Archive for the 'Economy' Category


‘Najibnomics’ is just bollocks

‘Najibnomics’ is just bollocks

COMMENT | Economics, as anyone who has had the benefit of studying it, is divided into two streams: microeconomics and macroeconomics.

Najibnomics does not understand the distinction between the two, yet jumped right in to transform Malaysia.

Not surprisingly, the transformation produced a slew of feel good numbers, what is otherwise known as ‘Syiok Sendiri Economics’ (SSE), that verges on a farce.

To begin with, inflation is not tracked holistically. Thus annually, the official inflation ranges between 4.5 percent to 5.5 percent, which effectively negates any meaningful growth of the same.

Not surprisingly, Malaysia is caught in a middle income trap, with private consumer debt of some 80 percent of the total GDP.

Invariably, the Malaysian economy is now within a whisker of being wiped out by any property burst in China, or, the explosion of the debt bomb, again in China.

By taking Malaysia closer to China, in the name of being integrated into China’s One Belt One Road, Malaysia has imported all the risks that now confront this massive project.

Indeed, Moody’s has downgraded the credit rating of Hong Kong the week before last, on the ground that Hong Kong has embraced the Belt and Road initiative without a clear sense of where the risks may be.

Malaysia, for the lack of a better word, walked where it should not thread blindly, jumped when it shouldn’t be hopping in joy.

China’s debts 250 percent of its GDP

Instead of spreading our risks, by working closely with all OECD countries, which formed the developed economy, Putrajaya hung on the coat tail of Beijing, at a time when China’s private and public debt combined have nearly reached more than 250 percent of its GDP.

At this rate, the Chinese economy is in the league of US and European economy just before 2008-2009 great recession. Lim Sian See, who remains anonymous, thus a black propagandist of Najib, argued that Najib has saved Malaysia.

How can, for instance, a debt of RM44 billion borrowed by 1MDB be used to save a country, indeed, to transform it, when all of the money now is missing, with interest needed to service the dent now verging on few billions a year and increasing?

Najibnomics is bollocks, precisely because it doesn’t know the micro and macroeconomics foundation of Malaysia.

Microeconomically, Malaysian entrepreneurs are bankrupted more easily than any laws in the world. Anyone above a debt of RM50,000 can be declared a bankrupt.

Not surprisingly, the legions of Malay and Chinese entrepreneurs, in an attempt to make a better life for themselves, end up receiving the short end of the stick.

Buy a van to sell to get involved in some cash-based food businesses. If the revenue is not more than what one can afford to repay, the bankruptcy is permanent. And, one thought that hell is eternal.

In Najib’s economic world, hell is already permanent in Malaysia, even before the angel of death comes knocking on one’s door.

Macro economically, Najib has had zero view on currency. Unlike Singapore, that made it a point to strengthen its currency in the mid-1980s, eventually allowing the Singapore currency to be as strong as the Australian and Canadian dollars, Malaysia took to allowing surplus labour from all over the world to invade the country.

Thus, stagnant wages went into a downspin, and Malaysia is now in a race to the bottom to tout its economic advantages. At this rate, it goes without saying that Malaysia has to show that it is more attractive than Myanmar or the Philippines.

Najibnomics are BSnomics pure and simple. It sought to dig a hole in the middle of Kuala Lumpur, borrowed heavily to refill the hole in the heart of the city, allowed tens of billions to be allegedly, stolen or frozen in more than six jurisdictions – all of which for criminal liabilities and money laundering – yet did nothing to repay the debt, except to go to Beijing yet again to ask for financial lifeline and redemption.

If Najib Abdul Razak had graduated in industrial economics in the University of Nottingham, one can see that he hasn’t been following his lectures with any diligence.

Not surprisingly, Najib often allows Professor Kim of the Blue Ocean Fame to tell him how to transform the country. In fact, the cabinet is so clueless, that they assume Blue Ocean implies the need to transform the maritime corridor of Malaysia.

Thus one has Port Klang, Port Carey and Malacca Gateway all within an earshot of one another. And, as if that was not enough, there are Port Tanjung Pelepas, Kuantan Port, Lumut Dockyard, Terengganu inland docking facilities and Penang Port, too.

If Najib is a quarter as wise as what Lim Sian See said, the Malaysian economy is what Hokkiens would call “sie liao” (dead already).

