In the past week or so, there were several news reports stating that Malaysia was regressing backward relative to the high-income country GNI benchmark of $15,000 per person by 2020. The Economic Planning Unit showed the figure fell to $9,291 in 2015 and to $8,821 in 2016, from $10,677 in 2014.[1]

From the figures alone, it is plain to see that the gap between current level and the $15,000 per capita has increased. The 2020 target was set by the government as the benchmark Malaysia needed to hit to in order to declare the country as a “high-income nation.”[2] Pemandu’s whole reason for existence is predicated on this.

But such conclusion (and the target itself) is superficial and largely a non-issue as far as economic growth is concerned. What is more important in terms of development is the levels of welfare, which is better represented by the purchasing power parity calculation, instead of the Atlas method used to calculate the GNI per capita figures in the US dollar.

There are three reasons why I claim the conclusion is superficial.

First, the $15,000 GNI per capita by 2020 target is susceptible to foreign exchange rate fluctuation. This is despite the Atlas method is designed to minimize the same fluctuation. The ringgit depreciation relative to the US dollar in 2015 and 2016 was just too big for the method to handle. Its inability to control for the fluctuation makes its output less reliable that it normally is. You can see why it does a bad job within the context of 2015 and 2016: the Atlas method controls the forex rate variation by averaging the latest three years of the relevant rates (the method does include inflation differential between countries but it is not nearly as good as the PPP). But even under normal circumstance, the Atlas method is inferior to the purchasing power parity just because the former does not adjust for domestic living costs properly. The PPP may have its own failings but its failings are considerably less serious than the Atlas method.

To understand this point further, we have to realize that for most Malaysians, earning and spending are carried out in the local currency, the ringgit. Only a small minority earn in ringgit but spend in foreign currency, among them the US dollar. So for most Malaysians, it is unclear why the size of the economy translated through the Atlas method into the US dollar is meaningful in determining the state of a country’s development level or its population welfare, apart from the fact that the World Bank uses it and that Pemandu was just following suit.

The World Bank states it is using the Atlas method for operational purposes,[3] which makes sense because the organization lends money to national governments mostly in major currencies and that the repayments are susceptible to the forex fluctuation due to currency mismatch. They need to take the forex fluctuation into account.

Meanwhile, Pemandu and Malaysia use it as a target… because the World Bank uses it for its global lending purposes done largely in US dollar. You can see the problem here. The World Bank’s and Malaysia’s purposes for using the Atlas method are vastly different. It fits the World Bank’s goal better than Malaysia’s. PPP, on the underhand, fits Malaysia’s purpose better than the World Bank’s. It is a case of using the wrong tool.

Second, even if we accept the target and the Atlas method wholly, the actual benchmark for high-income is likely lower than the $15,000 barrier. The $15,000 benchmark itself did not come from the World Bank but projected into the future by Pemandu based on figures from the international body. The latest 2017 high-income benchmark actually used by the World Bank is $12,476.[4] Pemandu had projected the figure from 2010 (if I am not mistaken), assuming the 2010-2020 growth rate of high-income countries to average 2.0% yearly. The reality is that the 2010-2017 average is only 0.2% yearly so far. At the current actual growth rate, the benchmark will be $12,563 per capita by 2020 assuming everything else remains the same. It is still a widening gap, but not as bad as when the $15,000 per capita is the target.

Third, the implications of the conclusion are outrageous, if the Atlas method completely addresses concerns over forex fluctuation: either Malaysia had run into a two-year long recession, or we had an extraordinary population boom during the same period.

But we did not have a recession. We did have a growth slowdown however. The Malaysian economy grew by 5.0% in 2015 and 4.2% in 2016. But no recession, which is a contraction of the GDP by two consecutive quarters.

And we did not have a population boom either during the two years. The size of the Malaysian population in 2015 and 2016 grew 1.4%-1.6% yearly, lower than in the previous years.

