Kita Perlukan Long Term Stimulus Package Atau Perangsangan Ekonomi Jangka Panjang

Our economy was already in very deep trouble even before the oil prices crashed in 2014. By the way the oil price went below US$20 per barrel yesterday to US$19.92 per barrel.

Until quite recently our huge strength was manufacturing but sadly we did not move up the value added chain sufficient enough to keep up with or stay ahead of  China, Thailand, Vietnam and now Indonesia. So our low value added manufacturing has either shut down or moved elsewhere. 

Even our other mainstay palm oil crashed. And the latest bad news is Bill Gates is funding a bio-research firm which has figured out a way to make synthetic palm oil.

• Synthetic palm oil gets Bill Gates' investment
• By Maeve Campbell 
• C16 Biosciences New York based startup producing synthetic palm oil
• company just received US$20 million investment from Bill Gates
• supports cutting edge startups with focus on environment and sustainability
• decision to invest in conflict-free palm oil
• synthetic palm oil bio-based and brewed through fermentation
• Palm oil exists in majority household products in supermarket
• oil-palm trees one of the major drivers of deforestation worldwide

Unfortunately our 'Restoran Sumber Alam' had only two main dishes on the menu : minyak petroliam and minyak sawit.  Both of them have now gone quite flat. 

For two years now (since May 2018) we have been talking about how to turnaround and grow the economy. 

But Dr Mahathir got sidetracked again into proven failed ideas like another national car, the non-viable ECRL project (now the subject of an MACC report) and pie-in-the-sky (angan-angan) projects like that.  We have seen from the past decades that just a few people will become very rich from siphoning out large amounts of taxpayers money. The taxpayer himself will become poorer.

So the past two years we were nowhere near to implementing anything great to turn around the Malaysian economy - either on a short term or long term basis. 

Then Dr Mahathir suddenly resigned from the post of PM - another  example of highly irresponsible behaviour.  So far - and on different days -  Dr Mahathir has blamed the Bugis thief, the Rear Admiral and even the present PM for conspiring against him.  

I am just wondering how someone as stupid as the Bugis thief could have made Dr M sign and deliver his letter of resignation to the Agong?    Yes you can lead the kambing to the water but you cannot force the kambing to drink lah.  Minum air itu kambing kena buat sendiri lah. You cannot blame others.

(Takpa tuan-tuan jangan takut. There are easy and workable solutions. Let me assure you of this. There is a great future for ourselves and our children.  Tapi malang sekali yang berkuasa dalam negara kita buat masa ini adalah orang kaya pembelot harta tuan-tuan, pemalas yang jadi kaya menerusi muslihat, penipu korporat dan poli-tikus pencuri duit rakyat yang tidak akan memberi peluang bagi tuan-tuan berdiri sama tinggi atau duduk sama rendah bersama mereka. This part of the equation must change.)

Anyway, back to the story, now we got hit by the Corona Virus.  This virus has already taken a terrible toll.  Sadly it has not ended yet. And I believe it is going to take a much higher toll. 

The bright spots (in my view) are despite the staggering 200,000+ cases (and still growing) the mortality rates in the US are still low. Plus the US is going into World War 2 type mobilisation to fight the virus. Ford, Tesla and other American companies are manufacturing ventilators whereas perfume companies are making hand sanitisers and disinfectants.  

Singapore has not even shut down. 

South Korea is going about their business. 

Wuhan has reopened its roads to traffic. 

China is getting back to some normalcy.

Shanghai has almost no restrictions. There is hope. 

Just follow instructions carefully, obey the rules and respect social distancing.

I have said many, many times and I will say it again - turning around the Malaysian economy and making our Malaysian economy reach unbelievable heights is a very easy thing to do. 

Please believe me on this one.  

You must believe this.

In any turnaround situation there can be three parts to it (yes lah I know you can debate this, do go ahead. Maybe you have seven parts - fine.)  

1. First we must stop the bleeding.
2. Then we have to patch the damage and stabilise the situation.
3. Then we have to quickly plot the course forward.

1. Everything in the country is bleeding. The economy, social structures, social cohesiveness, religion, politics, education, government administration (federal and state) - in more than one instance the administrations are like tribal hostiles or religious whackos. 

In Malaysia everything is race, race and more race. Each race suffers those things I have listed above to lesser or greater degrees.   

