Archive for category Finance
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 5 (Poverty)
Poverty
Chapter 4 of the Plan document together with several Tables dealing with Thrust 3 in the Appendices present fairly detailed statistics on poverty and income distribution.
In a somewhat self-congratulatory tone, the Plan proclaims that hardcore poverty was reduced from 1.2% in 2004 to 0.7% in 2009 and that the incidence of overall poverty fell from 5.7% in 2004 to 3.8% in 2009. These claims are questionable because of the underlying methodology employed in deriving these estimates.
In the first place there is no indication as to how the Poverty Lines were estimated. Assuming that the methodology used mirrors that used in the 9th Plan, the bar to define poverty is set at far too low a level.
In the second place, the use of “households” rather than “persons” distorts the measurement.
On the flawed basis, 228,400 households were categorized as poor. It is most significant that of these 99,100 were in Sabah with another 27,100 in Sarawak. Thus, there were a disproportionate number of the poor in these two states highlighting gross neglect by the Federal government of Malaysians in these two states. Read the rest of this entry »
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 4 (5 Thrusts of TMP)
The Five Thrusts of the 10th Malaysia Plan
The Prime Minister stressed that the 10th Malaysia Plan is oriented around five key strategic thrusts, namely:
* Stimulating Economic Growth – implementing a policy framework that will galvanize the private sector and promote trade and investment;
* Moving towards Inclusive Socio-Economic Development – focusing government support on those most in need and reforming affirmative action policies;
* Developing and Retaining a First-World Talent Base – improving schools, providing skills training to those in the workforce and implementing important labour market reforms;
* Building an Environment that Enhances Quality of Life – investing in housing, transport, healthcare, utilities, crime prevention and the environment to support economic activity and improved living standards; and
* Transforming Government to Transform Malaysia – building on the success of the Government Transformation Program to continue to improve government performance and transparency to best serve the people
The question that arises is: How different are these in comparison with the corresponding thrusts that were outlined in the 9th Five Year Plan? Read the rest of this entry »
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 3 (Unlearnt lessons from the past)
Unlearnt Lessons from the Past: Where have we come from?
A brief review is in order to understand how the nation got to the precarious point best amplified by a Minister sternly warning that Malaysia is heading towards bankruptcy by the end of the decade.
Malaysia is more integrated into the global economy than many other countries of a similar size and at a comparable stage of development. Globalization is a fact of life. It has contributed both positively and negatively to Malaysian development. On the upside, integration with the global economy permitted the nation to prosper through trade and flows of FDI in the years prior to the East Asian Crisis of 1997. There was rapid economic growth, rising income levels, declining poverty and unemployment and a somewhat more egalitarian distribution of wealth. A contributing factor was the fact that Malaysia was blessed with a rich resource base – its forests and oil and gas. It had reasonably well functioning institutions in the form of an established public service, a modestly independent judiciary and institutions that measured well against those in other developing countries. The nation progressed despite creeping corruption, growing race polarization, authoritarianism and a general deterioration in the delivery of public services. The early 1990s saw a degree of deregulation and the privatization that gave momentum to modest reforms. The economic fundamentals were essentially sound with the budget largely balanced, and low inflation and robust growth. These outcomes occurred despite the constraints and distortions imposed by the NEP.
The 1997 East Asia crisis provided a rude awakening. Absence of accountability, lack of transparency and the growing cronyism, nepotism and the megalomaniac obsession with mega projects Read the rest of this entry »
PM dispels fears of possible bankruptcy
Posted by Kit in Finance, Najib Razak, Parliament on Tuesday, 8 June 2010
Malaysian Insider
By Clara Chooi
June 08, 2010
KUALA LUMPUR, June 8 — Prime Minister Datuk Seri Najib Razak today moved to quell fears raised by a minister that Malaysia would one day go the way of Greece and Iceland and become a bankrupt nation.
In a written response to a question by Lim Kit Siang (DAP-Ipoh Timor) in Parliament, the premier gave an assurance that the government was taking steps to ensure that Malaysia’s debts would be reduced and maintained at a manageable level.
“Malaysia will not face problems like what is happening at present in Greece and Iceland. Read the rest of this entry »
Malaysia’s foreign debt – Parliament Question
Posted by Kit in Finance, Parliament on Tuesday, 8 June 2010
SOALAN:
Lim Kit Siang (Ipoh Timur) minta PERDANA MENTERI menyatakan apakah tindakan yang telah diambil untuk memastikan bahawa Malaysia tidak akan mengikut jejak langkah Iceland dan Greece dan menjadi sebuah negara bankrap yang memerlukan penyelamatan dan masyarakat serantau atau antarabangsa.
