Thursday, March 16, 2017

Don't “thank” the Domestic Trade Minister for raising sugar prices by “only 11 sen” - facts proved that the BN Government has allowed Malaysia’s sugar duopoly to make super-profits over the past 2 years

Two days ago, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hamzah Zainuddin said Malaysians should be thankful for the minimal hike in sugar price.  He said the hike, at only 3.8%, was minor compared with what was proposed.

This followed the ministry’s recent announcement that the new price of coarse granulated white sugar from March 1 onwards was RM2.95 per kg, up from the previous RM2.84.

“In fact, when we did the calculation, the millers had been asking us to increase the price to RM3.20, which is a jump of 40 sen. But from our calculation, we took the average and set it at the minimum of 11 sen,” he told reporters at the Dewan Rakyat.

“Malaysians should thank me instead of being angry with me,” Hamzah said.

An arrogant statement like that by the Minister is an open invitation for a fact-check.  In keeping with the current fad of “fact-checks” as epitomised by Malaysia Communications and Multimedia Commission’s (MCMC) “Sebenarnya” portal, I dug up the historical prices of global raw sugar prices, Malaysia government’s “Long-Term Contracts” (LTC) for raw sugar supply, our historical subsidies for processed white sugar and the Manufacturer’s white sugar price (before subsidy). (Please refer to table attached.)

Prior to 2015, Malaysia’s two sole sugar manufacturers purchased raw sugar via Malaysia government’s LTC for imported raw sugar supply.  For 2009-2011, the fixed raw sugar price was US$17.50 per 100lbs, while for 2012-2014, the price per 100lbs was US$26.00.

The LTC raw sugar purchasing system was subsequently abolished and manufacturers purchased import their raw sugar supply directly based on global market raw sugar prices.

I have also calculated the Manufacturer’s white sugar price, which is the sum of retail white sugar price plus any subsidy paid by the Government.  This will be the price that the two manufacturers receive per kilogram of sugar sold.

Very simply, I put the manufacturer’s raw sugar purchasing price and the processed sugar selling price historical trends from 2010 to date together in a single chart as shown in Chart A below.

The Chart itself speaks a thousand words.

Between January 2012 to December 2014, the manufacturer’s raw sugar supply price was US$26 per 100lbs.  They could sell processed sugar at RM2.84/kg and had no problems making a profit.

The question that needs to be asked is, today, the global market raw sugar price is approximately US$18.16 per 100lbs, why is it that the BN government see it fit to further increase the retail sugar price to RM2.95/kg?

Even after accounting for the differences in exchange rate over the period of time, the price of sugar should have been reduced, and not increased!

Chart A:


Worse, if you look at the raw sugar supply price in 2015, it dipped for the manufacturers immediately from US$26 in December 2014 to US$15.06 in January 2015, and further to a low of only US$10.67 in August 2015, why did the Government allow the manufacturers to continue making astronomical profits at RM2.84/kg?

Why hadn’t the Government reduced the price of sugar drastically in 2015 when the raw sugar supply price hit rock bottom?  As a comparison, even when the manufacturers bought raw sugar for US$17.50 prior between 2009 and 2011, the manufacturer’s sugar price was only between RM2.05 and RM2.50.

The data proved beyond doubt that there is absolutely no need for Malaysians to “thank” the Domestic Trade Minister as demanded by Dato’ Seri Hamzah Zainuddin.  Instead, Malaysians should perhaps be cursing and swearing at the Minister and the BN Government for stupidly (or perhaps intentionally) allowing the two Malaysian sugar manufacturers for profiteering via a Government-imposed selling price at the expense of ordinary suffering Malaysians.

We call upon the Government to not only withdraw the recent price hike of 11 sen for the retail price of sugar, but instead further lower the ceiling price from RM2.84/kg to reflect the substantially lower global price of raw sugar over the past 2 years.  This should be done immediately without any compensation or subsidies paid to the manufacturers.

Wednesday, March 15, 2017

Finance Minister’s convoluted answer on MoF takeover of 1MDB’s real estate assets was a blatant attempt to mask at least a RM3.2 billion bailout

I had submitted a question last week to the Finance Minister, Dato’ Seri Najib Razak which only required a simple straightforward, possibly 2-sentence answer.  I have asked the Finance Minister to “list the 1MDB real estate assets taken over by the Ministry of Finance (MoF) and the consideration paid for them”.

More importantly, I asked “did MoF take over the borrowings associated with these assets including, the RM800 million from SOCSO and RM2.4 billion in sukuk bonds”.  This question only required a simple “yes or no” reply, with the total borrowings assumed by the MoF, if any.

What I received was a long grandmother story which tried to obviously obfuscate the answer.

The Finance Minister tried to pin the blame or responsibility for the take over of assets on the Public Accounts Committee (PAC).  The PAC had indeed recommended that the MoF takeover these assets and I have no problems with that.
Anak-anak syarikat dan aset milik kumpulan 1MDB (TRX, Bandar Malaysia, tanah Air Itam, tanah Pulau Indah) seharusnya diserahkan kepada MKD, supaya dapat dikawal selia dan diuruskan dengan lebih rapi dan teliti. (pg 106)

To the second part of my question, again he shifted to responsibility to the PAC by quoting page 81 of the PAC report which stated that
…pinjaman SOCSO sebanyak RM800 juta oleh TRX City Sdn Bhd dan sukuk sebanyak RM2.4 bilion oleh Bandar Malaysia Sdn Bhd akan diuruskan, di mana ia akan kekal ditanggung oleh aliran tunai projek TRX dan projek Bandar Malaysia.

That was a most blatant slight of hand, and I actually had to double-check my own copy of the PAC Report because I didn’t recall any such recommendations. My memory certainly did not fail me because the statement on pg 81 was actually the proposal submitted by 1MDB to the PAC and not, a recommendation by the PAC!


However, while Dato’ Seri Najib Razak did not explicitly say “yes” or “no” to the above question, it is now clear as day that the MoF has effectively bailed out 1MDB to the tune of RM3.2 billion by taking over these debts!

It also meant that the Second Finance Minister, Dato’ Seri Abdul Johari Ghani’s prior insistence to the media that there was no taking over of 1MDB debts planned over the assets takeover was a blatant lie.

Malaysians are being raped two-times over the above transaction because these pieces of land were “sold” to 1MDB by the MoF at bargain basement prices.  The land for the 70-acre TRX was priced at RM64 per square feet (psf) for a total of RM194 million, while the 486-acre Bandar Malaysia was at RM72psf for a total of RM1.67 billion.

However, 1MDB has already sold parts of TRX to Tabung Haji and Armed Forces Pension Fund-owned Affin Bank for more than RM2,700 and RM4,500psf.  In total, 30.5 acre of TRX was sold for approximately RM3.5 billion.  At the same time 40% of Bandar Malaysia has been sold for more than RM1,000psf.  The proceeds of these sale has already gone into the pockets of 1MDB to service its mountain of debt unrelated to its property division.

