Malaysia is a rich country naturally endowed with various natural resources like rubber, oil-palm, timber, tin, iron and petroleum. At the time of writing, its GDP stands at or around RM600 bn.
The country is a multi-cultural, racial, religious and linguistic country. The population hovers around 28 million comprising the Malays, Chinese, Indians, Dayaks, Bajaus, Kadazans and the Orang Asli (Aborigines).
Malaya (before merger) obtained independence from Britain on 31 August 1957. In1965, it merged with Singapore, Sabah and Sarawak to form Malaysia. Singapore left the merger in 1968 due to irreconcilable difference between the political leaders in Singapore and Peninsular Malaysia.
The people used to interact freely regardless of race and religion before the 70's. Inter-racial relationship took a bad turn thereafter because of the affirmative discriminatory socio-economic policies, known as the New Economic Policy. It features sound objectives but due to slanted and unfair implementation, race relations took a dive at all levels of the socio-economic sectors.
Having to deal with racial problems is bad enough but with bigoted religious polarisation in schools, civil service and judiciary, the schism became even wider and wider among the several races of the country.
Of late, economic development of the country is marred by corruption, money-laundering and fraudulent trade documentation as reported by the Global Financial Integrity(GPI). In 2014, Malaysia ranked 52nd in the Corruption Perception Index as reported by the Transparency International Malaysia.
GFI reported that Malaysia laundered RM171.11bn in 2012 and between the period 2003-2012, the total illicit efflux of funds from the country approximated to USD1.38 trillion. This works out on the average of about RM100 bn which was being laundered annually representing about 16.7% the country's GDP. Besides, reportedly, taking into consideration the debts and all the financial gurantees granted to GLCs, the Debt:GDP ratio has surpassed the 80% mark which is about 25% above the danger level.
The Sun of 16 Dec 2014 reported that 205 Federal Government Projects costing in total RM7.0 bn were behind schedule while 82 projects totalling RM2.2 bn are deemed or regarded as "ailing projects".
Of late, the country is saddled by the heavy losses sustained by the national Malaysian Airline which has to be bailed out by Kazanah which pumped in RM6.0 bn in an effort to revive the corporation.
Again there was reported the 1MDB project which is steeped with heavy borrowings at high interest rate. It is allegedly saddled with losses amounting to RM41.2 bn.
Faced with the fast decreasing price of crude to below US60/- per barrel, the depreciation of the Ringgit, increase in prices of gasoline and diesel, hiked up assessment rate and the ominous enforcement of GST on 01 April 2015, the economy looks quite dismal given the fact that more than 80% of the work force are earning below the poverty threshold of RM30,000/- per annum.
It has been estimated there are now about 9 million foreign workers in the country; of which 3 million are legal while the 6 million are illegal. These latter workers are displacing locals from employment in the plantation, manufacturing, construction sectors and petty trades.
In my opinion and assessment, serious actions have to be taken by the ruling government. Corruption has to be curtailed if not substantially mitigated by the Malaysian Anti-Corruption Commission.
The Central Bank will have to tighten the control of illicit funds flowing out of the country. Prudent spending on socio-economic projects will have to be strictly exercised and monitored. In addition, attention must be given to minimise documentation frauds. The Finance Ministry will have to ensure that public expenditure should not exceed revenue. Tightening of belt is imperative if the country is to be turned around.
Unless the Governement of the day take serious remedial actions, the economic situation of the country is dismal and not too encouraging.
Saturday, August 22, 2015
The Country's Economy is in a Shamble
Malaysia was regarded once as a land of milk and honey. But, it is now in a state of shamble. The situation does not happen just now. The rot has in fact been going on ever since the affirmative National Economic Policy (NEP) was put into operation in 1970 following the racial riot that took place on May 13, 1969.
The NEP was mooted by the National Consultative Council, NEC, comprising in the main appointees of the Alliance Government. The NEC was in fact the de facto governing body of the country during the period when parliament was suspended. It was more of a pseudo- or semi-military rule.
The said policy was aimed at:
1) Eradicating poverty; and.
2) Eliminate identification of race with occupation of the people.
The Policy was noble but the implemenation was very much slanted to favour one particular race, the Bumiputra - that is, the prince of the land which in particular include the Malays and the indigenous people of Malaysia. The backwardness of the Malays and Bumiputra was taken as an excuse for the slanted implementation of the NEP.
In an effort to help bring about changes to the status of the bumiputras, various untoward policies were formulated to the exclusion of the non-bumiputras which comprise all the Chinese, Indians and Eurasians etc who are in fact citizens of the country. This latter group constitutes then about 40% of the national population. This percentage was reduced through induced conversion and recruitment and nauralisation of foreign muslim workers from neighbourly countries. Foreign workers have been reported to exceed more than 10% of the country's population of 28 million.
Consistent with the NEP, many racially and socio-economic policies were put in place to "elevate or lift" the status of the Bumiputras. As such, on the corporate front, 30% of the equity shall be reserved and allotted for the Bumiputras. So is employment which must reflect 30% Bumiputras.
Employment in the civil service was most noticeable - for many years majority of Malays and or Bumiputras were taken into the civil service; promotion of non-bumiputras was held in abeyance such that eventually all top positions were replaced and helmed by Malays and or Bumiputras. Entry into universities for non-Bumiputras was strictly monitored; as a result, thousands who were qualified were not admitted into courses of their choices such as medicine, engineering, accountancy and law in the public universities.
