Categories
Politics & government Sci-fi

[2792] Malaysian dystopia coming true

Some dystopian science fictions rest on absurd premises.

Terry Gilliam’s Brazil is a statist world of paperwork. There is a form to fill up for everything you do. The story begins with a naming mistake in a government ministry.

Instead of Tuttle printed on the warrant, it was Buttle. That leads to the arrest and the eventual death of an innocent man the authority believed was a terrorist.

When a person discovers that the authority had the wrong person, everybody else refuses to correct or even admit the mistake for fear of having to face the impossible mountains of paperwork. And so the bureaucracy covers it up rather.

Mistakes or not, the bureaucracy is always right. Adherence to the system is so paramount that any attempt to rectify the error is an act of rebellion against the state. The state, meanwhile, does not look kindly on rebellion.

George Orwell’s Nineteen Eighty-Four is more ominous than Brazil. While people of Gilliam’s world are free as long as they fill their forms correctly, Orwell’s is a totalitarian universe with the one party controlling every facet of your life.

The truth is whatever the government ”• the Big Brother ”• says. The government rewrites history however it sees fit. If anybody has a different opinion or remembers history differently, the government will put him through a special rehabilitation program to change his or her mind, forcefully.

There are other brilliantly absurd dystopian works out there.

These absurdities are fictions only to a healthy civilized society when the government is decent. We can laugh at these fictions because they are entertainingly absurd and so far removed from reality.

But the farther down the hole we are from a decent government, the less fictional these absurdities become. In them lie the seeds of truth.

Whenever I think of Malaysia today, my mind wanders to these old dystopian science fictions. I sigh at the ridiculousness of our situation that might as well be the target of mocking and satire of these works.

Our very own Big Brother (is he Ah Jib Gor?) proclaimed back when 1Malaysia Development Berhad (1MDB) was established that the fund was the centerpiece to his transformation.

It would help to create a new financial center for Kuala Lumpur. It would help reform the power sector. It would push Malaysia into the dreamy First World list.

Drive by the long Jalan Tun Razak, you will read the pretentious phrase ”For a Greater Kuala Lumpur” printed on aluminum hoarding surrounding the prime land 1MDB bought so cheaply from the government. ”1MDB is strong,” the government said.

Today, financial troubles and corruption scandals beset the fund. The strong 1MDB now is in need of government support to survive. The financial center stands unbuilt. The power authority is scrambling to meet Malaysia’s future energy demand because 1MDB failed to build the necessary power plants despite winning the tenders. Amid all this, the government is trying to convince us all that 1MDB is too small compared to the Malaysian economy. ”The fund is inconsequential now,” they claimed.

It took four to five years to change the storyline from it’s-a-big-thing to it-doesn’t-matter. One should be forgiven for not noticing the changing deceit told over such a long period.

But another episode is more shocking. Only a person of dulled senses and soft mind would not notice it.

Remember when all of those corruption allegations backed by various leaked documents implicating 1MDB, the prime minister and several other individuals first came out? They were tampered documents, the government said. The implicit defense was that the allegations were untrue.

Now, as the official government story goes, the money transfer did happen and the accounts did exist. All that was an all-legal multibillion-ringgit donation from someone unnamed. Suddenly, it was all true. Meanwhile, everybody who seems to be trying to right the wrong is arrested.

So, what about those tampered documents? The government is silent on that, instead preferring to talk about political donation reform, which by the way UMNO the ruling party itself rejected while blaming the Opposition for the reform failure. Such is the prevalence of doubletalk in Malaysia.

That blatant defense change happened in the pages of Nineteen Eighty-Four. The fascist party said ”We’ve always been at war with Eurasia.” The masses nodded and they understood they had always been friends with Eastasia.

Suddenly at the same event, the party said ”We’ve always been at war with Eastasia,” The masses were oblivious to the switch in name and nodded dutifully.

We have already that one party, the volte-face, a hint of corrupt bureaucracy along with the inane rationale and excuses today. It is up to us Malaysians to not nod lest Malaysia becomes these dystopias tomorrow.

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 August 7 2015.

Categories
Economics

[2791] Frontloanding theory confirmed for 2Q15 GDP

Apart from the slowdown in consumption, I was wrong. The Malaysian GDP grew 4.9% from a year ago, considerably higher than what I thought it would be at 4.1%-4.2% YoY. Still, economic growth is decelerating quite drastically.

