Ringgit plunges to US$1-RM4.75 following Madani’s support for kleptocrat Najib ‘1MDB’ Razak

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This was on Jan 20. Today, it is RM3.54 (It was 1:1 from 1965 to 1973). No wonder Singaporeans are laughing all the way to money changers in Malaysia this Chinese New Year holiday!

Ringgit plunges to US$1-RM4.75 following Madani’s support for kleptocrat Najib ‘1MDB’ Razak

KUALA LUMPUR, Feb 7, 2024: The 10^th Prime Minister (PMX) Anwar Ibrahim and his so-called Madani Unity Government’s support to pardon (or partial pardon) the world’s biggest kleptocrat, the disgraced and shameless former premier Najib “1MDB” Najib is beginning to spook investors.Asia Sentinel has posted an analysis titled “Sh_t Hits The Fan Overseas. USD Now At RM4.75”.

And it has directly blamed the Ringgit’s dip against the Greenback to the Pardon’s Board fiasco.

And Singaporeans are laughing all the way to money changers nationwide this Chinese New Year holiday because it is now S$1-RM3.54.

 “Jasa apa? (What service? Hutang bertimbun (Debt piled up).” - Facebook image

It opines that there is spreading outrage over the reduction of jail term and fine for the jailbird Najib, one of the architects (along with Low Taek Jho who remains on the run in China) of the 1Malaysia Development Bhd (1MDB) sovereign wealth fund (SWF) as its chairman, approving misappropriation as both finance minister and prime minister.

Najib refuses to admit guilt, has expressed no regret, served only 17 months of his 12-year prison term, and has four cases pending in the courts for abuse of power, money laundering, and criminal breach of trust (CBT).

1MDB collapsed in 2016, leaving the Malaysian government with bonded indebtedness of US$2.4 billion.

The mind-boggling scale of the fraud has saddled the Government with more than RM12 billion in public debt to settle 1MDB liabilities. The debt servicing for 1MDB adds to the deficit financing load from excessive, imprudent annual budgets.

Is it any wonder why freeing a kleptocrat like Najib spooks investors’ interest. No one would be confident in investing in a corrupt copuntry.

No News Is Bad News reproduces below the full report posted on Facebook:

 

OutSyed The Box

Monday, February 5, 2024

Sh_t Hits The Fan Overseas. USD Now At RM4.75

Asia Sentinel has picked up on the Pardons Board fiasco. Here is their report almost in full. The Ringgit has dipped down to RM4.75 against the US Dollar. Congratulations. Asia Sentinel does say something about foreign investor's confidence.

There is spreading outrage over the reduction of jail term and fine for former Prime Minister Najib Razak, one of the architects (along with Low Taek Jho who remains on the run in China) of the 1Malaysia Development Bhd sovereign fund as its chairman, approving misappropriation as both finance minister and prime minister. Najib refuses to admit guilt, has expressed no regret, served only 17 months of his 12-year prison term, and has four cases pending in the courts for abuse of power, money laundering, and criminal breach of trust. The fund collapsed in 2016, leaving the Malaysian government with bonded indebtedness of US$2.4 billion.

Madani, who conveniently left the Pardons Board a few months before the decision and has claimed no part in it, flagged anti-corruption as the priority for his administration. He made strident public speeches promising to take down the privileged elite who leverage political power to steal billions. The jailing of Najib Razak raised national hope for a judicial system of integrity, which Mahathir had previously compromised. Tengku Maimun Tuan Mat, Malaysia’s 10th chief justice, stood firm against political intimidation by Najib’s supporters, to despatch the thief to prison without delay.

Despite the pardons board verdict of Jan 29, the government kept stalling, asking everyone to wait for the “official announcement.” It was finally released on February 2. Jail was halved from 12 years to six, and the fine was discounted 76 percent, from RM210 million (US$ 44.4 million) to RM50 million. Neither the prime minister, the communications minister, the home minister, nor the federal territories minister (member of the pardons board) dared field a press conference. It was shambolic fumbling for four days, on a matter of the highest national and foreign investor interest.

 

In Malaysia, corrupt jailbirds are now entitled to discounts on their jail sentences and fines. - Facebook image

As the blowback arose in fury and volume, madani urged everyone to “respect the pardons process.” The question is if the pardons board itself breached the protocols on basic eligibility. To qualify for a pardon, by convention, the prisoner must admit guilt, express remorse, serve one-third jail term, and have no cases pending. Felon Najib, not even eligible on those criteria, was vaulted over the pardons queue. UMNO Supreme Council thanked madani for expediting the pardon review for the party’s former president, making his expressions of dissociation from the process look rather hollow.

