No News Is Bad News
Corruption costs Malaysians 107 million low-cost housing units
KUALA LUMPUR, May 16, 2023: EMIR Research has estimated that Malaysians lost RM4.5 trillion in 26 years.
Now, let us picture what is RM4.5 trillion - it is 4,500,000,000,000 i.e 12 zeroes in a trillion.
Malaysia’s definition of low-cost housing is housing units that cost between RM25,000 and RM42,000.
So, divide 4.5 trillion by 42,000, you get 107,142,857.143 low-cost housing units. That also means 30 million Malaysians can each own more than three houses!
And Malaysia’s 10th prime minister, Anwar Ibrahim, who assumed office on Nov 24, 2022, told Parliament in January 2023 that the country’s current national debt is at RM1.5 trillion, or more than 80% of Gross Domestic Product (GDP).
So, is it any wonder that the Malaysian Ringgit is struggling in the Forex market - currently Singapore $1= RM3.30.
If the previous Governments and prime ministers are not to blame, then who do you blame?
So for Dr Mahathir Mohamad (1981-2003 and 2018-2020), Abdullah Ahmad Badawi (2003-2009), Najib Abdul Razak (2009-2018) and Muhyiddin Yassin (2020-2021) and Ismail Sabri Yaakob (2021–2022), they have lost the right to talk about a clean Government and good governance.
Anwar has been in office for only about half a year and it is the same incompetent politicians who now want to bring Anwar down, just for power and the largesse.
Worst still, they are using racial and religious issues - used since Merdeka (Independence) - to create disunity among Malaysians.
These racial and religious bigots - PAS, Perikatan Nasional (PN), others - must not be allowed to succeed in destabilising national unity at the expense of socio-economic progress for Malaysians and Malaysia.
The economic and financial plundering must be stopped or Malaysia will be bankrupted by the bigots for their own selfish gains.
No News Is Bad News reminds its readers that Anwar did no former Finance Minister could achieve - not even Tengku Razaleigh Hamzah - and that is to steer Malaysia to five consecutive years of national budget surpluses.
Also, those were the only years from 1970 that the Malaysian governments had seen national budget surpluses.
So, before anyone or Malaysia starts labelling Anwar as a bull shitter in the country’s finances and economy, do think twice about his track record.
And we are free to monitor his governance and performance the past six months.
Read on for the details:
Malaysian Monetary Loss to Corruption and Leakages – RM4.5 Trillion over 26 years
For a moment let us pause and think what could we have done with RM4.5 trillion that we have lost (albeit conservative numbers) for the people and the...
By Rais Hussin
10/05/2023
Published in AstroAwani, TheMalaysianInsight & Malaysiakini, image by Malaysiakini.
Estimating the actual cost of corruption to society is daunting, due to its profound, ubiquitous and systematic impact on various realms of the socioeconomic life of a nation. Nonetheless, even conservative approximations can yield earth-shaking numbers.
As one way to estimate the monetary loss to corruption, EMIR Research used an approach similar to that in the study by Dreher, Kotsogiannis and McCorriston in 2007.
Dreher with his colleagues used structural equation modelling to construct a cardinal corruption index for approximately 100 countries and eventually compute a measure of the losses due to corruption as a percentage of Gross Domestic Product (GDP) per capita. First, corruption was treated as a latent (unobservable) variable, and the authors were able to retrieve its measure (cardinal corruption index) by modelling the relationships between this latent variable and its underlying observable causes and indicators (for example, GDP per capita; capital control restrictions; financial development as proxied by private credit as a share of GDP; and consumption of cement to capture projects where the scope for corruption is high).
Then by benchmarking the index to estimates of the losses due to corruption from an external source (cost of setting up a new business as a percentage of GDP per capita), the authors were able to derive a value for each of the countries in terms of the losses as a percentage of GDP per capita that arise due to corruption.
Instead of structural equation modelling, EMIR Research deployed a more rigorous Rasch modelling techniques to turn a few globally acknowledged indicators of corruption, such as the Corruption Perception Index, Control of Corruption Index and others (see Figure 1 for details), into a linear measure of corruption, similar to the cardinal corruption index in the study by Dreher et al.