Since both did not happen (with inflation was not big enough to matter: Malaysia’s 2%-3% and in the US, 0%-1%), we must question the validity of the Atlas method in measuring the well-being of Malaysians. And by extension, it questions the ability of the Atlas method to determine the status of Malaysia as a high-income nation. The one factor that changed was the forex rate.

But ultimately, the term high-income nation itself is fluffy. There are attempts to give it concrete meaning but would crossing the not too distance line suddenly transform Malaysia into a rich country? It is never as clear as that. While Malaysia has done well compared to a lot of countries in the world, entrance to “first world” is actually harder then merely cross the line defined by the World Bank or Pemandu. Just cross over to Singapore, or visit Japan, or Australia or any of the generally recognized high-income countries. Would Malaysia crossing the GNI per capita $12,475 line suddenly make the us like those countries? Maybe someday, but the barrier will be way above the World Bank’s line.

You know a high-income country when you see one: some classifications are looser than others and many of them are arbitrary. This is the limits of mathematics and economics. So, be careful of turning a soft arbitrary line in the sand as your true north. Managing a country’s development is not like running a business.

But coming back to the original point, no, we have not regressed in terms of economic development. We have regressed in other aspects, like our institutions, but the economy has grown, contrary to what the imperfect Atlas method tells us. If you really want to make an international comparison, the purchasing power parity model is far superior than the Atlas method, especially at a time when forex fluctuation is great.

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[1] — Page 5.The Malaysian Economy in Figures 2016. Economic Planning Unit

[2] — Page 59. Economic Transformation Programme: A Roadmap for Malaysia. October 26 2010

[3] — The income groupings use GNI per capita (in U.S. dollars, converted from local currency using the Atlas method) since they follow the same methodology used by the World Bank when determining it’s operational lending policy. While it is understood that GNI per capita does not completely summarize a country’s level of development or measure welfare, it has proved to be a useful and easily available indicator that is closely correlated with other, nonmonetary measures of the quality of life, such as life expectancy at birth, mortality rates of children, and enrollment rates in school. [Why use GNI per capita to classify economies into income groupings? The World Bank. Accessed March 23 2017]

[4] — For the current 2017 fiscal year, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2015; lower middle-income economies are those with a GNI per capita between $1,026 and $4,035; upper middle-income economies are those with a GNI per capita between $4,036 and $12,475; high-income economies are those with a GNI per capita of $12,476 or more. [World Bank Country and Lending Groups The World Bank. Accessed March 24 2017]

One of the better things Malaysia experienced on the policy front is the abolition of fuel subsidy and the introduction of targeted/conditional cash transfer as a replacement.

While the mean-tested nature of the transfer has been less the ideal (due to loose conditions) and appears uncorrelated to what the subsidy would have been (its discretionary nature means the transfer policy is increasingly digressing from its original purpose), the policy is still better than the very costly and inefficient subsidy regime Malaysia had. I have advocated the shift from subsidy to cash transfer for a very long time now, and I still support it.

But cash transfer should not be the end of progress. Perhaps the next step is to push the conditional cash transfer towards a more rule-based approach. In that spirit, I think the next step is the introduction of negative income tax system to replace the cash transfer system that we have now.

A negative income tax system works like this: it pays a registered taxpayer money if the person earns below a certain income level determined by the government. One easy benchmark would be the minimum wage level (in doing so, it could make minimum wage policy obsolete). The size of the payment could be a portion of the difference between the determined level and the person’s income.

In short, if you earn below that benchmark, the government pays you some money. If you earn above it, you pay tax. A brief introduction to the policy is available at the Library of Economics and Liberty.[1] 

The current cash transfer program Malaysia has, BR1M, has some resemblance to the negative income tax. Those earning below a certain income threshold get the cash transfer. Negative income tax does the same thing, but more.

It goes further by institutionalizing the cash transfer arrangement and eliminates the latter’s discretionary nature, which is susceptible to corruption in its widest sense. It guarantees the payment will be paid out every year based on transparent formula. There will be no grand announcement about the payments by ministers, party members, leeches and definitely no more mock-checks and unnecessary conflict of interest/suspicious handover ceremonies.

