Malaysia needs to overtake Gabon to achieve First World status

KUALA LUMPUR, May 4 - Malaysia will have to fundamentally rework its economy to become more productive and R&D based if it is serious about making the quantum leap to become a high income economy and move out of the income bracket currently occupied by countries such as Gabon and Botswana. [The Malaysian Insider]

"Gabon? Where in the world is that?" It is an honest question many Malaysians would ask (with all due respect to the Gabonese people, of course) when they hear that their country is lagging behind the west central African nation.

Latest figures from the World Bank revealed that Malaysia has now fallen behind Hong Kong, South Korea and Singapore in terms of gross national income (GNI) per capita and is now trying to play catch up - much to our embarrassment.

In 2007, Malaysia had a GNI per capita of US$6,420, far behind countries such as Singapore (US$32,340), South Korea (US$19,730), Japan (US$37,790), Hong Kong (US$31,560), Australia (US$35,760), Finland (US$44,300), and Switzerland (US$60,820) and Norway (US$77,370).

Gabon has a GNI of US$7,020.

Many Malaysians would be shocked to learn that despite Gabon having a population of just 1.5 million, they are still able to generate such wealth, compared to Malaysia's 27 million.

It is indeed heartbreaking for Malaysians to see their country fall behind nations like Hong Kong, Taiwan and Singapore - countries which were once economically on par with Malaysia just three decades ago.

What had shoved Malaysia into such a demise is anyone's guess but it is definitely not a surprise to find ourselves so low in the world rankings. If we have an MP who had once the courage (I'd say shamelessness) to celebrate Malaysia's achievements, saying Malaysia is 10 times more developed than Ghana, then it is no wonder that the real-world figures would eventually come come forth to prove our lack of ambition. If beating Ghana, which became independent in the same year as Malaysia, is a cause to celebrate, would it then be suicidal to know that Gabon has overtaken us, given the west central African nation achieve independence later than Malaysia?

From left: Libreville, the capital of Gabon and Kuala Lumpur.

And recently Lee Saw Hoon, a senior director of the Malaysia Productivity Cor­­poration said Malaysia had done well to maintain its 21st position in the World Economic Forum’s la­­test global competitiveness report [source]. According to the report Malaysia was the sixth most competitive Asian country after Singapore, Ja­­pan, Hong Kong, South Korea and Taiwan.

I don't know about Lee but I can't take that lying down. We should be up there with Singapore, for goodness' sake! Mind you, we were the ones who kick them out of the Federation and left them in the dark without having any natural resources of their own. Today, they are one of the financial powerhouses of the world.

And when international performance is concerned, Malaysia's dismal FIFA World Ranking never seems to escape the public's attention. Malaysia is currently ranked 161st in the world and yes, you've guessed it - countries like Eritrea, Myanmar and Turkmenistan are above us. Gabon, on the other hand, is ranked 48th.

However, the lack of ambition is not the only cause for our shortfall. It is because we have misplaced our priorities over the decades; further condemning ourselves to remain as a Third World country even after half a century of independence. It is high time for certain sectors of the government to take heed and stop the racial bickering, policies and propaganda. It is imperative that we devote precious time and resources to put Malaysia back onto the world map before we find ourselves overtaken by Cambodia.
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Pro-Malay policies are damaging the country. And they know it

KUALA LUMPUR, Feb 24 – Malaysia will relax some of its pro-Malay economic policies as part of a major stimulus package to keep the economy from faltering further, Minister of International Trade and Industry Muhyiddin Yassin said yesterday. [The Malaysian Insider]

Pro-Malay policies are damaging the country. And they know it. But nothing seems to be going around the tables of the policy makers to address the issue of inequalities enshrined in the New Economic Policy (NEP) that has been the subject of controversy since its inception in the 1960's.

The proponents of the NEP argue that the policy was intended to give a boost to the less economically-fortunate ethnic Malays, as compared to the other ethnic groups in the country. It had noble intentions, yes I agree. But the question was how long does Malaysia need for an unequal playing field to exist between the ethnic groups before the policy becomes discriminative? 20 -30 years?

(Click here for my previous article on the NEP.)

