The adverse impacts of RM55 billion 1MDB global scandal are beginning to bite on the country’s long-term competitiveness prospects.
The ebullient statement by the Minister for International Trade and Industry, Datuk Mustapha Mohamad that Malaysia maintained its top 20 position among 61 global economies in World Competiveness Year (WCY) 2016 cannot hide the fact that Malaysia’s WCY ranking is the worst in the seven-year premiership of Datuk Seri Najib Razak.
Malaysia’s WCY rankings in the past seven years under Najib’s premiership, falling from the 10th ranking in 2010 to the present 19th position, were:
2010 – 10
2011 – 16
2012 – 14
2013 – 15
2014 – 12
2015 – 14
2016 – 19
When Malaysia was ranked No. 12 in the WCY 2014, Mustapha gushed and said that the ranking reflected the progress of the Government Transformation Programme and Economic Transformation Programme and that the government expected a much better performance in the annual WCR ranking in the “next three to five years as more of its initiatives begin to bear fruit”.
This unfortunately has not come to pass, as Malaysia has dropped seven positions since two years ago, and looks to perform even worse with the global crackdown on the 1MDB global financial scandal, which started in Singapore and Switzerland last Tuesday, with more actions likely in other countries which are also conducting investigations into multi-billion ringgit embezzlement, money-laundering and corruption offences related to Malaysia’s sovereign fund.
For the second time in a week, international news agency, Bloomberg, described the 1MDB financial scandal as “one of the worst global financial scandals” which is “taking its toll on the world’s longest bull market run”.
Today’s Bloomberg report said the 1MDB scandal has “spurred the biggest outflow of foreign funds in eight months” as “Malaysia’s benchmark stock index has erased most of its gains after climbing to this year’s high in April”.
It quoted money managers as saying that the prolonged impact of 1MDB is prompting investors to seek out other markets in South-East Asia.
It is time that the Malaysian Government and Cabinet boldly address the headwinds undermining Malaysia’s economy and competitiveness caused by the 1MDB global scandal – and one of the steps is for Najib to relinquish the portfolio of Finance Minister.