Penny wise, Pound foolish (Pt III)

In the wake up public outcry about rising price of almost across the board of goods and services, political observers see the situation brewing into a point of contention for Prime Minister Dato’ Sri Mohd. Najib Tun Razak. The resentment does not only come from general public at large but also from the party.

News portal Asia Sentinel’s story:

Malaysia’s Najib Faces Party, Public Protest

Written by Our Correspondent
MON,13 JANUARY 2014
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Aigh what next

Subsidy cuts play into UMNO rebellion

Malaysian Prime Minister Najib Tun Razak enters 2014 beset by growing hostility from both the public and within his own political party, the United Malays National Organization, characterized by a deluge of New Year messages across cyberspace celebrating the “year of barang naik,” Malay language for rising prices of items.

That is a play on the initials BN, for Barisan Nasional, the national ruling coalition. It has become an opposition battle cry to the point where Najib mentioned it himself in a recent speech

Najib is making an astute move now, after national and intraparty elections have been completed, taking on the necessary but unappetizing task of dismantling decades of subsidies that have driven government debt close to the statutory limit of 55 percent of gross domestic product. In the wake of both sets of elections, he is temporarily invulnerable to both opposition and intraparty assaults.

However, electricity tariffs have risen by 15 percent, sugar subsidies have been cut. Last September, Petronas, the national energy company, cut fuel subsidies in a move that it said would save the government RMB1 billion annually. Public anger at the cutting of the subsidies is substantial and growing

In addition, many in the party rank and file are still furious over widespread spending to keep the current leadership in place in the September intraparty elections.

That has brought the prime minister under unprecedented attack from bloggers aligned with the wing of the party controlled by former Prime Minister Mahathir Mohamad, who are delivering an extraordinary onslaught on his lifestyle and that of his wife, even going so far as an unprecedented call for attention to corruption within UMNO itself. The attacks had been expected from the time Najib blocked Mahathir’s son, Mukhriz, from becoming one of the party’s three vice presidents in the September polls.

Najib has sought to deflect criticism, saying the price hikes have been caused by factors such as the global economy and extreme weather that cut into the fish catch and drove up the price of vegetables. The government has also sought to spread the pain by cutting government ministers’ allowances by 10 percent, banning civil servants from business class flights, restricting expenses on official government functions. However, that hasn’t mollified voters, who staged public protests over New Year’s.

Najib also enraged voters by leaving for most of the holidays, going to Las Vegas and other watering holes with his wife, Rosmah Mansor, whose free-spending ways have alienated large swaths of the conservative Malay Muslim community. He is being called “Mr Nowhere” because of his absences from the country.

“A putsch is in the air, definitely, as the frustration with Najib’s free spending and extravagant lifestyle increases,” a Malay businessman told Asia Sentinel. “Najib is in the weakest position any prime minister in Malaysia has ever seen.”

Calls have been rising to have Mahathir come back to the government administrative center of Putra Jaya as an “adviser” to right the ship, something that appears highly unlikely. Mahathir himself made light of the idea.

In the meantime, bloggers who have been described as aligned with Mahathir have been raising their game, making broadly based attacks on Najib and even other UMNO officials, calling attention to what appears to be corruption in the award of highway contracts.

Kadir Jasin, a former New Straits Times editor and close longtime Mahathir ally, wrote recently that “To many UMNO leaders, the measure of the party’s success is big cars, big houses and expensive watches whose names they can’t even mention.”  In particular, Rosmah has been criticized repeatedly for her taste in vastly expensive watches.

Kadir also called attention to “people with no formal appointments and duties (who) are known to use government on pretext of serving the country,” an apparent reference to Rosmah’s November commandeering of an official government jet to fly to Qatar to attend an international forum.

“Do they know that even the Queen (of England) uses trains and charters planes when travelling overseas? They should because many like the PM studied in the UK. Air transport for the British Royal Family and the government of the UK is provided, depending on circumstances and availability, by a variety of military and civilian operators. But most often they fly using scheduled commercial flights, normally the British Airways.”

“We are complaining about the wrong things he is doing in accommodating the wishes of his wife,” Kadir wrote. “We are asking the government to be accountable. The PM should answer these allegations. The way he bragged about his wife in public, he was in fact saying that his wife has more influence than him with foreign leaders.”

***************

On 30 December 2013, Prime Minister Najib announced the first round of 11 points ‘austerity drive’ which many saw as insincere, amidst the ostentatious and opulence lifestyle of the first couple globe trotting in super luxury at the expense of taxpayers’ coffer.