Malaysian GDP growth

Trade surplus did not improve as exports contracted worse than imports, and not the other way round as I wrote previously. Service trade and price factors have something to do with it since trade values published monthly had suggested otherwise. I had naively taken the number without taking into account export and import prices.

Meanwhile, investment growth crashed, becoming much weaker than what I expected. The Pengerang project has not created much dent yet.

But the two big things that caused me to miss the actual growth figure are inventories and government spending. I should have raised my inventory projection when the industrial figures come out respectably okay but the pessimistic me refused to do so. And I had expected with all the rage for deficit targeting, government expenditure would have taken a big hit (yes, I know the GDP government spending does not correspond exactly to actual federal government spending and there are other states’ government spending to account for). It grew in annual terms instead.

The thing that was really hard to get it wrong was consumption. The GST collected its toll. It was a stark slowdown, growing only 6.7% YoY after the 1Q15 8.8% YoY spike. Domestic demand growth decelerated to 4.6% YoY from 7.9% YoY in the same period.

A lot of people had expected a dip after the spike and they were right. The frontloading theory is right.

That has led me thinking about how much did consumers stock up on their foodstuff and other typical consumer non-durable goods. None of us has a warehouse to store a whole year worth of supplies.

This is a hard and important question. Whatever the answer is, it is the key to knowing when will spending normalization take place. When it happens, I think it is reasonable to expect a massive spike in consumption, at least on quarter-on-quarter basis.

If I had to guess, the normalization would probably start this quarter. We could see complete normalization by the end of the year.

Still, preempting the typical data for 3Q15, this quarter would likely be weak too and I feel we would only start getting better in 4Q15. The GST impact itself should be gone completely by 2Q16, if only because of mathematical artifact.

Categories
Economics WDYT

[2790] Guess the 2Q15 Malaysian GDP growth!

The Malaysian GDP figures for the 2015 second quarter will be out next week on Thursday.

I think it will be bad because of how the GST has hit consumption. This will be the focus next week as people write out their commentary. I am a believer of the frontloading theory but admittedly there are some problems with it as I have highlighted yesterday: consumption imports have been growing strongly much against expectations.

The trend in trade is not great either. The funny thing is trade surplus is improving in the quarter. The widening is not something to be celebrated however. Imports raced against exports to the bottom. Imports won that race no thanks to weak consumption.

The industrial index has been doing quite well despite the gloom all around. That is another funky stats that refuse to line up cleanly. The excellent EconsMalaysia believes it is really inventory build-up. That hypothesis can easily be assessed with the GDP figures.

I think, the only real good news will come from investment, especially with the Petronas Pengerang project down south. I have been there myself and it is truly massive. Still, I struggle to think of any other new big public infrastructure project that started recently. I have not heard any large scale work for the Pan-Borneo Highway despite earlier fanfare. MRT and LRT are old news. New water treatment plant? Ask Selangor. New power plant? Ask 1MDB. There are some (an understatement?) residential construction in Danga Bay but…

I could talk about inflation but with the GST in the way, it is hard to be confident about the exact CPI message. My core inflation is out of whack. The Stats Department produces a seasonally-adjusted CPI series but I have no learned to trust it just yet.

On the balance, I think our GDP growth for 2Q15 will probably be in the region of 4.1%-4.2%. I think there is an upward risk with the the weirdness in import composition and the industrial index.

What do you think?

How fast do you think did the Malaysian economy grow in 2Q2015 from a year ago?

  • 0%-2.0% (6%, 1 Votes)
  • 2.1%-3.0% (17%, 3 Votes)
  • 3.1%-4.0% (28%, 5 Votes)
  • 4.1%-4.5% (39%, 7 Votes)
  • 4.6%-5.0% (11%, 2 Votes)
  • 5.1%-5.5% (0%, 0 Votes)
  • 5.6%-6.0% (0%, 0 Votes)
  • Faster than 6.0% (0%, 0 Votes)

Total Voters: 18

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Categories
Economics

[2789] What happened to second quarter consumption imports?

There is something quite weird going on in the imports data.

