It’s commendable for the Deputy Prime Minister to acknowledge the very difficult problem the country and the people are facing. The people had for a long time wanted the truth from the government. They know better than the MoF2 and the media spinners that Malaysia is not on a different planet. We are on Planet Earth and like everybody else we are not immune to the worsening global recession. It had happened in 1997/98 and it’s happening again.

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IN this third installment of the of kopitiam discussion series with several veteran politicians, lawyers and, in this particular instance, a veteran economist, I would like to talk about the economy with particular reference to the upcoming mini budget.

I have been regularly asked to discuss economic issues by those who said they were fed-up with politics and politicians.

But we cannot run away from politics neither can we banish politicians to the mythological Laut Khalzum where the garuda and the jentayu reside. That’s why political stability so important in this time of crisis. We need a capable government and a responsible opposition.

As has been widely reported, the Ministry of Finance (MoF), who is also the Deputy Prime Minister, Mohd Najib Abdul Razak, is going to present a Mini Budget early next month – I believe on March 10.

Mohd Najib told this blogger and bloggers Pahit Manis (Ahmad A Talib) and Rocky’s Bru (Ahiruddin Atan) in a meeting in Putrajaya on Feb. 27 that he would tell the people the truth about the difficult economic situation and seek their understanding and cooperation.

The proposed Mini Budget has come as a surprise to some because a stimulus package was announced only in November during the winding-up of the 2009 Budget debate.

Before this, Minister of Finance 2 (MoF2), Nor Mohamed Yackop had been saying the country was not going to sink into recession. We all know that under Prime Minister and Finance Minister Abdullah Ahmad Badawi, Noor Mohamed was effectively the de facto Finance Minister.

We were told through the Press that there was going to be a 3.5-per cent growth last year and there should also be growth this year. So why the sudden change in budgetary strategy and requirements?

We dare not imagine that the MoF2, until Mohd Najib became the Finance Minister last September, had no clue about what was happening to the economy and made those media statements not based on the correct facts.

Growth Forecast Not Attainable

OUR fear was proven correct when, on Feb. 27, Mohd Najib announced that the government would revise downward the 3.5-per cent forecast, saying that the earlier growth projection was no longer attainable in view of the worsening external environment.

Mohd Najib said the new estimate would be announced together with the Mini Budget, adding the recession that hit the global economy was expected to be more severe.

He said that Malaysia’s actual GDP for the fourth quarter of last year grew by a meager 0.1 per cent, the lowest since the third quarter of 2001 when the growth was negative 0.4 per cent.

“I do not think that we can anticipate an improvement in the GDP figures for the next quarter (first quarter of 2009), but of course, it all depends on the situation in the United States and Europe,” Mohd Najib said.

It’s commendable for the Deputy Prime Minister to acknowledge the very difficult problem the country and the people are facing. The people had for a long time wanted the truth from the government.

They know better than the MoF2 and the media spinners that Malaysia is not on a different planet. We are on Planet Earth and like everybody else we are not immune to the worsening global recession. It had happened in 1997/98 and it’s happening again.

If he didn’t know, the best thing to do was not to mislead others. Or somebody should have told him not to make those misleading statements to the Press. Erroneous information had brought discredit and disrepute to the government and problems to the investors and consumers.

The question is have they spent everything in the 2009 Budget and the stimulus package? If they have, what are the projects? Similarly, what has happened to the projects and allocation under the 9th Malaysian Plan?

According to official sources, the money is being spent, citing the case of 14,000 over contracts worth RM500 million awarded to Class F contractors.

Some say it makes more sense for the government to wait until the first quarter to be over and the results are known before rushing to present a mini budget unless the government has run out of money.

The expectation is for more bad news around April. So it is wise for the government to be patient and wait for clearer indicators before acting.

The MoF2

BEFORE we proceed further, we have better give a bit of background of MoF2. He is mostly remembered for two things namely the Bank Negara’s loss of RM30 billion in foreign exchange trading in the early 1990s and for “advising” Tun Dr Mahathir Mohamad on the imposition of the limited exchange and capital control in 1998.

At RM2.50 to a USD then, the amount came to US$12 billion. Imagine what Malaysia could do with that amount of money.

The Governor then, late Tan Sri Jaffar Hussein, had to take responsibility for the fiasco and resigned. He was a decent man but died in disgrace and, literally, took the shame to the grave.

The MoF2 too resigned but got a job in Mun Loong Berhad with the help of then Finance Minister, Anwar Ibrahim. It’s a common knowledge that there’s a 600-page complaint against him by Gerakan Rakyat Anti Korupsi (Gerak).

When Dr Mahathir decided to impose capital control, it took the National Economic Action Council (NEAC) six months to agree because it wanted to be absolutely sure that the plan worked. It did.

