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Blessed with sweet crude but cursed with bitter debts

Petronas has contributed about RM800 billion to the government since its inception in 1974. In 2008 alone Petronas contributed about 44% of the federal government revenue but dropped to 31% in 2014 and expected to drop further to 22% in 2016.

 

Fossil oil, called black gold, was once priced at US110 is now hovering around US30 per barrel. Crude oil has plummeted to a new low, never seen for a long time and the market foresee a worsening supply glut along with slowdown in demand. So the good old days of high oil revenue is over and Malaysia has to tighten its fiscal belt.

 

Wastage, pilferage and leakages in public spending have to be curbed but UMNO/BN government has a poor record on this spending. The government for the first time has turned to tax people by introducing GST to raise revenue. It’s a known fact that governments with rich natural resources are poor in managing wealth.

 

Petronas the government savior, sitting tight in its 88 floored twin towers, once the world’s tallest buildings, dominate the skyline of Kuala Lumpur. Over the years, Prime Ministers have tapped into Petronas funds to build their dream projects like the twin tower and bail out their mistakes like Bank Bumiputra Bhd in 1985 with RM3.5 billion, saving debt ridden shipping company and even rescuing proton at one point.

 

Petronas is only accountable to the prime minister’s office were used by powerful UMNO politicians for lucrative and exorbitant contracts. Now Petronas is finally trying to say no which may lead to strained relations between Petronas and the government.  Resource rich government of UMNO/BN were less dependent on taxes for revenue and thus less accountable to Malaysians and more authoritarian using oppressive laws and tactics to rein opposition and dissenting voices. Opposition to the construction of white elephant and extravagant projects built at high prices went unheard.

 

Now that oil revenue has reduced drastically and a new indirect tax, GST, has been introduced the government will be forced to be more accountable. Divide and rule policies of yesteryear may lose its bait and those taxed now for the first time, will demand more accountability.

 

Despite the RM800 billion oil revenues paid by Petronas for the past 50 years, Malaysia remains heavily indebted, with public debt at  RM582.8 billion or 54.5% of GDP and household debt at RM940.4 billion or 87.9% by end of 2014. Malaysia had to face a continuous budget deficit for the past 16 years. Essential services like supply of water, electricity and highways just to name a few are all privatized. Malaysia has driven away its skilled and knowledgeable citizens to other countries and instead imported 6.7 million legal and illegal unskilled foreign workers who are stagnating the wages of Malaysian workers. Only 28% of our labor force is considered skilled compared 50% in Singapore.

 

Malaysia did create the National Trust Fund in 1988 to ensure revenue from natural resources, including oil and gas, continues to generate wealth for future generations. As of 2013, Petronas was the sole contributor to the fund with cumulative contributions of 8 billion ringgit. With more demand for dividend payment from government, Petronas will have less to contribute to this fund in future. Malaysia have spent away RM792 billion of the revenue received from Petronas since 1974.

 

Norway started oil production in 1971 and had managed its oil wealth to protect future generations and invest the money generated in education and human resource development. For many countries resource wealth seems to have been a curse rather than a blessing. But Norway has invested instead of spending and they own one of the largest sovereign wealth funds in the world which has grown from zero to USD865 billion within 18 years.

 

Norway government emphasized on transparency in all aspect of the fund. The revenue from oil and gas were invested in a well- diversified global portfolio of financial assets to reduce the dependence on the value of remaining oil reserves. Through this fund they have transferred oil wealth into financial wealth that will benefit generations to come. Norway with a population of 5.084 million has made every citizen wealthy.

GST makes 2015 year of living dangerously

2015 will always be considered one of the most dreadful Years for Malaysians due to the GST introduction on 1st April 2015. GST may have helped to narrow the budget deficit for 2016 but it created and continues to cut bigger holes in the people’s pocket. The prime minister cum finance minister has said that the government’s collection of revenue through the SST would have amounted to only RM18 billion. But GST is expected to rake in RM39 billion. And this make Malaysians poorer by the amount. While we were dependent on oil and gas all these years, it never struck the ruling government to develop its human resources and move up the supply value chain. The oil curse has reached Malaysian shores. The oil and gas dependence by the government has made the policy makers into complacency, recklessness, extravagant and unconcerned about integrity and honesty.

Malaysia’s long history of mega scandals like the RM2.5 billion from BMF, RM1.6 billion from MAMINCO, RM12.5 billion in PKFZ, RM9.4 billion from MAS, RM30 billion from Bank Negara forex dealing , RM10 billion Perwaja steel, RM250 million national feedlot and many more have made Malaysia poorer nation. Malaysia is currently surrounded by the 42 billion 1MDB and 2.6 billion controversies. Wastages, corruption and pilferage have become institutionalized.

