Ask any investor- Selangor's potential is UNDERUTILISED: Replacing faded Khalid is OVERDUE

Anwar Ibrahim contesting the Kajang by-election in the wake of the Azmin Ali’s PKNS sacking, has led many to speculate that this is an internal power struggle and not the struggle for the people.

Despite Rafizi Ramli explaining in his article “The Kajang Move: A Game-Changer for Putrajaya” that Anwar is contesting the by-election to meet UMNO’s changing tack in intensifying racial and religious tensions, the media, for obvious reasons, continues to play up the internal power struggle angle.

It is not denied that the Kajang by-election is about governing Selangor, however, the objective is for the good of the people of Selangor and Malaysia and not for any individual within or without the party. What has been forgotten in the hullabaloo and media speculation is that the people of Selangor and Malaysia will be better served with Anwar Ibrahim directly in the State to meet the coming economic difficulties and tensed political times.

Horses for Courses

Those saying the by-election is due to the purported feud between Azmin Ali and Khalid Ibrahim fail to mention that both Khalid Ibrahim and Azmin Ali support Anwar Ibrahim contesting the by-election. They also omitted to point out that Keadilan members and leaders consistently acknowledged the strengths and weaknesses of Khalid Ibrahim’s administration. Many harped on the fact that while accolades were showered on Khalid, there were also criticisms as proof of a feud.

It must be realized Keadilan is a reformist party. Its leaders and members speak without fear or favour. They will not hesitate to point out what is wrong if they see something is not right nor will they withhold praise when credit is due. What is important is the criticisms are constructive, made sincerely and genuinely for the good of the state government. The concern has always been that the Pakatan Rakyat government delivers to the people of Selangor.

Khalid's performance not satisfacory

It is on public record that delegates from Perlis to Sarawak from the Party’s 6th National Congress in 2010 at Kota Baru to the 9th National Congress on 25th May 2013, repeatedly voiced their concerns on Khalid Ibrahim’s policy of building a massive reserve instead of spending on development projects. Khalid built up a reserve of RM 3 billion from the RM760 million he inherited from BN in 2008. In his winding up speech at the 2013 Congress, Khalid accepted that he was “frugal” because he is taught to look after other people’s money with utmost care.

It is acknowledged by all from Pakatan Rakyat to his Barisan Nasional opponents, in particular, the Auditor-General Reports that Khalid had been financially prudent in running the state.

However, implementation of state projects have not been satisfactory. One example is the Auditor-General 2012 Report reveals Selangor only spent RM640.24 million or 56.3% of the RM1.14 billion it received from the Federal Government for the maintenance of non-federal roads between 2010 and 2012. Even though the under-spending accumulated RM631.27 million in surplus funds, the report said it reflected inefficiency in managing funds provided by the Federal Government.

Furthermore, the report said a survey conducted by the Auditor-General Office of 545 respondents in Klang, Gombak and Shah Alam showed 80% of them expressing dissatisfaction with the conditions of the local roads. Another problem is JPS’s frequent answer for the woes caused by the repeatedly occurring flash floods and lack of flood mitigation projects is that there are no funds. However, it has since been discovered that the Selangor JPS spent only RM45 million out of a RM67 million budget in 2012. Therefore there are efficiency and co-ordination issues that have to be addressed.

Inefficient culture

Khalid cannot be faulted entirely because he inherited a civil service with a five decade culture of inefficiency and complacency. However, Anwar is correct in being concerned with the tardiness in taking action and implementing measures for the benefit of the people. Anwar at the 24th November 2013 Special Congress in Shah Alam said:

“Pakatan Rakyat’s achievements are not measured in terms of whether there is a surplus or deficit in the budget but how we prioritize the needs of the public”

It is giving priority to the people’s needs that is the ultimate objective of the Kajang by-election.

Besides inefficiency there is also sabotage and non-cooperation by the agencies and privatized entities. The public may not realize that throughout Khalid’s administration he has to do battle with forces bent on retaking the state through the withholding of services and non-co-operation by these agencies and privatized entities.

One example is Alam Flora’s sudden termination of municipal waste collection services. The state had to scramble to appoint contractors to avert a disaster. Another is the water supply shortages when the dams were full. In the ongoing and protracted negotiations for the state to take back control of water distribution and the holding back of the Langat 2 Project, the National Water Services Commission (SPAN) has put on hold 878 development projects on the ground that there will be insufficient water supply in the future while Khalid points to the fact that there is sufficient supply presently.

The satisfactory resolution of these issues must not be at the expense of the Selangor people and requires the co-operation and talents of not only Khalid but all Pakatan Rakyat leaders including Anwar.

