Tuesday, June 28, 2011

This is what happened when a government spend more time politicking than looking after the welfare of the nation

Bankruptcy now firmly in sight: Are political games being played to hide

Amidst all the racial and religious rhetoric served up by the politicians
of the day, Malaysia is facing a far greater problem. The various political
entities in Malaysia can throw all the mud they want at each other, and
fight over who should be the next this and that, but if left unchecked;
there may not be much of a country to govern within the next two to three

Bank Negara have just released the 1st Quarter economic and financial data
for Malaysia on the 3rd of June and it paints a grim picture.

For the 1st quarter of 2011, the central government debt sits at RM430,151
million compared to RM407,101 million for the same period in 2010, i.e up
RM23 billion. Of the RM430,151 million, RM425,831 million is medium and long
term debt.

Domestic debt sits at RM414,217 million whereas in the same period in 2010
it sat at RM390,356 million. Again the medium and long term debt is the
bigger bulk of the debt at RM409,897 million.

Plainly stated, the Government of Malaysia owes the central bank and funds

like the Employee Providence Fund monies that run into the billions. Such
debts are a mystery when you take into account that the central government
operational expenditure has actually decreased. For April of 2011, the
figure stands at RM13,769 million; a reduction compared to RM19,416 million
for the same period last year.

Bear in mind the figures above are for the first quarter of 2011, there are
still eight more months to go for 2011, and this figure would surely be on
the rise if we take into consideration the pending General Elections and
various other government initiatives.

Does GOM even know what it is doing

The next key thing to note is that while the GOM has reduced its

expenditure, yet it has increased its debt.

And unless the debt is managed well, we are on the verge of seeing the GOM
going the way of the Greece government. A government broken under the weight
of its own debt.

And *if the GOM goes bankrupt than the people of Malaysia would in turn
suffer since the money the GOM owes is taken from public funds that belongs
to everyday Malaysians.

*Can the GOM repay its monetary debt to the people of Malaysia?

Adding to the grim picture, figures released by BNM for April 2011 show a

country where inflation is on the rise. Headline inflation, measured by the
Consumer Price Index (CPI), increased to 3.2% on an annual basis. Higher
prices for food and non alcoholic beverages along with higher cost in the
transport categories are contributing to the ever-rising inflation rate.

An increase in RON97 from RM2.50/litre to RM2.70/litre accelerated the
upward adjustment in the transport category. The impact would be greater as
the Najib administration toys with the idea of reducing subsidies in an
effort cut down on governmental expenditures.

While the idea to raise prices for RON95 has been shelved for the time
being, Putrajaya announced a 7.1% hike in electricity tariffs in an effort
to trim a subsidy bill that would otherwise double to RM21 billion this
year, promising that the hike would not affect three-quarters of domestic
users. A move some say would anger voters in the coming elections.

What should a PM do

In a critical report published by the Singapore Strait Times, economists
raised the question whether resource-rich Malaysia had fallen out of step
with the global environment.

The Straits Times reported the arguments by economists that decades of state
intervention that sought to meld free market practices with an ambitious
social agenda to restructure the country's multi-ethnic society in favour of
politically dominant Malays had sapped Malaysia of its competitive edge as a
destination for foreign investment.

Malaysia is slowly losing out on the global stage while the GOM is
floundering within its own debt.

This is a problem far removed from the smoke-screen of sex tapes, sodomy

trials, and mud-slinging so prevalently broadcast to the Malaysian public.
Yet*, it is this grim reality, that Malaysia is headed towards bankruptcy,

that has drawn so little effort to remedy from the Najib administration.

Should not Malaysians demand a Prime Minister, whoever he or she may be,
spends more time governing the country and the economy rather than
politicking and creating political and economic trouble for himself, his
party and worse of all, the innocent people who were foolish enough to have
voted for him.

*As they say, once bitten, twice shy.

[Maclean Patrick, Malaysia Chronicle]

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