the many are denied opportunities, all for the interests of a selfish few.

Now some of you may be thinking that I have not mentioned national companies where there have been issues. At 1MDB it is now clear that there were lapses in governance.

However, rather than bury our heads in the sand, we ordered investigations into the company at a scale unprecedented in our nation’s history. Rather than funnel good money after bad to cover up any issues 1MDB may have faced – the model embraced by a former leader – I instructed the rationalisation of the company.

And it is progressing well. Indeed, many of the assets formerly owned by 1MDB are thriving. One only needs to drive past Tun Razak Exchange to see the new construction for confirmation.

But let’s not forget that while there were issues at 1MDB, certain politicians blew them out of proportion, and tried to sabotage the company, in an attempt to topple the government in-between election cycles.

At the time we knew the real issue was not 1MDB, and that if 1MDB hadn’t been around they would have chosen another line of attack to try to illegitimately change the government. So we stood steadfast, and resolute, in the face of this orchestrated campaign. Because we will not be deterred from our duty, as the democratically elected government, to serve the nation.

Our priorities were made crystal clear when we introduced the concepts of the “capital economy” – which refers to the macro perspective – and the “people economy”, which is focused entirely on the people, the most precious asset of our great country.

We face challenges ahead, of course. We need to improve productivity. We need to raise the levels of education and skills. We need to put innovation and creativity at the heart of the economy of the future.

This why we have partnered with the Chinese technology leader Alibaba to create the Digital Free Trade Zone, the world’s first special trade zone that will promote the growth of e-commerce, and provide a state-of-the-art platform for both SMEs and larger enterprises to conduct their digital businesses and services.

This initiative is part of the digital roadmap which aims to double e-commerce growth from 10.8 per cent to 20.8 per cent by 2020.

But we can only achieve such targets with the people, and by empowering the people. To ensure the dignity of all, we have virtually eliminated poverty, to less than one percent. We are delighted that the income of the bottom 40 percent households has been increasing at a compound annual growth rate of 12 percent since 2009, when I took office.

But we know that cost of living issues hit those with low incomes the hardest; which is why we distributed RM5.36 billion in 1Malaysia People’s Aid, or BR1M, to 7.28 million households in 2016. This is why we ensured that essential foods and necessities are zero-rated for GST.

At the same time, we have many agencies promoting affordable housing programmes, and why we built and restored nearly 95,000 houses for the rural poor last year. Other affordable housing projects include PPA1M, for civil servants; PR1MA, for the urban middle income group; and the People’s Housing Programme for the lower income group, or Bottom 40, with monthly rents as low as RM124.

Infrastructure, too, is absolutely vital. It is crucial for our cities, and life-changing for rural communities. From 2010 to 2016 we delivered 6,042 kilometres of new rural roads, provided 350,000 houses with access to clean water, and connected 154,000 houses to electrical services.

At the end of last year, the first phase of the Mass Rapid Transit project was completed, and recently, the second phase of the Sungai Buloh-Kajang MRT Line has been launched. We now have 51 kilometres of operational line with 31 stations.

This will take 160,000 cars off road, making Kuala Lumpur more liveable. It created 130,000 new jobs, of which 70,000 are direct employment. And best of all, it was completed ahead of schedule and RM2 billion below budget. We are now planning for MRT 2 and 3.

The Pan Borneo Highway in Sarawak and Sabah will be a game changer for our people there, encouraging greater mobility, boosting industry and tourism and creating thousands of new jobs.

In a few years time, we will have the first high-speed rail link connecting Kuala Lumpur to Singapore, which will cut travel time between the two cities to 90 minutes, as compared to more than four hours by car.

And the East Coast Rail Link will bring huge benefits, jobs and a new connectedness to the people of Pahang, Terengganu and Kelantan in particular.

In other areas, we are seeing the benefits of our programmes for all the people. The national pre-school enrolment rate rose to 85.6 percent in 2016, for instance, as opposed to 67 percent in 2009; and we have achieved almost universal enrollment for the five years and upwards age group.

