The three MCA factions of Ong Tee Keat, Liow Tiong Lai and Chua Soi Lek have re-assembled as “1MCA” under the dictate of Prime Minister Najib Razak’s “1Malaysia” but the “mother of all scandals”, the RM12.5 billion Port Klang Free Zone (PKFZ) scandal is the greatest casualty as it has disappeared from the radar of the MCA leaders.
When the Ong faction split asunder at the MCA central committee meeting of Oct. 14 following Ong’s refusal to resign as MCA President despite the passing of a motion of no confidence in his leadership at the Oct. 10 MCA extraordinary general meeting (EGM), Ong wrote in his blog to justify his decision:
“I still have a long list of unfinished business involving Party and public interests, like the direct election of the MCA presidency and the Port Klang Free Zone issue. It is my wish to see such issues be addressed without any abrupt disruption.”
Yesterday, Ong conspicuously omitted any mention of the PKFZ scandal when he reiterated that he had “unfinished work” as reasons for the reconciliation with Chua and Liow to reassemble the ill-fated and short-lived “1MCA-1Team” which he had launched on the eve of the Oct. 10 EGM but had not survived for more than 48 hours.
Is full accountability and transparency for the RM12.5 billion PKFZ scandal a casualty of the latest MCA “greater unity plan” of the Ong, Liow and Chua factions?
Clearly, it will not be the only one.
For some two months in the run-up to the Oct. 10 MCA EGM, the over 2,300 MCA delegates, the Chinese community and the Malaysian people were told that great issues of right and wrong were involved but they have proved to be, as Shakespeare would describe it, “A tale told by an idiot, full of sound and fury, signifying nothing”.
The roiling MCA crisis provide many salutary lessons why statements by political leaders cannot be taken at their face value. For instance, while Deputy Prime Minister and Deputy Umno President, Tan Sri Muhyiddin Yassin was saying publicly on Tuesday that Najib will not intervene in the MCA leadership crisis unless asked to do so by all members of the MCA Central Committee, top MCA leaders were already trooping into Najib’s presence for a “peace pow-wow” without the knowledge or consent of the MCA central committee members.
The Oct. 10 MCA EGM proved that there were not just two factions – Ong and Chua factions – in the MCA, but also a “third force” causing the EGM to end with a most unprecedented and completely unexpected result, rejecting both Ong and Chua.
But hovering over them is a more powerful force – the “super force” of Umno, as personified by Najib.
The MCA central committee members, the 2,300 delegates, the Malaysian Chinese community and the entire Malaysian people have all been taken for a ride!
Looks like MCA fractions have all suddenly seen the bigger picture. Looks like the bigger picture includes, forget PFKZ, and the bigger picture includes, UMNO decides, MCA follows. So sad. BN is just UMNO decides. Dont look like we will ever see the full PKFZ story.
yb should move a motion in the parliament to hold-back ong and liow’s salary and allowances for the time that they are not working for the people and the country. these people do not know their responsibility and priority.
they should resign from the cabinet or should be sacked if they are not interest in the national matters.
To think that there are still thousands of MCA rank and file who are willing to put up with the antics of their leaders whose policy is “See No Evil, Hear No Evil, Smell No Evil, Speak No Evil and Admit No Evil”
Malu lah! Long ago, UMNO president don’t get elected if MCA decide against it. Think about it, UMNO can’t even decide of MIC president.. That is why Samy Vellu tells Chinese to poraah!!!..
You not paiseh, I am paiseh..All MCA leaders are trash..(lap sap)
UMNO knows that this bunch of MCA leaders are pure trash…and that’s why UMNO needs them to be around….to be controlled, to be bullied, to be put at a corner and told to keep quiet.
All of them under MACC investigation – one for sexual indiscretions, one for accepting favours from Tiong, and one for corruption involving his wife’s gifts. So what better option now than for Najis to put them all into one basket ?
On or before MCA 10/10 EGM, LTL was the closet comrade of OTK. He together with Youth Chief WCS and Women Wing Chief CMF were the most ardent opponents of CSL and were instrumental in getting the Presidential council to approve the Disciplinary Committee’s recommendation in sacking CSL. It has been reported by TLK, a CC member that OTK stated clearly during the meeting that if that was the collective decision of the Committee, then the Committee members had to be accountable to the decision.
The results of 10/10 EGN was known and OTK was persuaded not to resign on the spot.
Based on the constitution, both OTK and CSL can return to their positions as President and Deputy. The decision of the Disciplinary Committee to sack CSL was null and void, and the suspension of CSL in his position as Deputy President was approved by a simple majority vote.
The Chief of MCA legal Bureau came out with two different interpretations on one same issue. He opined that the next EGM would require a two-third majority to sack the central committee because the constitution requires two third of central delegates to sack elected officials. But he confirmed a vacancy exist for the Deputy President post when there was not a two-third majority vote to remove CSL as Deputy President.
