Archive for category Economics
Budget 2011: Would Razaleigh’s warning be heeded
Posted by Kit in 1Malaysia, Economics, Najib Razak, NEM, Razaleigh Hamzah on Thursday, 28 October 2010
2011 Budget not a child of New Economic Model but bears all the marks of old discredited Mahathirish policies (Part 2 of 5)
A veteran leader had warned that “It is time to wake up”.
He said: “Without a doubt, Malaysia is slipping. Billions have been looted from this country, and billions more are being siphoned out of the country as our entire political structure crumbles.”
Warning that corruption is the single biggest threat to the nation, he warned that corruption has become institutionalized in our political system and ruining Malaysia.
Who is this veteran leader? He is the head of the Barisan Nasional by-election in Galas, the MP for Gua Musang Tengku Razaleigh.
Will his views about the crisis of nation-building now be heeded? Of course not – just as it is clear that the Prime Minister does not have the political will to implement the New Economic Model (NEM) which he launched on March 30 to transform Malaysia into a developed, competitive and high-income economy with inclusivity and sustainability.
Read the rest of this entry »
Budget 2011 : Malaysia towards a failed state and bankrupt nation 2019
Posted by Kit in Corruption, Economics, Media, Najib Razak, public service, university on Thursday, 28 October 2010
2011 Budget not a child of New Economic Model but bears all the marks of old discredited Mahathirish policies (Part 1 of 5)
On Monday, the Prime Minister Datuk Seri Najib Razak launched the Economic Transformation Programme (ETP).
It was also the start of a week which saw the Government Transformation Programme (GTP) suffering a triple blow.
The first blow was Monday’s tabling in Parliament of the 2009 Auditor-General’s Reports which continues to be annual tale of horrors of waste, mismanagement, misuse of public funds and corruption – as highlighted by headlines like:
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Federal government debt hits five-year high;
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KTMB mired in RM1.45 billion debt;
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Only 18.2% of pupils bring free eBooks to school;
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Stimulus funds used for chandeliers, home theatre, government audit shows;
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PTPTN to face whopping RM46 bil deficit;
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PTPTN okayed RM23 mil to students who didn’t apply;
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Million-ringgit scanner stuck in KLIA, under-utilisation woes;
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‘Sandwich kosong’ for school kids, sardines missing.
Building projects unsustainable in long run, say analysts
Posted by Kit in Budget Debate, Economics, Finance, Najib Razak on Monday, 25 October 2010
By Boo Su-Lyn
The Malaysian Insider
October 25, 2010
KUALA LUMPUR, Oct 25 — Putrajaya’s focus on mega construction projects instead of key reforms in its economic plans — symbolised by the 100-storey Warisan Merdeka tower — will hamper the country’s goal of becoming a high-income nation, analysts have said.
They have stressed that economic and institutional reforms to increase market efficiency and human capital development were the crucial elements to lift Malaysia out of its middle-income trap.
“It is not sustainable as we will have first-class infrastructure and facility and third-world work ethics and mentality,” RAM Holdings group chief economist Dr Yeah Kim Leng told The Malaysian Insider.
“The soft part of the development, which is the human capital, will have to take centre stage for the high-income transformation drive to be successful,” he added.
Yeah noted that Prime Minister Datuk Seri Najib Razak’s reform commitments in his New Economic Model (NEM) have been eclipsed by the mega construction projects announced in Budget 2011 and the Economic Transformation Programme (ETP). Read the rest of this entry »
Malays competitive and competent – need for New Pro-Poor Economic Policy/Reform
Malaysia’s Development Strategy Revisited (5)
by Dr. Mohamed Ariff*
A New Pro-Poor Economic Policy and Reform
There is certainly a need for a clear focus on the needs of the poor and marginalized regardless of race, colour or religion. In other words, Malaysia needs a ‘new’ New Economic Policy that is explicitly pro-poor. The main beneficiary of such a policy would still be Malay households, as they account for roughly three-quarters of the bottom 40 per cent of households in terms of income distribution. Read the rest of this entry »
NEM stillborn?
Malaysia’s Development Strategy Revisited (4)
by Dr. Mohamed Ariff*
New Economic Model Up Against Formidable Challenges
The structural change agenda presents formidable challenges. The kinds of skills that the new paradigm demands cannot be provided by Malaysia’s archaic education system, which needs a complete overhaul. At the same time, the country is suffering from a serious brain drain caused by both push and pull factors. The importance of a truly independent judiciary cannot be exaggerated: anecdotal evidence suggests that Malaysia’s tarnished judiciary and gutter politics are among the push factors. Seen in these terms, the brain drain is largely a manifestation of frustration that has led some people to vote with their feet.