Next, we benchmarked this Rasch-derived measure of corruption against publicly reported estimates of losses associated with corruption as a percentage of GDP for 65 countries from 1996-2022 (Figure 1). Figure 1 shows a very clear relationship (log-linear) where corruption cost as a percentage of GDP escalates rapidly as the country’s corruption level increases.
The regression line in Figure 1 can estimate corruption cost as a percentage of GDP for a given year and country, knowing its Rasch-derived corruption measure, which EMIR Research has calculated as explained above.
We can also use other publicly reported data points on corruption, specifically in Malaysia.
As was reported under Najib Razak’s “Government Transformation Program” in 2010, corruption in Malaysia averaged around 1% to 2% of the Gross Domestic Product (GDP) or RM10 billion a year over the preceding years. This figure seems to be way below the global average cost of corruption as a percentage of a GDP estimate in Figure 1, which is about 10%, while, at the same time, based on EMIR’s Rasch-derived estimates, Malaysia was hovering around the global average corruption level over the period from 2000 to 2010 (see Figure 2).
Also, the above study by Dreher and his colleagues reported a more significant number for the economic cost of corruption in Malaysia over 1980–1997. According to their estimates, Malaysia’s cost of corruption, expressed as a percentage of GDP per capita, over 1980–1997 steadily remained at about 48%. For comparison, in the least corrupt countries on the list, such as Norway and Denmark, over the same period, the cost of corruption reduced from 32.44% and 29.78%, respectively, in 1980, to 11.2% and 11.92%, respectively, in 1997 (Table 1).
However, even though Malaysia’s 2% figure for the early 2000s appears as a gross underestimate, let us still work with this number as a publicly reported figure.
Therefore, we assume that, from 1997 to 2010, the economic loss due to corruption in Malaysia was about 2% of GDP, considering that this is a lower estimate.
The next publicly reported data point is by Transparency International Malaysia (TI-M) and World Bank. According to TI-M and World Bank estimates, since 2013, Malaysia has been losing close to 4% of its GDP annually to corrupt practices. The increase from 2% in 2010 to 4% in 2013 implies 26% annual growth. Therefore, corruption would be 2.25% in 2011 and 3.17% in 2012 (Table 2). And, it is reasonable to assume this 26% yearly growth dynamic shall at least remain — probably, again, as a lower estimate — into the future years, given the massive amount of corruption unearthed during Najib Razak’s administration time and even more recent times.
Interestingly this 26% annual growth figure corresponds well with the PricewaterhouseCoopers (PwC) reports. A PwC report in 2016 showed that bribery and corrupt activities amongst private entities in Malaysia rose from 19 per cent in 2014 to 30 per cent in 2016, which again implies 25.7% annual growth.
Pulling all these figures together (Table 2), we can estimate Malaysia’s total economic cost of corruption by RM2.3 trillion over the last 26 years.
Interestingly, a nearly identical figure, RM2.2 trillion (Table 3), can be derived using the benchmarking method based on global corruption-related data points (see again Figure 1). Naturally, those global data points, as often reported by government officials, are also very conservative estimates.
The total monetary loss figure can still be significantly higher due to the investment multiplier effect, which refers to the stimulative impact of public or private investments. Productive government spending creates productive economic activities across industries, boosting workers’ income in various economic sectors, and the effect is bound to ripple a few times through the economy. However, public money lost through leakages and corruption will not result in this wide spreading of the economic stimulus, thus constituting additional opportunity cost to the public.
Investment multipliers are usually greater than 1. However, consistently keeping to a very conservative line of the estimates, each RM1 out of an estimated above loss of RM2.2 trillion – RM2.3 trillion could easily result in at least an additional RM1 opportunity cost bringing the total amount to a whopping RM4.5 trillion over the last 26 years.
Yet, still, we must remember that all the above are frugally conservative estimates!
Furthermore, many indirect costs of corruption are bound to remain immeasurable and unaccounted for, as corruption does more than anything else to destroy the various central relationships needed for peaceful, harmonious development—it undermines the very glue that holds society together. It is often at the root of political dysfunction and social disunity.
The corruption also leaves the nation bare open to neo-colonisation and exploitation and poised to lose its global competitive advantage. It discourages local and foreign investment, especially the ones that can create high-value jobs and economic activities, while exploitative foreign investment will still be there and thrive with the high level of corruption. Through a distortion in spending priorities, corruption undermines the ability of the state to promote sustainable and inclusive growth.
