February 6, 2018
By Abdul Rahmat Omar
I read with amusement a recent article posted on an Opposition-leaning news portal how Jomo Kwame Sundaram’s answer to address a ballooning debt is by cutting the Prime Minister’s Office’s spending, and also to reduce the number of mega-projects.
Jomo, who is Visiting Senior Fellow at Khazanah Research Institute, said that what Malaysia needs now is more appropriate development expenditure, not yet more operating expenditure, especially for the PMO, which has grown more than tenfold and has centralised power like never before.
According to the article, the PMO was allocated RM17.43 billion in Budget 2018, almost double the RM8.938 billion it received in 2008.
The Prime Minister’s Office or the Prime Minister’s Department?
The Visiting Fellow at Khazanah Research Institute apparently finds it difficult to distinguish between the Prime Minister’s Office and the Prime Minister’s Department.
According to Budget 2018, RM17.43 billion was allocated to the Prime Minister’s Department, and not the Prime Minister’s Office.
The Prime Minister’s Office is only one of 56 agencies under the Prime Minister’s Department.
I don’t know what was Jomo also trying to imply by saying that the PMO has more centralised power like never before.
Since the budget is for the PMD and not the PMO, the centralised power and authority to spend the budget comes under the Chief Secretary to the Government of Malaysia, who is appointed by the Yang DiPertuan Agong.
Major agencies under the Prime Minister’s Department include the 7,000-strong Malaysian Maritime Enforcement Agency, the 3,000-strong Civil Defence Force as well as the Eastern Sabah Security Command (ESSCOM).
All these agencies have been tasked to look after our security and well-being.
In 2008, there was no MMEA nor was there the ESSCOM.
The MMEA, for example, has since added more capable blue-water assets to replace its ageing heritage assets handed down from other agencies such as the Royal Customs Department, Royal Malaysian Police, Royal Malaysian Navy and the Fisheries Department.
The heritage assets’ average age was 30 years old and consisted mainly of coastal and brown-water assets.
ESSCOM has also added more assets such as surface-search radar, build installations for security units to operate from, to combat border incursions by illegal immigrants as well as by terrorist groups.
The Malaysian Civil Defence Force, or Angkatan Pertahanan Awam Malaysia (APM), has gone on a massive recruitment drive and assets procurement.
With a permanent force of only 3,000 there is not enough of them to go around in the case of an emergency or disaster.
It was reported that in Kuala Kangsar, there is only one permanent APM staff who is the ambulance driver when responding to an accident or other emergency medical cases, and is also the coxswain for the rescue boat when there are floods.
Surely the men and women of the agencies I mentioned above also deserve a raise when due.
Then there is of course, the Parliament.
The budget for Parliament also comes under the Prime Minister’s Department, in case Jomo is not aware of that.
Operating costs, staffing costs, allowances and pensions for current and former members of Parliament come from the Prime Minister’s Department.
So, when your MP walks out of a debate or does not attend bills voting sessions, don’t ask why is the government spending unnecessarily.
Ask why is the government paying for your lazy MP. Ask also why was your MP a one-term MP, and why is there so many one-term MPs especially from the Opposition.
And please also ask why is the government still spending on the secretariats of two former Prime Ministers – one who made so much noise when the government reduced the budget allocated for his staff, while he goes around running down the current government as well as the country.
Jomo, described as a prominent economist in the article, also mentioned about the fast-rising government debt which is now hitting almost RM700 billion (USD178 billion).
He said that the mega-projects that are now being constructed have added to the burden of debt that Malaysia has to shoulder.
While it is true that our debt is actually at RM687 billion, domestic debt is at RM492 billion (or 72 percent of total debt) while external debt is at RM195 billion (28 percent).
Our International reserves stand at RM417 billion. I am looking at the latest report issued last week by the Bank Negara Malaysia.
But you do not just look at debt to know how we are performing economically.
Our debt to GDP ratio is at 53.2 percent, down from 54.5 percent the previous year, year-on-year.
So Jomo is off the target when he said the government is not addressing its debt issue.
Market consensus of our GDP expansion was at 5.4 percent. Yet, it was at 6.2 percent year-on-year in September 2017, making our economy one of the most robust expanding economy.
Private consumption increased by 7.2 percent in the same reporting period where Malaysian spend mostly on food, communication, housing and facilities.
So how is that possible if the economy is not doing well? Our exports grew by 12 percent; manufacturing sector rose 7 percent; services rose 6.6 percent; construction 6.1 percent.
At 53.2 percent debt to GDP ratio, it means that the government is still able to pay off its debts.
As a comparison, Japan’s debt to GDP ratio is 250 percent; the US is at 106 percent; France is at 96 percent while the UK is at 89 percent.
Among ASEAN nations, Singapore has the highest debt to GDP ratio which is at 112 percent. Any country that has its debt to GDP ratio exceeding 100 percent means that it has debts more than it could make money.
But do we hear anyone from the countries mentioned above complain?
Every day we hear of ill-informed Malaysians complaining that our country is in such huge debt that the country will soon be in ruins.
Selective statements by the likes of Jomo is not helping the situation. And it certainly does not help especially when his statement was intentionally directed at the Prime Minister’s Office, and not the Prime Minister’s Department where the budget was given.
Perhaps, it was malice on his part to intentionally and falsely painting the wrong picture, to make the Prime Minister look bad.
Or perhaps it was the editor of the said portal who spun Jomo’s statement to make it look as if Jomo implied that it was the PMO instead of the PMD.
Either way, Jomo’s intentional or unintentional non-mention of the debt-to-GDP ratio shows the bad blood he has with the Najib administration.
A true economist would give the WHOLE picture.
Jomo is not.