All this calls for bold structural changes, including institutional reforms encompassing everything from education to the judiciary, backed by governance reforms to strengthen fiscal discipline, transparency and accountability. Nothing short of a holistic approach will set the Malaysian economy far enough or fast enough on a true development path. The politics of policy making, however, may hobble the reform process. Read the rest of this entry »
NEP “outlived its usefulness” – does not make sense to keep an obsolete policy ticking along on life support
Posted by Kit in Corruption, Economics, Finance, NEP on Friday, 22 October 2010
Malaysia’s Development Strategy Revisited (3)
by Dr. Mohamed Ariff*
The New Economic Policy: Pervasive Poverty in the Malay Community
Multi-racial Malaysia’s major structural problems are largely attributable to the New Economic Policy initiated in 1970 in the aftermath of the May 1969 racial riots. With its emphasis on ‘positive’ discrimination in favour of the then backward Bumiputeras (literally ‘sons of the soil’), the objectives of the policy were laudable, serious misgivings about its implementation notwithstanding. The New Economic Policy continued to exist after reincarnating itself in various forms beyond the original 1990 deadline. While it has undeniably helped narrow interethnic income differences, all is not well judging by the outcomes. While interethnic income disparity has narrowed considerably, intraethnic income disparity, especially within the Bumiputera community, has widened. Read the rest of this entry »
Middle income-trap – Malaysia has shot itself in the foot!
Malaysia’s Development Strategy Revisited (2)
by Dr. Mohamed Ariff*
Input-Driven Growth unsustainable
It goes without saying that Malaysia must grow at a faster pace if it is serious about joining the club of developed countries by 2020 – hence the need to reinvent itself through reforms that can help restore the lost growth potential. Malaysia has learned the hard way that input-driven growth is unsustainable. It is instructive to note that the economy was growing at a rate of over 8.0 per cent in the early 1990s despite declining total factor productivity. To stay competitive, the growth strategy then was to keep wages low with the aid of a large migrant workforce. Obviously there was a dismal failure to understand that there were limits to economic expansion through input increases.
Migrant Workers depress wages
It was a major policy blunder to let migrant workers depress wages in the country, thereby throttling productivity improvements. Malaysia locked itself into low value-added manufacturing by allowing foreign workers to work in the sector for low wages, thus removing the incentive for manufacturers to automate. The size of the problem is huge: the country reportedly has 1.9 million registered migrant workers and another 600,000 unregistered ones (probably an underestimate), accounting for nearly one-fifth of the working population. These workers are not confined to the so-called 3D jobs – the difficult, dirty and dangerous jobs that the locals shun – but compete with Malaysians in the wider labour market. Read the rest of this entry »
Solution to the problems of economic openness is not less openness but more openness
Malaysia’s Development Strategy Revisited (1)
by Dr. Mohamed Ariff*
Malaysia has turned 180 degrees since Independence in 1957, transforming itself into a thriving modern economy and leapfrogging from a low-income to a middle-income trajectory. The country owes its prosperity to its economic openness, with trade as the lifeblood and foreign direct investment (FDI) as the backbone of the economy.
Economic Openness and Vulnerability to External Shocks
The price Malaysia has had to pay for this success is greater vulnerability to external shocks, but it has learned to cope with cyclical ups and downs with remarkable dexterity. This does not mean, however, that all of the crises in the Malaysian economy were caused entirely by external forces, as if domestic policy missteps had nothing to do with them. The Malaysian experience shows that crises tend to be blessings in disguise, as they force the authorities to step back, take a hard look at their policies, learn lessons and move on. Read the rest of this entry »
A Malaysian Lunch
Posted by Kit in Economics, Financial Scandals on Thursday, 21 October 2010
While everyone spent the last weekend mulling over the recently announced Budget 2011, I spent mine immersed in chocolates and experiencing a brief moment of notoriety on Lim Kit Siang’s blog.
It was back to business on Monday as I met up with two old friends over lunch. In true Malaysian fashion, our conversation flirted with everything from the erection, oops, election budget to matters of national (un)importance and just generally anything that came into mind. All this over banana leaf and lots of (burp) curry. The following is a parable of our discussion:
Friend A (special officer to a certain executive in a certain GLC): Service is so slow. Why does it take so long to make one iced Milo?