In short, corruption is at the heart of our failures as a society.
This is why despite its massive wealth of oil, gas, palm oil, rubber, timber, agriculture and many others, Malaysia was not able to keep pace with many other countries in the region that are less blessed with natural resources. Forgetting not how much Malaysia is protected from the massive natural calamities. Malaysia is designed to succeed from its inception. Only man, i.e. leadership can profoundly impact the natural Malaysia’s DNA to succeed.
The wealth of resources is something that always gives unwise stewards of nations an illusion that they govern it well — bad governance and continuous plundering of the resources but the country is still standing. But can Malaysia continue to bleed ?
If we look at the declared national debts including liabilities reaching RM1.5 trillion, almost 80% of the GDP end-2022, and look at the conservative estimated loss due to corruption and leakages for the last 26 years at RM4.5 trillion, Malaysia could have prospered without any debt and/or borrowings. We must remember while the natural resources are all finite, like oil and gas, the government funding requirement to support nation’s growth will continue to increase infinitely. This has pushed many nations in the middle east, for instance to looks at diversifying the economy credibly through impactful digital transformation and reduce over reliance on oil and gas.
For a moment let us pause and think what could we have done with RM4.5 trillion that we have lost (albeit conservative numbers) for the people and the nation?
Dr Rais Hussin is the president and chief executive officer of EMIR Research, a think tank focused on strategic policy recommendations based on rigorous research.
Malaysia's national debt now at RM1.5 trillion, or over 80pct of GDP
By Teoh Pei Ying, Farah Adilla - January 17, 2023 @ 10:01am
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Malaysia's national debt including liabilities has reached RM1.5 trillion. NSTP/AIZUDDIN SAAD
PUTRAJAYA: Malaysia's national debt including liabilities has reached RM1.5 trillion and should be addressed urgently, Prime Minister Datuk Seri Anwar Ibrahim said.
This was already more than 80 per cent of the country's gross domestic product (GDP).
The figure also suggests that Malaysia's budget deficit will widen further than the earlier estimate of 5.8 per cent of the GDP for 2022.
"The economic uncertainties are still not easing. The economy is still considered dim and this was also contributed externally including the Ukraine-Russia conflict as well as global recovery post-Covid.
Budget 2023: Kenanga Research expects debt level to reach 61.4 pct of GDP this year
"The problem with our debt is it has already touched RM1.2 trillion and if includes liabilities, it is RM1.5 trillion.
"We have to accept this reality. We cannot feel complacent, living with the culture of contentment as if there is no problem," Anwar said during the 2023 Budget dialogue here today.
Also present were deputy Finance Ministers Datuk Seri Ahmad Maslan and Steven Sim Chee Keong, as well as deputy secretary general of treasury Datuk Johan Mahmood Merican.
The new 2023 Budget is expected to be tabled in the Parliament on Feb 24.
The original 2023 was presented on Oct 7 by the then finance minister Tengku Zafrul Abdul Aziz with a total allocation of RM372.3 billion but was not approved due to the dissolution of Parliament three days later to make way for the 15th general election (GE15).
Anwar was reported to have said that the government will look at the proposals in the budget tabled by the previous government and make the necessary changes before tabling his government's budget.
Meanwhile, Anwar said it had taken him only two months in the office to recognise that the government would be able to save around RM10 billion from leakages from its procurement system.
Hence, he said the mandate of the unity government remained - to change the orientation of the system in order to ensure that the vast majority of citizens benefit from economic initiatives and reforms. - NST
Budget 2023: Kenanga Research expects debt level to reach 61.4 pct of GDP this year
By Bernama - February 26, 2023 @ 10:16am
The MoF projects federal government debt to reach around 62.0 per cent of GDP, in order to finance development programmes and projects under the 12 Malaysia Plan as well as the redemption of the 1MDB bond maturing in March 2023. - NSTP file pic
KUALA LUMPUR: As the revised Budget 2023 remains moderately expansionary, Kenanga Research expects the debt level to increase slightly to 61.4 per cent of gross domestic product (GDP) for 2023 on an estimated fiscal deficit of RM95.0 billion and potentially slower economic growth.
