Malaysia today is an INDEBTED country with over RM1.5 Trillion in Debt, Liabilities, etc - so, the most urgent thing to do is to REDUCE Debt - Not acquire new and additional debt. Sadly, Prime Minister Anwar Ibrahim is SPENDING MORE that the Malaysian government earns - and that means that Malaysia's DEBT is INCREASING - not reducing.
BUDGET 2025 - the most important thing to note is whether it a SURPLUS Budget or a DEFICIT Budget. A Deficit Budget is IRRESPONSIBLE as it means that once again the government is planning to spend more that it is expected to earn - this translates in Malaysia needing to borrow even more - and Malaysia's DEBT increases...
They always use 'DEBT to GDP ratio' to state that Malaysia is still OK. So what exactly is GDP (Gross Domestic Product)? It really is a bad way of determining whether a country is doing well or not?
GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country. GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services provided by the government. An alternative concept, gross national product, or GNP, counts all the output of the residents of a country. So if a German-owned company has a factory in the United States, the output of this factory would be included in U.S. GDP, but in German GNP.
GDP - is not about the earnings of the government. It is about the monetary value of the final goods and services produced in the country by everyone not just Malaysians. It will include products and services of even foreign companies which Malaysia does not even own - the most Malaysian government can get are maybe export/import taxes, cost of permits, etc. IT certainly is not a reflection of the financial position/reality of Malaysians and/or Malaysia.
Who did the calculation of the Malaysian GDP? Can we trust them?
Would it not be better to look at GNP(Gross National Product) that excludes foreign owned goods and services.
But, what matters is the GROWING Malaysian DEBT - and ALL Malaysians are burdened with it. Malaysia itself have to pay about RM50 Billion per year for debt financing.
One billion is equivalent to 1000 million, then RM50 Billion divided by 30 million people gives us about RM1,667 each.
Now, these government DEBTS are unlike our housing and car loans, where as we make our monthly payments, the debts reduces. On the other hand, most(if not all) government debts, payment of the 'debt servicing' charges does not reduce the DEBT. It remains the same, and Malaysia will be obligated to repay the full debt amount when the due date comes. That is why the Auditor General recently said...' ...the Federal Government needs to allocate funds to repay
maturing loans totaling RM773.750bil over the next 10 years.'(see earlier post)
Yes, we will need that much money to repay DEBTS that will mature over the next 10 years, and so, where will be get that money. MORE new DEBTS to repay maturing debts? Or give over Malaysian land and property in lieu of the debt amount? One thing to note is that a country with a large debt of about RM1.5 trillion may likely get new LOANS but with less favourable terms - maybe higher annual debt servicing rates, or maybe other requirements like handing over property and rights? We do not know - and PM Anwar(our Finance Minister) should really tell us clearly so we can all understand.
During the first reign of PM Mahathir, Malaysia's debt of about RM50-RM100 Billion stayed relatively constant, not increasing, but things change under PM Abdullah Badawi and then Najib - where Malaysia's debt sky-rocketed to now about RM1.5 Trillion. PM Anwar is no better as in 2023 itself, the Malaysian Debt went UP more than RM90 Billion...not reducing. Anwar proudly proclaimed it as an 'achievement' compared to 2021 and 2022, where the NEW Debt was RM100 Billion yearly. He did not give us the NEW Debt of Malaysia for the earlier years - like 1995, 1996, 2000, 2005, 2008, 2010, 2018, 2019, 2020? Most likely the NEW DEBT would have been so much lower. Comparing with figures when the Covid pandemic hits us badly, where people could not work, companies could not operate and trade was affected badly, vacination and new medical response needed is rather shameful and wrong. When PM Anwar comes into power, things were back to normal again...
Once, I visited a kampung in Malaysia, and when I entered the home, I saw a refrigerator, TV and other electrical appliance. But, then I discovered that there was no electrical supply - and the refrigerator was used like a cupboard to store clothes...Interestingly, in Malaysia, in some communities, the 'show' of being all right(nay rich and good) is part of culture - people want to give the 'impression' that all is well and good, and we are well-off, when the reality is that we are not - we do not want to show our poverty and hardships.
So, that was the problem with Prime Ministers since Mahathir - they behave that Malaysia is a 'RICH' Country, and the government spends and spends generously giving people this and that even though reasonably Malaysia cannot afford to do so... and thus our DEBT went up and up to now become more than RM1.5 Trillion.
Sadly, the current Anwar Ibrahim is of the same 'attitude' - he started out with a SURPLUS Budget for 2023, far over the amount that the Federal Government could afford - hence new LOANS of about RM92 Billion. Same thing happened again with BUDGET 2024 - and I believe that the NEW LOAN will be about RM80 Plus Billion, more so since money expected to come in for that year from investments and dividends did not come in - based on the reason Auditor General's Reports. Hence, EXPECTED Earnings did not come in - it was much less.
Now, the BIGGEST BUDGET ever for Malaysia - BUDGET 2025 > the question is whether the amount the government will spend EQUALS the estimated amount of earnings? Or, is it again a SURPLUS Budget - where more NEW LOANS will have to be taken?