Friend B (self-employed IT entrepreneur): Nothing new about that…
Me (chocoholic): Yeah, what do you expect? We don’t get first class service on private jets like you.
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Tan Zhong Shan – top law student at Cambridge University is Malaysian and latest example of our costly brain-drain
Posted by Kit in Economics, Education, Najib Razak, NEM on Tuesday, 19 October 2010
Congratulations to Ipoh-born 23-year-old Tan Zhong Shan who has emerged as the top student in his final-year law examinations at Cambridge University.
In a report headlined “Malaysian is top law student at Cambridge University”, the Star today reported that Tan obtained a first-class honours in the Bachelor of Arts (Law) in June this year at Queens’ College, which is part of the university, one of England’s oldest and most prestigious.
The report said:
“He even scored the ‘Slaughter and May’ prize given by the university’s Law Faculty – an award given to those who achieve the best overall performance in the final-year law examinations.
“Other coveted prizes he bagged include The Norton Rose Prize for Commercial Law, the Clifford Chance Prize for European Union Law and the Herbert Smith Prize for Conflict of Laws.
“Queens’ College dean Dr Martin Dixon said Tan definitely stood out among the students there.
Read the rest of this entry »
2011 Budget – Eulogy for NEM and relaunch of Mahathir economic model (Part 4 of 4)
Posted by Kit in Economics, Mahathir, Najib Razak, NEM on Monday, 18 October 2010
Human Capital Issues
The allocations announced in the Budget for human capital development are indeed impressive. However, the question arises if the nation will get value for its money. There can be no denial of the fact that the Malaysian educational system is in disarray.
Standards have fallen dramatically. Our universities turn out graduates who lack rudimentary skills demanded by employers thus contributing to low productivity and loss of competitiveness. Our secondary school system is in disastrous shape.
Those who are charged with educating the next generation of Malaysians to be responsible citizens are more interested in promoting race hate as recent episodes of misbehavior by teachers highlight.
The lack of an adequate reaction from the top echelons of the Government has sent a strong signal to others in the educational system to project the message of hate that BTN promotes with impunity. These despicable acts and patterns of behavior give credence to the notion that the 1Malaysia slogan is nothing more than a catchy slogan devoid of meaning or sincerity.
Read the rest of this entry »
2011 Budget – Eulogy for NEM and relaunch of Mahathir economic model (Part 3 of 4)
Posted by Kit in Economics, Mahathir, Najib Razak, NEM on Monday, 18 October 2010
The Pivotal Role of the Private Sector
Much was made in the ETP presentation about reinvigorating private investment, with 92% of the total projected investment of US$444 being investment by the private sector. These expressions are repeated in the Budget Speech. However no details have been provided as to how this target is to be achieved.
The speech tantalizingly offers the suggestion that the Government will intensify the Public-Private Partnership to “… enhance private sector involvement in economic activities” To this end the Government proposes to invest RM 1 billion from the Facilitation Fund in support of several infrastructure projects.
On the one hand the formulation is built upon the notion that the private sector will be unleashed; and yet the ETP is in reality a top down creation. PEMANDU is seemingly picking “winners” and it would imply that Malaysia is about to embark upon a new form of central planning to get to highly untenable targets.
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2011 Budget – Eulogy for NEM and relaunch of Mahathir economic model (Part 2 of 4)
Posted by Kit in Economics, Mahathir, Najib Razak, NEM on Monday, 18 October 2010
Recent Economic Performance & Prospects
In the formulation of the Budget for 2011, the Prime Minister made the claim that the Malaysian economy had recovered from the global economic recession.
In an act of self congratulation, he attributed this to the proactive measures taken by the Government through the RM 67 billion stimulus package. He however failed to acknowledge that other countries in the region had performed equally well or even exceeded Malaysian performance.
The statistics he cited refer to the short term and are soothing. However, he made no mention of the challenging issues that will determine the medium term performance of the nation’s economy.
He appears to be suffering from a bout of amnesia about the need to address the issue of subsidies and to achieve fiscal balance.
Read the rest of this entry »
2011 Budget – Eulogy for NEM and relaunch of Mahathir economic model (Part 1 of 4)
Posted by Kit in Economics, Mahathir, Najib Razak, NEM on Monday, 18 October 2010
The Budget presented by the Prime Minister was a eulogy for the death of the New Economic Model. It provides a clear confirmation that this Government is incapable of living up to the rhetoric of reform that it had vigorously promoted over the past year.