The institutionalization also brings about one thing: a real basic income for all Malaysians. It is also an automatic stabilizer for the economy, which means in case of economic troubles, the urge for discretionary fiscal stimulus can be reduced. That also means less corruption on the procurement side.

Payments itself can be done just like how tax returns are done every year. If cashflow is of concerned, the payments can be broken up in stages just like how BR1M is being paid this year.

I do not think the jump will be that big, unlike the previous shift from fuel subsidy to cash transfer. But I do think in terms of benefits, it might be bigger the cash transfer as it could make redundant other welfare policies while streamlining administration cost of supplying or enforcing these other policies.

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[1] — The NIT would thus be a mirror image of the regular tax system. Instead of tax liabilities varying positively with income according to a tax rate schedule, benefits would vary inversely with income according to a negative tax rate (or benefit-reduction) schedule. If, for example, the threshold for positive tax liability for a family of four was, say, $10,000, a family with only $8,000 of annual income would, given a negative tax rate of 25 percent, receive a check from the Treasury worth $500 (25 percent of the $2,000 difference between its $8,000 income and the $10,000 threshold). A family with zero income would receive $2,500. [Jodie T. Allen. Negative Income Tax. Library of Economics and Liberty. Accessed February 15 2017]

The final quarterly GDP figures will out next week on February 16. The GDP grew 4.3% YoY in the third quarter, up from 4.0% YoY in 2Q16. In the first quarter of 2016, it was 4.2% YoY. So, as the game goes…

How fast do you think did the Malaysian economy expand in 4Q16 from a year ago?

  • 3.0% or slower (13%, 3 Votes)
  • 3.1%-3.5% (0%, 0 Votes)
  • 3.6%-4.0% (9%, 2 Votes)
  • 4.1%-4.5% (35%, 8 Votes)
  • 4.6%-5.0% (39%, 9 Votes)
  • 5.1%-5.5% (0%, 0 Votes)
  • Faster than 5.5% (4%, 1 Votes)

Total Voters: 23

Loading ... Loading ...

Judging from industrial and import figures, I would think the domestic demand part of the economy grew reasonably okay in the fourth quarter although other statistics like car sales remain depressed, suggesting not all is well.

The labor market says as much. Unemployment rate is relatively high at 3.6%. That suggests the recent economic growth recovery has not brightened up the labor market. It is not that there is no job creation, but the pace of job creation is not happening as fast as the growth of the labor force.

(Interestingly, the core inflation has been stable at about 2.0%-2.2% in annual terms. Nerdy stuff to note: core inflation fell as unemployment rate rose. This is cool, assuming the GST had minimal impact on the core inflation. Cool because unemployment rate and demand-pull inflation that the core is supposed to measure tell something about the output gap: it may suggest the gap has not changed by much despite 2015-2016 economic weakness. One would start to worry if unemployment rate goes up but core inflation remains unchanged, which suggests the output gap might be widening. A worse worry is when unemployment rate goes up together with core inflation: gap is shrinking but potential is decreasing)

The other good news is that exports did great. But with strong import growth, trade balance for the quarter will not help the GDP. Indeed, from the merchandize goods trade stats, 4Q16 net exports actually fell in the quarter by nearly 10% YoY.

So, in the end, I am thinking the 4Q16 GDP growth will be somewhere in the mid-4.0%, leaving the full year 2016 GDP growth at 4.2%-4.3%.

It’s a big, big interconnected world out there. And that interconnectedness, ironically, makes the world smaller is a non-physical sense. Economically, socially and politically. Our lives are no longer affected purely by domestic matters. To some, the foreign affairs segment in the newspapers is an abstraction but for some others, the lines demarcating domestic and foreign concerns are blurry.

These remain the days of globalization still, however the Trumps, the Le Pens, the Farages and all those who long for a smaller world are trying to rewind the clock. They may yet be successful but for now they have a lot to undo. In the meantime, many have multiple homes and multiple affiliations with friends traversing national boundaries, opposing such undoing and rewinding.