Hence we were screwed first time when we practically gave the super-prime land to 1MDB for free, allowing 1MDB to blindly profit for billions of ringgit.  We are now screwed the second time, when MoF takes back the balance of the assets from 1MDB, now attached with a mega RM3.2 billion debt.

Malaysians can now understand why former Second Finance Minister, Dato’ Seri Husni Hanadzlah decided to quit the Cabinet.  The brazen bailout horrors which are taking place today are just mind-blowing – and the above refers only to the real estate transactions.

No Minister with an iota of integrity or credibility would want to remain in this Cabinet, bent on using billions of ringgit of tax-payers’ money to cover up the single largest kleptocratic crime by the Najib administration.

Tuesday, March 14, 2017

1MDB Chairman, Tan Sri Irwan Serigar must answer as to why his fellow Directors are so tardy in making urgent and critical decisions on the financial audit of scandal-ridden 1MDB

The last audited financial statements filed by 1MDB was for the accounts for the year-ending March 2014.  1MDB has failed to file their financial statements for 2 consecutive years, March 2015 and March 2016 which were due to by October 2015 and 2016 respectively.

Even so, Deloitte Malaysia has since July last year, withdrawn its endorsements for the financial statements of March 2013 and 2014.  At the same time, the disgraced audit firm announced that it had resigned as the auditors of 1MDB as at February 2016.

The new auditors, Parker Randall, which is operated locally by a four-partner Afrizan Tarmili Khairul Azhar (aftaas) was appointed in January this year.

I had asked in my parliamentary question to the Finance Minister last week as to whether Parker Randall will re-audit the 1MDB financial statements for March 2013 and 2014.

The Minister of Finance responded that the Board of Directors will make a decision on the above on “after further discussions with the new auditor”.

The reply also stated that the last time the Board of Directors met to discuss the implications of the US Department of Justice asset-seizure kleptocracy suit was prior to 26 July 2016 when 1MDB had issued a press statement.

Malaysians are shocked that for exactly 1 year after Treasurer-General, Tan Sri Irwan Serigar took over the 1MDB Chairmanship from the disgraced Tan Sri Lodin Wok Kamaruddin, the Board of Directors had basically sat on their backsides and demonstrated little or no urgency over the 1MDB fiasco.

Allegations and evidence have been produced and made available globally by the US Department of Justice which showed that more than US$5 billion have been misappropriation from 1MDB and laundered around the world and yet our Treasurer-General acts as if it is no big deal.  These allegations and evidence have been supported since by court prosecutions which took place in Singapore and Switzerland against banks which had facilitated the money-laundering transactions.

Worse, it has also been discovered that at least US$731 million from the above misappropriated sum had found its way into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.  Despite the gravity of the crime, our Treasurer-General, the most senior civil servant responsible for managing our hundreds of billions of ringgit of annual tax revenue has shown only nonchalance in the scandal.

Any auditor worth their salt would immediately tell you that they will not be able to complete a financial audit for the year without the “opening balance” or prior year accounts.  In this case, it is clear that there have been no audited and certified accounts for March 2013 and 2014 given that Deloitte has withdrawn its endorsement.

What’s more, the Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies.  It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.

The only resolution for the above matter is for the accounts for March 2013 and 2014 to be re-audited and re-stated.

Hence, what is the point of appointing Parker Randall as the new auditors if they cannot properly perform their duties? Why is the 1MDB Board of Directors dragging its feet under the chairmanship of the Treasurer-General?

We call upon Tan Sri Irwan Serigar to do what he is being paid to do by the Malaysian tax-payers properly.  He must remember that his job is to protect the integrity of his office and not to protect those who have misappropriated and stolen billions of ringgit from the Government and the people.

Monday, March 13, 2017

There’s nothing personal about a Tun Dr Mahathir – Dato’ Seri Nazri Aziz 1MDB Debate

A public spat between former Prime Minister, Tun Dr Mahathir Mohamad and the Minister of Tourism, Dato’ Seri Nazri Aziz has led to a 1MDB debate challenge which has been duly accepted by the latter.

The Tourism Minister even took a dig at his colleague, EPU Minister, Dato’ Seri Abdul Rahman Dahlan, who withdrew at the last minute after agreeing to a highly anticipated debate with the Penang Chief Minister, Lim Guan Eng.

Dato’ Seri Nazri said he would not budge. "Why should I? I am Nazri Aziz, you should know me better, I am not Rahman Dahlan," he told Malaysiakini when contacted.

The Minister’s bravado has apparently put the Najib Cabinet in a panic mode as the debate on 1MDB has been a subject matter which they have taken great pains to hide and cover up.

Even 1MDB CEO, Arul Kanda withdrew from a debate with me last year, after accepting a similar challenge with much bravado – holding a press conference in a hotel to say “Bring it on!”

They are so worried about the negative fallout for the Najib administration that Finance Minister II, Dato’ Seri Johari Abdul Ghani had to declare that the proposed debate between Tun Dr Mahathir and Dato’ Seri Nazri had “nothing to do” with the Government.


How ridiculous is it for the Finance Minister II to claim that the RM50 billion corruption scandal has “nothing to do” with the Government?

The 1MDB debate has everything to do with the Government, and in particular the Prime Minister, Dato’ Seri Najib Razak.  The latter, who is also Finance Minister I, has been found to have received US$731 million which had originated from 1MDB based on the documents and evidence produced by the United States Department of Justice (US DOJ).  The 1MDB scandal has made Malaysia the kleptocratic capital of the world and put Malaysians to shame.

In fact, it is shocking that to date, since the US DOJ filed the suit to seize assets acquired with money laundered from 1MDB in July 2016, Dato’ Seri Najib Razak has not once denied the allegations that he has received the US$731 million misappropriated from 1MDB.

Dato’ Seri Johari Abdul Ghani tried to argue that the matter had purportedly already been “debated extensively in Parliament”.

He told the reporters that “the report that (was) prepared by the auditor general, (the) public accounts committee (PAC), have been deliberated extensively in Parliament, all questions have been answered in Parliament.”

However, the Finance Minister II failed to also clarify that the Parliament Speaker has forbidden any answers on questions relating to the 1MDB US DOJ suit, preposterously claiming “subjudice”.  At the same time, the then newly appointed PAC Chairman, Dato’ Hasan Arifin took pains to unilaterally make amendments to the PAC Report and refused any attempts during the meetings to investigate links between the scandal and the Prime Minister.  Worse, if all questions on 1MDB has allegedly been answered, then why is the Cabinet hiding the Auditor-General’s Report under the Official Secrets Act (OSA)?

Even the Finance Minister II himself failed to answer questions raised in Parliament on the scandal during the last sitting.

Hence with the utter failure of the Parliament, the next best thing Malaysians can hope for to gain the truth is via a debate. And one between the former premier and one of the harshest critic of the Najib administration, versus one of the most senior Minister’s in Najib’s cabinet could not have come at a better time.