No one knows because the NEP has not been discontinued despite the lack of convincing results after 40-odd years - with some quarters claiming the 'economic inequalities' given to the ethnic Malays were divine rights. But speak to a rational Malaysian and he/she would tell you that such discriminative policies should either be done away or re-amended to encompass all members of every ethnic group who are less fortunate. There are also poor ethnic non-Malays out there as there are poor ethnic Malays in this country.

The fact that the government was willing to go easy on pro-Malay policies now during the economic slowdown has shown that such policies that favour one ethnic group over another is detrimental to the country's economic future. Pro-Malay policies are in the way of healthy economic growth and is keeping foreign investors away from investing within our shores. By going easy on them, it does go a long way to help steer the nation out of the current global turmoil; thus making Malaysia competitive again!

To say Malaysia is not affected by the global economic crisis would be a public lie. Malaysia's exports have fallen 14.9% from December last year given the export demand for local goods have declined.

It was reported that the government would scrap the guidelines for the retail sector in order to keep the economy from worsening. Under the guidelines, retailers and restaurants in Malaysia were required to have 30% bumiputera equity participation if they had more than 15% foreign shareholding. They were also required to have boards, management and staff reflecting the demographics of Malaysia - meaning a certain number of bumiputera workers had to be employed regardless of their qualification or competitiveness.

So when is the time for Malaysia to move beyond racial lines in our economic policies? On March 2, PAS spiritual leader Datuk Nik Abdul Aziz Nik Mat (image) said the NEP had neglected the rights of the non-Malays and even labelled the "bumiputera'' terminology as racist. DAP’s Dr Boo Cheng Hau, the opposition leader in Johor was reported to have even compared “bumiputeraism” with apartheid. Too strong of a comparison from the DAP man? Maybe. Just maybe.

UMNO Youth's Khairy Jamaludin took a swipe at the PAS veteran, Nik Aziz for saying the NEP was discriminative to the non-Malays. According to Khairy, the NEP had never discriminated against the non-Malays in the disbursement of aid and the approach taken by the Barisan Nasional government.

“I feel Nik Aziz’s remark was not accurate. May be he had been wrongly informed by his officers.We have never suppressed or oppressed other races and previously at the initial stages, we gave priority to the Bumiputera because they were the poorest at that time," he said. [The Malaysian Insider, 2/3/2009]

That 'time' has long gone by, Khairy...
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Toll rates should correlate with traffic volume!

- A commentary -

KUALA LUMPUR, Feb 26, 2009 — Toll rates will go up at five major highways from March 1, the government said in an announcement today which has already drawn sharp criticism from the Pakatan Rakyat. [The Malaysian Insider]

This is absurd. It is not as if the toll rates for the five major highways (North-South Expressway, Sprint/Kerinchi/Damansara Link Highways, Ampang Elevated Highway, Sungai Besi Highway and the New Pantai Expressway) are not high enough to be burn holes in our pockets.

Works Minister Datuk Seri Mohd Zin Mohamed said the federal government had no choice but to allow the increase in toll rates as stated in toll concession agreements. The government has shown little or no consideration whatsoever to the plight of the people given the current current economic situation of the nation. The minister said the government would have to pay concession holders compensation if the increase was not allowed.

And one day later after announcing the hike in toll rates, the federal government said it would defer the hike till end of the year following mass protests from MPs and members of the public. At the mean time, taxpayers would still need to pay RM287 million in compensation to toll concession holders. Regardless of whether the toll rate hike is in effect now or later at the end of the year, the people of Malaysia is still at the losing end - pay higher toll rates or risk losing public funds to compensate concession holders.

As I understand, toll rates are collected from road users to pay off the cost of construction of highways. But the main question is how long does the public need to pay to cover the cost? Instead, highways have been money-making machines for concession holders that include high profile, well-linked businessmen and companies. The trick up their sleeves is wipe off any code of transparency in toll concession agreements from the public under the Official Secrets Act (OSA) - meaning such agreements are filed as state secrets. One can only imagine how agreements on highway construction could be a threat to national security. It's not like the North Koreans or the Israelis are interested in our tolls.

The five major highways bound to have its rates raised enjoy stupendous traffic volume everyday. And yet, toll rates are reviewed and raised every few years without bearing in mind its effect on the pockets of the middle-class. Toll concession holders may argue rising maintenance costs to justify toll rate hikes but let's look at it this way. The tarmac on the highways remains the same. So really, how expensive could maintaining tarmac be. Streetlights along the highways are not exactly lighthouses too. Unless there are gargantuan holographic road signs or ion-powered chrome streetlights to justify the toll rate hike, I do not see why road users have to dig deeper into their pockets every now and then.