Scholarships were rarely awarded to the non-Bumiputras. A serious constraint was and still is the pre-condition that the scholarship applicant must first secure a place in the university before his application is considered. If at all, they are offered scholarships, they must be the straight A students
On the governance side, the Barisan Nasional have been ruling the country since attaining independence of Malaya in 1957 and formation of Malaysia in 1963. But little did the masses realise or know that over the years - more than half a century - the BN Government had been resorting to and engaged in a lot of undersirable actions to stay in power. Money politics, vote-purchasing and gerry-mandering were blatantly perpetrated in the last two General Elections by BN Government to stay in power.
Power somehow has tended to the point of obsessive avarice. Billions had been siphoned out of the country during the past 15 years as reported by the GFI. The figure was staggering and mind-boggling. It exceeded USD1.30 trillion. Translated into local currency, money laundered approximated to slightly more than RM100.0 billion per annum. For a small economy like Malaysia, this huge sum of money if ploughed backed into the country for socio-economic development would have benefitted very significantly the people of Malaysia.
If the political leaders really had the interest and welfare of the people at heart, Malaysia would be like Singapore - an educated populace, high averaged income, a strong, clean and stable economy, with a strong currency, modern infra-structural amenities, unity and racial harmony among the multi-racial, multi-cultural and multi-lingual society. At the time of writing, the Malaysian Rinnggit has depreciated to almost RM2.80 to a SD1.00 and RM4.10 to a USD1.00.
In Singapore, corruption is strictly prohibited and anyone caught committing such an offence will be severely dealt with regardless of the background of the perpetrator.
Corruption is prevalent in Malaysia. It pervades all sectors and levels of the society so much that it has almost become a way of life. Politicians and prospective politicians are attracted to politics for this very reason; that is, to enrich themselves fast through graft and even fraudulent means.
A case in point is the recent revelation of the wheel and deal of the State Sovereign Company, infamously known and referred to as 1 MDB which will be the subject of the next post.
The NEP was mooted by the National Consultative Council, NEC, comprising in the main appointees of the Alliance Government. The NEC was in fact the de facto governing body of the country during the period when parliament was suspended. It was more of a pseudo- or semi-military rule.
The said policy was aimed at:
1) Eradicating poverty; and.
2) Eliminate identification of race with occupation of the people.
The Policy was noble but the implemenation was very much slanted to favour one particular race, the Bumiputra - that is, the prince of the land which in particular include the Malays and the indigenous people of Malaysia. The backwardness of the Malays and Bumiputra was taken as an excuse for the slanted implementation of the NEP.
In an effort to help bring about changes to the status of the bumiputras, various untoward policies were formulated to the exclusion of the non-bumiputras which comprise all the Chinese, Indians and Eurasians etc who are in fact citizens of the country. This latter group constitutes then about 40% of the national population. This percentage was reduced through induced conversion and recruitment and nauralisation of foreign muslim workers from neighbourly countries. Foreign workers have been reported to exceed more than 10% of the country's population of 28 million.
Consistent with the NEP, many racially and socio-economic policies were put in place to "elevate or lift" the status of the Bumiputras. As such, on the corporate front, 30% of the equity shall be reserved and allotted for the Bumiputras. So is employment which must reflect 30% Bumiputras.
Employment in the civil service was most noticeable - for many years majority of Malays and or Bumiputras were taken into the civil service; promotion of non-bumiputras was held in abeyance such that eventually all top positions were replaced and helmed by Malays and or Bumiputras. Entry into universities for non-Bumiputras was strictly monitored; as a result, thousands who were qualified were not admitted into courses of their choices such as medicine, engineering, accountancy and law in the public universities.
Scholarships were rarely awarded to the non-Bumiputras. A serious constraint was and still is the pre-condition that the scholarship applicant must first secure a place in the university before his application is considered. If at all, they are offered scholarships, they must be the straight A students
On the governance side, the Barisan Nasional have been ruling the country since attaining independence of Malaya in 1957 and formation of Malaysia in 1963. But little did the masses realise or know that over the years - more than half a century - the BN Government had been resorting to and engaged in a lot of undersirable actions to stay in power. Money politics, vote-purchasing and gerry-mandering were blatantly perpetrated in the last two General Elections by BN Government to stay in power.
Power somehow has tended to the point of obsessive avarice. Billions had been siphoned out of the country during the past 15 years as reported by the GFI. The figure was staggering and mind-boggling. It exceeded USD1.30 trillion. Translated into local currency, money laundered approximated to slightly more than RM100.0 billion per annum. For a small economy like Malaysia, this huge sum of money if ploughed backed into the country for socio-economic development would have benefitted very significantly the people of Malaysia.
If the political leaders really had the interest and welfare of the people at heart, Malaysia would be like Singapore - an educated populace, high averaged income, a strong, clean and stable economy, with a strong currency, modern infra-structural amenities, unity and racial harmony among the multi-racial, multi-cultural and multi-lingual society. At the time of writing, the Malaysian Rinnggit has depreciated to almost RM2.80 to a SD1.00 and RM4.10 to a USD1.00.
In Singapore, corruption is strictly prohibited and anyone caught committing such an offence will be severely dealt with regardless of the background of the perpetrator.
Corruption is prevalent in Malaysia. It pervades all sectors and levels of the society so much that it has almost become a way of life. Politicians and prospective politicians are attracted to politics for this very reason; that is, to enrich themselves fast through graft and even fraudulent means.
A case in point is the recent revelation of the wheel and deal of the State Sovereign Company, infamously known and referred to as 1 MDB which will be the subject of the next post.