This was back in 2011 in Paris. I was there at the height of the Arab Spring and also interestingly, during the emergence of French far-right parties in mainstream politics.


I do not have much or anything new to say. It is late here in Kuala Lumpur, six or seven hours ahead of Paris. Yet, I still want to express my opinion that we should not discriminate or blame the innocent refugees for the horrible acts committed today in Paris by a group of Islamist terrorists.

I am angry at the attack and I am sure a lot of others do, especially in Paris. The senseless killing is outrageous whatever the excuse. But I am also angry at the mistrust the attack is creating everywhere.

I am disgusted reading responses from right-wingers who somehow think the refugees from Syria and elsewhere from the Arab world as causing of the Paris attack. The right-wing xenophobic policy recommendation is to stop the refugees from coming in.

But as many have highlighted, these refugees are running away from the same barbaric Islamic State which attacked the civilians in Paris today. These refugees are civilians too and they are as much a victim as Parisians.

The right way is to direct the anger towards the Islamic State, and not at the innocents who just happen to share, nominally if I might add, the same religion at the attackers.

Growth in 2Q15 was bad but we know it due to the GST with all the front-loading spending.

The question now is, was the GST largely the one exerting negative pressure on growth?

In a very superficial way, growth should rebound in 3Q15 if the answer to the question is in the affirmative because it suggests consumption would return to normal.

If not, we should see worse growth in the last quarter, and possibly bigger trouble ahead.

Things are quite confusing for me at the moment because of the GST as well as due to low energy prices. Inflation has stopped being a useful proxy to demand and is out of wack. It is driven by cost factor and not really demand. I have not figured out how to handle this yet but things might only stabilize April next year, assuming energy prices remain at about current levels.

There are signs something bigger than GST is at work. The service sector is not doing too well. We know this from official 3Q15 statistics. Service growth was mostly pulled down by the finance sector, but retail growth also moderated. I am also hearing many anecdotes of personal hardship with greater frequency than usual. Some of my friends run businesses and they are not doing great either. I usually would dismiss anecdotes but I dare not do it this time around. There are just too many of them.

But there are good news. Industrial production did well, and so did construction and exports.

Net exports should give a big boost to the GDP, cushioning any expected slowdown in the domestic economy. I do not know how long the export strength will last, but for 3Q15, it looks like we had the two engine-model back. The weak ringgit might have a contributing factor, but I think it is a bit too soon to pass judgment about currency and competitiveness despite the temptation to claim so.

But, yea, the only reason I write this post is to do this poll:

How fast did the Malaysian economy grow in 3Q15 from a year ago?

  • 3.0% or slower (17%, 2 Votes)
  • 3.1%-4.0% (8%, 1 Votes)
  • 4.1%-4.5% (42%, 5 Votes)
  • 4.6%-5.0% (33%, 4 Votes)
  • 5.1%-5.5% (0%, 0 Votes)
  • Faster than 5.5% (0%, 0 Votes)

Total Voters: 12

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The official GDP figures will be released midday tomorrow.


Text to the Transpacific Partnership came out today. I have yet to go through it fully. It is massive and it can be technical. It is worse than Sejarah Melayu. It will take time.

Nevertheless, I attended a briefing at the trade ministry earlier today and I think I understand the gist of the most important chapters. My somewhat initial impression: there are damn lots of exemptions.

All these exemptions – including the continued maintenance of the Bumiputra policy, flexibility to government procurement for up to 25 years after signing/ratification much to the benefits of local firms and even what appears to be status quo for a lot of GLICs and GLCs – should allay nationalists, protectionists and anti-globalization groups’ fears that Malaysia is surrendering our policy space to foreign governments and multinationals.

In fact, there are so many exemptions that I am unsure I should support the agreement as strongly as I did previously, notwithstanding progress made on market access and tariffs. I have always understood that any FTA is not a real free trade. We live in a imperfect world and I realize that much, but the exclusions Malaysia won exceed my expectations. Hence, my surprise.

