Malaysia Bankruptcy firmly in sight

Bankruptcy now firmly in sight:   
Are political games being played to

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Written by  Maclean Patrick
Tuesday, 07 June 2011 15:39

Amidst all the racial and religious rhetoric served up by the

politicians of the day, Malaysia is facing a far greater problem.

The various political entities in Malaysia can throw all the mud

they want at each other, and fight over who should be the next

this and that, but if left unchecked; there may not be much of a

country to govern within the next two to three years.

Bank Negara have just released the 1st Quarter economic and

financial data for Malaysia on the 3rd of June and it paints a grim

picture.

For the 1st quarter of 2011, the central government debt sits at

RM430,151 million compared to RM407,101 million for the same

period in 2010, i.e up RM23 billion. Of the RM430,151 million,

RM425,831 million is medium and long term debt.

Domestic debt sits at RM414,217 million whereas in the same

period in 2010 it sat at RM390,356 million. Again the medium

and long term debt is the bigger bulk of the debt at RM409,897 million.

Plainly stated, the Government of Malaysia owes the central bank

and funds like the Employee Providence Fund monies that run into

the billions. Such debts are a mystery when you take into account

that the central government operational expenditure has actually

decreased. For April of 2011, the figure stands at RM13,769 million;

a reduction compared to RM19,416 million for the same period last year.

Bear in mind the figures above are for the first quarter of 2011, there

are still eight more months to go for 2011, and this figure would surely

be on the rise if we take into consideration the pending General Elections

and various other government initiatives.

Does GOM even know what it is doing

The next key thing to note is that while the GOM has reduced its

expenditure, yet it has increased its debt.

And unless the debt is managed well, we are on the verge of seeing

the GOM going the way of the Greece government. A government

broken under the weight of its own debt.

And if the GOM goes bankrupt than the people of Malaysia

would in turn suffer since the money the GOM owes is taken

from public funds that belongs to everyday Malaysians.

Can the GOM repay its monetary debt to the people of Malaysia?

Adding to the grim picture, figures released by BNM for April 2011

show a country where inflation is on the rise. Headline inflation,

measured by the Price Index (CPI), increased to 3.2% on an annual

basis. Higher prices for food and non alcoholic beverages along with

higher cost in the transport categories are contributing to the ever-

rising inflation rate.

An increase in RON97 from RM2.50/litre to RM2.70/litre accelerated

the upward adjustment in the transport category. The impact would be

greater as the Najib administration toys with the idea of reducing

subsidies in an effort cut down on governmental expenditures.

While the idea to raise prices for RON95 has been shelved for the time

being, Putrajaya announced a 7.1% hike in electricity tariffs in an effort

to trim a subsidy bill that would otherwise double to RM21 billion this

year, promising that the hike would not affect three-quarters of domestic

users. A move some say would anger voters in the coming elections.

What should a PM do

In a critical report published by the Singapore Strait Times, economists

raised the question whether resource-rich Malaysia had fallen out of step

with the global environment.

The Straits Times reported the arguments by economists that decades

of state intervention that sought to meld free market practices with an

ambitious social agenda to restructure the country’s multi-ethnic society

in favour of politically dominant Malays had sapped Malaysia of its

competitive edge as a destination for foreign investment.

Malaysia is slowly losing out on the global stage while the GOM is

floundering within its own debt.

This is a problem far removed from the smoke-screen of sex tapes,

sodomy trials, and mud-slinging so prevalently broadcast to the Malaysian public.

Yet, it is this grim reality, that Malaysia is headed towards bankruptcy,

that has drawn so little effort to remedy from the Najib administration.

Should not Malaysians demand a Prime Minister, whoever he or she

may be, spends more time governing the country and the economy

rather than politicking and creating political and economic trouble

for himself, his party and worse of all, the innocent people who were

foolish enough to have voted for him.

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As Malaysians which party has betrayed us for the past century?  

Do we continue to mumble or do we take a drastic stand?