To give a glimpse of what is to come unless Malaysians reclaim their highways, a return KL-Penang journey (currently at RM86.60) will balloon to RM115.30 in 2015 and RM168.80 by 2030.

Highways should not be 24 hours-a-day-7-days-a-week wealth machines, serving to fill the pockets of wealthy concession holders and well-connected companies. On February 25, the DAP proposed for a toll-free North-South Expressway by 2016 that the party said will save taxpayers RM14 billion (Click here for a detailed summary of the proposal).

And I personally welcome that notion.

To conclude, I believe toll rates should be proportionate to traffic volume. It makes no sense to raise the toll rates to 'cover costs' when traffic volume increases exponentially every year. If logic permits, the toll rates should be reduced as more motorists are sharing the 'costs'. Hence, I believe that toll rates should correlate with traffic volume and not at the mercy of highway concessiors. That way, it makes more sense for every cent spent on toll rates.

Toll rates of 2007 and 2008. Note the increase. (Image courtesy of: http://www.jeffooi.com)

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Have Dr Mahathir and his protestors gone too far?

At least 5,000 people protested outside the US embassy in Malaysia on Friday, and around 300 held a noisy protest outside the National Mosque in Kuala Lumpur to urge Arab countries to cut off oil supplies to the US and boycott Coca-Cola, Colgate and Starbucks. [Al-Jazeera.net, 9/1/09]

Qatar-based news agency, Al-Jazeera reported that at least 5,000 people gathered outside the US embassy in Kuala Lumpur and about 500 outside the National Mosque to protest against the Israel's aggression in Gaza.

Speaking to the crowd gathered at the National Mosque was none other than former Prime Minister Tun Dr Mahathir Mohamad (image) whose vigour still draws public attention despite his age. The 83 year old who publically denounced Israel's latest invasion into Gaza, recently called for a boycott of US products and its currency for being Israel's 'partner in crime'.

Mahathir, while addressing the 500-strong crowd, said Malaysians 'will not die if they do not use US products' and urged employees of American companies like McDonald's to quit their jobs.

"I hope Starbucks and McDonald's employees will stop working there," he said. [Al-Jazeera.net, 9/1/08]

He has got to be kidding us...

Sure, it's easy for him to tell Malaysians working in American companies to quit because he does not need to worry about earning a living. Try telling that to a wage-earner in McDonald's who has a family of five to feed and could barely make ends meet.

Mahathir has really got to be kidding us. Where, then, are they going to get their money? Can their idealist approach pay their bills and put food on the table? Who would hire them? Are Malaysian companies going to hire these people when giant firms are currently laying off their workforce due to global recession?

Well, as a side note, our economy is not even big enough to sustain itself and that is why we need foreign investors here. Do these people really think our economy is so mighty that we can survive on our own?

The crowd also rallied by shouting "Long live Islam, long live Palestine, destroy Israel!" and urged Arab countries to cut off oil supplies to the US.

Now, why would the Arabs do that when they are earning millions of dollars from the sale of their crude oil? The people who make such ludicrous statements fail to understand or rather, fail to realise that the Arabs need the Dollars and the Americans need their oil. It's a love-hate relationship.

The Malaysian Islamic Consumers Association, and the Muslim Restaurant Operators Association, on the other hand, is spearheading the boycott of US products by removing Coca-cola from the menu of more than 2,000 Muslim restaurants. They, along with Mahathir, suggest that Malaysians should also boycott American brands like Starbucks, Maybelline and Colgate to further their cause.

In response, Coca-Cola Malaysia spoke out against the boycott of its drinks and other US labels, saying such a move would only hurt the local economy and the local citizens.

"As everybody else, we are deeply touched by the human side of the situation in the Middle East," Kadri Taib, Coca-Cola Malaysia public affairs and communications director, said in a statement. [BBC News, 9/1/08]

Coca-Cola Malaysia, who has a plant in Shah Alam, currently employs 1,700 Malaysians and interestingly enough, 60% of whom are Muslims.

Enough said.


This article is preceded by Boycotting US products a really dumb move for Malaysia dated (5/1/09). Images are courtesy of Malaysiakini.