Statutory debt will likely remain under the 65.0 per cent threshold, the research firm said in a note released on Saturday.
As of end-2022, the federal government's debt was RM1,079.6 billion, which was 60.4 per cent of GDP.
Although its share of GDP was lower than in 2021, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim emphasised in a Budget 2023 speech that it was still too high and needed to be reduced.
Budget 2023: Government revenue soars to nearly RM295bil or 16.5pct of GDP in 2022
Budget 2023: Govt to reduce this year's fiscal deficit from 5.6pc to 5pc
On the other hand, the Ministry of Finance (MoF) projects federal government debt to reach around 62.0 per cent of GDP, in order to finance development programmes and projects under the 12 Malaysia Plan as well as the redemption of the 1MDB bond maturing in March 2023.
The government needs to borrow to redeem the US$3 billion 10-year US dollar debt paper with a 4.44 per cent coupon per annum, it added.
The statutory debt, which includes Malaysian Government Securities (MGS), Government Investment Issues (GII), and Malaysian Islamic Treasury Bills (MITB), was at 57.7 per cent of GDP, which is well below the 65.0 per cent threshold set by the amended Act 830 (Temporary Measures for Government Financing).
Meanwhile, the research firm commends the revised Budget 2023 as a comprehensive effort to tackle the country's pressing economic challenges while promoting greater social responsibility as well as fiscal accountability and transparency.
However, it reckons there will be challenges to reach the lower deficit target of 3.2 per cent of GDP by 2025, given the delicate and highly uncertain economic environment post-pandemic.
"Nonetheless, we welcome the proposed presentation of the Fiscal Responsibility Bill later this year and think it reflects a commitment to ensuring long-term stability alongside sustained economic growth," it said.
Medium-term Projection Has Been Revised, Tax Collection To Improve Revenue
Under the revised 2023-2025 Medium-Term Fiscal Framework (MTFF), real GDP growth is projected to moderate to 4.7 per cent (previous MTFF 2022-2024: 5.5%).
The firm said the latest revision also considers several policy measures and reform initiatives to rebuild a fiscal buffer and strengthen the government's finance.
This is reflected in the increased projected revenue via non-petroleum and petroleum-related and the absence of COVID-19 funds.
Likewise, the fiscal deficit is targeted to average much lower at 4.1 per cent of GDP (2022-2024: -5.0 per cent), which signals that the government is pivoting towards fiscal consolidation by 2025.
"Nevertheless, we project the fiscal deficit in 2023 to narrow to 5.0 per cent in line with the government, considering the prospect of a global economic slowdown and the normalisation of domestic economic activities," it said.
Meanwhile, tax collection is expected to be the primary source of revenue in 2023, with an anticipated increase of 4.6 per cent to RM218.3 billion, driven by a higher collection from direct tax (RM164.1 billion; 2022: RM153.5b) and partially offset by a slightly lower collection from indirect tax (RM54.1b; 2022: RM55.3 billion).
Consequently, the contribution of tax revenue to total revenue is expected to increase to 74.9 per cent (2022: 70.9 per cent).
"The anticipated improvement in domestic labour market condition and income prospects, coupled with the ongoing recovery in economic and social activities, are expected to contribute to higher tax revenue in 2023, in line with the government's projection.
"Furthermore, the implementation of new taxes, government efforts to enhance tax compliance and higher taxes for the wealthy are likely to further boost tax revenue," Kenanga Research said.
Growth Outlook
MoF forecasts Malaysia's economic growth to grow by 4.5 per cent in 2023 (2022: 8.7 per cent) – slightly below Kenanga Research's forecast of 4.7 per cent. The research firm said in line with the updated estimates and forecasts by the government, it has updated projections with a slightly lower adjustment on revenue and DE components, cognisant of the cautious outlook.
It said the revenue projection would be challenging to achieve amid the expected global economic slowdown narrative.
"At the same time, any delay in the implementation of big government projects and the prospect of renewed global supply chain disruptions may weigh on government spending and the progress of major projects," Kenanga Research said.– BERNAMA
Budget 2023: Government revenue soars to nearly RM295bil or 16.5pct of GDP in 2022
By Azanis Shahila Aman - February 24, 2023 @ 8:35pm
The government’s total expenditure stood at RM395.2 billion or 22.1 per cent of the GDP, according to the Economic & Fiscal Outlook and Revenue Estimates 2023.
