Commentary Economics Politics

When talking economics, keep it factual


Written by TheMole

By Salahuddin Hisham

Aug 4, 2017

THE general election date is not known but politics is in the air. Guessing the election date is the latest past time. Attack, counter attack and defence on issues are now a daily affair.  

Which are facts and which are fiction, lies, and slander? The political narrative will usually take its own path and lifecycle.

But, the bigger concern is that the wrong fact on the economy and business being perpetuated could make investors nervous and pull their handbrake or divest; business environment turned from confidence to cautious, and finally perception becomes real.

The modus operandi by a certain party is obvious. Accuse first, get foreign media to report, and portals and social media to viral. If voters buy it and the present ruling party ousted, all including allegations “related to 1MDB” in the application by the US Department of Justice and French court enquiry on DCNS suspected bribery will likely be forgotten.

Salahuddin Hisham was involved in various financial markets but has since, turned political and online.

Similarly issues raised in past political campaigns are thrown in the back burner after election. Only lately, it is recycled for lack of other issues to complement 1MDB.

Since the by-election in Ijok in 2007, the opposition political campaign against Barisan Nasional has primarily been personal attacks agains Prime Minister Datuk Seri Mohd Najib Abdul Razak. It was pushed to a new limit of the accusation for murder.

The Goebbels’ method of propaganda to lie big enough until the public accepts as true is usually faulty and lacks facts.

A fact is a thing that is known or proven to be true or has happened or existed. There has to be verification for proof, credible references, and data or statistics. Information itself is not sufficient to be considered as truth.  As do opinion, personal preferences and allegations or stipulation.

Of late, social media is viralled by allegations on the level of national debt. They showed the national debt increase in absolute terms in the past few years.

IMF had reclassified national debt to include the deposit and debt taken by foreign individuals and the corporate sector. The national debt for 2013 was adjusted from RM196 billion to RM396.6 billion.

It is too simplistic to measure in absolute numbers and apply time series comparison. It has to be compared with debt or other economic data. The Debt-to GDP ratio decreased from 53.6 per cent for 2012 to 52.7 per cent for 2016.

When compared to other developed and developing countries, whose Debt-to-GDP runs to more than 200 per cent, Malaysia’s debt to GDP ratio is too low.

That argument has led to the perception play that Malaysia is on the path to face bankruptcy and failed state status. It is a conscious attempt by the parties in creating and distributing such falsehood to sabotage the economy and country.

An economically failed and bankrupt state would have government officers and staff not being paid salaries and the functions of government would grind to a halt.  

1MDB is a victim of a similar act.

In 2015, there was a conscious and coordinated effort by many parties including the media to railroad the listing of its energy arm by making a mountain out of the delayed loan repayment to Maybank and Deutsche Bank.

1MDB was having cash flow mismatch and the Independent Power Producers acquired had a negative carry. However, 1MDB did not default and nor bankrupted.

Late payment does not mean default till banks take legal process. It needs court judgement, and execution of the court decision.

The recent delayed payment to IPIC is far from default. 1MDB was restructured to ensure that the cash inflows are matched with cash outflow, and asset or investment matched the liabilities. A delayed cash inflow will see cash outflow delayed. It is hardly a problem that cannot be ratified.

Second Minister of Finance Datuk Johari Abdul Ghani said that as a business entity it has to run on its own.  1MDB had not asked the mother ship to beam it up.

Not worth in making mountains out of anthills as though public money was used to bailout and the rakyat had to pay for GST. 1MDB was a highly geared entity but the seed money from the government was only RM1 million. Its current paid-up capital of RM1 billion came from capitalised profit.

And, the bridging loan from the government to start the restructuring was less than RM1 billion and was already paid back. The fact is it is equivalent to less than a week of Royal Custom Department GST collection and could not be the reason the GST was implemented.

The complaint on GST should be directed to the international oil market.

This story of the government gone bankrupt due to 1MDB may have been taken to a new dimension of more nonsense than sensibility. These morons claim that the government is short of money due to 1MDB and Bank Negara Malaysia (BNM) had to open tender to print currencies.

If they were lawyers, they’d have thrown their competency in presenting and scrutinising facts and evidence in courts out of the window. Cash management is part of the role of BNM. Old currencies in circulation need to be replaced.

Malaysia does not issue money at will but currency released is matched with commercial banks’ account position with BNM. These lawyers may never have heard of terms to describe money like M1, M2 and M3.           

If they claim that the issuance of Treasury Bills and Malaysian Government Bonds was to cover 1MDB also, they should refrain from commenting on anything outside their expertise – law.

These are debt instruments issued by BNM for short term and medium term government expenses. They have existed since time immemorial or to not exaggerate, since Malaysia began to have a central bank.  

Nevertheless, it is something positive for the public to discuss politics beyond power play and campaign strategies, and tactics. Politics is about governance and discussion on policies should be encouraged.  

However, be it economics or business or politics, it has to be factual. The sign at Petronas pump stations that reads “Not everything in the Internet is true: Unsure, do not share” should be adhered to.

It cannot be based on suspicion, unqualified self-interpretation, and rumours. It is best to hear unbiased views of those with the expertise in the respective discipline.

Then, hear from both and many sides of the divide.

Make a list of the terms of reference for one to take a position on. Sometimes there is no right or wrong answer but it is the term of reference that determines whether the position or view taken is fair or intelligent.



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