CSL’s position as Deputy President was suspended when the EGM return a majority vote to that effect. But since CSL cannot be sacked because the EGM did not turn out a two-third majority vote, the vacancy did not exist. However since the incumbent has been suspended and cannot perform the duties, the Central Committee might have the authority to appoint somebody to the position in acting capacity. LTL was made a deputy President, not an acting Deputy President. CSL is appealing to the registrar of society to intervene. From the photos appearing in the press showing LTL having tete’a’tete with PM, DPM, WiraKeris, the group of 22 CC members are convinced that it is now or never, for coup d’etat.
Before 10/10 EGM, it would be normal for LTL to meet with OTK whenever a need arises. Now LTL has to declare that he is making appointment to meet with OTK, and he even said that the presence of CC members are to be there as witness. After the tete-a-tete, the urgency for change or settlement in MCA has become imminent. What have been the crises in MCA since 10/10 other than what went through the mind of TLT in securing the top prize? TLT has conveniently forgotten that the AGM of MCA will be held within 10 weeks, and if there is any unresolved matter, the central delegates will be the best position to do so. That included the sacking of individual members or office bearers if LTL is keen to remove.
LTL was one of the four vice-presidents of MCA who might gain from a vacancy or two created on top. He said he was asked by OTK to see what best could be done on the succession plan. That might take place say in the next GA, or may be in two years time when a new election has to be held. LTL did not get the highest votes in the last MCA election, and he is not the most senior vice President to be promoted to Deputy President even in acting capacity. In the committee of 42 CC members, 22 votes form the majority which can approve any decision at the committee. LTL got the signature of 22 persons to support him and in LTL’s words, they have given LTL their voice; the 22 have now their master’s voice. Thus LTL was more powerful than KCA, the Vice President who scored the highest votes in the last MCA election. LTL was even more powerful than OTK who had only one vote, and he had to abstain on the vote on whether a vacancy did exist in the Deputy Presidency on the meeting of 15/10.
Having tasted the power of 22 votes, plus his own, the ambition of LTL has suddenly bloated, and he eyes the final prize of MCA Presidency. One wonders why the 22 CC members were willing to sell their voice, and can now speak only his master’s voice. If that is the quality of MCA politicians at the CC level, they should be removed, and hopefully by the next EGM.
The way LTL claims that the crisis in MCA should be resolved soon so that it is ready to face the voters in two years shows that he is carrying and echoing his UMNO master’s voice out loud. The Chinese are watching LTL to call UMNO to interfere in MCA affairs; just like WuSanKooi inviting Muchu into China.
Crisis in Chinese word comprises opportunity and danger. When one becomes too opportunistic danger returns. LTL was quite safe as a VP and a Minister. He is not only interested in becoming Deputy President, but having achieved the later position, he is demanding to be made President. CSL with all his faults is not as despicable as LTL in his most recent episode. He cannot be trusted as a team member, as he would kill his teammates when they are weakened after fighting the so-called common enemy. The snakes are out of the hole now.
whenever and wherever you see an mca man or woman you just ask him or her Arn Cnua Liau. Arn Cnua Ka Hoe for us Chinese?
Once again MCA was held ransom by the big brother. In MCA history, there was many times the big brother dictate who should be the MCA boss and who can not be the boss.
In this episode, we also noticed that all the grass root supporters have their own leader to support and they can easily break away and form their own faction. All these taukeh only have their own interest to think about but never seem to serve the people as their goal of entering politic. This was evidence by the quick surface of the Liw’s faction, where his supporters were so impatient to push him up and this young Liow was also too impatient to approaching the President seat. This was how Liow faction was surface in such a time and try to side step on OTK who has suffered great damage in the last EGM.
MCA can never serve the people as all the supporters have their own agenda of making money for their own and therefore support who ever they think can be Ministers. This also contribute to the fierce fight among the faction of the President and Vice President, this will never being the end and history will keep repeating in MCA history as far as this mentality of selfishness prevail in MCA’s members.
This was also the reason why MCA can work along with the big brother UMNO, where both are making use of each other. In fact all component parties share the same goal in politic ie to enrich themselves by being in politics rather than the genuine wishes to serve the people to the best of the people interest.
With the big brother’s hand on, we will never expect reform can be carry out by OTK that he has promised so far. He has suffered great damaged in the hand of his own supporters who did not see him fit to carry out his agenda of reform and it go back to the square with all the quarrel unsettled.
It is high time for the Chinese in Malaysia to forget about MCA now.
MCA has become irrelevant to the Chinese, and UMNO knows it. Just like MIC has become irrelevant to the Indians, and Najis had to form the new Indian party to get support for BN.
In Chinese, all names have meanings. You know why OTK is still the president? Here goes…
Chua Soi Lek,Liow Tiong Lai, Ong Tee Keat
in hokkien, it sounds like as in english:
Snake slithers by and Liow comes charging thru the middle but the emperor stands firm.
If MCA (MIC for that matter) is so good, Malaysian Chinese and Indian will not be marginalised. They will not beg for places in the local universities beg for scholarships, beg for contracts, beg for scums and beg for everything. Now their leaders are fighting for their positions.
