Archive for the ‘Malaysia Foreign Reserve’ Category


“Cutting off the nose to spite the face” is an expression used to describe a needlessly self-destructive over-reaction to a problem: “Don’t cut off your nose to spite your face” is a warning against acting out of pique, or against pursuing revenge in a way that would damage oneself more than the object of one’s anger.

The phrase is known to have been used in the 12th century. It may be associated with the numerous legends of pious women disfiguring themselves in order to protect their virginity.

It was not uncommon in the Middle Ages for a person to cut off the nose of another for various reasons, including punishment from the state, or as an act of revenge. Cognitive scientist Steven Pinker notes that the phrase may have originated from this practice, as at this time “cutting off someone’s nose was the prototypical act of spite.”

The expression has since become a blanket term for (often unwise) self-destructive actions motivated purely by anger or desire for revenge. For example, if a man was angered by his wife, he might burn down their house to punish her; however, burning down her house would also mean burning down his, along with all of their

The Embargo Act of 1807, passed by the United States Congress in protest against British and French interference in U.S. shipping. The Act had the side-effect of prohibiting nearly all U.S. exports and most imports, greatly disrupting the U.S. economy.”

Now course we have this 1MDB fiasco at a time when a dipping growth rate and drop in value of the Ringgit was holding out hopes of revival.


First it was the Kimanis Power Plant project, Sabah’s new 300-megawatt power plant, a whooping RM1 billion contract. Then Sabah has been allocated another RM10.723 billion to implement 424 new projects in the first phase (2011-2012) of the Rolling Plan under the Tenth Malaysia Plan. Then there is another RM3 billion in MoUs signed by Sabah State Government with private sectors to invest in agriculture and forestry and manufacturing.

It is a commentary on the bizarre priorities of our information order that investment commitments total-ling $14 billion, equaling nearly one tenth of Malaysia’s GDP, are either ignored or put on par with anodyne political statements. This, however, is not the occasion to lament the lack of even-handedness in the treatment of anything remotely connected to Sabah chief minister Musa Aman. It is the time to celebrate something that is fast becoming undeniable: the emergence of Sabah as the investment powerhouse of Malaysia.

The start of the Rabbit Year, there was a stark contrast between a Sabah bubbling with optimism and the rest of the country despairing over economic mismanagement and missed opportunities. It is not that all the MoUs signed with private sector will be translated into reality. Many will remain paper commitments . But when the who’s who of Malaysia industry line up to proclaim their faith in Sabah as a wholesome place for investment, having already put their money where their mouth is, neither Malaysia nor the rest of the world can afford to be in denial.

The proclamations of faith in Sabah are all the more meaningful because they have been made despite KL’s unremitting displeasure with anything that could bolster Musa Aman’s credentials. Musa Aman doesn’t usually win awards for being the “Reformer of the Year” or for innovative governance. In fact, he doesn’t even make it to the shortlist. But he has invariably secured an unequivocal thumbs-up from those who have a real stake in the emergence of Sabah as a Malaysia economic power house.

The skeptics, who insist that the rise and rise of Sabah has little to do with the state government, are partially right. Entrepreneurship and business are part of the Musa Aman’s DNA and not because he is Sabahan, and its reason why Sabah has always proudly cloaked itself in the business ethos since Musa took over as CEO of the state.

The reason Sabah has registered the highest, near double-digit GDP growth in the past 2 years owes much to the targeted, business-friendly approach of its government. Four features stand out. The first is quick decision-making—what Musa Aman has dubbed the “red carpet, not red tape” approach, ask corporate philanthropist Datuk Victor Paul, for example, recount how the land allotment and development for the Perdana Park in Tanjung Aru was made possible. Datuk Victor Paul built the multi-million ringgit park all with his own money, there was no such thing as land swap and he build the park entirely as part of his Corporate Social Responsibility and as a gift to the state and the people without any form of payment or reward. Victor Paul completed the whole project in less than two years, a quick-fire decision that has fetched Sabah this park.

