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Books & printed materials Economics Politics & government

[2954] The frustrating read that is Notes to the Prime Minister

The ringgit has been on a depreciating trend versus the US dollar since early April 2022. While it is natural for Malaysians to focus on the ringgit, the depreciation is best explained by the strengthening of the US dollar against a slew of other currencies. Global events are triggering capital to head to the US, leaving other economies having to deal with the repercussions of such capital flight. But this fact does not stop Malaysians from calling domestic authorities to do something about the depreciation. Former Prime Minister Mahathir Mohamed recommends Malaysia pegs the ringgit as the country once did.

This is where Wong Sulong’s Notes to the Prime Minister: The Untold Story of How Malaysia Beat the Currency Speculators might be useful in providing greater details how pegging and capital control of the 1990s came about.

Unfortunately, the book does not do the job very well by digressing too much.

The book is firstly a reproduction of notes Nor Mohamed Yakcop wrote for the Mahathir at the heights of the crisis. Nor Mohamed is the architect behind the pegging and possibly the brain behind the rebuilding of Malaysia post-Asia Financial Crisis.

Secondly, it is an unexpected festschrift-like tangent in honor of the man, written by men and women (themselves had, and have, big roles in corporate Malaysia post-1998) Nor Mohamed recruited to head various government bodies and companies.

While the notes are useful and enlightening, the book is deficient in a way the notes are ill-supported by context-making commentaries. Because of the structure, the book makes a disorienting read, which leaves me dissatisfied.

When I bought the book some time back, I had expected it would discuss how Malaysia came to the decisions it made, and how the debates among those in power went. Furthermore, given the book was published more than 10 years after the crisis, possibly a critical review of the pegging and capital control.

There is no critical review. When I write critical, I do not mean criticizing the actions. Rather, I expect an examination why the policy worked for Malaysia. What we have instead is assertion that it worked and everybody else in the world was wrong.

Debates had around the various policies advocated by Nor Mohamed through notes are totally absent. A reader would need prior and outside knowledge of the economic and political environment of the 1990s to truly comprehend the reasons and tensions behind the notes. For instance, Nor Mohamed in his letters to Mahathir here and there criticized decisions taken by the Finance Ministry and the central bank, both of which were responsible to the then Finance Minister, Anwar Ibrahim. But Wong Sulong left the tensions largely out. I did not expect a full political analysis of tensions between Mahathir and Anwar, but I think it would be reasonable to expect an exploration of policy difference between the two men in response to the Asian Financial Crisis.

This makes me feel reading the book a little like reading Malaysian newspapers in the 1990s and the 2000s. Journalists during those decades (sometimes, even now) liked to write about the government’s reply to an issue, but not the issue itself. Imagine the government saying “everybody is alright” in response to a major vehicular accident, but that accident is not mentioned at all. The public of that era would have to guess what the government was referring to. Reading Notes to the Prime Minister is a little bit like that: frustrating. Annoying even.

Nor Mohamed proposed multiple policies in his notes, but readers are left to guess whether the policies were adopted. This is yet another example how the Wong leaves the notes uncontextualized.

My frustration grows further when in the chapters following the ‘notes,’ the book goes off tangent to celebrate Nor Mohamad. The man deserves to be celebrated, but the book overly does it by having various then-contemporary corporate captains (several of them are still active) recounting how they met the man and describing the man’s best traits in a festschrift style.

Nevertheless, some of the stories told help readers understand some aspects of government policy in the 2000s. I also become more appreciative how many GLC men and women were Nor Mohamed Yakcop’s men and women. When Najib was at war with Mahathir, and reopened the forex scandal of the 1980s and inevitably found Nor Mohamed as the number one scapegoat, I wonder how these men and women felt. But again, these insights come only frustratingly indirectly.

Finally, the notes themselves are fascinating. I learned one or two things that I took for granted before. I think more importantly, I am just impressed how detail-oriented Nor Mohamed Yakcop was, how knowledgeable he was, and how he was able to explain complex financial transactions in simple terms to the Prime Minister. Very clear-minded.

Categories
Politics & government Society

[2953] In Kampung Baru issue, PH supporters need to develop greater capacity for empathy

The expected eviction of some Kampung Baru residents by a private company during the administration of a Umno-led government has more than some Pakatan Harapan supporters feeling a little bit smug. Schadenfreude is aplenty. The residents are targets of that smugness.

