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Najib’s Greatest Folly?

June 4, 2010

Dr Dzulkefly Ahmad, PAS Central Working Committee Member.

 It wasn’t always as bad. But of late, it has turned a lot worse. Judging by the spate of confusion and distress the nation is undergoing, Prime Minister Najib has to urgently invoke Divine Intervention to save his Administration from a tailspin – a choice which is as hard to him as to overturn the gambling license he recently awarded to the Ascot-Berjaya Group, in anticipation of a windfall from ‘sinful’ revenues.

 Never mind the Limbang and Blok L-M fiasco. Never mind the Tanjong Pagar land swop which may turn out to be positive for us after all. Never mind the many exposé of the RM billion losses and colossal projects cost over-runs of stressed GLCs. The citizenry is perhaps numbed by the endemic and unbridled corruption. Never mind even the Sodomy 2.0 now showing.

 Much worse is the latest Najib’s alarmist tactic and shock therapy which may prove to be ‘the medicine that will kill the patient’. Claims of the nation going bankrupt by 2019 may prove deadly. But to whom, you may really want to ask? The patient or the doctor?

 Worst of it all is Najib’s newly-found-elegant-and-dignified escapism ie his latest ploy of leveraging credits for himself while swiftly and flagrantly passing the blame on others (read think-tanks) when challenged. This is despicable much as it’s very irresponsible for a Prime Minister.

As if admitting that the New Economic Model (NEM) was not a document of his government but merely a suggestion from Tan Sri Amirsham’s NEAC (National Economic Advisory Council) wasn’t dreadful enough, Najib’s earlier qualified support and now seen (after Perkasa) distancing himself from DS Idris Jala’s Management and Delivery Unit (Pemandu) subsidy rationalization programme, came down almost as the last straw that broke the nation’s back.

The nation is rudely reminded of the fate of Dr Lim Teck Ghee, the Asian Strategy Leadership Institute (ASLI) for challenging the alleged underachievement of 30% bumiputera corporate equity of the NEP. The power-that-be came down hard on him and he finally bowed out graciously. Will Idris Jala suffer the same fate?

Najib’s commitment is wavering while his direction is anything but clear. He truly displays his intrinsic character of indecision and fear, both traits miserably disqualifying him as a true statesman and a premier.  

The nation now stood astounded, extremely distressed and enraged. How are they going to take all these and make sense of its disparate revelations?

 This writer has penned numerous pieces on Najib’s penchant for flip-flopping and an open letter, imploring for his leadership to get us out of this unending quandary. A relentless optimist as he always claimed to be, this writer will not despair and will continue his advocacy. This piece is yet another.

Sooner rather than later, the better it is for Najib to take cognizant that the buck stops at him. He needs no reminder that as the Prime Minister he could only delegate tasks and assignments. But he still is responsible and accountable for it. Much as he wanted to, he couldn’t delegate responsibility. There’s no two ways about it. Najib must now take the bull by the horn and bite the bullet to the end. Otherwise it is best that he bows out graciously as did his Japanese counterpart a few days ago.

NEAC and Pemandu are his think-tankers. He could have more if he so wishes, each addressing specific predicament of this nation. Indeed he has a few more at his disposal. His think-thankers are about the best professional brains and talents of the nation, much superior to him at times, in their own respective expertise. But they are not there to be blamed for the various failures and shortcomings of Najib’s government.

Lest Najib thinks that this writer is yearning to see the eventual failure of the various blueprints of the government’s think-tanks, let it be known to him that he has to change his mind-set and negative perception. That’s of the obsolete paradigm of the Old Politics of the Umno/BN. That’s the destructive zero-sum game of the old political order. That needs debunking by all leaders of both political divides.

This writer, hopefully like all other opposition MPs and leaders would like to see and in fact would ensure and vouch that not only are the policies and blueprints of the BN’s government sound and viable, but they must also be judiciously and effectively implemented. Period.

To reiterate, Najib should know that from our perspective, the NEM as presented to date has finally addressed many pressing economic problems, both fundamentally and structurally. That is the good news ie that we generally are aware of our problems. We no longer could sweet talk and hoodwink the rakyat by our usual phrases of sound economic fundamentals, hefty foreign reserves and the healthy current account surplus.

Najib is eventually admitting that the economy has suffered a decade of stagnation as a result of being stifled by a middle-income trap, low value-added activities and low productivity. Over-reliance of unskilled foreign labour force and lagging in local human development to support a liberalized and high-valued-added economy were essentially the causal factors.

Similarly, there has been an over dependence on petro-dollars as revenue and a widening of a public-private investment gap. Confidence is at its lowest ebb, both foreign and local.

