Minister in the Prime Minister’s Department, Abdul Rahman Dahlan seemed quite unhappy with the way some have reported unfavorably about the Malaysian economy, misrepresenting what was actually reported in the World Bank report (Bernama Report dated 11 Oct 17). Rarely do we agree with ministerial statements, especially after the explosive 1MDB debacle. But in this instance we agree with the Honorable Minister that the World Bank report, ‘East Asia Pacific Economic Update, October 2017, Balancing Act’ and an earlier report undated in September, made several favorable remarks about the state of the Malaysian economy.
The Minister made the argument that Malaysia’s Gross Domestic Product (GDP) grew from 5.6% in Q1 2017 to 5.8% in Q2, which he rightfully said does not appear to be a worsening economy. However, critics quoted the World Bank report further that by 2018 the GDP would lower to 5%, and decrease further to 4.8% in 2019 which prompted certain critics to say our economy is heading into recession. Economic data, like statistics can be quite confusing and even misleading for those uninformed. In this respect, we in Persatuan Patriot Kebangsaan have our independent views. We Patriots do not believe in spreading false news and do not condone such act.
With regards to recession, the commonly accepted definition is the continuous negative growth for two quarters in an economy. Merely based on the World Bank forecast that the GDP will decline from 5% to 4.8% in the next two years to conclude a recession is a mistake. The negative growth has to be measured to a base year. Hence, although decreasing from 5% to 4.8%, it may still be a positive growth. It also depends on whether our GDP is calculated in ringgit or US dollar. As it is, our government insisted in GDP calculation in ringgit, and hence the economy looks robust. Some economists argued that it should be calculated in US dollar, after all the GDP is also meant for global comparison. If so, then with our depreciating ringgit, from RM3.80 to USD1 more than a year ago to the current RM4.22 to USD1, calculated in dollar term, our GDP will be in negative growth for the past one year, effectively putting our economy in recession.
However, the GDP is not the only appropriate indicative measure to determine a recession. Other factors are also important, such as consumer spending, unemployment rate, bankruptcies, closure of SMEs, relocation of large corporate and multinationals, non-performing loans etc. Looking at all these other factors, one who is street wise should be able to see and hear the alarm bells in our economy. Whether we are already in recession or not, there is much to put right. Our government uses the GDP calculated in ringgit to proudly show a robust economy. What matters most is the gap between the haves and the have not’s should be narrowed. The wealth should be more evenly shared among the populace, to the poorer regions such as Kelantan, Sabah and Sarawak. Furthermore, our public debt to GDP is 53.2% as at 2016. More than half of income going to debt payment can be horrendous if our economy is not properly managed. This is before the ECRL borrowing. The flood of so-called FDI from China over the past few years amounting to tens of billions, projects and deals done in opacity, such as the Forest City, Melaka Gateway, Kuantan Port Expansion, Kuala Linggi International Port, Robotic Future City and the temporary shelved Bandar Malaysia, on the contrary does not give confidence to our people with regards to long term benefits. Question mark arises on the commercial viability and funding for the projects. Construction contracts awarded to Chinese corporations on a near lock-stock-barrel totality is akin to imported services. Simply put, it is receiving one hand and giving away with another.
As Abdul Rahman Dahlan has made reference to the World Bank report, we wonder if he is also aware of a much earlier report. In the World Bank report 2008, ‘The Growth Report: Strategies for Sustained Growth and Inclusive Development’, it cautioned that money from foreign investment is sometime stolen and wasted. “Often it is collected and spent in secret, making it difficult to know how it is used. Foreign investment with properly negotiated deals have the potential to relax constraints on growth and development, providing a ready source of foreign exchange a country might lack. But they can also distort a country’s politics. Political leaders may fight for power not to serve the country, but to get their hands on the resource revenues, which they can then use to buy votes and stay in power”.
We leave it to those in position of power to search their conscience.