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Malaysian government’s debt to approach RM1 trillion by 2020

by Pak Sako | Monday, 25 February 2013 14:53
CPI

CPI Introduction

This is the second part of a three-part CPI series on Malaysian debt. The first part, entitled, ‘Investigate Malaysia’s debts now’ , surveyed the overall debt situation.

This part examines the trend in government debt. The upcoming part will concern Malaysia’s total debt.

Statistics reveal that in the last 15 years, the Malaysian government’s debt increased at an unprecedented rate.

The graph below shows the statistics for the government’s combined domestic and foreign debts from 1991 till the present. Forecasts are provided up to the year 2017.


Continue reading “Malaysian government’s debt to approach RM1 trillion by 2020”

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Room for competent Bumiputera companies: How to become competitive

— Koon Yew Yin
The Malaysian Insider
Feb 24, 2013

FEB 24 — After reading the article “Room for Competitive Bumiputera Companies’ in The Edge this morning, I am encouraged to write this piece to support Petronas Chairman Tan Sri Shamsul Azhar Abbas.

He said that in 2010 and 2011 alone Petronas awarded about Rm 74 billion worth of contracts to Bumiputera controlled companies, a sum cannot be described as anything but huge.

Despite this Petronas has become a punching bag for Malay right wing and business groups in recent months. The Malay Economic Action Council (MTEM)- an umbrella of more than 60 business group blamed Petronas for sidelineling Bumiputera companies and favouring more competitive foreign companies.

The MTEM has called for Tan Sri Shamsul and the Menbers of the Board of Petronas to resign. This is outrageous. The Malays cannot continue to expect hand outs and juicy contracts.

It is time they must realise that they have to become more efficient and competitive to face the real business world. Continue reading “Room for competent Bumiputera companies: How to become competitive”

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Investigate Malaysia’s debts now

By Pak Sako | Thursday, 21 February 2013 11:34
CPIASIA

Former prime minister Mahathir Mohamad claimed last week that Malaysia’s current debt level is “healthy” compared with Greece’s.

But the debt-to-GDP percentage Mahathir relied on tells next to nothing about the full extent of Malaysia’s debts; the nature of these debts; or what can happen next.

The real devil lies in the details, namely:

(i) the trend in the debt level.

How has it changed in the recent past? Is there momentum in a certain direction? The federal government’s debt had doubled in just four years from 2007 and 2012. Will it stop growing, or will the trend and absolute totals continue their upward rise?

In the last decade, our finance ministers have repeatedly pledged to reduce the budget deficits. This has not happened. Instead, deficits have ballooned and the federal government’s debt has mounted.

(ii) the causes of debt.

For what are the borrowings and for whom? Are these borrowings for worthwhile investments that benefit the public? Are these liabilities being used to cover government operating costs or to prop up failing crony companies or the stock market? Is the use of costly loans for projects with low or no rates of return justified?

Almost a trillion ringgit was recently whisked out of the country in the form of illegal outflows. This is capital flight. It is conclusive evidence that our economy is ‘leaking out’ wealth.
Continue reading “Investigate Malaysia’s debts now”

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Star Headlines (07/02/13) “150k loans for students”

By PW Cheng
Feb 7, 2013

I would like to remind those students and parents who had read the Star today (07/02/2013) on “150k loans for students”, do not feel ecstatic about it. Please be prepared for a rude shock. No banks or any financial institutions in their right mind will give loans without any collateral. As according to Najib “this is a creative way of helping the rakyat”, I do not see anything creative about this. The interests charged is far too high and much higher if you were to take a mortgage loan. Najib should be sent back to school to study mathematics and calling it as creative, do not emanate intelligence.

In 2004 or 2005, the government has a loan scheme for tertiary students studying overseas. I was one of the few who knows about this loan scheme. Not even Dr Wee Ka Siong ( who was then the MCA Education Bureau chief) knows about this. I tried applying the loan for my son who was studying in Australia then but PSD kept on giving various excuses by twisting their terms and conditions to turn the loan down. Continue reading “Star Headlines (07/02/13) “150k loans for students””

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What change? A reply to Dr M

― Pak Sako
CPI
Jan 04, 2013

JAN 4 ― Former prime minister Dr Mahathir Mohamad published a piece called “Change” yesterday in his blog.

In it he asked why change governments.