To save the situation, the prime minister has resorted to implementing a 6% GST. Malaysians are going into 2016 with cost of living increasing and uncertain international economic growth. The prime minister seems to depend heavily on his foreign and private advisors who are supporters of neo liberal policies in shaping his economic policies and they have strongly recommended GST. But this view is not gaining traction among Malaysians.

Before the GST was introduced government promised people that prices of goods and services will go down because SST was 10% + 6% but GST only 6%. But instead prices of goods and services increased 2 to 3 fold. Malaysians felt mislead and deceived by their own government. GST introduced along with the withdrawal of subsidies on petrol and sugar, subsidy for electricity being reduced and tolls were hiked. Government has announced that LRT, ERL charges are also set to increase. All these measures by government at the same time has increased cost of living tremendously till Malaysians from all walks of life are feeling the pinch.

GST has now become an integral part of Malaysian tax regime and whenever government need to increase revenue they can just raise the GST tariff from 6% to up 7% or 8%. Singapore started GST at 3% now stands at 7%. With Malaysian’s household debt to GDP standing at 87.9%, one of the highest in the world, this regressive tax has been a hard blow to the not only bottom 40% but also the middle 40%. The long term ramification remains unknown and grim. These added financial pressures from 6% GST on the majority of Malaysians will increase their indebtedness further leading to more crime and social tensions in society as a whole. It’s time for the government to initiate a social economic impact study on the consequences of the GST introduction.

To add injury to insult GST was introduced in the mist of the prime minister’s own worst and most expensive corruption scandals. The RM42 billion 1MDB debt and RM2.6 billion donations where the prime minister is directly implicated remains unsolved and have increased the political risk in Malaysia. All these negative developments have weakened the Malaysian ringgit considerably leading to high cost of imports and increase in prices of goods and services. The high public debt was matter of concern among policy makers. GST needed to pluck the holes.

To make matters worse GST implementation was flawed and haphazard. Of course it’s normal to have teething problems but Malaysian’s problem went beyond the gestation period. The list of zero rated and exempted items were not settled long after implementation. The lack of consultation with workers representatives on service charges led to more confusion. The inability of customs department to handle technical questions and non-Malay speaking enquiries further added to confusion and disappointments. Poor implementation of the GST caused some sundry shops and retailers to close down. There are major discrepancies in the prices charged post GST which went well beyond the 6% GST level. The government doesn’t seem to have a clue why the price increased shapely and could not put a stop on traders raising prices.

GST has become a political thorn on the government especially the prime minister Datuk Seri Najib Tun Razak’s regime. Malaysia is said to be facing its worse inflation after the GST implementation despite the many zero rated and exempted items. The concern and fear now is the government raising GST tariff to more than 6% in 2016 since oil price is expected to bottom out at US20 per barrel. In Budget 2016 oil revenue was estimated at US48 per barrel. 2016 looks grimmer than this year. Hope the finance minister provides information to Malaysians on meeting his 2016 budget proposals.

An immoral question in a moral subject

The SPM moral paper, as in the past has caused yet another controversy this year by insinuating, through examination questions, to students that they should not oppose the government or join anti-government protests.
Allowing such a question as part of a public examination shows the level of intolerance, non-scholarly and narrow mindedness of the examination syndicate. For a democratic country which elects a new government once in every 5 years, such questions are an anti-anecdote to our parliamentary system of governance.
If a student learns English, it improves the proficiency in English. Similarly, if a student takes up mathematics, the numeric skill improves and likewise in Bahasa Malaysia and other subjects. But if a student does well in moral paper, does it mean that the student has high moral values. It appears the Ministry of Education wants to convert the moral paper into a test of the government’ immoral propaganda! To participate in a peaceful rally against a corrupted government is a moral responsibility of a citizen.
Mahatma Gandhi said “civil disobedience becomes a sacred duty when the state has become lawless or corrupt. And a citizen that barters with such a state shares its corruption or lawlessness”. If Gandhi were to sit for SPM moral paper, he may fail. But to add insult to injury, the moral paper is compulsory for non-Muslim students, which is included in determining the overall performance of students.
The SPM Moral exam paper has been controversial ever since it was introduced. Instead of moral exam, a better moral message would be the exemplary role of the Prime Minister, his cabinet and the bureaucracy. The whole nation is docked with the RM42 billion 1MDB and the RM2.6 billion donation fiascos. To date no action or response is forth coming from the government. Is that morally correct?
Despite the highest allocation to the ministry of education every year, the standard of English, Maths and Sciences are slipping down. The ministry has no new idea to correct and reverse the trend. To add a politically slanted question in the moral exam paper is morally wrong. Despite the public outcry, the minister and his officials have not responded yet. Isn’t it their moral obligation to respond?
In the first place what use is the moral paper to the students and others concerned? It shows the lack of understanding of what is moral education is all about.
Moral education in many countries focuses on infusion of character and noble values. Besides learning numeracy, literacy, sciences and health education a focus on character building makes the schooling experience wholesome and nation building. To build cohesive and progressive society students need to be infused with a sense of responsibility, hard work, self-control, tolerance, respect and care for elders and patriotism to the nation. Some Community services nearby schools regardless of race and religion can send the moral lesson loud and clear.
Teachers and leaders have to be role models and dedicated and disciplined athletics coaches can better and effectively sent moral messages to students instead of testing moral as an examinable subject. Constantly harping on race and religion on every form of the bureaucracy and ministry of education is the most immoral message sent to the students. Hope the ministry gets their morality right before teaching moral to students and examining it later.