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Boycotting US products a really dumb move for Malaysia

-A commentary-

Minister in the Prime Minister’s Department Datuk Seri Dr Zahid Hamidi concured with the proposal by Tun Dr Mahathir Mohamad that Muslim countries boycott US-made goods in protest against the attacks on Palestinians. [The Star, 5/1/09]

The recent Israeli aggression in retaliation towards Hamas' rocket attacks caused ripples of anger across the Muslim world. Malaysia, being a Muslim-majority nation was also caught in the wave where recently street protests were held in support of the Palestinian people. While many are outraged towards the United States and Israel, there has been a suggestion calling Muslim countries to boycott U.S.-made products and companies with Israeli connections.

Even former Prime Minister Tun Mahathir Mohamad surprised everyone when he proposed that Malaysia should do the same as a sign of protest against Israel's aggression and the indecisiveness of the Americans in resolving the matter. His view was shared by Minister in the Prime Minister's Department Datuk Seri Dr Zahid Hamidi (image) who said he would present the proposal to the Cabinet soon.

I will not get into a debate on Israel's right to invade Gaza or whether Hamas are the actual perpetrators of this mess. But we all agree that innocent Palestinians; women and children are the real victims of war. While everyone has their own views on the Israel-Palestinian conflict, I will not comment on this rather sensitive issue. However, what has come to my attention is the suggestion by certain parties to boycott U.S. products - a move, in my opinion is naive in many aspects.

First, let me stress that this is not a religious issue as there are also non-Muslim organisations who have supported this proposal.

But to those who are calling for the boycott of U.S. goods, do you think that by doing so, it is an effective way to protest against Israel or America? I mean, come on...seriously? Do you actually think that the entire American economy will collapse when we refuse to buy their goods so that in time, they would not be able to fund their war efforts?

In fact, boycotting U.S.-made goods would do us more damage than good. Consider the following, before any judgement is passed on me as a pro-American, anti-East or whatever you may call it (source: Bernama):

• In 2006, Malaysia was the 10th largest trading partner of the U.S. with a trade balance of RM158.1 billion which represents 16 percent of Malaysia's trade activity, with exports to the U.S. of RM102.3 billion or 18.8 percent of Malaysia's total trade.

• According to government statistics, the U.S. was the fourth largest foreign investor in 2006, with RM8.5 billion in FDI (Foreign Direct Investment) approvals, and is the largest foreign investor on a cumulative basis, with over RM105.4 billion of capital invested in the Malaysian economy.

• The biggest contributor to the growth in trade between Malaysian and the U.S would be the semiconductor industry. In 2006, the Malaysian American Electronics Industry (MAEI) employed more than 54,000 workers here.

So here is my two cents worth. Whether we like it or not, the U.S. is a major player in our economy and will likely still be in the coming decades. Hence, to simply suggest that we boycott U.S. goods is easier said than done.

Also, the people who are calling for a boycott of U.S. goods are simply clueless, if not blinded by shear unrealistic idealism. There have been brochures and images circulating around the internet through local blogs, urging the masses to reject U.S. brands and companies such as McDonald's, KFC, Pizza Hut, Coca-Cola and etc.

But do they not know that these companies are franchises and hire Malaysians by the thousands in their workforce? I'd like to advise them to walk into any American fast food outlet mentioned in the above and see how many Americans are there behind the cashiers and in the kitchens. Or try visiting the Intel plant in Penang and count how many Malaysians are currently employed there.

Click here for the list of American companies and brands with Israeli connections (?).

One blogger even suggests that by boycotting U.S. products, the rural industries would be given the opportunity to expand [link]. Apparently, rural researchers have come up with a way to replicate Microsoft's Windows with bamboo frames.

That being said, the fact that they are rallying support through blogs hosted on American servers like Wordpress or Blogger already spells hypocrisy. Are not Intel chips American? Or the internet, was it not initially American? Google? Yet, they appear to be selective in their boycotting spree.

The very same people who are urging for a boycott repeatedly say that Israel should not punish the Palestinian people for the politics of Hamas. And yet, they are attempting to 'punish' American companies for the politics of their government. Why the double standards? Is that not a form of hypocrisy too?