This is the wrong.

Nevertheless, it is easy to understand the cause of those feelings RM1,000 per square foot offer was made on a willing buyer-willing selling basis, with a cash portion, as part of a plan to redevelop Kampung Baru comprehensively. It was not a perfect plan, but it was a plan. Many residents rejected the offer and many had legitimate reasons to do so.

But many too rejected it because they bought argument brought by Umno and Barisan Nasional’s politicians. Umno, Najib Razak especially, pushed for a ridiculous rate of RM3,000 per square foot deal. Ismail Sabri Yaakob, then leader of the opposition, also had commented on the issue to encourage residents to say no.

Roughly two years after the fall of PH government, Umno is back in power with Ismail sitting in the Prime Minister’s office. And here is where the incongruity happens.

Based on news reports from The Malaysian Insight and Malaysiakini, the private company is offering those whose properties have been taken over RM400 cash per square foot as compensation. This is approximately 3 times lower than the 2021-2022 market rate of RM1,500 per square foot. In addition, each household would be given the option to purchase a newly developed property there at discounted rates.

The numbers might change, but what will not is the sense of betrayal experienced by residents, and observed by third parties. There is no RM3,000 per square foot to be seen. Worse, eviction notice has been served regardless whether a resident agrees with the takeover term.

While it is tempting for PH supporters to hold that grin, and pontificate the residents on chances lost, and the betrayal the residents suffered, that is a self-defeating position to take.

PH needs those very residents’ support to win an election. But the way things are going, those residents will not be encouraged switch their political leanings. And if they are PH supporters in the first place, then the smugness will drive them away.

One has to remember, this is Titiwangsa, a seat PH won in 2018 but lost to political betrayal. That shared experienced of becoming victims of betrayal should enhance our capacity to be sympathetic to each other. But no. We prefer to say, “we told you so” instead.

PH supporters need to develop a larger capacity for empathy. Not just with respect to the Kampung Baru eviction, but also on other national issues. Build bridges instead of widening the chasms.

Again, this is Titiwangsa, a Malay majority seat in Kuala Lumpur. The way things are set up, if you cannot win urban Malays, you likely will not return to Putrajaya. Without empathy, you can wait for 10 years, and still not win federal power.

Categories
Economics Society

[2952] When did dates become popular among Muslim Malaysians?

Dates now feel ubiquitous on Ramadan dinner tables among the Malay (and the wider Muslim Malaysian) community. Not only that, more often than not, they break fast with the fruits first.

Just the other day, somebody spotted me breaking my fast with something else (a glass of water), and the person commented how unusual my behavior was.

I found that comment very peculiar. Contrary the person’s assertion, I feel date-eating had never been normal in Malaysia. I remember a time when dates were not even at all popular. It was not even available in the Malaysian mass market easily unlike now. The Yusuf Taiyoob trend, in particular, is really a recent phenomenon appearing in the early 2010s.

I myself first tasted dates not in Malaysia, but at a mosque in the United States in the early 2000s. There was a large Arab community—Iraqis, likely due to the Gulf Wars—and they loved their dates.

That comment made me wonder, how and when did dates start to become popular?

I know how it became popular: many would tell you it is religiously preferable to break fast with fresh dates. It is sunnah, which means extra pahala, or merit for those practicing it. And during Ramadan, Mulims believe everything good has a big multiplier assigned to it, unlike normal times when one good deed is considered one. Do not ask me about how the scorecard works.

So when?

I figured, the best way to know when dates became popular in Malaysia, and to prove whether I was right (that is mass date consumption being a relatively recent phenomenon in Malaysia), is to look at trade data over the years.

Here, two public databases are helpful. First, the International Trade Center, a body under both the World Trade Organization and the United Nations. Second, the UN Comtrade Database. Unfortunately, the best I could get was data all the way back from 1989.

So, when did dates first becoming popular in Malaysia (within the confines of Ramadan)?

I will let the graph talk.

The chart suggests date consumption grew in popularity (within its own context) over time. More supply means more could consume it: at the very least, date import volume grew at a faster rate than population growth.