In fact, if the Government has nothing to hide, we call upon the Cabinet to insist that the debate be broadcast live on RTM or TV3, for there could not be a better opportunity for the Najib administration to destroy the opposition’s allegations on 1MDB and clear its tainted reputation.

Friday, March 03, 2017

Dato’ Seri Abdul Rahman Dahlan failed to convince anyone that he has not abused his powers to benefit developers while he was the Housing Minister

Dato’ Seri Abdul Rahman Dahlan has been embroiled in the controversy of granting an extension of time (EOT) for the construction of condominium projects by BHL Group of Companies.  The former Urban Well-Being, Housing and Local Government (KPKT) Minister’s move has resulted in the house-buyers failing to secure Liquidated and Ascertained Damages (LAD) from the developer as stipulated in the Sale and Purchase Agreements (SPAs).

The aggrieved house-buyers have filed a judicial review against the Housing Controller and the Minister for the above decision last year.

Last Tuesday, the High Court ruled that the Housing Controller has no power to grant an extension of time to developers who delay the completion of housing projects.  Justice Hanipah Farikullah, who allowed the judicial review application by 71 house buyers, said the minister’s decision to rely on a regulation to allow the extension was against the Housing Development (Control & Licensing) Act.

We have called upon Dato’ Seri Rahman Dahlan to explain why he abused his powers to benefit the developers who have failed to deliver their projects on a timely basis for the house-buyers.

Worse, it has been discovered that the appeal by BHL approved by the Minister was supported by a letter from the wife of the Attorney-General, Tan Sri Apandi Ali, masquerading as a Director of the company.  The existence of the letter raises valid suspicions of bias, cronyism and impropriety.

Yesterday, the former Minister, Dato’ Seri Abdul Rahman Dahlan denied that he has abused his power in the process.



"The decision I took was based on the powers clearly given to KPKT minister as stated in Act 118 (Housing Development (Control and Licensing) Act 1966)," he said.  He added that the decision in granting EOT was based on merit and was not influenced by support letters.

However, the Court ruling has stated clearly that the Minister has no power under Section 24 of the Housing and Development (Control and Licensing) Act, to empower housing controllers to waive or change any of the terms and conditions of the prescribed statutory agreement.  What “power” is the Minister harping about?

What is however most important, is the fact that Dato’ Seri Rahman Dahlan had insisted that his decision was based on the “merits” of the case.  However, in his statement, the Minister failed to specify even a single instance of such a “merit” to justify his decision which had rubbed salt onto the wounds of the house-buyers.

What could be so convincing and justifiable in the appeal by the developer, other than the fact that it was put forth by the wife of the Attorney-General, which moved the Minister to arbitrarily extend the completion date of the housing project by 12 months resulting in millions of ringgit of losses by the house-buyers?

Among the primary roles of the Minister is to safeguard the interest of Malaysian home-buyers against incompetent and unscrupulous developers.  Barring perhaps acts of God, the Minister should never interfere in a transaction, especially if it were to clearly result in substantial losses to the house-buyers.

Instead of granting approvals for extensions to Developers and penalising house-buyers, the Minister should have instead given warnings to the Developers that the Government will not hesitate to assist home-buyers in asserting their rights should the former fail to deliver their promises.

Sunday, February 12, 2017

Move to allow petrol companies and kiosks to compete will benefit consumers and is long overdue

Bernama reported last week that the Second Finance Minister, Dato’ Seri Johari Abdul Ghani said the government is studying the option of setting a ceiling price for petrol in view of the escalating cost of fuel.

He added that "It is up to the government to set a ceiling which is deemed fair for all. When the government has decided on the ceiling price, whether they (O&G industry players) want to sell the oil at lower prices for promotional purposes, we leave it to them.”

We fully welcome the above move as it is long overdue. Malaysians do not understand why petrol companies in Malaysia are not allowed to sell petrol prices at lower prices when they could see how kiosks in Thailand or Singapore can compete and lower pump prices.

When I asked the above question in Parliament several times, the only response I had once in 2009 from the then Deputy Minister of Domestic Trade and Industry, Datuk Tan Lian Hoe was that allowing petrol stations to compete with different prices “would confuse consumers”.  It appears that Malaysians consumers are much more easily confused compared to our overseas counterparts.

We can understand if the Government sets a maximum price these companies can sell petrol so that Malaysians will not be unfairly over-charged.  But we don't see the logic of not allowing the companies to compete and transfer their cost efficiencies to us via lower fuel prices. This is especially since the Government has already abolished fuel subsidy more than a year ago.

The only reason we could think of was that the Government is merely trying to protect the weaker players at the expense of the consumers.

As publicly discussed over the past weeks over the fuel price hikes, the petrol price is calculated based on the average monthly price of refined fuel as measured by Means of Platt Singapore (MOPS). However, petrol companies don't purchase their fuel at these “average” prices. They will all try, with varying degrees of success to acquire their supply of petrol at the lowest possible price during the month or even the year.

In addition, some petrol companies are obviously more efficient than others and have lower operating and investment costs.

Therefore, why shouldn't these companies who purchase their stock at cheaper prices and are more cost-efficient be allowed to pass on some of their savings to long-suffering Malaysians?

Hence we call upon Dato' Seri Johari Abdul Ghani to free up the competition as soon as possible and not wait until petrol prices go up further in the coming months.

In fact, under the new regime, the competition between petrol companies and kiosks must be regulated under the Competition Act by the Competition Commission of Malaysia. This is to ensure that there will be a level playing field and the petrol companies and kiosks will not collude to fix prices at the expense of ordinary consumers.

Saturday, February 11, 2017

Instead of making the Ministry of Communications and Multimedia the bastion of truth and integrity, Datuk Seri Salleh Keruak has made it the Ministry of Fake News and Miscommunications

There cannot be greater irony when the Minister of Communications and Multimedia, Datuk Seri Salleh Keruak warned in his blog exactly a month ago against posting “fake news”:
I’ve said this before and I will say it again – verify before you vilify your source of news information. It is very unfortunate to know that many people still cling on to mistaken beliefs and theories that could even be decades old!  
Fabricated news stories and irresponsible online news sources spread misinformation in order to mislead and/or make money when others click on the site or article. This makes fake news much more insidious than real news.  
According to an analysis by BuzzFeed, a leading independent digital media company, hoaxes about the US politics were among the top-performing fake news content on Facebook in 2016. BuzzFeed News Media Editor, Craig Silverman said that twenty-three of the 50 top-performing fake news hoaxes found on Facebook, were focused on US politics.

However, the Minister seems to have picked up a different lesson from the above analysis that he cited.  It appears that the prevalence and popularity of “fake news” which helped President Trump with the American elections is the exact approach he would take to help Dato’ Seri Najib Razak defend his kleptocratic administration.

