Archive for category Finance
Explain why Malaysia topped the world in per capita illicit capital outflows, losing RM888 billion as a result of corruption and misgovernance, instead of campaign of lies and falsehoods in Tenang by-election
Posted by Kit in Corruption, Election, Finance on Monday, 24 January 2011
UMNO and MCA leaders should be explaining why Malaysia topped the world in per capita illicit capital outflows, losing RM888 billion in nine years from 2000 – 2008 as a result of corruption and misgovernance, instead of disseminating lies and falsehoods in the Tenang by-election in Johore.
It is five days since the Washington-based financial watchdog, Global Financial Integrity (GFI), reported that Malaysia is among the countries which registered the highest illicit financial outflows over a period of nine years in the last decade.
The five countries with the highest illicit financial outlays between 2000 and 2008 were:
1. China $2.18 trillion
2. Russia $427 billion
3. Mexico $416 billion
4. Saudi Arabia $302 billion
5. Malaysia $291 billion.
Capital outflows from Malaysia more than tripled from US$22.2 billion in 2000 to US$68.2 billion in 2008, totaling US$291 billion (or RM888 billion) in nine years between 2000 and 2008. Read the rest of this entry »
Investigate Why Malaysia Has Attained World Ranking in Illicit Outflows
Posted by Kit in Corruption, Finance, Letters, Lim Teck Ghee on Sunday, 23 January 2011
by Dr. Lim Teck Ghee
I refer to a report by Washington financial watchdog Global Financial Integrity which found that Malaysia lost US$291 billion or RM889 billion through illicit outflows between 2000-2008.
The report written by GFI economists Karly Curcio and Dev Kar, who is a former senior economist at the International Monetary Fund is deserving of attention from everyone in the country – the Prime Minister to the lowest of our citizenry.
This finding of massive illicit capital outflow for Malaysia is the strongest confirmation of sustained capital flight from the country during the past decade, even if one wants to dispute the definition of “illicit” used. What is especially worrying is that the outflow has tripled in the short period of eight years from 2000-2008
There can be no dispute that a major part of this outflow is due to financial gains accumulated through corruption, kickbacks and other illegal means. How much is due to various causes can be disputed and can only be determined by a thorough investigation such as through the establishment of a Royal Commission to determine the extent and the reasons for the outflow. Without an independent panel or Commission looking into this and having access to banking and other financial data, there will be no end to finger pointing and needless speculation as to who are the parties implicated in these outflows. Read the rest of this entry »
Explain RM888b illegal funds leak
Posted by Kit in Brain drain, Corruption, Finance, Good Governance, Lim Guan Eng on Sunday, 23 January 2011
by Lim Guan Eng
23.1.2011
DAP wishes to extend our congratulations to the Royal Malaysian Navy for its success in capturing 18 Somali pirates and preventing their attempted hijack of a Malaysian chemical tanker near the Gulf of Aden. This successful operation in saving the tanker and their crew without any loss of life inspires confidence in a professional navy that justifies the people’s faith.
Whilst our navy boys are heroes for their successful capture of Somali pirates in international waters, DAP regrets that land “pirates” are allowed to roam freely in Malaysia. The US-based financial watchdog Global Financial integrity (GFI) reported that illicit money outflows from Malaysia tripled to US$68.2 billion (RM208.1 billion) in 2008, from US$22.2 billion in 2000.
For the period 2000-2008, China tops the chart among the world’s exporters of illicit capital with a whopping US$2.8 trillion of outflows, followed by Russia (US$427 billion), Mexico (US$416 billion), Saudi Arabia (US$302 billion) and Malaysia (US$291 billion or RM888 billion). Other Asian countries with high illegal capital flight are Philippines ($109 billion), Indonesia ($104 billion) and India ($104 billion).
Clearly illegal capital flight from Malaysia of RM888 billion over 9 years from 2000-8 has dwarfed legitimate capital inflows into the country. GFI defines illicit financial flows as generally involving the transfer of money earned through illegal activities such as corruption, transactions involving contraband goods, criminal activities, and efforts to shelter wealth from a country’s tax authorities.
GFI said that poor governance, pervasive corruption and rising income inequality as contributory factors, making serious allegations that even GLCs such as Petronas could probably be driving illicit flows. This is a devastating indictment of the lack of enforcement, rule of law and a culture of corruption that has eroded confidence in our capital market. Read the rest of this entry »
Malaysia is world’s No 5 in illicit outflows
Posted by Kit in Corruption, Finance, Good Governance on Friday, 21 January 2011
Jan 20, 11
Malaysiakini
Malaysia is among the countries which registered the highest illicit financial outflows over a period of nine years in the last decade.
According to a ground-breaking report by Washington-based financial watchdog Global Financial Integrity (GFI), money flows out of Malaysia have more than tripled from 2000 to 2008.