He then criticised the socialist ideology. He strangely claimed that “Malaysia has no ideology”.

That is completely untrue.

When Dr Mahathir came into power in 1981, Malaysia was introduced to the neoliberal ideology.

This is an ideology that is biased in favour of corporations and capitalists.

It is the opposite of socialism, which aspires to put people first.

The neoliberal ideology was aggressively promoted around the world in the early 1980s by influential global networks of business interests and their supporters.

Their mantra? Continue reading “What change? A reply to Dr M”

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Let 2013 end the national deformations and usher in an era of genuine national transformation by electing a new Pakatan Rakyat Malaysian government for the first time in 55 years

For nearly four years, Prime Minister Datuk Seri Najib Razak had been promising one transformation programme after another – government, economic, political, educational, social, etc all under an overarching slogan of 1Malaysia under one agency or another.

All these pronouncements and initiatives have achieved is to earn the nation the epithet of “The Acronym Nation” while national deformations in all aspects of national life have proceeded unchecked.

Najib’s four-year premiership will be remembered by Malaysians as an administration of plunging global indices, and this unpleasant fact has been underlined by three international reports in the last month of this year, viz: Continue reading “Let 2013 end the national deformations and usher in an era of genuine national transformation by electing a new Pakatan Rakyat Malaysian government for the first time in 55 years”

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Before meddling with subsidies, ask why we need subsidies

by Pak Sako
26th Oct 2012

Two groups, CPI and REFSA-IDEAS, are debating government subsidies.

This debate is critical because politicians are taking their cues from it.

It is important that good judgement prevails. Much is at stake.

But first, what is a subsidy? Why do we need it?

Some believe subsidies are government money spent on primary healthcare, infrastructure, culture or the environment.

But these are not subsidies. These are fundamental public provisions that a decent society would collectively provide for all its members in most ordinary circumstances.

A subsidy is different. It is a special kind of public expenditure.

A subsidy is designed to support a disadvantaged group that cannot secure the needs and necessities for survival because an underlying condition is persistently preventing their fulfillment. Continue reading “Before meddling with subsidies, ask why we need subsidies”

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Refsa on subsidies: Still off the mark

Dr Lim Teck Ghee
CPI

The response by Research for Social Advancement (Refsa) institute to my note is disappointing. It provides little value added to the current knowledge on subsidies in Malaysia; repeats various motherhood statements about the need to rein in subsidies and selectively focuses on so-called various ivory tower statements that they have detected in my note to triumphantly declare victory.

The major contention in my note is necessary to repeat:

It is necessary to remind the REFSA-IDEAS team that subsidies have an important role to play in providing a safety net for vulnerable groups. They help bring down the cost of living as well as enable access to health, education, transport and other necessities.

They are a necessary burden in a highly skewed capitalist economy such as Malaysia’s where the lower classes of labour do not get the fair remuneration that they are entitled to or deserve. Continue reading “Refsa on subsidies: Still off the mark”

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Dr M defends policies, says Jews created problems

By Zurairi AR
The Malaysian Insider
Oct 23, 2012

KUALA LUMPUR, Oct 23 — Tun Dr Mahathir Mohamad today blamed Jews for “creating problems for us,” and pointed out that while his economic policies may have been interpreted as anti-Semitic it was actually to help develop Malaysia.

This morning, former Cabinet minister Tan Sri Sanusi Junid said Dr Mahathir’s policies when he was prime minister were inspired by Germany’s past policy of limiting Jewish financial influence to help the Malays but they were later thwarted by Datuk Seri Anwar Ibrahim.

Sanusi told a Malay economic forum that Dr Mahathir and former Finance Minister Tun Daim Zainuddin were hoping that Malays would control the economy but when they saw progress was slow, they decided to follow the German example of not granting banking licences to Jews, in their treatment of Chinese interests.

“The problem is that they (Jews) were the ones who created problems for us and the world because they disobeyed international law and got away with it,” Dr M said in a press conference this afternoon.

He also pointed out that he won the general election in 1999 because non-Malays supported him, while Malays refused to since they thought his treatment of Anwar was unfair. Continue reading “Dr M defends policies, says Jews created problems”

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The 2013 Budget: Najib’s Last Hurrah? (1)

“More debt has been accumulated in six years than what took 48 years after Merdeka to accumulate.”