Mca to emulate umno? No. More like mca swallowed by umno. Yumm. Yummm. “Hidup-hidup kena telan.” “Apa-deh?” samy asked ong. “Gua punya burung lama sudah hilang.” “Apa boleh buat?” came the reply.
The PM dictating the MCA leadership has produced a Cerberus, a hellish 3-headed dog to protect UMNO’s hellish interest.
What happen to Ong’s determination to fully uncover and expose the PKFZ’s scandal? We are 100% sure that some top UMNO leaders or ex-leaders are also involved. We hope Ong and other MCA leaders will not fear UMNO leaders when such truths are uncovered. Or have they chicken out already?
OK. So basically for the Chinese in this country, the situation is dire. Can it bet on just the DAP and PR to uphold their interest? Face it, it may never happen. MCA cannot represent their interest anymore after this public display of political castration..
So, is the Chinese only ultimate option is to migrate? I put it to you, the Chinese best bet is to self-organise and look to China to influence this govt. The Chinese want a stable South East Asia that a big part of their needed resources have to pass through from particularly oil. Self-organise and look to China and other East Asian nation to push this country to the left. Make it clear to any UMNO govt that if they take the right, the Chinese and other East Asian nation will take their lunch.. and dinner and breakfast. Have SIngapore built bridges between China and Thailand, Burma and even Indonesia as a check against Malaysian rightist arrogance..
Najis claimed UMNO is for all and 1Malaysia, yes it is but NEP is only for Malay and to protect Malay supremacy.
University spot, Scholarship Application, Housing benefit, and Low interest business loan, we will forever be denied as long as UMNO continue to rule.
It’s 52 years we are still debating about corruption, nothing much on how to develop Malaysia into a strong nation, free from race & Malay supremacy.
Worst of all, Lingam case is closed, therefore, law of jungle has been confirmed and Law is designed to protect Datuk and those who has power in the government.
A two-headed snake Liow Tiong Lai
This recent episode exposed that Liow is a real traitor. He betrayed his friendship with Ong and thus showed that he cannot be trusted. This is not the virtue of an MCA President that the Chinese Malaysians desire. He is clearly seen as another lap dog of UMNO.
ha22 undertaker888, Your Hokkien very “Keat”
Snake slithers by and Liow comes charging thru the middle but the emperor stands firm.
The mastermind of this big mess is Najis who is interested to see the disintegration of both Ong and Soi Lek. Najis failed in his bid to dethrone Mr. Sam, and now he seems to fail again to disintegrate OTK.
What to do, finally the real President of MCA has to emerge, yep UMNO dictate terms so what, it’s no secret!
Trouble is, MCA leaders had been too busy filling up their pockets, dare they not listen to the Mastermind least they’ll meet the same fate as TeohBengHock, remember?
“I have unfinished work” …as the reason Ong Tee Keat gave to stay as MCA President.
He broke his promise to resign..
He has no moral….dignity nor principles in life.
He loves dirty politics.
So do Chua Soi Lek.
Let those 2 clowns continue the good work of Ling Liong Sik.’
Who do those two MCA buggers think they are trying to fool?
Do you guys know that najib is actually a chinese in malay skin? Ah ha. Got you fellas there didnt I? Right between the eyes. Yeah! Ooh ooh ooh ho! And he is also the new chief of mca – the new leader of all chinese in malaysia. Three grown men all in top leadership position in the chinese community had to obey and listen to him. That makes him supreme. Are we fools or are they birdless and plain on the underside?
Why doesn’t he just leave? “Unfinished work”?
When is work ever finished? Even when someone kicks the bucket, he would still have unfinished work.
So don’t give excuses. Just pack up and leave.
OTK lost a vote of no confidence. He must go. It is as simple as that. The majority has spoken.
The fact that the 3 warring factions of MCA have now reached a truce and “peace plan” brokered by UMNO’s chief has suggested to many that MCA now is under UMNO’s thumb.
This perception is based on what is “out in the open” – the obvious. The fact is : it is not just now (due to UMNO’s brokering) but all along, and for many decades, MCA and its leaders, like those of any other component parties of BN, have been beholden to UMNO and its leaders for ministerial positions and largesse, and therefore as a matter of speech under its thumb! That is precisely why UMNO is in the position to broker the intra-party strife, in the first place, in its ensconced position as final arbiter.
So nothing really has changed. How much of probe will be permitted into the PKFZ RM12.5 billion is ultimately UMNO’s call, though the MCA president as Transport Minister and MCA officials have been placed in PKA and various committees to do the so-called investigations.
To say that PKFZ is now “off” the MCA’s or its president’s “radar” may misrepresent the true situation if it were taken to mean that it was very much within MCA or its president’s radar before and if not for UMNO brokering the peace that obliterated whatever left of it. If it did appear so, it was just posturing by MCA president, trying to shore up support relative to the significant splinter divisions not with him.
The whole PKFZ is merely ‘delegated’ by big brother to MCA stalwarts to do damage control over a burgeoning public relations scandal of epic proportion in which the major focus is for the MCA to play ‘bad boy’ to identify an appropriate scapegoat to appease public demands for accountability without collateral damage to the integrity of UMNO and BN as a whole, as to diminish their collective support in the next general election.