Two days ago, I have countered Datuk Seri Salleh’s attempt to shrivel 1MDB’s scandal into a peanut-sized RM1 million.  The Minister even presented the alternative fact that 1MDB was in possession of RM51 billion in assets and hence is a healthy “going concern”.

I’ve detailed the Auditor-General’s findings that the Federal Government has guaranteed, directly and indirectly, RM39.8 billion of 1MDB’s monster debts of which the Ministry of Finance wholly-owned subsidiary has no ability to repay.

I’ve also cited the fact that even 1MDB’s auditors, Deloitte have renounced the 1MDB March 2013 financial statements which provided the RM51 billion asset figure.  This was after various international agencies, including the US Department of Justice (DOJ) provided documents demonstrating that at least US$5.6 billion have been stolen and laundered from 1MDB via fraudulent transfers and fake companies.

Despite the Minister’s normally quick responses, Datuk Seri Salleh Keruak has failed to respond to the cited facts, much less provided any shred of evidence to counter the allegations.

Instead, the above only proved that the Minister has corrupted his position to become the official Ministry of Fake News and Miscommunications, consistent with many of his earlier statements defending the indefensible Prime Minister and 1MDB.

The award of the fakest news of all perpetrated by Datuk Seri Salleh Keruak has to be his continued insistence, even after the mountain of evidence presented by the US DOJ on US$731 million finding its way into Dato’ Seri Najib Razak’s personal bank account in Ambank, that “after comprehensive investigations by many authorities, it has been confirmed that the funds were a donation from the Royal Family of Saudi Arabia”.

The problem is, Datuk Seri Salleh Keruak is learning from the best, Nazi Hitler who wrote, “Make the lie big, make it simple, keep saying it, and eventually they will believe it.”  The Minister presented not an iota of proof to continue asserting that the siphoned funds actually originated from “the Royal Family of Saudi Arabia”.

It is the sacred task and duty of all right-thinking Malaysians to stand up for the truth and defeat the ‘big lies’ of the Najib administration to protect our country from crooked dictators, and ensure that our children do not pay for our indifference.

Thursday, February 09, 2017

Unlike DAP Parliamentary Leader Lim Kit Siang who believed that Dato’ Seri Salleh Keruak could be tutored by me on 1MDB, I believe that the Minister is untutorable because he can’t count

DAP Parliamentary Leader Lim Kit Siang asked me to tutor Dato’ Seri Salleh Keruak on 1MDB yesterday. This was in response to the Communicatioarns and Multimedia Minister’s incredible claim yesterday that the 1MDB scandal is only a puny RM1 million scandal compared to the BMF RM2.5 billion scandal.

I really would, if I could.

I now believe that the Minister is actually untutorable because he really cannot count nor understand simple accounting fundamentals.

This was after he insisted yesterday that he didn’t need any tutoring, that “1MDB's start-up capital was only RM1 million” and that debt-stricken company has “RM51 billion worth of assets to show for it plus ongoing development for the next couple of decades.”

Unfortunately, Dato’ Seri Salleh Keruak is spinning a story that even the CEO for 1MDB, Arul Kanda has stopped spinning since a year ago.  And it only goes to prove that he really doesn’t know what he is talking about.

Firstly, while the Government did inject only RM1 million in cash into 1MDB, that Government has provided direct and indirect guarantees to various lenders from whom 1MDB borrowed RM5.8 billion and US$7.73 billion (RM3.4bn), or a total of approximately RM39.8 billion.  The amounts, which have been verified by the Auditor-General as disclosed in the Public Accounts Committee Report on 1MDB included:
  • RM5.0bn – 30-year bond guaranteed by the Federal Government (2009)
  • RM0.8bn – 10-year loan from SOCSO guaranteed by the Federal Government (2010)
  • US$3.5bn –10-year bond guaranteed by IPIC, Abu Dhabi but indemnified by MOF Inc (2012)
  • US$3.0bn – 10-year bond backed by a “Letter of Support” signed by the Minister of Finance which effectively guaranteed the debt (2013)
  • US$1.0bn – Advance by IPIC to 1MDB, indemnified by MOF Inc (2015)
  • US$0.23j– Advance interest payments by IPIC on behalf of 1MDB, indemnified by MOF Inc (2015/6)

All the indemnities, direct and indirect guarantees above mean that should 1MDB fail to pay the above, then the Federal Government of Malaysia, funded by ordinary tax-payers are liable to pay for the RM39.8 billion of 1MDB borrowings.

The above does not yet include additional billions of borrowings by 1MDB which are not officially guaranteed by the Federal Government.  If Salleh Keruak doesn’t trust me or the Auditor-General with the above figures, he could perhaps request for tuition from Arul Kanda instead.

The question is, does 1MDB really have “RM51 billion worth of assets”, a figure Arul Kanda no longer cites and worse, a figure that 1MDB’s own auditors have publicly renounced, to pare down its debts?

Has Dato’ Seri Salleh Keruak completely forgotten the fact that much of the RM51 billion worth of assets have either been sold (at a loss) or worse, been proven to be misappropriated by the investigations published in the United States, Switzerland and Singapore?

The documents which have surfaced since the international scandal broke showed the following sums have been outrightly siphoned from 1MDB:

  • US$1.83bn – Investment in or with Petrosaudi, which was mostly misappropriated to Good Star Limited, a company owned by Jho Low (2009-2011)
  • US$1.367bn – Purported “deposit” paid a fraudulent Aabar set up in the British Virgin Islands (BVI) which has since been liquidated (2012)
  • US$0.855bn – Additional “deposit” paid to the same fraudulent Aabar in 2014
  • US$1.56bn – Investment by 1MDB “Global Investment” in fraudulent investment funds (2013)

The total of funds misappropriated and hence completely lost, amounts to US$5.612 billion or approximately RM24.7 billion!  These losses do not yet include losses arising from 1MDB various “real” business transactions like the acquisition of power plants and real estate, astronomical fees paid to Goldman Sachs etc.

And despite all of the above, Dato’ Seri Salleh Keruak still deemed 1MDB “a going concern”.  The Minister obviously do not understand what is the meaning of “a going concern”.  Does he not realise that 1MDB no longer has any income sources despite remaining tens of billions of ringgit in debt?  Even Deloitte has given up auditing the company, and 1MDB itself has failed to produce a single financial statement since March 2013.

I sincerely hope that Dato’ Seri Salleh Keruak is merely pretending to be stupid.  Because if he is really that stupid, then even Arul Kanda would give up on him.  In fact, the 1MDB CEO might just prefer that the Minister keeps his mouth shut to save himself, BN, 1MDB and the Government further outrageous embarrassment.

Thursday, February 02, 2017

No clarity, more obfuscation: BN Strategic Communications Team's lengthy answer on how the Government arrived at a painful 20 sen hike for February petrol prices

I had issued a statement yesterday demanding that Dato’ Seri Najib Razak explain exactly how the Government arrived at a painful 20 sen increase for petrol prices.