The second feature is the curious phenomenon of the near-absence of political corruption at the top. Even Musa Aman’s worst enemies will not deny that the chief minister’s fanatical personal integrity has had a salutary trickle-down effect. Irritated by politically inspired extortion, industry has identified Sabah as a place where it is possible to do ethical business.

Third, Sabah since Musa Aman 2003, has been marked by social and political peace. Particularly important for industry is the absence of political unrest, which unseated Pairin in 1994 and is now so marked in Perak. This is because Sabah has bucked a national trend and is witnessing high growth in agriculture—last year the sector grew by 9.9%. This means that farmers mainly natives, now have a stake in the larger prosperity of the state and aren’t swayed by populists like Anwar Ibrahim.

Finally, the growth of Sabah has been spurred by a philosophy of “minimum government and maximum governance”. In plain language, this means that the state government has concentrated on creating the infrastructure for growth and left it to the private sector to get on with the job of actual wealth creation. In Sabah, politicians don’t talk the language of class conflict; they too mirror the preoccupation with business. So all-pervasive is the respect for enterprise that even the Perdana Park which I call Victor Paul’s Park, which has the state of the art facilities, someone has even suggested that Victor Paul create amusement features for kiddie games centred on the use of virtual money!

The extent to which this vibrant Sabah capitalism will benefit Musa’s ambitions is difficult to predict. But one thing is certain. As Sabah shines and acquires an economic momentum of its own, more and more businesses will find it worthwhile to channel a major chunk of their new investments into Sabah. Kuala Lumpur may not like the resulting uneven growth but the alternative is not to thwart Sabah by political subterfuge-such as preventing public sector from engaging with the state government and the whimsical use of environmental regulations. Sabah has shown that accelerated and sustained growth is possible when the state plays the role of an honest facilitator, rather than a controller.

Musa Aman didn’t create the Sabahan character; he was moulded by it. He merely gave it a contemporary thrust and an ethical dimension. If politicians focused on these, Malaysia as a nation will be a much better place.


I picked up this letter written to Malaysia Today by a  chap calling himself  “SAS ( Saham  Amanah Sabah) Victim.” This is interesting subject, perhaps to me, because I have many  friends in KK who had invested a fair bit and lost their pants in this investment, after a steep fall of the SAS unit price during Yong Teck Lee’s time as Chief Minister. Till today many curse and swear Yong Teck Lee and Ambrose Lee whom they say is the “mastermind” behind the lost in their life-savings.

What happen was in 1998 there was a share swap deal between Warisan Harta Sabah Sdn Bhd of which Yong Teck Lee was Chairman and Suniwang Holdings Sdn Bhd of which Ambrose Lee was the Boss. The rational of entering into this transaction was that the Government through Warisan Harta could utilise a RM50 million fund. Yes Ringgit 50 juta. The RM50 million was to support counters in which Warisan Harta and Sabahans had investments.

As a result of the share swap deal Warisan Harta lost RM114 million. The RM114 million was lost after Warisan Harta under the chairmanship of Yong Teck Lee disposed its blue chip MISC shares in return for the acquisition of NBT shares and Sugar Bun shares. Both counters are delisted ever since. Both of these share counters  NBT and Sugarbun were connected to Suniwang which was controlled by Ambrose Lee.

A whopping RM 114 million losses in this deal for the State.

So don’t you have to have somewhat of a criminal mind to be a politician? Most politicians are devious. They’ll sell “hope” to the public and they’ll make it seem very rosy and people don’t even know that their investment will be paid for out of their hard-earned savings. These politicians act like it’s fine. Politicians have no problem telling people something’s fine when it’s not. Politicians are worse than criminals because really when you think about it all a criminal does is just steal your money… what politicians do is to lie to people. They’ll lie to you… they’ll tell you what you want to hear… it’s a good deal…plenty of money to make…State Government investment, so must be good. People don’t know people like Ambrose Lee the CEO of Public Companies has got no money and cannot give personal guarantees for 200 million dollars to get this deal fix. It will surely fail because the motive is to milk the cow dry on the expanse of the people.