JAWAPAN:
Tuan Yang di-Pertua,
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Untuk makluman Yang Berhormat, hutang negara adalah hutang luar negara yang terdiri daripada hutang luar jangka sederhana dan panjang bagi Kerajaan Persekutuan, Perusahaan Awam Bukan Kewangan (PABK) dan sektor swasta serta hutang jangka pendek sektor perbankan dan swasta. Peratusan hutang negara kepada Keluaran Dalam Negara Kasar (KDNK) dan tahun 2004 hingga 2009 kekal terurus dengan purata 34.6% dan pecahannya adalah seperti berikut:
Tahun Peratus hutang negara kepada KDNK 2004 42.3 2005 37.8 2006 32.1 2007 29.2 2008 31.9 2009 34.3
Rebuking Idris show Umno’s distaste for subsidy cuts
Posted by Kit in Economics, Finance, Good Governance, Najib Razak, NEP on Thursday, 3 June 2010
By Debra Chong
Malaysian Insider
June 03, 2010
KUALA LUMPUR, June 3 — Datuk Seri Idris Jala’s plan to save Malaysia from going broke appears to be stillborn, as Umno’s constant attacks on the minister show that the Najib administration has no appetite for subsidy cuts.
Prime Minister Datuk Seri Najib Razak also appears to have distanced himself from Idris’ proposal, after he told the Perkasa-led Malay Consultative Council meeting last week that proposals to save RM103 billion in subsidies were not yet finalised.
“Idris’ proposal is stillborn. 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,” DAP publicity chief Tony Pua said.
Analysts contacted by The Malaysian Insider agreed. Read the rest of this entry »
Re: Idris Jala: M’sia must cut subsidies, debt by 2019 or risk bankruptcy
Posted by Kit in Corruption, Economics, Finance, Good Governance, Letters, Sarawak on Monday, 31 May 2010
Letters
by Sara Wak
Dear YB Idris Jala and Koh Tsu Koon,
For the last many years, the BN Govt has been handing big ang pows to the rich Malays who are given APs, and it has been said by the BN Govt that this practice will go on until 2013 0r even 2014!
Why can’t the Govt control the issue of APs to people who want to import cars? The govt can collect RM30,000 to RM40,000 on each important cars. Why must the BN Govt decides to pass the right to collect these payments to only a handful of rich Malays?
How many APs are issued to these rich Malays a year ? Like what Rafidah did when she was minister , in giving APs and shares to her relatives?
The Malaysian Economy has deteriorated so much for the last decade because of all these handouts to the UMNO cronies. Malaysia was ahead of Korea, Taiwan and Singapore, and look at it now, it is even behind countries like Thailand, Vietnam and others in Asia !
Read the rest of this entry »
Vote BN for bankruptcy, warns Pakatan
Posted by Kit in Corruption, Finance, Financial Scandals, Pakatan Rakyat on Saturday, 29 May 2010
Malaysian Insider
By Asrul Hadi Abdullah Sani
May 29, 2010
KOTA BARU, May 29 — Pakatan Rakyat (PR) leaders used dire forecasts of a gloomy future if there are no subsidy cuts to warn that voting for Barisan Nasional (BN) in the next general election would lead the country to bankruptcy.
A government minister this week had predicted Malaysia could be bankrupt by 2019 if it does not begin to cut subsidies for petrol, electricity, food and other staples, which cost RM74 billion last year. But the Najib administration is waiting for public feedback before deciding on actual cuts.
DAP leader Lim Kit Siang said it was not subsidies but BN’s corruption and abuse of power that has led the country to current financial crisis.
“I cannot imagine if DAP, PKR or PAS had made the announcement that country will be bankrupt by 2019. If we did, Umno would have labelled us as anti-nationalist and traitors. We probably would have been locked up in ISA and given free food.
“Remember Vision 2020? We were supposed to become a developed nation by 2020 but unfortunately one year before 2020, we are already bankrupt,” he told a crowd last night in Tanah Merah, a two-hour drive from the Kelantan state capital.
Lim was one of many PR leaders in the state speaking at ceramahs ahead of the PKR convention this weekend. Read the rest of this entry »
Najib’s qualification instead of endorsement of Idris Jala’s warning that Malaysia could become next Greece and go bankrupt unless it saves RM103 billion in next five years to reduce the nation’s huge debt proof of lack of political will to address subsidy syndrome
Posted by Kit in 1Malaysia, Economics, Finance, Good Governance, Najib Razak on Friday, 28 May 2010
Four things stand out in yesterday’s Subsidy Rationalisation Lab Open Day of the 1Malaysia Government Transformation Programme (GTP) where the Minister in the Prime Minister’s Department and CEO of Performance Management and Delivery Unit (Pemandu), Datuk Seri Idris Jala made his presentation on the country’s proposed five-year subsidy rationalization roadmap.