For example, which race is more racist than the others? Oops. Red line. 

I think free, frank and intelligent discussion will help everyone better understand each other.  Those who are not intelligent and do not believe in free and frank discussion will become outcast. They will become poor. This is already happening in front of our eyes.  As you read this, a kiamat or reckoning is taking place in the country. 

Back to the question, when there are different races in a country - which race matters the most?   Their numbers, their total mass and the size of their footprints must all be counted. 

You can have many squirrels scurrying around leaving small footprints in the sand. You can have just a few bears walking around who leave huge and deep footprints. So who matters most? Who carries weight ? Who carries less? In what area of the economy, of society etc. Add them all up. Then we can go in and do a better job of moving everyone forward. Help the strong become stronger. Help the weak become stronger. No one must be left out.  

(To digress a little :

One man one vote plus the right to be poor or rich - this is democracy.

One man one dollar, you have no vote - this is communist dictatorship.

One man one millionaire - this is China today ?? )

2. I believe stabilising the situation (politically) is easier in Malaysia because enough people still have good sense. For example that peaceful and uneventful hand over of power after 61 years of single party rule is  testimony to a more matured and responsible society. Not a single car window was smashed. We must congratulate ourselves.  The same cannot be said about the politicians and 'their' government. Remember that spy woman?   

3. Now we have to quickly move forward. This is what I want to discuss today.

Another important point about managing anything - your country, your factory, your plantation, your family, your girlfriend, your boyfriend, your wife, husband etc is "Work with what you have first".  Work with the assets that you have first.  

Having climbed many trees as a child I learned never to release my grip on one branch unless I had a strong grip with the other hand on another branch. Later (in my 50s) having attempted wall climbing with my son (who is good at it)  the same principle applies. Never attempt that move until you have at least two other points firmly secured (three is better - two feet one hand or two hands one foot).  

So always work with what you have instead of making some leap of blind faith.   
So let us work with what we have inside our country. 

Why do I say this? 
What is the flipside to this? 

Well there are many people who want to import "outside assets" to achieve their objectives.

There are foreign funded religious groups with ulterior motives.
(I know of folks from at least three different religions with foreign links).
There is/are foreign supported politician(s) with ulterior motives. 

There are also "foreign funded NGOs" with ulterior motives. 

They have strange, supranational ideological motivations.

They are not working with what we have inside our country. 
They draw upon money, ideology and/or religious support from outside our country to achieve their objectives. 

Meaning they try to draw upon "assets" that are NOT from this country - hoping that it will give them an advantage. 

This is very dangerous because when there are assets, the owners of those assets will insist on their ROA or Return on Assets. Have you heard of Rumplestiltskin or Shylock ?

So lets focus on what we have inside our country. 
Let us focus on ourselves the human beings in Malaysia first.

(To digress again the Brotherhood, Guru-ji, Father who never comes, the 'isms etc just have to wait.)

Then bear in mind that economic assets can become liabilities and of course vice versa. 
Palm oil was a huge economic asset. 
I don't know if this will be the case for ever. 

Bill Gates wants to make synthetic palm oil.
Can you remember something called rubber? Tin? 

Oil has been a major economic asset. 
But not this year.
This year oil will likely be a liability. 
At US$20 Petronas will likely make losses for every barrel produced.  
And I think this is going to be the case for a while.

(I will re-visit this 'work with our assets' again later. I know I am dragging but I am getting there ok.)

Why is our economy in such a weak position now? 
Our Ringgit has been weakening since the 1990s. 
We have an economy that has been seriously damaged or crippled by authoritarian economic policies. 
These policies must be abandoned before the sun rises tomorrow. 
These old policies have destroyed much capacity in the country. 
If you don't change these policies, you will eat grass. 
I think some sections of the economy are already close to doing that.

The biggest blunder of course has been the Dasar Ekonomi Baru.  
The Dasar Ekonomi Baru or DEB is actually a socialist and a little "communist" policy. 

When you have major "earth shattering" philosophies like the Dasar Ekonomi Baru, there must be one or a few main players behind such ideas. And these main players themselves must have their influencers or teachers from whom they must have picked up such ideas. 

There is no dispute that the main man behind the New Economic Policy was Tun Abdul Razak, our second Prime Minister.