There is a reason why both the Prime Minister and the International Trade and Industry Minister are keeping mum on this issue. The act of boycotting Malaysia's largest cumulative foreign investor would have dire consequences on our economy and they both know it.

We may protest all we want but let us all be realistic when making our stand towards the U.S. Boycotting U.S. products will not stop Israeli tanks from entering Gaza neither will it persuade Hamas to drop its arms. As a matter of fact, such a move will only see ourselves kissing our hard-built economy goodbye. Is our economy the price to pay for unrealistic idealism?
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When fuel subsidies cease, Malaysians pay petrol tax

KUALA LUMPUR — Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad revealed today the government has stopped subsidising petrol since Nov 1 and has been effectively collecting taxes instead on petrol consumption. [The Malaysian Insider, 18/11/08]

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad (image) revealed to reporters in Parliament that the government had actually ceased all fuel subsidies since November 1 onwards. The price of RON97 petrol had fallen to RM2 per litre while RON92 and diesel were reduced to RM1.90 per litre. The world price of crude oil had dipped under US$65; making it possible for the government to slash fuel prices. As of November 18, the current world crude oil price hovers at US$55 per barrel. In May, the price was at a whopping US$120 per barrel.

It was understood that oil companies make a profit of RM0.19 and fuel station operators rake in RM0.12 for every litre of fuel purchased here in this country. If the laws of mathematics still apply, it can be inferred that the cost price of RON97 petrol is actually RM1.61. But why are Malaysians are paying RM2 instead? The Domestic Trade and Consumer Affairs Minister said margins in the pump prices and the cost was being returned to the government effectively as a form of tax.

So, is the so-called petrol tax justified?

The announcement that fuel subsidies have ceased since November 1 puzzled many, as the government said it would maintain a RM0.30 fuel-subsidy to keep pump prices below its market value. In June 2008, the government decided to trim its expenditure by reducing fuel subsidies that had kept petrol and diesel prices well below RM2 for years. As a result, the prices of RON97 petrol and diesel rocketed to RM2.70 and RM2.58 literally overnight.

On the other hand, Finance Minister and Deputy Prime Minister Datuk Seri Najib Razak claimed that a projected RM7 billion in savings in fuel subsidies would be utilized to stimulate the ailing economy while presenting the 2009 Budget. The same sentiments were shared by the Domestic Trade and Consumer Affairs Minister.

"...With RM21 billion budgeted for fuel subsidies in 2009 and subsidies for 2007, savings from fuel subsidies would be far more than RM7 billion. If crude oil stays under US$60 per barrel, I am expecting at least RM10 billion in savings," Shahrir said. [The Malaysian Insider, 18/11/08]

If the government had wittingly reduced fuel subsidies in June to save some cash, it appears that the government intends to profit from its petrol taxes when the fuel subsidies are nowremoved. Even so, the government still stands to make profit if RON97 petrol prices are back at RM1.92 - the pump price prior to the reduction of subsidies in June.

Subsidies or no subsidies, it does not seem to be any of any difference as Malaysians are still asked to pay more than what is written on the price tag.
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Malaysia under Najib spells dictatorship, says Anwar

Opposition leader Datuk Seri Anwar Ibrahim (image) has predicted a dictatorial regime under Prime Minister-designate Datuk Seri Najib Razak. [The Malaysian Insider, 10/11/08]

The charismatic former Finance Minister turned Opposition head was commenting on the government's plan of a financial boost worth RM7 billion to stimulate positive economic growth in the midst of a global recession. Deputy Prime Minister and Finance Minister Datuk Seri Najib Tun Razak announced that the funds will be spent on a wide range of projects, from light rail transport to repairing houses of the poor with the hope of boosting the nation's ailing economy.

However, Najib's decision to allocated the huge sum of public funds despite its positive effects (as argued by the Finance Ministry) was criticized by theDatuk Seri Anwar Ibrahim. Such a move, according to Anwar, did not go through the proper parliamentary procedures and thus, could not be considered an approved policy.

"It has not been approved by Parliament. It has not even been tabled," the Permatang Pauh MP said of the stimulus plan. The public is not even aware this is a problem as conveniently most mainstream newspapers have covered this up just to protect him," Anwar said. [The Malaysian Insider, 10/11/08]

Najib's refusal to table the financial package in the parliament for a proper debate was seen as a prelude of what was to come under reign ofNajib when he assumes the role of Prime Minister next year. Anwar's statements echoed the Opposition insistence that such large utilization of public funds should be brought for a detailed parliamentary debate.