People should not be TOO HAPPY with the 'GOODIES PROMISED', but must look at whether Malaysia can really afford it at this time WITHOUT getting DEEPER into DEBTS?
The problem with our current PM Anwar, I believe, is that he wants to create an image as 'The Best Ever Prime Minister of Malaysia' that is LOVED by the people, especially the Malay and Muslims...so, one of the 'things' he did was introduce was things like "HIGHEST ever pay rise for Public Officers", and 'Highest ever spending BUDGET 2025". He may also eventually be the Prime Minister who went and visited the most number of world leaders in their own country'
The way PM Anwar Ibrahim is governing, both as Finance Minister and Prime Minister, will cause the Malaysia's Debt to increase ANNUALLY, and come GE16, we would have increased our debt by about RM400 - 450 Billion (O.45 Trillion)...
When a company cannot settle its debts - it winds-up, and the creditors can go after the remaining company's assets and property - not after the property/assets of the company's owners, the shareholders. They can go after the GUARANTORS to recover the debt, and that may result in all these guarantors being destroyed financially. The creditors can go after assets that were placed as additional security maybe the land the company owns.
But, when a COUNTRY cannot settle its DEBTS - at risk is not them Ministers or Prime Ministers that took these loans on behalf of Malaysia, it will be all Malaysians and Malaysia. Would the creditors be able to acquire Federal Government owned property/buildings? ... Did Malaysia when they borrowed say in the agreement that failure to pay the debt, the creditors can take over Malaysia's airports/ports? We do not know - because all these loan agreement are kept 'SECRET' - Many are even wondering about the ECRL Agreement - what are the terms and conditions? Is there a condition that when the ECRL is handed over to Malaysia, Malaysia will be required to generated a certain income from ECRL within a certain number of years and/or repay the full debt, failing which the ECRL will be handed over to the Chinese company to own, operate and manage? TRANSPARENCY and Accountability requires us the right to know NOW the contents of all these agreements, including DEBT agreements?
The problem with PM Anwar then(and possibly still) is his capacity to understand problems and how to effectively deal with them, according to Mahathir. Do we agree?
Former prime minister Tun Dr Mahathir Mohamad today claimed that Datuk Seri Anwar Ibrahim was unable to address the financial crisis that Malaysia was facing in 1990s when given the opportunity to be the acting prime minister.
He said Anwar, who was at the time deputy prime minister, had given the impression that he did not understand the issues that the country was facing, which made him unable to address and solve the issues at the time.
He said Anwar only did things based on the recommendations provided by the International Monetary Fund (IMF).
"I realised that when I gave Anwar a chance to become the acting prime minister, he was not able to handle problems, especially when it came to financial crisis.
"It was as if he did not understand the problem, (and) of course when we do not understand the problem, we cannot design a way to address the issue.
"(And) at the time, he liked to follow what was advised by the IMF and the World Bank. Hence, I decided that I could not take a leave and came back to take over my duties," he said during the Keluar Sekejap podcast by former Umno Youth chief Khairy Jamaluddin and former Umno information chief Shahril Hamdan.
Following this, Dr Mahathir, who is also former Langkawi member of parliament, said he established a new committee outside the cabinet's jurisdiction to get more in-depth opinions from financial experts.
He added that Anwar, however, was still given the chance to provide views and opinions in the committee.
"Cabinet, as usual, did not have experts, hence, we took experts from outside. I set up a new committee outside the cabinet as I wanted bankers, financiers and lawyers to come together so we could listen to their opinions.
"Anwar was also there and I still allowed him to give his opinion, however, he was more inclined towards the advice given by the IMF and the World Bank."
Dr Mahathir also claimed that Anwar was adamant about following the recommendations, despite warnings that the country might not have enough money to pay people's salaries.
"There were many problems that were caused by the fall in currency value and he followed IMF's recommendations.
"For example, let's say a loan was unsuccessful and non-performing, it (the loan) should be reduced to 30 per cent when it already reached 60 per cent.
"(And) when we reprimand him, he deliberately lowered our currency and we became poor when the currency was low.
"Because of that, our currency dropped and we became poor, where in the past we could buy things for RM100, we now need to pay RM120 or more to get them."
The worry of many is that PM Anwar may at the end of the day resort to taking IMF and/or World Bank loans, and history has shown us how so many countries took this option - how it adversely affected the people, local businesses and even the country itself.
So, if PM Anwar and the present government is acting irresponsibly, in a mannert which may lead Malaysia into a worse state of affairs - that will lead to increased sufferings of Malaysia, now and definitely including future generations, then we must decide whether we are OK with this or not.
So, do not simply be HAPPY with the 'GOODIES' in the BUDGET 2025 - but look at whether we really can afford it considering the amount of monies the Federal Government will actually earn. Will we be FORCED into taking NEW additional LOANS again?
I believe that anyone, including the government, should spend according its means - without acquiring NEW DEBTS. In fact, we should be trying to reduce our debts, or even eliminating it completely. We should strive for Malaysia to be a DEBT-FREE Country.