PAS is in the past, new hope with Pakatan Harapan

Parti Amanah Negara, DAP and PKR have officially announced the formation of their new coalition Pakatan Harapan on 22/9/2015 with much hope and promise in view of the fast emerging new political landscape. One faction in PKR wants the formation delayed until PAS is persuaded to join the coalition. But PAS seems not keen in joining the coalition while their friendship with UMNO is warming day by-day.
PAS members who oppose their courtship with UMNO have deserted and have formed Parti Amanah Negara. So waiting for Hadi’s PAS to join Pakatan Harapan seems futile. PAS has shown that they cannot be trusted and their words mean nothing. For Hadi’s PAS, the hereafter is more real and rewarding than bring about a clean and just government here and now.
The race and religious politics of UMNO and PAS have divided Malaysians and keep the Malays under siege mentality. The Malays are forever warned that they will lose their privileges and political power to non-Malays if they do not support UMNO. But UMNO, with its total control over the government machinery, judiciary, parliament, law enforcement and even the royalty, has transformed the country into a heaven for the corrupt, racists and religious bigots. Non UMNO connected Malays themselves and other races are the big losers. Now we are known internationally for corruption and money laundering. The situation is becoming direr as we go forward.
Malaysians of all races are looking for alternative to the current mess created by UMNO. Pakatan Harapan should but instead lead the country move forward taking into consideration the aspirations of all Malaysians. The young are no more interested in the racial and religious divide and rule politics of UMNO and PAS.
But of course the UMNO warlords and leaders will continue to perpetuate their brand of politics and derail any alternative to their brand of politics. Unfortunately PAS, which has been fighting against the UMNO corruption and high handedness all this while, has fallen in love with UMNO that is fully immersed in corruption.
By including PAS in Pakatan Harapan may portend yet another Pakatan Rakyat disaster in the opposition coalition. Once bitten, one needs to be twice as careful. PAS under Hadi Awang seem to be moving back to the stone ages by making ridiculous statements like all those who desert PAS must divorce their wives and the need for 4 witness to prove that 2.6 billion donation is bribe.
Nobody takes bribe and has 4 witnesses to testify to it!. He seems to be the agent provocateur in Pakatan Rakyat. Under Hadi’s leadership PAS lost Trengganu and Kedah state governments. And now, without Tok Guru,Nik Aziz Nik Mat, PAS may lose Kelantan too.
Hadi seems to be the down fall of PAS. Even the moderates in PAS have deserted it and formed Amanah. So why should one faction of PKR want Hadi’s PAS to be in Pakatan Harapan? Something is not right here. Do we still need religious and race based political parties after all these hiccups, backstabbing and scandals.
With urbanites voting for change, rural areas in peninsula Malaysia seems to be the political battleground. UMNO or PAS were the choice they had all this while. Now both these parties are in shatters and seem to be imploding. Can Pakatan Harapan able to convince these voters into voting for a change. These important constituents may be more conservative to new political developments and may be slow to changes. Amanah has to move in quickly to fill the vacuum.
Of course UMNO and even PAS will throw spanners and bottles to frustrate Amanah’s attempt. Younger voters who are victims of GST and the bad economic policies of UMNO are the hope. So, all is not lost in the Malaysian political quagmire. There is still hope. Let’s seize the moment. There is a new hope…