But the one clause that blows those “sovereignty” concerns out of the water is the exit option stated in the last chapter of the agreement. The TPP allows any country to quit the group unilaterally by giving a 6-month notice without incurring any penalty.

The easy exit clause means most of the requirements under TPP, like the extension of copyrights from 50 to 70 years and protections for biologics, are reversible by simply quitting the TPP. I reject the sovereignty argument but, if joining the TPP means losing national sovereignty, then the ability to quit and to reverse those policies must mean Malaysia is always be in control of its policy space.

(Not everything is reversible however. For instance, as I understand it the WTO disallows import tariffs to go up from any point of time and it does seem the TPP’s lower tariffs would be applicable even in the case of exit… I am unsure how post-TPP-exit discriminatory tariffs would work within WTO settings however. We need a trade law expert to answer that hypothetical.)

At the very least, the exit option lowers the cost and risk of joining the grouping.

Whatever it is, I come from the perspective we should always strive to create a rules-based world and then makes the rules as transparent as possible. To say it differently, we should reduce the discretionary powers from the authority as much as possible whenever it makes sense. I suppose, this originates from my libertarian tendency to control powers, be it states, companies or individuals.

In any case, I am a bit disappointed with the concessions Malaysia won, especially in terms of government procurement, state-owned enterprises and Bumiputra policy. I had believed TPP could liberalize Malaysia further more than local politics would allow it. Politics won.

Yet, I think I can stomach that. All this is a process and there will be another time. And right now, the TPP as it is seems okay to me. As I told somebody earlier today, better in than out.

Or, better we set the rules from a position of strength instead of wanting to join later and having to accept the rules from a weaker position.

Touching on the exemptions again, perhaps in retrospect we had too much strength at the negotiating table.

Unlike cabbies whose occupation is mostly driving (save for the minority), most Uber drivers drive part-time. I have had engineers, civil servants, doctorate students and advertising people as my Uber driver.

That occupational diversity makes conversation during an Uber ride much more interesting than that during a typical taxi journey. I have heard fascinating tidbits across industries as Uber transports me around Kuala Lumpur. This makes Uber a gold mine for economic anecdotes, giving colour and warmth to hard cold data.

These conversations have turned depressing lately.

The economy is going through a rough patch and official data tells you just as much. No citing of how well Malaysia ranks in the WEF Global Competitiveness Index — an index that does not measure economic cycles — can overcome concerns over the economy at the moment.

We are not in a recession but recession as a concept can be a statistical abstract. I would suppose in personal terms, you are in a recession if you lose your job and then struggle to meet your financial obligations. It is within this context my Uber conversations took place.

The worst stories almost always come from oil and gas professionals. With low petroleum prices and spending cuts by Petronas, the whole Malaysian oil and gas sector is in a recession of their own.

This has led one geologist to drive Uber. He used to spend months at sea and all around the world on lucrative contracts looking for oil and gas for big companies. But he has not been out of Kuala Lumpur for a while now. There is no new contract to sign. Nobody is exploring anymore.

Petroleum professionals like him are used to big pay and those in the industry did appear to be among the best paid compared to the rest. And this geologist in particular was used to big spending. He bought a property in a good neighbourhood along with a car last year through bank borrowings. Then, the repayment seemed insignificant.

But the times are changing. With no job on the horizon and no money coming in, his personal finances are not in a great shape currently. He is not alone. “My friends are trying to rent out their places. They did not need the money before but now every cent counts,” he insisted.

I fear what this portends. These are highly qualified and well-paid members of the middle class. Upper middle class perhaps but they are now at risk of losing that status.

There has always been somebody struggling with their finances even during good times. But the idea a person with a fine education such as the geologist could fall so far down so rudely because of something out of his control made me shrink in my seat as he drove me towards my destination.

There might be some comfort the petroleum industry employs just a small segment of the Malaysian labour force.

