Author Topic: DEBT  (Read 12706 times)

Online king

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« Reply #50 on: February 02, 2018, 08:43:29 AM »

it's now or never
The Muhyiddin factor in Harapan

Debt spiral signals death of fiscal Malaysia
Published: 1 Feb 2018, 4:11 pm     Modified: 1 Feb 2018, 5:24 pm

COMMENT | Prophet Muhammad (SAAS) used to pray that his life be spared from debt. This explains the simplicity of his lifestyle, getting by with just dates, bread, milk and water. After all, when one’s need is simple, life will be not suffocating.

The government under Prime Minister Najib Abdul Razak has obviously not understood this principle of simplicity. Instead of keeping the debt low and manageable, under Najib, the level of debt has shot up.

According to Professor KS Jomo and Raisa Mukhtar:

"Malaysia has a debt problem. Government debt is about 53 percent of the GDP, just below the already increased 55 percent debt-to-GDP ratio threshold. The big jump in such government debt from 41 percent in 2008 to 53 percent in 2009 followed the last change of prime ministers."

To which they further added: "Contingent liabilities refer to debt commitments related to government guaranteed loans. With contingent liabilities growing rapidly, the overall consolidated public sector debt-to-GDP ratio has risen to 68 percent of GDP."

Granted the sheer lack of transparency, the government may be sitting on a higher debt pile, since government-linked companies like Malaysia Airlines (MAS) or, FGV Global which is part of Felda, haven't been doing well.

If anything, MAS has had to retire close to 6,000 ground and aircrew. There is no telling when, indeed, if the shares of FGV Global can go beyond its listed price of RM4.80 ever. It has been more than three years and the shares are still trading at half their price and even lower, though Najib insists that Bursa Kuala Lumpur is on a strong run.

Indeed, 30 percent of Malaysia's annual budget is contributed by Petronas alone. This has been the trend for well over a decade. It means the Malaysian government, under Najib, has done nothing to reduce Malaysia's exposure to the peaks and valleys of the energy industry.

One should further note that most of the country's carbon resources were drilled and found in the 1970s. Regardless of how rich Malaysia may be in oil and gas, especially off the coast of South China Sea, these are not resources that exist in indefinite or infinite supply.

Thus, in order to avoid the curse of the "black gold" (i.e. oil), one must be prepared to take the country forward based on digital disruptions, services and the knowledge economy, all of which Malaysia remains weak in or is getting weaker by the day.

In fact, research by Nikkei Asia Review has shown that Huawei Technology has been in Malaysia over the last 16 years. While Huawei has helped Malaysia increase its broadband penetration, with AliPay working in tandem with Maybank to improve its AliPay e-payment system, Malaysia has done nothing of note on the digital front.

Meanwhile, spending hasn't been reined in, due to the massive size of the government. The size of the civil service – estimated at 1.6 million by Mohd Sheriff Kassim (below), the former secretary-general of the ministry of finance - remains in place.


While such a large civil service has the effect of buttressing the government, making Malaysia more stable, it also hampers efforts to transform the government, making Malaysia more stagnant too.

So while Sheriff’s desire to right size the civil service is quite convenient - indeed, in his mind, it may even be necessary to prevent a government financial meltdown - Najib Razak knew that doing so would be the kiss of death politically, given the impending general election.

This being the point, too. If Najib's financial reforms are always delayed due to the electoral cycles, then when can Malaysia ever change at all?

The contingent liabilities of 1MDB alone, according to the research of Jomo and Raisa, have taken up nearly 2.5 per cent of the country's GDP.

It should be noted that Sheriff’s figure of 1.6 million includes armed forces, police, education and hospital personnel. The Congress of Unions of Employees in the Public and Civil Services (Cuepacs) claims that these should not be included in the headcount, as is the case in some other countries, and consequently claims the civil service numbers 500,000.

Even so, there is a self-serving logic to Cuepacs’ suggestion - they don’t want their heads to roll.

