We’re not in dire straits
IN Bank Negara’s first quarterly report for 2018, the overall tone of the economic and financial report remains positive. Malaysia registered positive figures in GDP growth, current account surplus, steady financial market performance despite outflows from spooked investors and a strong banking capital base. The figures even evinced a decline in inflation rate at 1.8% year-on-year.
Yet, the whopping fiscal debt of RM1tril (and counting) seems to have sent the country into a spiral of fear, resulting in the setting-up of Tabung Harapan Malaysia to “save” the nation.
Is there any need for panic? Isn’t this crowd-funding effort rather jumping the smoking gun, so to speak?
Ultimately, the financial reports are interim in nature. Announced only three weeks after the Pakatan Harapan government was set up, the numbers do not as yet spell the death knell for us.
There are other economic indicators besides the national debt. And if there are debts, there must be assets too, oil no doubt being one of them. While this is a key card in our bid to restructure our economy, it is by no means the only one.
There’s no doubt that the oil or energy market is volatile; the latest report from Bloomberg forecasts a soft floor and ceiling of US$40 to US$75 per barrel for crude oil on the back of divergent economic and political factors by global players.
But this data is not new to our current prime minister who previously shepherded the country for a record 22 years. The strategic reform of our economy, the birth and strengthening of the private sector, and the notable success in recovering from the 1997/1998 Asian Financial Crisis despite refusing financial aid from the International Monetary Fund were all achieved by Tun Dr Mahathir Mohamad together with a strong team of economists and advisers.
Hence, he is not a new hand, and certainly not alone, in tackling the country’s current economic situation. There is also the Council of Eminent Persons whose members are not novices at solving economic problems.
At no point was it ever confirmed that we could not repay our debts. There are concerns, yes, but there is no need for useless alarm. The numbers are important to sketch the economic reality Malaysia has to face.
But without ascertaining the assets (liquidated and unliquidated) and detailed analyses, why build on panic that we cannot service our debts? Furthermore, it was never confirmed that the RM1tril debt has to be repaid overnight. It is to be serviced periodically for the next few years.
The public outcry for donations speaks otherwise; panic is catching on in social media where unjust accusations of being unpatriotic are being hurled at non-donors. Donating to Tabung Harapan is now imperative to “bail out” the country.
The point is what is there to bail out when the numbers point to us being in the black and there is no default as of now? There is no confirmation of imminent Greece-style bankruptcy. If Malaysians cannot keep a cool head in view of our finances, what is to be expected of foreign investors? This sends desperate signals to both domestic and foreign investors that we are definitely in murky financial waters, and it does not bode well for investor confidence.
Moreover, these crowd-funding efforts set a dangerous precedent for future and current public officers that it would be fine to play with public finances because Malaysians would always “bail” them out. There would be no sense of urgency to recoup allegedly stolen funds and no accountability for those in public office.
Does this mean every time investor pay day materialises, we would have to start a similar fund? What about transparency and account reporting requirements? There are already reports of scammers capitalising on Malaysians’ “generosity”.
This Tabung Harapan is the new GST; we are essentially using it to “bail” out the country. The only difference is the first is voluntary while the other wasn’t. CELESTE-ISLA H Kuala Lumpur