So except for perhaps “appearances” (like for example the hypocrisy/facade of MCA as equal partner to UMNO), nothing of substance in the reality of things or underlying dynamics of either MCA – UMNO relationship or handling of PKFZ has significantly changed by the twists and turns of the following events – Ong/Chua spit, then the Ong/Liow split and then the brokered peace bringing Ong/Chua together against Liow and the so called “third Force”
Even the peace may not be a real lasting one. As regards the constituency MCA is canvassing and supposed to represent – ie the Chinese voters- even if the peace were lasting, it does not signify that it would regain support that it has lost over the years. Of course if the peace were short-lived, then another round of open fighting will see whatever residual existing support that it has, diminish further that opens the prospect for Big Brother to marginalise it even further and more openly. (Unless against all odds in a further turmoil a true leader has opportunity to emerge to unite the fractured divisions and galvanise the MCA on a more even keel in managing the unequal relationship with UMNO. Right now the prospects of that happening look dim.
In this land, don’t get too excited over investigation, official or not
Even with the setting up of a royal commission
Haven’t we seen lots of investigations, after months n years
No ground for further action to be taken
Semua OK, poom, poom, poom
Most investigations involving opposition members, ya, got actions lah
Najib had to intervene for he knew that if he did not intervene, the MCA political baggage would get heavier and heavier and eventually would bring down UMNO/BN.
Now….Koh Tsu Koon trying to please Najib said…..
“1 hati” “1 negara” “1 wawasan”.
This idiot does not know…that is exactly what Najib try to avoid…with his “1 Malaysia”…to be disunited…so that the one and only one UMNO can rule forever.
Naturally…..Najib needs to fool Malaysians and Koh Tsu Koon keep talking kok.
One Acer lap top bought for RM42,320 in Penang by UMNO crooks…he has no balls to expose….just pretend he does not know.
Mind you….it is two lap tops!……….and many more items cheating public by the millions.
Najib respond?…”I am very unhappy”….as if this is new to all UMNO hypocrites.
Keep pretending…..keep acting…playing the dirtiest politics you can find on Earth…to use our money….to buy souls and country.
UMNO BARU is dangerous and governed by evil minded few.
……The three MCA factions of Ong Tee Keat, Liow Tiong Lai and Chua Soi Lek have re-assembled as “1MCA” under the dictate of Prime Minister Najib Razak’s “1Malaysia” …………..
sort of ‘FORCED MARRIAGE’ ………
where will this forced marriage leading MCA to?
“I still have a long list of unfinished business involving Party and public interests, like the direct election of the MCA presidency and the Port Klang Free Zone issue. It is my wish to see such issues be addressed without any abrupt disruption.”
============================================
This kind of excuse is not new. It is so common that we lost count of how many Malaysian leaders had actually used it to cling on to power – Samy did it, Tun Abdullah did it, OTK did it and who will be the next?
MCA is not worth one sen….right now.
Just look at how those selfish good for nothing idiots are performing.
Months….like deadly enemies..suddenly…shake hands..all OK.
They are so long under the influence of Ling Liong Sik…who is exactly like Mahathir…different style .different strokes…but cannot be a par with Mahathir.. for Ling Liong Sik…try to sell Malaysian Chinese dignity and soul to UMNO….creating so many selfish hypocrites….right now.
Voters rejected MCA …with vast Malaysian Chinese doing the great job in cities…throw all into dustbins…yet so many feel so great…just because Najib put them back in cabinet…to make sure.all owe UMNO with their lives.
Good for them…succeeding with whom you know and not what you know….but majority Malaysians…particularly the Malaysian Chinese will need to show other Malaysians…all rejecting MCA….to make sure…Muslims are contented to vote against UMNO too.
This..we will show again in 13th GE…which UMNO knows it will be Najib last act.
That’s why…he is now a slogan man….knowing youngsters are music lovers and therefore slogans appeal to youngsters…followed by acting.
Once awhile…UMNO shows their true colours…with Isa and Penang MARA massive corruptions..not forgetting the mother of all corruptions………PKFZ RM12.4 billion stolen from tax payers.
Attorney General said..”Lingam class closed!”….defying the Royal Commission of Inquiry findings….said it all.
Kapal Singh said…” This is not rule of law. This is law of the jungle”
He further said…the findings of Royal Commission seems to carry no weight.
Let all Malaysians judge…is Kapal right or wrong.
AG said….'”Lingam case closed”
Sorry typing error..on my above comment
I was under the impression that the Indians in Malaysia are really dumb and stupid but the Chinese seem to have outclassed them in the latest MCA episode.
The Indians, even after being marginalized and sodomised by the UMNO tuans for 5 decades, could still kiss their ass by receiving the handouts and voting for a known and discredited felon in the Bagan Pinang buy-elections.
The stupid traitor, Thanenthiran stabbed all the supporters of Hindraf in the back by selling out to Najib just for a pat and maybe a million ringgit.