For Malaysians, the war in Ukraine so far away across the Asian continent painfully proves the fact foreign affairs are home affairs too. Many Malaysians could not find the country on the map, but it still has an impact on the Malaysian psyche. And Malaysians did care for development in Bosnia during the Balkan War and in Kosovo. They do care about the conflicts in Palestine, in Syria and in Iraq. And to take a trivial example, there are Malaysians who care about the fate of foreign, English Premier League teams, despite not being English themselves.

The refugee crisis in Myanmar is also a Malaysian concern, because these oppressed men, women and children are coming to or passing by Malaysia. Whether we like it or not, we have to act in one way or another. Pretending the imaginary lines on a 2-dimensional map as an impregnable wall ensuring that is not our problem will not help by one bit. And to turn back the boats is not just an illiberal policy, it is heartless.

In the several years after the 9/11 attack, I became a victim of profiling at US airports, just because of my nationality and my Arab-sounding name. Security personnel would put me under extra security measures and screening. That discouraged me from leaving the US for home for the next four years for fear I would face immigration troubles upon reentry at the airports. I knew of other international students who needed to report to the Homeland Security office regularly, and I feared being subjected to the same requirement as an entry condition.

And so, I spent my entire time as a student in Michigan travelling throughout the US, reaching New York, DC, Miami, San Francisco, St Louis, Chicago, Sioux Falls and more. I remember how it felt like to drive the car through the Great Plains from the Great Lakes, or how peaceful it was staring into the night sky from the bottom of the Tuolumne Canyon just north of Yosemite in California. I learned to love America for the wonders it brought to my young mind.

Indeed, my political beliefs to a large degree were shaped in the US. However flawed the US is with all of its hypocrisies, it is still the greatest liberal democracy that the world has. It is the Athens, the Rome, the Baghdad, the Cordoba and the Delhi of our time. Just because of that, I looked up to it. Because of this and because I spent a significant portion of my early adult life there, if I had a second home, the US would be it.

When Trump and his followers do what they do, and among others equating the US to Russia, I feel that is an undoing of what the United States of America is supposed to be in my eyes, a foreigner, who looks kindly to the east across the Pacific. Trump is killing the US that I know, and by that, threatening the idea of liberal democracy all around the world (even in Malaysia where our democracy is becoming increasingly flawed and more authoritarian). That makes me angry.

The Trump’s ban, now challenged in the courts, adds further to the anger. My alma mater, the University of Michigan, is celebrating its 200th anniversary this year. And I am entertaining thoughts of returning to Ann Arbor to catch the festivities and walk down the memory lane. Trump’s ban, could potentially affect me. I still remember my experiences at various US airports during the Bush era. I thoroughly dislike the discrimination and I do not wish on others what I went through.

So, I do care for things that if happening in the US. The world is interconnected enough that I have real attachments to the US. Needless to say, I have friends in the US too.

But one does not need to have personal ties to the US to be worried about development in the US. It is just like how some of us are concerned about the oppression in Xinjiang, or in Iran, or in Egypt, or in the Philippines or anywhere else without the need to have any personal connection.

Even if we cannot think of ways which a reclusive, protectionist US could affect Malaysia — it will by the way: HSBC economists think Malaysia will be one of the top four economies to be worst affected by a protectionist US — we can still care because we have empathy for other human beings. Injustice or discrimination anywhere is still wrong and we can take a position on the matter. We can make personal judging based on our values. We have enough room for empathy those near and far beyond our shores.

Because of our capacity of empathy and because of the interconnectedness of the world we live in, it is outrageous to think we have to choose between caring US-based or Malaysia-based issues. Both are causes for concerns. I care for the deplorable things happening in the US, and at the same time, I care about the 1MDB corruption scandal, or the blockade in Kelantan, along with other injustices in the Malaysian society I am living in.

Indeed, it is a false dichotomy having to choose the US or Malaysia. There is no reason why a Malaysian needs to choose between the two. We can be concerned for both, and more.

