Obama CANCELS trip to KL: 'US in a mess, Malaysia in a BIGGER mess'

UPDATE3 KUALA LUMPUR - In a move that is bound to disappoint many Malaysians who had hoped to catch a glimpse of him, US president Barack Obama has cancelled his trip to Kuala Lumpur next week.

According to Malaysian Prime Minister Najib, he received a call from Obama early this morning and was told the bad news. The US president offered his regrets and promised to make the visit on a later date, revealed Najib.

The Malaysian PM also told reporters that Obama had explained his wish to remain in the US to tackle the partial shutdown of the US government after hitting a constitutional debt ceiling.

Speaking to reporters at an event in Sepang, Najib said US secretary of State John Kerry will still be coming to Kuala Lumpur next week. Obama was initially scheduled to address the Fourth Global Entrepreneurship Summit here on October 11.

Obama viewed positively despite TPPA fears

While generally viewed in this region as a positive influence and as reformist, Obama has also drawn some flak from some Malaysians, who feared his visit was to influence Najib into signing the controversial US-mooted Trans Pacific Partnership Agreement next year.

The global free trade agreement would require Malaysia to open key economic sectors, a move that has been resisted by many in the country including Opposition Leader Anwar Ibrahim and former premier Mahathir Mohamad, mainly because the terms and conditions for which are shrouded in secrecy and can only be made known 4 years after the agreement has been signed.

However, the brewing storm over the US debt, the biggest in the world, has pushed the TPPA back into the shadows.

"The US is in a mess, we are in a bigger mess. This is a good wake-up call to Najib that there is no free lunch. Whatever is spent must be paid and when you keep borrowing, one day your lenders will sit up and say, 'sorry  no more, limit is up'," Opposition MP for Wangsa Maju Tan Kee Jwong told Malaysia Chronicle.

"At least, US is a world leader in many integral fields like technology, finance, banking, the sciences. Many experts say it cannot be allowed to go bankrupt even though it may already be technically so. Somehow the rest of the world will have to adjust for the US because it contributes so much to the world economy.

"But not Malaysia, I am afraid. For us, the lenders will not be forgiving at all. We have to be responsible for our debt and this is something that Najib and his Umno-BN coalition don't seem to get. Maybe Najib imagines himself to be the Obama of the East but wait and see what happens if he doesn't cut out the wastage and excesses. Already Fitch has put Malaysia on negative outlook. If there are no reforms, the others will follow."

'Obama of the East'?

Malaysia's national debt to gross domestic product is currently around 53% or just 2 percentage points shy of the 55% limit set by Parliament.

Once touched, the Malaysian government must seek Parliament's approval for an extension. Already, many private researchers have put the actual debt to GDP ratio at close to 70%.

"Debt grew the most during the Najib administration, it just soared. At the moment the government gets around the 55% limit by excluding the debts of the government-linked companies. Technically, because the government is the majority shareholder in most of these GLCs, their debts should be proportionally included. When we do that we already hit 70%," a research director at a bank-backed brokerage toldMalaysia Chronicle.

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Malaysia Chronicle