"This means you can anticipate the type of administration under Najib. In the issue of tabling this revised budget, the fact is that it was not done according to procedures. If he says it will be disbursed in January, how do you disburse funds that have not been approved by Parliament? So I do not know from where, maybe from his savings,"Anwar told reporters. [The Malaysian Insider, 10/11/08]

Even the US$700 billion financial bailout package proposed by President Bush in September to rescue the American economy had to be presented to Congress for approval.

The RM7 billion stimulus package was not part of the original 2009 Budget. On Wednesday, Dewan Rakyat Speaker Tan Sri Pandikar Amin Mulia was right to rule that Najib's proposals were not an amendment to the 2009 Budget. However, the announcement of the RM7 billion stimulus package was announced by Najib in his closing speech of the 2009 Budget debate.

The question mark hangs over Najib's announcement of an addition to the existing budget when clearly no changes to the 2009 Budget was tabled at the Dewan Rakyat.In other words, Najib made changes to the agreed Budget without informing the Dewan Rakyat of any amendments.

However, Deputy Finance Minister Datuk Ahmad Husni Hanadzlah had insisted in Parliament that the funds allocated in the stimulus package was under an administrative order from the Finance Ministry and were not considered an amendment to the Budget Bill. In answering to Ipoh Timur MP Lim Kit Siang's query, Ahmad Husni said that the RM7 billion package was a 'hypothetical' solution as it depended on savings made from the downturn in global fuel prices.

But the 2009 Budget was also a 'hypothetical' solution by itself, as it depended on educated assumptions of revenues and expenditures acquired from predicted economic trends.

One might also argue that such bureaucratic corners had to be cut when an immediate response by the government is needed in the wake of a dire situation, in this case, the global credit crunch.

But why the double standards when the 2009 Budget was given the privilege of a parliamentary debate while a similar 'hypothetical' solution in the form of the stimulus package was approved without the need of one?

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Govt defers another helicopter deal

The Inspector-General of Police, Tan Sri Musa Hassan said the Royal Malaysian Police will add 21 more helicopters to their fleet to improve the efficiency of the force patrolling the nation's waters. [Utusan Malaysia, 12/8/08]

In a report by Utusan Malaysia dated August 12, Tan Sri Musa Hassan announced that the purchase of 21 helicopters by the Royal Police was approved by the Cabinet. The force currently has 12 helicopters patrolling the country's waters but Musa expressed the limited numbers of helicopters were not adequate to effectively monitor our borders.

The total cost of the deal was never revealed to the public; fueling speculation that it may have been similarly overpriced as the recent controversial Eurocopter scandal. Information of the manufacturer, model, specifications, tenders and the company involved remained illusive from the public even two months after the Cabinet's decision to allocate funds for the purchase.

However, DAP veteran Lim Kit Siang questioned Musa's claim of the apparent "Cabinet approval" of the deal. In his blog (http://blog.limkitsiang.com), the Ipoh Timur MP wrote "When did the Cabinet approve the purchase of 21 helicopters for the Police...?"

If there was indeed an official Cabinet sanction of the purchase, how could an MP not know about it? Even if such approvals by the Cabinet had indeed slipped Lim's mind , it still does not justify the government's failure to disclose the details of the purchase to taxpayers.

On October 28, the government decided to call off negotiations on the ostentatious purchase of 12 Eurocopter EC-725 Cougars in the wake of falling crude and palm oil revenues. The next project to be deferred was the procurement of 21 helicopters for the Royal Police. The Minister in the Prime Minister’s Department, Datuk Amirsham Aziz announced so on the same day during the final minutes of the Parliament session. Indeed, such expensive undertakings like the purchase of the Eurocopters and the ones for the police had to be shelved to enable the government to divert precious public funds to more pressing matters.

Nonetheless, the question arises as to how many more mega projects are still hovering behind the backs of the Malaysian public that need to be scrapped to weather the global economic uncertainty. Whose call is it to make then, on which project goes and which ones stay?