More importantly, there are liberal values and among them are that we all are created equal and all should have the same fundamental rights. This applies all around the world, not just in and around your small neighborhood.

In time when anti-liberal populists are turning national policies inward, it will be most disappointing to have liberals retreating to a small-world cocoon as well. Such inward retreat would be a betrayal of liberal belief, that liberal values are universal in nature and not provincial. We fight racism, discrimination and everything bad out there by staying true to our liberal values, not by abandoning it.

There is a very good article published in the Malay Mail over the weekend.[1] It is about the brisk sales of high-end cars like BMW and Mercedes in Malaysia while entry-level, compact cars like Perodua are doing badly, and the consumption pattern in the economy by income levels.

[The divergence car sales by prices are part of the weird macroeconomic statistics that have been coming out of Malaysia since the GST was introduced back in April 2015, along with the collapse of oil prices. Weirdness like the consumption growth is rising nicely while big ticket items like cars and homes are not doing so well in terms of growth. In fact for cars as a whole, it has been declining. It may be some non-business cycle explanation behind this, like the widening of train network in Malaysia but for now (a person driving BMW rarely if ever take the train, for instance), let’s put that aside and maybe discuss that on another day.]

But I have one, tiny issue with the article, way, way down. The author questions the accuracy of the 2014 Gini coefficient, which suggests inequality, decreased compared to 2012, while pointing to the latest car statistics (2015-2016), which may say otherwise:

While BMW Malaysia posted its highest ever sales growth last year, its rival Mercedes posted record sales for the second straight year in 2016. A total of 9,047 Mercedes vehicles reported to have left its showrooms in the first nine months of 2016, marking a 10 per cent growth compared to the same period last year, according to Malaysia’s leading automotive online magazine Paultan.org.

In 2015, when the local economy appeared to be slowing, Mercedes sold a total of 10,845 vehicles, a record increase of 56 per cent from 6,932 units in 2014.

[…]

Based on the sales data, slower economic growth was not affecting all segments of the country equally. While those in the lower income brackets are complaining of rising costs, their more well-off counterparts have been splurging.

“What it indicates is that while the low and middle income earners are experiencing fiscal constraints, it is business as usual for the higher income group,” Muhammed told Malay Mail Online in a phone interview.

Global trend

Putrajaya has so far shrugged off the idea. According to official statistics, the country’s Gini coefficient series shows a downward trend in household income inequality from 2004 to 2012, after which it falls off drastically — the Gini coefficient was 0.46 in 2004 and only dropped by 0.3 percentage point after eight years. But in 2014, it dropped to 0.40.

I find the final paragraph (especially the final sentence) in this excerpt as slightly confusing. After laying out the situation in 2015 and 2016, the article goes on talk about the 2014 Gini data, which might not describe 2015 and 2016 very well.

Confusing, because the Gini coefficient is a low-frequency data done, at the moment, every 2-3 years together with the household income survey. Not only that, it lags severely, published only after the survey was done months earlier: the 2014 data was released in June 2015 while the 2012 data was released in July 2013. You can see its low frequency in the chart below:[2]

In contrast, car sales statistics are high-frequency data available monthly.[3] 

High-frequency data do have a lot to say about the present time. But I feel it is unfair to cast aspersion on low-frequency data from all the way back by using more recent information (2015-2016 car sales) the way the article does. It is unfair because the two datasets describe two different points of time. They are not contemporaneous data and not comparable, at least in the way it is being done.

I am aware of the paper by Lee Hwok Aun and Muhammed Abdul Khalid which the Malay Mail article cites. But the paper utilizes car sales data that is contemporary to the Gini coefficients it uses (before that, I would like to say it is a shame that Lee had to leave University of Malaya because of the short-sighted government spending cuts). You can read the working paper here.

In contrast, the Malay Mail article is taking post-2014 car sales data to question a 2014 Gini coefficient.

So, I think the attack on the 2014 Gini coefficient from the Malay Mail angel might be overdone, and different from the Lee-Muhammad criticism. The 2014 coefficient is just unable to describe the 2015 and the 2016 situation, especially since the GST was introduced in April 2015. There was a significant structural break since the 2014 coefficient was released.

