IN November 2011, Performance Management and Delivery Unit (Pemandu) CEO Idris Jala warned that Malaysia could go bankrupt by 2019 if the annual growth rate is constantly below 4% while debt increases at 12% a year while the country continues to spend borrowed money on operational expenditures such as subsidies. 

As at the end of the 2010 fiscal year, federal government debt stood at RM407 billion, or 53.1% of GDP, and is fast approaching the ceiling of 55% of GDP.

Idris is not a nobody. As the captain of Pemandu, which was established in September 2009, he was responsible for leading the Government Transformation (GTP) and the Economic Transformation Programmes (ETP) charting Malaysia path toward becoming a developed, high-income nation by 2020.

Pemandu’s job is to support the ambition with pilot projects and to set the KPIs associated with the programmes.

According to Jala, the government will scrap subsidies gradually over a period of five to seven years so that their removal will not cause shocks to the system.

Eleven years later, in 2022, is the country worse off than it was in 2011, when Idris made the predictions?

As at December 31, 2021, government debt stood at RM979.8 billion while the annual growth rate, except for 2020 which saw negative growth, ranged from 4.4-6% for the period 2011 to 2021.

Based on the revised ceiling of 65% of GDP under the Temporary Measures for Government Financing (Coronavirus Disease 2019 [Covid-19]) (Amendment) 2021, it would appear that the country’s debt is under control.

From 2011 to 2014, oil prices hovered around US$90 per barrel before nosediving to US$40-70 per barrel from 2014 to 2021. The war in Ukraine and issues with the global supply chain disruptions have caused prices to rise to above US$100 per barrel.

Thus, for seven years from 2014 to 2021, the country’s revenue dropped as a result of the drop in oil prices.

Except for its subsidy rationalisation program, all talk about removing subsidies or gradually phasing it out  was neve never taken seriously.  There was never a plan in the form of a national subsidy policy. 

In March, the finance minister said if the price of crude oil stayed above US$100 per barrel, fuel subsidies would cost the government RM28 billion in 2022, more than double the cost of the the previous year 2021.

As only a million Malaysians were paying taxes among a population of 28 million, Idris had in 2011 also pressed the government to hasten the implementation of the goods and services tax (GST), which was eventually implemented in 2015.

The GST brought in a revenue of RM43 billion per annum in 2016 and 2017 before it was abolished in 2018.

Does the country’s resilience have anything to do with the economic stimulus measures?

The real unemployment rate is well above the published 4.1%. The unemployed numbered 389,200 in 2011 but grew to the 500,000s in 2016. Regionally, Malaysia had the fourth highest jobless rate in 2020 at 711,000, ahead of  Vietnam (1.23 million), the Philippines (4.5 million) and Indonesia (9.7 million), 

So what does this mean for our future? 

If the present or future government continues to focus solely on how the economic pie is divided rather than  encouraging it to grow, productivity will plummet and industry shrink as the economy loses its ability to remain self-sustaining.

Geopolitical tensions are high after the Russian invasion of Ukraine, and those tensions are quickly spilling over into the South China Sea. The country is torn between its historical alliances and its new economic reliance on China. 

This is only the start of the country’s problems in a world of increasing conflict. The other issue the country will need to contend with is inflation. Global inflation is rising, spurred by sanctions, spiralling energy costs and shortages of staples such as wheat. 

Every country will have to deal with these problems except those that have managed to secure domestic food and energy supplies. Malaysia faces an additional problem – its depreciating currency – as a high-import nation.

Decades of prosperity are coming to a halt. An economy propped up by “houses and holes” is looking increasingly unstable. The divide between the rich and the poor has become a canyon.

Can the people continue to assume that the world is their oyster and that things will always turn out right no matter how irresponsibly they behave?

It is time for the rakyat to vote some politicians back to the Stone Age and make the country lucky again in the general election .

If Malaysians want to enjoy a future as favourable as the past, everyone must be willing to work together. – July 17, 2022.

* FLK reads The Malaysian Insight.

* 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.