A Brief History

The Budget unveiled by the Prime Minister on September 28th , his fourth budget, contained no real surprises. It followed the broad pattern of previous Budgets presented since 1998, the year of the East Asian Financial crisis.

A constant feature of these Budgets has been the use of deficit financing to further the BN agenda of promoting the interest of its key constituents while maintaining a grip on the loyalty of its traditional supporters. Tax giveaways and subsidies were part of the instruments used.

Despite buoyant revenues from the exploitation of natural resources which provided almost a third of revenue, the Government has consistently ran deficits which contributed to the buildup of a mountain of debt. The initial rationale for deficit financing was to stimulate and revive the economy after the devastating set back resulting from the East Asia Financial crisis of 1998. Continue reading “The 2013 Budget: Najib’s Last Hurrah? (1)”

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Budget 2013: Same old formula, with no solutions

Tony Pua
MP SPEAKS
Malaysiakini
Sep 28, 2012

Over the past few years, the government has been able to increase its budget tremendously to achieve record expenditures annually.

This has allowed the government to prop up the economy as we face challenges in attracting private investments, as well as a drop in our trade contributions.

However, Budget 2013 has projected an increase of only 0.7 percent (2012: 11.8 percent; 2011: 16.1 percent) in projected revenues from RM207.2 billion to RM208.6 billion in 2013.

This is the slowest projected increase in the tabled budget since 1999, barring the global financial crisis in 2009.

Consequently, the government is forced to table a smaller budget than the prior year. The proposed operating expenditure has been reduced by 0.3 percent from RM202.6 billion to RM201.9 billion, while the development expenditure is also reduced from RM46.9 billion to RM46.7 billion or 0.4 percent.

The marked decline in revenue growth will have a very significant impact on the government’s ability to impact growth in the Malaysian economy through fiscal means.

The fact that we have not been able to reduce our budget deficit below four percent over the past few years reflects the years of wasted opportunities, where we have failed to curb our expenditure through reduced wastage, abuses and corruption. Continue reading “Budget 2013: Same old formula, with no solutions”

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Is Malaysia’s IPO Boom Overhyped?

– By Dhara Ranasinghe
CNBC
27 Aug 2012

Malaysia is marking itself out as the IPO destination to beat this year with a string of billion-dollar-plus deals. Impressive, for sure, but don’t take the booming IPO market as a sign that Malaysia is poised to become a regional financial hub, experts say.

The reasons for this, they add, are simple: once the slew of big Malaysian companies seeking new listings runs out there is likely to be a dearth of initial public offerings (IPOs) in Malaysia. Because Malaysia is still developing open and liquid capital markets, foreign firms looking to list in the region are likely to pick Singapore and Hong Kong over Kuala Lumpur.

All the big companies listed in Malaysia this year are local firms. To really develop itself as a centre for IPOs, Malaysia needs to attract new listings from big foreign firms in the way Singapore and Hong Kong have done in the past, analysts add.

“Part of the boom in the Malaysian IPO market can be explained by the well-developed pension system in Malaysia, which has allowed for growth in domestic demand for equities,” said Herald Van Der Linde, Head of Equity Strategy, Asia-Pacific at HSBC in Hong Kong.

“However, when it comes to comparing Malaysia with Singapore and Hong Kong, these markets are much larger, more diversified and much better developed. As such, they can compete for global IPOs. This is unlikely to happen in Malaysia yet,” Van Der Linde said. Continue reading “Is Malaysia’s IPO Boom Overhyped?”

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Be aware of Fitch’s fiscal warning

— Ramon Navaratnam
The Malaysian Insider
Aug 23, 2012

AUG 23 — International ratings agency Fitch Ratings has once again warned Malaysia that its public finances are under sustained strain!

This firm but polite expression of censure, if not admonition, should not be played down by unduly highlighting Malaysia’s short-term good economic growth gains in the last two quarters of this year .

Neither should we be complacent about the serious declines in economic growth and stability occurring currently in the relatively rich developed industrial world. We can do this only at our own peril.

The fact of the matter is that Malaysia will be adversely affected by the global slowdown in the near future. The extent of our economic slide is difficult to project at this time. But we know for sure that we cannot take a “business as usual” attitude against the headwinds and strong disruptive socio-economic currents whirling around us, at home and from abroad. Continue reading “Be aware of Fitch’s fiscal warning”

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Ideology and debt: A reply to Dr Mahathir

— Pak Sako
The Malaysian Insider
Aug 23, 2012

AUG 23 — In his blog post “Change” (August 22, 2012), former Prime Minister Tun Dr Mahathir Mohamad criticised the socialist ideology.

