PLAY RACIAL SUPREMACY AT YOUR PERIL, NAJIB: Another economic crisis will wipe out BN - Umno man

KUALA LUMPUR - Barisan Nasional (BN) will have to pay close attention to weathering public dissatisfaction over the next few months, senior Umno leader Datuk Seri Salleh Said Keruak said, warning that if the country faces a repeat of the 1997 Asian Financial Crisis, the ruling pact could lose its grip on power.

In a statement here, the Sabah Umno deputy liaison chief warned of a dire financial situation for Malaysia not seen since 1997 and 1988, attributing this possibility to falling gold and oil prices, as well as a weaker ringgit.

In outlining the gloomy economic scenario, Salleh cautioned that it could easily lead to BN losing its decades-old grip on power, especially with the federal opposition Pakatan Rakyat (PR) on its heels in terms of share of popular votes from Election 2013.

“Changes in government happen when the rakyat are facing an economic crisis. In the 1988 and 1997 crises it was not so crucial.

“The opposition made some gains in the 1990 and 1999 general elections that followed but not enough for a change of federal government, mainly because the gap was quite wide,” he said.

He cited political analysts’ remarks that BN would need at least 45 per cent of the popular votes to stay in power while PR needs at least 55 per cent to take over, due to the way seats are carved up.

“Hence there is only a 2 per cent or so gap to see a change in federal government, not a very large gap indeed. Barisan Nasional has to take cognisance of this fact,” the Sabah state legislative assembly speaker said.

“Barisan Nasional must not only brace itself for a crash-landing but also be able to survive this crash-landing in one piece,” he added, saying that this should be the coalition’s focus in the coming year unless the global crude oil price bounces back to USD80 per barrel or more.

As Malaysia is an oil producing and oil exporting country, the current drop in global crude oil prices is expected to chip away at government revenue and state oil giant Petronas profits.

Salleh noted that there is talk that global oil prices will dip even lower, possibly even below US$60 a barrel, and should this happen, many countries, including Malaysia, will get badly hit.

He pointed out that Malaysia’s recently-approved budget for next year was pegged at a higher contribution from Petronas, which contributes to about 30 per cent of the government’s revenue.

Therefore, if oil prices fall, budget 2015 will fall short, he said.

Yesterday, the ringgit underperformed against regional currencies and declined by as much as 1.6 per cent to 3.4375 per dollar – its lowest point since February 2010.

Today, second finance minister Datuk Seri Ahmad Husni Hanadzlah said Malaysia is still keeping to the targeted deficit reduction for the government budget to 3 per cent of gross domestic product despite the expected lower oil revenues.

Budget 2015 was based on forecasted crude oil prices of around US$105 per barrel, with Petronas cautioning last Friday that its payments next year could drop by 37 per cent if oil prices remain at roughly US$75 (RM256.88) per barrel.

Putrajaya’s budget deficit figure could benefit from its scrapping of expensive fuel subsidies from this month onwards.

But Bank of America Merrill Lynch’s research note yesterday projected Malaysia’s budget deficit to grow to 3.8 per cent of the GDP next year, while HSBC recently said it expected 3.6 per cent.

HSBC attributed this expected figure to a likely slash in government revenues for 2015 by RM7.4 billion from the original expected RM235.2 billion. -Malay Mail