CNA trumps Malaysian media

Singapore’s satellite broadcaster Channel News Asia (CNA), along with Asia Sentinel, carried the pardons board decision on January 30, citing “reliable sources” three days before the Malaysian government. CNA has a regional footprint, and Asia Sentinel an international one, which means neighboring countries and governments were informed days before citizens. Given the history of prickly relations between the two nations, CNA must have had unimpeachable sources, to so boldly broadcast highly confidential information ahead of the Malaysian government.

Malaysian journalists and media are upset to be outplayed on their home turf, on the hottest domestic news – facilitated by authoritative sources. Communications minister denied he was the leak. Journalists have a troubled relationship with him, who threatens police raids and investigations for reports he deems embarrassing to his boss and government. “Fake News” laws add the hazard of legal booby traps for investigative journalists doing their job. That job generally is to expose what flaky governments wish to hide.

Will Najib be required to make full restitution of all that he stole? His seemingly inexhaustible funds to pay expensive legal teams for seven years of court hearings, can only come from his 1MDB heist, not his salary, which was RM78,000 monthly. The supreme irony of the thief using stolen state funds to challenge the state, seems lost on the government. That audacity exhibits the culture of impunity of political elites entrusted with the key to state coffers.

Elite politicians can literally get away with murder. The feudal social construct of Malay society and inherent fealty, tributes obsequious awe to the titled. No one blows the whistle on the political burglars. The police investigate whistleblowers. A couple of incidental murders await legal closure too. The jailing of Najib rattled the political class to its roots. Najib’s error was in getting caught – not in stealing. His loyalists are upset by the other high-level thieves roaming free, while their patron is jailed.

UMNO was booted out in the 2018 general election, and an upright and competent attorney-general drove legal recovery of the stolen funds. The US Department of Justice investigated 1MDB for abusing US financial institutions, and convicted those it could get hold of – which provided valuable material evidence for the Malaysians to proceed.

Consequences for Malaysia

The mind-boggling scale of the fraud has saddled the government with over RM12 billion in public debt to settle 1MDB liabilities. The debt servicing for 1MDB adds to the deficit financing load from excessive, imprudent annual budgets. That has triggered credit rating downgrades and increased borrowing costs. Citizens have to shoulder this payback over several generations. Taxes on petty stallholders are being levied, the GST scheme is being reconsidered, and tax dodgers are being hunted.

Malaysia’s governance of public funds and financial institutions stinks. It ranks 50th of 180 countries on the 2023 Transparency International Corruption Index. Corruption at the highest levels has been normalized over six decades of unbroken UMNO rule. The Pakatan Harapan government scrambled to strengthen the Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) framework. Too little, too late.

The Malaysian ringgit continues to dive against the Singapore dollar. They were on par 1:1 from 1965 (when Singapore was evicted from Malaysia) to 1973. Today the Singapore dollar is worth RM3.54, reflecting persistent misrule, and mismanagement of the Malaysian economy. As one African commented, “When politicians are richer than entrepreneurs, the country manufactures poverty.” Along with imposing onerous bumiputra equity and staffing conditions, there is little interest from investors. Capital flight is rampant. The Pandora and Panama Papers revealed the scale of ill-begotten cash stashed in tax havens abroad by politicians and their cronies.

Civil service pensions totaled RM32.4 billion, gouging 10.5 percent of the 2024 budget. It is an unproductive financial albatross expected to balloon to RM46 billion by 2030. It is unsustainable, diverting resources from infrastructure investment, education, and social programs. This gravy train chokes itself.

Next five years

The incoming 17th Agong, Sultan Ibrahim Sultan Iskandar, has made clear his distaste for racial politics, religious extremism, displacement of Malay culture by Arabic, corruption, and political jockeying. He is keen on fundamental education reform to upgrade teacher quality, and review of religious education content. Multicultural harmony is the norm in Johor state, and a core principle of governance.

Ibrahim wants the stalled fast rail project between Singapore and KL revived and has confidence in Chinese joint-venture partners to boost the Johor economy via closer logistics integration with Singapore. The massive Forest City scheme in Johor crashed after Mahathir canceled the permanent residence incentive for mainland Chinese buyers and the developer, Country Garden, crashed into bankruptcy in China’s distressed property market.

The Agong is constrained by the Westminster model of constitutional monarchy, which has time-honored protocols in place between a sitting prime minister and monarch. Madani will find the monarch more interested in execution than talk, and if he has the right team to implement. In an interview with the Straits Times of Singapore, Sultan Ibrahim said he wants to “put things right” during his term till 2029. He floated the idea that the anti-corruption agency MACC and state-owned oil monopoly should report to the King, not the prime minister.