RON95 and RON97 prices went up by 20 sen to RM2.30 (9.5%) and RM2.60 (8.3%) respectively while diesel cost went up by 10 sen to RM2.15 (4.9%).

This follows from the already big hike Malaysians have experienced since January where all types of fuel already increased in price by 20 sen.

Malaysians deserve a straightforward answer from the Government because they cannot fathom why the prices of fuel was upped significantly even though global crude oil prices have declined over the past month. What’s more, the beleaguered Ringgit actually recovered marginally which should ease the price pressures further.

Instead of receiving any response from any responsible Minister, much less the Finance and Prime Minister, we got a reply from the “BN Strategic Communications Team”. We don't know who they are, or even know what is their capacity to respond on behalf of the Government.

Regardless, taking their response at face value, they failed to provide any clarity on how the Government arrived at the painful 20 sen quantum of hike. If they could write such a lengthy essay to rebut my simple question, why couldn't they just attach the spreadsheet to justify the increase?

It explained that the pump prices was calculated from the average refined oil prices as measured by the “Singapore Means of Platts” (MOPS), which is already a widely acknowledged fact.

However, all that was further relevant from the statement was a paragraph which said, “a check on the MOPS would show that the average price of motor gasoline 95 unleaded for January had stabilised in a range of US$69 to US$70 per barrel and was materially higher than the average price in December 2016 where the price had steadily increased from US$62 at the beginning of the month to US$68 by December’s end.”

If the BN Strategic Communications Team is so confident of the numbers, why did they try to obfuscate the statistics with a fuzzy range of numbers, instead of just providing the specifics to justify the 20 sen hike?

I did the BN Strategic Communications Team a favour by doing the calculation on their behalf.

The average MOPS95 price for December 2016 is US$66.553 per barrel or US$0.4186 per liter. That works out to RM1.8753 per liter at the then exchange rate of US$1:RM4.48.

MOPS95 averaged slightly higher at US$68.820 per barrel or US$0.4328 per liter in January.  In turn, it translates to RM1.9130 per liter (US$1:RM4.42).

Hence based on the exact explanation provided by the BN Strategic Communications Team, the difference in price is only 3.8 sen more for January.

If so, why did the Government increase by so much more at 20 sen?

Therefore, my question raised yesterday remains unanswered, and Dato’ Seri Najib Razak, as both the Finance and Prime Minister, must explain why the price of petrol has increased so significantly despite the above.

The Ministry of Finance must disclose if the Government is actually imposing hidden taxes on the consumers to cover up for Government budget shortfalls.

Once again, we call for the full disclosure of the data, formula and exact details on how the fuel price hikes are calculated so that Malaysians know exactly why they have been forced to suffer as a result of the Government’s policies.

Tuesday, January 31, 2017

Dato’ Seri Najib Razak must explain why the price of petrol increased so drastically despite international crude oil prices having fallen slightly in January

Malaysians of all races returning from the Chinese New Year holidays received a shock when Dato’ Seri Najib Razak presented them with a big “ang pow”, a big hike in fuel prices.  RON95 and RON97 prices went up by 20 sen to RM2.30 (9.5%) and RM2.60 (8.3%) respectively while diesel cost went up by 10 sen to RM2.15 (4.9%).

This follows from the already big hike Malaysians have experienced since January where all types of fuel already increased in price by 20 sen.

While it was painful, Malaysians could perhaps have understood when fuel prices went up for January.  It was as a result of an increase in global crude oil prices for the month of December.  Brent crude prices went up from US$51.48 to US$56.73 in December 2016.

However, Malaysians cannot understand why the prices were increased for February when the Brent crude price actually declined slightly in January to approximately US$55.86.

Even when we try to second guess that perhaps it’s due to the ringgit depreciation, it also doesn’t add up.

In December 2016, the ringgit depreciated from RM4.38 to RM4.48 for every US Dollar.  However, for January 2017, the ringgit is currently trading at approximately RM4.42 to the dollar, which means it has strengthened marginally for the month.

Therefore, the increase in fuel prices cannot be as a result of any increase in crude oil prices or further depreciation of the ringgit.


Hence Dato’ Seri Najib Razak, as both the Finance and Prime Minister, must explain why the price of petrol has increased so significantly despite the above.

The Ministry of Finance must disclose if the Government is actually imposing hidden taxes on the consumers to cover up for Government budget shortfalls?

Barely a week ago, Dato’ Seri Najib Razak said he did not want a situation where ministries use excuses, like “not enough budget” to not implement people-oriented projects.  “Not receiving money or not enough budget should not be an excuse for any operating ministries to not start a project or programme,” he added.

If the above the reason for the hefty hike in fuel prices so that the people are forced to pay for the so-called “people-oriented projects”, so that the Najib-BN administration can claim credit?

We call for the full disclosure of the data, formula and exact details on how the fuel price hikes are calculated so that Malaysians know exactly why they have been forced to suffer as a result of the Government’s policies.

Saturday, January 14, 2017

Ministry of Finance plans to wind down 1MDB by taking over 1MDB’s assets, but how much, Dato’ Seri Johari Abdul Ghani?

In a series of announcement since the middle of 2016, the Ministry of Finance has announced that it is slowing taking over all the real estate projects from debt-stricken and scandal-ridden 1MDB.

The Wall Street Journal has already reported in June last year that the Ministry of Finance (MoF) has signed a shareholder agreement that will see the ministry take over 1MDB's stake in the Bandar Malaysia development project.

The agreement will see MoF hold a 40% stake in Bandar Malaysia Sdn Bhd, the joint-venture company that will develop the 486-acre site of the former Sungai Besi Royal Malaysian Air Force base.  The remainder of the 60% stake has been sold to a joint venture between Iskandar Waterfront Holdings Bhd and China Railway Engineering Corp.

Last month, the Second Finance Minister, Dato’ Seri Johari Abdul Ghari told The Malaysian Reserve that "Tun Razak Exchange (TRX) is now taken over by the MoF and we are going to complete the entire project. We will complete it.  We will have to finish it. Otherwise, we will have to leave it to 1MDB and they will never be able to do it."

Yesterday, the Minister confirmed to Malaysiakini that 1MDB is winding down with the disposal or transfer of its assets to MoF.  "It is not winding up but it is in run-off operation. We don't conduct any new business.  We can't wind up the company until all the debts are settled and amounts due from disposal of assets are collected," Dato’ Seri Johari said.

At the surface, all appears well and good.  However, the big question to ask is, how much of 1MDB’s liabilities is the MoF taking over?  The Government must not quietly mask a multi-billion ringgit bailout of 1MDB with the innocuous announcements that the MoF is taking over 1MDB’s key assets in Bandar Malaysia and TRX.


Has the Government taken over Bandar Malaysia’s RM2.4 billion of sukuk bonds, of which only less than RM800 million was used for the purposes of the project while the balance of the bond proceeds was used for purposes unrelated to Bandar Malaysia?