Yet, it is not the only one in trouble. Retail is not doing well too. It is unclear if the tough time there is temporarily caused by the GST or due to something bigger and more lasting. Meanwhile, euphemisms like downsizing, voluntary separation scheme and “having to let you go” are making its rounds in the banking sector.

Another sector I have had anecdotes to share is advertising.

One person running a small production house told me he drove Uber because there were fewer and fewer advertising jobs available for grabs these days. “In tough times,” he said when the lights were red, “businesses would cut advertising spending first. It is the easiest thing to do for them.” Indeed advertising expenditure has fared badly so far, contracting 9 per cent in the first eight months this year compared to 2014.

Before we parted ways, he joked driving was his full-time job now judging by the hours he spent on the road instead of at the desk doing creative work.

I only hope these are mere anecdotes.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malay Mail on October 29 2015.

I think I am well-exposed to foreigners’ opinions about Malaysia beyond the editorial stance of various foreign newspapers. I have friends of diverse national origins and I work for a global organization where many of my colleagues are not Malaysians. I keep in touch with them regularly and so I get to learn of their personal and professional views about the country.

Everybody has an opinion. But do they know Malaysia?

They might be able to tell you where it is on the map. They would know the Petronas Twin Towers. They might know who Mahathir Mohamad or Anwar Ibrahim is.

But if you dig a little deeper you will realize most of them usually do not track our news closely.

Sure, they would remember reading some odd news like how naked hikers supposedly angered the spirits up on Mount Kinabalu. Sometimes, some third-rated politicians — even ministers — would say the darnedest thing and make it to the news.

These friends and colleagues would turn these trivial snapshots of Malaysian life into joking jabs at me. I would not protest too much as these embarrassing episodes would pass quickly. These kinds of news are light reading of no real consequence written to amuse the world on a slow news day.

But something more serious and lasting is hogging the headlines of some of the world’s finest newspapers in the past few months. Our prime minister and his troubled brainchild 1MDB are regularly mentioned in the context of corruption and power abuse across the world. As the prime minister’s reputation is left in tatters, so too is Malaysia’s.

Foreigners are becoming more aware of the grave trouble besetting Malaysia. A London colleague told me his unsophisticated English mother living all the way up north in Newcastle had begun asking about 1MDB and Najib. That is a sign of how widely known the corruption scandal is.

My friends from abroad have also begun asking me about the situation here. The questions asked make me feel ashamed of being a Malaysian.

Not too long ago, I always felt a little bit proud talking about Malaysia. We have achieved so much over the years. I sensed a kind of economic optimism that might even match the 1990s boom years. Socially, politically and economically, I felt we were almost there with the challenges ahead of us very surmountable. As a member of that generation who sang the song Wawasan 2020 at the top of our lungs every Monday morning during our school assembly, “there” was well within our lifetime.

Sadly, that optimism is fading fast. Whenever I talk about Malaysia today, it is no longer about that country on the cusp of something grander. Instead, I feel like I am referring to a Third World country with its Third World regime where power abuse is common and might is right.

At one time, it was the in-thing for government supporters to say that Malaysia was better than many Third World countries and we should be grateful for that. The joke now is we are directly comparable to some corrupt Third World regime out there.

The joke hurts because it is true in a substantive way. All those joking jabs are no longer petty. It saps our pride away.

I know who to blame for that. I put the blame squarely on the prime minister and 1MDB. They are an acute source of embarrassment for me.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malay Mail on September 28 2015.

They jogged on through the crowd of frightened people leaving the area, while the wizard took great mouthfuls of cool dawn air. Something was puzzling him.

“I’m sure all the candles went out,” he said. “So how did the Drum catch fire?”

“I don’t know,” moaned Twoflower. “It’s terrible, Rincewind. We were getting along so well, too.”

Rincewind stopped in astonishment, so that another refugee cannoned into him and spun away with an oath.

“Getting on?”

“Yes, a great bunch of fellows, I thought — language was a bit of a problem, but they were so keen for me to join their party, they just wouldn’t take no for an answer — really friendly people, I thought…”

Rincewind started to correct him, then realized he didn’t know how to begin.

