It’s a sham! It’s a show! It’s a Shame – it’s our Sick Economy!

By Martin Jalleh

· “The present PM has made some helpful gestures towards liberalising the economy…These initiatives, however, must do more than skim the surface of what must be done. (7 January 2010)
· “Malaysia is a sham democracy, one which existed only in name but grievously compromised in substance, reality and fact… Reforms could not be expected from the incumbents in power.” (8 February 2010)
· “Our economy has stagnated. Productivity remains low. We now lag our regional competitors in the quality of our people, when we were once leaders in the developing world.” (23 March 2010)
~ Tengku Razaleigh, former Finance Minister and veteran leader of Umno

Below is a glance at the sad and scandalous scenario of how the country’s once strong economy has fallen sick with the government putting up a big show (performance now!) of economic reforms in 2010 – full of sound and fury signifying nothing.

1. Flight in capital

The year 2010 began with the bad news that Bolehland had suffered disastrous capital flight in the previous year. The Asia Sentinel, an online news website, on 11 January 2010, quoted investment bank UBS as revealing that in 2009 foreign exchange reserves fell by close to 25 per cent even though the country continued to run a huge surplus on the current account of its balance of payments.

The USB described the situation as “bizarre” and contrasted Malaysia with other countries with large current account surpluses – Thailand, China, Taiwan, Singapore, and Hong Kong – which have seen their reserves increase – as should be expected.

AS suggested that the massive outflow could be partly due to the government’s state-controlled enterprises, headed by Petronas, which “has been spending its billions in profits around the world as it attempts to become a major global player – at the expense of Malaysian citizenry in general and the oil and gas producing states in particular.”
The newspaper added the capital flight was also due to “the outflow of local private capital (which) has been taking place on an unprecedented scale in response to political instability, massive official corruption and discrimination against non-Malays.”

“Often with the exodus of money goes an exodus of talent as highly skilled persons disadvantaged by race or, as in the case of some Malays, disgusted by local corruption or primitive religious authorities, take themselves and their capital to Australia, Canada, India, China, etc.”

2. Foolish denial

In a report on Malaysia released at the end of January 2010, the Hong Kong-based Political and Economic Risk Consultancy (PERC) warned: “Events of the past month give the impression that pressures are building and the entire situation is becoming much more unstable” (Malaysian Insider, 10 Feb. 2010).

Since New Year’s Day (2010) “the situation in the country is becoming increasingly unstable; a group of elite minorities were dominating the national agenda to the extent that it was hurting Malaysia’s attractiveness to investors…”

Lim Kit Siang then asked for Najib’s response to the PERC’s “blistering” report and the prospect of Malaysia becoming even more uncompetitive internationally. Najib chose to be silent but his deputy Muhyiddin Yassin called the report “part of a hidden agenda to destabilise the country”.

Evidently, Muhyiddin chose to ignore Second Finance Minister Husni Ahmad Hanadzlah’s revelation made in December 2009 that the country’s economy “has been stagnating for the past decade (in the wake of the 1998 Asian financial crisis)”.

3. Flip-flopping on the NEP

On 30 March 2010, the PM unveiled the much-awaited New Economic Model (NEM) which will “transform the nation into a high-income economy that is sustainable and inclusive and will position the nation on the right path towards attaining developed nation status by 2020”.

Dr Jeyakumar Devaraj, an Aliran member and Sungai Siput MP, praised the NEM’s policy statement and in particular the “uncharacteristic honesty about the current situation of the Malaysian economy”. He added that “its policy thrusts have been lifted from the Pakatan Rakyat’s (PR) prescription for reform”.

He, however, argued that the NEM is “a deeply-flawed policy”, “essentially the recycling of policy prescriptions from the neoliberal school”. He warned that planning for the future must not be left to the PM and the NEAC who “are clearly still stuck inside the old and tired neo-liberal box”.

As the months passed, Najib backtracked on the “promising” NEM. He succumbed to strident objections from extremist right wing groups, such as Perkasa, to the NEM. He flip-flopped over the 30 per cent Bumiputera equity target and even called the NEM a “trial balloon”.

4. False alarm by Idris Jala?

On 27 May 2010, Idris Jala, Minister in the PM’s Department stunned the nation with his sudden and dramatic warning that we have a time bomb in our hands – we could go bankrupt by 2019. We either swallow subsidy cuts or risk having a “Greece” staring at us!

