Agenda Daily


Prime Minister Datuk Seri Abdullah Ahmad Badawi has swapped his finance portfolio with his deputy Datuk Seri Mohd Najib Abdul Razak in a bid to show that the power transition is indeed in motion. The question is: Can the Number Two restore the faith of the rakyat in the government, and is the transition on track?


AS THE PROSPECTS FOR THE WORLD ECONOMY worsen and the developed economies are either stagnating or are heading for a recession, Malaysia continues to be mired in both political and economic uncertainties.

The appointment of the Deputy Prime Minister, Datuk Seri Mohd Najib Abdul Razak, as Finance Minister on Sept 17 has given some hope.

In a move described by Prime Minister Datuk Seri Abdullah Ahmad Badawi as a further step towards the power transition, he and his deputy swapped posts.

Mohd Najib took finance and Abdullah, defence. The swap took place at an inauspicious time. It

should have been done a long time ago. As early as November 2003, the month Abdullah took over as Prime Minister, I had commented about his unsuitability as Finance Minister.

In the Nov 16, 2003 issue of this magazine, I wrote: ‘It is certainly not a good idea for the Prime Minister to be a full-time Finance Minister for an extended period.

‘A separation between political and financial management will enhance our global standing.

‘Thus, for the good of the country, a capable and experienced person should be appointed to the job.

Only then can Malaysia hope to lead the developing world in promoting reform of the global financial and trading arrangements.’

Understandably, other than the muted support and the expression of confidence by the business sector, Mohd Najib’s appointment failed to lift the spirit and the market.

Bursa Malaysia continued to be bombarded by the bad news coming out of Wall Street. The KL Composite Index had, on occasions, fallen below the critical 1,000- point level.

Unless Mohd Najib and his team quickly come up with credible policies and programmes, Bursa could fall further and the monetary and fiscal health of the country could be further jeopardised.

The sell-off on Bursa cannot be considered over. Although the market has shrunk by nearly 31% in ringgit terms since Dec 31, the potential for further disposal cannot be discounted, bearing in mind that China has fallen in excess of 60%.

Should there be a recovery and the foreign funds return to the market, China will be their first choice as the stocks there are being traded at huge discounts.

The importance of Bursa cannot be underestimated not only because it acts as a barometer for the economy, but also because millions of ordinary Malaysians rely on it through their unit trust investments.

A senior executive of a major unit trust fund estimates that the market value of its stock holdings has fallen by as much as RM600 million in recent weeks.

Mohd Najib was to have met fund managers in New York but cancelled the trip at the eleventh hour. But the Finance Minister must not be hasty in rejecting any ideas thrown at him, not even the re-pegging of the ringgit.

But in an act that could have been crafted to show his toughness and quick action, Mohd Najib swiftly rejected the call to re-peg the ringgit after less than half a day of consultation with officials of the Finance Ministry and Bank Negara Malaysia (BNM).

Understandably, the re-pegging of the ringgit is not for the faint-hearted and run-of-the-mill economists.

Only an unconventional and self-assured person like the former Prime Minister, Tun Dr Mahathir Mohamad, would gamble on such an orthodox and risky undertaking.

At the risk of being presumptuous, I would like to tap Mohd Najib gently on the shoulder and whisper into his ears that he should keep his options open and not be hasty in rejecting any unconventional ideas – from friends and foes and anybody else in between.

Bringing back the peg

TAKE a look at the US. Its action is nothing but conventional. From a nation that abhorred and

condemned bailouts, the US is today engaging in the biggest corporate bailouts in history.

The Bush Administration is seeking Congressional support to allocate US$ 700 billion (about RM2,401 billion) for an emergency bailout plan of the financial system.

Ten years ago, when Malaysia and several Asian governments went into the market to aid the

companies and corporations hit by the regional financial crisis, they were squarely condemned by the US and the International Monetary Fund.

They were told that bailouts were against the spirit of free market and would not work. The-then Deputy Prime Minister and Minister of Finance, Datuk Seri Anwar Ibrahim, sided with them and went on to popularise economist Joseph Alois Schumpeter’s controversial ‘constructive destruction’ theory.

Dr Mahathir was called a mad man for introducing limited exchange controls in September 1998 and Malaysia was a pariah to fund managers and other hot money investors.

But what he did via Danaharta and Danamodal saved giant corporations like Lion, Berjaya, Renong, Sunway and scores of banks from bankruptcy, and protected millions of workers.

Of course, today, many have forgotten what Dr Mahathir did, and his suggestion that we revisit

limited exchange controls was summarily dismissed by Mohd Najib and his advisers.

Ironically, the man whose expertise Dr Mahathir tapped before implementing the exchange controls is now Mohd Najib’s right-hand man. He is second Finance Minister Tan Sri

Nor Mohamed Yakcop.

He came so highly recommended that despite being partly blamed for BNM’s massive foreign exchange trading losses in the early 1990s, he was summoned to fly to Buenos Aires. Dr Mahathir was then on an official visit to Argentina.

