ECONOMIC INDICATORS POINT TO A
MELTDOWN OF NAJIB’S ECONOMIC POLICIES
The latest national economic indicators may have a deeper impact on
Malaysia besides the obvious economic loss felt especially the billions
of ringgit wiped out from Bursa
Kuala Lumpur in the past one week.
In particular, the downgrading of economic growth forecast
recently announced by local research houses and analysts may spell an
early doom to the grand economic master plan and targets unveiled by
Dato’ Seri Najib Tun Razak’s administration through the Economic
Transformation Programmes (ETP), the 10
th Malaysian Plan and
the New Economic Model.
If Malaysia’s economic growth continues to slide as expected, the
ETP would have failed even before it takes off because the ambitious
plan requires a steady 6% growth annually to reach the GNI per capita
target of USD15,000 (or RM48,000) by 2020. A less than 5% growth for
2011 means ETP has failed to excite the market at the time when the full
government focus, resources and machineries were directed to promote
it; let alone when all the euphoria wears off 2-3 years down the line.
The impact of the economic uncertainties in the USA and Euro-zone
countries may add severity to the Malaysian economic prospect;
especially when the debt crisis in Euro-zone will begin to pull the
third (Italy), second (France) and largest (Germany) economies in Europe
into the economic mess. Should the current trend in the Euro-zone
continue, there is a possibility that there will be further downgrades
of economic growth in the near future.
Dato’ Seri Najib Tun Razak’s administration has also failed to
meet its own private investment growth target that is a centre-piece of
his strategy to rejuvenate growth in Malaysia. PEMANDU/ETP has boldly
claimed that 92% of the hundreds of billions worth of investments will
be funded by the private sector to reverse a decade’s worth of dependent
on pump priming using public coffers.
Unfortunately, the source of funding of flagship ETP projects is
still shrouded in mystery. Of the top 10 ETP projects announced (or
expected to take off) in between October 2010 and June 2011, 77% of
these projects will be carried out by GLCs.
The following analysis of the top 10 ETP projects will heighten
the sense of economic dejavu as essentially the present administration
still employs the same approach of pump priming using public money –
though it is now being channelled through the GLCs:
|
FLAGSHIP ETP PROJECT
|
INVESTMENT ANNOUNCED
(RM BILLIONS)
|
GLC/NON-GLC
|
|
Refinery and
Petrochemicals Integrated Development (RAPID)
|
60.0
|
GLC (PETRONAS)
|
|
MRT (investment without
rolling stocks and land acquisition)
|
36.6
|
GLC
(special purpose
vehicle set up)
|
|
Oil and gas development at
Tapis field (enhanced oil recovery) and Teluk field development (due to
start in 2013)
|
10.0
|
GLC
(PETRONAS &
ExxonMobil, reinvestment of profits from hydrocarbon resources)
|
|
Development of Karambunai
Integrated Resort City
|
9.6
|
Non-GLC
|
|
Small Retailer
Transformation Program (TUKAR) to modernise sundry shops
|
5.43
|
Unknown
|
|
Shell Malaysia’s expansion
program (upgrade of refinery/new builts including Shell Middle
Distillates, Port Dickson complex and Gumusut deepwater development)
|
5.1
|
GLC
(PETRONAS & Shell,
reinvestment of profits from hydrocarbon resources)
|
|
Development of deepwater
petroleum terminal in Johor
|
5.1
|
Dialog Group
(private group with
large shareholding by GLICs)
|
|
3 new power plants, 2
hydro power plants, 1 coal plant and investment in transmission
infrastructure
|
4.0
|
GLC
(TNB)
|
|
Development of Tanjong
Agas Oil & Agas and Logistic Industrial Park in Pekan, Pahang
|
3.0
|
GLC
(under East Coast
Economic Region)
|
|
Development of MINES
Wellness City
|
3.0
|
Non-GLC
|
The total investments announced for the top 10 ETP projects are
RM142 billion that makes 82% of the total ETP projects announced so far
(total investments of RM173 billion). The fact that 77% of the top 10
ETP projects will be carried out by GLCs or firms with large GLIC
shareholdings is a proof that the 92% private investment target set out
in ETP is nothing more than a
public relations number with no
indication that it will ever be achieved.
The 3 national economic indicators – the turmoil at Bursa
Kuala Lumpur, the growth
forecast that looks dimmer as we move closer to the end of the year and
the failure of ETP flagship projects to hit the private investment
target set out by Dato’ Seri Najib – point to a meltdown of his
administration’s economic policies and initiatives.
Malaysia’s economic predicament is the complete opposite of the
tremendous growth enjoyed by Indonesia. Indonesian economy continues to
register a 6.5% growth in the last quarter and expected to grow further
at 7% next year. While Malaysia’s inflation hit a two-year high in the
last quarter, Indonesia’s inflation recorded a 14-month low for the same
period. Stagnated wages that grow only at a snail pace of 2.6% over the
last decade for Malaysian workforce is contrasted by the double digit
annual rise in wages in Indonesia since 2006.
Clearly there is a fundamental difference between Malaysian and
Indonesian economies that leads to this divergence.
While Indonesia embraced political, economic and social reforms
since 1998, the Barisan Nasional government balked at any attempt to
spearhead political and social reforms at the detriment of the economy.
Therefore, it is a matter of time before the
rakyat subscribes to
Pakatan Rakyat’s principle that there cannot be an economic reform
without a commitment for political reforms.
RAFIZI RAMLI
DIRECTOR OF STRATEGIES
10 AUGUST 2011