Perfect storm

Both Khalid Ibrahim, Azmin Ali and all of the PKR leadership support the Kajang by-election because they are fully aware that Malaysians are about to face the perfect storm of economic hardship coupled with heightened political tensions. There is an urgent need to batten down the hatches and strengthen the Selangor Government leadership. It is not a case of changing horses in midstream. It is to recognize that there are horses for courses.

There are three immediate concerns. The first is the 1997 financial crisis is looming to be repeated. The second is self-inflicted by the BN Federal Government putting the economy into a shock therapy by its fiscal structural adjustment measures. The third is the escalating tension that is reaching May 13 levels instigated by irresponsible elements. Any government, federal or state will welcome Anwar Ibrahim with his experience on its team as they prepare for the storm that will soon be unleashed by these three converging factors.

Reversal of Quantitative Easing and Repeat of Asian Financial Crisis

The first concern is the effect of the US Federal Reserve tapering of quantitative easing. The United Nations Conference of Trade and Development (UNCTAD) in its report on the “World Economic Situation and Prospects 2014” released on 18 December 2013 warned that there are a number of uncertainties and risks in 2014. One of them is the risk associated with the unwinding of the unconventional monetary policies of the central banks of major developed countries or “quantitative easing” over the course of 2014-2015.

Since the global financial crisis of 2007-2008, the United States, United Kingdom and the Eurozone carried out the unconventional monetary policies or so-called quantitative easing (QE) by purchasing bonds and other assets from financial institutions to stimulate their respective economies.

The US Federal Reserve in late November 2008 started to buy US$600 billion mortgaged backed securities reaching US$2.1 billion by June 2010. In November 2010, the US Federal Reserve announced a second round of quantitative easing buying US$600 billion of treasury securities by the end of second quarter 2011. A third round of quantitative easing was announced on 13 September 2012 that the US Federal Reserve launched a new US$40 billion per month bond purchasing programme. The US Federal Reserve purchases and assets have since gone beyond US$3 trillion.

As a result of this quantitative easing in the developed markets, a significant amount of capitals flows, in search for higher yields, was driven to markets of primary commodities and markets of equities and bonds in emerging economies in 2009-2012.

The Asian Development Bank in its ADB Economics Working Paper Series “Effects of Quantitative Easing on Asia: Capital Flows and Financial Markets” reports that the capital inflows in these emerging economies besides going into commodities markets, bonds and equities also increased housing and property prices in these countries. ADB reported that housing prices nearly doubled in Hong Kong, China and India during the 4 year period from 2008 to 2012 and steadily rose to 57% and 27% in Taipei and Malaysia. This drove property prices beyond the means of many ordinary Malaysians in need of a home and a plunge in prices will hurt many. The QE also caused volatility in commodity and equity prices as well as currency values in the emerging economies.

As risks abated and economic recovery in the United States and Japan improved, Ben Bernanke announced on 19 June 2013, a “tapering” of this quantitative easing. The US Federal Reserve would scale back the purchases and completely unwind by mid-2014. Bernanke’s announcement sparked a mini crisis as international capital flows started to move away from emerging markets back to developed markets. This has led to waves of decline in capital flows in emerging markets and outward capital flows. The other aspect of the tapering of the quantitative easing is that the currencies of the developing economies depreciated against the United States Dollar as capital flows went back to the developed market.

This tapering of the quantitative easing and unwinding of the unconventional policies have created a new risk to the stability of the world economy. UNCTAD warned of the vulnerability of emerging economies to these external shocks. The financial turbulence encountered by many emerging economies in 2013 has reminded the world of the Asian Financial Crisis of 1997-1998. The volatility of capital flows, increased current account deficits and high ratio of foreign debt to GDP of several emerging economies are similar to those during the Asian Financial Crisis. It is a reminder that emerging economies are bound to face more external shocks as the major central banks start to unwind their massive QE programmes.

Sudden selloff to be expected

Malaysia will not be spared. Foreigners now hold 45.1% of Malaysian government bonds and 23.6% of Malaysian equities. A sudden sell-off will affect us negatively. Bloomberg reports that RM1.26 billion of foreign funds had exited Malaysia in the first three weeks of 2014. This was not an isolated event as markets across Asia felt the effects of the reversal of the US Federal Reserve quantitative easing programme. The Stock Exchange of Thailand declined by 2.88% while the Straits Times Index slid by 4.7% since the beginning of the year. MIDF Amanah Investment Banker Bhd’s research division noted that in the last 16 weeks, a total of RM8.48 billion of foreign money exited Malaysia. Foreign funds were aggressive sellers every single day in the last week of January 2014. Economist Nouriel Roubini described it as a “mini perfect storm”. Currencies and capital outflows are again giving rise to crisis and contagion. Leadership is needed in these challenging times. In the midst of this our Prime Minister was only able to speak about kangkung!