“It’ll be a blow for old Broadman,” Twoflower continued. “Still, he was wise. I’ve still got the rhinu he paid as his first premium.”

Rincewind didn’t know the meaning of the word premium, but his mind was working fast.

“You inn-sewered the Drum?” he said. “You bet Broadman it wouldn’t catch fire?”

“Oh yes. Standard valuation. Two hundred rhinu. Why do you ask?”

Rincewind turned and stared at the flames racing towards them, and wondered how much of Ankh-Morpork could be bought for two hundred rhinu. Quite a large peice, he decided. Only not now, not the way those flames were moving… [Page 88-89 The Color of Magic. Terry Pratchett. 1983]

Back in January, the official deficit projection for 2015 was revised up by the government to 3.2% of GDP from 3.0% due to the falling energy prices. I concluded then the new target was achievable if government revenue would increase by at least 1.2% YoY. It was a reasonable target eight or nine months ago.

Unfortunately, a lot of things have happened since then and that 1.2% YoY revenue growth does not look easy anymore. That means, the current deficit target seems incredible now.

I have updated my sensitivity analysis. I think the fiscal deficit this year will likely be around 3.5%-3.9% of GDP. I did a tighter projection for work but I can afford to cast a wider net here.

Below is a table of deficit-to-GDP, dependent on revenue and NGDP changes this year. I have highlighted several cells in red corresponding to my expectations.

2015 Fiscal deficit sensitivity analysis

The assumptions (projections?) are:

  1. 0%-2% revenue contraction
  2. 4%-5% NGDP growth.
  3. For government spending growth, I imputed 1.2% YoY into my model, which is the exact increase the government announced from its budget revision back in January. I do not expect any spending cut due to… hmm… some political imperatives and I suppose, Keynesian tendencies within the government. I am unsure how the Monday announcement would affect spending as details are scarce so far but my gut feeling says it will not matter.

The weaker revenue is mostly due to depressed petroleum tax collection, lower petroleum royalties and lower dividend. I am a bit unsure how other taxes, especially company and individual income taxes, will change. But what we do have is the first half data and individual income tax collection is already down by 33% YoY, partly, I guess, because of the earlier tax cuts. Company income tax collection rose strongly however, increasing 43% YoY but judging from earning reports so far, I think the second half will be very different.

The 1MDB Minister Prime Minister Finance Minister will table the government budget on October 23. We will know more then.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
p/s — It would be interesting to compare current assumptions with past ones:

  1. My current expectation is based on 1.2% spending growth, 0%-2% revenue contraction and 4%-5% NGDP growth. These are part of the three assumptions listed above.
  2. Back in January 2015 during the revised budget, the assumptions were 1.2% spending growth, 1%-2% revenue growth and 4%-5% NGDP growth.
  3. The original 2015 official projection, shared in October 2014, was 3.2% spending growth, 4.5% revenue growth and 9% NGDP growth.

You can see the drastic change in projections and assumption since October 2014. Maybe a table will be clearer for comparison:

Malaysian deficit ratio target change

PAP’s better-than-expected victory in Singapore has gotten BN supporters in Malaysia excited.

It tickles me to no end watching BN people looking into the Singaporean mirror and seeing men in white instead of their own reflection. They see the Singaporean reality and confuse it for a Malaysian one. Perhaps there is something wrong with the lens they wear for BN is no PAP and Najib Razak is no Lee Hsien Loong. And Singapore is no Malaysia.

Salleh Keruak, the unelected information minister, thinks otherwise. He believes the Singaporean election has proven a point about the silent majority defeating the noisy minority at the ballot box. He believes this will be the case for Malaysia and encourages the government to act as so.[1]

Former PM Mahathir Mohamed loved the argument when he was in power but in our last general election in 2013, there was no silent majority voting for BN. Did we forget 51% of us voted for Pakatan Rakyat, and that BN received only 47% for the votes? In fact I would even go farther and say the the silent majority argument has been irrelevant since at least 2008 because our society is essentially divided in the middle.