However the headcount is made, the fact is the Malaysian civil service is a behemoth, one of the largest in the world. In February last year, Johari Abdul Ghani, the second finance minister, had warned that the annual payroll was already at RM74 billion while pension payments were RM19 billion a year.

There is one civil servant for every 19.37 people in Malaysia, according to Johari, as opposed to 1 to 71.4 in Singapore; 1 to 110 in Indonesia; 1 to 50 in South Korea; 1 to 108 in China; 1 to 28 in Japan; 1 to 84 in Russia and 1 to 118 in Britain.

The bloated size of Malaysia’s service causes government expenditure to rise yearly and creates a government that is unwieldy and bulky.

When a government is facing charges of corruption, to which Najib is trying to weather, it cannot reform the economy any more then it can continue to provide subsidies and handouts to pacify its political enemies. This is why Najib has to go, and soonest.

With or without the impending general election, Najib has been a blight on the country. And, with each passing day, the country's debt will only increase, making any attempt to balance the books by 2020 all but a chimera and illusion.

Without strong reform, the ratings of Malaysia's creditworthiness will take a hit eventually. When the cost of borrowing shoots up internationally, Malaysia would either have to bite the bullet - thus causing more outflow of an already weak ringgit albeit some technical retreat recently - or rely even more on China to tide it over.

But there are no free lunches in the world of international relations. More debt denominated with and in China will mean less maneuverability on any issue ranging from Malaysia's stake in South China Sea as well as Asean and East Asia writ large.


The death of Malaysia - as a sovereign country - will begin with the inability to manage the massive debt, period.

Pakatan Harapan is ready to lead where Najib has failed. But Harapan has no plans to slash and cut the civil service. That is not even our first or last option irrespective of the financial convulsions Najib enforced on Malaysia.

Rather, leakages and corruption produced by Najib will be stopped. Thus, Harapan is agreeable to the idea of Dr Mahathir Mohamad that every single contract previously approved by Najib, which has and will lead to more debt, would have to be re-examined properly.

This includes the East Coast Railway Link (ECRL), which is not a game changer, since it is built on a single, rather than a double track, on bloated costs and interest rates that are screaming for perpetual bail-outs in the future.

Harapan will also recover the national loot stolen by those in authority and return it to the rightful owners, the people.

In addition, Harapan will return true dignity back to the civil service as the credible backbone of the government’s administration. Harapan will stop senseless outsourcing contracts involving foreign or domestic consultants who charge the government and the people a bomb for services way below the standard of what our civil service has been providing.

The days where the civil service becomes just a mere statistics or data provider to these “outrageously expensive consultants” who are experts in “PowerPoint” presentations are over for good.

Harapan will not only return the glory of the civil service once again, it will honor and dignify them as the true backbone of the government administration.

There will be no political interference nor will there be enforced “outrageously expensive consultants” to force the civil service to toe the government lines.

Instead, the civil service will be fully empowered to do their jobs with the right dignity without fear or favor in the best interests of the people and the nation, rightfully.

RAIS HUSSIN is a supreme council member of Bersatu. He also heads its policy and strategy bureau.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.


Offline jjwong

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« Reply #51 on: February 11, 2018, 11:23:46 AM »

National debt close to critical level, says don
Minderjeet Kaur
Dr-Yeah-Kim-Leng-economyPETALING JAYA: An economist has warned that Malaysia’s debt is fast reaching the maximum level for a developing country, saying much of the blame lies with the government’s fervour for large-scale infrastructure projects.

Yeah Kim Leng, a professor at Sunway University’s Business School, noted that the nation’s direct debt now stood at 52% of its gross domestic product (GDP) and contingent liabilities guaranteed by the government, such as for loans taken by government-linked companies, were between 20% and 30% of GDP.

He said total debt should not be higher than 80% of GDP, warning that anything beyond that would expose the country to an economic crisis.

“When we reach 80%, it is not like we will go into economic crisis, but it has reached a maximum level and it is time to be prudent as the economy will become more vulnerable to the economic crisis or sovereign debt crises after that,” he told FMT.