In the last quarter, we all know we had GST for the first time. It replaced an older consumption tax. After all have been said and done, the effective rate was higher than it was under the old regime. That means higher tax. You could also see it in the inflation figure that hit 2.4% YoY in May from almost 0.9%% in March when retail petrol prices took a dive.

There were concrete proofs of frontloaded purchases happening from the 2015 first quarter GDP statistics. From the 2014 fourth quarter even. Consumers did buy everything to avoid paying the new consumption tax. It happened on a scale grander than the ridiculous lines formed at the petrol station each time a price hike was announced. The GDP consumption component rose 8.8% from a year ago in 2Q15 at a time when credit growth was very weak. Bank loans used to increase more than 10% YoY each month. Now, it is about 9% YoY. All those lending requirement tightening are working.

201508GDPCvsLoanGrowthMalaysia

There is not much correlation from the chart above but the theory is, weak credit growth should affect spending growth negatively. Less money for everybody. The GDP consumption spike is jarring in that aspect, lending credence to the frontloading theory.

If the theory is right, we should see considerable weakness in private consumption growth in the second quarter. And there are quite widespread anecdotes of weaker consumer activities all around. Some statistics like car sales are extremely weak, providing more concrete proof to rely on.

On the surface, merchandise imports data suggests the same thing. In terms of value, it fell 5.2% YoY in the second quarter. In term of volume stripping off the price effect of depressed commodity prices like crude oil, gas, palm oil and rubber, it fell about 4.8% YoY in the same quarter.

So far, so good for the frontloaded purchase theory.

But there is a wrinkle.

Malaysia is a huge trading nation and it is an integral part of the global supply chain. We import not just end goods but also intermediate goods used for the production of other goods. Some are reexported.

Deep down beyond the import headlines, we can see some of these at work. The cause of import contraction however does not seem to be weak consumption growth. In fact, imports of consumption goods have been growing strongly despite the GST in the second quarter (and also despite the weakening ringgit).

201508consumptionImportsJune2015Malaysia

I cannot drill down the category too deeply. So, I do not know the exact reason behind the increase in consumption goods. I have heard explanation that goes like this: the imported stuff were really luxury goods and demand for it had not really let up, suggesting a tale of two classes in Malaysia. But I do not know for sure.

The second quarter GDP numbers will be out next week. Perhaps that would provide some answer to the puzzle.

Categories
Politics & government

[2788] It isn’t about Mahathir or Muhyiddin. It’s about government corruption

It is true. The 1MDB corruption scandal brings together strange bedfellows against the Najib government.

Mahathir Mohamad, Muhyiddin Yassin, Gani Patail and the likes are not exactly role models for liberals. These men have their own faults and sins. Their comments and their actions in other matters can be criticized easily. After 22 years in power while actively weakening Malaysian institutions, there are enough material to talk about Mahathir. Just the other day, a friend of mine jokingly said Muhyiddin was the enemy of the internet for all his nonsensical opinion about the Malaysian education system.

Yet, they have become, to their own followers at least, the leading voices against 1MDB. The Anti-Corruption Commission, much reviled by the federal opposition in particular for the mishandling of Teoh Beng Hock case, are now gathering sympathy for investigating the government and being intimidated by the police and suspicious men of conflicted interests.

As these new allies of sort band together, we hear and read the cynical remarks pointing out that suddenly these men, women and institutions are heroes and angels. Their past sins are forgotten and forgiven.

That is nonsense and utterly beside the point.

We are not in the business of appealing to authority. We are interested in answering questions and uncovering the truth, regardless who asked the questions. We are interested in removing the conflict of interest currently preventing a proper earnest investigation from being carried out.

Whether it is Mahathir or Muhyiddin or whoever your favorite man to hate, their questions are the same as asked by others. If they share the same concerns as many others, good for them.

What must be stressed is that those similarities of concerns say nothing of the legitimacy of the demand for truth and justice.

This is why when Najib Razak and his men began attacking Mahathir trying to wean credibility off the former Prime Minister, that did little to stop the advancing criticism against 1MDB, Najib and the government. It did nothing because this is never about Mahathir or Muhyiddin or Gani Patail or anybody else who are attacking 1MDB and the government.

We who want justice could not care less for the credibility of Mahathir, Muhyiddin and others.

What we care is the issue of corruption — both pecuniary and institutional wise — involving the 1MDB and the highest office in the land. Others are sideshows.