21Mac2019

A NEEDFUL BALANCING ACT

Now that Deputy Prime Minister Datuk Seri Mohd Najib Abdul Razak is poised to take over the running of the country, he has to play it smart and lend his ears to all segments of society and not just those with the power to lobby.

 

Balancing the interest of consumers and producers amidst growing global economic uncertainties is a major challenge facing the government in coming months, if not years.

The success will determine whether the much-debated transition from Prime Minister Datuk Seri Abdullah Ahmad Badawi to his anointed successor, Datuk Seri Mohd Najib Abdul Razak, will do any good to the country.

The early indications suggest that there is an improvement in the level of confidence all ground. Despite his image problem, Mohd Najib seems to enjoy a higher level of confidence in the matter of economic management.

He may even outperform Abdullah in the game of perception. There are no hang-ups about Mohd Najib to begin with. If he’s successful in debunking his many detractors, he’ll come out stronger than Abdullah.

Abdullah came in smelling like roses – ‘Mr Nice’, Mr Clean’, the son and grandson of ulama and all. But as he prepares to make a premature exit, the smell has all but disappeared. Mohd Najib, on the other hand, will take over the job smelling less than pleasant.

The growing endorsement by his party Umno will make it easier for Mohd Najib to concentrate on managing the country’s economy and finances instead of campaigning for party posts.

At the point of writing, with just under two-thirds of the divisions having made their choice, Mohd Najib is the sole contender for the president’s post. Barring any unforeseen circumstances, the trend is almost certain to continue.

As I have stated in the last column, Mohd Najib has to lend his ears to all segments of society and listen to people who have proven track records in economic and financial management.

Whereas trade bodies and organizations like Bursa Malaysia and its participants, investors, big-time entrepreneurs and banks all have their lobbying avenues, the ordinary people do not.

ValueCap Poser

The big-time entrepreneurs and investors can tell and urge the government to do things that are beneficial to them while arguing that what they do is good for society.

The recent injection of RM5 billion to the capital of ValueCap Sdn Bhd by the Employees’ Provident Fund (EPF) at the behest of the Finance Ministry is a case in point.

While the capital injected will have some positive effects on the stock market, its contribution to the economy as a whole may not be significant. The local stock market has fallen so badly that a RM5-billion injection may not have much impact.

But under the present circumstances, whatever little the government can do to boost the economy and trade is welcomed.

Still, the accusation by the Opposition that the government had abused its authority by directing the EPF to make the investment must not be taken lightly.

ValueCap is a vehicle of the Finance Ministry whose stated function is to invest in listed equities on Bursa Malaysia.

The present move is seen as an attempt to shore up the share prices of government-linked companies on Bursa Malaysia.

Mohd Najib Explained that the RM5-billion advance to ValueCap would be in the form of a loan from the EPF. Given the market volatility, the move is fraught with danger.

On Oct 22, the emerging markets – of which Malaysia is a member – fell sharply on concerns about an economic recession and falling commodity prices.

While we caution the government against giving GLCs backdoor assistance by way of ValueCap share purchases, we must also demand the government monitor more closely the conduct and performance of GLC managers and board members.

We cannot afford to have a repeat of the Maybank-Bank Internasional Indonesia fiasco which we are yet to fully understand the extent of damage to our reputation and the welfare of the various stakeholders.

For the sake of reason and in keeping with the government’s promise of transparency and accountability, a full-blown investigation has to be launched into the incident, with those responsible in the bank and the various regulatory agencies being held accountable.

Voice of reason

The responsibility of the government is heaviest when it comes to the ordinary people. They have no avenue to lobby, and yet, they are the people who depend most on a good government.

Investors can take their capitol to where the returns are better. Well-educated and well-heeled Malaysians can go where their skills pay more.

But for the teeming masses – the Malays in the kampong, the Orang Asli, Ibans and Kadazans in the hinterland, the Chinese in small town and new villages and the Indians in the plantations – this is home for better or worse.

In recession, it’s the poor and the incapacitated who will be hit the hardest. They have no safety nets to cushion their fall – no savings, no unit trust investments, and no insurance coverage.

So, while the city slickers and the Bursa-types may hail the RM5-billion ValueCap pump-priming package, I would prefer if we could declare camaraderie with the former Finance Ministry Deputy Secretary-General Tan Sri Ramon Navaratnam.

On the day that Mohd Najib played Santa Claus to ValueCap, Navaratnam urged the government to give priority to the real economy.

That the Umno-owned Utusan Malaysia should give the story considerable importance is heartwarming.

The paper quoted Navaratnam as saying that the government should give priority to the needs of the real economy before taking steps to confront the global financial crisis.

He singles out the growing inflationary pressure and unemployment as issue warranting priority, adding that the government should be willing to borrow if required.

‘This is because the real economy involves the welfare of the people. Therefore, if we need to borrow to wade through the crisis, we must do so,’ he said.

Navaratnam was commenting on a statement by Mohd Najib that the government would revised the economic growth forecast for the coming year to a level lower than original 5.4%.

Navaratnam made a very strong point when he said that apart from defending the GLSs, the government must also assist the small – and medium – scale companies in the private sector.

I cannot agree more with the good Tan Sri. While giant corporations can draw on their reserves and the GLCs can run to the government for cover, the SMI companies are left to the mercy of lenders, who are better known as fair-weather friends than friends in need.

Taking the bull by the horns

And Navaratnam could not have spoken sooner. On Oct 23, The Star newspaper reported in that Johor Menteri Besar, Datuk Abdul Ghani Othman, was taking the issue of ‘mass unemployment’ in the state seriously.

It said Abdul Ghani would be meeting industry players in a bid to help retrenched workers, as fears increase that thousands may also be retrenched by employers across the Johor Straits in Singapore.

We must congratulate the Menteri Besar for taking the bull by the horn instead of hiding behind the full employment mantra that we so often hear.

He said based on feedback, there are still job vacancies in Johor for Malaysians who are retrenched in Singapore. The Star reported that thousands of Malaysians working in Singapore risk losing their jobs.

‘So far, investors have voiced their need for more engineers, especially in the electronics sector, ‘he said, adding that skilled and technical workers were still needed due to the many investments coming into the state.

‘We are still receiving foreign investments in the manufacturing, electronics and oil and gas sectors, ‘he said.

During a meeting with company executives in the state capital, Abdul Ghani was assured that in the event of a recession, they would give priority to locals. Currently there are 2,000 job vacancies in the state.

Human Resources Minister Datuk Dr S Subramaniam in statement said the effect of the world financial crisis would be felt in mid-2009. According to him, the ministry has set up a committee to moniter the job market in the country.

The government should do more to prepare the people for the hard times. It is better to tell them the truth the way it was done during the 1997/98 crisis than to falsely put up a bold front.

I think the people will understand and will be willing to do their part if they are taken into confidence and told the truth. Mohd Najib will have to polish his communications skills and avoid using spin-doctors to confuse the people.

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