Such of a responsibility lies in the hands of politicians whose cronies would have to endure massive financial setbacks whenever a government deal is called off.
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What the government does not want Malaysians to realise

On September 17, Prime Minister Datuk Seri Abdullah Badawi who was then the Finance Minister switched portfolios with Defence Minister, Deputy Prime Minister Datuk Seri Najib Tun Razak. There were mixed reactions to the sudden exchange of offices but it was a matter of better-late-than-never as the future of the country's ailing economy seemed bleak.

Being a graduate from University of Nottingham with a Bachelor's degree (Hons.) in Economics, many saw Najib as a more suitable candidate to lead the Ministry of Finance. His predecessor, Badawi on the other hand graduated with only a Bachelor of Art in Islamic Studies.

And it took Badawi this long to realise Islamic Studies had nothing to do with economics.

In just than a week in office, the new Finance Minister announced that Malaysia is heading for an economic growth rate of 5.5% or 5.7%; provided the US economy remains stable.

PUTRAJAYA, Sept 25 - Malaysia is on track to achieve the targeted 5.5 per cent or 5.7 per cent GDP growth if there are no more disastrous news from the United States, Deputy Prime Minister Datuk Seri Najib Tun Razak said today. [The Malaysian Insider, 25/9/08]

So, does it mean that the Malaysian economy is getting any better?

The optimism and confidence in the country's economy shown by Najib may just be nothing more than a smoke screen to dilute the magnitude of the current economic situation. However, it is not to imply that the announcement of encouraging GDP growth is a total lie by the government as there could be understated issues affecting the economy which has gone unnoticed by the majority of Malaysians.
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Malaysia's Corruption Perception Index (CPI) remains at 5.1 this year, showing no major improvement since 2001, said Transparency International Malaysia president Tan Sri Ramon Navaratnam. [The Malaysian Insider, 23/9/08]

On September 23, Malaysia's Corruption Perception Index (CPI) remained unchanged to last year's; at 5.1. The CPI works a scale of zero (highly corrupt) to 10 (highly clean). Transparency International Malaysia president Tan Sri Ramon Navaratnam told reporters that Malaysia's CPI have lingered within 4.9 to 5.1 since 2001. The absence of any signs of improvement can only be explained by Badawi's empty promises of reforms to curb corruption when he assumed office in 2003. Nonetheless, the country's CPI may have been stable but Malaysia's ranking have slipped from 43rd to 47th among 180 countries this time around.

Our closest neighbour, Singapore scored 9.2.
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The inflation rate has jumped to a 27-year high of 8.5 percent in August, driven by the escalating cost of food and fuel. [Malaysiakini, 24/9/08]

On September 24, the day before Najib announced a positive growth for Malaysia, it was reported that the inflation rate for the month of August have skyrocketed to 8.5% - the highest ever in 27 years. The hike was driven by the reduction of fuel subsidies in June which witnessed the price of fuel reached an unprecedented peak of RM2.70 for petrol and RM2.58 for diesel. Hence, the prices of products ranging from rice to transportation increased as well. The price of fuel have since been reduced to RM2.45 for petrol and RM2.40 for diesel.

However, the government would be naive to believe the current reduction of fuel prices would bring the prices of goods and service down too. Most products off the shelf of supermarkets and grocery stores remained high despite lower fuel costs.

Can the projected 5.5% GDP growth be able to increase household incomes and help the middle-class cope with rising costs?
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Foreign direct investment (FDI) outflow in Malaysia has exceeded inflow for the first time ever, underscoring fears that investors might be losing confidence in the government and its economic policies. [Malaysiakini, 25/9/08]

According to the United Nations Conference on Trade and Development's (Unctad) World Investment Report 2008, FDI outflow in 2007 surged 82% to RM38 million from 2006. The net outflow was also reported to be almost RM9 billion.

Many economists perceived that the increase in FDI outflow reflected the maturity of many local sectors as more companies were accelerating cross-border acquisitions to expand regionally. Nonetheless, Malaysia's Inward FDI Perfomance Index ranking fell to 71st position from 67th in 2006. Ratings Agency Malaysia chief economist Yeah Kim Leng told the Business Times Singapore that larger reverse investments are acceptable, but there would be a concern if domestic investments and FDI inflow declined sharply in future.
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Malaysians certainly do hope that a graduate in Economics could do a better job in turning the economy around this time. However, the predicament is not solved until the link between Islamic Studies and the military has been figured out.





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