Singapore is a poster child for fiscal prudence. It almost always runs a budget surplus, and its constitution virtually prohibits borrowing to pay for current spending. - Financial Times, 24/3/2024
10 countries with ZERO Public DEBT - Switzerland, Sweden, Norway, Denmark, Czech Republic, Estonia,Singapore,Taiwan, South Korea and Russia
Public debt is one of the great problems of our era. The existing debt load is unprecedented. And what is worse, it has been accumulated to finance short-term spending. We have nothing to show for it.
In the past, the only reason a country took on a significant amount of debt was because an exogenous event taking place, such as a world war. And the will to defend their county made governments willing to spend recklessly.
However, the debt governments have taken on in recent decades have mostly been used to finance frivolous spending. In other words, instead of living within our means, we have opted to continually go into debt, not worrying about how that debt would be paid back in the future.
The population has shown a high degree of ignorance and selfishness. And politicians have taken advantage of that, making promises to the public with the only goal of being elected to office.
The result is that virtually all the world’s major economies are in a very vulnerable situation. Many officials try to justify it with the argument that high public debt is the price for having a developed economy. But that could not be further from the truth.
Rich countries are not rich because they owe a lot of money. Debt only helps in the short term. In the long term however, debt creates many problem. The reality is that rich countries are rich despite their high public debt.
With that in mind, we wanted to highlight 10 prosperous countries with hardly any public debt. It will help make the point that a country can both be rich and have its public finances in order.
Additionally, all these countries are very different from each other. They are of different sizes, on different continents, different levels of economic development and standard of living, and very different economic models.
But they all share one thing in common: enough fiscal discipline to keep the country’s public finances healthy - Clear Finances
Anwar's 2024 Budget was a DEFICIT BUDGET - requiring new loans of RM85 Billion, and 2025 Budget will again need new debt of RM80 Billion. REDUCING amount of NEW DEBT is not the way - we should be REDUCING the amount of Existing DEBTS/LIABILITIES.
PM Anwar and the current government lacks FISCAL DISCIPLINE - when what we should get is really a SURPLUS BUDGET whereby that surplus can REDUCE existing DEBTS.
We saw the removal of SUBSIDIES for Diesel, and in 2025 the removal of subsidies of petrol RON95. But what is missing is the development of localized public transport ion every towns that will encourage the citizenry to take public busses or public rail services. We need Public Busses that travels to every Tamans/Kampungs - where no one will required to walk more than 500 meters to get into these public busses from their homes/workplaces/etc. If one has to walk 1 or more kilometers to get to the bus stops, it will simply not work for a generation that is so used to travel using private cars and motorbikes directly from home to intended locations. BUT no plans to improve local public transport, be it by busses or rail in every town in Malaysia in the BUDGET 2025? As fuel prices increase, driving own cars/bikes become more expensive and economically problematic...
REMEMBER, if the people do not speak up - then the government will think that the people are HAPPY with the proposed BUDGET.
Dr M: Anwar failed in 1997 financial crisis
KUALA LUMPUR: Former prime minister Tun Dr Mahathir Mohamad today claimed that Datuk Seri Anwar Ibrahim was unable to address the financial crisis that Malaysia was facing in 1990s when given the opportunity to be the acting prime minister.
He said Anwar, who was at the time deputy prime minister, had given the impression that he did not understand the issues that the country was facing, which made him unable to address and solve the issues at the time.
He said Anwar only did things based on the recommendations provided by the International Monetary Fund (IMF).
"I realised that when I gave Anwar a chance to become the acting prime minister, he was not able to handle problems, especially when it came to financial crisis.
"It was as if he did not understand the problem, (and) of course when we do not understand the problem, we cannot design a way to address the issue.
"(And) at the time, he liked to follow what was advised by the IMF and the World Bank. Hence, I decided that I could not take a leave and came back to take over my duties," he said during the Keluar Sekejap podcast by former Umno Youth chief Khairy Jamaluddin and former Umno information chief Shahril Hamdan.
Following this, Dr Mahathir, who is also former Langkawi member of parliament, said he established a new committee outside the cabinet's jurisdiction to get more in-depth opinions from financial experts.
He added that Anwar, however, was still given the chance to provide views and opinions in the committee.
"Cabinet, as usual, did not have experts, hence, we took experts from outside. I set up a new committee outside the cabinet as I wanted bankers, financiers and lawyers to come together so we could listen to their opinions.
"Anwar was also there and I still allowed him to give his opinion, however, he was more inclined towards the advice given by the IMF and the World Bank."
Dr Mahathir also claimed that Anwar was adamant about following the recommendations, despite warnings that the country might not have enough money to pay people's salaries.
"There were many problems that were caused by the fall in currency value and he followed IMF's recommendations.
"For example, let's say a loan was unsuccessful and non-performing, it (the loan) should be reduced to 30 per cent when it already reached 60 per cent.
"(And) when we reprimand him, he deliberately lowered our currency and we became poor when the currency was low.
"Because of that, our currency dropped and we became poor, where in
the past we could buy things for RM100, we now need to pay RM120 or more
to get them." - NST, 13/11/2023
Posts
No comments:
Post a Comment