The other nincompoop, Uthayakumar could not even see who the real enemy is. He had to come up with a nobrainer by asking the Indians not to vote. He failed to understand no vote means a sure win for UMNO.
Now the shameless MCA topdogs namely OTK, CSL and LTL have shown that they are worse than Samy Velu when it comes to holding on to positions. At least Samy Velu stood his ground and by hook or crook ( more by crooked methods) is again the president of MIC aka Malaysian Indian Circus. He didn’t kowtow to Najib or even the Mamak Mohamad Kutty. Samy Velu told off UMNO not to meddle in MIC’s internal affairs.
Look at the MCA. Those good for nothing towkays whose only God is money and power did not even honour their words. The moment UMNO’s advisor, Mamak says that Najib should step in and advise MCA, the lapdogs are ever ready to beg for UMNO’s advise. Not only that they were willing to bury all their differences for the party’s sake.
The Chinese community would be better off without such leaders. They have stooped so low as to be subservient to UMNO and wait for the tuans to throw the bits and crumbs. Without these crumbs, these minions would not be able to stand on their own.
High time the Chinese community demands for a EGM and elect new leaders who will really work for the community and not display the slave mentality of the present crop of leaders.
YB
I thought it would never happen. But MCA has just succeded in replacing MIC as the worst circus in town.
1 Cockamanie tumbling act of clowns, that’s what it is. I would laugh if it isn’t so pathetic and sad.
If MCA members continue to vote BN come GE 2103, they will only have themselves to blame for when they lose all their remaining representation in Parliament!
dpp
We are all of 1 race, the Human Race
The voice of 2,000 MCA delegates in 10/10 drowned by 1Malaysia Najib’s 1Voice. OTK is now MCA’s Ceremonial President, CSL of video lucah fame is Deputy Ceremonial President. LTL is……LTL who? Najib is the Undisputed President of the MCA. MCA members, where to put your face?
Kopitiam people in JB are saying “bo lan, bo siow yeong, chor lao kui” MCA no longer a Chinese party. Officially sold to UMNO Baru.
I think we should not waste more time and space discussing MCA. Let’s go back to PKFZ and TBH’s death. Even the BAR Council has made a statement more profound than DAP and PR. What is happening to you fellows?
It is funny; BN did badly during the last election and that was not because PR is strong. I have the inkling that BN has regained some ground and that is not because BN is getting stronger.
Three blind mice, three blind mice,
See how they run, see how they run,
They all ran after the farmer’s wife,
Who cut off their tails with a carving knife,
Did you ever see such a thing in your life,
As three blind mice?
http://www.youtube.com/watch?v=16lY_FPscek
Despite all the incompetencies n boohaha
Lots of ppl get titles n decorated each year
M’sia must b one country that produces that most number of titled ppl per year
States n nation compete to give away titles
Easily 10,000 recipients per year
Halloween is round the corner
Excellent 4 newspapers, $$$ fr bodek congrat messages
Najib said keDAILan is managed by 3 As……Anwar Azizah and Azmin.
What is wrong with that?
3 As is constant and sign of goodness.
I schools..get 3 As better than UMNO’s 3 Fs.
UMNO is managed by 3 too….Najib Myhuiddin Mahathir.
Najib non performer…Mahathir manipulator…. and Myhuddin…masquerader.
All are crooks….not constant and full of nonsense…to keep fooling Malaysians.
Youngsters love slogans.
Lets see how many can that cunning fox trap youngsters into believing him……daily contradicting..daily promoting race and religion politics…divide to rule…apply rule of men….double standards..and so much more.
Lets see young Malaysians are half past sixes or smart.
Three spineless mice, three treacherous mice,
See how they run, see what they want,
They all want the MCA’s prize ,
But the delegates cut off their tails with their casting knife,
Did you ever see such a thing in your life,
As three spineless mice?
YB Kit,
The following financial figures as disclosed by the Finance Minister in Parliament on 23.10.2009 have clearly indicated that the Federal Government of Malaysia has lesser money to spend now as compared to one year ago.
Public Expenditures
2009 RM215.7 Billion
2010 Fiscal Budget) RM191.5 Billion
The public expenditures are going to shrink by 11.2% this year as compared to last year.
Foreign Direct Investment (Historical Data)
FDI 2009 19.7 Billion
FDI 2010 3.6 Billion
The 81.7% drop in FDI over the past one year also indicates that the Malaysian economy has been put on the track of fast economic decline due to lesser inflows of money coming from outside economic streams of the country.
The following comparison figures of 1997 and 2008 private sector expenditures in Malaysia also indicated that the common citizens and the corporate citizens of Malaysia had spent lesser money in 2008 as compared to 1997 because both of them had lesser money at their disposal as of 2008 after about 12 years’ lapse.
In other words, the general Malaysian public are much poorer now as compared to 12 years ago. This is the end result of long term inefficient Federal rule by Barisan Nasional in Malaysia.
Will YB Kit please raise question in the Parliament on how many percent of the Public Expenditures of the Federal Fiscal Budget will be used in the next one year to service the Government’s foreign debt repayment and the Government’s interest expenses on foreign borrowings? We need to know this information in order to get a better understanding about the financial position of the Malaysian Federal Government!