MoF2 then was recalled to join the Bank Negara as advisor because the newly appointed Governor, Ali Abul Hassan, who came from EPU, had no banking experience. Later he was made advisor to Dr Mahathir.

Abdullah appeared not to have made a distinction between an advisor and someone who runs and manages an organisation. So he made Noor Mohammad MoF2. Since then we all know how the economy has performed.

Reading is a must at the MoF. There are plenty of files that must be read and understood. It’s a huge Ministry, which includes Bank Negara.

Abdullah’s interest in and understanding of complex fiscal and monetary matter is always suspected. So the day-to-day running of the ministry is left with MoF2. It’s also a common knowledge that the MoF2 and the Bank Negara Governor, Zeti Akhtar Aziz, do not see eye-to-eye.

This kind of situation can only lead to mess and we have every reason to worry about the incoherent policies and confusion as to who really runs the economy.

Conflicting Views

TAKE the example of the MoF recently saying that he was not ready with details of the Mini Budget but EPU chief, Dr Sulaiman Mahbob, was reported as saying that it was ready and programmes would be skewed in favour of the private sector.

A few days earlier, the MoF2 said there were a lot of surprises and goodies in the Mini Budget. So who is telling the truth?

This kind of media information shows not only a lack of coordination, but also a lack of secrecy. In the past, budgets were kept secret and closely guarded until they were presented to the Parliament.

Abdullah was advised by his advisers and consultants to revise and revoke policies of the Mahathir era. They created the impression that a lot of money was wasted under Dr Mahathir.

They talked about reducing the deficit and many educated people were taken by their public relations exercise and cheered the reversal of Dr Mahathir’s policies.

Dr Mahathir’s policies were tried and tested. We have one million registered foreign workers and another one million illegal to support the success his policies. There was growth, political stability and people have jobs and were generally happy.

No intelligent government would want to change or abandon these successful policies. But Abdullah listened to the MoF2 and 4th Floor boys and changed them.

The MoF2 was advisor to Dr Mahathir. He supported Dr Mahathir’s successful policies. But once Dr Mahathir left he agreed and followed those who wanted his policies discarded.

Strange enough, not long after that, the projects were re-started at double the price and to make matters worse, retail fuel prices were increased by 40%.

Thus a lot of knowledgeable observers wondered if the MoF2 and the smart boys on the 4th floor had the knowledge and foresight to detect the onslaught of troubles and problems the country is now facing.

Warnings Unheeded

THERE were no shortages of warnings and cautionary notes from the experts. The former MoF, Tun Daim Zainuddin, had warned as early as 2007 of the looming sub-prime crisis.

But fearing that such warnings might affect the Stock Market, the local press refused to publish them.

In a July 2008 article in the Malaysian Business Daim advised the Government to tell people the truth and prepare them for the worse and yet Budget was still bullish on economy and suddenly while winding up the Budget, the MoF tabled a stimulus package.

Overnight things have gone wrong and now in March there are signs of panic and another stimulus package is being proposed.

Please let the rakyat know what has happened to the 9th Malaysian Plan allocations, the Budget 2009 and the RM7-billion stimulus package before this new mini budget is presented.

Where has the money gone? The people are shocked and suspicious. Rumours abound that all contracts are given to friendly parties.

Even Ministers are unhappy as their recommendations were ignored. Ordinary people don’t see the multiplier effects and are angry with the government over their daily problems like rising prices, unemployment and crimes.

Only the MoF2 is still giving press statements telling people not to worry, more goodies are coming and everything is ok.

Abdullah has acknowledged his shortcoming and has done the honourable thing by stepping down early. He reiterated that he would go by the end of the month. The King had already thanked him and wanted a smooth transition.

It’s only logical that the people, whom he trusted but failed to do their job well and, as a result, brought hardship and misery to the people, should also step down or be removed.

Speed Is The Essence

IF we do not work fast to halt and then reverse our faltering economy, there is nothing to stop our country becoming a basket case by which time it’s too late and we really will have to beg from the likes of the IMF.

If the Federal Government seems at a loss as to how to handle the crisis, the Oppositions are not doing any better. They too have no clue. We deserve the government we elect and we also deserve the Oppositions we put in place.

For the Government to enjoy the confidence and support of the people, it must tell the truth and stop flip-flopping like it did in the cases of the highway toll increase, the KLIA LCCT and the proposed part-privatization of the National Heart Institute.

The people have felt the effects of the crisis a long time ago. They are angry at not being told the truth. The government has to acknowledge this if it hopes to get the cooperation and support of the people in riding out this economic tsunami.

Blog source: http://akadirjasin.blogspot.com / http://akadirjasin.com