Women have seen great strides as well. The female labour force participation rate has increased from 46 percent in 2009 to 54.3 percent last year. That’s over 700,000 more women in the workforce.

And I am delighted to be able to announce that Malaysia has reached its target of women making up 30 percent of top management – that’s 1,446 women, out of a total of 4,960 in top management excluding CEOs, as of December 2016.

We want to go further, though, and have set 2020 as the date by which we want all public listed companies (PLCs) to have at least 30 percent women at board level. Because we know that when women succeed, we all succeed.

Unfortunately, we still have 17 “top 100” PLCs that have no women at all on their board. This just is not good enough, and I call on these companies to immediately address this lack of diversity. I would like to announce that, from 2018, the Government will name and shame PLCs with no women on their boards.

As many of you will know, SMEs make up 97 percent of businesses in Malaysia, and one of the hallmarks of my administration has been its support and encouragement for this backbone of our economy.

So I am pleased to be able to officially launch today the Leading Entrepreneur Accelerator Platform Market, or LEAP Market, by Bursa Malaysia. This is a new qualified market which will offer an alternative way for small and medium companies to raise funds and grow their business to the next level.

It is in line with our SME Masterplan which aims to raise the share of GDP contributed by SMEs, their numbers of employees, and their volume of exports.

And it is another of the many initiatives that my government has put in place in pursuit of our transformation, and that prove our trustworthiness as a business-friendly government of a vibrant economy.

We want you to see Malaysia as a gateway to ASEAN and the region, and with the eventual conclusion of the Regional Comprehensive Economic Partnership or RCEP, we want you to see Malaysia as a base from which to access almost 50 percent of the world’s population, and over 30 percent of global GDP.

This year, we are celebrating the 60th anniversary of independence. From relatively humble beginnings, we have grown and evolved into a modern economy and society with a record to be proud of. But we are looking to the future as well – which is why we have produced the 2050 National Transformation, or TN50, initiative.

Through TN50, we want to listen to our rakyat. We want them to be heard. And through our dialogue sessions, we are listening to the aspirations of our youth for what they want the Malaysia of 2050 to be.

As the Prime Minister of Malaysia, I want to lay out the foundations needed for our nation to be counted among the very top countries in the world. We want that competitive edge, and to be a knowledge-based society – but we must always work towards those goals in ways that are sustainable, inclusive and equitable. No Malaysian must ever be left behind. All must participate and benefit from this amazing journey that we are on.

We invite you be to part of that journey, and I hope today we are able to shed light on the tremendous opportunities that Malaysia has to offer. We urge to you to look at our potential; to look at the great achievements the government’s transformation programme has delivered, and continues to deliver; and invest in Malaysia.

 

Martin Khor looks back at the East Asian Financial Crisis 1997

July 5, 2017

http://www.thestar.com.my

It is useful to reflect on whether lessons have been learnt and if the countries are vulnerable to new crises.

IT’S been 20 years since the Asian financial crisis struck in July 1997. Since then, there has been an even bigger global financial crisis, starting in 2008. Will there be another crisis?

The Asian crisis began when speculators brought down the Thai baht. Within months, the currencies of Indonesia, South Korea and Malaysia were also affected. The East Asian Miracle turned into an Asian Financial Nightmare.

Despite the affected countries receiving only praise before the crisis, weaknesses had built up, including current account deficits, low foreign reserves and high external debt.

In particular, the countries had recently liberalised their financial system in line with international advice. This enabled local private companies to freely borrow from abroad, mainly in US dollars. Companies and banks in Korea, Indonesia and Thailand had in each country rapidly accumulated over a hundred billion dollars of external loans. This was the Achilles heel that led their countries to crisis.

These weaknesses made the countries ripe for speculators to bet against their currencies. When the governments used up their reserves in a vain attempt to stem the currency fall, three of the countries ran out of foreign exchange.

They went to the International Monetary Fund (IMF) for bailout loans that carried draconian conditions that worsened their economic situation. Malaysia was fortunate. It did not seek IMF loans. The foreign reserves had become dangerously low but were just about adequate. If the ringgit had fallen a bit further, the danger line would have been breached.