Private Sector Expenditures
1997 72 Billion
2008 56 Billion
These two figures recorded a 22.2% drop in the Private Sector Expenditures of Malaysia during 1997 and 2008, after about 12 years’ lapse. The figures clearly showed that the general Malaysian public are much poorer now as compared to 12 years’ ago.
There is no evidence showing that the personal income of the Malaysian individuals or the corporate income of the Malaysian corporate citizens will go up in the near future, as Malaysians have largely lost their business competitiveness to Vietnam, Laos, Kemboja, Mainland China, India and Indonesia.
But our forex reserves are at a high of US 100 billion.
Sometimes figures are very confusing to understand.
“But our forex reserves are at a high of US 100 billion.
Sometimes figures are very confusing to understand.” (sheriff singh)
In order to explain why the foreign reserves (also called international reserves in the United States) of BNM can be kept as high as USD100 billion but the Federal Government still finds that it has gotten not enough of money to spend, perhaps we should look at how some Malaysian private companies conduct their daily businesses in a debt-ridden situation.
Assume Fat Cat Company borrowed RM10 million from a commercial bank. It spent about RM7 million investing in the long-term fixed assets such as development lands, Office Building, Plants and Equipment, Motor Vehicles, Electrical Fittings and fixtures, Office Equipment and etc. Fat Cat Company’s Balance Sheet indicated that the company has a paid up capital of RM2 million and an accumulated loss of RM5 million but the company still keeps RM1 million in the bank account as a contingency plan to prepare cash for servicing the bank loan interest expense and the trade creditors’ demand for payment which falls due soon. The RM1 million deposit in a bank account does not mean that the company is financially sound because that RM1 million savings will not be enough to pay back the commercial bank in case the commecial bank is to serve a legal demand to the company for a loan call back by the commercial bank.
BNM has to keep a high level of foreign reserves because it makes Malaysia’s official currency Ringgit being pegged to the US Dollar. The foreign reserves which worth USD100 billion in total may just be barely enough to keep the Ringgit’s international value stabilised at around RM3.50 against USD1. In case the BNM is no longer able to keep the foreign reserves at USD100 billion level (let’s say it has to draw out the money from a foreign bank in order to finance Najib’s fiscal budget spending), it is quite likely that the international value of Ringgit will drastically drop. A weakened Ringgit will cause a worse-off situation to the domestic inflation because Malaysia basically is still a net food importer!
In other words, a high level of foreign reserves at the Central Bank may not necessarily mean that the Federal Government is rich. This can be explained by the analogy of using a private company mentioned above. The fact of high bank savings being held by Fat Cat Company does not necessarily translate into a financial soundness or financial health of a business if Fat Cat Company already makes big losses in business operations and is struggling in a debt-ridden situation.
Goodness me, Onlooker Politics, how does a country get its foreign reserves besides from borrowing from abroad? Do you think we keep our reserves only in foreign banks? Do you think our reserves are only in foreign currencies? Must we mandatorily need foreign currencies to finance fiscal deficit? Where do you think is the major source of financing of our fiscal deficit? Does USA have any foreign exchange or as you said international reserves? I hope these questions will help you to ponder over how much you really know about foreign exchange reserves.
Let me see. According to the latest official reserve statistics (see Wiki) as at September, it is like this:
Malaysia US$ 93.5 billion
UK US$ 84 billion
US US$ 83 billion
Australia US$ 43.5 billion
European Central Bank US$ 73 billion
UAE US$ 45 billion
Canada US$ 53.5 billion
etc etc
Thailand US$ 133 billion.
So we are better off than UK, US, Australia and the ECB even. But way behind the Thais.
Somethings are just puzzling. I am not an economist but can some economists out there explain in plain simple “England”?
Are we pokai or not?
Mr Singh, may be I can help you a little.
A country’s foreign reserves may originate from many sources. One of them is from our borrowing abroad as pointed out by some of you. But borrowing from abroad to build up the reserve does not really make sense because with increased reserves, the country has also built up foreign (or external) debts which must be serviced and repaid in foreign currencies. Most external debts are denominated in US D, Euro or yen.
Then we have foreign reserves originating from foreign investment, either FDI or portfolio. FDI is more sustainable because the investment is usually for medium and long terms and so the possibility of reversal (pull out) is less. Portfolio investment, i.e. investment in our stocks and shares and currencies is usually more volatile and may cause problems when foreign investors decide to pull out at short notice as happened in 1997/98 crisis.
The more sustainable foreign reserves are one from trade surplus, i.e. foreign exchange we earned from Malaysia’s exports. When firms earn foreign exchange, they have to exchange it with BNM for ringgit. That is how BNM accumulate foreign exchange.
Because of 1997/98 financial crisis, most East Asian countries decided to accumulate large amount of reserves to cushion against any sudden change of confidence or any sudden reversal of investment flows. The conventional wisdom now is foreign reserves provide confidence to a country’s currency. A large reserves is an indication the country is able to meet its foreign obligations either servicing the interest or repay the external debts. Large reserves also indicate a country’s ability to pay for its imports.
