Commentary Economics

Fresh Gale on Najib-nomics

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Syndicated News
Written by Syndicated News

By Salahuddin Hisham

THIS year’s Merdeka celebration was the 60th but the political discourse on public policy, especially on economic matters, has yet to reflect a maturity.

In an article in the Singapore Straits Times on September 1st, Dr. Bruce Gale wrote about anticipating this.

He clarified from the start that the few controversies of alleged financial mismanagement or fraud were unfairly given prominence over an honest and objective assessment of the Malaysian economy.

One critic of a regular contributor to the Free Malaysia Today news portal, T.K. Chua, reflected this typical attitude of the Malaysian public to look at the economy from a limited personal perspective.

It is similar to nitpicking comments by common folks over specific measures that affect them directly tabled at the annual budget presentation as their general assessment of the economy. Another one is soon to be tabled for 2018 so expect a repeat.

It is unlikely for journalist Chua to not know that Gale is an old hand in political and economic analysis.

He is reknown as a former partner of Hong Kong-based Political and Economic Risk Consultancy (PERC). Since being formed in 1976, the periodical PERC report is major source of independent and unbiased political and economic assessment of Asian countries and an important reference for financial institutions and multinational corporations.

Gale himself authored few books on Malaysian political economy and goes as far back to the 1981 publication, Politics and Public Enterprise in Malaysia. His work is often referred to in books, journals and articles by academics and commentators of Malaysian political economy.

His assessment of Prime Minister Datuk Seri Najib Razak touched on a wide range of areas on national debt, the weakening ringgit, impact on the poor, bureaucratic reforms and structural weaknesses.

Unlike Chua, whose major bat to hit out of the ballpark is escalating prices, Gale specifies his pluses and minuses to give credit where it is due and finally deriving to his conclusions.

No doubt rising prices are a major concern but that cannot be the only consideration to make any assessment on Najib’s macroeconomic policies. Rising prices are a common occurrence and part and parcel of the capitalist economic system.

Currently, rising prices are solely blamed on the Good and Services Tax (GST). However, the Malaysian market has legacy issues of being structurally marred by ogopolistic cartels, excessive profiteering and unsavory business practices.

A past leader who stayed around the longest refused to address this market anomaly problem and even broke up Pernas, the government linked company started by Tun Abdul Razak.

The GST and reduction of subsidies are critically necessary long term economic reforms. If any blame is to be made, it has to be poor planning and implementation by civil servant as. Specific blame goes to the Customs and then way up to decisions by the Treasury’s secretary-general.   

One cannot help but view Chua’s criticism as politically motivated and devoid of objectivity, to only criticise without mentioning the positives.

It is glaring of him to emphasise on the negatives that is in-sync with the limited political narrative of the opposition to haunt the public with horror economic stories such as the ridiculous impending bankruptcy of Malaysia.

Chua’s discussion of the weak ringgit, national debt, mega projects, GST, reforms and credit agencies are obviously politically slanted and partisan, as it is filled with questions posed to create doubts rather than offer any substantive argument backed by facts and figures.

It is a dishonest critic to claim the national debt is out of control at slightly above 50% of GDP. As Gale highlighted, Malaysia’s national debt is stable. During the 80s to 90s, Malaysian debt to GDP ratio was almost 100%!

The formula to calculate national debt was changed by World Bank. Non-government debt and foreigners’ liabilities are now added. More developed and vibrant economies have their recalculated national debt to be more than 100% and reached more than 200% of GDP.

Externalities and market condition on global weak economy, ringgit exchange rate, and prices of oil is part of an open economy, thus it is beyond the control of any single party, let alone a small country like Malaysia. Thus it is ridiculous to blame Najib for it.

If foreigners’ confidence in Najib is truly low, the stock market would have plunged, there’ll be no glowing IMF-World Bank assessments of Malaysia and international rating agencies would have crucified Malaysia.

The fact that the market remains steady is a testimony of foreigners’ respect of the strength, depth and stability provided by domestic institutional investors.

A fair economic assessment on Najib’s economic management should be on how the problems are addressed and the macroeconomic policies formulated, which took into account the economic constraints and including inherited legacy issues besieging the economy. 

For too long, past fascination with Thatcherism to corporatise and subsequently the privatised public services turned into monopolies led to the wastage of failed ventures and bailouts. Together with unfocused subsidies, budgetary constraints from the significant fall in oil revenue would have denied the needs of the poor.

Aggressive effort to address another structural legacy of widespread tax avoidance and evasion provide a permanent solution to make available source of revenue to assist the truly needy.

If enforcement by agencies related to consumer protection did their job, the GST impact on the poor should be minimal as common food items such as rice, fresh fruit, bread, meat and vegetables are GST-exempt.

More to come in social programs as the budgetary transformation stabilised.

By the look of things, Najib’s program to help the poor is not out of political expediency. He is continuing where his late father left off but taking account the realities of the present and the changing demographic and social profile.

Where his past predecessor evaded civil service bureaucratic reform by privatisation and opportunistically, use it to feather some nests, Najib attempted the unthinkable through introduction of key performance indicators (KPIs) and measured goal setting.

Despite unsubstantiated political allegations of corruption leveled at him, Najib did not curb enforcement agencies such as Malaysian Anti-Corruption Commission from being aggressive in their campaign against corruption.

He is more earnest as both sides of the political divide are not spared from being raided and charged in court. 

Gale highlighted that the problem with low productivity but viewed that it is steadily improving.

It should continue to improve as access to economic opportunity is determined through competition, good business practices and continual improvement than favouritism. A level playing field serves all communities for a chance of socio-economic upliftment.   

1MDB, FGV and various concerns of mismanagement and frauds is being addressed. Unlike the past, there is no cover-up till it takes more than 25 years to know of a humongous loss of RM31.8 billion and there is no evading from necessary due processes.

Gale believed Najib should be given credit where it due and concluded that under his leadership, Malaysia’s macroeconomic policies have been broadly appropriate.

The unpopular policies were necessary and the political fallout propagated by UMNO dissidents and opportunistic opposition are only expected reaction to the growing pain of change and a past leader‘s desperate effort to cover-up past wrongdoings.  

It is for a better Malaysia that Najib should and must survive this temporary political setback.

 

 

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