Interview by The Edge: 2016 Outlook
Ultimately, the challenges faced by Malaysia boil down to the question of leadership and confidence the market and the people place in that leadership.
Speaking from the perspective of an Opposition MP, it’s about time for Prime Minister Najib Razak to plan an orderly exit, as he is very much the source of declining confidence in the national leadership.
But if Najib is not prepared to exit, he must lead, instead of just rearrange chairs on the deck of the Titanic. He must not allow the economy to ‘auto-pilot’ into a free fall.
I hope that Najib feels secure enough to relinquish the position of Finance Minister and handover the position to a senior minister with strong economic background, for instance Trade Minister Mustapha Mohamad.
Hopefully 2016 will see more political clarity. 2015 was the year of ‘once-in-a-generation’ political earthquakes which saw PAS split into two and UMNO split into one and half. The earthquakes triggered a series of realignments which are still murky work-in-progress. Once clarify prevails, the line would be drawn clearer between conservative forces and progressive movements.
2. What are your biggest fears for 2016?
I fear that Malaysia will be hit by a ‘perfect storm’ crisis. I first used the term ‘perfect storm’ in a piece in the Edge in December 2013. In Parliament, I have repeatedly called on the Government to recognise that the Malaysian economy has entered a prolonged crisis mode. Abdul Wahid Omar was the only minister who agreed that we might face a ‘perfect storm’ crisis. The rest buried their heads in the sand.
The ‘perfect storm’ comes when everything that could go wrong indeed goes wrong at once:
The emerging markets are already grappling with the full impact of the tapering of the US Fed’s unconventional monetary policies, in particular Quantitative Easing. Prices for oil and commodities have fallen substantially, triggering a fiscal crisis in countries heavily dependant on oil revenue such as Malaysia.
The falling oil prices also put pressure on the ringgit, which has fallen by nearly a quarter vis-à-vis the US dollar. Of course the ringgit has fallen in part also due to lack of confidence in Malaysia’s domestic political situation.
The ultimate impact of the implementation of GST, the removal of subsidies, toll hikes, changes to electricity tariff etc is that the ordinary workforce suffers further cuts to their already limited disposable income as wages do not rise much. Consequently, the domestic market is deprived of consumption it badly needed.
As the household debt level is very high, one prays that there is no sudden losses of jobs. The combined effect of a struggling domestic market and potential losses of jobs could result in higher non-performing loans. And, as more than 60 percent of households debts are property-related, even if there is no crash the property sector would not be rosy for quite a while.
At the same time, exports may not be able to come to Malaysia’s rescue as the global economy slows. Even if the US economy is holding up reasonably well, Malaysia’s past two decades of low skill, low wages and low productivity have led to a premature deindustrialisation milieu , hence we have limited range of products to export anyway.
I do not wish to be a doomsayer but I am just appalled that no one in the Government is looking at these issues in a serious manner. We may or may not hit the big iceberg but the indifference on the part of those who steer the Titanic is scary.
3. How would you describe 2016, do you expect the new year to be worse or more challenging for Malaysia (be it politics or the economy) than 2015?
More cracks in UMNO will appear if the general economic condition worsens. UMNO will resort to harsher racial messages. It is the test of whether those who oppose to UMNO can rise to the occasion to offer a vision that is inspiring and capture the imagination of the wider population.
Najib probably thinks that his lifeline is a marriage with PAS in the name of Malay-Muslim supremacy and unity. But that will lead to further split in PAS, as the first objective of most PAS members and leaders in joining PAS was to oppose UMNO.
DAP, PKR, and Amanah have to buck up to come up with a convincing economic agenda that addresses insecurity during economic difficulties. The line is drawn between the old racial politics of UMNO-PAS and new progressive ideas that haven’t surfaced as yet. A set of leaders who can communicate those ideas would need to come forward at a much faster pace too.
4. What are your biggest takeaways from 2015?
For Malaysia, if 2014 was bad with the plane crashes and all the bad news, I am sure most would feel that 2015 was no better.
My biggest takeaway from the year is that Malaysians have realised that nothing is static, and the previous ‘normal’ which they assumed could be counted on, could just change so swiftly and with far-reaching consequences.
For instance, oil prices halved in a matter of months and never recovered. In terms of politics as well, the situation has gone from bad to worse. A year ago when I spoke about the possible split in PAS, no one took it seriously. Also, the slide in Prime Minister Najib’s fortune and popularity is unprecedented.
5. Malaysia took a blow in terms of newsflow in 2015, so much so that it’s said we have a perception problem. How can we win back favour on the global stage?
It is not merely negative perception that Malaysia has a problem with.
1996 was the last happy year where most Malaysians genuinely felt that the nation and themselves were in unstoppable upward mobility and progress. The Asian financial crisis in 1997 shattered the collective sense of pride, purpose, and destiny. A generation has passed. Malaysia is still in perpetual crisis, stagnation and decay, a scenario that continues to plague Malaysia until today.
Only fundamental rethinking of our politics and economics can propel Malaysia back to the world stage as a respectable middle power.