AUGUST 13 — Irrespective of guilt or innocence, bribery or donations, legal or illegal deposits and this camp or that camp, the fact is that whoever takes the responsibility for GST and 1MDB, also takes it for the current state of the economy.
In a world where perception is reality, these two issues coming at nearly the same time has soured the economic mood of the nation.
Added to that is the impact of a slowing China, the global drop in commodity prices and the expected hike in US interest rates and their impact on the local economy.
In any economy, whoever runs the finance ministry runs the economic levers to help mitigate the impact of this economic hurricane. But with a panicky administration hounding investigators and whistle-blowers alike in a bid to keep the incumbent in power, the costs of the current policy paralysis are mounting.
Consider this, as of the August 12, 2015
- Since hitting a peak of 1,862 points on April 21, the stock market has dropped 11 per cent based on yesterday’s close.
- As of end July, the country’s foreign exchange reserves reduced by US$8.8 billion (RM35.2 billion), the largest it has fallen since December 2014, to US$97.6 billion.
- In July, there was a net outflow of US$19.3 billion, six times more than the US$3.1 billion recorded in the same month last year.
- The ringgit is down 12.2 per cent for the year, trading at 4 to the US dollar, and is at a 17-year low as of August 12, 2015.
- Overseas ownership of Malaysian government and corporate debt fell 2.4 per cent in July.
- The Malaysian Automotive Association said sales in the first half of 2015 fell 3.3 per cent from the corresponding period in the previous year.
- According to MATTA, there is an unprecedented 30 per cent drop in tourist arrivals in the last six months.
- According to Retail Group Malaysia MD Tan Hai Hsin, quoted in The Star “the current political situation is affecting the consumer sentiment. They are frustrated, confused and are uncertain of their future in this country. As a result, they are less willing to buy more.”
A trading economy like Malaysia with a reliance on commodities is disproportionately impacted by changes in the global economic landscape.
Add to that the drop in domestic demand post GST and it becomes apparent that serious policy action needs to be taken immediately to stem the negativity and reassure foreign investors.
Fundamentally, reaffirming its commitment to the rule of law, democracy, the independence of state institutions and the eradication of corruption in deeds and words is what the international community would like to see.
Instead, we have the spectacle of an administration in complete disarray since the July 3 Wall Street Journal revelation of US$700 million (RM2.6 billion) making its way into the personal accounts of the prime minister.
The rule of law has been turned on its head with anti-corruption investigators being hauled up for leaking news on the incident while there is still no clear explanation of how and from where this humongous sum of money came to be deposited in his personal account.
Democracy and the right to freedom of expression has been severely trampled on by the suspension of the printing licenses of two publications for simply reporting on the scandal, where none of their revelations have been specifically denied or rebutted.
Activists and civil society reps demanding accountability from the government on 1MDB are being arrested for crimes like indulging in “activities detrimental to parliamentary democracy”, whatever that might mean.
The independence of state institutions has been compromised with the multi-agency task force investigating the IMDB case being summarily disbanded, the deputy prime minister dropped in a Cabinet reshuffle and the Attorney General being sacked by executive fiat.
Statements on the eradication of corruption seem like a cruel joke in a scenario where the scale of the alleged 1MDB shenanigan is so massive that ordinary Malaysians are writing checks to themselves for RM 2.6 billion just to see how many zeroes that sum has.
All in all if reassuring the world of its continuing economic and political stability is at all on this government’s agenda and if it is truly a government with the interests of its people at heart, it could not have gotten it more wrong, either in deeds or words.
Nero truly did fiddle while Rome burned.
Kipidap? NOT.
*This is the personal opinion of the columnist.