The fact is Najibnomics has and always been about an allegedly a land scam based on over leveraged debt, something he learned from another Larry Low, the father of Jo Lhow, both of whom would probably sink in a sea of spit, if they dared to show their faces anywhere in Penang or Malaysia.

‘Najibnomics’ is just bollocks
Rais Hussin Mohamed Ariff
7 June 2017 – malaysiakini


The 1MDB scandal is not going away

Book, film on 1MDB scandal in the works

THE 1Malaysia Development Berhad (1MDB) scandal is not going away. A book and film on the scandal-hit Malaysian investor, which piled up debts of nearly RM42 billion and money being siphoned off, are in the works by two different groups.

Among those to be named in the book and documentary include Prime Minister Najib Razak, who was 1MDB advisory board chairman, businessman Low Taek Jho better known as Jho Low, former chief executives Shahrol Halmi, Hazem Abdul Rahman and current 1MDB president Arul Kanda Kandasamy.

Others include Saudi Arabia’s PetroSaudi director Tarek Obaid and Abu Dhabi duo Khadem Al Qubaisi and Mohammed Al Husseiny, who are executives of Aabar, which partnered 1MDB in several ventures.

The Wall Street Journal’s (WSJ) Tom Wright, who broke many reports on 1MDB, has been on leave since last year to complete the book which he promises will have “lots of revelations”.

A British production house, Salt Lick Films, began production of a documentary on 1MDB two years ago and has gone into a co-production deal with another company, Roast Beef Productions, with a 2017 premiere deadline.

It is not known if Sarawak Report editor Claire Rewcastle-Brown is involved in the documentary but she reported the production works last March in her portal, which has run exposes on 1MDB since 2015.

Sources said the documentary producers have interviewed a number of opposition leaders and activists about the 1MDB scandal that first broke when the state firm missed its bond payments.

Opposition politicians Tony Pua from DAP and Rafizi Ramli from PKR were among the first to expose 1MDB’s debts before they caught the attention of Sarawak Report and the WSJ.

WSJ won the Scoop Award in the Society of Publishers in Asia (SOPA) Awards 2016 with its “Malaysia 1MDB scandal” report, which launched international investigations into the Malaysian state investor as well global media coverage.

Wright, who is WSJ Asian edition economics editor, won SOPA’s Journalist of the Year Award 2016.

The 1MDB expose also made WSJ a finalist in the International Reporting Category of the Pulitzer Prize in the United States, which is one of a few authorities investigating the 1MDB money trail.

Book, film on 1MDB scandal in the works
30 May 2017 – The Malaysian Insight


What is TRX and Bandar Malaysia?

Deconstructing TRX and Bandar Malaysia

Bandar Malaysia and TRX are sister projects about five kilometres apart and managed by TRX City Sdn Bhd – formerly known as 1MDB Real Estate Sdn Bhd.

Situated at the intersection of Jalan Tun Razak and Jalan Sultan Ismail, TRX is meant to be an international financial district.

According to its website, the master plan for the 28-hectare development will feature at least four “investment grade A” office towers, two five-star hotels, six “up-scale” residential towers, a lifestyle retail mall and a large urban park.

Essentially, TRX appears to be geared to become Malaysia’s version of Midtown Manhattan, New York – the home of most of the US’ big financial giants.

Among the companies that have bought into TRX are Mulia Property Development Sdn Bhd, Affin Bank, Lembaga Tabung Haji, WCT Precious Development Sdn Bhd and Lendlease Group.

Lendlease is developing a 17-acre Lifestyle Quarter in TRX on a 60-40 joint-venture with TRX City. The quarter will house Signature Tower, which is set to be the second tallest building in Kuala Lumpur.

Meanwhile, Bandar Malaysia is set to be developed where the Royal Malaysian Air Force (RMAF) base in Sungai Besi is located.

Prime Minister Najib Abdul Razak has a grand vision for the 194ha mixed development, which he said must have “great content, great cultural value” and be a “tremendous entertainment attraction”.

Among others, Najib wants it to be the new KL Internet City – the key hub of the world’s first Digital Free Trade Zone.

He also wants Bandar Malaysia to be a transport hub, hosting the Kuala Lumpur-Singapore High Speed Rail station, the MRT and connections to KTM Komuter, the Airport Express Rail link and twelve highways.

As of writing, a master developer for the project has yet to be appointed, although China’s development giant Dalian Wanda group appears to be a front-runner for the job.

The RMAF base which Bandar Malaysia will replace, has also yet to be relocated.

