Two days ago, Dato’ Seri Najib Razak finally conceded that “we are facing a challenging (economic) situation” in Malaysia. However, he tried to shift the entirety of the blame of the current and impending economic crisis to “factors outside our control”. He said “they are not our mistakes, not our weaknesses”.
First, he blamed the international oil price plunge “from about US$100 a barrel to between US$32 and US$33 a barrel, currently”.
Then, he blamed the United States Federal Reserve who normalised the interest rate which “made the US dollar stronger compared with the value of currencies worldwide”. And then he blamed China's economic slowdown for negatively affecting Malaysia’s economy.
No one denies the fact that the above factors are indeed beyond Malaysia’s control. However, our struggling economic conditions today are substantively exacerbated by the failure, weakness, mistakes and abuses of the Najib administration.
The price of crude oil was less than US$25 prior to 2007. However, the price of oil never impeded Malaysia’s economic performance in the years before that.
Instead, the question that needs to be asked to Dato’ Seri Najib Razak who became the Finance Minister in September 2008, is this: what happened to all the excess earnings during his reign when oil prices hovered above US$100 per barrel?
The windfall profits we enjoyed during boom years should have been sufficiently saved or invested to ensure that we would have the necessary cushion to sustain any oil price decline or global economic slowdown. However, all the windfall profits over the past 7 years have been wasted away through corruption, abuses, mismanagement and wastage, leaving the Malaysian government defenceless against any blips in the global economy.
This in turn led to the desperation of the Government to implement the Goods & Services Tax (GST), which then compounded the economic difficulties faced by the man-on-the-street.
It is also utterly laughable that Dato’ Seri Najib blamed the United States Federal Reserve raising interest rates when the move had always been expected to happen at some point. In fact, the Federal Reserve had been expected to raise rates as early as 3 years ago. This means Dato’ Seri Najib should be thankful that he had an additional 3 years to “prepare” the country against the impact of rising US interest rates.
Ironically, his admission that we are at the complete mercy of international oil prices and US interest rates proved that our moderate economic performance during his premiership was achieved as a result of super-peak oil prices and ultra-low global interest rates, and not because of his economic management.
His admission proved that there is little resilience in Malaysia’s economy to external pressure, which in turn proved the complete failure of Najibnomics and its much-hyped “Government Transformation Programme” (GTP) and “Economic Transformation Programme” (ETP).
After more than 7 years, Malaysians and international investors can now see through the charade of Dato’ Seri Najib Razak’s economic rhetoric. The glossy and polished “transformation” presentations are nothing but a façade to mask the shenanigans and abuse of power taking place behind the scenes. However, the mask has been exposed with the full-blown 1MDB and RM2.6 billion donation scandals which have made Malaysia the butt of international jokes.
The outcome was the Ringgit becoming the worst performing currency among Bloomberg’s basket of 10 Asian currencies for 2015.
Therefore, Dato’ Seri Najib Razak who is both the Finance and Prime Minister, must take full blame for Malaysia’s failure to build any substantive economic resilience to external turbulence despite enjoying years of super-high oil prices and record low global interest rates. His much-hyped GTP and ETP reforms have failed miserably both in implementation and in goals achieved.
Worse, there is no one but himself to blame for the collapse of 1MDB under the weight of RM50 billion of debt which he personally approved, and the controversial RM2.6 billion “donation” which he received in his personal bank account.