He then claimed that “Malaysia has no ideology”.

This is not accurate.

It can be strongly argued that the Malaysian government after 1980 followed the “neoliberalism” ideology, a pro-business ideology.

This economic ideology was aggressively promoted around the world at the start of the 1980s by two pro-business world leaders: British Prime Minister Margaret Thatcher (elected 1979) and American President Ronald Reagan (elected 1981). Continue reading “Ideology and debt: A reply to Dr Mahathir”

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Mounting Malaysian debt could lead to downgrade, says ratings agency

By Lee Wei Lian
The Malaysian Insider
Aug 01, 2012

KUALA LUMPUR, August 1 — Malaysia’s public finances are weak relative to those of its ‘A’ range peers and the country is now on par with more heavily indebted ‘A’ range sovereigns such as Italy, said Fitch Ratings today.

This comes after some economists said that the federal government’s debt, which nearly doubled since 2007 to RM421 billion, poses a fiscal risk to the country if not managed carefully as it impairs Malaysia’s resilience to economic shocks, which appear to be occurring with increasing frequency.

Fitch said that despite strong GDP growth, the deterioration in public debt ratios is affecting Malaysia’s credit profile and a lack of progress on fiscal reforms could lead to a ratings downgrade.

Fitch said that the rise in the federal government debt-to-GDP ratio and the limited broadening of the fiscal revenue base have pushed Malaysia’s debt-to-revenue ratio to 246 per cent in 2011, which is well above the ‘A’ and ‘BBB’ range medians of 137 per cent and 119 per cent respectively and is now on par with more heavily indebted ‘A’ range sovereigns such as Italy at 261 per cent and Israel at 180 per
cent.

Italy is considered one of the countries at risk of a debt default and saw its borrowing costs soar to above seven per cent in November last year. Continue reading “Mounting Malaysian debt could lead to downgrade, says ratings agency”

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Penghapusan duti eksais kereta: Sekali lagi BN kata tak wajar

— Aspan Alias
The Malaysian Insider
Jul 25, 2012

25 JULAI — Niat Pakatan Rakyat untuk menghapuskan duti eksais dan berbagai cukai terhadap kereta-kereta adalah usaha yang patut mendapat sokongan. Ini adalah kerana kereta adalah perkara keperluan oleh rakyat negara ini yang masih terlalu jauh ketinggalan dalam menyediakan kemudahan pengangkutan awam. Sesungguhnya rakyat telah terlalu terbeban dengan kos pembelian kereta kerana sebahagian besar dari harga jualan kereta di negara ini adalah disebabkan oleh elemen cukai-cukai seperti duti eksais yang tinggi yang dikenakan oleh pihak kerajaan kita.

Jika duti eksais diturunkan ketahap minima maka kereta import yang berharga sebanyak RM150,000 itu akan boleh didapati dengan harga RM120,000 misalnya. Malahan kalau kita kaji harga kereta di banyak negara maju ia adalah jauh lebih rendah dari harga kereta yang rakyat kita terpaksa bayar. Harga kereta di negara ini terlalu tinggi dan kita adalah bersamaan dengan negara-negara seperti Singapura dan segelintiran negara di-rantau ini.

Itulah sebabnya ramai di antara rakyat negara ini, apabila kembali ke Malaysia kereta adalah salah satu ‘item’ penting yang dibawa mereka kembali kerana mereka telah membeli kereta-kereta tersebut dengan harga yang amat murah di luar negara. tetapi cadangan ini jangan kita harapkan mendapat sokongan dari pihak parti yang memerintah sekarang kerana mereka tidak akan bersetuju untuk memberikan sokongan dan alasan ‘standard’ yang diberikan mereka ialah tindakan itu akan mengbangkrapkan negara.