Will 2018 show otherwise?

I do not know and as a person who believes strongly in the need for institutional reforms (read power change at the federal level) instead of more investment in malls and condominium to boost the GDP, the dynamics involving PAS and the rural votes worry me. But the differences between Singapore and Malaysia are so big that there is a limit to how much the Singaporean experience is applicable to Malaysia. The minister’s confidence does not recognize that limit at all.

For one, Malaysia had no Lee Kuan Yew. His death sparked the politics of thankfulness much to the benefits of the PAP, never mind the nationalism in conjunction of Singapore’s 50th year as an independent state. What Malaysia has in contrast is Mahathir and he, unlike Lee, does not think highly of the incumbent government.

Furthermore, Singapore has no real scandal of its own. There were issues causing the PAP to lose some support back in 2011. But the party set out to address those concerns after that and apparently, sufficiently successful at doing so. This, I think, is the most important point that has been raised out there to rationalize PAP’s victory.

Malaysia? The sitting government has created more problem than it has solved. The power abuse and corruption concerns of 2008 have been amplified instead.

The minister and the proponents of the silent majority would do better if they compare and contrast the Malaysian and the Singaporean contexts closely. In fact, there is no guarantee those keeping quiet will vote for BN when the time comes.

Remember 2008?

The social media is not the best national barometer, but do not take the hostility in cyberspace to mean all is fine and dandy on the ground.

In Wangsa Maju, there is a big water pipe visible from the main road leading to Taman Melawati. On it written “Undur Najib. Kekal BN” in red paintIn Keramat, I am surprised Najib’s big poster on the UTC facade has not been vandalized yet. Maybe because there is a police station inside of it.

But talk to these Malays in Keramat, Kampung Baru, Kerinchi, Wangsa Maju and Setapak for instance. See if you will be celebrated as a superstar.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

[1] — There may be thousands marching and screaming and demonstrating its displeasure. But there may be an even larger group that has no issues and do not share the views of this minority group of noisy protestors.

Politicians do not fear that noisy minority. What they fear is the silent majority because one never knows what the silent majority is thinking and what they will do come Polling Day.

The Singapore general election has proven this point. The noisy minority dominated the internet and the social media. They made it appear like they represent the majority rather than the minority. And the election result proved that the silent majority were not with the noisy minority.

Undeniably, in Malaysia as well the noisy minority dominates and monopolises the internet and the social media. In fact, many are intimidated and do not want to post their views on the internet because if you disagree with the noisy minority you would get vilified and insulted.

However, just like what happened in Singapore, the silent majority got turned off with what the noisy minority was saying on the internet and in the social media. They watched silently what was being said and the more the silent minority talked the more people were turned away. Sometimes overkill can work against you, like what the Singapore election has proven. [The noisy minority and the silent majority. Salleh Said Keruak. September 12 2015]

UAE scored 10 goals against Malaysia in the World Cup qualification. That is right. Ten against none. It is such a happy coincidence given the 1MDB and Najib scandals. It is UAE of all countries, the country which somebody sold Malaysia to.

But up next in the schedule, for September 8, is Saudi Arabia, which is probably as tough as UAE. So…

Malaysia versus Saudi Arabia. What will the result be?

  • Malaysia to win! (0%, 0 Votes)
  • A draw (0%, 0 Votes)
  • Lose by a goal or two (4%, 1 Votes)
  • Lose by 3-5 goals (22%, 5 Votes)
  • Lose by 6-10 goals (22%, 5 Votes)
  • Lose by 11-700,000,000 goals (13%, 3 Votes)
  • I have never taken these goals for personal gain (39%, 9 Votes)

Total Voters: 23

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Late after midnight… on the wall of one of the buildings along Jalan Tun Perak previously filled with protesters in yellow.

20150830 Bersih4 (169)

281 pages