Prime Minister Dr. Mahathir Mohamed and Finance Minister Daim Zainuddin introduced selective capital controls and pegged the Ringgit at RM3.80 to USD1.00.

 

After a year of self-imposed austerity measures, Malaysia dramatically switched course and introduced a set of unorthodox policies.These included pegging the ringgit to the dollar, selective capital controls to prevent short-term funds from exiting, lowering interest rates, increasing government spending and rescuing failing companies and banks.

This was the opposite of orthodoxy and the IMF policies (The Washington Consensus). The global establishment predicted the sure collapse of the Malaysian economy. But surprisingly, the economy recovered even faster and with fewer losses than the other countries. Today, the Malaysian measures are often cited as a successful anti-crisis strategy.

The IMF itself has changed a little. It now includes some capital controls as part of legitimate policy measures.

The Asian countries, vowing never to go to the IMF again, built up strong current account surpluses and foreign reserves to protect against bad years and keep off speculators. The economies recovered, but never back to the spectacular 7% to 10% pre-crisis growth rates.

Then in 2008, the global financial crisis erupted with the United States as its epicentre. The tip of the iceberg was the collapse of Lehman Brothers and the massive loans given out to non-credit-worthy house-buyers.

The underlying cause was the deregulation of US finance and the freedom with which financial institutions could devise all kinds of manipulative schemes and “financial products” to draw in unsuspecting customers. They made billions of dollars but the house of cards came tumbling down.

To fight the crisis, the US, under President Barack Obama, embarked first on expanding government spending and then on financial policies of near-zero interest rates and “quantitative easing”, with the Federal Reserve pumping trillions of dollars into the US banks.

It was hoped the cheap credit would get consumers and businesses to spend and lift the economy. But instead, a significant portion of the trillions went via investors into speculative activities, including abroad to emerging economies.

Europe, on the verge of recession, followed the US with near zero interest rates and large quantitative easing, with limited results.

The US-Europe financial crisis affected Asian countries in a limited way through declines in export growth and commodity prices. The large foreign reserves built up after the Asian crisis, plus the current account surplus situation, acted as buffers against external debt problems and kept speculators at bay.

Just as important, hundreds of billions of funds from the US and Europe poured into Asia yearly in search of higher yields. These massive capital inflows helped to boost Asian countries’ growth, but could cause their own problems.

First, they led to asset bubbles or rapid price increases of houses and the stock markets, and the bubbles may burst when they are over-ripe.

Second, many of the portfolio investors are short-term funds looking for quick profit, and they can be expected to leave when conditions change.

Third, the countries receiving capital inflows become vulnerable to financial volatility and economic instability.

If and when investors pull some or a lot of their money out, there may be price declines, inadequate replenishment of bonds, and a fall in the levels of currency and foreign reserves.

A few countries may face a new financial crisis. A new vulnerability in many emerging economies is the rapid build-up of external debt in the form of bonds denominated in the local currency.

The Asian crisis two decades ago taught that over-borrowing in foreign currency can create difficulties in debt repayment should the local currency level fall.

To avoid this, many countries sold bonds denominated in the local currency to foreign investors. However, if the bonds held by foreigners are large in value, the country will still be vulnerable to the effects of a withdrawal.

As an example, almost half of Malaysian government securities, denominated in ringgit, are held by foreigners.

Though the country does not face the risk of having to pay more in ringgit if there is a fall in the local currency, it may have other difficulties if foreigners withdraw their bonds.

What is the state of the world economy, what are the chances of a new financial crisis, and how would the Asian countries like Malaysia fare? These are big and relevant questions to ponder 20 years after the start of the Asian crisis and nine years after the global crisis.

 

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.
Read more at http://www.thestar.com.my/opinion/columnists/global-trends/2017/07/03/the-asian-financial-crisis-20-years-later-it-is-useful-to-reflect-on-whether-lessons-have-been-lear/#EEkW3MiZXu87cFZM.99

Foreign Policy: Najib courts China

November 12, 2016

Foreign Policy: Najib courts China and Abandons traditional ties with the United States and its allies

by James Chin

Najib Razak on Ego Boosting Jet setting Trip to China

Malaysia’s scandal-plagued Prime Minister is finding old friends in Beijing after wearing out his welcome in the West. James Chin looks at whether this is a path more ASEAN countries are likely to follow. 