[Also, I feel it is important to note that the Gini we have here measures income inequality, not consumption inequality. We have the Household Expenditure Survey though. Just saying]

In any case, the next Gini coefficient may come out this year or the next. The Household Income Survey is supposed to be done twice in five years (last done in 2014). The latest coefficient may yet go up.

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[1] — Syed Jaymal Zahiid. What BMW and Perodua sales data says about the economy. Malay Mail. January 21 2017.

[2] — 2014 Household Income Survey. Department of Statistics. Accessed Jan 23 2017.

[3] — Malaysian Automotive Association. Accessed Jan 23 2017.

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p/s — I am not defending the Gini coefficient per se. I am saying the criticism mounted in that particular way is off the mark.

I just got off work. I just got off the train. The sun was coming down and the tropical heat was subsiding.

The train station is not that far away from home and so I decided to walk home instead of getting on a bus or calling a cab.

I was not feeling that hungry but I figured, maybe I should get something light just in case. There was a Monday market nearby. I made a detour, looking for something I could munch on later at home.

The entrance was a narrow pathway with brick walls on both sides leading into a small square. Narrow, only because food vendors set up their stall on one side of the wall. They sold noodles, fruits, nasi goreng and other items typical in this corner of Asia.

Several beggars lined up along the opposite wall. The passing crowd had to navigate between the stalls, the beggars and those who stopped in the middle of the path, deciding what to buy, apparently oblivious to the foot traffic and the space constraint.

A blind old Malay man sat on an old worn tool wearing a white skull cap, ignored by the crowd. A foreign woman, possibly a Bangladeshi, in her Muslim headscarf, sat on the pavement with her palms extended out, not far from the old man. Her eyes looked down, seemed too ashamed to look up into the eyes of others. A kid, with lines on his face, sat farther away, hoping for a stranger’s generosity by selling ersatz serviette that nobody really needed.

I have been here before and I did not think much of the crowd, or the begging men and women. I was tired. I went on with my business. I walked past the crowd at the entrance, made a quick circuit in the square before deciding on a cheap meehoon for slightly more than three ringgit, packed in a white polystyrene container, apparently banned now. The seller placed the container into a flimsy red plastic bag before handing it to me. I said my thanks and he gave me a weak smile.

I headed out, passing the several beggars I mentioned earlier.

On my way out, a migrant worker was walking in. He stopped, reached out from his torn and worn wallet and pulled out a ringgit for the blind old Malay man on the stool. It did not look like he could afford to be generous, but he was generous to the old man anyway.

I walked on. I was tired and I wanted to get home as quickly as possible.

Halfway to home, walking up the hill, I slowed my pace. A sense of guilt filled my being. I felt so ashamed.

I felt ashamed for the rest of the day.

I wish I had pulled a note or two for those men and women. But no I did not.

Terence Gomez is embarking on a massive project investigating quantitatively the influence of government-linked companies in the Malaysian economy. The dominance of government in business and in the economy is no mystery. What is special here is that he is analyzing the numbers more comprehensively than many had done before. He is currently focusing his research at the federal level but if I remember correctly, he plans to delve into state level bodies, looking into bodies like Kumpulan Perangsang Selangor, which are much less known than those like Khazanah Nasional.

Together with Jomo Kwame Sundaram, Gomez in 1997 wrote the go-to book — Malaysia’s Political Economy: Politics, Patronage and Profits — exploring the ownership of corporate Malaysia in the 1990s and its links to politics, namely Umno. To understand political financing during the Mahathir era, this is the book to read.

The scale of Gomez’s latest project on ownership is larger than anything available before. There have been work done on corporate ownership in Malaysia after his 1997 book but they provided only partial view of the whole story while nibbling at the edge.

Gomez in his lecture, which I attended at the University of Malaya earlier this year (and later at an event organized by the Institute for Democracy and Economic Affairs; Ideas is funding of the project) made the connection between previous ownership literature and showed how the majority ownership changed from the 1950s to the 2010s, the present time.