The slogans and feel good speeches crafted by highly paid spin doctors have not been translated into clear action programs. The divided and weak BN Government remains mired and has now demonstrated its inability to deliver upon its promises of change.
The Budget marks the return to failed economic policies of the past. The Mahathir Economic Model built around mega projects, crony capitalists as key players, bailouts and handouts is once again alive and returns to haunt the nation.
The Budget yet again demonstrates that this administration is incorrigibly incapable of drawing lessons from the past and persists with policies that have entrapped Malaysia in the middle income trap.
The Budget for 2011 has all of the attributes of a blunt tool for distributing public funds to UMNOputras, BN cronies, and vested groups that constitute the vote bank of the Barisan.
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Budget 2011: A budget for the big boys and civil servants
Posted by Kit in Economics, Najib Razak, public service on Saturday, 16 October 2010
There are several ways to analyze the budget. One is to take at face value what the Prime Minister has written in his blog just before his budget speech where he promised that it is “a budget by the rakyat”. By it, he explained that he had read through the more than 1,000 comments and suggestions from his readers and forwarded them to the Ministry of Finance to incorporate.
According to the PM, there were three key issues raised – employment, taxes and subsidies, and education.
In his words, “employment was the most frequently discussed with some of you calling for the implementation of a minimum wage policy”. Also, he noted that “comments from the youth requested for increased tax rebates for young families or ways to provide financial assistance in managing the rising cost of living”. As for education, the feedback on his blog related to concerns with education quality and the rising cost of education.
Now that the budget has been unveiled, it is clear that the civil servants preparing the budget have completely ignored the Prime Minister. Firstly, the implementation of the minimum wage policy has been further deferred for the umpteenth time. The only beneficiaries of wage reform appear to be security guards who deservedly see their minimum wages raised and female civil servants who will now have longer maternity leave.
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Budget 2011 – Unable to stimulate necessary growth to meet high-income nation objective
Posted by Kit in Economics, Najib Razak, Parliament on Saturday, 16 October 2010
By Tony Pua
Budget 2010: Government failed to keep a lid on sky-rocketing operating expenditure
The Prime Minister in his speech announced that the Government will be on track to meet the projected budget deficit of 5.6% for the fiscal year 2010 giving the appearance that the Government was able to meet its financial commitment and targets. However, the meeting of the deficit target masks the fact that the Government had in fact substantially overspent its allocated budgets, and was “saved” only by a higher than expected collection of tax revenues.
Last year when the budget for 2010 was announced, the Government promised a commitment to trim operating expenditure to reduce wastage and to generate greater value for money returns with the tax-payers’ money.
We had in fact applauded the Government’s decision to reduce operating expenditure by a significant 13.7% from RM160.2 billion in 2009 to a budgeted RM138.3 billion. The government’s operating expenditure includes salaries and pensions for the civil service, purchase of government assets, supplies and services, rentals, various subsidies, debt repayments, toll compensations and “other” expenditures. A government’s “operating expenditure” is not expected to generate high economic multiplier effects, as opposed to “development expenditure”.
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Key political risks to watch in Malaysia
Posted by Kit in 1Malaysia, Anwar Ibrahim, Corruption, Economics, Elections, Islam, Najib Razak, nation building, NEM, Sarawak, UMNO on Sunday, 3 October 2010
Oct 1, 10
Reuters/Malaysiakini
Malaysia has unveiled ambitious plans to boost its economy by mobilising hundreds of billions of dollars of private investment, although questions remain over whether the money will materialise.
Prime Minister Najib Abdul Razak’s cut in fuel, gas and sugar subsidies in August triggered a political backlash that may see him holding off more reforms ahead of the next general elections due by 2013.
Najib has pledged to reform the country’s subsidy bill to tackle the budget deficit. But he is wary of upsetting the country’s majority ethnic Malays, a critical votebank whose support will be vital as he tries to revive his ruling coalition which was hit by record losses in general elections in 2008.
Following is a summary of key Malaysia risks to watch:
Political conflict
Political tensions spiked after the 2008 general election when unprecedented opposition gains transformed the political landscape. BN coalition’s 52-year grip on the country was dented when it ceded control of five states and lost its two-thirds parliamentary majority to an opposition led by former Deputy Prime Minister Anwar Ibrahim.
The political uncertainty has weighed on foreign investment with net portfolio and direct investment outflows reaching US$61 billion (RM188 million) in 2008 and 2009 according to official data. Money has since flowed into the bond market according to central bank statistics, but little has flowed into equities.