The Malaysian Prime Minister, Najib Tun Razak, last week took his third official visit to the People’s Republic of China. These sort of official trips do not normally attract much attention, but this one is generating prominent coverage in highly influential newspapers such as the New York Times, Washington Post and Financial Times.

The reasons are obvious – Najib’s arrival comes immediately after the controversial visit of Rodrigo Duterte, the new Filipino president. Duterte made a series of pronouncements in Beijing that caught the Americans off-guard, including his comments about a “separation” from the United States. Many were surprised by Duterte’s statements given that before touching down in Beijing, he was criticising China for its aggressive behaviour in the South China Sea. In fact, the Philippines took China to the International Court of Arbitration over the issue.

Malaysia and the Philippines have overlapping claims with China in the South China Sea and both countries are unhappy with China’s de facto policy of building islands for military use in the disputed waters and using Chinese coast guard vessels to harass fishermen from their countries. It’s well-known that Chinese coast guard vessels regularly sail within 50 miles of Bintulu, the gas-rich town in Malaysian Borneo. Malaysia has sent several diplomatic notes to Beijing on the matter.

Selling Malaysian Assets to cash rich China for political survival while the Malaysian Ringgit takes a beating against the Greenback (Rm4.5 to 1 Usd)

Despite this, Najib has just signed multi-billion dollar deals in Beijing, including the purchase of Chinese-made military equipment for the first time in Malaysian history. Chinese state-owned enterprises will also buy into key Malaysian assets and provide funding for new infrastructure projects such as a new railway line.

Even more surprising was his interview with Xinhua, Beijing’s official mouthpiece, in which he said he was seeking closer military ties. In an editorial in The China Daily, Najib was quoted as saying former colonial powers should not lecture nations they once exploited as colonies, a clear reference to the West.

So, the question is, are we seeing a tilt in Malaysian foreign policy to China from the previous pro-Western position? The short answer is “Yes”, as long as Najib is in power.

Malaysian insiders will tell you that this was the only position Najib could have taken in light of recent events. To understand Najib’s move, one must look towards domestic politics.

Malaysia’s Watchdogs

For the past four years, Najib has been mired in a massive corruption scandal called 1MDB. The story is complicated, but suffice to say that there is credible evidence that huge amounts of money, in the region of US$10 to 15 billion, was scammed off 1MDB, a sovereign wealth fund, and part of the amount, in the region of US$1 to 2 billion, allegedly ended up in Najib’s personal bank account. Earlier this year, the US Department of Justice’s Kleptocracy Asset Recovery Initiative filed court action to recover more than US$1 billion in assets tied to 1MBD. The Department named Najib’s stepson and indirectly named Najib as “Malaysian Public Official No 1” in the proceedings. Several other countries such as Singapore, Switzerland and Luxembourg are also pursuing money laundering charges related to 1MDB. The consequence of all these legal actions is that Najib is longer welcome in Western capitals and some are calling on the US administration to ‘distance’ itself from Najib. Prior to the scandal, Najib could boast that he was the only Asian leader invited to golf with Obama in Hawaii, the President’s home state.

Related to the political fallout is investment from the West. The ringgit has fallen more than any other currency in the region against the US dollar in the past three years. It is obvious that a major part of the reason for this is a lack of confidence in the Najib administration. To restore confidence in the economy and kick-start foreign direct investment, Najib can only turn to one country: China.

China has the money to invest heavily in Malaysia, but more importantly, it does not care about Najib’s alleged corruption allegations or governance issues. For the Chinese, the bigger picture is the ongoing rivalry with the US for influence in the ASEAN region. The Chinese see the US as trying to block their influence by pursuing the Trans-Pacific Partnership Agreement and pushing ASEAN to collectively confront China over the South China Sea. China has consistently refused to deal with ASEAN on the South China Sea issue, insisting that the solution lies in bilateral negotiations between the claimant countries. China also scored a victory-of-sorts when many ASEAN countries signed up for the China-founded Asian Infrastructure Investment Bank despite the US openly lobbying against it.

