The Tangled Web They Weaved

Tan Sri Muhyidin says BN must not lose Sabah. If it does, then many UMNO and BN leaders will retire at Bamboo River Resort. It is not for him to say. The shouts of inikalilah can be heard far and wide in Sabah. 

Some years ago, one Michael Chia was caught with 16million Singapore Dollars- or RM 40 million. Everyone knows and understood the money was meant for Musa Aman to add to his millions of USD stashed away in Swiss accounts. Chia said that was not his money. It was for Musa Aman. When Musa Aman was asked about it, he said it was Najib’s money. Nazri Aziz stepped in to say, no the money was not for either of them. It was for UMNO Sabah. The PM was quick to say there was no element of money laundering or currency smuggling. 

So there you have it folks, what is haram becomes halal if it’s shared with UMNO. As they used to say in our ceramah circuits- wal-haraa-mun kalau makan sorang, wal halal-lun kalau kongsi sama UMNO. I suppose, the bak kut teh , if it has UMNO label is also halal. It will be if the meat used is beef or lamb slaughtered by UMNO ustazs and holy men. 

No, it’s not for the Sabah BN secretary to say, the case is closed. PR knows it’s closed. That is why it is petitioning the HK government to reopen it because there are grounds of concern. The case was closed because for 3 years, the Malaysian government did not respond to any of the HK governments request for cooperation. Nazri can’t just dismiss the issue by saying "not true- MACC did cooperate" Let us have the records and statement from Hong Kong then. Whether closed or not, the rakyat still wants to know the who, what, when, how and why of the RM 40 million. 

If Sabah were to lose 12-15 seats, the dreams of many Malaysians into seeing Bamboo River Resort turned into a retirement home for UMNO politicians and their business cronies will come to fruition.We must remember to include into the Resort Project, facilities such as Kedai 1Malaysia, Premium Outlets and maybe even a franchisee of Jacob Jewelers. 

The other piece of news that caught my attention is the statement by Deputy Finance Minister Awang Adek. He says, the government’s gross domestic product (GDP) growth target of five per cent this year is easily achievable, given the impressive 5.2 per cent economic expansion in the third quarter. He said Malaysia’s economy only needs to grow a minimum 4.1 per cent in the fourth quarter, to achieve the five per cent target. How does he come by the confidence? Because he says “Cumulatively, for the first nine months, GDP grew by 5.3 per cent. That means we only need to register 4.1 per cent in the fourth quarter, which I am very sure we can achieve more. Its like a walk in the park.

As an economist, he knows the figures are like a bikini. What it reveals is suggestive, but what it hides is more vital. What has he hidden?  He did not tell that the source  for that growth has come in the form of  growing provision of guarantees to government-linked borrowers. He did not tell that government and government-linked activity is a significant contributor to that growth achievable it seems, like a walk in the park.  Well, it depends on which park. Try walking alone in New York’s Central Park. 

Greater drawdown of existing federal government guarantees of debt issued by public sector enterprises suggests increasing use of quasi-fiscal policy to support economic activity and this behavior may cause negative results. For example, it may negatively affect Malaysia’s sovereign credit profile. Malaysia will become a credit risk. 

The value of outstanding debt guaranteed by the Malaysian federal government has increased by RM23.4bn (USD7.6bn), or 20%, between December 2011 and September 2012. Such debt is now equivalent to 15% of GDP compared with 9% at end-2008, and suggests a growing contingent liability on the sovereign.

What does that mean? That means what the PM says about ensuring that federal debt will not go beyond 55% of our GDP is all BS. The increasing reliance on off-balance sheet funding could potentially call into question the meaninglessness of the 55% of GDP federal debt ceiling (debt/GDP had risen to 52.4% at end-Q312).  What it means is, the federal debt is much more than the official bikini figures suggest.  It will lead as we said earlier to some form of negative rating action. 

At the same time, foreign holdings of government debt have continued to increase and now represent nearly 50% of Malaysia's foreign exchange reserves, up from 36% at end-2011.  

So when the PM says the government will ensure that Malaysia’s debt limit will not exceed 55% of Gross Domestic Product (GDP)  because ensuring so is part of its prudent management strategy in managing the nation’s finances, is not true. 

Not true too were his statements regarding steps taken to reduce its fiscal deficit in line with its commitment to ensure further growth. 

What deficit curtailment? We have large portions of hidden debts that do not finance projects that are commercially viable and will ultimately require government repayment. For example, there is the RM24 billion owed by PTPTN and the RM11 billion owed by Prasarana Negara Berhad.  There will be additional hikes in our contingent liabilities as the government embarks on many mega-projects off its balance sheet, such as the RM50 billion MRT project, which has yet to raise the necessary financing, and the RM25 billion Tun Razak Exchange spearheaded by 1MDB. 

By the way, there are already 60 million square feet of office space, and Najib says TRX will not affect the property market. He is not a property man, so there is no reason we should believe him just as there is no reason to believe me. Let readers do the checking themselves then.