What to watch:
• Opposition leader Anwar Ibrahim’s sodomy trial. Anwar says the case is a political conspiracy, and a contentious verdict would anger his supporters. Any marked increase in political tensions could see more foreign money pulled from stocks, bonds and the ringgit. But with limited foreign portfolio investment still in the country, the impact will be muted.
• Elections in the Borneo state of Sarawak, expected by the end of this year. The state’s chief minister has directed the ruling coalition to ready itself for state-wide polls, and analysts say nationwide elections could follow soon after. BN’s shock defeat in a May by-election in Sarawak raised doubts over its support levels in the state. Read the rest of this entry »
International deluge of criticisms on persecution of Anwar
Posted by Kit in 1Malaysia, Anwar Ibrahim, Court, Economics, Foreign, Najib Razak, NEM on Tuesday, 28 September 2010
By Dr. Chen Man Hin, DAP life advisor
International deluge of criticisms from the conspiracy to convict Anwar of sodomy 2
Suddenly there appears to be a deluge of international personalities criticising the Malaysian government for persecuting Anwar on trumped up charge of sodomy 2.
It started with ex US vice president Gore, and IMF chief Stiglitz, followed by Barry Wain former AWSJ correspondent as well as a former US ambassador to Malaysia John Croft
All of them unanimously condemned the conspiracy to paint Anwar as a sodomist and therefore not fit to be the Opposition Leader.
These are all distinguished members of the international community who are shocked in unison by this serious transgression of justice, democracy and the rule of law by the Malaysian government. UMNO, the power behind the prime minister, intends to perpetuate their power by trying Anwar on trumped up charges of sodomy, to convict and imprison him, thus denying him the opportunity to be the next Prime Minister.
Read the rest of this entry »
Malaysia stumbling
Posted by Kit in Abdullah Ahmad Badawi, Economics, Finance, Mahathir, Najib Razak on Friday, 24 September 2010
Eric Ellis
TheAge
Australia
September 23, 2010
ONE of Australia’s key partners in Asia is struggling. Given the way its leaders have taunted Australia over the years, schadenfreude at its plight would be understandable. But this should be resisted, for if Malaysia stumbles, the effects may ripple across the region.
Erstwhile sponsor of the Carlton Football Club, a cash cow for the Australian education sector, Australia’s 10th largest trading partner and a champion of ”Asian values” – whatever they are – Malaysia seems to be brimming with sky-is-falling Chicken Littles. And their analyses are alarmist; ”failed state”, ”deep pit”, ”national decay”, ”ocean-going corruption”, ”useless mega-projects”.
While some of these could be used to describe the Delhi Commonwealth Games – a massive undertaking Malaysia successfully pulled off 12 years ago by the way – it is about a country oft-regarded as an Asian success, whose rampant economy inspired a cockiness among its leaders to take racially tinged potshots at the ”decadent and immoral” West, and at Australia in particular.
And then there was the International Monetary Fund and the World Bank to demonise, indeed anyone its mercurial then prime minister Mahathir Mohamad didn’t like on any given day. And there was 23 years of it, the Mahathir monopoly on Malaysian power.
So what’s prompted such painful hand-wringing from a tigerish economy that likes to boast how it ditched traditional models to virtually promise endless riches? The answer is some of the nastiest foreign direct investment (FDI) statistics an Asian economy has served up in a generation. Read the rest of this entry »
How real is the Economic Transformation Programme?
The Economic Transformation Programme (ETP), the latest pronouncement by Minister in the Prime Minister’s Department Datuk Seri Idris Jala, follows upon a number of other pronouncements that have become the hallmark of Dato Seri Najib’s administration.
Like the previous pronouncements of 1Malaysia People First Performance Now, the Government Transformation Programme, the 10th Malaysia Five Year Plan, the ETP is rich in rhetoric.
The sloganeering and spin that is common to all of these exercises provides a clear indication that the Government led by Najib is wholly at sea in tackling the enormous challenges that the country faces.
These challenges have accumulated over the wasted three decades characterized by mismanagement, corruption and abuse of power that has benefited a small coterie.
A common feature of the series of announcements is that they contain unrealistic assumptions about economic growth prospects; they use clichés that are taken from business school texts that have been spun in order to create a false impression of a rethinking of policies.
The various announcements of “policies” and “strategies” are littered with a slew of abbreviations such as KPIs, NKRAs, MKRAs, NKEAs, EPPs and BIZ Ops are freely bandied about. Read the rest of this entry »
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