Malaysia’s real problems – corruption, collusion, connivance

POLICY debates cannot necessarily lead to better governance. Just as live telecast debates in Parliament over time did not improve the management and governance of the legislature, one should not expect the debate between Anwar Ibrahim against Najib Razak to produce a major breakthrough for Malaysia, which has suffered from the aftermath of the Covid-19 pandemic and corrupt practices that have become endemic.

To make matters worse for the country, Ukraine and the US signed a Charter of Cooperation in November 2021. Therein began the twofold nightmare. The core components making up Malaysia’s GDP is similar to that of Singapore. Not unlike Singapore, Malaysia is a top trading nation, too.

By this token, Malaysia’s GDP is deeply vulnerable to external perturbations, especially when we import close to 70% of our food. With a GDP that is exposed to global supply chain disruption – to the tune of 320% – Malaysia is reeling from the twin impact of the Covid-19 pandemic and the Russia-Ukraine war. A “perfect storm” has hit the owners of more than 300,000 small and medium enterprises (SMEs) and affected millions from the B40 and M40 groups.

With only 3% of Employee Provident Fund (EPF) members having more than RM250,000 in savings, where 15% of a population of 32 million being  over the age of 60, Malaysia is trapped.

The country is not merely trapped as a middle income country, it sliding down economically and politically. There has been a change of three prime ministers between March 2020 and August 2021.

It was clear in the Anwar-Najib debate both understood that one of the critical issues facing Malaysia was the rising cost of living, apart from the lack of good governance and integrity, and that corruption has become a way of life.

What was good about the debate was that the entire focus was on “governance” with Najib using the analogy of a cake to describe how the national economy should be grown bigger to allow the people to participate and partake in the process.

While this was an argument originally used by the late Singapore prime minister Lee Kuan Yew, Anwar was quick to emphasise a critical and simple point. Sensible as this approach may be, the structural and systemic issues at play are the 3Cs: Corruption, Collusion and Connivance between the powers that be and special vested interests that may even be criminal in nature.

The well-connected get a bigger piece of the cake, while the people get crumbs that are not even enough for them to survive on, let alone invest in their own education or upgrade themselves to participate in the thriving digital sphere.

In this vein, this makes Najib’s preliminary opening statement almost moot if not impossible to implement. The former prime minister insists that entities such as Samsung, LG and Hyundai should be attracted into Malaysia. They should. But would they, if the 3Cs remain the root problem? In South Korea, the former attorney-general known for holding big wigs and small fries to full account of any illicit activities will soon become its president. Why would the CEOs of GLCs take the risk of investing abroad, when the 3Cs could have a whiplash effect of how they are seen to be managing their parent holdings?

Now, let’s turn to an issue that did not emerge with any specificity in the debate: Ukraine. This nation, in peacetime, is responsible for 12% of the world’s wheat. The ingredients that are needed to create fertilisers are nitrate, potassium and carbon dioxide; the latter is used in the packing of the fertilisers.

The rise in the price of fertilisers has been global phenomenon since the summer of 2021 due to the Covid-19 pandemic and supply shocks. It has hit the US just as badly as it has affected the UK and the whole of Europe, even Africa. Malaysia, of course, was not spared.

As of May 6, the price of fertilisers per tonne in UK has risen from £650 to £1000. The US, the whole of Europe, Africa, Asia and Latin America are all witnessing the same rise in the cost of production.

Everything rose in a matter of two months. Although the US consumer price index is registering at 8.3%, this is the highest inflation to hit the country since 1941. And the worst is yet to come.

In Europe, farmers said they were likely to offset price rises by buying less fertiliser than usual this season for cereal crops, potentially leading to lower production at a time when there is a threat to supplies from Ukraine. The agricultural inflation in Europe is real. Although Asians don’t consume so much wheat, oatmeal, barley, cereal and corn, these are commodities Malaysia does import in the form of animal feed. Therefore, local producers and consumers will also face imported agricultural and fertiliser inflation.

In a globalised world that is only in the midst of being de-globalised between the West on one side and China and Russia on the other, the geopolitics, and by implication, the geo-economics of Malaysia could not be more dire. This is why Putrajaya can no longer be impervious to the structural and systemic problems caused by the 3Cs. Najib may argue that his track record over nine years speaks for itself. But if the trajectory of growth was strong to begin with, Malaysians, especially the Felda farmers in 26 out of 54 constituencies would not have bolted to Pakatan Harapan to begin with.

That is food for thought for all sides now battling for Malay hearts and minds in order to engineer their coalition’s respective victory in the impending general election that could be held in the September 2022 or July 2023. – May 14, 2022.

* Dr Rais Hussin is president and CEO of Emir Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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  • Not only Malaysia is afflicted with the 3Cs disease, our leaders are incredibly stupid.

    De-globalization is taking place in advanced countries due to fears of national security, supply chain disruption, inflation causing recession and unemployment, etc. As such, they are encouraging their companies to locate onshore or nearshore. US has its Chips Act and European governments are subsidizing the building of factories.

    We will have a hard time attracting foreign FDIs. Instead we should focus on local investments. To do so, we must have a completely free market economy and dismantle all discriminatory economic policies and restrictions. Otherwise even our own entrepreneurs (eg Grab) would flee to other countries which accord them a more level playing field and free hand in operations.

    p/s Trying to attract Tesla is a joke. The company only builds its Gigafactory in countries with large population and an attractive domestic market. Malaysia has neither.

    Posted 2 weeks ago by Malaysian First · Reply