Posted by SM Maulana
KUALA LUMPUR, July 7 — Over the weekend, nearly every Cabinet minister was on the election trail.
Datuk Seri Abdullah Ahmad Badawi, Datuk Seri Najib Razak, Tan Sri Muhyiddin Yassin, Datuk Ahmad Zahid Hamidi, Datuk Seri Syed Hamid Albar, Datuk Seri Rais Yatim, Datuk Hishamuddin Hussein, Datuk Shafie Apdal, Datuk Ong Tee Keat, Datuk Ong Ka Chuan, Datuk Liow Tiong Lai…
The Umno ministers were preoccupied with winning support on the ground and turning that into nominations to contest for top positions in the party elections in December while the MCA ministers were making the rounds to ensure that they would be in the drivers’ seat against Messrs Chua Jui Meng and Chua Soi Lek come October.
This pattern of activity is going to get more intensive in the coming weeks and months as the party polls draw nearer, creating some concern about whether the country’s top politicians are focused on steering the economy through this testing period of gut-wrenching inflation and lower growth or are they simply consumed on staying in power.
Anecdotal evidence suggests that politics is winning the day, leading some political pundits to quip about the nation being on auto pilot. And yet, the economic situation is dicey and likely to get worse by the turn of the year.
Malaysia’s benchmark stock index has slumped to its lowest in more than a year, the ringgit dropped to a five-month low and three-year government bonds fell for a ninth week, their longest losing streak since at least 1998, as political tension, slower growth and higher inflation worried investors.
Government officials told The Malaysian Insider that they are bracing for the full force of the global turmoil to hit home early next year and for the recession to last for at least 24 months.
That is why the government cut fuel subsidies instead of borrowing, keeping prices artificially low and allowing the budget deficit to balloon from 3.2 per cent of Gross Domestic Product to 5 per cent.
A senior government official said: “We need to have the flexibility for later on when the economic environment really gets challenging. If our budget deficit has grown, this would have affected our sovereign rating and made it more difficult for the government and Malaysian companies to raise funds.’’
The warning signs are everywhere. Twenty per cent of the country’s exports go to the US. A contraction in the US economy will affect demand for goods and services from Malaysia, which will hurt thousands of companies and businesses here and in turn reduce economic activity.
The International Monetary Fund reported that surging food and oil prices could “severely weaken” the outlook in about 75 developing countries, including populous Asian nations such as Pakistan and Indonesia. But of more danger to Malaysia — one of the world’s top trading nations — is the limp economic situation in the United States.
The twin challenges of surging food and oil prices will be felt severely, said Tun Dr Mahathir Mohamad.
But he wondered if the government understood the magnitude of the economic challenge it was facing, noting that it was still talking about inflation being between 5 per cent and 7 per cent.
“This is quite meaningless to lower and middle-income people who must pay 40% more for petrol and 100% more for rice. Other necessities too have increased in price by well over 5%-7%. Stopping price control in the belief that the market will determine prices is imprudent.
“One of the reasons why Malaysia’s inflation rates had remained low compared to other developing countries and even some developed countries is the control over prices of essential goods. Without control there will always be profiteering. And profiteering will result in a high rate of inflation, ” he posted on his blog, suggesting that there be judicious wage increases to cushion the impact of rising costs.
His ideas may not be sustainable but he appears to be the only Malaysian leader trying to make sense of the impending economic tsunami. The rest, whether they belong to the Barisan Nasional or Pakatan Rakyat, are on the conveyor belt of politics. Their survival or political ambitions appear to take precedence over that of their constituents.
The Prime Minister noted yesterday that his priority was to tackle inflation.
“The general election is over. The people have already given their trust to the political parties of their choice. The people have chosen the Barisan Nasional to continue to rule, ‘’ he said.
Really, this message should not be for public consumption — it should be directed at those still on election mode. And that includes the PM and his Cabinet ministers.