A mismatch of a high national saving with a low private investment rate is equally reflective of some structural problem of accessing credit and funds. The opposition and enlightened non-partisan bodies and academics had also been drumming that on to the deaf ears of the BN’s leaders for ages.

Of course it is important to get to the correct diagnosis as to ensure we have the right prescription to our problems. The NEM now sets as its target the achievement of a high income economy which is both inclusive and sustainable. That’s both encouraging and consoling to many.

Inclusivity provides for an equitable development for all regardless of race, religious and cultural divides. Sustainability consideration ensures that the future generations are not short-changed by reckless use of current resources by self-serving greedy leaders.

Unfortunately, the bad news is the fact that all these problems were known all along but there was hardly any serious effort to mitigate and resolve them.

What was missing then? A sheer political will to dismantle rent-seeking activities, debunk crony and corrupt practices which had endlessly subverted the otherwise good policies.

Quoting Najib verbatim, he admitted shamelessly, that out of RM54 billion of equity allocated to Bumiputra, only RM2 billion remains due to immediate and large sell down of Bumiputra shares in the capital market.

 Embarrassingly, he went on to admit that “those who received bumiputra shares were not ordinary folk but mainly influential people ‘who sat in the front rows at functions such as Tan Sris and Datuk Sris”.

Has anything changed? Does Najib provide a leadership bent on reform and change?

What of Idris Jala’s subsidy cut and rationalization are new?

Yes, it has been presented in the most alarmist way as it could be. Yes he was apparently articulate. However, it is the conviction of this writer that the biggest loser and the most alarmed is not the rakyat, but none other than Najib himself and his Umno/BN political elites.

Idris Jala has certainly served his boss very well indeed. If anything he has overdone it.

His invoking bankruptcy has in fact finally let the cat out of the bag. Had it been said by any opposition leader, it will definitely be scorned at with such disdain and fury. Now it shall remain a political meal for their political nemesis.

It took a minister and ironically from the Prime Minister’s department to pronounce the Doomsday for Corporate Malaysia. With a prediction of an annual 12% increase of the federal government debt it would surely be RM1.03 trillion by year 2019. It’s well beyond Greece.

Admittedly, this writer has also been an ardent advocate of the need to have a blueprint or a national policy on subsidy in the parliament. It is in fact long outstanding. Both subsidy and taxation are two faces of the same coin for the stabilizing measures for a fiscal policy of any nation. It has a role and a place in the entire economy.

Premised on that, Jala’s rationale for a dire need for a subsidy cut is overly incomplete. His exposition is at best only half-truth and at worst misleading the nation. He couldn’t even convince himself that putting the entire blame on subsidy is justifiable.

He has chosen to exhibit selective amnesia when it comes to explaining how the economy has been crippled by endemic corruption and malignant leakages due to a dysfunctional delivery system. He also chose to overlook the Auditor General’s Report year in and out.

Of all those things said about the various subsidies given to the deserving citizenry and the least deserving ones like the IPPs, highways and other utility concessionaires, one that needs special mentioning here would be how money are spent to prop up (read subsdise) the Bursa composite index or its barometer on a daily basis. It is well into the billions yearly.

Call it what you may, but public funds from tax-payers money of the EPF and others, injected to support our blue chips of the GLCs need to also be addressed unequivocally and squarely along side with all other forms of ‘subsidy’. The various ‘incentives’, ‘grants’ and activities of ‘investment arms’ like Value-Cap and Ekuinas must not escape Idris Jala’s radar when he talks of the ballooning debt and widening fiscal deficit. Only then will he be truly honest and holistic about mitigating and averting the financial Armageddon in 2019.

Be that as it may, is Najib seriously contemplating to take it head on come what may?

Emphatically again, his greatest enemy is none other than himself. Perkasa, the Umno-ultra backed by the Tun, and other like-minded outfits will of course continue to challenge leaders out to execute change and reform. His Malay party will similarly derail his many intended reforms for reasons best known to them.

Najib has hardly a choice. He is placed between a hard place and a rock. After a succession of by-election defeats, failure is no longer an option.

Will he relent? Will he resort to blaming his think-tankers again? Will that be his greatest folly for now?

If he succumbs, he does it at his own peril. If so, Najib truly paves the way for a regime change. Hence the reason why we want a sound NEM, the 10 MP and all, in place soonest!

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9 Comments leave one →
  1. Monday sunshine permalink
    June 4, 2010 4:53 am

    I always enjoy reading your posts. One thing that we are all carefully skirting around though, is the elephant in the room, the current DPM. Unless Najib’s regime is comprehensively replaced at one go, he will take over and from the glimpses we have seen before he decided to keep quiet lest he be found out, he will be way worse, in the Perkasa mould. This really worries me.

  2. Black Arrow permalink
    June 4, 2010 5:44 am

    Salam Dr. Dzul,

    Unlike you, I am the eternal pessimist. I do not hold out any hope of great things coming from Najib. So far, it is all rhetoric, nothing concrete.