Pihak BN telah memberikan reaksi yang negatif terhadap isu ini dan Ketua Pemudanya Encik Khairy Jamaluddin telah menyatakan jika ini terlaksana maka ia akan mengurangkan pendapatan negara dalam jumlah yang berbillion ringgit setahun. Kita tidak boleh melayani pandangan ini kerana beliau (Khairy) adalah di pihak pimpinan dan kerajaan yang tidak mempunyai cukup imiginasi untuk mencari pendapatan alternatif terhadap kekurangan pendapatan dari tindakan mengurangkan duti eksais dan cukai-cukai yang berkaitan dengan harga kereta ini. Continue reading “Penghapusan duti eksais kereta: Sekali lagi BN kata tak wajar”

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The bitterness of a financial conservative

by Hafiz Noor Shams
The Malaysiann Insider
Jul 26, 2012

JULY 26 — I handle my finances conservatively. I spend very little for someone my age and my profile. In fact, I impose a sort of limit on my spending. I am conscious of it and get mildly nervous if my total spending grows too fast even when I can more than afford it.

I probably do buy too much insurance and I do save or invest a large part of my earnings. My credit card service provider probably hates me for having to finance me without getting the chance to charge me interest too often too much.

I can afford to save a lot partly because I do not have too many financial responsibilities.

The other factor behind my saving habit has a lot to do with my upbringing and education. Continue reading “The bitterness of a financial conservative”

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Is Petronas an ungrateful child of Malaysia?

Anas Alam Faizli
Free Malaysia Today
July 12, 2012

In early June Petronas hinted publicly at the World Gas Conference that they are tired of being the Malaysian government’s cash cow. They said no to fuel subsidy and last year they said they wanted to pay less dividends! Is Petronas ungrateful? The money belongs to the rakyat anyway and hence the government.

While many have attempted to comment on the sustainability of Petronas’ payouts, this article aims to give some insights into the realities of the local oil & gas industry, and why returning all oil harvests back to Malaysians may not benefit them in the longer run.

In 1974, Petronas, fully owned by the government of Malaysia, was established and given full ownership and control of our Petroleum reserves. Today, it has evolved into a fully integrated oil and gas multinational corporation, ranked among FORTUNE 500’s largest and most profitable oil and gas corporations with a total workforce of more than 30,000. Continue reading “Is Petronas an ungrateful child of Malaysia?”

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WSJ: Malaysia needs China’s help to weather euro storm

The Malaysian Insider
Jun 20, 2012

KUALA LUMPUR, June 20 — Trade-dependent Asian countries including Malaysia will take a major hit if the euro zone economy collapses and will require China’s aid to hobble along, according to the Wall Street Journal (WSJ).

The newspaper highlighted the point that Malaysia has bank loans from Europe equal to 20 per cent of its gross domestic product (GDP), which it said was high for the region, and would be more troubled compared to financial hubs Hong Kong and Singapore, both of which have huge “rainy-day funds” to keep homes and businesses above water.

While China, the world’s biggest economy after the US, would be able to withstand the global slump due to its closed financial system, WSJ said Malaysia’s growth would be lessened.

“If China doesn’t open the stimulus floodgates, that would mean less of a boost for its neighbours, including commodity exporters such as Australia and Malaysia,” the paper said. Continue reading “WSJ: Malaysia needs China’s help to weather euro storm”

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Election spending risks credit downgrade, say S&P and Moody’s

By Shannon Teoh
The Malaysian Insider
Apr 26, 2012

KUALA LUMPUR, April 26 — The federal government’s record spending binge ahead of elections expected within months may result in Malaysia’s first credit-rating downgrade in 15 years.

Bloomberg reported today that several top rating companies say Putrajaya must bring down its debt, the second highest in Asia at 53.8 per cent of GDP or face a ratings cut.

The international business wire cited Standard & Poor’s (S&P) analyst Takahira Ogawa as saying it “might have to think about” a potential cut in a few years unless the next government boosts revenue and reduce subsidies after polls.

It also reported that Moody’s Investors Service and Fitch Ratings also said Malaysia must cut its debt, which the International Monetary Fund (IMF) projects may climb to a 20-year high of 55.9 per cent this year, above the statutory 55 per cent ceiling.

A downgrade to Malaysia’s credit, rated as A- by S&P, would be its first since the 1997 Asian financial crisis.

The rating is the same as Botswana, which has a debt ratio of 16 per cent, while Indonesia, Southeast Asia’s largest economy, is rated BB+ by S&P and has seen its debt fall to 25 per cent in 2011 from 95 per cent just after the crisis. Continue reading “Election spending risks credit downgrade, say S&P and Moody’s”