China’s investments, including buying 1MDB assets, will allow the controversial company to partly square its accounts and the shortfall from the missing money.

The added bonus for Najib is that he can show the domestic Malaysian audience that the “next” Superpower, China, will give him a red carpet treatment even if the West has side-lined him over the corruption allegations. Najib and the Chinese are also going to great pains to remind the international audience that it was Najib’s father, Tun Razak, Malaysia’s second prime minister, who opened-up diplomatic relations with China. Thus, according to Beijing, Razak’s son Najib, easily qualifies as China’s “old friend”. In turn, Najib has described China as a “true friend and strategic partner”.

With such “old friends” who needs the meddling West with its “lectures” on good governance, human rights and corruption?

The long-term winner in the current saga will be Beijing. As the south-east Asian region becomes more and more dependent on China for its development funds, tourism and trade, more and more ASEAN countries will start to tilt towards Beijing. This is especially true if Donald Trump becomes President on Tuesday.

Professor James Chin is Director of Asia Institute, University of Tasmania. He is also a Senior Fellow at the Jeffrey Cheah Institute in Malaysia.

This article is published in collaboration with Policy Forum — Asia and the Pacific’s leading platform for policy discussion and analysis.

http://www.newmandala.org/najibs-china-legacy/

 

Haris Ibrahim of ABU Fame

September 1, 2016

by FA Abdul

http://www.freemalaysiatoday.com

Haris Ibrahim of ABU (Anything but UMNO) Fame

A few weeks ago, during one of my usual breakfast get-togethers with my close friends, I saw a familiar face walking towards an empty table next to us. It was Haris Ibrahim, a social activist whom I have a very high regard for. For a moment, our gazes crossed and I took the opportunity to smile at him – he nodded and returned my smile.

Throughout my conversation with my girlfriends, I kept an eye on Haris, for I am truly and utterly in awe of him and his incredible personality. Truth be told, I secretly hoped he would turn to look at me too – which he never did (total potong stim on my part).

Anyway, being a Facebook queen, on my way home, I updated my status. It read: “Met Haris Ibrahim at my usual breakfast place and I feel like a little girl who just met Superman.”

In a matter of a few seconds, comments started pouring in. Many of my Facebook friends had very nice things to say about Haris while others shared stories about his dedication to his cause and his courage. One friend, who claimed not to know Haris, was ‘educated’ by means of a long thread of comments on who this ABU champ was.

What happened next totally blew me away. “Ting!”

A few notifications on Messenger informed me about screen shots of my status that had been sent to Haris! Apparently some of them were mutual friends of his. Ayoo kadavuleh, this is gonna be a major embarrassment, I thought.

An hour later, a text message arrived: “Fa, Haris is asking for your convenient time for tosai meet up.” I almost died. And so we did meet up for tosai one fine morning.

Haris was not as gregarious as I thought he’d be – he was a lot more. Star-struck, I utilised our breakfast time to ask him everything I wished to know. This was not going to be an encounter I would waste. We spoke about a lot of things that morning. Race, religion, education, discrimination, corruption, power abuse, hypocrisy, bigotry, faith, trust and hope.

As we spoke about our family and children, I asked him how he separated his time for his children with that of his struggle to fight for what he believes in.

“I have always found it tough to carry out my responsibility as a mother and still be able to find time to do my part in fighting for what’s right for the country. How do you do it, Haris, how do you find the time to be a good father to your children?” I asked while he took a sip of his kopi.

With his natural charm, Haris replied: “I have 10 million children…”

In just one short sentence, he answered a very tough question. Clearly, not everybody is capable of doing what my Superman does. To dedicate your entire being for one single purpose takes a lot. And to be ready to give away your freedom for your struggle is a whole different thing.

Yes, Haris is currently waiting for his appeal following his eight-month prison sentence by the Kuala Lumpur Sessions Court for allegedly delivering a seditious speech in 2013.

