MALAYSIA Tanah Tumpah Darahku


Thursday, May 31, 2018


KUALA LUMPUR —  Finance Minister Lim Guan Eng’s insistence that Malaysia’s liabilities are greater than previously disclosed is unorthodox but augurs well for transparency in the future, according to economists.
Responding to Malay Mail about the effects of Lim declaring the country to have over RM1 trillion in liabilities, they conceded that the disclosure may concern investors in the short term.
However, all believed it would encourage greater investor confidence in Malaysia’s administration and its finances once the initial concern is overcome.
“Transparency and access to information are critical forms of good governance and as such revealing economic situation does not constitute any irresponsibility,” said Institute for Democracy and Economic Affairs acting chief executive Ali Salman.
He said Malaysians were also entitled to know how and where the government spends public funds, particularly in the wake of the 1Malaysia Development Bhd (1MDB) corruption scandal in which several federal agencies and government-linked corporations have been implicated.
The change in power during the 14th general election led to the discovery that the previous Barisan Nasional government may have committed the country to RM38 billion of 1MDB’s liabilities.
It also came to light that both Bank Negara Malaysia and sovereign wealth fund Khazanah Nasional were made to bear billions of the troubled state investment firm’s debt and interest payments.
The Finance Ministry alone paid nearly RM7 billion directly to 1MDB’s creditors last year.
“The public were kept in dark about the bailouts. That is why IDEAS have been generally critical of role of government in the business.
“All GLCs are not necessarily inefficient or corrupt, but their control and ownership by a central government poses great risks of financial misconduct,” Ali said.
Lim previously said the Pakatan Harapan government would call “a spade a spade” and openly disclose that the Putrajaya’s liabilities were over RM1 trillion or 80.3 per cent as a ratio of the entire economy.
He said much of the additional liabilities had been kept off the books in order to portray the country’s debts as around 65 per cent of the economy.
Yeah Kim Leng, professor of economics at Sunway University Business School, said it would be normal for investors to be spooked by these revelations.
“On the other hand, increased transparency, integrity, credibility and trust in the government will restore investors’ confidence quickly,” Yeah said.
Institute of Strategic and International Studies director of economics, trade and regional integration, Firdaos Rosli said he lauded such openness in the government, but cautioned that officials must be clear and detailed when talking about such data.
He noted that prior to Lim’s explanation, Prime Minister Tun Dr Mahathir Mohamad had made similar claims without supporting information beyond blaming it on the beaten Datuk Seri Najib Razak.
Firdaos stressed the importance to be consistent when defining how much the country owed, however, saying it should always include both debt and liabilities.
“I welcome the government’s declaration of corruption and mismanagement of the previous administration,” Firdaos said.
“However, I don’t think it is necessary for the government to give doubts on the accuracy of our official numbers when it is in fact the interpretation of them,” he added.

Moody’s: Too early to assess new govt’s economic impact

KUALA LUMPUR — It is still too early to assess the impact of the new government’s policies on the Malaysian economy, according to Moody’s Analytics Economist, Katrina Ell.
She said the Malaysian financial market had been volatile to the downside in view of the more uncertain policy pipeline.
“Barisan Nasional was in power for 60 years so this is a significant changing of the guard. It will take time to reveal the economic implications,” she said in an email interview with Bernama News Channel from Australia.
PH recently won the 14th general election, which ended the six-decade rule of the Barisan Nasional coalition in a landmark shift for Malaysia.
On the proposed abolition of the Goods & Services Tax (GST), Ell said: “Removing the GST would increase the government’s reliance on oil-related revenue and narrow the tax base.”
Malaysia would revert to the Sales and Services Tax that was in place before the GST’s introduction in 2015, which collected relatively lower revenue as a share of GDP than the GST, she said.
“It’s unlikely that the multiplier effect from higher consumption due to lower taxes will offset the drop in government revenue. One temporary saving grace for Malaysia is rising oil prices. The nation is a net oil exporter, so higher oil prices will lift government tax revenue, production and exports.
“Time will tell whether the regime change is a success, and the scrapping of the GST and subsequent impact will be the first real test,” Ell said.
The economist said it appeared a sensible strategy for the PH government to form the Council of Eminent Persons comprising well-respected individuals to advise the government and allay fears on the future economic management being markedly different from the past in terms of broader strategy.
Prime Minister Tun Dr Mahathir Mohamad has also promised to review foreign investments, including those that are part of China’s One Belt, One Road project.
She cautioned that if some of these projects were scrapped and the infrastructure bottlenecks were not addressed, it would hurt longer-term productivity.
In 2017, Malaysia’s GDP growth surged to 5.9 per cent, the fastest pace since 2014 and well up from the 4.2 per cent in 2016 — thanks to the upbeat global environment and Malaysia’s large exposure to the sustained upswing in the global tech cycle.
“The lift from buoyant global demand is less assured in 2018 and downside risks are heightened, not least due to the elevated trade tensions between the United States and China that threaten to significantly reduce trade flows,” she said, adding that Malaysia’s GDP growth was forecast at 5 per cent for 2018.
During the week prior to the 14th general election, Moody’s Investors Service raised Malaysia’s GDP growth forecast for the year to 5.4 per cent from 5.2 per cent projected earlier, supported by a pipeline of large infrastructure projects that were expected to stimulate public and private investments. — Bernama

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