2. Rising Costs of Living and Deteriorating Standards of Living

The second immediate concern is the rising costs of living, deteriorating standards of living, rising economic costs and welfare losses from rising unemployment, tightening credit conditions and slowing down of real economic activity in Malaysia.

The Malaysian Institute of Economic Research (MIER) in releasing its Malaysian Economic Outlook on 28 January 2014 said that although the long delayed fiscal deficit corrective measures are undeniably necessary, their implementation one after another is akin to shock therapy. This has resulted in overshooting of consumer prices and rising costs of living. Inflation at a level Malaysians are not accustomed is raising its ugly head.

This inflation is mostly BN policy-driven. It arises from fiscal structural adjustment measures through subsidy rationalization and broadening of the tax base by implementing goods and services tax (GST) by 1st April 2015. Minimum wage implementation and currency depreciation aimed at boosting exports and avoiding a shrinking current account surplus provide additional sparks for rising prices and cost of living in the country.

The Federal Government in implementing the fiscal structural adjustment programme has reneged on its promise to adopt a gradual approach and staggered implementation. The shock therapy will in all probability result in a situation where the operation is successful but the patient is dead.

A strong Selangor government is needed to carry out programmes to mitigate the increased costs of living. Such programmes are crucial because usually a period of rising inflation will be followed by a period of rising unemployment. There is therefore an urgent need for a strong Selangor government to take measures to address these challenges.

3. Increased Tensions and the Shadow of another Operation Lalang

The third immediate concern is the increased tensions arising from racial and religious issues that Anwar described as being at May 13 levels in his call to work towards a national consensus on 26 January 2014. He said that in the past few months there have been a series of circumstances and developments that collectively are fast eroding the national cohesiveness that is so crucial to our identity. Anwar said:

“In fact, we have not seen this building up of tensions since the events leading up to our national tragedy of May 13, 1969. The voices of hate and animosity, the voices of prejudice and suspicion, and the voices of wreck and ruin are attempting to drown out the harmony, cooperation and understanding that we have managed to build on the ruins of this tragedy.”

The people of Selangor and Malaysians need a leader like Anwar Ibrahim. A leader who can reach out to all Malaysians to turn the corner from the path of increasing polarization to the path of greater integration. Malaysians have to stop race-baiting, put an end to the disease of incitement of religious intolerance and hatred.

What are the intentions of these voices of hate and animosity? Let us not forget that the weapons for detention without trial remain in existence. They may have taken on new forms and new names but the power to detain without trial is very much alive. The ISA has been replaced by the Security Offences (Special Measures) Act. Detention without trial has been brought back by amendments to the Prevention of Crime Act 1959. Requirements for police permits to hold demonstrations have been tightened by the Peaceful Assembly Act.

Ops Lalang '87

A blogger, Hartalmsm, reminded that recent events and developments are similar to those when Operation Lalang was carried out on 27 October 1987.

In 1987, UMNO was in a political crisis with the party bitterly split between Dr. Mahathir and Tengku Razaleigh. On 29 January 2014, Prime Minister Najib Tun Razak held a meeting with division chiefs, opinion makers in his party and supporters to address criticism against his leadership by Tun Dr Mahathir, Tun Daim Zainuddin and other party veterans.

In 1987, UMNO/BN political influence was declining. In the 13th GE, BN only obtained 47% of the popular vote and the lowest number of parliamentarians in the coalition’s history.

In 1987 the economy was in trouble. In 2014 the economy is facing strong headwinds as prices of goods and costs of living rises.

In 1987, 5 mosques in Pahang were burnt. In 2010 several churches, a mosque, a surau and a gurdwara were attacked following the “Allah” controversy. On 27 January 2014, two Molotov cocktails were thrown into the Church of Assumption compound in Lebuh Faquhar, Penang.

There is a critical need for a strong Selangor government that can impress on those who contemplate another Operation Lalang that Malaysians will not stand for this form of abuse.

Need for a Courageous Leader

Benazir Bhutto once said that: “Throughout the ages, leadership and courage have been synonymous. Ultimately, leadership requires action; daring to take steps that are necessary but unpopular, challenging the status quo in order to reach a brighter future.”

Anwar Ibrahim is painfully aware that the Kajang by-election is a necessary step for a brighter future for all Malaysians. It is regretted that the voters of Kajang are burdened to come out to vote again. He is prepared to stand up in the times of crisis, the people of Kajang are asked to stand with him.

The dream of a better Malaysia of all races living in real harmony and in equity lies in their hands. It is prayed that the people of Kajang will come out and vote for a better tomorrow where our children can fulfill their fullest potential without regard to race or religion.

William JK Leong is MP for Selayang/ Treasurer-General Keadilan