I tried imagining being in his shoes – I could think of a thousand things I would be doing before I ended-up facing four walls for eight long months. Spending time with my family, friends, traveling within the country, watching movies, going for a karaoke session, hitting the beach, eating all the food I love – the list would never end.

But there he was, answering calls in between our conversation, still attending to people who needed his expertise as a lawyer. Clearly, this man never gives up fighting.

Talking to him, time flew by. After a few more rounds of drinks, it was time to leave – and I managed to ask him one final question.

“I don’t believe in our current government,” I said, “and I fear our Opposition is no different. So what do we do?”

Haris tilted his head, raised his eyebrows and while looking sharply at me, he said, “Look to your right. Look to your left. If the one on your right is not reliable and so is the one on your left – then it is time to take a step forward.”

Profound words indeed. Profound words from my Superman.

Malaysia: No end to discrimination of the Other

August 19, 2016

by Farouk A. Peru

http://www.themalaymailonline.com

One of the most despairing things I dread reading every year is news on how members of the rakyat are denied their rightful places at local universities.

They do everything right, tick all the boxes but when it comes to reaping the fruits of their labour, they are short changed. Instead, their rightful places are given to Bumiputera students. Those whose grades are good but not comparable to those who score stellar grades but are not of Bumiputera status. My question to my fellow Bumis is this: Can we live with ourselves while supporting this policy?

I was moved last Saturday when I read the plight of a young Indian woman. She scored straight As in her UPSR and PMR. In her SPM, she did equally well and she was also a high achiever in her extracurricular activities. Yet she was denied a place to do dentistry and was offered a place to do bio-medical engineering.

Some may say she has a lot to be grateful for and I would agree but that is hardly the point. The point is rather to ask the question: “Is she getting what she deserves?” Would she get the same offer if she was a Bumiputera?

If we are indeed practising pure meritocracy, then the only way this young woman would be denied her place is if there were other candidates with equally perfect scores and who did equally well in extracurricular activities. This is highly doubtful. What is probably the case here is that she is the victim of the racially segregating quota system. Her non-Bumi status had put her at a disadvantage.

As a Malay-Muslim, I am appalled by such policies. It is not because I do not want people of my own socio-culture to progress. Of course I do and we have over the decades. There is now a clear strata in Malay-Muslim society who are highly educated professionals and clearly above and beyond the abysmal politics of UMNO and PAS.

However, the majority of us are still clinging to the crutches to which we have acclimatised ourselves over this time. Remember the protest by UITM students when it was suggested non-Bumis be allowed entry? It is that kind of mentality that impedes Malay-Muslims from achieving further progress.

Then there is the matter of religion. As Malay-Muslims, our Islamic identity is becoming increasingly important to us.

In Malaysia, we are proud of our high place in the Islamic index. We have grand mosques and our lifestyles are becoming more and more Arabicised (or Islamised, as the priesthood would have us believe). But are segregating Bumiputera policies actually Islamic?

Let us consider the following: The Quran is replete with commands to believers to perform acts of goodness. In no less than four places (Chapter 2 Verse 83, 4/36, 6/151 and 17/23), this command is connected with the actual worship of Allah which is the main point of the Quran.

Yet, in not a single of these commands is there a pre-condition that good deeds be towards believers or even Muslims. Rather, good deeds are generally to parents (not one’s own necessarily but parents in general), near neighbours, orphans, the socially stagnant and travellers.

Not only that, there is an entire chapter of the Quran (Chapter 83, Al-Muthaffifeen) which is dedicated to the event in which all our deeds is accounted for. The eponymous “muthaffifeen” is a unique word used only once in the first verse of this chapter.

It refers to people who extract a particular measure of benefit but refuse to give the full measure of effort required. Needless to say, the Quran is against such an act. It tells us that we will made to pay for this sin on Judgement Day.

So while we expect non-Muslim Malaysians to contribute to the development of the nation, we refuse to give them equal rights. We will have to answer for this disparity on the day of reckoning, according to the Quran.

It is very clear from these and numerous other principles from the Quran that there is simply no justification for racialised policies. Yet, we have not even heard a peep from the Islamic priesthood about them.