The 9M-AWK, shot in Lapangan Terbang Sultan Abdul Halim, Alor Setar the morning a VVIP party leader flew in to attend the breakfast with rakyat of Pendang

The 9M-AWK, shot in Lapangan Terbang Sultan Abdul Halim, Alor Setar the morning a VVIP party leader flew in to attend the breakfast with rakyat of Pendang

The Federal Government has been spending a little bit too much on operations, managing and running the country. In fact, in the Bajet 2014 presentation speech in Dewan Rakyat last October, more than 82% of the RM264.2 billion proposed budget is spent on operations. For a growing and still developing economy and the need of various infrastructure projects, the development budget or CAPEX is less than 18% per annum.

Even Fourth Prime Minister Tun Dr. Mahathir Mohamad sounded out on the matter and was cynical when asked to comment about the extravagance of the RM181 million per annum VVIP jet cost.

Budget 2014 breakdown

Budget 2014 breakdown

He did not even announce any measures to cut down and cost saving for expenditure pertaining to the extraordinary large staffed and complemented Prime Minister’s Office (PMO) and Seri Perdana household.

Not all leaders are continuing their lavish lifestyle being the Chief Executive. Conservative Australian Prime Minister Tony Abbott is adopting the economisation and cost cutting measures.

The British Telegraph story:

Australia’s prime minister, Tony Abbott, opts for economy class on flights

Tony Abbott, Australia’s PM, stuns fellow airline passengers by flying economy class as the nation’s leaders turn frugal

Tony Abbott, Australia’s prime minister

Tony Abbott, Australia’s prime minister Photo: AFP

By Jonathan Pearlman

5:33PM GMT 12 Jan 2014

Tony Abbott, Australia’s prime minister, has won praise for his frugality after travelling economy class on a long-haul flight to France.

Mr Abbott and his family travelled economy on a flight from Sydney to Paris, which normally takes a gruelling 24 hours in total. His office did not apparently publicise his decision, but his presence at the back of the plane emerged after a fellow passenger broadcast the news on social media.

In similar fashion, Australia’s foreign minister, Julie Bishop, has insisted on flying business class rather than first class, and last year rejected her department’s plans to book her in to a £1,000-a-night hotel suite in New York. She has been branded “the iron lady” after choosing to do her own ironing while travelling.

Mr Abbott, wearing a blue polo shirt, was travelling with his wife and two younger daughters during the Christmas holidays to Paris to spend a week with his eldest daughter, Louise, who is living in Switzerland. He reportedly rejected an offer of an upgrade.

The former Rhodes Scholar, leader of the ruling conservative coalition, has shown a particularly frugal approach to the trappings of office since his election last September.

He chose to live in a tiny £65-a-night flat at the police academy in Canberra last year while his official residence, The Lodge, was undergoing repairs. He turned down an offer by the public service to put him up in a home rental or in a luxury hotel but it later emerged that his department had already rented him a £1600-a-week home, which remained empty. Julia Gillard, the former Labor prime minister, also reportedly opted to stay at the police academy while leader.

Since he became prime minister, Mr Abbott and his family have continued to live ordinary family lives as much as possible. He has been photographed taking out the rubbish outside his suburban Sydney house; his wife, Margie, has been photographed lugging armfuls of shopping bags from the local supermarket.

Mr Abbott’s thrifty approach is in line with his political pledges to reduce public spending and cut the civil service. He has reined in travel costs and introduced a rule that ministers must sign off on all civil servants’ expenses above £11,000. Any expenses more than £28,000 must be signed off by the prime minister himself.

“It was a commendable look for the leader of a government preparing to take the razor to the budget this year,” observed political correspondent Bianca Hall in Fairfax Media. “And while Abbott’s office didn’t try to publicise his frugal travel arrangements, they did not go unnoticed… In these days of austerity and belt tightening, no politician can be seen to be living it up on the public purse.”

**************

It is not like the Australian Government cannot afford to provide an executive jet for its Prime Minister, considering that the country is actually the size of a continent. In factRoyal Australian Air Force owns and operates three BBJ and two Bombardier Challenger 604 VVIP jets.

One of three RAAF BBJs

One of three RAAF BBJs

Prime Minister Abbott was making a point that he is willing to do cost saving, despite the facility exist. It is leadership by example.

Prime Minister Najib has been seen to be obtuse when he condescendingly  if not trying to insult the intelligence of Malaysians trying to justify that not all price of goods and services are going up and gave the price of kangkung in the market currently has gone down, in an appreciation event near Kemaman on Sunday.

That brought about a series of viral punts against him using the kangkung motive.

An initial salvo of on over all strategy for the kangkung consumption

An initial salvo of on over all strategy for the kangkung consumption

It is a clear demonstration of the seriousness how the Malaysian public of treating and reacting to any response pertaining to the escalating cost of living, especially household grocery items and goods and services.