At the same time, has the Government agreed to take over 1MDB’s RM800 million sukuk bonds borrowed from the Pension Fund (KWAP) which were meant for 1MDB’s real estate development but was instead used for other purposes?

The Government should assume any of the borrowings taken by 1MDB which have not been spent on the development of the 2 real estate projects.  Any amounts beyond that would tantamount to a backdoor multi-billion ringgit bailout of 1MDB which have lost billions from corruption and misappropriation.

What’s more, 1MDB has benefited from the sale of these 2 pieces of land after selling various parcels to third parties.  For example, despite acquiring the TRX land from the Federal Government for only RM64 per square feet, 1MDB sold TRX land to Tabung Haji and Affin Bank for more than RM2,700 and RM4,000 per square feet.   Similarly, 1MDB has sold 60% of Bandar Malaysia for a purported RM7.41 billion but acquired 100% of the land from the Federal Government for only RM1.6 billion.

Effectively, 1MDB gets to keep all of the multi-billion ringgit of astronomical profits from the sale of land it bought at bargain basement prices, while the Government is forced to absorb all the loans and liabilities incurred by 1MDB.

It becomes a triple-whammy for the people of Malaysia where (i) tax-payers funded GLCs were forced to pay sky-high prices to acquire the 1MDB land, (ii) 1MDB gets to keep all the ridiculous profits to cover up its stolen billions with none returned to MoF, while (iii) the Rakyat has to foot the bill of the billions of ringgit of loans assumed by the Ministry.

Dato’ Seri Johari Abdul Ghani must not hide the above matter from the public but instead provide full disclosure of the terms of the “take over” of the 1MDB assets and justify why and how much Malaysians will be forced to pay for the shenanigans which have taken place in 1MDB.

Wednesday, January 11, 2017

1MDB Foundation RM690 million spend: “corporate social responsibility” or reckless and irresponsible vote-buying for the BN administration?

1MDB has proudly announced that since 2010, its foundation has spent RM690 million into "worthy causes" which had benefited 2.8 million Malaysians through 60 projects in education, healthcare, youth development and community services.

"Examples of such activities can be found on the 1MDB website, ranging from Dana PIBG grants and academic grants to SPM and STPM students to academic grants for Sri Murugan Centre and Unified Examination Certificate holders, as well as Dana Belia 1Malaysia and 1Malaysia Mobile Clinics,” the company elaborated in its statement.

1MDB also emphasized that the funds were generated from “its legitimate business operations, formerly in energy production and more recently, in real estate development”.

1MDB’s generous spending in corporate social responsibility (CSR) appears to set the ultimate benchmark for all other companies to emulate.  1MDB’s statement and outsized CSR spend were clearly designed to enhance the perception of the state-owned firm as a benign and benevelont corporation, a stark contrast against its much maligned global reputation.

The only problem, and the crucial one, is that 1MDB never generated these cash from its businesses past and present.


For its “profitable” energy business, 1MDB borrowed extensively to acquire them for an overpriced RM12.1 billion.  The borrowings were so big that the profits from the energy companies were insufficient to even service the interest of the relevant loans in the group, what more the principal.

As a result, 1MDB was “forced” to sell its energy business for RM9.83 billion, suffering a huge loss of RM2.27 billion.

However, at least 1MDB’s energy business was generating productive revenue.  1MDB’s real estate business never took off for the years in question.  The land 1MDB acquired was alienated to 1MDB by the Federal Government at bargain basement prices.  The company was sold undeveloped land to Tabung Haji and the Armed Forces Pension Fund (LTAT) group, who were cajoled into buying at astronomical prices.  For example, LTAT subsidiary, Affin Bank paid RM4,500 per square feet for a piece of land in Tun Razak Exchange, when 1MDB acquired it from the Government at only RM64 per square feet.

What is vital to note is the fact that despite the sale of land at astronomical prices, 1MDB still cannot settle its outstanding debts that remains in excess of RM35 billion today.

As we have discovered via the Swiss Attorney-General Office and the United States Department of Justice, at least US$5 billion have been misappropriated from the 1MDB funds while more than US$730 million of the amount have found its way into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account in Malaysia.

Hence effectively, 1MDB wasn’t executing its CSR programmes from its cash pile arising from the company’s profits.  Instead, 1MDB was pretending to be a big profitable company, spending big on CSR via its mega-borrowings which it is now unable to service.

Worse, the burden of these loans are now dumped squarely on the shoulders of ordinary Malaysians who are forced to bailout 1MDB via the Federal Government.  In short, we Malaysians are footing the bill, with interest, the money that 1MDB has so “generously” spent on us via its CSR programmes.

This leads to the conclusion that 1MDB is not the benign and benevolent entity it sought to portray but a recklessly irresponsible one causing greater hardship on the rakyat.  And it did so with the clear intent to influence and “buy” votes for the general elections to prop up the corrupt Najib administration.

Sunday, January 08, 2017

Be it “Parker Randall” or “Afrizan Tarmili Khairul Azhar”, will new 1MDB auditors act as “independent auditors” in an objective, professional and timely manner?

Scandal-ridden 1MDB has finally appointed new auditors to replace Deloitte Malaysia who resigned since the middle of last year.  Deloitte is the 3rd audit firm which have resigned in 6 years, following Ernst & Young and KPMG.  The new 1MDB chairman, who is also the Treasurer-General, announced that “Parker Randall” appointed to the task two days ago.

A little storm was created as “Parker Randall” in Malaysia is essentially Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) with 4 partners, based in Sri Rampai, Kuala Lumpur.

As the corporate profile downloaded from the firm’s website stated, aftaas is “a member of Parker Randall International” which is an “international association of independent audit and accounting firms”.

As highlighted by Malaysiakini, each member firm of Parker Randall in each country is a separate and independent legal entity. Malaysiakini also pointed out that the 2011 ranking on the largest law and accounting firm networks ranked Parker Randall at 56 among 60.  Parker Randall also did not make the list for accountancy publication Accountancy Age's 'Top 100' survey for 2016.

However, what is ultimately most important for Malaysians isn’t the question of whether it is Parker Randall or Afrizan Tarmili Khairul Azhar carrying out the 1MDB audit.  What is of utmost importance is whether the newly appointed firm will carry out their responsibilities as “independent auditors”, and I emphasize “independent”, in an objective, professional and timely manner.


For a start, this is the perfect opportunity for aftaas to prove that they can do a better job than global giants, KPMG and Deloitte who have failed miserably in their audit of 1MDB by signing off financial statements which were at best misleading, at worst completely fraudulent.

Both KPMG and Deloitte failed to detect even a single dollar of misappropriation from 1MDB in the five financial years ending March 2010 to 2014.  We have since discovered, with confirmation from both Bank Negara Malaysia, the Switzerland Attorney-General as well as the Department of Justice of the United States that at least US$5 billion has been siphoned from 1MDB into private off-shore firms owned by Low Taek Jho, fraudulent entities masquerading as legitimate Abu Dhabi companies as well as dodgy investment funds which acted as money laundering conduits.