Some felt Idris’ doomsday scenario had a sobering effect. Others were sceptical. Some said it was just a scare tactic or just some stunt or drama by Idris – to sidetrack the nation from the real issues. Some Umno warlords told the PM to give Idris the sack; he was asking them to commit political suicide!

DAP supremo Lim Kit Siang was sharp enough to point at Idris’ failure to address the root causes of the national economic crisis instead of just dealing with its symptoms. Idris failed to focus on the big ticket items – corruption, mismanagement, extravagance and lack of accountability. (See sections on “A leap into greater losses” and “Malpractices, mismanagement and misuse of funds”.)

Idris proved that he was a typical politician, though he says he is not one, by claiming that his statement was taken out of context. The PM stayed far away from Idris’ apocalyptic speech. He made the CEO of Pemandu a sitting duck whilst he ran short of political will to seriously address the subsidy syndrome.

Things turned out the way DAP’s Tony Pua had predicted: “I don’t think the Najib administration has the courage to carry out the cuts…not across the board and not as Idris planned it. They’ll probably stagger the subsidy cuts, one every three to four months, as long as there is no by-election.”

Then came another slap on Idris’ face. His warning was based on the country’s total subsidy of RM74 billion, equivalent to RM12,900 per household last year. Najib’s Finance Ministry had the country’s total subsidy at only RM18.6 billion, equivalent to RM3,246 per household.

The contradictions between the PM and Idris would become more and more glaring. For example, three days after the dire warning that the country could become bankrupt by 2019, the PM declared: “Malaysia can be a developed nation by 2020, if the country registers a continuous six per cent annual growth”!

5. Foreign/local investors stay away

In mid-July the released UN’s World Foreign Investment Report (WIR) 2010 revealed the following:
· Malaysia’s FDI plunged 81 per cent from US$7.32 billion in 2008 to just US$1.38 billion in 2009, trailing behind neighbouring countries such as Thailand, Indonesia, Vietnam and Singapore.

· Malaysia was the only Asean country to experience negative FDI flow in 2009.

· The country’s 2009 FDI fell lower than the Philippines, which attracted US$1.95 billion, while Singapore raked in the most — more than US$16 billion. (It was the first time ever that Malaysia attracted less investment than the Philippines!)

Pas vice-president Mahfuz Omar said that the plunge in foreign investment in 2009 proved that Najib had failed miserably in his Key Performance Indicators (KPI) and National Key Results Area (NKRA) (meant to gauge governmental performance) as PM and Finance minister. He should resign gracefully.

According to Mahfuz, the main factors responsible for the dismal performance in attracting investors were:
· Rampant corruption, bureaucratic red-tape and money paid to middle men.

· Interference and a state of “lawlessness’ in the judiciary. The Lingamgate case, the BN’s power grab in Perak and Sodomy II gave the impression that Malaysia practised law of rule and not rule of law.

· Government’s mismanagement of giant government-linked-companies such as Sime Darby, Felda and Maybank had hurt investor confidence.

DAP’s chief economist Tony Pua had this to add: “Despite Datuk Seri Najib repeatedly insisting that the era where ‘the government knows best’ is over, his administration continues to crowd out private investments by directly awarding mega-projects to government-linked entities, such as the Sungai Buloh land to an EPF joint venture with the government, or the Sungai Besi airport redevelopment, to the 1Malaysia Development Fund.”

“Without these necessary and critical changes to the government’s economic policies, the Malaysian economy will only continue to drift away from the radar of both local and foreign investors,” he said.

Nothing really changed in spite of the warnings of the WIR in July 2010. One could see this clearly in a statement which came out in December 2010 by Ramon Navaratnam, who warned that the Najib administration would face continued investor scepticism until it became more explicit on how to make Malaysia a high-income nation.

The former senior civil servant who had helped Tun Abdul Razak draft the NEP said the second New Economic Model (NEM) report was filled with good intentions but “very short” on specific measures. He added: “And therein lies the problem… Investors, after waiting so long, find they’re back almost to square one in terms of the specifics and policy proposals they can act on.”

6. Fine performance by PR

According to Penang Chief Minister Lim Guan Eng, the combined four Pakatan Rakyat states of Penang, Selangor, Kedah and Kelantan beat the 9 BN states together in terms of investments in 2010.

They succeeded in attracting RM25 billion in investments comprising 53% of Malaysia’s total investments of RM47.2 billion in 2010. Despite the financial constraints and limitations imposed by BN, PR showed good governance.