Firstly, the absence of Tan Sri Dr. Koh Tsu Koon, the Minister in charge of the 1Malaysia GTP and Chairman of Pemandu. Why is he on leave in the United States on such an important event in the Government Transformation Programme or is he seriously considering, according to reports quoting Gerakan sources, relinquishing the post as Minister in the Prime Minister’s Department after the humiliation in the last meeting of Parliament where he dared not stand up to vouch for what 1Malaysia stands for – that he is Malaysian first and Chinese second?
Secondly, Idris’ failure to address the root causes of the national economic crisis instead of just dealing with its symptoms.
Idris warned that unless Malaysians bite the bullet and wean off subsidies to save the government RM103 billion in five years to reduce the nation’s deficit and huge debt, Malaysia could become another Greece and go bankrupt in nine years.
Although Idris said the government would focus on big ticket items such as fuel, electricity and toll to achieve the savings, he failed to focus on the biggest ticket items – corruption, mismanagement, extravagance and lack and accountability.
When corruption, mismanagement, extravagance and lack of accountability cost the government from RM10 billion to RM28 billion a year, what credibility has the government to talk about slashing subsidies affecting the rakyat when it has nothing to show to end the rampant and worsening state of corruption, the gross abuses of power and public funds like indiscriminate issue of APs and various forms of “piratisation” in the name of privatization? Read the rest of this entry »
DAP says cuts cannot be limited to subsidies
Malaysian Insider
By Shazwan Mustafa Kamal
May 27, 2010
KUALA LUMPUR, May 27 — DAP’s Tony Pua grudgingly admitted today that cutting subsidies could lower Malaysia’s debts, but he said the cuts will only be successful if leakages from graft and help for big corporations are plugged first.
“I feel that in general, the points raised were agreeable. But at the same time, these plans can only be put into motion if other conditions are first met.
“He (Datuk Seri Idris Jala) was quite naughty when he said that Pakatan Rakyat (PR) agreed with lowering subsidies. We agree to it but with conditions,” DAP National Publicity Secretary Tony Pua said shortly after he attended a government open day on rationalizing cutting subsidies.
The Petaling Jaya Utara MP told The Malaysian Insider that while the government has outlined ways in which to gradually lessen subsidies, other “main causes of debts” had not been carefully addressed.
According to Pua, the issue of subsidies was a small problem compared to the actual cause of Malaysia’s huge deficit problem. Read the rest of this entry »
The DAP Ipoh Resolution
Posted by Kit in Constitution, Corruption, Crime, DAP, Economics, Education, environment, Finance, Good Governance, nation building on Monday, 18 January 2010
The DAP Ipoh Resolution:
MUAFAKAT TRANSFORMASI MALAYSIA
(adopted by the DAP National Conference 2010 in Ipoh on Sunday, 17th January 2010)
PREAMBLE
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That the nation is waiting for a profound change is beyond doubt and that it is now a fact that the government-of-the-day is incapable of changing the intolerably arbitrary, self-serving, unjust, cruel and corrupt system of governance;
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That the world does not stand still to wait for Malaysia, and we risk watching Asia changing and its economy growing not as an active participant but as bystander if we do not catch up fast;
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That to save Malaysian governance from further deterioration, the economy from further plunder, and the people from further injustices is a shared imperative;
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That the Democratic Action Party (DAP) therefore, in partnership with other Pakatan Rakyat parties and in cooperation with civil society, is determined to transform Malaysia through a new muafakat (consensus)
- by reversing distortions and corruptions of the Constitution, the rule of law and the system of governance,
- by restoring mutual respect amongst Malaysia’s multiethnic, multicultural and multi-religious peoples,
- by renewing trust in public institutions and in the security services,
- by rejuvenating the economy
- by conserving the environment,
- by revamping the education system, and
- by re-establishing hope in our future as a nation;
Malaysia’s Disastrous Capital Flight
Asia Sentinel
by Our Correspondent
11 JANUARY 2010
Money leaves the country on an unprecedented scale
Churches are not the only thing to have been going up in flames in Malaysia. Take a look at the nation’s foreign exchange reserves. They fell by close to 25 percent during 2009 according to investment bank UBS even though the country continued to run a huge surplus on the current account of its balance of payments.
