Little hope is left for Malaysia to avoid a regime change or a failed state after the serial rebuke of Prime Minister Najib Razak’s maiden New Economic Model (NEM) Budget he read on Friday 15 October. It was read to a nation that was still reeling from the aftershocks of the Economic Transformation Plan (ETP) Minister Idris Jala revealed weeks earlier.
It confirmed a business plan for selected companies to harvest super-mega projects mainly focused in Greater Kuala Lumpur ostensibly to overcome the declining foreign and domestic investments in 2009 and to revive a climate of growth.
Each costing tens of billions, the MRT alone running into RM40 billion and dwarfing all the previous mega-projects together, sunk all hopes that Najib had ever meant to deal by open tender.
The laissez faire of the NEM had with it a twist that could mean giving the Prime Minister and his select group of crony companies the right to be left alone to take as they please the cake, the cream, the cherry and the tables as well.
In every other way the Budget is an election budget.
Former Prime Minister, Dr. Mahathir Mohamad, was prompted to prophecy after the budget reading that the Barisan Nasional (BN) will not get the two-third majority in the 13th General Elections it heralded.
This writer, long an observer and commentator of elections in the country, reads Dr. M’s remark as directly meaning the BN will lose to the Pakatan Rakyat (PR), plus a sundry line-up of small parties and Independents that are expected to crown the extended rebuke of the BN’s leadership.
The BN was saved in 2008 by Sabah and Sarawak.
It could be different this time, the Budget and the Economic Transformation Program (ETP) providing too little to the Sabahans and Sarawakians. There had been extensive corruption in the two states.
The NEAC (National Economic Advisory Council) mentioned a slur of concern for the 40 percent of Malaysian households that earn RM 1500 per month or less, fearing most of these would not make it through in the conjugations of the high income society the NEM is about.
Truth is, households in Malaysia cannot make ends meet with less that RM 2000 a month and at least 70 per cent of Malaysian households earn RM 2000 or less, the bulk of these are Bumiputras with the larger numbers of households in the two states falling in the category.
The minimum household income in the urban centers would be RM 3000.
In the case of Malaysian workers, the Human Resources Ministry stated in August 2010 that the National Employment Return study of 2009 found that 34 per cent of the country’s workforce earned less than RM700 a month which was below the poverty line (RM720 per mensem).
Another 37% earned between RM700 to RM1500, giving 71 percent of the labor force earning RM 1500 or less of more than 11 million in a total population of 28 million, which also brings us to the question about where the consumption will come from in the super-spending of the New Economic Model (NEM) that will involve RM1.4 trillion of investments in 10 years to 2020.
In the fragile domestic and world economies, a high investment profiling of crony capitalism as imposed by the Budget and the ETP will certainly add to the inflation that is already severe.
It is easy to see the Najibian Economics will leave him a bread-and-butter villain to the larger number of households in the urban as well as the rural, meaning he will be voted out.
Looking at the Bank Negara (Central Bank) numbers about money will show the money supply had risen substantially between 2009 and 2010, suggesting a means to reduce the domestic debt. This adds to the inflation as do the reduction or withdrawal of subsidies for food and essential items.
Much more money will soon enter the market. With the super-mega projects the ETP has proclaimed, the tip of more than RM 110 billion for the first six opening salvos of the ETP [ahem!] will add a whopper to the money supply.
More monies will enter the market in the enhanced fluidity, making it pertinent to ask aloud how Najib will ensure that overall production will go up and stay up through the nine years to 2020 to avoid hyperinflation or even a Depression.
Should the supply of money show a steep upward curve because more money was printed and the same applies to the financial curve either because money is made cheap and/or it is made easily available, we will get hyperinflation if the production curve is stable. If the production curve goes down, the result is Depression. It’s plain and simple.
But who determines the level of production in Malaysia?
With that load of investments negotiated behind close-doors plus a larger-than-usual Operating Expenditure, and a smaller-than-otherwise Development Expenditure of less that RM 50 billion, plus monies that will flow into the market for the bubbly property market and the KLSE Casino Royale, it is hard to believe Najib’s game to draw Chinese votes will pull through even if we are calculating on a six-month run for the general elections.
He seems to be betting on large numbers, i.e. monies that are large enough to keep flowing and keep voters happy even if the markets shrink.
But what if the markets go down in a tailspin should the World Bank fail to convince the Europeans from applying austerity and them as well as others from devaluating their currencies?
The world economy is teetering on the edge of peril. Why do we deny that? What could be the reason or reasons for such a desperate lunge for the quick fix of an ailing economy and a disreputable party and coalition that should have undergone surgery but did not?
As the rebukes continue and observers sing the confusion in an endless chorus, it does look Najib is unlikely to bring the BN safely through the coming general elections even if Anwar’s PKR is a failing party.
Anwar’s repeat incarceration plus Teoh Beng Hock’s untimely and mysterious death will bring the tom-toms to a higher pitch than ever before. This time, whether or not Saiful was true that Anwar had not worn condoms and had done it in naked truth, he (Anwar, not Saiful) is Opposition leader.
It is done. What needs a close look is how Malaysia is to avoid becoming a failed state and/or fall under the micro-management of the UN global-mongers or of a colonial power. The Reformasi has lost its appeal. ----a. ghani ismail, 20 October, 2010
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