The Parliamentary Public Accounts Committee has also similarly provided evidence of the complicity of the 1MDB top management who signed dubious agreements and provided false information to the Board of Directors as well as the regulating agencies.

The previous auditors were so badly and disgracefully duped that Deloitte found it necessary to announce the withdrawal of their recognition of 1MDB’s March 2013 and 2014 audited accounts which they had previously signed off without any qualification.  Deloitte said that the above accounts “should no longer be relied upon”.

Hence, regardless of what the 1MDB directors and management might think, it is important for Parker Randall and/or aftaas to carry out a thorough audit of all the questionable transactions of the past where billions of dollars have been misappropriated.

Therefore, the first task by aftaas is simply to review and restate 1MDB’s 2013 and 2014 financial statements which have been withdrawn by Deloitte.  The Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies.  It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.

Following that, with the “right” opening balance determined, then aftaas can proceed to conduct the audit for March 2015 and 2016 which are both already overdue.

If aftaas fails to perform the above review and audit, they can be assured that not only their market reputation will be left in tatters in Malaysia, their international affiliation, Parker Randall – whose credibility 1MDB is banking on – will be similarly disgraced internationally and dragged through the mud.

Thursday, January 05, 2017

While blinkered Treasury-General Tan Sri Irwan Serigar continues to praise the Emperor’s new clothes, little hope of seeing meaningful changes to Malaysia’s drifting economy

The dreadful performance of the Malaysian ringgit and a listless economy under-performing its potential are not merely depressing news but have caused Malaysians plenty of pain.

And yet, the most senior civil servant in the Ministry of Finance, arguably a most powerful one, the Treasury-General insisted that all is well, and what is wrong is only “a matter of perception”.

"I go to restaurants and supermarkets, who are there? People are buying and travelling.  Some group of people are making noise as though the whole country is in trouble,” Tan Sri Irwan Serigar quipped at a press conference yesterday.

We are stunned that the Treasury-General thinks that just because there are people in restaurants and people are still visiting the supermarkets for the daily needs, everything’s fine and dandy with the economy.

Does he expect all Malaysians to be jobless and living in the streets begging for food before he would recognise that the economy is in trouble?

According to him, the plummeting of the ringgit was a short-term phenomenon that would recover in the middle-term following the measures taken by Bank Negara Malaysia (BNM).

However, isn’t that exactly what the Ministers and BNM have been telling Malaysians annually over the past 4 years as the ringgit lost more than 40% of its value against the dollar?  How can it still be a short-term problem when we are consistently the worst performer among the major regional currencies for each of the past few years?

Worse, the latest Nikkei Malaysia Purchasing Manager’s Index (PMI) clearly cited that our manufacturing production has been shrinking for 21 consecutive months, with no signs of improvement.

The PMI is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

How can Tan Sri Irwan continue to insist that all is well when our manufacturing performance is so pathetic despite the fact that our substantially depreciated currency should have made our goods so much cheaper and competitive?

The biggest shocker from the press conference however, is the fact that he believed that all the negative perception arising from the problems with the economy will be righted and vanished immediately once the media publish his “all is well and good” assurance.

He told the media to contribute to the ringgit appreciation through positive reports about the currency and economy.  "Hopefully, when you publish today's briefing, the ringgit will be strengthened," said Tan Sri Irwan.

How we Malaysians can renew our hopes on the economy when we have such a hopeless Treasury-General is beyond me.

Tan Sri Irwan Serigar’s refusal to address and resolve the issues surrounding the tens of billions of ringgit which have been siphoned from the Ministry of Finance subsidiaries, 1MDB and SRC International, which made Malaysia an infamous kleptocratic capital of the world is one thing.  After all, he is not the first person you would accuse of “cari makan”.

However, his woeful attempt to wave away our economic misery with his magic wand without recognising the problems we face and without offering any concrete measures to remedy the situation proved beyond doubt that the Najib administration is completely bankrupt of ideas.

In order to have any chance of reviving our currency and economy, the Najib administration must be replaced and there is no better time than the impending general election.

Wednesday, January 04, 2017

2017 – Relief and recovery for the Ringgit, or more pain and punishment?

While 1MDB and the Prime Minister Dato’ Seri Najib Razak’s kleptocratic scandals were unquestionably the most talked about topic for 2016, it is the Ringgit’s relentless depreciation which would have caused the most pain for ordinary Malaysians.

Over Christmas, I managed to take my family for a week’s holiday in Chiang Mai – our first since I was banned from overseas travel for allegedly taking part in “activities detrimental to parliamentary democracy” in July 2015.

One would have assumed that travelling to the “backwaters” like rural Thailand would have been easy on the pocket.  Well, in the past, trips to Thailand did make me feel “richer”.  When you walked the colourful and rambunctious street markets, you needed to exercise maximum self-restraint to prevent oneself from having to purchase additional luggage space from AirAsia because everything was “cheaper”. 

Not anymore. Now, the Baht-Ringgit exchange rate will automatically keep you disciplined.

As late as August 2014, the currencies were trading at 10 Baht to the Ringgit. Today, it’s 8 to 1. And to rub salt on the wound, the Ringgit ain’t particularly welcomed by our neighbours. 

Needless to say, if a trip to Thailand could make you feel kinda poor, a journey south to Singapore would make you feel like a destitute.  Think about it, a budget Hotel 81 room in the fringe of the city would cost you just about S$100, or RM310 per night.

Ringgit déjà vu?

So, will we get to see some desperately yearned for relief and recovery of the Ringgit this year?

Most pundits are telling us that the Ringgit is undervalued and will recover by the second half of this year.  PublicInvest Research said the Ringgit will recover to average between 4.10 and 4.15 for 2015 against the US Dollar, which is currently trading at 4.48.

Dato’ Seri Najib Razak would similarly like you to believe that the ringgit will recover.

“With the recent changes and developments, we are confident the ringgit will recover.  It is due to speculation by outsiders and the uncertainties in the United States that the ringgit dropped, and not because the ringgit is weak,” he said in December when the Ringgit traded at 4.42 to the Dollar.

But didn’t they all say the same thing last year?  Or for that matter, the year before?

The Prime Minister told us way back in January 2015 that the Ringgit will bounce back from the then five-year low versus the US dollar as “Malaysia's financial market is sufficiently robust”.  Believe it or not, the Ringgit was then trading at 3.60 to the Dollar, which now seemed like a parallel universe away.

If we had all trusted our Ministers and invested based on his financial advice, some of us would be bordering suicidal tendencies today.  2016 was the Ringgit’s 4th consecutive year of decline against the US Dollar.

The thing is, if everyone else had declined at the same rate against the Dollar, it wouldn’t have felt so bad.  What is particularly galling is that the Ringgit performance is the worst among all the major regional currencies.