Specifically, 1989 date imports were approximately 440 g/person. It rose to 480 g/person in 2000. An increase, but not too much. But it surge to 640 g/person in 2010 and then 700 g/person in 2020. There was a big jump between 2000 and 2010. I think that says something.

Things changed some time in the 2000s or the 2010s, which coincided with the rise of Tunisia as an exporter to Malaysia. Prior to that event, China, Iran and Egypt were the biggest suppliers. Both China and Egypt have fallen off the rung since the last decade.

With that, I think I can say in the 1990s, it was not that popular. That justifies my experience. It is not me that is unusual. It is the community that has changed.

I also suspect date consumption was popular among rich Malays first, way way before. The culture became popular with masses later partly due to religious exhortation/advisory (sunnah) and a version of conspicuous consumption at work: a Veblenian way of saying rich religious people eat it, and if I eat it, I would be seen as a rich religious person too. This is probably harder to prove.

Finally, it is good to put the rising popularity of dates into context. These date imports are small compared to other (foreign) fruits. For instance, nearly 170,000MT oranges (citruses really), 150,000MT apples and 50,000MT grapes and the likes were imported in 2020. Compare that to the 2020 dates imports of 22,500MT.

Still, 2020 date imports were bigger than bananas. But Malaysians do grow bananas locally. So, it is not a proper comparison.

Categories
Economics Politics & government

[2951] Politics of prices is counter-productive

There has been a global supply constraint of various kinds for at least a year now. The supply chain disruption was expected by many—I quickly noted the post-war Malayan supply-side crisis as a parallel. Nevertheless, few people expected the constraints would be this tight for so long. I certainly did not.

The tightness has slipped over into the Malaysian consumer market. Chicken, beef, vegetables are the usual suspects.

The waitlists for cars are long due to a persistent global chip shortage: I test drove a Peugeot several weeks back and that experience to me underscores how modern ground vehicles these days are more and more an electronic device than a mechanical one. I knew vehicles had an ever increasing electronics (and electrical) components to them. Several months earlier, I read a report showing how the share of electronic cost relative to total car manufacturing cost has gone up drastically in the past 20 years, from less than 1% to maybe 40%-60%. But there is a difference between reading it, and riding the thing. The dashboard is a computer screen popping more information any older car could show. When I say dashboard, I mean a dashboard full of dynamic data, with customizable menu. The air-conditioning controls are only accessible through a separate central LCD screen, which also controls other aspects of the car. Even the brakes can be controlled by the computer, along with so many other things.

It is not just chip and electronic components are in short supply. Somebody on Twitter jokingly said “oh, this is the chip shortages they were talking about” in reference to shortages of fries at McDonald’s in Malaysia and Japan.

Consumer prices are rising, and it would have risen higher if it was not for price control mechanism and subsidies in place in Malaysia. This is readily observed from the following chart, where consumer prices are not rising as fast as producer prices. The latter is a proxy to global prices.

PPI vs CPI

Nevertheless, despite enjoying the shield, consumers have been complaining about rising living costs. They demand actions. More than a few activists and politicians have demanded the same.

All governments are sensitive to such criticisms and this government, especially as weak, incompetent and clueless as it is, is doubly so. The opposition has been relentless in their criticism. Some Pakatan Harapan supporters have highlighted how their government played a better and proactive role in addressing prices, and go on to claim a Pakatan Harapan government would have been far more effective in managing cost of living problem. And when Pakatan Harapan was in power, Barisan Nasional and Pas, on top of their usual racist rhetoric, also attacked the government for rising living costs regardless of whether prices was actually rising (prices then were actually very stable due to the imposition of an overly generous blanket fuel subsidy).

I dislike politics of prices. While it has its uses in cases when there are monopoly abuses and regulatory hurdles (the drop in broadband prices are a great exception), in the current climate prices are largely out of the government hands. The truth is, if Pakatan Harapan was in power, they too would not be able to do much about it either.

But that does not matter. Such is the politics of prices.

The problem is with the supply itself and the players of politics of prices simply ignore the cause of the problem. Some even go has far as misdiagnosing it as unhelpfully as greed.

A supply-driven crisis like this requires investment to loosen up the supply chain: expansion of ports, new technology to hasten production and delivery, new plants, more workers, etc. Yet, the aversion for price hikes have led to large government subsidies (think fuel), which takes fund away from productive investment purposes that are needed to address the supply chain disruption.