That fateful trip and the implementation of the exchange control set off Nor Mohamed’s rehabilitation process – first as Dr Mahathir’s economic adviser and later as second Finance Minister under Abdullah.

So, he can still advise Nohd Najib on matters pertaining to the ringgit’s exchange rates.

The problem, unfortunately, is not confined to policies and programmes alone. The trickier problem is the lack of confidence.

Investors and consumers are not confident that enough is being done, or that the people doing it are truly on-the-ball. Abdullah has certainly done very little to convince the public that the crisis is being appropriately handled.

So, the handing over of the finance portfolio to Mohd Najib is a matter of necessity rather than an attempt by the Prime Minister to convince the public that the handover process is progressing and on track.

Quick transition needed ON the contrary, the portfolio swap has not abated the call for Abdullah to hasten the transition process and for the Umno divisions to make it happen.

The clearest sign of the growing revolt was when key Umno Supreme Council members spoke openly of the need to hasten the power transfer.

This was preceded by sharp criticism by the International Trade and Industry Minister and the

most senior Umno Vice-President, Tan Sri Muhyiddin Yassin, that the 2010 deadline was way too far off.

This led to Datuk Zaid Ibrahim, an Abdullah ally and the-then de facto Law Minister, to call for

Muhyiddin’s resignation.

Instead, it was Zaid who resigned from the Cabinet as a protest against the Internal Security Act (ISA) detentions of webmaster Raja Petra Kamaruddin, Sin Chew Daily journalist Tan Hoon Cheng and the Democratic Action Party Member of Parliament for Seputeh, Teresa Kok.

Tan and Kok have since been released but Raja Petra has been committed to the Kamunting Camp in Taiping to undergo a two-year detention.

Abdullah’s future does not look brilliant. Even the servile Mohd Najib has issued a veiled challenge, saying that the wishes of party members must prevail.

Of course, Mohd Najib is fighting his own battle. Since Muhyiddin’s announcement that he was ready to receive nominations for the post of deputy president in the December Supreme Council election, Mohd Najib has been in a fix.

He does not cherish the prospects of defending the post against Muhyiddin, yet is reluctant to challenge Abdullah for the Number One post.

If Muhyiddin remains adamant about contesting the Number Two post, then Mohd Najib has to consider a do or die battle for the president’s post, which will pit him against Abdullah and, possibly, the Gua Musang MP, Tengku Razaleigh Hamzah.

The best Mohd Najib can hope for is the repeat of the 1993 battle royale between Datuk Seri Anwar Ibrahim and the late Tun Abdul Ghafar Baba.

In deference to the wishes of his then boss Dr Mahathir, Anwar declared that he would not challenge Abdul Ghafar for the post of deputy president.

But behind the scenes, he and his allies encouraged the divisions to nominate him. As the divisional meetings progressed, it became clear that Anwar was the overwhelming favourite, forcing Abdul Ghafar to withdraw his candidacy.

The dark horse Tengku Razaleigh may yet receive sufficient divisional nominations – a minimum of 58 – to contest the post. Given the prevailing mood, Mohd Najib may not be assured victory even in a straight fight with the Kelantan prince and former Finance Minister.

The D-Day for Abdullah, on the other hand, is fast approaching. Starting Oct 9, the 193 Umno divisions will meet. Renegade divisions may nominate Mohd Najib for the Number One job either because they support him or because they dislike Abdullah.

In an act of desperation, the special Supreme Council meeting on Sept 26 decided to defer the

General Assembly to March next year. Abdullah also said he will decide by Oct 9 on whether to defend the Umno presidency.

Anwar’s deadline dilemma

AS for Anwar, his deadlines have come and gone. The Sept 16 takeover of the government did not materialize although he kept claiming he had enough BN turncoats in his pocket.

He then set Sept 23 as the new deadline. That too passed uneventfully, except for massive traffic jams around Kuala Lumpur.

He blamed the failure on the unwillingness of the Prime Minister to meet him and call for an emergency session of Parliament.

Then, claims were made that a letter petitioning the Yang di-Pertuan Agong to call for a session of Parliament had been sent. That too amounted to nothing.

What did happen was Anwar’s return to the Kuala Lumpur Sessions Court on Sept 24 to face the sodomy charge brought on by a former aide, Saiful Bukhari Azalan.

He will have to wait until Oct 7 for the decision whether the case will be transferred to the High Court or not.

That has not deterred the Opposition Leader from continuing with his mind games. He defended his failure to topple the government and asked Malaysians to be patient, saying that he wanted to do it smoothly and within the confines of the law.

And it does not stop the sellers of political DVDs in Jalan Masjid India in Kuala Lumpur from playing the DVD of DAP stalwart Lim Kit Siang proclaiming Saudara Anwar Ibrahim as Pakatan Rakyat’s Prime Minister on Sept 16.

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