MAHATHIR SAYS NAJIB’S SILENCE IS GOLDEN: IS HIS TIME AS PRIME MINISTER WELL SPENT?

 Petronas said today that the country’s dependence on subsidised gas could cost it nearly RM30 billion this year or about twice its second quarter net profit. Mahathir says Najib’s Silence is Golden The Search for Political Money Is it Time as Prime Minister Well Spent?
Of the myriad prescriptions that I’ve encountered for living life to the full, one of the most compelling to me is Mahatmas Gandhi’s exhortation to “live as though you die tomorrow; learn as though you’ll live forever.”

But unfortunately I find it impossible to put into practice. For several reasons, not least of which is the fact that, as applied to any one moment in time, this wisdom is hopelessly paradoxical.

Take today for example. If I was to realistically contemplate the prospect of dying tomorrow, I would almost certainly not be sitting at this keyboard trying to rattle-out my customary weekly column criticising Malaysia’s ratty current ruling regime.

Nor would I be as distracted as I actually find myself from this activity by the confusing alternative prospect of writing academic essays for the two courses I’ve commenced at Sydney University in an effort to learn as though I’ll live forever.

But what I’d be doing instead I have absolutely no idea, as my entire psyche is saturated with the spirit of futurism that so sadly characterises the society in which I’ve lived my whole life.

Since the day I was born I’ve been indoctrinated into, and hopefully if not happily gone along with, the pressures both implicit and explicit in the Judeo-Christian and Western capitalist traditions to sacrifice the unsatisfactory present in favour of a better, brighter tomorrow.

This spirit of a never-ending quest for more prosperity, more security, more pleasure and indeed more, more, more of everything around the next corner, over the next hill or in some chimerical after-life paradise is so all-pervasive, at least in Western society, that it is even enshrined in the pre-amble to the US constitution as the “right” to the “pursuit of happiness”.

And, as much as I’ve come to resent such encouragement to mis-spend most if not all of my life postponing the enjoyment of the present in favour of pursuing unattainable dreams, chasing unreachable mirages or fulfilling airy-fairy fantasies, I just can’t seem to focus on the present as the priceless gift it truly and literally is.

But nor, unfortunately, can I achieve the feeling that by spending my days in intellectual pursuits that I’m learning as if I’ll live forever. In fact while I’m sitting here contemplating yet another way of criticising the crimes of Malaysia’s Umno/BN regime, all I’m learning is how futile it feels.

Just as I fancy the great Mahatma himself would feel, if he hasn’t already in some conscious reincarnation, to learn that after he died his name was stolen by the so-called “Gandhi” political dynasty that has so corruptly and ineptly ruled his beloved India almost ever since.

The original, genuine Gandhi’s exhortation to “live as though you’ll die tomorrow”, as spiritually as it was intended, remains a starkly practical prospect for countless millions of India’s poor and oppressed.

And as for learning as though they will live forever, it sometimes seems as though the voters of India, like those of Pakistan, Russia and dozens of other kleptocracies posing as democracies, will never learn.

A thought that inevitably brings us to Malaysia, where, despite 55 years of object lessons in the evils of being ruled by an increasingly racist, religionist, corrupt and outright criminal regime, a great many citizens have yet to learn how much better off they would be if they voted this pack of crooks out.

And in fact millions have yet to learn the wisdom of registering and turning-up to vote.

Not that I’m suggesting that Malaysians are stupid, or at least any more so than I am for so failing to live as though I’ll die tomorrow as to sit here wasting a day every week writing a column criticising their apology for a government.

In fact it’s altogether possible that most Malaysians are much smarter and wiser than I am in being able to find satisfaction in living for today rather than figuratively, let alone literally, dying for a more fortunate future.

In any case, as attractive as Mahatma Gandhi’s “learn as though you’ll live forever” sounds or seems at first sight, this part of his paradoxical exhortation turns out to be a problem in itself.

Because of there’s one lesson that life and my continuing studies has taught me, it’s that the more you learn, the more you realise you have yet to learn and surely never will.

A point that I recently learned that the ancient Greek philosopher Socrates made much of almost 2,500 years ago with his trademark assertion that he knew nothing but that in doing so was superior to his peers, who didn’t even know they knew nothing.