Historically, MACC was used to target political enemies of the ruling party, while cronies strutted. P----s is the giant piggy bank Mahathir and Najib raided repeatedly, along with the Employees P------t F--d, to bail out incompetent cronies who were gifted national assets. The national shipping line was bankrupted under Mahathir’s s-n.

Sultan Ibrahim questioned the huge budget allocated to JAKIM, the Islamic development department, which he banished from interference in the religious affairs of Johor state. JAKIM monitors all government departments for Islamic conformity, including dress codes. This has inconvenienced citizens filing reports at police stations and seeking treatment at hospitals. It is not the mandate of civil servants to tell the public what to wear. “Do the job you are paid to do, and mind your business,” was his majesty’s advice.

JAKIM and its champion madani have to tread carefully. Malaysians are fed up with JAKIM and wish it could be purged entirely from the civil service. They wonder why MACC’s investigation into systemic corrupt JAKIM halal meat packaging practices, exposed in 2018 by Asia Sentinel, has failed to charge the scammers.

Cyril Pereira, former publisher of Asia Magazine, is a long-time Asia Sentinel contributor based in Hong Kong since 1985

Corruption and politics blamed for ringgit woes

Lowering inflation, rising employment and reducing fiscal deficit can restore investor confidence in Malaysia, say economists.

Sankita Jayanandan - 07 Feb 2024, 8:00am

Political uncertainty, corruption and a weak economy have been cited as reasons for the sharp decline in the value of the ringgit against other major currencies in the past two weeks.

PETALING JAYA: Political turmoil, a weakening economy and corruption have been cited as internal factors that have led to the sharp decline in the value of the ringgit.

Externally, economists told FMT Business, factors such as high US interest rates can also been instrumental in the local currency’s poor performance.

On the bright side, head of research at Bank Muamalat Afzanizam Rashid said, the ringgit could rise again if the government remains steadfast in pursuit of economic reforms.

The ringgit fell to RM4.75 to the US dollar in early trading on Monday and some analysts have warned that it could breach the RM5 level in the near future.

It breached the RM3.50 mark against the Singapore dollar and went past the RM6 level against the British pound in late January.

Prior to that, the weakest the ringgit has been against the sterling was on May 31, 2016 when it closed just a peek above the RM6 threshold.

Pacific Research Centre of Malaysia principal advisor Oh Ei Sun sees Anwar Ibrahim’s comments during his trip to the US for the UN General Assembly in September last year as especially poignant.

Anwar had said then that he had contemplated not attending the assembly because there were “various domestic issues” to be resolved.

Oh recalled that Anwar had also mentioned that American businesses he met in New York complained that the processes of doing business in Malaysia was rather “cumbersome”.

Thus, he said, investors were putting their money elsewhere for higher returns.

“Until such time that the country is able to make it easier to do business, the ringgit is likely to keep on falling,” he added.

Rise in US interest rates

Afzanizam said the US Federal Reserve’s insistence on keeping interest rates elevated in its battle against inflation has worked against the ringgit.

“Similarly in the UK, the Bank of England is keeping the rates high to help them achieve their goal of keeping inflation at 2%,” he said.

“So we have a situation where major central banks refuse to budge on interest rates and the markets fearing that a higher interest rate for a longer period can do more harm than good to the economy,” he added.

As a result, Oh said, there is now a shift in investors’ preference from Malaysia to the US.

“Investors are repatriating their funds to take advantage of the higher interest rates there,” he said.

Oh said domestic and foreign investors are constantly evaluating the balance between lower returns and lower business risks in developed nations against potentially higher returns but high risks in developing countries such as Malaysia.

Afzanizam said the ongoing struggle between markets and central banks has only intensified economic uncertainties.

“This has significantly influenced the foreign exchange markets and the local currency cannot escape the impact,” he added.

The remedy

Oh pointed out that the ringgit cannot help but feel the impact of the rise and fall of US interest rates because the greenback is the world’s currency for trade.

“What we can do to strengthen our currency is by improving the country’s economic fundamentals,” he said.

This, he said, would instil confidence among investors and, by extension, not only discourage outflow of US dollars but also lead to higher inflows.

Afzanizam said the government should be relentless in executing its economic reforms agenda.

“This includes fiscal consolidation, the transition towards renewable energy and ensuring robust governance,” he said. “It will improve investor confidence.”

That, he said, would ensure that foreign funds see value in Malaysian assets and serve as an incentive for them to invest in Malaysia.