He is continuing the work pioneered by James Puthucheary, who back in the 1950s went through official colonial and Malayan documents to understand who owned what in the economy. Through that, he corrected the idea that the Chinese had controlled the economy when in fact it were the Europeans. Gomez mentioned Lim Mui Hui’s work as the other important literature in the 1970s tracing capital ownership in the Malayan-Malaysian economy in the early days of the New Economic Policy period.

Gomez in his lecture showed just as Puthucheary demonstrated decades ago that the British and other European bodies controlled the majority of the top Malayan companies in the 1950s. This changed in the 1960s and the 1970s when Chinese tycoons rose up in the list. By the 1980s and the 1990s, due to the implementation of the New Economic Policy and Mahathir’s industrialization drive, the list was dominated by Malay industrialists. The ownership list was also more diverse than it ever was, with Genting, Berjaya and YTL were among the biggest then.

But in the aftermath of the Asian Financial Crisis, something fundamental happened. Most of top Malaysian companies were owned by the government and no longer belonged to private individuals or groups. There were bailed out or acquired by the government through the Government-Linked Investment Companies. Gomez listed the usual seven: the Employees Provident Fund, Kumpulan Wang Persaraan, Permodalan Nasional, Lembaga Tabung Haji, the Armed Forces Fund, Khanazah Nasional and the Ministry of Finance Incorporated. Many of the Malay industrialist companies like UEM were now owned by the government.

Not all of those seven government-linked investment companies are the same. The EPF, for instance, is not strictly a government company, in the same Khazanah is. But nevertheless, the EPF does have an extremely strong presence in the Malaysian economy, in both the equity and the debt markets.

In a different talk of a more casual style, historian Khoo Kay Kim claimed the Germans controlled the Malayan economy before the First World War. Their influence diminished after their lost the war and was replaced by the Japanese during the interwar period. I have not read a proper document to ascertain the claim but I have read from various sources that Japanese companies were active in Malaya prior to the Second World War.

Gomez’s work has implications beyond economics. Control over of these government-linked corporations and entities enables political control and enhances political power, just has the Umno’s ties to various the 1980s-1990s Malay industrialists had kept the party’s machinery going. But unlike then, when those funds were private money from private companies (public companies privatized), the government today does enforce spending or procurement requirement to benefit certain parties. While Gomez did not cover 1MDB, the 1MDB corruption scandal, provides the starkest example of public resources being used directly and illegally to finance Umno’s (and even its president’s personal) requirement. The connection is starker and more corrupt now than ever before.

The evolution of corporate ownership in Malaysia simply does not inspire confidence, and the completion of Gomez’s work will truly show how big the beast has become.

I love this kind of contrast.

Within Southeast Asia, it is at its starkest in Vietnam.

I have been to Laos with its own nominally communist government. The hammer and the sickle would adorn lamp posts and facades in Vientianne and Luang Prabang, reminding tourists and locals alike the insecurity of those in power. But deep in the Mekong heartland, commercialization is still at its infancy, rugged and all. There are contrasts, but not like how it is in Vietnam, where consumerism is embraced wholeheartedly decades after American troops were chased out, sparking Malaysia’s first refugee crisis.

Malaysia received those Vietnamese refugees about 30-40 years ago, unwillingly. They are grateful to us, it seems, regardless of our intention.

Not much has changed today as Malaysia experiences its third refugee crisis, the second, I think, being the one caused by the civil war in southern Philippines. This time around, the new refugees from Myanmar are just a political football game to be played by the corrupt.

Several hundred people gathered at Dataran Merdeka on Monday night demanding the release of Maria Chin.

On Tuesday, the number grew to possibly more than a thousand. It is a good turnout I think.

Maria Chin

I hope the crowd size will double tomorrow.

The crowd shouted “Reformasi!” last night as they gathered on the edge of Dataran Merdeka to demand the release of Maria Chin.

About 20 years ago, the term was so full of anti-Mahathir context. “Not today however,” History said, smirking as she played a joke on all of us.