For the first time in history, Penang was the new champion of investments in Malaysia, replacing the previous 2009 champion Sarawak by recording RM 12.2 billion in 2010 as compared to Sarawak’s RM3.9 billion.

Lim took pride in saying that Penang’s success in drawing in RM12.2 billion was an extraordinary vote of confidence by both foreign and local investors in the PR state government of Penang. The No.2 state after Penang was another PR state of Selangor with RM 10.6 billion in investments.

7. Farcical reforms

2010 was a year which revealed how sick the country’s economy has become with the PM and his government trying to cure it by drowning it with acronym soup — GTP, NKRAs, NKEAs, SRIs, NEM, ETP, EPPs, SRIs and more.

Alas, Najib would end up looking so silly at times. When commenting on the Budget for 2011, Sakmongkol AK47, the pen-name of Mohd Ariff Sabri Abdul Aziz, a former state assembly member of Pahang who is an Umno member, said that Najib was “suffering from Acronymitis”.

“It’s a new disease I suppose which has become fashionable since Najib took over from Pak Lah. And we are seeing its deleterious effects when the PM/Finance Minister prepared the 2011 budget recently. He is suffering from an economics heatstroke I think.”

He provided an excellent example: What has the construction of a 100-storey tower got to do with the government budget? Or for that matter the construction of the RM43 billion MRT, the RM10 billion mixed development of Sungai Buluh, the RM26 billion construction of the KLIF hub, RM10 billion worth of highways?

Idris Jala will be remembered as the man who at one moment would shake the nation with his apocalyptic message and at the very next moment suffocate the nation with a slew of grandiose plans through his slick powerpoint presentations. He would be sadly accused of being an spin doctor for Umno.

The target for private investment set by Najib through the ETP, 10-MP and Budget 2011, stood at RM115 billion at an increase of 12 per cent every year until 2020. But in spite of the slew of acronyms, the showcase of plans, projections, and programmes, and the spate of privatised projects, there were no significant signs of foreign and domestic investor confidence.

On 24 December 2010, the Malaysia Chronicle reported that a survey showed Najib’s popularity dropping by a significant amount – from 72 per cent to 69 per cent cent, and this had his minders scrambling to spin away his loss of approval among Malaysians.

“The artificial public relations and false promises are starting to come unstuck. It is also highly likely the actual results are much worse because you can be sure the survey-takers would have tried their best to be kind to him,” commented PKR vice president Tian Chua.

The poll was conducted by the Merdeka Centre and suggested that the lower approval rating was due in part to a reduction in government subsidies for fuel and sugar. The poll also found that few Malaysians understood or appreciated his flashy RM1.4 trillion Economic Transformation Programme.

Many felt the government was refusing to do what was necessary to save the economy. As was plainly put by Tengku Razaleigh, who blamed the Najib administration for crippling the national economy by putting politics ahead of policy reforms, “only political change can bring economics reforms to Malaysia”.

The Umno veteran urged the PM to end race-based affirmative programmes in the NEP, drawn up 40 years ago, which he said was a cover for “corruption, crony capitalism and money politics”.

Before the year ended Opposition Leader Anwar Ibrahim accused the government of bullying the poor by failing to impose similar subsidy cuts on “subsidy monsters” like the Independent Power Producers The latest price hikes on daily essentials was clear proof of the BN’s “double standard” and “flagrant inconsistency”.

(The above article first appeared in the latest issue of Aliran Monthly. It is part of a 30-page comprehensive review of the year 2010.)

  1. #1 by Godfather on Monday, 7 March 2011 - 7:21 pm

    This is an amazing story of deception, one which the majority will unfortunately realise only when the country goes bankrupt.

    The MRT is now pegged at RM 50 billion – and rising. Even at the inflated ridership numbers, the cost per passenger carried is simply ridiculous. They are trying the Hong Kong model where the MTRC is actually a property company – and 90 pct of its profits are derived from property development. It works in Hong Kong – and Singapore – where land is scarce, and property prices are about the highest in the world. At RM 300 – 500 psf for condominiums around the Klang Valley MRT route, the deal just doesn’t add up. However, the MMC/Gamuda consortium – UMNO’s cronies – doesn’t care as it is just a delivery partner, and has no financial risks in the project.

    The delivery partner has already decided on who gets what – reserving the choicest subcontracts for the consortium.

    All the talk about transparency, competitive tenders, etc is pure bullsh!t.

  2. #2 by rockdaboat on Monday, 7 March 2011 - 7:24 pm

    Our leaders like to dream, they cannot accept facts that are not in our favour. Denial, denial, denial, shiok sendiri, shiok sendiri, shiok sendiri – these they are good at.