Politics of prices not only ignore the source of price pressures Malaysian consumers are experiencing. They ignore wages. Prices and wages are part of the same coin: wages are prices of labor. Notwithstanding issues relating to income distribution between employees and employers, and technology-driven price cuts among others, the politics of prices suppresses price growth, and through it, risk of suppressing wage growth.

More than once, the politics of prices have led to calls for wage cuts. The targets have been high-paying professionals and ministers (and their unqualified advisors), but too often, it has gone a little bit too far. Mahathir as the 7th Prime Minister for instance, is a fan of pay cuts and that unfortunately set the tone for the whole economy when he was in power. Coupled with his obsession with government debt (government debt and transparency were a problem), and his history with the gold dinar movement, it felt like he wanted a deflationary environment.

All that set the tone for austerity. There was really no austerity in place—government spending went up and the economy expanded—but the narrative set by the PM made it difficult to convince many out there that that was no austerity. And the economy, even as it expanded, took heed of the deflationary sentiment.

Categories
Liberty Politics & government Society

[2950] Too tame for our own good

Many things could describe the past two separate years that merged into one. Here, I would describe it as the taming of our society. The fire that powered many before was doused by shocks and disappointments of February 2020 along with all the political development that followed. This broke the heart of many.

And if there were still beating heart fighting on the political front, the pandemic that flared up soon after broke the body of many. The crisis and its mismanagement brought debilitating economic effects that forced many to switch attention away politics (politics here is not the narrowly defined partisan-party politics, but one about governance and the overall organization of society) to that of personal livelihood. Many died along the way.

Malaysian society as it was before the pandemic was mostly too polite for our own good, but the bludgeons needed to fight the pandemic turned that politeness into utter submission. There were noise and protests against the manner government regulation was applied incompetently. Some went to the streets. But those noise and protests were nothing compared to the years before. During the pandemic, far too few could, or willing to go to the ground, divided out of fear of getting infected, or the need to work at a time when unemployment was soaring, furloughing was the talks of the town, and wages were cut down significantly.

The foundation which the Muhyiddin government stood on was shaky soon after its undemocratic formation, but it stood for so long because any anger was contained by fear, or deference of power. But the ember-like anger burnt further and when it appeared a fire was about to lit—even patience among the polite has its limits—the irresponsible government played poker: they raised the stakes by declaring emergency. The stakes were raised to the point the polite did not dare challenge it too fiercely. Or they were too tired, and hapless.

The subsequent government under Ismail Sabri lowered the temperature for a while but the incompetence remained. That same incompetence was for all to see during the recent great floods across the peninsula. The further loss of life and property raised the political temperature yet again. The politics of race and religion showed it was all meaningless in the face of incompetence, so much so that this administration that largely has the same Cabinet members who previously prided itself as a Malay-Muslim government, has stopped marketing itself as one.

Amid the troubles faced by the general public, yet another scandal is erupting in the public first involving the Malaysian Anti-Corruption Commission, and as national crisis tends to pull other public institutions into the ditch (1MDB was one such case but on a grander scale), later the Securities Commission. A good institutional set-up would have contained it. This government prefers to drag everything down, for their benefits, at the expense of the country. All that highlights how institutional reforms achieved due to the 2018 General Election was fragile and needed nurturing, and how the events of February 2020 undid the good work. The message before had always been reforms took time, but few imagined there would be so big a digression happening so soon.

The digression is happening because we have been too polite, too tame amid assaults over our democratic institutions. It is time to be not so tame and fight.

I would like to end this post by reproducing Usman Awang’s Sepatah Kata:

Sebuah perkataan yang paling ditakuti
Yang tradisional sekali
Untuk bangsa kita yang pemalu.
Sekarang kata ini kuajarkan pada anakku:
Kau harus jadi manusia kurangajar
Untuk tidak mewarisi malu ayahmu.
Lihat petani-petani yang kurangajar
Memiliki tanah dengan caranya
Sebelumnya mereka tak punya apa
Kerana ajaran malu dari bangsanya.
Suatu bangsa tidak menjadi besar
Tanpa memiliki sifat kurangajar.