The outflow from Malaysia in 2000 was RM67.7 billion (US$22.2 billion). Eight years later, this has ballooned to RM208 billion ($68.2 billion).
The report warned that the sharp increase of capital flight in Malaysia is “at a scale seen in few Asian countries”.
It said that it was difficult to point out the reasons behind this massive outflow of illicit capital – estimated at RM889 billion (US$291 billion) between 2000 and 2008 – without carrying out an in-depth study of Malaysia, which is outside the scope of the report.
“It is clear however that significant governance issues affecting both the public and private sectors have been playing a key role in the cross-border transfer of illicit capital from the country.
“For instance, there are reports in the Malaysian media that large state-owned enterprises such as Petronas could probably be driving illicit flows.”
The financial watchdog said that its research has indicated that political instability, rising income inequality and pervasive corruption are some of the structural and governance issues that could be driving illicit capital from many developing countries. Read the rest of this entry »
Investors shun Malaysia as emerging market outlook cools
Posted by Kit in Economics, Finance, Najib Razak on Thursday, 20 January 2011
By Yow Hong Chieh
The Malaysian Insider
January 20, 2011
KUALA LUMPUR, Jan 20 — Global investors are continuing to avoid Malaysia as fund managers trim investments in emerging markets over concerns that China’s economy will slow this year.
Bank of America Merrill Lynch said in a note this week that Malaysia remained a “big underweight” for investors in emerging markets, with its underweight rating increasing from 46 per cent in December to 55 per cent in the first month of 2011.
An underweight call is a recommendation for investors to reduce their investments in a particular security, asset class or, in this case, country.
Malaysia slipped from 14th place in December to dead last this month among the 15 countries studied by the investment bank, despite the roll out of big ticket Economic Transformation Programme (ETP) projects and speculation that snap polls will be held later this year.
Topping the list was strongly overweight Russia, followed by Thailand, Brazil, Turkey, South Korea, China, Indonesia and Mexico. Other emerging market underweights were Poland, Taiwan, Colombia, India, South Africa and Chile.
Malaysia’s underweight call also comes at a time when fewer investors are looking to increase investments in emerging markets due to worries that China’s “eroding” economy will have a knock-on effect on the market in Asia. Read the rest of this entry »
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 »
Two-generation home loans may bankrupt the next generation
Philip Ho
Klik4Malaysia
23 October 2010
Petaling Jaya, Oct 23 – Housing and Local Government Minister Datuk Chor Chee Heung has urged house buyers to sign up two-generation housing loans so that more Malaysians can afford to own houses.
“The most important thing is for the individual to own a house for his family to live in. If loan repayment is extended to the second generation, that means the family will remain intact,” said Chor yesterday after launching the Malaysia Building Society Bhd’s Ultimate Mortgage programme on Friday (Oct 22).
Chor said that the newly announced 2011 Budget also encouraged the two-generation loan term while denying that the move would increase the financial burden of the next generation.
“I don’t think it is a burden for the next generation because the repayment will be spread over a long period and the younger generation are financially strong. They can even buy a second house,” he added.
Klik4Malaysia (K4M) contacted Selangor state government’s chief executive of economic advisory Rafizi Ramli for comments from an accountant’s perspective, regarding the implications on the younger generation’s financial burden. 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 »
Will Muhyiddin return to Treasury his salaries and allowances as Federal Minister for past 15 years so as not to be associated with forbidden money?
Posted by Kit in Finance, Muhyiddin Yassin, Penang Government, UMNO on Tuesday, 5 October 2010
Deputy Prime Minister Tan Sri Muhyiddin Yassin and Umno Ministers should decide at the Cabinet meeting tomorrow whether they will return their salaries and allowances to Treasury as they do not want to be associated with gambling money.
Ten days ago on September 25, Bernama carried the following report:
MUAR, Saturday 25 September 2010 (Bernama) — Deputy Prime Minister Tan Sri Muhyiddin Yassin has called on Penang Chief Minister Lim Guan Eng to answer allegations made by Umno Youth on the state government’s financial source to fund its poverty eradication programmes.
Muhyiddin said Muslims would not want to be associated should gambling money were used for the programmes.
“We want an answer from Lim. If the money is from a forbidden source, Muslims will have no part in it,” he told reporters after launching a Pagoh education excellence programme at the Dewan Sri Pekembar, here.
Muhyiddin was asked on a news report today quoting Umno Youth as claiming that funds from gambling activities were used to finance poverty eradication programmes in Penang.
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 »
When will Najib and his Ministers wake up and realize that the twin crisis of human talents and investments confronting the country are more than a matter of economics?
Posted by Kit in Economics, Finance, Financial Scandals, Najib Razak on Thursday, 26 August 2010
The Minister in the Prime Minister’s Department Tan Sri Nor Mohamed is quoted in today’s press as saying that Talent Corporation has been tasked with attracting at least half of the 750,000 Malaysian professionals working overseas to come home as part of its efforts to draw the best brains in the world to Malaysia.