As such, the Cabinet this morning decided on the formation of a Special Cabinet Committee to address the issue.

NST story:

15 January 2014| last updated at 05:16PM

Special committee to tackle rising cost of living set up

By Ahmad Fairuz Othman
 3  5 Google +0  0 0 comments

PUTRAJAYA: The government has set up a Special Cabinet Committee to tackle the cost of living faced by the people, and laboratory to identify ways to ease the people’s burden in relation to the matter.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said the two measures, in addition to a directive by the Cabinet for ministers to ” go to the ground” to listen to grouses of consumers, were among the things that would strengthen current measures to cushion the impact of the rise in cost of living.

Muhyiddin, who would chair the cabinet committee, said it was an expansion of the National Key Result Areas (NKRA) task force on the cost of living, and it would act as the centralised body to handle issues pertaining to the hike in prices of goods.

“The committee will look into the rise of prices which has nothing to do with the fiscal consolidation measures, but is instead due to issues of market structure, including the issue of supply and marketing system.

“The Domestic Trade, Cooperatives and Consumerism Ministry will act as the secretariat and facilitating ministry in this special committee. Other relevant ministries and agencies such as the Finance, Agriculture and Agro-based Industry, Transport and others are appointed as special committee members to tackle the rising cost of living,” said Muhyiddin,  when speaking to reporters at his office in Perdana Putra here today.

The Special Cabinet Committee will among other things,  coordinate policy spanning ministries and agencies, cooperate with the Fiscal Policy Committee, conduct a sectoral study to trace the actual effect of the rise of input cost towards the cost of goods; engage with consumers, and related trade groups and NGOs; and step up enforcement.

The deputy prime minister said a laboratory, which began its task today for the next two weeks, would look into ways to ease the burden of the people.

“The laboratory will comprise those from consumer associations, industry players, academicians, students and others to provide input and views in tackling the rising cost of living.”

Deputy Prime Minister Tan Sri Muhyiddin Mohd Yassin with Domestic Trade, Cooperatives and Consumerism Minister, Datuk Seri Hasan Malek and Minister of Agriculture and Agro-Based Industry, Datuk Seri Ismail Sabri Yaakob before the press conference on Special Cabinet Committee to tackle rising cost of living, at his office in Putrajaya today. — NSTP photo by Mohd Fadli Hamzah

Read more: Special committee to tackle rising cost of living set up – Latest – New Straits Timeshttp://www.nst.com.my/latest/special-committee-to-tackle-rising-cost-of-living-set-up-1.462950#ixzz2qT1cAOAO

***************

Unfortunately, it was explained with the term ‘Laboratory’. Generally, Malaysians are very suspicious when it comes to anything with the connotation of  ‘laboratory’, ‘PEMANDU’ and ‘Consultants’, as the general impression that the Federal Government had been extra lavish and ostentatious in this particular expenditure.

Never before the Federal Government is this unpopular and it is non political.

Published in: on January 15, 2014 at 20:00  Comments (12)  

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12 CommentsLeave a comment

  1. […] The “thirteen million plus Ringgit” guy rambles…. […]

  2. Another laboratory being setup ,and probably another group of consultant to monitor the kangkong price.

  3. Well the Special Cabinet Committee to tackle the high cost of living should have been set up at the same time various fiscal measures and subsidy cuts were announced. The committee was set up only after widespread discontent by the people became apparent. That aint no way to manage a country. And this Special Cabinet Committee will actually not look into the effects of fiscal consolidation measures as reasons for price increase but rather on the market structure and the supply and marketing side. Meaning the chase will be not on the root cause of price hikes which is the taxation measures but rather on the structure of supply and marketing. Hmm..this doesnt sound that good because costs of production , transportation etc have already been whacked by the taxation measures so the logical consequence is increase in prices of consumer items. One cannot run away from that Economics 101. To look away from it is to deny that fiscal measures ala IMF have the inevitable effect of putting lifes of the ordinary people esp those households with income less than RM4k in such misery for years to come. Next time, do have broader consultations with various sectors and layers of the society before bulldozing belt tightening measures on the people because the people do not deserve to be treated like this.

    • And yes, the word Lab, is really annoying. Is there a dearth of a better word in the entire English dictionary?

      • Bring on the neoliberalism advocates!

        Seriously, this was a situation that could have been anticipated.

        And Dr Mahathir has a selective memory, it seems. Did he do anything to rationalise and reduce subsidies when he was the PM?

        Answer: nope, nada, zilch.

