10th Malaysia Plan – Najib, the Sheriff of Nottingham

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Jun 10 2010
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Malaysia will be bankrupt by 2019 (nine years from now) if it does not begin to cut subsidies for petrol, electricity, food and other staples which cost the government RM74 billion in 2009. The country has a whopping RM362 billion debt and could end up like Greece if the people do not agree to what the government is planning to do – cut the subsidies. Another threat *yawn* from the government who mismanage the country yet has the cheek to ask the average Joes to tightening their already tightened belts.

Since the news revealed by Idris Jala, minister in the prime minister department, and later supported by PM Najib himself, many analysts, politicians and average-Joes were busy debating the statement. It would be awesome if the country could go bust despite the abundance of natural resources – from tins, rubbers, timbers, palm oils, black oils and whatnot. My dog is still cracking its’ head and keep asking me till today why such thing could happen when tiny-dot Singapore continues to prosper *grin*.

It was an exaggeration (confirmed by former PM Mahathir) statement (Idris Jala is always good in this) meant to test the water of Najib’s intention to get more money from the public. While it’s true the country is getting poorer because of mismanagement mainly due to corruption, it’s definitely a hoax that the country will be bankrupt if it does not cut subsidies (Malaysians are good at savings, mind you). However while my 3-year old daughter knows that the country can do without cutting subsidies but eliminate corruption, it’s a different story altogether as far as Najib’s administration is concerned.

Subsidies are bad because it creates fictitious or artificial competitiveness against actual market value. It is a form of protectionism and distorts real market’s supply and demand easily. If it’s not used carefully it could potentially create over-dependence as if it’s some sort of drugs. And former PM Mahathir was the person who started the subsidy and didn’t know how to take it off without causing major disruptions to the equation of the real supply-demand simply because the people were already too addicted to subsidy.

As can be seen by the 10th Malaysia Plan revealed by Najib this morning, the main juice of the whole plan is to squeeze more moolahs from the public, both via widening tax base through GST and slashing of subsidies. The ruling government plans to spend RM230 billion over the next five years but are quite cluesless as to where to get the money except from the citizens. Najib is finding it hard convincing the ethnic-Malay voters that it’s time to erase their subsidy mentality as the country’s budget deficit is at its highest 7% of the GDP because the premier couldn’t explain why the PKFZ’s RM12 billion scandal was swept under the carpet instead.

It was also a joke that the 10th Malaysia Plan includes the need to transform the country into a high-income nation through specialization (*yawn*, haven’t we heard enough of such requirement?) when the best drains were continuing draining out of the country due to racist remarks and policies by Najib’s own ruling government. Hence the flowerish ideas as to nurture, attract and retain top talents should be taken with a pinch of salt. Unless the government forces employers to raise their employees’ salaries multiple-folds, the target of achieving high-income nations looks very distance indeed.

Najib also realizes that it’s fighting an uphill battle attracting foreign investment into the country hence his plan to drive the economy internally. But all the agendas of via smart partnerships between public and private sectors would be not much difference from the status-quo – the Ali-Baba partnership. The ruling government’s cronism and nepotism will continue to prosper and for that you can bet all your money that Vincent Tan will get his sports betting license, if not already got it as claimed by Najib recently, one way or another. So it’s laughable that the 10th Malaysia Plan also introduced Competition Law to ensure healthy competition against market manipulation and cartel practices *grin*. Maybe the “smart” partnership was actually referring to the “Smart UMNO” working together with “Smart Cronies”.

Of course the most impressive initiative was to maintain 30% Bumiputra (or rather UMNO?) corporate equity target while adopting market-friendly, merit-based and transparency policies. But with the proposed RM800 million new Parliament building (didn’t they spent RM100 million to repair the existing building’s leaking roof), seven new highways projects costing RM15 billion, two rail projects from Klang Valley to Singapore at a cost of RM50 billion and so on, I suppose the country is still very far away from bankruptcy.

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