So perhaps I and my fellow critics are being altogether too hard on Umno/BN politicians in accusing them of pathological lying.

Perhaps it’s the case, for example, that in claiming they know nothing of Ops Lalang, Project M, the Scorpene submarines purchase, the murder of Altantuya Shaariibuu or dozens of other alleged regime crimes, they aren’t so much lying as showing their Socratic wisdom.

Just as Umno Wanita chief and former cabinet minister Shahrizat Abdul Jalil, in her repeated pleadings of ignorance of her husband’s bid for the National Feedlot (NFC) project may not be so much lying as saying she knows so much about it that all she knows is nothing, which is more than the rest of us do.

But not all falsehoods can be passed-off as philosophy, and sometimes what could appear to be Socratic wisdom can be plain, old-fashioned stupididy. Witness Home Minister Hishammuddin Hussein’s recent claim that crime-fighting was “not seen as a need” for the government until only recently.

Causing all us sceptics to wonder if the police had been so busy committing their own crimes, and aiding and abetting Umno/BN politicians and cronies in committing and concealing their misdeeds, to be bothered with petty offences against ordinary citizens.

And confirming me in my long-held conviction that, with apologies to the late, great Mahatma Gandhi, the motto of the Umno/BN regime must be something along the lines of “Live by stealing today as though there’s no tomorrow; and learn nothing forever, or as long as you can get away with it”.

The state oil company is struggling under a crushing gas subsidy burden and forgoing massive revenue due federally mandated prices for gas that are below market levels.

Petronas chief executive Tan Sri Shamsul Azhar Abbas said that the country has an “insidious addiction” to subsidies and, for the first half of this year, the cost to subsidise gas amounted to RM14 billion.

“If you extrapolate that, it will be RM28 billion for 2012,” he said in a media briefing. “That is revenue foregone and money required to grow the business.”

The amount for this year is likely to exceed the RM23.7 billion incurred last year and comes at a time when Petronas is facing uncertainty in the coming quarters due to volatile oil prices and production problems.

Petronas earned RM70.7 billion in revenue in the second quarter, down three per cent from the same period last year.

Net profit fell 30 per cent to RM15.2 billion while its gross profit margin shrank to 37.5 per cent from 42.4 per cent.

While the government has committed to reduce subsidies over the long term, gas prices have only been adjusted once in the last two years.

The government’s price controls and subsidy policies help Malaysia achieve a lower official inflation rate than its ASEAN neighbours.

Ratings agencies have warned that subsidies are one of the factors causing weaknesses in the government’s finances. But they also say that subsidy reforms are unlikely until after the next general election, due to the fear of a backlash at the polls if subsidies are removed and cause a surge in the cost of living.

Apart from gas, Malaysia, ranked as among the fattest of Asian countries, also subsidises sugar and flour.

 

he surest way to ride out an economic slowdown is to improve productivity and competitiveness. Unfortunately, going by the Global Competitiveness Report brought out by the World Economic Forum, India seems to be doing precisely the opposite. Not only has the country slipped 10 ranks in the competitiveness rankings, from the 49th  position in 2009-10 to 59th position in 2012-13, but it has also been overtaken by other Brics economies like countries like Brazil and South Africa which are now ranked in the 48th and 52nd position respectively.  Meanwhile China, the most competitive Brics country, retained its ranking at the 29th position and even Russia, the laggard Brics nation, has slipped only four rungs to the 67 position during the period.

Malaysia has yet to present a convincing plan to tackle the twin fiscal threats of its federal budget deficit and federal debt even though strains on its credit profile are increasing said Fitch Ratings in a report yesterday.

Fitch also said that data clearly shows public sector-linked activity has been a key driver of GDP growth for the last four quarters alongside robust private sector activity.

It said that the ratio of federal government debt to GDP reached 51.8 per cent at end-2011 despite strong GDP growth but barring a further deterioration in the global economy, the Malaysian government should be able to meet its 2012 deficit target of 4.7 per cent of GDP.