What criticism have both projects faced?

TRX and Bandar Malaysia both came under intense scrutiny because the government had sold the land it occupies for below market price. 1MDB then re-sold the land at a far higher price.

This can be best observed in TRX, which 1MDB said it had paid RM230 million or RM76 per square feet (psf) for the 28 ha land – although its 2011 financial statement indicate the land was bought for just RM194 million (RM64 psf).

However when pilgrimage fund Tabung Haji bought into TRX in 2015, the price had skyrocketed to about RM2,773 psf with the firm paying RM188.5 million for 0.63ha.

1MDB has defended the price at which it purchased the land, saying it was fully owned by the government and that any rise in land value would also benefit the government.

But in Tabung Haji’s case, there was an uproar as the firm is a public fund. Its decision to buy land in TRX had sparked concerns that public monies were being used to bail out 1MDB, which at the time had RM42 billion debts.

Deconstructing TRX and Bandar Malaysia
24 May 2017 – malaysiakini


Corruption, collusion and collision – the cost of 1MDB

Corruption, collusion and collision – the cost of 1MDB

COMMENT | 1MDB is a four letter word that screams at Malaysian with an expletive. I don’t have to spell it out loud what that is.

Prime Minister Najib Abdul Razak may think Malaysian voters cannot think of the enormity of the billions.

They are simply caught up in vice-like living conditions where the cost of living are higher, while their wages are flat.

But 1MDB is literally a middle finger to democracy, and a thumbs-up to its base version of a kleptocracy.

Let’s assume each Jaguar is worth a RM1 million. And if takes one third of a million to train a doctor in a top school in Russia, over a whole stretch of seven years.

By borrowing RM44 billion, and losing all of them, it is akin to losing 44,000 Jaguars? at RM1 million each.

It is also similar to telling 132,000 doctors in Malaysia that they cannot be sent to the best but cheapest medical schools any more over the next seven years.

That’s a whole lost generation of doctors, who can otherwise come back to Malaysia to serve and nourish those who are sick.

And, if they want to teach in the medical faculties, Malaysia would not be in lack of medical lecturers as an army of 132,000 lecturers stand ready to teach.

That’s Russia. If we use India as a counterpoise, whose fees are cheaper than Russia by a factor of half, the RM44 billion we lost could have been used to train 264,000 Malaysian doctors in India.

If we send them to Indonesia, whose fees are even cheaper by half of India, the number of medical doctors we can train in Indonesia would be 528,000 doctors.

And, if we train them locally, the RM44 billion would be in circulation in Malaysian economy, with the attendant rise in healthcare, better standards of living and potentially spawn a new health tourism sector that is even more powerful.

Instead, grand corruption creates collusion – as those allegedly on the take do not want their massive ill-gotten wealth to be shared.

When their wealth is not shared, popular frustration will grow when their wages are stagnant, all the while inflation kept rising each year to neutralise their hard-earned gains.

This collision course has emerged in the form of Bersih against the government, not once, but on five separate occasions. But the government of the day still remain oblivious.

So, if 1MDB has zero link to the plight of the people, or, the people somehow cannot understand, then Bersatu stands ready to educate them – on the opportunity cost of not being able to use the money to educate their children or provide basic healthcare.

Corruption, collusion and collision – the cost of 1MDB
Rais Hussin
15 May 2017 – Malaysiakini


Pemandu: A half a billion colossal failure

Pemandu: A half a billion colossal failure

ARE we on track towards becoming a high-income nation? As recent as last month, Idris Jala, the head-honcho of Pemandu claimed that we were on track, just 15 percent off the mark to be among the high-income nations, alongside South Korea, Germany, France, Singapore and the like.

Let me put it bluntly, we are not on track. Pemandu has failed. I would give them an ‘F’. Let me explain why they deserve that grade.

Their assertion that we are close to become a high income country is at odds with the data.

Our GNI per capita is declining, not increasing. Data from Bank Negara shows that our GNI per capita had fallen by 15 percent from US$10,345 in 2013 to US$8,821 in 2016. This is far from US$15,000 that Pemandu benchmarked to be a high-income economy.

This is not rocket-science, as our currency has weakened by 42 percent against the US dollar between 2011 and 2016. Last year, it depreciated by 4.5 percent, and the year before that it was a whopping 23 percent. The high-income benchmark was in US dollars, so when our currency weakens, the target moves further away.