He said mega-scale projects like the High-Speed Rail (HSR) connecting Kuala Lumpur and Singapore and the East Coast Rail Link (ECRL) connecting the east and west coasts were likely to increase the country’s debts.

He also said he was concerned that the national debt might rise more rapidly than expected if such projects didn’t bring in returns soon enough.

The cost to build the 350km HSR is expected to be more than RM60 billion, according to an estimate by the Institute of Southeast Asia Studies.

The ECRL, for which Malaysia has secured Chinese construction expertise and financing, has been estimated to cost RM55 billion. The opposition has claimed that it will eventually cost Malaysia more than that because 30% of the amount would be financed by the government through the issuance of sukuk and bonds and because interest payments had allegedly not been factored in.

Yeah also warned that economic growth would slow down once the national debt shoots above 80% of GDP and the government would then have less money to spend on education, health and other essential services.

In such a situation, he added, a government would normally start selling off its assets and privatising some services and projects.

He said high debt levels would also affect investment. “If there is no confidence in the sustainability of a country’s growth, there will be an erosion of confidence.”

With less investment, he pointed out, there would be fewer jobs and salaries would not rise, adding to the vulnerability of the economy.

He urged the government to improve on governance and reduce leakage in the system so that it could use the money thus saved to pay off its debts.

He also said the government should aim to achieve a balanced federal budget as soon as possible.

Against such backdrop, an average Malaysia worker will find increasing pressure to shoulder the countries debt through more taxes, gst, parking tax, inflation tax by mamat24 shop, tnb and telco raising their tariff, petrol prices suka suka naik(but election time stop raising temporary) owners getting higher assessment and quit rent bill, school bus raising their charges, express buses double their rates since last 5 years, taxi fares going up.
"The only conquests which are permanent and leave no regrets are our conquests over ourselves"    Quote from Napolean Bonaparte

Politicians like to rally the masses to stage conquest  against "the enemy",  the real intent is  actually...$ $

Online king

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« Reply #52 on: February 19, 2018, 07:03:35 AM »

Malaysia’s high interest on debts sparks budget crisis fears, says report
Updated one day ago · Published on 17 Feb 2018 3:38PM · 1 comments
Malaysia’s high interest on debts sparks budget crisis fears, says report
Going by an annual growth rate of 10.7%, Malaysia's debt could reach RM1 trillion by 2021 on excessive spending. – The Malaysian Insight file pic by Seth Akmal, February 17, 2018.

HIGH interest payments, low government revenue and off-the-books bailouts of state firms have sparked concerns of a looming budget crisis in Malaysia, despite Prime Minister Najib’s Razak’s assurance that the country’s total borrowings was well under control, said Singapore’s Straits Times.

Last month, Najib said Malaysia’s total debt of RM685.1 billion last year compared favourably against other countries, because they formed only 50.9% of the country’s economy, or gross domestic product (GDP).

"Malaysia is better than developed countries such as Singapore at 112%, United Kingdom at 89.3%, Canada at 92.3%," Najib had been quoted as saying.

However, he declined to explain that Singapore spent far less servicing their debt, using only 6.1% of its revenue in 2016. By comparison, Malaysia used 12.5% of its income on interest payments that year, according to Finance Ministry statistics.

This year, Putrajaya is expected to pay RM31 billion in interest, more than double the amount paid in 2009 when Najib took over and when the government’s interest burden was less than 9% of its revenue, according to the ST report.

This amounts to nearly all the personal income tax the government expects to collect, or more than two-thirds of its takings from the unpopular goods and services tax (GST), which it began collecting in 2015.

Economists had said Malaysia's single-A-rated status, which means it has to borrow at higher rates compared with countries like Singapore, which are triple-A rated,  would pose a further challenge to the government in lowering its debt interest payments.

"Weak debt affordability, which we measure as the ratio of interest payments to revenues, has been a credit challenge for Malaysia  ," Moody's analyst Anushka Shah told The Straits Times.

Another concern is undisclosed, or “off-the books”, government payments to help ailing state firms