“Looking beyond this year, however, the Malaysian authorities have yet to outline a credible near-term plan to reduce the fiscal deficit to three per cent of GDP, and the debt/GDP ratio to 50 per cent, by 2015, in line with their official targets,” said Fitch.

The ratings agency noted that Malaysia’s public finances already compare poorly with its similarly rated peers in both the ‘A’ and ‘BBB’ range medians and added that improving the nation’s fiscal position will be challenging without significant reform to address the cost of fuel subsidies, broaden the fiscal revenue base, or reduce dependence on energy-linked revenues.

“Without such reforms, our base case is that the debt/GDP ratio will continue to rise until 2016,” said Fitch. “The federal debt ceiling of 55 per cent of GDP, which was increased from 45 per cent in July 2009 to accommodate fiscal stimulus, suggests that the room for fiscal slippage may be limited without further alteration to the debt ceiling. If this were to happen, it would apply additional negative pressure on Malaysia’s credit profile.”

It said, however, that Malaysia still possessed several strengths such as a track record of macroeconomic stability, a strong net external credit position, and funding flexibility.

Malaysia reported a surprisingly strong second-quarter economic growth of 5.4 per cent despite weakening exports largely due to the buffer of ongoing construction projects and increased spending attributed to civil servant salary hikes and government cash handouts said economists.

They added that the difference in performance between the domestic and export sectors could point to uneven growth in the months ahead and lead to a two-speed economy

While the Najib administration’s efforts to help tide the country over the rocky global economic environment with a longer term goal of transforming the country in a high income nation by spending more on salary hikes and kick-starting large infrastructure projects has helped boost GDP growth, analysts have noted that its debt has outgrown revenue since 2007.

Figures from the Federal Treasury’s Economic Reports show that the federal government’s domestic debt almost doubled in the space of less than five years — from RM247 billion in 2007 to an estimated RM421 billion in 2011 — far outpacing its revenues which only grew 31 per cent, or from RM140 billion to RM183 billion, during the same period.

While the Najib administration has vowed not to let federal government obligations exceed 55 per cent of the country’s GDP, there is increasing worry that when government-backed loans or “contingent liabilities” are taken into account, the government’s total debt exposure has already risen to about 65 per cent of GDP last year.

Fitch earlier warned that the country is now on par with more heavily indebted ‘A’ range sovereigns, such as crisis-hit Italy, on some measures like debt-to-revenue ratio and a lack of progress on fiscal reforms and may lead to a ratings downgrade which could push up the country’s borrowing costs.

But what makes the scenario even worse for India is that it is losing out on the competitiveness edge when the country is still languishing at the first stage of development, the factor driven stage where growth is based on factor endowments like natural resources and cheap labour along with 37 other economies like Bangladesh, Nepal, Pakistan and Vietnam. On the other hand most other Brics countries were either in the efficiency driven stage or the innovation driven stage of development where growth is driven by step up in efficiency or by introduction new business models and products.

So what accounts for the sharp fall in India’s competitiveness ranking during the last four years? A cursory glance indicates that the reasons are extensive with India’s rankings slipping sharply in at least half of the dozen parameters that contribute to overall competitiveness.  It included competitiveness drivers like infrastructure, institutions, technological readiness, business sophistication and innovations with India’s global ranking in these various parameters falling between 8 to 16 rungs.  However the highest fall in the competitiveness parameters was in higher education and training and goods marketing efficiency with India’s ranking going down by 20 and 27 places respectively.  The only solace was that the country’s ranking has remained fairly stable in the case of other parameters like macroeconomic environment, health and primary education, labour market efficiency, financial market development and market size. Given such complexity of the national competitiveness it is no great surprise that India has to focus on an extensive set of reforms to improve it competitiveness and get the economy back on the rails

And the possibilities of a reversal of the trends and an improvement in competiveness are not too daunting.  In fact the experiences of some Asian countries give India some semblance of hope. The best example we have closest to home is that Philippines which has improved it global competitiveness by 22 places over the last four years.  And its problems are similar to that of India with the economy lacking in adequate infrastructure and rigidities persisting in labor markets.  So it is now up to the government to let loose a slew of reforms that improve the competitiveness of the Indian economy and accelerate growth to the pre crisis levels.

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