In 2015, the excuse given was straightforward – the Ringgit suffered more because we were an oil-exporting nation.  As the price of global crude collapsed from US$102.10 in January 2014 to US$60.70 (Dec 2014) to US$36.57 (Dec 2015), it is almost understandable that the Ringgit would be disproportionately pummelled. 

The pundits had predicted that the Ringgit would recover with the recovery of oil prices last year.  They were indeed spot on in their prediction of higher oil prices with the Brent crude trading at US$55 a barrel by December 2016.  Unfortunately, despite the oil price reversal, the Ringgit value worsened significantly.

How was that even possible?

No more an export powerhouse

Back in November 2015, the then Bank Negara Governor, Tan Sri Zeti Aziz told an international audience that the Ringgit was “significantly undervalued” as our “export growth remains fairly strong”.

Except it wasn’t.

Conventional economic theory tells us that as our currency gets depreciated, our goods become cheaper and consequently the demand for them increases.  A robust increase of the export of our goods and services would in turn increase the demand for our currency and hence provide a strong platform for the recovery of our ringgit and economy.

Well, the Ringgit was massacred in 2015 when it depreciated by nearly 20%.  On paper, that makes our exports dirt cheap in 2016.  And given that we have always prided ourselves as an export-oriented economy, our goods should definitely be flying off the shelves as they became extremely competitive.

But the Government’s own statistics tell us that our exports barely eked out a gain.  The 2016/2017 Economic Report published in October 2016 tells us that our Gross Exports for January to August 2016 grew by only 1.1%, compared to 1.6% in 2015.

More specifically, the electrical and electronics exports, the pride of our manufacturing industry, grew by only 2.2%, a substantial decline from 7.4% in 2015.  While 2.2% might have been just about acceptable under normal economic circumstances, the number is pathetic given the depreciation the Ringgit suffered.

Worse news followed since the above report, when the Department of Statistics disclosed last month that our exports declined 3.0% and 8.6% for the months of September and October respectively.

Separately, the latest Nikkei Malaysia Manufacturing Purchasing Managers' Index, or PMI which measures manufacturing activities shows that the sector “in contraction territory for 21 consecutive months”.

The headline PMI posted for December was 47.1 signalling continued deterioration.  A score above 50.0 signals improvement in manufacturing conditions, and Malaysia has not reached a score of 50.0 since early 2015.

Living and La-La Land

There is no question that our economy is suffering from something chronic which needs immediate treatment.  Alarm bells should have been blaring deafeningly in Putrajaya but all we get is Ministers with their heads in the sand. 

Prime Minister Najib Razak welcomed 2017 by boasting that Malaysia has achieved a growth rate the Western world can only “dream of”.

“Our estimated growth rate of 4.3 to 4.5 percent for this year is one that developed countries in Europe and North America can only dream of.  Malaysians should be proud of the growth we are achieving.”

A statement from the Barisan Nasional strategic communications team earlier in December also boasted that “Malaysia’s economic growth is less volatile and more robust than Singapore’s as a result of the Najib administration’s shift towards the domestic economy.”

Of course the fact that developed countries have a different growth trajectory compared to developing ones was irrelevant.  What was more important to the ruling leadership was the continued thumping of the chest to praise and glorify the Emperor in the eyes of seemingly gullible Malaysians, even if the Emperor is really naked.

So what’s really happening?

A loss of confidence

The anticipated explosive growth in exports and manufacturing activity as a result of persistent depreciation of the Ringgit never materialised. Either no one wants to buy more Malaysian products even though they are significantly cheaper or more plausibly, businesses and investors are not investing in additional production capacity in Malaysia.

They are at best adopting the “wait and see” strategy or at worst, have decided in investing their money in other countries.  There could be many reasons for this, including perhaps a increasingly limited supply of skilled and quality labour, a weakening education system or the bureaucratic and corruption cost of doing business. 

However, anecdotal evidence would tell you that one of the key factors is the fact that they have lost confidence in the country.  A country led by a Prime Minister who has been indicted as one of the worlds biggest kleptocrat would and could never inspire confidence in genuine investors.

The complete failure of the institutional authorities to take enforcement actions against blatant and brazen corruption has destroyed whatever that’s left of Malaysia’s long-standing reputation as a country they could do business in.

Bank Negara saves the day?

Bank Negara Malaysia is now forced to implement increasingly desperate measures to stem to tide against the Ringgit.  They now include the restricting the off-shore trade of the Ringgit via non-deliverable forward contracts, and more controversially, the move to compel exporters to convert 75% of their proceeds into Ringgit.

The Central Bank is claiming success for its policies, stating that the measures are starting to bear fruit, following lower volatility in the ringgit.  Sure, such short term measures will provide immediate support for the Ringgit as it mops up whatever excess liquidity existing today. 

However, as explained earlier, Malaysia being an “export-oriented country” is heavily dependent on continued investments in our export sectors, manufacturing or otherwise.  If the use of your future export proceeds are restricted and the hidden cost of doing business in Malaysia increases, then who would want to invest in new or additional production capacity in the country?

Current exporters would not have a choice in the repatriation of export proceeds as demanded the authorities.  But they and future investors – both local or foreign – have a choice in where they choose to invest in the future.  With alternative competing investment destinations aplenty today, such short-term Bank Negara measures will only further dampen the medium and longer term demand for the Ringgit, jeopardising any eventual recovery.

A new normal

We used to pride ourselves as an export and manufacturing powerhouse.  We are used to being described as an “economically resilient” country, even if it was somewhat a function of striking oil lottery, especially during the decade of high oil prices.

Unfortunately, the hard statistics are becoming hard to refute.

I would be foolish to give a specific prediction of how the Ringgit will perform over the next 3, 6 or 12 months even as it hit 4.50 to the Dollar yesterday, a new record low since the Asian Financial Crisis.  However, it would be more than fair to say that the downside risks significantly outweigh the upside prospects given the reasons explained above.

For Malaysians, perhaps its time to accept the new normal.  We have lost more than 40% of our wealth in US Dollar terms over the past 3 years. The lost of wealth will be reflected in higher prices of goods and services – including the higher price of petrol as oil is traded internationally in Dollars.

Although it is not impossible, this new normal will be extremely difficult to reverse.  In fact, it more than likely to get worse given the utter inability by the Najib administration to rectify the failures of the economy.

I would be foolish to give a specific prediction of how the Ringgit will perform over the next 3, 6 or 12 months.  However, it would be more than fair to say that the downside risks significantly outweigh the upside prospects given the reasons explained above.

The only way Malaysians can hope for “the good old days” to return is to see a change of regime.  The new regime needs to cleanse the country of its kleptocratic reputation and wipe out the scourge of grand corruption from the Government.  It needs a new, intelligent economic team which isn’t encumbered by sacred cows decreed by those who are desperate to stay in power at all costs.  It really isn’t rocket science.

Then perhaps, we will see a meaningful, significant and sustained recovery of the Ringgit, and our wealth over the longer term.