Spare us the lame excuse that other currencies also weakened. Let’s look at how we performed against our regional (read: poorer) neighbours. In the past two years (2015 and 2016), our currency dropped by 14 percent against the Philippine’s peso, 15 percent against Thailand’s baht, and 16 percent against Indonesian’s rupiah. Get real and face the facts.

Even assuming the ringgit remains at the same level, we are still off target simply because our economy grew at a lower rate than Pemandu’s target of 6 percent per year in order to reach high income economy. Between 2011 and 2015, our growth rates were just slightly above 5 percent on average.

Can we expect the economy to expand more than 6 percent to cover the shortfall in the next 3 years?

Highly unlikely. Growth has been on the declining trend, from 6 percent in 2014 to 5 percent in 2015 to 4.2 percent in 2016. Asian Development Bank expects our economy to grow less than 5 percent in the next two years. In other words, we can forget the 6 percent target as proclaimed by Mr Idris Jala and company.

These ‘court jesters ‘ would argue that the economy is still ‘resilient’. They are wrong.

Just look at how our firms are doing. KLCI already lost 13 percent of its market value between 2014 and 2016 and corporate earnings are equally depressing. Lest we forget, the dividend rate announced for ASB unit-holders in 2016 was the lowest ever recorded, in fact, it was much lower compared to 1997 and 1998 when we had our financial crisis.

Pemandu proudly claimed that 3.3 million new jobs were created, but they conveniently forgot to tell us that most of the job creation were low income jobs, which would not make us high-income workers or high-income nation.

Data from EPU shows between 2010 and 2014, the share of skilled workers in total employment has in fact declined, from 27.6 percent in 2010 to 25.5 percent in 2014. The creation of mostly labour-intensive and low-productivity employment in the country pushed up the share of low-skilled worker to total employment from 9.5 percent to 15 percent during the same period.

So where was the inflow of investments that created 3.3 million high income jobs which Pemandu is talking about? For those left scratching their heads while sitting in horrendous traffic jams, the basic story is that we somehow don’t create enough high-income jobs. Bank Negara Malaysia, in its latest annual report, clearly stated: “the Malaysian economy also continues to face the challenge of attracting high-quality investments that would create more high-paying, high skilled jobs for the local workforce”.

There are negative repercussions for this failure. Not only are we not producing enough high-skill jobs, the slowdown in the economy is in fact eliminating the existing pool of high-skill workers. Data from the Human Resources Ministry shows in 2015, 1 in 2 of those retrenched are skilled workers compared to 1 in 3 in 2010. Only 12 percent of those retrenched were low-skilled workers in 2015, compared to 19 percent in 2010.

Sure, Pemandu can crow as much as it cares to our youth about the ‘successes’ of ETP. But those unfortunate kids will tell them that the reality is starkly different.

Youth unemployment is creeping up. In 2015, youth unemployment rate was at 10.7 percent compared to 10.2 percent in 2010, despite that the economy still growing. Even having a tertiary education doesn’t guarantee these heavily indebted students a job. In fact, among those with tertiary educational attainment, the unemployment rate is higher at 15.3 percent compared to youths without tertiary education (9.8 percent).

In case these ‘court jesters’ are still in denial, let me quote what BNM says; “chief among factors that led to high youth and graduate unemployment was that job creation locally has remained focused on low and mid-skilled jobs”.

Worse still, even if these kids were lucky enough to land a job, 54 percent of graduates earn less than RM2,000 a month. In fact, starting salaries for graduates have remained largely stagnant since 2007.

Is that an indicator of high-income workers? Absolutely not. Yet Pemandu tells us we are on track.

For the sake of argument, let us assume that this is a fairy tale and somehow we are on track to become high income nation by 2020. The major flaw among those who keep on shouting that we need to be high-income economy as measured by GNI per capita is in their intellectual thinking.

What we should aim for is a developed economy where growth is sustainable and inclusive.

How about Pemandu’s accomplishments in reducing corruption? Total catastrophe!

We are falling down the ranking. What is more shocking is that despite fighting corruption enshrined as a target of GTP, there is total silence, not even a word from Pemandu on the biggest kleptocracy case, despite the media all over the world carrying this shameful story. We must speak the truth to power, even if it is as painful as a spike through the flesh.