However, confidence is not solely dependent on international reserves. USA is a typical example. It has almost no foreign exchange reserves and yet the US dollar has remained acceptable in most country. But because of its spending beyond its mean, the beginning of the end of US dollar has probably begun. The next world currency? The Chinese renminbi perhaps.
“Are we pokai or not?” (sheriff singh)
The above question is something which I really wonder. That is the reason why I made a request to YB Kit asking him to raise question in the Parliament on how many percent of the Fiscal Budget Expenditures is used for the purpose of financing the interest expense of Government Foreign Debt.
“The more sustainable foreign reserves are one from trade surplus, i.e. foreign exchange we earned from Malaysia’s exports.” (limkamput)
The above point is the best practical knowledge Mr limkamput has tried to teach we the Malaysians. Our immediate neighbour, Singapore, is able to survive many rounds of world economic recessions even though it has gotten negligible natural resources simply because the tiny red dot nation has successfully built up its strong foreign reserves based on its trade surpluses accumulated throughout the past 40 years. The Singaporean Government is deemed to be a debt-free government because it does not depend on foreign debt to build up the strong foreign reserves. The efficiency of Singaporean Government is definitely something worth noting by us because Singapore is a good economic model which can inspire us along the line of doing the economic planning works!
“However, confidence is not solely dependent on international reserves. USA is a typical example. It has almost no foreign exchange reserves and yet the US dollar has remained acceptable in most country.” (limkamput)
The world confidence in the US dollar has been built on the goodwill of the democratic political systems and an efficient judicial court system, plus plenty of underpriced aerable agricultural lands which produces a lot of inexpensive but healthy foods, plus the strong national defense system.
To add on to what Onlooker Politics said, world confidence is also reposed on assumption of continued US leadership in R&D (from the many think tanks and research and Ivy leaque tertiary institutions) and innovation that supposedly will help maintain her cutting edge in economic competitiveness and ICT. Not to mention further US’s ability to attract talents from all over the world (brain gain) including Malaysia.
Also the dissemination of American values – freedom, rule of law, equality, meritocracy and opportunity – via Hollywood films Music (Beyonce, notwithstanding). And not just strong national defense system – but sheer military might to project and assert American dominance geo politically all around the world where American interests and her friends are vital! Going hand in hand is also American influence on key supra national institutions like the United Nations to vest her the legitimacy of world’s support…China may have the strength in market but who buys from and invest in infrastructure in China? Doing business in China is still hazardous if one does not know the ropes because of the various tiers of authorities coupled with corruption, uncertainty of laws (eg they don’t have a developed corporate laws, companies Act or land law) and selective enforcement of laws and relatively little respect of intellectuial property, amongst other set back..
Ultimately it is the intangible “confidence” factor from the world. In military, economic, intellectual, diplomatic and cultural terms the US wins hand down at least for decades to come if it does not mess up again and again by her rogue paper shuffling and manipulation of the financial system by her brightest in investment banking and commodity, equity and currency trading fields.
Lots of hot air and conventional wisdom here! The world most “innovative” and “efficient” economy, to me, must also be able to earn its own upkeep. The US is living on its past legacy – the world currency status which at the moment no other currencies are able to take its place (yet).
The US is able to continue to live beyond its means simply because the rest of the world, particularly China and other East Asian economies, have remained stupid to finance it. They will eventually wake up. How soon? We shall see.
As for China, I guess someone is describing that country twenty years ago.
“The US is able to continue to live beyond its means simply because the rest of the world, particularly China and other East Asian economies, have remained stupid to finance it.” (limkamput)
limkamput has shown his arrogance here when he calls the rest of the world beyond the US, particularly China and other East Asian economies “stupid” because they continue to finance the US in order to enable its people to live beyond their means.
If limkamput’s opinion is to prevail, then I believe he can also call the high interest rate loan offeror, the so-called loan shark or “Ah Long”, stupid for giving away loan to the loan borrowers. However, as far as I know, most loan sharks in Malaysia are not stupid. They are only the high risk takers. They are just holding a very lenient view on the importance of the security of loan recovery therefore they don’t usually request that the loan given out must be secured by some valuable collaterals.
Japan and China may be the daring high risk takers by buying a huge amount of the interest-bearing sovereign bonds of the United States. However, the monies which Japan and China have continued to deposit into the hand of the American Government will be proven to be some kind of fruitful investment. Besides the bond yield, the monies lent to the US Government will eventually be put into the hands of many American import businesses, which will continue to import goods and services from Japan and China. This kind of economic arrangement is mutual beneficial between the US and the East Asia, as the Americans keep having some monies to spend while the factory workers in Japan and China will continue to retain their jobs even when the world is having a big financial turmoil.
For the past 11 years, the only person who kept criticizing the Americans’ predominance in world currency choice and unshamefully claimed his glory in fighting against the American predominance during the 1997-1998 Asia Financial Crisis is Dr. Mahathir. Nevertheless, we still ironically find that the central bank of Malaysia, BNM, continues to peg Malaysia’s official currency Ringgit to the US dollar since September 1998 until todate.
