Najib’s Special Economic Committee is a waste of time

The freshly-formed Special Economic Committee (JKE), which convened for the first time on 1st September, is a complete waste of time if the trust deficit of the Najib Government is not addressed up front.

I therefore call on credible independent figures like Dato’ Seri Nazir Razak and Tan Sri Andrew Sheng to withdraw from the Committee until Prime Minister Dato’ Sri Najib Razak is held accountable for his RM2.6 billion “donation” and the RM50 billion (or more) 1MDB crisis is investigated.

Prime Minister Najib announced the formation of the 9-person Committee chaired by Minister in Prime Minister’s Department Abdul Wahid Omar last week after the free fall of ringgit to a level not seen in the past 17 years. The vague brief given to the Committee is to “develop immediate and medium-term plans to strengthen Malaysia’s fundamentals”.

The free fall of the ringgit is of course partly caused by the devaluation of the Chinese yuan (renminbi), the anticipated rate hike by the US Fed in September (which boosts the value of US dollars at the expense of currencies of emerging market) and the massive decline of petrol and palm oil prices etc.

But most observers would agree that the trust deficit of the Najib Government is probably the most important contributing factor for the freefall of the Ringgit. While the Singapore dollar depreciated vis-à-vis US dollar, the Singapore dollar appreciated against the Ringgit to a historical height. Likewise, just as the Chinese yuan devalued on its own volition against the US dollar, the yuan appreciated against the Ringgit.

There are no shortage of committees in Najib’s six years as Prime Minister since April 2009 but there is almost no leadership by the Prime Minister cum Finance Minister in setting the economic vision and its execution, as well as anticipating and resolving crises.

Economic Council

Najib first transformed the Economic Council formed by Prime Minister Tun Abdullah Badawi in June 2008 into an Economic Cabinet that deliberates on projects. This committee bypassed the Cabinet by effectively making the Cabinet a rubber stamp for decisions made at the Economic Council. The Council meets on Monday while the Cabinet usually meets on Wednesday.

This process of usurping the Cabinet’s collective decision-making process and internal scrutiny was what made the 1MDB and PFI scandals possible.

The latest composition of the Economic Council, according to the website of Economic Planning Unit (EPU), includes the PM, Deputy Prime Minister Zahid Hamidi, Abdul Wahid Omar (Minister in Prime Minister’s Department responsible for economic affairs), Ahmad Husni Hanadzlah (Second Finance Minister), Idris Jala (CEO, Pemandu), Ali Hamsa (Chief Secretary to the Government), Zeti Aziz (Bank Negara Govornor), Irwan Serigar Abdullah (Sec-Gen of Treasury), Rahamat Bavi Yusoff (Director-General, EPU) and Tan Sri Yong Poh Kon.

There is no representation of Ministers from Barisan Nasional component parties. Former MCA President Chua Soi Lek was a member of the Economic Council between November 2010 and May 2013 after I revealed that MCA had no representation in the Economic Council.

National Economic Advisory Council

Najib also formed the now defunct National Economic Advisory Council on 11th July 2009 with great fanfare. The composition of the Council was very impressive with highly reputable economists such as the late Dr. Mahani Zainal Abidin, the late Dr. Zainal Aznam Yusof, World Bank’s Dr. Homi Kharas, Danny Quah and Andrew Sheng.

The NEAC produced a historic document, the New Economic Model, which was partially unveiled by Najib on 31st March 2010 at the InvestMalaysia Conference. However, the proposals were stillborn and some of the most crucial proposed reforms were not included in the subsequent 10th Malaysia Plan, which was tabled in Parliament three months later in June 2010.

The NEAC died a natural death as there was no interest on the part of Najib to push for institutional reforms.

Fiscal Policy Committee

After the May 2013 general election, one a major concern was the nation’s potential downgrading by international rating agencies. Najib’s knee jerk response was to form another committee, the Fiscal Policy Committee, on 18th June 2013.

The Committee is headed by Najib and the permanent members of the FPC are the Deputy Prime Minister, Minister of Finance II, Minister in the Prime Minister’s Department (in charge of the Economic Planning Unit), Chief Secretary to the Government, the Governor of Bank Negara Malaysia, the Secretary-General of Treasury and the Director-General of EPU.

The Fiscal Policy Committee is still in existence but Malaysia’s economic woes have gone beyond just fiscal. That Malaysian economy is faced with a full-blown economic crisis at the moment is increasingly apparent.

Another Committee would not get Malaysia very far. What is needed is the courage to take the bull by the horns, but this is unlikely so long as we remain under the trust-deficit-ridden leadership of Najib.