  3. #3 by yhsiew on Monday, 7 March 2011 - 8:58 pm

    The government is using GTP, NKRAs, NKEAs, SRIs, NEM, ETP, EPPs and SRIs to buy time. If the foundation of the country’s economy is shaky, the system (economic) will eventually collapse, no matter what cosmetic dressing the government tries to put on the sick economy.

  4. #4 by KL Dude on Monday, 7 March 2011 - 9:43 pm

    Say whatever you want but the problem is the Rakyat is not getting all these messages and BN continues to win all by-elections with massive landslide victories. What is PR doing all the while to counter all those rubbish in the MSM ?

    Rurals folks mostly are not internet savvy & they rely on the MSM as their bread & butter knowledge, so if PR really want to win the coming GE, their efforts must be tripled to get the message across those rural folks, or not stop dreaming about even denying BN 2/3 majority this time round.

  5. #5 by Godfather on Monday, 7 March 2011 - 10:07 pm

    This is absolutely ridiculous. I write “BS” and my message gets moderated. I type “bullsh!t” and it gets moderated too.

    What do you take us for ? A bunch of monks that cringe at every unsavoury word ? Are we little kids that need to be moderated at every turn ?

  6. #6 by tak tahan on Monday, 7 March 2011 - 10:59 pm

    Apco should make the acronym chicken soup recipe much,if not, a little easier to memorize like A for GTP,B for NKRAs,C for NKEAs and so forth till Z the last standing order on behalf of TOTALLY STUPIDITY SOB.Poor thing for the rest of the politicians and the populace to regurgitate in yet more to come its offspring,knowingly there would be no any closer dim hope of the outcome from its purported intention to implement.They are all jokers for us to laugh at and be entertained.PPP BBB EEE GGG HEHEHE HAHAHA HOHOHO

  7. #7 by tak tahan on Monday, 7 March 2011 - 11:18 pm

    Najib is a spoilt,incorrigible child morphed en-route escalator into adulthood(instead of ladder) without determinism,seriousness and humility to be qualified as a supposed to be a exemplary leader.Big shame.Big loser.

  8. #8 by boh-liao on Monday, 7 March 2011 - 11:39 pm

    What sick economy? With oil price record high, M’sia has lots n lots of oil money
    With price of palm oil so high, M’sia has lots n lots of money fr d golden crop
    No worries, there will b $$$ 2 bribe voters, as shown in d latest 2 buy erections
    FLOM is waiting 4 d golden opportunity 2 call 4 d next GE, NR will say aye aye sir

  9. #9 by raven77 on Tuesday, 8 March 2011 - 12:27 am

    As long as there is money floating in the Malaysian market…..political change will not come….

  10. #10 by monsterball on Tuesday, 8 March 2011 - 2:36 am

    It is about the survival for Najib and UMNO B that the art to fool all Malaysians has to be carry on not stop.
    It is about Najib’s life and his party winning at all cost..and it seems working well for him right villages and small towns…as seen in the recent few by-elections.
    And you can see…he dare not commit to the 13th GE date…..with all his so call great 72% support……shows clearly…Najib have doubts over all the good news…..for he split personality is haunting him day and night..with Atlantuya ghost following him….when all his pawangs stop working after few weeks.
    I bet you..he wears talisments…to protect him from a ghost.

  11. #11 by boh-liao on Tuesday, 8 March 2011 - 3:13 am

    Don’t underestimate NR, he is no sleepy AAB
    With talented n beautiful FLOM by his side, he is set 2 soar, up up n away bashing PR

  12. #12 by tak tahan on Tuesday, 8 March 2011 - 4:03 am

    Haiyoh,monsterball and boh-liau,the former scared me with ghost storey,the latter boost me up with up up an away tantalizing beauty and the beast script.How to sleep,my friend?4 am you know?Good night.

  13. #13 by tak tahan on Tuesday, 8 March 2011 - 4:10 am

    Careful of the moderator yo.Don’t play play.Once bitten twice shy,isn’t it that seem to be?Ha ha

  14. #14 by k1980 on Tuesday, 8 March 2011 - 7:05 am

    The BN in its campaigning uses the 1Malaysia slogan to mean different things to different groups of people,…When campaigning in the Malay areas, BN speakers say this 1Malaysia is for development and to promote ketuanan Melayu,….When talking to minority communities, they talk about importance of unity, and how we have to be together, as we are all Malaysians.”