While he was in the UK, Tun Abdul Razak, the architect of the Dasar Ekonomi Baru was a member of something called the Fabian Society. A few writers have picked up on this Fabian connection but not enough.  

The Fabian Society was founded in 1884. 

They became hugely powerful and influential in the UK. 

Among other things the Fabians are staunch socialists, and believe in centralised planning (not unlike communism).  

The center of Fabian economic thinking is the world famous London School of Economics which the Fabians themselves established in 1895.

The Fabians have produced FIVE or more British prime ministers plus many other British leaders and notables. One of their shining lights was a genius called William Arthur Lewis, who at the age of 18 (?) earned his Bachelors degree from the London School of Economics and went on to complete his PhD there as well (1940). In 1979 Lewis became the first black man (born in St Lucia in the Carribean) to win the Nobel Prize in Economics.  Lewis' specialisation was developmental economics. 

Et tu, Fabius.

In the 1950s, after the many British colonies became independent, William Arthur Lewis began  advising newly independent Carribean and African countries to embark on FIVE YEAR DEVELOPMENT plans -  with a strong emphasis on CENTRAL PLANNING. 

According to their model CENTRAL PLANNING also meant the government takes a major role in deciding how economic resources shall be allocated.  The other group of people who did the same are called communists.

In 1957 as their economic adviser, Lewis designed newly independent Ghana's  first FIVE YEAR PLAN. 

The FIVE YEAR PLANs were trademark Fabian thinking. 

(Folks I am NOT disputing Fabian economic thinking ok. Jangan salah faham. We can debate five year plans, central planning, state ownership etc. Just that man made theories must constantly be updated, renewed, overhauled and re-polished. Nothing is written in stone. Here I am revising what I said earlier. Man made theories are also subject to interpretation, hijacking, getting lost along the way etc. Bear that in mind.)

Well, by the 1960s, 1970s and into the 1980s  British Commonwealth Africa and the Carribean turned out none too great. They became basket cases. As Dr Mahathir used to say the wealth is not common in the British Commonwealth. Africa would not begin to become great again until the "communist" Chinese turned up in force (in the 1990s?) 

Anyway when William Lewis was awarded the Nobel Prize in Economics in 1979 it must have boosted his FIVE YEAR PLANs idea a little. 

The 1st Indian PM Jawaharlal Nehru was also a Fabian and a strong socialist.

Not surprisingly in 1951 Nehru embarked on the 1st FIVE YEAR PLAN for India. 

Plus strong centralised planning to develop the Indian economy.

Nehru believed that the State should launch and control heavy industry.

This was a time when heavy industry literally referred to its weight.

Steel, cement, road building, dams etc.

Communist Russia's (USSR)  Five Year Plans began in 1928.  
You can snapshot Communist Russia's Five Year Plans here.

Communist Russia also embarked on strong centralised planning.
Also known as a 'Command Economy".  And heavy industry.

Here is a graphic of Soviet leader Josef Stalin's Five-Year Plans for the Soviet Union:

Not surprisingly, Tun Abdul Razak the Fabian also embarked on Five Year Plans.

We had the Rancangan Malaysia Pertama (1956-1960), Kedua, Ketiga etc.

And Malaysia also undertook large scale central planning of the economy.

Just like Communist Russia and Nehru's socialist India.

And this is going on until today. 

(The national car, the GLCs stranglehold on resources etc)

We know that in the end both Communist Russia and Nehru's socialist India failed miserably. Not only that but Communist Russia (aka USSR) collapsed disastrously. 

(Another small historical fact - those of you who are below 50 years of age may not know that THREE of Tun Razak's close advisers were later arrested and detained under the ISA for being 'communists'. I have met two of them, one of them was through yet another well known 'socialist'.) 

Malaysia is still failing now - but not all Malaysians. 
Parts of Malaysia are failing. Do read on.

In the socialist planned economies (central planning) as much of the primary resources and heavy industry of the country (and its banking system of course) would be placed under state ownership. In Malaysia this was attempted through the SEDCs, the GLCs etc. With miserable results. Those of you below 40 years of age would not even know what is an SEDC. 

So it was the government (and not the market) which would decide how to allocate resources and how to generate growth. A centrally planned economy. Or a command economy. Just like Communist Russia and Fabian influenced India.

Then in Malaysia in 1970 another market destroyer popped up : the Dasar Ekonomi Baru or DEB.  The DEB was a political tool. Full stop. 