Speaking at the launching of the Public-Private Partnership’s website www.3pu.gov.my, he said seeking out the Malaysian diaspora for the top brains was necessary as the Government aimed to hit the target of RM115 billion per year in local and foreign investments to turn the country into a developed nation by 2020.
It is shocking that Nor Mohamed could come out with such an unrealistic and “tall order” not only because of the dismal failure of previous government “brain gain” policies but in the light of recent events when the unchecked escalation of the rhetoric of race and religion would have the effect of giving a major push to greater brain-drain from the country instead of pulling back talents from the Malaysian diaspora to return to serve the country.
It is time that the Prime Minister, Datuk Seri Najib Razak and his Ministers wake up and realize that the twin crisis of human talents and investments confronting the country are more than a matter of economics.
Read the rest of this entry »
DAP: MP allocations better spent on scholarships
Posted by Kit in DAP, Education, Finance, Good Governance on Saturday, 3 July 2010
Malaysiakini
Humayun Kabir
Jul 3, 10
The DAP has slammed the additional project allocations to parliamentary constituencies totalling RM111 million, saying the money would be better spent on more scholarships to deserving students, our future assets.
Party supremo Lim Kit Siang lashed out at the BN government for squandering precious public funds for their personal political agenda instead of helping needy students.
He said more non-Malay students who deserve scholarships are not getting the opportunities, describing Prime Minister Najib Abdul Razak’s 1Malaysia policy as hypocritical.
Lim praised party national vice chief M Kula Segaran – who is helping Indians secure Public Services Department (PSD) scholarships – for championing the rights of his community. Read the rest of this entry »
Tenth Malaysia Plan: Long Live NEP – RIP NEM
Posted by Kit in 1Malaysia, Economics, Finance, Parliament on Monday, 21 June 2010
The signature theme of Datuk Seri Najib Razak on his accession as Prime Minister in April last year was the national transformation of Malaysia, which is anchored on four critical pillars:
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1st pillar: “1Malaysia, People First, Performance Now” concept to unite Malaysians.
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2nd pillar: the Government Transformation Programme (GTP) to deliver the outcomes defined under the National Key Result Areas (NKRAs).
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3rd pillar: the New Economic Model (NEM) resulting from the ambitious Economic Transformation Programme (ETP) to transform Malaysia by 2020 into a developed, competitive and high income economy with inclusivity and sustainability.
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4th pillar; the 10th Malaysia Plan 2011-2015 as the first policy operationalisation of both the government and economic transformation programme.
The Prime Minister unveiled the New Economic Model on 30th March and the presented the Tenth Malaysia Plan in Parliament on 10th June. A sea-change took place in the intervening two months, with Najib retreating from his national transformation programme when he succumbed to pressures from extremist groups making baseless and incendiary claims such as that the Malays are under siege and that the Chinese would take over the economy and country.
Read the rest of this entry »
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 7 (National Agenda for all Malaysians instead of a mutating NEP)
A dispassionate analysis of the forty years of implementation of the NEP-NDP provides many lessons. These include:
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There is no alternative to pro-growth policies if Malaysia is to attain the original goals of the NEP, namely eradication of poverty irrespective of race and economic restructuring; pro-growth policies are also essential if the Vision 2020 goals are to be achieved.
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Malaysia has achieved rapid growth and prospered when the policy framework has been pro-market and liberal.
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On the other hand, pro- distribution policies such as those favored and advocated by Faaland in the early 1970s and again revived now championed by PERKASA, have led to slow overall growth and more specifically low achievement of the restructuring targets.
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The private sector constitutes the main engine of growth. Over-regulation of the sector under the NEP framework creates impediments to investment, both domestic and foreign, thereby impacting on poverty eradication and opportunities for restructuring.
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There is a high cost of doing business when there is over-regulation or bureaucratic control. Distortions emerge that create opportunities for rent-seeking and corruption.
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 6 (Equity Restructuring/Ownership)
Equity Restructuring and Ownership
The Plan restates that the target of attaining at least 30% Bumiputra corporate equity ownership at macro level remains. It goes on to indicate that the focus will be on promoting genuine economic participation, consistent with the objective of sustainable high growth, rather than corporate equity allocation.
The Plan proclaims that this will be achieved through more transparent, market-friendly and merit-based instruments, focused on:
• Strengthening Bumiputra entrepreneurship to help create competitive businesses in high impact sectors;
• Increasing wealth ownership beyond corporate equity to include other properties and business assets such as retail space landed properties,
commercial buildings, intellectual properties and other services through pooling of funds and institutional investment; and
• Promoting Bumiputra representation in high paying jobs through enhanced capability building and demand-side incentives.
These statements can be cautiously welcomed as they represent a nuanced shift. However, if the past is any indicator, this shift may be no more than illusionary and a mutation of the NEP. Read the rest of this entry »
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