Recent financial crises have visited economic calamity upon ordinary citizens in the countries of the East and West alike. Experience tells us that there can be no complacency about a nation’s financial state.
Concerns voiced in various reports and the media call for special attention to Malaysia’s finances and their management. These concerns are:
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A record-breaking capital flight out of Malaysia. Financial watchdog Global Financial Integrity (GFI) reported that a total of RM880 billion of funds were illegally transferred out of the country between 2001 and 2010.
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A sharply rising trend in government debt. This debt almost doubled from RM274 billion at the beginning of 2008 to RM502 billion at the end of 2012. International Monetary Fund (IMF) statistics expect it to grow by RM277 billion to RM779 billion in 2017.
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Incomplete information about the Malaysian government’s full exposure to debt. The official figures for government debt exclude debts that are called contingent liabilities. These include off-balance-sheet borrowings and the debts of banks, government-linked companies and other private-sector enterprises that the government has guaranteed to pay off in the event that these entities default. One estimate of these hidden debts in 2011 placed it at RM117 billion.
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Rapid growth of the share of total government debt owed to foreign holders. This has soared from 0.1% in 2003 to 6.7% in 2006, 11.8% in 2009, and 26.8% in 2012. Although 97% of this debt remains Ringgit-denominated, this trend is a cause for concern, and compromises future policy autonomy as well as heightens exposure to capital flight in the event of financial panic.
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Possible massive losses by 1Malaysia Development Bhd. Recent revelations indicate that this strategic company, wholly owned by the government of Malaysia and tasked to lead in market driven initiatives to help transform the Malaysian economy, may have incurred losses of as much as RM4 billion through mispricing of its bond issue.
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Inconsistencies in Bank Negara reports regarding Malaysia’s total debt. While one portion of Bank Negara’s statistics tallies with the official total debt of RM695.4 billion for 2011 and RM737.6 billion for 2012, elsewhere in its reports it is implied that Malaysia’s total debt is more than twice larger, at about RM2.025 trillion for 2011 and RM1.743 trillion for 2012. The latter would ordinarily be considered crisis-level figures.
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Fears of an imminent credit bubble in Malaysia and other East Asian countries. Households in Malaysia have amassed a consumer debt in excess of RM600 billion according to an IMF country report. Various financial analyses claim that Malaysia, Thailand, Singapore and Taiwan are at risk of a household debt crisis.
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The lack of sustainability of Malaysia’s GDP growth. Rapid liquidations of natural capital such as petroleum and forests to finance deficit spending or to fulfill debt obligations have adverse economic and ecological implications for present and future generations. Moreover, unproductive investments and expenditures are recorded as positive GDP in the national accounts even if they yield returns that do not cover borrowing costs.
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A lack of discipline in adhering to Malaysia’s statutory ceiling for debt. The ceiling has been raised on the debt limit from 40% of GDP set in 2003 to 45% in 2008 and subsequently to the present 55% in 2009.
The above details signal an alarming trend.
Decisive action is required to safeguard Malaysia’s development potential and forestall a crisis situation such as in Greece.
In line with public interest, therefore, and as a first step towards democratising the management of government finances, we, the undersigned, call upon Barisan Nasional and Pakatan Rakyat, the main contenders for government in the 13th Malaysian general elections, to openly lay out detailed policy positions on how they intend to manage the nation’s finances.
In their policy briefs on national finance and debt, the two political coalitions must provide the following minimum feedback:
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Justify the projections for the borrowings that they anticipate making in the coming five years under their respective watch;
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Spell out plans for tackling fiscal deficits and ballooning government and household debts;
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Explain how their election manifesto promises on government spending will be consistent with sustainable debt and resource management;
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Declare their commitment to investigating illegal financial outflows and repatriating these monies as prescribed by the United Nations Convention against Corruption;
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State explicitly whether they will support the foundations of public transparency and accountability in our national finances by
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establishing a continuously updated ‘debt register’ that will be publicly available on the Internet, which records the stock of debts, the sources of these debts, interest/dividend payments made on these and details of the uses made of these borrowings;
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establishing a multi-partisan parliamentary committee for debt oversight and approval;
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holding public fora and referenda on spending or debt decisions of great import; and
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other possible measures.
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We urge the two major political coalitions to produce their national finance and debt policy briefs focusing on the proposals set out above as soon as possible.
The voters of this country deserve to go to the voting booths with better knowledge of what to expect in the management of Malaysia’s finance and debts from the new government in power.
Signatories
Dr Cheong Kee Cheok
Dr Fatimah Kari
Dr Terence Gomez
Dr KJ John
Dr Cassey Lee
Dr Lee Hwok Aun
Dr Lim Teck Ghee
Dr Rajah Rasiah
Pak Sako
Rozilini M Fernandez- Chung
Yew Siew Yong
You expect them to admit that there is an unreported RM 200 billion in guaranteed debt to entities like PLUS, Tanjong Pelepas, 1MDB ? You expect them to admit that many “piratisations” are structured such that the government is obligated to assume the debts in the event of a concessionaire’s default ?
We are a bankrupt nation held together by a web of lies spun by government controlled media, and an ill-informed rural population.
To the ill-informed, receiving RM 500 or 1000 is a big thing to be grateful for, without realising that the crooks at the top justify taking billions in tandem with the giving of such miserable sums to the rakyat.
