Saturday, June 23, 2018

RM1 trillion debt: We have gotten the measurement and messaging wrong?

I like less corruption. I like the ability to change the management of the government as long as they are for the people. I like a government that is transparent. I like a government which is more truthful and not trying to spin.

My article here is to put Malaysians into the mindset to think rather than be blindly led. I have always been supportive of this government or the people behind them long before the change. But things have to be put into clear perspective.

Over the last 6 weeks, we have been bombarded with the RM1 trillion debt message. I think no one single day, we have been told and drilled that Malaysia is now a country with huge debt and we have to tighten our belt, and to show patriotism there is a a save the country fund called Tabung Harapan. To be fair, the government has also told us that the fund is not meant to repay all the RM1 trillion debt but it is more of being a message to allow Malaysian to show that we care about the dire situation of this country.

First of all, let me put this question into the mind of all Malaysians. Are we serious with the message of having a ZERO debt country. Name me a country that has zero debt. Singapore? China? US? Japan? South Korea? These are countries which we are taking as our benchmark. Countries which have almost no debt - Norway, Saudi - and we know how their wealth came from. I have not heard from their government that they want to pay off their debt.

(Prof Jomo and Zeti are in the Council of Elders. I would love to hear from them on this perspective, as they have been quiet.) So far the ones that have drilled the high debt message are the politicians - Lim Guan Eng, Tony Pua, Mahathir Mohamed. They still want to win more seats in parliament, please remember. I want to hear from the professionals. The BNM governor, ex and current and others whom have been helping the government.

We mentioned that our debt during then was about RM200 billion. Today, it is RM1 trillion - I am not going to challenge the ones used by Moody's as their record still shows our debt is RM650 billion. In fact, I have not heard from any other government that they are willing to show to people how bad is their debt situation when they are the government. Is this a manner to create confidence? As opposition, yes! Not as the ruling government.

Now, let me give a case study from our past in 1990s and now. One of the barometer to show the difference between those days and today is the wealth of Khazanah. To put into perspective, look at this link to see the history of Khazanah. From its creation in 1994, now Khazanah has Net Worth of RM116 billion and assets of RM157 billion. Back in 1994, it was probably zero in assets.

There is a difference between then and now. TimeDotCom, Malaysia Airport, PLUS Expressway, UEM, Axiata, IHH and many more were under private hands. Today, it is owned by the government and obviously it can be sold. With more assets, there is a chance that there would be more debt. One of the measurement which have been used largely to measure how much debt the country can take is Debt/GDP. Even then as above, it is not the right measurement as countries like China and Singapore for example have huge reserves. They have huge sovereign controlled assets which can be utilised when needed.

Besides Khazanah, there are several more sovereign funds which are owned by the country such as KWAP, Johor Corp. Back then in 1990s these organizations were worse off than today. Example, KFC which is now part of Johor Corp was under private hands and the good company was wrongly mismanaged.

As a country, the private savings is also much healthier. EPF is now having fund size of around RM700 billion. I believe back then it was probably around RM200 billion. The wealth of the people is also the wealth of the country.

Truth be told, our country has progressed but of course as compared to many other countries and even our neighbors, we may not have come out ahead. Generally, the world has moved on to the better. And we have to call spade a spade.

Anyone who is saying I am not fair to this government should read this where I wrote it in 2013. A spade is better off being shown as a spade. So that as the people of this nation we are better off better educated - on the economy.


5566 said...

What you said is the truth. The current government or LGE that just want us -- the rakyat do have the illusion that the BN had fucked up the country by having a lot of debt, but seriously tell me which country does not have debt? The fact is the world is running by the debts and politicians are always playing the blame game. I speculate the motive behind this is they do not have the intention to fulfill the promises that made in the first place. Instead of telling the truth directly to the rakyat, they are trying to playing the "low-ball" trick. At first, they gave promises that can never be fulfilled entirely and then said that they were forced to cancel/postpone some of the projects/ promises because of the high debt.

Lets us put it another way,
Do you know that oil price had dropped a lot in 2015 and Oil-related- revenue had made up 30% of the total revenue of Malaysia government in 2014 (THE STAR Impact OF LOW OIL PRICE) If Malaysia is so indebted like what LGE said, why they want to bring back oil subsidy as oil price is currently recovering and reduce the GST to 0% that contributed 30 % OF THE REVENUE.Every quarter, the revenue that distributed to the government in the form of company tax or dividend has shrunk a lot. This is why the GST was introduced in Malaysia. I think that reducing GST to 0% and bring back SST is not a wise move in the long term. Malaysia heavily depends on oil-related revenue. With GST, Malaysia can diversify its income, and it is a very fair and transparent taxation system. It has proven that it can effectively reduce the tax leakage and tax evasion. According to OECD, only 1.8 million out of 6.4million registered taxpayers in Malaysia. In fact, Malaysia had 28 million of the population in 2014. GST can broaden the tax base as well as promote the equality and fairness.

I had attached some links. Unfortunately, u need to google some of it by yourself. What i said is based on news or article. I did not deny the 1MDB issue, but Najib does have some contribution to the countries such as GST, sold part of the stakes of the proton to foreign parties.

felicity said...

Thanks 5566 for the lengthy comment. The previous government was not entirely bad, but with rumors such as what they did with the pharmaceutical oligopoly and getting the government to pay premium for drugs, the RM20k charges for Bangladeshis who wants to work in Malaysia - there is no denying the previous group need to go. IMDB is something I do not even want to highlight as one can read TheEdge, Sarawak Report and any other news sites to get the true picture.

As a Malaysian, I am hoping for progression. If we are to listen to the press conference, anyone who is neutral will know that it is more than merely presenting facts. There are still huge political element in the speeches. For 10 years, since 2008 this country has been under political spotlight. Many things that are done are meant to win election and GE were always in their mind. Unfortunately, I still have this feeling today - 6 weeks after election and it is not reducing. Example is the boy whom donated to the Tabung Harapan. Latheefa is right. It is with political in mind. I donated to the PH group during election obviously to help to change the government. But after election, things should change.

To be fair, there are many good things that happened. Good examples came from the Transport Ministry - one of it was how the Takata airbag issue was being handled. One do not see this from the previous Minister despite being there for ages.

I was hoping for a big change as in the way things are being addressed. Talk about challenging Singapore. We should be amazed at how focus they have been when comes to addressing issues. They do not look at things from political perspective (but more for nation) until few months to their GE.

The RM1 trillion debt need not be repeated. Things have to move on. I have to admit the first 3 days after GE were good, but it just went downhill as politicians can't clear themselves from being apolitical.

5566 said...

I am so happy to see a person without misleading by the politicians from both parties. By the way, the link I attached in the last comment is about the blackout in Bentong in the previous GE. It was proven fake news. However, to date, a lot of my friends still believe in this fake news. Many supporters just workship the politicians blindly.....