  15. #15 by boh-liao on Tuesday, 8 March 2011 - 9:03 am

    Well, d hard truth is lots of rakyat/voters/bosses willingly allow UmnoB/BN 2 fool them all d time n happily continue 2 vote 4 UmnoB/BN, boh wah kong

  16. #16 by Godfather on Tuesday, 8 March 2011 - 9:25 am

    Do we all know what a SHAM is ?

    It is allowing inflation to spiral out of control while:

    1. They announce a RM 36 billion MRT project which is now widely acknowledged to have gone up to RM50 million (and counting).

    2. They announce a RM 6 billion patrol boat contract which is now expected to escalate to RM 7.2 billion.

    3. They announce a RM 7.55 billion armoured vehicle contract for 257 vehicles, or about RM 30 million per vehicle.

    The SHAM is that the rakyat is being made to pay for all these while the cronies continue to enrich themselves.

    I have said it before – the SHAM can only end when the country goes bankrupt…and it will be quite soon.

  17. #17 by Godfather on Tuesday, 8 March 2011 - 9:27 am

    sorry, the MRT project is expected to cost RM 50 billion (and counting). I’ve also lost sight of the number of zeros….

  18. #18 by tak tahan on Tuesday, 8 March 2011 - 9:43 am

    9 zeros after the first digit,Godfather.Thanks for remindng me previously.

  19. #19 by Godfather on Tuesday, 8 March 2011 - 10:37 am

    Hahaha….it is easy to lose count after the first 9 zeros….and yet we still have people of all races living below the poverty line. It’s criminal, absolutely criminal.

  20. #20 by dagen on Tuesday, 8 March 2011 - 11:20 am

    Lets face it. Middle eastern people are smarter than our local folks. There, they can see injustice. And they can also smell injustice. A large number in our midst here actually cant do both. A rotting fish head might even smell good to them, if they saw it!

    And yet genetically speaking middle eastern people are no different from us. So what is going on? The answer lies with umno’s decades of fear-mongering and active ignorance/mediocracy promotion. In short, umno made us stupid. For those who did not become stupid, they were denied opportunies to progress; and were thereby forced to leave the country.

  21. #21 by dagen on Tuesday, 8 March 2011 - 11:33 am

    Hoi, where is that Mr Low of penang good friend of paris party goer champaign smasher cruise lover G8 live-er of high-life and close-friend of numerous arab funds.

    Errr. I think that final bit is a little off now. Cronies of dictators who have fallen must also have fallen. Its inevitable. So hey jib where do you think your fund to develop the sg besi air base is going to come from now. And for that matter, the funds for all the other mega projects? Singapore?

  22. #22 by Loh on Tuesday, 8 March 2011 - 11:40 am

    Godfather :
    sorry, the MRT project is expected to cost RM 50 billion (and counting). I’ve also lost sight of the number of zeros….

    MRT at 50 billion ringgit is for the benefit of the people in the Klang valley, and perhaps fifty thousand workers would use it to work. 50 billion equals fifty thousand time a million. Thus the government is spending a million ringgit to each worker who could not afford to use car. Who can accuse UMNO for not caring? NEP was said to help the poor rural Malays, numbering perhaps 500,000 families. Some 889 billion ringgit had been transfered out within the last ten years, and god knows how much since the advent of NEP. The 500,000 families would have a share of 1.778 million ringgit each, with that illegal outflow alone, and they would be richer than many other households. UMNO wants to continue the same policy, and Mamakthir said the jelly-tongkat is still useful. They certainly are good, in name for those who are proud to be Malay. Mamakthir said that he was proud to be Malay though he has Indian blood. Trouble is others cannot claim to be bumiputras, like him.

    Nobody ever said that he is proud to fail a test, or proud to belong to a family which has nothing to show and others would not be proud of. Mamakthir since 1969 condemned Malay race, and he claimed that he is proud to be Malay. It might be correct to say that to Indians, he feels proud that he could pretend to be Malay, enjoys the status, and even condemn true Malays and the latter kiss the ground he walks. Quite a feat for an opportunist.

  23. #23 by negarawan on Thursday, 10 March 2011 - 7:42 am

    Instead of listing all the failures of BN, why not list down the benefits that PR has brought upon in all the states under its control now, if any? It is pointless to point out the weaknesses in BN when PR may have its own weaknesses to address. Certainly this is not the way to convince the rakyat in the coming GE. This article by Martin Jalleh is pointless.

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