Having the crowd crying out reformasi on Monday evening made the atmosphere surreal. Surreal because sitting at the front facing the crowd was the former Prime Minister Mahathir Mohamad.

Reformasi! Reformasi! Reformasi!” the crowd roared.

He managed a smile and raised his hand together with the rest. I had to assess my own sanity and senses whether I actually saw or heard him shout reformasi along the protesters, possibly numbering between 500 and 1,000 people.

Hishamuddin Rais with his hat and ill-fitted clothing — released from police lock-up just a few hours earlier — joked he could hardly believe Mahathir had attended Bersih and on this night, Mahathir was sitting close to him. Hishamuddin made a mocking impression of Mahathir. Yet, he, one of Mahathir’s harshest critics from the streets from the very beginning, is convinced of the need to work with Mahathir and put the past behind. Mahathir understands the compromise Hishammuddin has made, and took the jab with a open, humbled heart.

On Saturday, when Mahathir gave a speech to a much bigger crowd under the Petronas Towers, it was evident many were still distrustful of the old man. I could see it in their faces. They looked on and listened incredulously to Mahathir as he spoke of free speech, free press and freedom of assembly. “Malaysians have short memory,” remarked a friend to me as the clouds threatened to unleash a tropical rainstorm on us.

What was a clear blue sky had turned gloomy by four or five o’clock, when Mahathir arrived to give the speech. The rain god understood the popular sentiment on Jalan Ampang.

It is hard for anybody, me included, to stomach having Mahathir pontificating about free speech, free press and freedom of assembly. This is the man along with Lee Kuan Yew who believed in the so-called Asian values, the belief that the well-being of the whole trumps individual rights. I wonder how Lee would think of his former sparring partner.

To many liberals, I can see, Mahathir simply does not have the moral authority to say things he said on that Saturday afternoon and on that Monday night. Many liberals and others who opposed Mahathir during the 1980s and the 1990s yearn for pure heroes.

I hate to break it to you but those pure heroes do not exist in these desperate hours of ours. Anwar Ibrahim is in jail and Anwar himself is imperfect. Yet, we follow him, believing the injustice brought down upon him reformed him for the better for us all.

What we have now, ironically, is Mahathir.

At this stage, those who believe Najib Razak needs to resign and be brought to justice need to invest in coalition building. That is the only way realistically available to correct the wrong the corrupt have done. It is the only way to get Malaysia to move on. Without a coalition, Najib will continue to be in power plundering public wealth and undermining public institutions that we need to get to the next level of development.

Muhyiddin Yassin on Saturday is right. We need to forget our differences for a moment, just for this moment, and work together towards a common goal for the greater good. The urban and the liberal folks need their heartland cousins to push Malaysia forward and this is where Mahathir comes in.

Muhyiddin Yassin at Bersih 5

We have done it before. We saw that in 2008 and 2013. We just need to do it again. Yes, things crumbled afterwards but you know, if at first you do not succeed, try and try again. Nobody said it would be easy.

A defeatist would not even try. He would want to read a 100-year plan before starting anything.

I would say we should cross the bridge when and if we get there. It is premature to think about all permutations and worry about the downside as if the bad outcomes are guaranteed. There is no guarantee. None. And that is why attempts at building a coalition matter. We need to try instead of resigning ourselves to certain damnation.

And to the cynics who still distrust Mahathir, I think we can safely bet that Mahathir cannot be the dictator he used to be. As I stood at the back staring at him judgmentally, somehow I felt pity for him. There was a statesman, the former strongman of Southeast Asia, sitting upfront, shrunken, old, tired, small and humbled.

Yet, he was there on Monday night.

The question should not be why he was there, or whether he should to be there?

The question instead should be, where were you?

Mahathir ate his ego for something greater. Yet, here are the liberals, worried about some kind of ideological purity, trying to parade your moral superiority while more injustice is being committed by others.

Mahathir is not the authoritarian leader we have now. The monster is in Putrajaya.

Get on the program, fucking please.

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