    NEM, GTP, NKRA is nothing but mythology to me.

    If the rakyat place too much hope in BN or Najib, they are going to be in for a great disappointment. NEM has good ideas but what about the mechanics of implementation?

    As for the country going bankrupt, it looks a likely possibility but not because of the subsidies given to the deserving rakyat. It is due to unbridled corruption and mismanagement by BN for more than 50 years.

  3. francis ngu permalink
    June 4, 2010 9:18 am

    Due to inherent self interests and internal conflicting interests, we are witnessing a remarkable policy followed by administrative paralysis.

    Ideas remain on drawing boards. Whether it is Human Rights, Police Reforms, Key Performance Indices, NEM, subsidies/GST/incomes/wages, we are witnessing stagnation on a broad front.

    The nation will simply not move forward under UMNO/BN; Najib is at once the author of this paralysis as well as the victim of his own making. He tries to play to all the galleries all at one time, instead of being a real statesman of principle.

    YB, I and others may be expecting too much from a party/coalition which has few options left, but bidding precious time to be replaced .

    Kuching.

  4. Foo Wy Len permalink
    June 4, 2010 10:50 am

    To ask Najib to take the bull by the horn and to bite the bullet and probably kick the bucket ? No UMNO PM has ever done it and to expect Najib to do otherwise?

  5. angela ooi permalink
    June 4, 2010 10:53 pm

    THe subsidies are just a spoonful of sugar while those ANNOINTED ones grab the rest.
    Najib is a leader weakened by questionable baggages and therefore unable to push through any radical changes no matter how desperately needed. Unfortunately, much like Nero fiddling while Rome burnt, the party will grind to a halt ONLY when there is nothing left in the larder. Meanwhile, the band plays on and ‘who can grab the most in the shortest possible time’ game is played robustly daily.

  6. Shanker permalink
    June 5, 2010 5:05 am

    Dear Dr Dzul

    Najib is not the man to bring about the change required – ie to alleviate Malaysia’s economic standing to an altogether high level.

    Any Prime Minister who thinks that he can address long standing electorate problems power by uttering “I help you, you help me”, is not, in my opinion, part of the solution.

    And if Najib is not part of the solution, then he is part of the problem. Well, with UMNO around the corner, it is always problematic for this country.

    And I am convinced that with all the scandals/allegations hanging over his head, Najib looks as lost as a child in a supermarket looking for his parents.

    In other words, things are really beyond him. He is the CEO without the right people in his cabinet supporting him. Notice the deadwood appointments in the latest cabinet re-shuffle. It’s the same people who failed in the past; how does he expect to achieve any lasting results with them ?

    The Pakatan team therefore, really needs to get ready for Putrajaya. I for one, look forward to the day where I can see you in a new government team, articulating and implementing policies that will take this country and its rakyat forward.

  7. abdul karim tarmizi permalink
    June 5, 2010 10:15 am

    assmuallaikum, interesting reading again your articulations of the trial and tribulations being faced by our Prime Minister currently. i would just like to address one issue with regard to the Idris Jala expose on the impact of the subsidy system currently prevailing.
    There is no question that the subsidy system currently prevailing is totally unjust. It is a system that just benefit the rich and midle class and the poor still gets a raw deal. Subsidy system exists everythere in this world. It is a policy instrument for some form of economic incentives and affirmative action program to help the poor. In some it is for strategic security reason. eg Japanese govt subsidising its padi farmers.
    Essentially it is a universal economic policy. But in Malaysia it is sometime even been clouded by insinuations of helping a particular race while in actual fact the complaining race are the one who really benefits from the scheme.
    And with Idris Jala alarmist straight talking presentation further confusion is added.
    Idris jala presentation totally ignore the unique nature of our public finance bookeeping. In the Mahathir era in his quest to speed up the process of modernization he has cleverly crafted a public finance system that bypass the scrutiny requirements of the constitution. This creation of GLC”s, Petronas, etc is a way whereby direct Parliementry scrutiny is avoided and perhaps avoid the role of civil servants in running this country. As a result a lot of Govt revenue and expenses are not part and parcel of budget scrutiny. The humongous assets of the govt. access to cash flow and billions of investments are not being accounted as part of the Govt balance Sheet. If any accounting of these nonbudgetary entities at most in the Parlimenetary approved Budget is in the seed money in their creation. eg. Petronas started with a $10 million budget from the Govt.
    But today Petronas is worth hundreds of billions and can be more. It is richer than the govt. that is why rating agencies gives its corporate bond issues a higher rating than even govt bonds. Petronas is just an example. there are so many others.
    what i am alluding to is the ratios and amounts of debts, etc refferred to by Idris Jala is with respect to the normal cashflow balance sheet of the govt. it excludes the other potential assets and investments that is being represented by these many huge govt investments. I mean petronas profits is equivalent to 20% of our GNP.
    So when IJ say bankcrupt, i think it is a bit of an alarmist call.
    In fact a lot of Govt statistics do not portray the correct picture. When we say the govt budgetary deficit is 8 or whatever it is of GNP it only measures Govt. direct revenue and expenditure. But if we include all these cashflows and income from these other govt agencies, it is a different story. 8% of our GNP of say $500 billion is $40 billion. That is the so call deficit today. Well if govt incorporattes Petronas $40 billion profit in its accounts such a deficit in the govt accounts becomes zero. Malaysian govt looks good is not it. But todays accounting is not as such. Fortunately for Petronas they keep all past and future profits may be not all but a good portion of it. Their credit ratings goes up but we in Malaysia debate mindlesslly about the country becoming bankcrupt etc.

