Time to ditch Najibnomics


ON January 23, Prime Minister Najib Razak spoke at the Invest Malaysia seminar 2018. As expected, he cherry picked figures to show positive economic growth, investment and employment.

And another round of promises to enhance transparency, accountability and competency. The big question is whether it is enough to boost investor confidence at such a late hour?

Najib took pot shots at the opposition and his critics. He is mistaken if he thinks that the investment community is oblivious of the nation’s micro- and macro-economic situations and the scandals besetting it.

Investors are fully informed of the risk profiles of their investment portfolios.

It is a coincidence that Finance Asia, an e-financial journal, ranked Najib lowest among the finance ministers in 2016.

On the back of the damning exposure of the 1MDB scandal, the ringgit understandably turned chronically anaemic and with subsidies withdrawn, the rising cost of living of the rakyat remains unabated.

This year has unravelled further fiscal improprieties. The Felda-Jalan Semarak KLVC and the Mara fiascos are among the latest scandals.

Najib allows for the RM2 billion land acquisition by Bank Negara Malaysia’s (BNM) RM2 company, MKD Signature SB also begs explanation. It acquired a 51% stake in Mulia Property Development, the owners of “The Exchange 106” at Tun Razak Exchange (TRX). Taxpayers are, at best bewildered by this acquisition.

And what about the mega RM8.7 billion (£1.6 billion) bailout by PNB and EPF of the Battersea Power Station in London?

Did the pension funds get another raw deal? Wasn’t it best to cut losses and exit before more money are burnt in a project that hasn’t much upsides anyway and where cost overrun has become gargantuan.

Najib’s promises of transparency and accountability sound hollow and stink from afar. The opposition’s critique aside, l will only dwell on what local economic experts have to say about Najibnomics.

Dr Muhammed Abdul Khalid, commenting on Najib’s oft-boasting of Malaysia’s 5.8% GDP growth, reminded Putrajaya that the GDP is not the best indicator of the nation’s economic health.

GDP numbers do not reflect the actual state of borrowings in driving the growth agenda. It doesn’t account for the deranged environmental ecosystem consequent upon illegal logging and bauxite mining. It equally fails to reflect whether there is equitable distribution of wealth.

The nation’s economic health is optimal when the Bottom 40 (B-40) enjoys the wealth equitably as the Middle 40 (M-40) and the Top 20 (T-20).

Najib needs reminding that when the economy was flourishing between 2014 and 2016, the EPU reported that the income of the B-40 actually plummeted.

The share of the total income of the B-40 dropped from 16.8% (2014) to 16.4% (2016). Najid has failed to achieve an economic growth which is both equitable and inclusive.

Dr Yeah Kim Leng, an economics professor from Sunway University, advocated a growth which is “investment-based” rather that Najib’s “consumption based” economic policies. While acknowledging BR1M’s (1Malaysia People’s Aid) short-term benefits, he asserted that creation of fair opportunities for employment instead of reinforcing a subsistence mindset among Malaysians is critical.

Prof Kamal Salih, a renowned economist, concurred that the approach of enhancing wages is more economically sustainable than a programme of cash handouts (BR1M). He stressed that the nation will not progress towards a stellar economic status with BR1M economics.

Similarly, while not undermining the Uber-economy, the pertinent question to ask is where are the employment opportunities for these STEM (science, technology, mathematics and engineering) graduates as alluded by the education-based group, PAGE.

Former Bank Negara deputy governor Lin See-Yan alerted that any talk of TN50 must kick off with educational reforms, ceasing employment of low-waged foreign workers, enhancing industry and productivity.

He asserted that the fatigued and failing system must not be sugar-coated with misleading growth figures. There is obviously a disconnect between the favourable government statistics and the rising and burdensome cost of living of the rakyat.

The consumer sentiment index nosedived upon the introduction of the GST because of the increased cost of goods and services.

Commenting on fiscal discipline, Prof Jomo Sundaram was highly critical of the excessive government spending and the federal debt, which escalated 10% annually from RM123 billion in 2007 to RM687.43 billion as at September 2017.

Going by an annual growth rate of 10.7%, The Edge extrapolated that the federal debt will breach RM1 trillion in 2021, RM2 trillion in 2028 and RM3 trillion in 2032.

Interest payments will total RM30.88 billion in 2018, meaning 71% of GST collections (RM43.8 billion) will be used to service interests alone.

Jomo reiterated that the nation’s leaders ought to prioritise on development spending, instead of escalating the management budget. Najib has hidden the former from the federal budget by utilising and abusing “off-budget or off balance-sheet spending”.

These include mega-development projects, such as ECRL, TRX and Bandar Malaysia.

Thus Jomo adds, Najib’s report to the Parliament is irresponsible and opaque and has the effect of spiralling the federal debt quietly to astronomical heights.

It is plainly obvious to the discerning investors at Invest Malaysia 2018 that Najib is “cakap tidak serupa bikin”, he does not walk the talk.

Will the nation and rakyat survive another term of irresponsible and incompetent Najibnomics? – January 30, 2018.  

* Dr Dzulkefly Ahmad is Amanah strategy director.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.


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Comments


  • After two terms in Selangor and Penang, the title of Party of Development is Pakatan, NOT UMNO/BN. Najib's UMNO is the party of Dedak even if it's development.

    Posted 6 years ago by Bigjoe Lam · Reply