Prime Minister Anwar Ibrahim, like former Prime Minister Najib Tun Razak, may be in unique position on poverty eradication, and recovering money laundering assets and ‘secret profits’ as state revenue and thereby help strengthen the RM!
Commentary And Analysis . . . The story telling on Malaysia’s economy appears bogged down by the fate of the Ringgit Malaysia (RM). The currency, not yet battered, has reached such depths never kept before except during the 1997/1998 Asian Currency Crisis.
1998 was the year that Datuk Seri Anwar Ibrahim was sacked by dictatorial Prime Minister Tun (then Datuk Seri) Mahathir Mohamad. Anwar lost the deputy premiership and finance ministry in the morning. He lost the Umno deputy presidency by nightfall. More on RM later.
Anwar, besides harping almost daily on Islam and Malaysia Madani, can only fall back on the economic policies and programmes pursued by former Prime Minister Datuk Seri Najib Tun Razak, before 2018, albeit minus the latter’s controversial political donation initiatives which cut short a promising career.
Anwar, like Najib, may be in unique position for helping make difference for the better on poverty eradication, and recovering money laundering assets and “secret profits” as state revenue and thereby help strengthen the RM.
Anwar for all the woes on managing the RM and economy has plus points unlimited.
The government should manage the supply side of the economy as well so that inflation can be kept at the ideal 2 per cent per annum. New money will not create new inflation. In fact, new money will enlarge the consumer economy — now at 65 per cent of GDP in Bank Negara reports — and make for bigger GDP. The government will benefit from increased tax collection especially if GST was brought back with better safeguards. Traders were cheating consumers on refunds due on payments above 6 per cent at the final retail end.
The supply side of the economy has become even more important in recent years after the Najib years from 2009 to 2018. Successive governments in Putrajaya, in emulating Najib, keep pumping money directly into the pockets of those living below the poverty line.
Anwar’s Focus
Poverty eradication remains one area where the Anwar government can also emulate the Najib Administration and make real difference for the better.
The focus should be on bringing all, especially in the east coast, and rural areas in Sabah and Sarawak, into the money economy.
Poverty will persist as long as significant sections of the population remain outside the money economy. The self-sustaining portions of the rural areas, away from money, isn’t factored by the economic managers in government.
Poverty eradication efforts can be tweaked by increasing the amount of money pumped directly into the pockets of the poor and making the payments monthly.
There’s also case for monthly pension, perhaps starting at modest RM500 as in Brunei, for seniors drawn from citizens, permanent residents, stateless, economic migrants, illegal immigrants, refugees, and asylum seekers.
In law, Article 8 in Malaysia, there can be no discrimination.
University education does not guarantee jobs. It might not even provide education based on knowledge.
The government should not impose university education on all.
School leavers are better off at training institutes for skills needed by the workplace.
Ringgi Malaysia
It’s more than likely that Anwar chanting the Mantra on Malaysia Madani — based on Islamic civilisational values — on everything will be exercise in futility especially as the RM risks getting battered. If there’s volatility in the velocity of circulation of the RM, it would be impossible to price goods and services.
Then, Anwar will have mud on the face as in 1998 when Mahathir decided that his deputy was financially illiterate. There’s no volatility currently, on the velocity of circulation of the RM, unlike in 1998 when the local currency took the cue from bhat, won and rupiah which were all battered by the Asian currency crisis. The IMF came in. The 1MDB phenomenon in 2013 has no bearing on the current position of the RM in the forex market.
Welfare State
The welfare state in conventional economics and finance proved unsustainable model in Britain after World War II, in socialist India, USSR, China, and Cuba, among many places.
Islamic economy and finance, on paper, remains the untested minus usury and/or minus interest version of the welfare state in conventional economics and finance.
This may be no time for experimenting for politically expedient reasons on the economy and flogging redundant Articles in the Constitution. There’s consensus among subject matter experts that when politics comes in through the door, economics flies out the window.
Article 153 was rendered redundant in 1972 when the sunset clause, which facilitated discrimination, ended. Again in law, Article 8 in Malaysia, there can be no discrimination. Other facilitating Articles, all Article 153 related, have also been rendered redundant. These include the Defination of Malay as “form of identity” in Article 160(2), aberration in law Article 3 (Islam), Article 152 (national language), and Order 92, Rule 1, Rules of the High Court 2012 (national language).
In law, Article 4 in Malaysia, redundant Articles remain in the book unless removed by the court or Parliament or both.
In any case, it’s unlikely that the government would remove Article 153 without the consent of the Conference of Rulers and the pre-Council Meeting, a day earlier, delierates on the matter. Parliament and court can remove Article 153. They need no consent.
Principles
Anwar should take principled stand and not play the gallery, in competition with PAS, for rural votes. Anwar will never get these votes as proven during elections in six states last August. The poor states — Kedah, Kelantan and Terengganu — remain with PAS. The unity government can only make some headway in these states when the next delineation of constituencies will be completed in 2026.
It’s no use throwing good money after bad, even on poverty eradication, in the PAS-ruled states.
Economics has been defined as social science which studies human behaviour in the battle between unlimited wants and scarce resources which have alternative uses.
There are opportunity costs. Google opportunity costs and economic scale of preferences.
Anwar, based on oft repeated statements, belabours in the delusion that speculative activities are part of the economy. In fact, they don’t create real wealth. The losers are many, the winners few. The syndicates may be rigging the market and fleecing the small man after luring him with upbeat media reports.
Only the production of goods and services create real wealth as reflected in GDP growth rates and the GDP.
Anwar claims that unprecedented FDI (foreign direct investment) inflows show that there’s continued investor confidence in the economy. These investors, it must be stressed, are those already in the country for the longhaul. They invest using RM. Otherwise, the RM will head north as US$ come in for the FDI inflows.
The forex and stock market are speculative activities. If there’s outflow of short term investments, i.e. hot money, from stocks, the RM will fall. There’s inverse relationship between the stock market and bank interest rates. The stock market falls when bank interest rates go up.
Money remains intrinsically worthless. It’s the 2nd person accepting RM from the 1st person, based on confidence that the 3rd person will accept it, that gives it value.
Bank Negara probably has no options on the OPR (overnight policy rate) for inter-bank lending. In any case, the US Reserve Bank can’t keep raising interest rates indefinately, or risk the destruction of economies which benefit it as well.
Malaysia needs at least one million longstay tourists from India and China in the country. The two million tourists with one year visa will help strengthen the RM. The question of overstaying does not arise when the visa was for one year on multiple entry basis. The US, for example, gives ten years multiple entry visa. India gives 15 years multiple entry visa but only for persons of Indian origin. In law, others can also Apply.
Media
The media should stop harping on two million Chinese entering the country, not so long ago, and remaining behind. The Immigration DG explained during the Altantuya case that the Dept keeps each entry and exit record for only two months. The computer automatically purges entry and exit records which are two months old.
The conservative media in particular should not fan fears based on prejudice and hatred. It has cost the Johor government and Sultan dearly as the Forest City project lies virtually abandoned. Chinese investors, in particular, lost confidence in the future in the wake of hostile media reports and immigration raids. — NMH
Longtime Borneo watcher Joe Fernandez has been writing for many years on both sides of the Southeast Asia Sea. He should not be mistaken for a namesake formerly with the Daily Express in Kota Kinabalu. JF keeps a Blog under FernzTheGreat on the nature of human relationships.
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