There was always been an assumption about UMNO/BN financially- that as much as they are willing to compromise long term potential and they are willing to be risky financially, they would never put this country in jeopardy of stability..
But that assumption has clearly been thrown out the door. The promise of REGULAR handouts is complete reversal of past UMNO. ITS CLASSIC WELFARISM. Period..
In less than a year, UMNO has given out 3 nationwide welfare cheques and and a series of other handouts to civil servants, GLCs and others. The amount is now has BUILD EXPECTATION OF WELFARISM THAT IS IRREVERISBLE BY THEM..Just like the money politics in UMNO that has just increased year-after-year after it went party-wide in the 1980s, its IRREVERSIBLE..
UMNO/BN has to KEEP INCREASING THE HANDOUT IN YEARS TO COME. In other words, THERE IS NO WAY UMNO/BN CAN GET OUT OF RAISING TAXES – in fact future plan of GST is likely ALREADY MUST GO TO WELFARISM and NOT to deficit reduction or paying the financial debt, on and off balance sheet, that is already inevitable..
We have crossed into Welfarism, classic socialism..
The voters of this country deserve to go to the voting booths with better knowledge of what to expect in the management of Malaysia’s finance and debts from the new government in power. – End of quote
This article sounds a tad too naive!
Now, don’t Malaysians know the thieving track record of UMNO/BN?
While they are spewing out rosy pictures of this country in all aspects through their mouthpiece in the MSM, they are busily siphoning off the wealth of the country!
And the National Debt of billions of Ringgit speaks for itself!!!
Why such massive, humongous debts in a country blessed with vast and varied natural resources!
At least this much is public knowledge.
Now, as far as PR is concerned, their track record of the four states they captured in the last GE has the stamp of approval by the Auditor General.
And of the four states, Penang and Selangor takes the cake by winning accolades for their performance.
Now, seen against this background, it obviously doesn’t take a genius to figure out who will better govern this country.
Unless of course, Malaysians are suicidal or masochistic or both!!!!
Huh wot?
Umno’s Tun Tan Sri Dato Seri Dato Sri Datuk Wira Dato Datuk Dr Prof Apapunboleh bin Similancheowpunok, ABC, CDE, EFG, HIJ, phD, is not one of the signatories?
Anyway, WTF. Who cares. Umno is so last decade. Go umno. Go inhale some underground longkang gas in NY. Ask chengho. He knows the ins and outs of that.
Financial crisis is still going to be one issue that will sink umno eventually, if somehow assisted by a super large dose of cheating, umno managed to survive GE13.
The way umno spends and borrows now is completely irresponsible and totally unsustainable. And umno is doing it purely for the very very short term aim of winning GE13. At the moment umno does not even want to look beyond the tip of its eyelashes.
If umno should win, the country would soon collapse financially. Then, even umno’s loyal supporters would rise and turn against umno.
All the more reasons to change govt. BN is now playing Santa Claus giving out money to buy votes and where is the revenue coming from? Once voted in, BN wil continue with its old ways of cronyism and corruption and there will be more leakages from the economy. Result: economy will be sucked dry until the bubble burst.
With a change in govt, we have a real chance at institutional reforms and at least we can minimize the leakages via corruption. And in their first term in govt, they will be eager to perform.
So, does it matter if BN and Pakatan comes out with their policies. BN can come out with fantastic policies on paper but the will to carry them out after re-election will not be there and we will be talking about the same thing 4-5 yrs down the road when the next election is due when they want to remain in power. For 56 yrs they did nothing and you expect them to suddenly wake and do all the right things? Rather naive isn’t it?
This an election to correct the democratic institutions and get the fundamentals of the country back on track.
All the nation’s ills are caused by BN. There is no way BN will respond to this memo.
For Pakatan, its simple. Without corruption and capital flight we can save RM 20 billion a year. If you recover all the billions from Mahathir and UMNO Ministers and cronies (all the ill-gotten gains) we can settle our debt in a jiffy.
Directing this memo to BN is like asking the thief to catch himself.
Governance is what concern the academics, the informed voters, who think.
Money is what concern the uninformed voters, TV3 will do the thinking for them.
If you have concern over governance, you never trust BN anything they said.
Election is one big business, voters get their fair share of money once every 5 yrs, and winner can rips-off everyday for next 5 years.
Where the money came from, is not my business, my business is to grab money from the pool of money, who know whose.
These academics know the difference between an election and an erection. The people in the kampungs don’t. Even after they get shafted by the gomen, they are still grateful.
It is good that these academicians took the trouble to explain the real situation of the nation but here we have a regime that had planned to con the people for the past 30 years with half-past six education system whose sole aim was and still is to mislead them into believing that this is a Gomen that is above average. And sadly many of them accepted all such swindling as per of the goodness of this regime. There won’t be any change unless a new Gomen takes over!
Yes, it is very important for any new government to uncover the many ways in which funds are moved abroad as it looks like the days of becoming the ASEAN Greece are very near!
http://www.malaysiawatch4.blogspot.com/2013/04/malaysiakini-and-13th-general-elections.html
When you have irresponsible persons running the economy with a concoction of cooked-up figures and acronyms, what you get is a sure recipe for disaster. We are not far from it.