The thing is, Pemandu has failed miserably despite consuming a lot of taxpayers’ money. How much you may ask? A whooping RM639.5million, according to data from the Finance Ministry. That is more than half a billion ringgit right down the drain. But despite overpaid bosses in Pemandu, the strategy, analysis and policy making and thinking were done by consultants.

Pemandu: A half a billion colossal failure
24 Apr 2017 – Malaysian Insight


After BSI, mystery bank now custodian of Brazen Sky’s units (re-post)

After BSI, mystery bank now custodian of Brazen Sky’s ‘units’

The Finance Ministry has confirmed that a new bank has taken over BSI Bank’s functions as custodian bank for Brazen Sky Limited – a key component of the 1MDB controversy.

However, the ministry, in a parliamentary written reply, has refused to name the new bank.

“Brazen Sky Limited’s units are managed by a fund manager. The purpose of the fund manager is different from the function of a custodian bank, which among others, acts as an intermediary.

“The Brazen Sky Limited board has confirmed that a licensed international bank has been given the mandate to take over BSI Bank’s role as the custodian bank.

“The board also reports that there are no changes in the status of value of the investment,” said the ministry.

This was in response to a question by Petaling Jaya Utara MP Tony Pua, who asked the Finance Ministry to name the new custodian bank overseeing the Brazen Sky’s “units” which were valued at USD940 million.

In May, the Singapore Monetary Authority (MAS) had forced BSI Bank to shut down its operations in the country over “serious breaches of anti-money laundering requirements, poor management oversight of bank’s operations, and gross misconduct by some of the bank’s staff”.

Although MAS had not mentioned 1MDB for the withdrawal of BSI Bank’s merchant bank licence, some former BSI Bank staff, including Yeo Jiawei, had been charged in court for matters relating to his dealings with 1MDB.

The episode eventually led to the resignation of BSI Group’s CEO Stefano Coduri and other investigations in Zurich.

The “units” held by Brazen Sky Limited is of significance to the 1MDB saga because “units” supposedly represent money redeemed from 1MDB’s prematurely terminated joint venture with PetroSaudi International.

The JV project was signed in September 2009, but the deal was called off in just six months. 1MDB monies were then diverted to a Cayman Islands-registered fund before being transferred to Brazen Sky Limited in the form of “units”.

After BSI, mystery bank now custodian of Brazen Sky’s ‘units’
24 Oct 2016 – malaysiakini


Explain how 1MDB will repay Abu Dhabi

Explain how 1MDB will repay Abu Dhabi, says Rafizi

PANDAN MP Rafizi Ramli has threatened to campaign in Titiwangsa to ensure its MP Johari Abdul Ghani, who is also Finance Minister II, loses in the general election if public funds are used to bail out 1MDB.

He said this following a report in The Straits Times last night that Malaysia and Abu Dhabi had reached a settlement on a dispute involving US$3.5 billion (RM16 billion) in debt obligations from 1MDB.

According to the report, part of the proposed settlement calls for Malaysia to repay Abu Dhabi US$1.2 billion (RM5.3 billion) before year-end.

The amount represents a loan and accumulated interest charges on a bailout financial package 1MDB received from Abu Dhabi’s International Petroleum Investment Company (IPIC) in July 2015.

The bulk of the payment on the outstanding loan amount will come from the sale of so-called “fund units” from Brazen Sky, a financial unit owned by 1MDB, to an undisclosed buyer, the Straits Times reported.

The settlement agreement also calls for both parties to enter into negotiations to resolve another dispute involving roughly US$3.5 billion in the form of cash advances and payments from 1MDB to IPIC.

The PKR vice-president said he was surprised by the news and worried that this might be another move to “misappropriate public funds to bail out 1MDB”.

“I urge Johari to answer which company is buying the investment unit that has not been verified of its value from Brazen Sky Limited or 1MDB,” Rafizi said in a statement today.

“Is the company that is injecting US$1.2 billion into 1MDB to pay IPIC a government subsidiary? Where, if the company is a government subsidiary, will get the funds to pay 1MDB?”

Explain how 1MDB will repay Abu Dhabi, says Rafizi
21 Apr 2017 – Malaysian Insigt

Nuclear lessons for Malaysia (Part 1) (Part 2)
BN govt is directing attention to distant past and distant future, in order to distract people from present misdeeds and poor governance
Felda - A picture is worth a thousand words
How the 1MDB Scandal Spread Across the World (WSJ)
We cannot afford ridiculously expensive RM55 Billion ECRL!
All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?