Says UBS: “Question: which Asian country had the biggest FX losses in 2009?” The answer is Malaysia and by a very large margin; we estimate that official reserves fell by well more than one quarter on a valuation-adjusted basis”. It describes the situation as “bizarre” and contrasts 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.
In short there has been an exodus of money from Malaysia on a scale which surpasses that which occurred during the Asian crisis. Nor is this just a mirage. The decline is also reflected in a sudden decline in base money supply – even while, thanks to Bank Negara, broader M2 has continued to grow modestly. Read the rest of this entry »
Abu Dhabi poised to throw lifeline to Dubai
From Times Online
November 28, 2009
By Rhys Blakely in Dubai
Abu Dhabi is poised to come to the aid of Dubai’s debt stricken-businesses, but only on a “case by case” basis, senior bankers an officials said today.
The Dubai Government sent global markets into a tailspin this week after it asked creditors of Dubai World, the state-owned conglomerate behind the city state’s building boom, for a six-month standstill on $80 billion of debt repayments.
The move kindled fears that the world economy is yet to rid itself of toxic debt, and may even succumb to a fresh downturn in a “double dip” recession.
Oil rich Abu Dhabi, which has the world’s largest sovereign wealth funds, thought to be worth as much as $700 billion, could easily bail out Dubai, but is thought to be unwilling to pour more money into its neighbour’s beleaguered property sector, which has buckled under the weight of a series of half-finished grand projects. Read the rest of this entry »
2010 Budget: sound and fury without substance (4)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
Key Budget Allocations
The budget allocations listed in the budget speech are indeed astonishing and represent a long litany of projects and allocations, the direct beneficiaries of which appear to be special interests and well connected individuals.
This should be no surprise as the budget has become the chosen means to distribute corporate welfare with a few sops for the public at large. One may well ask why billions more are being channelled to infrastructure at a point in time when the economy is in greater need to strengthen institutions, develop human capital and to widen the safety net programmes to protect the weak and the vulnerable elements of our population. Read the rest of this entry »
2010 Budget: sound and fury without substance (3)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
The Track Record
The Budget for 2010 must be seen against the larger canvass of economic management by the BN Government over the recent past.
It should be recalled that the global Great Recession began in mid 2007 as the sub-prime fiasco in the United States began to unfold. The economic slowdown spread and gained momentum in 2008. As the gathering storm clouds hovered over the horizon, many Governments began to react and take counter recessionary measures.
The Barisan Nasional Government for its part remained in a state of denial. Ministers dismissed with some arrogance the notion that the Malaysian economy would succumb to the global slowdown. They argued rather smugly that Malaysia was immune as it had decoupled from the global economy. Read the rest of this entry »
2010 Budget: sound and fury without substance (2)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
The Macro-Economic Scene
The key economic indicators and assumptions used in the budget formulation are:
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Malaysia economy to grow 2-3 percent in 2010 after a contraction of 3 to 4 percent in the current year.
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Per capita income to increase by 2.5 percent to RM24, 661. This rate of growth is inconsistent with a GDP growth rate of 2 to 3 percent as population growth is in the region of 2.5 percent; this would yield a per capita growth of close to zero
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Budget 2010 allocations total RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.
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Federal government revenue in 2010 to decline by 8.4 percent to RM148.8 billion despite the tax changes proposed.
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Budget deficit at 5.6 percent of GDP compared with 7.4 percent in 2009.
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Exports will revive to 3.5 percent growth after having fallen by over 23 percent in the first half of 2009; this assumption is dependent on developments globally;
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Private consumption will grow by 2.9 percent as against 0.5 percent in the current year
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Inflation will remain low
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Unemployment will not exceed 4 percent
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Private investment will grow by 3.4 percent in 2010
The 2010 Budget: sound and fury without substance
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
Introduction
The maiden Budget unveiled by the Prime Minister was anticipated with great expectations of a new direction to move the Malaysian economy on to a new path of growth and revival through the adoption of policy reforms designed to restore competitiveness. These expectations, sadly, were not met.
The 40-odd-page two-hour long Budget speech delivered by the Prime Minister in Parliament was a great disappointment. It contained little by way of a bold policy agenda or a set of much needed measures to begin to restore the Malaysian economy to health.
The speech was long on rhetorical assertions and a litany of expenditure proposals; it contained little in the way of actual innovative thinking despite the Prime Minister’s resolve to adopt a new model for the economy “based on innovation, creativity and value-added activities”.