KUALA LUMPUR: Malaysia's revenue surged to RM294.4 billion or 16.5 per cent of gross domestic product (GDP) in 2022, buoyed by better-than-expected economic growth.
The government's total expenditure stood at RM395.2 billion or 22.1 per cent of the GDP, according to the Economic & Fiscal Outlook and Revenue Estimates 2023.
The report said the revenue was expected to be lower at RM291.5 billion or 15.4 per cent of GDP this year as a result of slower global economic growth and anticipated moderation of commodity prices.
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Total expenditure is estimated to be slightly lower at RM386.1 billion or 20.4 per cent of GDP, mainly due to expiry of Covid-19 Fund and spending optimisation measures.
The report said the higher revenue in 2022 was utilised primarily to cushion the additional requirement for fuel and electricity subsidies.
According to the report, the country's operating expenditure (OE) increased by 25.4 per cent to RM292.7 billion compared to budget estimates last year, mainly due to higher requirements for subsidies and social assistance.
The development expenditure (DE) decreased moderately by 5.3 per cent to RM71.6 billion compared to earlier budget estimates following the reprioritisation and implementation progress of programmes and projects.
On the fiscal deficit, the report said the federal government's fiscal deficit for 2022 dropped to 5.6 per cent of GDP, lower than the estimate of 6.0 per cent.
At the same time, it said the primary deficit, which excluded debt service charges, stood at 3.3 per cent of GDP.
For 2023, the report said OE allocation was estimated to decrease to RM289.1 billion primarily due to lower allocation for subsidies following the expected lower crude oil prices and gradual move towards a more targeted subsidy mechanism.
The DE allocation is estimated to increase significantly to RM97 billion for programmes and projects under the 12th Malaysia Palan involving construction of highways and public transport infrastructures, health facilities as well as educational institutions.
"In addition, a sum of US$3 billion is provided for the redemption of 1Malaysia Development Bhd (1MDB) bond," it said.
Overall, the report said the fiscal deficit was expected to consolidate further to 5.0 per cent of GDP.
Similarly, the primary deficit is estimated to reduce further to 2.5 per cent of GDP.
"The government is committed to continue the fiscal consolidation plan guided by the Medium-Term Fiscal Framework to ensure the sustainability of public finances," it added. - NST
Budget 2023: Govt to reduce this year's fiscal deficit from 5.6pc to 5pc
By Teh Athira Yusof, Nor Ain Mohamed Radhi, Qistina Sallehuddin - February 24, 2023 @ 4:58pm
Prime Minister Datuk Seri Anwar Ibrahim tabling the 2023 Budget at Parliament today.
KUALA LUMPUR: The government will reduce the 2023 fiscal deficit to five per cent from 5.6 per cent last year.
Prime Minister Datuk Seri Anwar Ibrahim, who is also the finance minister, said the government was determined to achieve a sustainable fiscal deficit level in the medium term, with an increased target of 3.2 per cent in the growth of gross domestic product (GDP) by 2025.
"Meanwhile, the Fiscal Responsibility Bill will be presented to Parliament this year to ensure that the economic policy is more transparent to avoid any possibility of continuous overreach in the future," he told the Dewan Rakyat during the 2023 Budget tabling today.
Anwar added that the government would also take a progressive approach in terms of targeted subsidies and structural tax to look after the underprivileged.
Among the initiatives introduced include an increase in Amanah Saham Bumiputera (ASB) dividend to 5.1 per cent per unit for depositors with less than RM30,000 savings.
"Meanwhile, those with savings over RM30,000 will receive a 4.6 per cent dividend per unit," he said.
He added that the government had not considered re-implementing the Goods and Services Tax (GST) because of inflation in food prices, which currently recorded an increase of five per cent.
At the same time, electricity tariffs would be maintained for all domestic consumers and small- and medium-scale enterprises. However, large corporations, except those in the food security and agriculture sectors, would see an increase in their tariff.