    The crux is there are many contributing factors withn regard to the deficit in goverment
    fiscal position. Do not overplay the issues of subsidy as a major contributor. It will dilute the importance of subsidies as an important instrument of govt policy to address many economic inbalances in the country. It is now doomed as a sinful economic word. Not realising it is a key instrument of policy by every single country in this world. Be it communist countries (China) and USA the capitalist country.
    what is wrong is the system of subsidy. It is not progressive. Essentially it enrich the middle and capitralist class. That must be resolved.
    I list here some key areas that we can look at. Petrol and power. Who really benefits. The poor farmer or working class does not consume as much as the middle class and the rich. The kampung folks do not have airconditioning in their house. The rich have 20 aircond and 20 huge cars in the garage but they pay the same tarriff.
    To make it worst those franchised for generating power are further subsidised by grandiose IPP rates and further subsidised feedstock prices. One company can even proudly unashamely announced that it has $15 billion in the till by portraying how effecient its business entity is. But they forget to mention the lucrative rates they have and worst they are the ones talking about CSR(Corporate Responsibility Program). They are not qualified to talk about it for they fleece from the people the billions. Their returns are abnormal.
    Our subsidy system must be totally overhauled. It must be structured that the benefits goes direct to the raakyat. If we want padi farmers to have a better standard of living, pay them direct incentives. Pay them more for their toil. if they produce more then give them more direct subsidy.
    if someone want to have 20 air cond in the house, then they must pay punitive electricity bills because the fact they have 20 air cond. they can afford.
    Study the system but not resolve it by cutting this or that.
    in these matters both sides of the political divide are playing politics again. nothing constructive coming from the opposition about the subsidy system . i know why. they are just waiting for the govt to make one false move and make a political capital out of it. eg the way Pakatan handle the GST.
    It is time for Pakatan thinkers to sit down and prepare proper economic and social master plan and blueprint in major issues like affirmative action program, subsidies, taxation etc etc. Today all i can see including articles written your goodself YB Dr zulkifli are purely responding in a manner to make political capital.
    As an opposition member of Parliement, place yourself in a position as the govt. Prepare your blueprints. Not playing politics. Where are your policies and programs. That has been your pakatan biggest failure.
    You are no different fromn the current bunch running the country. i shudder to think about the choice i have as a citizen. Given Pakatan hypocritical non racial stance about issues that is just a vote getting exercise. i think with the realities the country faces today, Najib perhaps is more pragmatic and realistic to ensure a peaceful future on balance in this country.

  8. Joe A permalink
    June 6, 2010 3:02 pm

    Dear Dr Dzul

    Something is in the air. Sports betting license reissued, KTM land in Singapore to be developed, RM 50B takeover of all Toll operators, Subsidies reduction being considered et and all this within a few months. Why this sudden happenings. As you pointed out, Najib and Co are hard pressed . Cronisim is still very strong. Next, maybe sell Langkawi or other islands to US / Singapore . Anything is possible in Malaysia now. Malaysia Boleh.
    Thanks for insight, Dr Dzul. Regards

  9. Black Arrow permalink
    June 7, 2010 5:31 am

    Najib is not a visionary leader. He is just bungling along.

    An elderly taxi driver told me that Najib is clever with short forms only but there’s little substance.

    This may sound like I’m plugging for Pakatan Rakyat but I dare say that Pakatan Rakyat has better economists.

    The blueprint for the economy is in a book entitled Democratising Malaysia’s Economy which is published by DAP.

    I look forward to Pakatan Rakyat taking over Putrajaya because Pakatan Rakyat has the better administrators, e.g. Penang is quite well-governed given the short time-span that Pakatan Rakyat is the state government in Penang. Perak, under Nizar’s short tenure as Menteri Besar also did well. The Auditor-General’s report did commend them for a job well done.

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