While they are busy pronouncing Pokemon Go as forbidden and making sure wives submit to their husbands even while riding on camels, they are deafeningly silent on this very fundamental teaching of the Quran. I urge Malay Muslims to ask these priests at every opportunity.

Malay Muslims need to realise that these preferential policies not only hurt our relationship with the rakyat, they also compromise our religion as well as our capacity for competition. The sooner we let go of these policies, the sooner we can take our place as members of the rakyat alongside the others.

Message from a Friend overseas for 2016

December 19, 2015

Sarawak–The New Political Battleground

I thought I should share this note I got from a dear old Malaysian friend and contemporary after I responded to his message for Christmas and the Near Year (2016). I asked him to tell me what is happening in our country which used to be an oasis of racial harmony (apart from May 13, 1969) and a high-flying geese economy. I wanted his professional views because being some distance away from negara ku tersayang, he can be balanced and less angry than I. Here is it is for your consideration and comment. –Din Merican

Dear Din,

On Politics, Race and Religion

The current scene and trends are troubling. The use of draconian laws to silence everyone who does conform has become most common; nothing shocks anymore. The latest effort to silence Farida of G25 is a step too far. The passing of the NSC bill is a most far reaching action. Its membership establishes Ketuanan Melayu in both name and practice. Najib has essentially staged a coup in order to hang on at all costs. He has bought over the UMNO Party chiefs with presumably the proceeds from the “donation”. They are silenced.

The Pinkees

The NSC composition also sends another message: it is a one race body. It would seem that advocates of Ketuanan and the Ugama purists in JAKIM are  now the hand maidens aiding him to buy over the older generation of rural dwellers. The seduction and co-option of  PAS President Ustza Hadi  Awang further closes the circle.  Nothing now stands in the way of acquiring total power.

I am quite pessimistic about GE 14.  The Pakatan Harapan have blown their chances with their petty squabbles. The so-called strategists in Parti KeADILan Rakyat (PKR)  and Democratic Action Party are going to sell the store by agreeing to further gerrymandering – they are totally naïve in believing that additional seats if created will come way. Here the first time  politician Dr. Ong Kian Meng and his boys are to blame.

This latest cryptic call to plan ahead beyond 2020 is also ominous. It smacks of constitutional changes not of economic adjustment. Civil society is much too weak to provide checks and balances while media have been muted. Those who naively believe that Barack Obama or the United States will apply pressure are mistaken. The US are content to leave the man in power so long as he locks up a few of the ISIS types and indulges in remaining on their side over the South China Sea issues.

The Economy Stupid

The fundamentals are strong- What Fundamentals?

Beyond the political mess, there is the problem with the economy. We are once again a commodity producer and thus truly stuck in the middle-income trap. We are no longer competitive in manufacturing; nor do we have any means to move up the value chain as we lack human capital to get into high value added activities.  In any event the GLCs are like dinosaurs  that stifle innovation and are themselves unable to move forward. Their corporate honchos  are quite happy to engage in  rent seeking while enjoying their very generous perks of office. Other domestic investors are unable to lead; FDI is not coming in given the political and economic scene.  In the meanwhile indebtedness is becoming dangerous. The Federal Government debt may be at 55% of GDP with another 30% or so being off budget. To this one needs to add the contingent liabilities— not clearly announced. The corporate sector too has large debt liabilities. On top of all this household debt is of the order of 88%. And yet  that disappointing Bank Negara Governor Dr. Zeti Aziz says: “The fundamentals are strong!!”

Will we get out of this hole that we have dug? The only hope – somewhat dim—is that the Rulers may take matters into their hands. However they will need to be encouraged. They are likely to be responsive to urgings from the middle urban ground (G25? BERSIH, and like-minded groups?). Civil society could play a role in this regard.

2016 may mark a turning point. Perhaps things will get worse before they get better.  Let us prayer that we shall avoid a collapse. Selamat Hari Natal dan Tahun Baru to you, Dr. Kamsiah, and all your friends and associates on this blog.–Your Kawan Lama.

My Songs of Defiance-Thanks, Sammy Davies Jr.