Dr. Mahathir likes to prejudically despise the capability of the typical Americans because he has attributed Americans’ success in International Trade on the sole reason of the existence of highly overvalued US Dollar which dominates the World Trade as the most popular World currency. However, he may sometimes forget about the truth that one of his sons is successful in doing business mainly due to the reason that his son has received the profound training in business with his petrol chemical engineering education in an American University at Oklahoma State during early 1980s.
//This kind of economic arrangement is mutual beneficial between the US and the East Asia, as the Americans keep having some monies to spend while the factory workers in Japan and China will continue to retain their jobs even when the world is having a big financial turmoil.//
Has it ever occurred to you why China and the rest of Asian must keep producing and paying their workers dirt so that American consumers can continue enjoying good life? In return from their large amount of exports, may I know what these East Asian countries are getting in return? Oh, yes huge amount of papers (they affectionately called foreign reserves) which will be getting lesser value by the day. For smaller economies with small domestic market I may understand the logic of export driven strategy. But for countries like China, it is time they learn how to consume and provide better livelihood to their own people. Most Chinese work their butt out, and may I know what do they get? Why can’t the Chinese use more shoes and shirts and consume better food at home?
There is nothing mutually beneficial between the US and the East Asia basing on the existing arrangement. It is one part of the world working their butt out and the other part of the world pay for it using the printing press. Eventually there will tears for those who keep accumulating the papers and there will be hard reality for those keep spending beyond their means. The arrangement is not sustainable and it will break down.
Precisely because the US dollar is the world currency, that is why there is no orderly adjustment to the existing imbalance. The US does not have foreign reserves. The US does not have “external debt” (i.e. its debts are all denominated in US D) although the bulk of it is held by foreigners. In other words, the US can carry on incurring foreign debts without facing foreign exchange risk. Can you visualise another country having trillion of trade and fiscal deficit and yet have not exchange rate meltdown?
I say let’s decouple the rest of the world as much as we can from the US economy, and there will be less financial turmoil.
It is not about Mahathir. It is about what is logical and sustainable. I can’t relate the issues we discuss here to your Ah long analogy, sorry.
“Eventually there will (be) tears for those who keep accumulating the papers and there will be hard reality for those keep spending beyond their means. The arrangement is not sustainable and it will break down.” (limkamput)
When Ah Long gives out loan to a loan borrower, he may not look at the borrower’s tangible asset on hand. Ah Long may look at the income earning potential of the loan borrower, or worse still, to look at whether the loan borrower has the potential to work as a prostitute! It is that simple!
The US has the hi-tech weapon technology and many other things which the East Asians want. It is also that simple!
I suspected so about your analogy. The problem is the victims of Ah Long are usually helpless, and as you said, may have to prostitute themselves in order to pay back the money. Yes, US have high tech weapons and they also owe you lots of money. Why don’t you try to force it on them to pay back? They will ask you to go fly Kelantan kite. Now, is it that simple?
“Yes, US have high tech weapons and they also owe you lots of money. Why don’t you try to force it on them to pay back?” (limkamput)
limkamput, in Americans’ political dictionary there is a word called “lobby”. Indeed, it is not necessary for Japan and China to use force on the American government in order get back the loan proceeds receivable because employing a lobbyist to do lobbying on the politicians for purpose of seeking the U.S. politicians’ consent to pay back the loan will be a much cheaper and much easier way than using “force”. Don’t you know that the BN Government did also use a lobbyist in Washington D.C. in order to get Americans’ acceptance on the appointment of a Malaysian ambassador to the United States during Dr. Mahathir’s rule and during Former US President G.W. Bush’s administration?
If the political leaders of China and Japan start to open their mouth uttering some words about their intent to buy high tech weapons such as aircraft fighters from the United States, I believe many lobbyists from the American aircraft companies may quickly go lobby the Senators and the Congressmen in order to get them to agree to declassify certain high tech aircraft fighters which have already stimulated the buying appetite from Japan and China. In America, almost everything is up for sale, so long as the price is right and the political climate permits.
Americans earn a lot of their foreign exchange from weapon sale to the Middle East. In the past American politicians from time to time were willing to risk the enlisted soldiers’ lives in the unrighteous wars being waged against the so-called terrorist government in Middle East simply because the lobbyists from the American weaponry industry had successfully been able to pursuade the American politicians to put the soon-to-be-obsolete weapons in actual use in order to justify additional replenishment of more advance new weapons. In the event that Japan and China are interested to buy some advance weapons from the United States, it will be even a much easier task for the lobbyists to accomplish because weapon sale to East Asians does not involve killing of anyone and does not risk the life of any American soldiers.
If Najib is interested to buy American weapons, please be rest assured that the American politicians will not ask him to go fly kite. I am willing to offer myself as the middleman and I can assure him that I will give him a large portion in the shares of kickback, surely much more attractive than that being managed by Razak Baginda!
If Najib is interested, just leave your email address in this comment blog and address to Onlooker Politics. I will keep you in touch later!