You cannot find the DEB written inside any economic textbooks. 
Not even in William Lewis' developmental models.  
As we all know it, the DEB was/is race based.

To marry the government's control / ownership of natural resources, banking, finance and many other franchises (the socialist, Fabian, centralised planning, and yes even "communist" model)  with racial quotas and racial targets. 

The single whammy became the double whammy.

Then later even this racial system evolved one step further. The DEB's racial targets and quotas (especially the management / stewardship of natural sources and major industries or sectors of the economy) were further linked to political patronage  aka political cronies.  

 

1. The politicians plotted  : We are going to build a toll highway.

2. Then the DEB said : We will give it to a Malay / bumiputra.

3. Political patronage said : It has to be our Malay - with the right political stripes. 

This has been the Malaysian model until today.   

This also became the triple whammy.

It has failed miserably. Very miserably.

As a footnote the political patronage (aka cronyism) took off to the stratosphere during the time of Dr Mahathir, but after 1987. 

Dr Mahathir first became prime minister on 16th July 1981.  
He immediately started fighting the British.  

Those of you below the age of 45 will not know what was the Dawn Raid. 
The Dawn Raid was to "bring home" the Guthrie company from the London Stock Exchange to the Kuala Lumpur Stock Exchange?  
It happened on September 7th, 1981 - less than two months after Dr Mahathir became PM.

Then just over three weeks later on 2nd October 1981, Dr Mahathir launched his Buy British Last policy.  As I said fighting the British was his pre-occupation. 

But there were cracks in the UMNO party. 
Musa Hitam and Tengku Razaleigh were challenging Dr Mahathir's policies, especially his economic policies.  
This led to that huge break up between Tengku Razaleigh and Dr Mahathir in 1987. 
1987 was a rude wake up call for Dr Mahathir.  
Because it showed that Dr Mahathir did not have the full support of his party. 

Why? Because of money.

It was after 1987 that Dr Mahathir really ramped up on the political patronage. 
He wanted to create "instant millionaires" among the Malays / bumiputras. 
So the bungling accelerated. The triple whammy accelerated even faster. 

Hence besides the centralised planning and the racial quotas, we have the political patronage and cronyism - we have the monopolies, the oligopolies, the 50 year franchises, the APs, the licenses etc. Until today with no end in sight.

How did this model sustain for so long in Malaysia when it had failed in so many other countries around the world? 

I believe the answer is oil money. 

After oil was discovered in quantity in Malaysia the oil money was used like wall paper to cover over any cracks in the system.

For decades now Petronas has been the single largest contributor to the governments kitty. 

Did you know that when Petronas pays its taxes and dividends, the amount of cash injected into the banking system could dampen overnite interest rates and the Ringgit's exchange rate? That is how much cash Petronas had (hopefully still has).

Not only Petronas paid taxes and dividends but when :

• Proton failed, Petronas bailed them out.
• MAS went bust, Petronas bailed them out.
• Formula 1 show off project ? Petronas paid.
• Putrajaya? Petronas paid. 
• Special dividend RM20b (?) for the government? Petronas paid.
• The KLCC Twin Towers

Have I missed out anything? 

In no time at all, this 

• centrally planned (Fabian, socialist, ciri-ciri "communist")
• racially identified (Dasar Ekonomi Baru) and 
• "political patronaged" (UMNO's survival)

portion of the economy became almost exclusively identified or identifiable with the larger Malay bumiputra population.  Meaning it encapsulated almost ALL Malays / bumiputras, including those who were opposed to UMNO, Barisan Nasional and Dr Mahathir. 

Very quickly it created a feeling of entitlement among ALL Malays.   

So when the Malay paddy farmer in PAS-controlled Kelantan looked up at a Malaysian Airlines flight taking off from Pengkalen Chepa airport, he could say with pride 'Itu hok kito' (That plane belongs to us).

Fastforward to the 21st century. Now the systemic weakness of the entire set up is becoming evident. It looks like the  'Restoran Sumber Alam' had only two main dishes on the menu : minyak petroliam and minyak sawit.  Both of them have now gone quite flat. The system is crashing. 

And its largest beneficiaries ie the Malay bumiputra economy which has to bear the brunt of the loss. 

How do we come out of this? 

This is already too long. I will continue with a second part.