Prime Minister Dr Mahathir Mohamad has accused his predecessor Najib Abdul Razak of being a firm believer that cash is the ultimate panacea for all conundrums and winning the hearts of the people.
He often recalls a conversation with Najib when the latter was in power and how the former premier had told him point blank that “cash is king”.
However, a source close to the former premier repudiated Mahathir's version of that conversation.
“The words were mentioned. But not in the vein Mahathir claims,” he told Malaysiakini.
The source claimed that Mahathir objected to the Najib administration's BR1M financial handout scheme and wanted subsidies to be maintained instead.
“But Najib told him that recipients of BR1M should decide for themselves how they wanted to spend their money. Instead of giving them subsidies they might not benefit from.
“'Cash is king' to the recipients. This is what he told Mahathir,” he added.
The source accused Mahathir of later giving the impression that it was Najib who believed that cash is king as opposed to the latter pointing out that cash would benefit the people more compared to subsidies.
He claimed that the difference between the two was that Najib believed the B40 households could make their own decisions in a wise manner with regard to the extra income.
“Would you rather buy a necessity like kerosene or food grains at a subsidy or receive an equivalent amount of cash instead?
“Would you prefer that the government decides your consumption pattern rather than figuring out on your own how to spend your income?” he asked.
The source claimed that Najib believed that BR1M would increase resources available to households whereas subsidies distorted the market.
“The most obvious distortion is that subsidies, which reduce the market price and by definition cannot be targeted. It allows everyone to benefit, even those who don’t need help.
“Whereas direct cash transfers can, in principle, be targeted directly to the poor,” he added.
Apart from this, the source claimed that Mahathir and Najib also disagreed on minimum wage, which the latter was supportive of.
He then cited a blog post from 2012 where Mahathir said the increase in wages would not be a concern for the government.
“But it should worry the private sector. Already Malaysia's wages and salaries are higher than all the Asean countries excepting Singapore. It is certainly higher than China. This might deter both domestic and foreign investors.
“If investments do not come in, the number of new jobs created would be diminished. This might increase unemployment,” he added.
The source further commented that this was one of the key differences between the thinking of Mahathir and Najib that eventually caused their relationship to fall apart.
"Najib believes more in raising the wages and income of the ordinary folk while Mahathir continues to think of the interest of the businessmen.
“This can still be seen today where Najib had continued to raise the historically low civil service salaries while one of Mahathir's first acts was to review the pay hikes of the civil service," he added. - Mkini
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