Budget 2023: Bank Pembangunan mandated to disburse RM6bil funds for strategic projects
By NST Business - February 24, 2023 @ 8:46pm
The projects are to promote sustainability and automation, as well as equity and working capital support for high-performing companies that are still dealing with the Covid-19 pandemic's adverse effects. NSTP/HAIRUL ANUAR RAHIM
KUALA LUMPUR: Bank Pembangunan Malaysia Bhd (BPMB) says the 2023 Budget has mandated it to provide financing of up to RM6 billion for strategic development projects.
The projects are to promote sustainability and automation, as well as equity and working capital support for high-performing companies that are still dealing with the Covid-19 pandemic's adverse effects.
"As the country's premier developmental financial institution, BPMB is committed to working closely with the government to ensure sustainable growth for Malaysia by delivering impact capital for national development," its chief executive officer Roni L. Abdulwahab said today. - NST
A previous posting by No News Is Bad News:
Tuesday, 25 September 2018
Anwar has proven track record in managing Malaysia’s financial health
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How Anwar performed as Finance Minister |
Anwar has proven track record in managing Malaysia’s financial health
As Malaysia’s former Deputy Prime Minister Anwar Ibrahim makes his comeback bid to Parliament in the Port Dickson by-election, Malaysians must give serious consideration to his track record as a former Finance Minister.
Anwar did no former Finance Minister could achieve - not even Tengku Razaleigh Hamzah - and that is to steer Malaysia to five consecutive years of national budget surpluses.
Also, those were the only years from 1970 that the Malaysian governments had seen national budget surpluses.
So, before anyone or Malaysia starts labelling Anwar as a bullshitter in the country’s finaces and economy, do think twice about his track record.
And, Malaysia would indeed see better times, hopefully, if and when he succeeds Dr Mahathier Mohamad (Dr M) as Prime Minister in two years time?
At the recent S Rajaratnam Endowment Dialogue in Singapore, Anwar said he was greatly optimistic that Malaysia can be transformed into a new economic force in the region.
He attributed such strong expectations to Malaysia’s “vibrant pro-growth policies, stable and clean business environment.”
“With the rule of law prevailing and democratic institutions firmly in place … I believe, God Willing, Malaysia will emerge once again as an exemplary economic power,” he added.
Even Singapore’s Premier Lee Hsien Loong, wrote on his Facebook, wished Anwar “all the best in the upcoming by-election in Port Dickson”.
Is it that easy to get the kiasu and kiasi (fear of loss and fear of death) Singaporeans and their leader’s respect, if you do not have the leadership quality to steer Malaysia to greater heights?
"THE POTENTIAL IS BACK! MALAYSIA SET TO BECOME NEW ECONOMIC FORCE IN THE REGION – ANWAR
Politics | September 16, 2018
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SINGAPORE – Malaysia’s Prime Minister-in-waiting Datuk Seri Anwar Ibrahim said he was greatly optimistic that Malaysia can be transformed into a new economic force in the region.In addressing the audience at the S Rajaratnam Endowment Dialogue, Anwar attributed such strong expectations to Malaysia’s “vibrant pro-growth policies, stable and clean business environment.”
“With the rule of law prevailing and democratic institutions firmly in place.. I believe, God Willing, Malaysia will emerge once again as an exemplary economic power,” he added.
The Dialogue was a key programme of the Singapore Summit 2018 held at the Shangri-La Hotel here.
Also presence were Singapore Former Prime Minister Goh Chok Tong and Chief Executive Officer of Temasek Holdings, Ho Ching.
The Singapore Summit is organised by the Temasek Foundation Connects with the support of the Singapore Economic Development Board, GIC Pte Ltd, the Ministry of Finance, the Ministry of Foreign Affairs, the Ministry of Trade & Industry, the Monetary Authority of Singapore and Temasek.
Taking a question from the floor on Singapore-Malaysia relations, Anwar who is also Parti Keadilan Rakyat (PKR) president-elect asked in turn, “is there any problem?”.
“I honestly don’t believe that there is a problem (between the two countries),” he said and received a round of applause.
Anwar who is also the de facto leader of the governing Pakatan Harapan coalition in Malaysia also made a promise, saying: “If and when I assume the premiership I will make sure the first country I visit is Singapore.” — Bernama/Malaysia Chronicle
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