        It doesn’t take rocket science economics or MBA holders to tell you that a country cannot continue to live beyond it’s means indefinitely without being called to account.

        Heck, any ordinary citizen trying to balance a household budget could tell you this.

      • The last thing Malaysia needs is more doses of the economic neoliberalism hideous solution. Economic neoliberalism is a creature of hegemonic aim at domination through the veil of deception that free market and free flows of unproductive currency speculation are good for mankind. No, these are good only for economic hegemons, cheap skate foreign investors sucking for tax free priviledges and incentives from host govts, exploitation of workers across the globe, excessive profits and wealths in the hands of 1% and the creation of money through non productive speculative activities etc etc. The current Malaysian govt should know that using draconian austerity measures will eventually reduce domestic consumption and result in sluggish economic growth if it grows at all. Since money is backed by commodity and economic growth, any downturn will further weaken the ringgit. The people and the economy will be thrown into a whirlpool of misery. Yes, you do need knowledge of economic models so that you are prepared to consider all options before leading the country spiralling to the bottom.

      • Well, that’s fine in theory.

        But there’s only so much domestic consumption can do to maintain and drive the Malaysian economy forward.

        We do not have a large domestic base like the US (where domestic consumption accounts for about 80 per cent of GDP) or China or India (with their emerging middle-class middle-income consumers).

        As a relatively small trade-driven economy, Malaysia has no choice but to restructure and re-tool it’s economy into a productivity-driven and higher value-added construct.

        It cannot continue to rely on cheap labour (local and foreign) and a cheap Ringgit to drive it’s exports. There are other countries who can play that game better, without being bogged down with the polemics and politics of “redistribution”.

        Incidentally, if the Malaysian government and corporates want to borrow from overseas funders, they will have to maintain a good credit rating. Which means, among other things, that the government has to get it’s finances under control.

        A continued reliance on deficit financing, as you propose, is the surest way to get punished by the International financial markets. Just see what’s happening in Indonesia.

        Sure, we can go all gung-ho and spit in the face of the world, a la Dr Mahathir. Just don’t be upset and blame the neoliberal capitalist cabals if the world spits back in the face of Malaysia!

      • It is domestic consumption that has driven Malaysia’s economy in the wake of weak economies in thd US and Europe in the last few years. So how small Malaysia’s domestic market is, it has served as the engine of growths consuming items that could not find markets abroad due to weak demands.

        And you talk about productivity driven economy to cater to the global markets that are uncertain? High productivity will be laid to waste if there’s no demand and who will mop up excess productivity if not for domestic markets? Dont rely on export oriented foreign investments who’d wrap up and leave to lower cost countries should exports growth are sluggish. And in Malaysia the irony is the govt allows imports of low cost workers into Malaysia displacing local workers and then had the audacity to lecture local workers as lazy and reject certain jobs. You see how capitslists push down wages for greater profit and then put the blame on workers? Another neoliberal hideous behaviour.

        Yeah credit rating agencies controlled by the likes of Goldman Sachs and JP Morgan who claim national govts dont have to follow their indicators because it is only their opinion and yet the Msian govt.bent backwards to toe the line of rating agencies. Deep in the clasp of the jaws of neoliberalism the govt cant think at all. Look at say the German model and Keynesian for alternatives to solving economic or financial woes of the nation.

      • Yeah, but Angela Merkel is a paragon of fiscal discipline and rectitude!

        Which is why most Germans yearn for the days of a rock-solid Deutsch mark as opposed to an iffy Euro!

        You may wax wroth about the international rating agencies, but see if the Malaysian government is going to market with it’s bonds and sukuk without an imprimatur from these same rating agencies? I’d dearly like to see them try.

  4. On account of executive jet usage alone, especially when compared to the Australian Prime Minister travelling economy class, Najib should go – elsewhere other than in the air or in the PMO.

    On account of handling the economy, you guys know better than I do, but I dislike his attempt at sidelining the NEP. On that, he should have been made to go the time he announced the New Economic Model.

    Khairy and Shahrizat should be got rid of in order to get Najib out?

    • Really?

      Why shouldn’t the NEP be sidelined?

      Has the government ever told foreign investors that they have to employ X per cent Malays, Y per cent Chinese and Z per cent Indians in their workforce if they want to set up shop in Malaysia?

      And make damn sure that their top and senior management are at least 60 per cent Malays?

      No, they haven’t, and there’s a good reason why.

      Simply put, foreign investors and MNCs won’t put up with these types of “quotas”.

      And the government can’t call their bluff, because, to use a analogy from poker, they are holding a set of weak cards!

    • Actually, the MNCs are not “bluffing”.

      They have plenty of choices where to invest.

      Like Singapore, for instance……


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