There were hardly any credible steps outlined as to how the unsustainable record high fiscal deficit of 7.4 percent recorded in 2009 was to be slashed. The broad assertion that the reduction of the deficit to 5.6 percent was to be largely achieved via proposed expenditure cuts in the year ahead. The main spending cuts are to come from reduced “operating expenditure”, lower food and fuel subsidies, and less money for development spending. Yet the expenditure proposals for 2010 allocate 11 per cent more money for the Government wage bill in 2010 for the nearly one million workers on the payroll which account for almost 10 per cent of the work force and constitute a mainstay of the BN government’s support. Read the rest of this entry »
Malaysian Economic Democratisation – Extract 6
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
9. Thrust II: Rakyat First – Restructuring and Reallocation
9.3 Unfair Public Contracts
The Malaysian economic landscape is littered with many one-sided contracts and concessions under which private entrepreneurs reap supernormal profits while the government or government-linked companies continue to bear considerable business risk. Major privatisation exercises were conducted and concessions granted in manners that were not open, accountable and transparent through public tenders.
An Unfair Public Contracts Act will be enacted and an independent public commission to be known as the Public Contracts Commission will be formed to review such lopsided concessions that are deemed to be against the public interest.
Constitutional and corporate lawyer Tommy Thomas if of the view that such an act will be constitutional as it will be similar in nature to the Land Acquisition Act 1960 which allows the government to take over any private land for public purpose, provided adequate compensation is paid.
Such legislation is not unique to Malaysia. Eminent domain (United of States of America), compulsory purchase (United Kingdom, New Zealand, Ireland), resumption/compulsory acquisition (Australia) and expropriation (South Africa and Canada’s common law system) are examples of the inherent power of the state to seize or expropriate private property without the owners’s consent provided, of course, Read the rest of this entry »
Malaysian Economic Democratisation – Extract 5
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
9. Thrust II: Rakyat First – Restructuring and Reallocation
9.2 Managing Oil Wealth
Over-reliance on Oil and Gas
Malaysia is blessed with abundant natural resources. In particular, we are thankful that the country is rich in oil and gas, which created Malaysia’s sole representative in the Fortune 500, Petroliam Nasional Berhad (PETRONAS). Since the incorporation of PETRONAS Group 35 years ago, the Group has paid RM471 billion to the Government, in addition to bearing a cumulative gas subsidy of RM97 billion.
In the most recent financial year ending March 2009, PETRONAS achieved profit before tax of RM89.1 billion amidst the challenging economic backdrop. Of greatest importance was the fact that PETRONAS contributed RM61.6 billion to our national coffers in taxes, royalties, dividends and export duties last year. Contribution from PETRONAS Group alone was budgeted to make up some 46% of the Federal Government revenue for 2008. This represents a steep increase from approximately 20% in 2004. The heavier reliance on oil and gas industry for Malaysia over the years signals an alarming trend.
Despite the fact that the total Malaysia hydrocarbon reserves has increased marginally from 20.13 billion barrels of oil equivalent (boe) at January 2008 to 20.18 billion boe at January 2009, and the reserves replacement ratio (RRR) has improved from 0.9 times to 1.1 times during the same period, our reserves will inevitably run dry at some point. During an interview with Bernama in June 2008, the president and chief executive officer of PETRONAS Group, Tan Sri Hassan Marican said that “we will continue to produce for another 20 years or so.” In more immediate terms, “Malaysia will become a net importer when its domestic consumption, growing at six percent per annum, is expected to overtake national production in 2011.”
Read the rest of this entry »
Malaysian Economic Democratisation – Extract 4
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
8. Thrust I: Economic Democratisation – Fiscal Decentralisation
8.2 Fiscal decentralisation policies
Other countries, such as Canada, Spain, and the UK have been moving in the opposite direction recently compared to Malaysia, by increasing decentralisation. Nearer to home, China and Indonesia have also successfully decentralised much of their financial and economic decision-making process. Even smaller countries such as Switzerland and Belgium have developed forms of fiscal federalism. To ensure that Malaysia is able to tap into the sizeable latent potential benefits arising from the political accountability, economic efficiency and economic growth, DAP proposes that states are granted greater control over their finances.
8.2.1 Tax revenue sharing agreements
It is proposed that the federal government enter into tax revenue sharing agreements with states so that there is a stronger link between a state’s performance and its revenue share. 20% of individual and corporate income taxes collected in a state, as determined by the residence of the taxpayer and location of the establishment, will become the state’s entitlement. Income taxes will continue to be collected by the federal government using the existing infrastructure, but the states’ portion will be distributed back to the states for each financial year. This is the system which has been adopted by Germany.
Read the rest of this entry »
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