So I mean aren’t politicians similar to criminals? I know there are exceptions to the rule – like Yong Teck Lee?  Don’t make me puke lah! Read below and make your opinion heard.

Birds of the feather flock together: Joseph Ambrose Lee comes to the rescue of Yong Teck Lee

By SAS Victim

For more than a decade Sabahans have forgotten about Joseph Ambrose Lee Yok Min, 52, who once boasted of himself as the new Syed Kechik of Sabah, after he failed in his scandalous schemes to take over the RM30-billion timber wealth of Yayasan Sabah.

The late Syed Kechik was the de facto Chief Minister of Sabah when he was legal adviser to the late Tun Datu Mustapha bin Datu Harun who ruled the state with an iron-fist from 1967 to 1976.

Ambrose was back in Kota Kinabalu, having made his home in Perth, on August 7 at the Sutera Harbour Resort defending his bosom buddy Yong Teck Lee, who was Sabah Chief Minister from 1996 to 1998, over the fiasco of Saham Amanah Sabah (SAS) arising from a scandalous share-swap between Warisan Harta, the Sabah government’s investment arm, and Ambrose’s Suniwang Holdings Sdn Bhd.

More than 55,000 Sabahans, most of them pensioners and low-income civil servants, lost all their life-savings when the price of the state unit trust plummeted to 17 sen from its RM1.00 unit price soon after he sealed the deal when he became Chief Minister.

At the press conference, Ambrose (that’s what his few friends and many foes call him) made a feeble attempt to defend Yong over the missing RM50 million from the share-swap which Yong has been unable to explain to Sabahans.

Ambrose stressed that he paid RM50 million in cash through Innosabah Securities, the stockbroker, to Warisan Sabah in a deal that saw him exchanging his over-priced shares of NBT and Sugar Bun for Warisan’s blue chip MISC shares.

No one has disputed this. But what has not been answered is that the money received by Warisan was never given to SSB as Yong has said. Yong was the Chief Minister and Warisan Chairman. Yet he has failed to tell Sabahans what happened to the RM50 million which he, as Warisan Chairman, received and which he never gave to SSB.

Dr Yee Moh Chai, Minister of Resource Development and Information Technology, told the assembly on August 3 that Saham Sabah Berhad (SSB) which manages the SAS has confirmed to him that it has never received the RM50 million out of the share dealings of Warisan Harta.

At the assembly, Dr Yee pointed out that it was Yong who linked the disastrous share-swap of blue chip MISC shares belonging to Warisan with shares of NBT and Sugar Bun, which were cornered speculative stocks. The swap resulted in a loss of RM114 million to Warisan.

Yong had defended the share-swap. As Warisan’s chairman, he was on record to say that “the wider policy in entering into this transaction was that the Government through Warisan Harta could utilise the RM50 million fund.”

Yong said the RM50 million was to support counters (stocks) on the then Kuala Lumpur Stock Exchange (KLSE,now Bursa) in which Warisan and the people of Sabah had investments. The true outcome, according to Dr Yee, is that as a result of the share-swap deals, Warisan Harta lost RM114 million.

Ambrose blamed Warisan for the loss because it refused to accept his offer to pay RM96 million for the difference between its purchase and market price of NBT and Sugar Bun shares which he said fell sharply because of the Asian financial crisis.

What he failed, in Ambrose’s own words, to tell the “entire populace of Sabah” was that he did not have the cash to pay RM96 million. He suggested another share-swap! Thus Warisan sued Suniwang for RM179,825,000. True enough, Suniwang folded. Warisan did not get a sen. If Ambrose had the money, would his flagship Suniwang Holdings Sdn Bhd collapse like a pack of cards?

Ambrose blamed Musa Aman, who was then Finance Minister, for rejecting again his proposal in 2007 to settle his debt of RM179,825,000 by transferring shares of Borneo Marble Corporation Sdn Bhd which he owned through proxies.

He said Warisan had entertained his proposal but the Sabah government rejected it. Warisan officials said it was true that they entertained his proposal but it did not accept it because the company was a liability.

Recently filings with the Companies Commission of Malaysia have proved this to be so. Borneo Marble was formerly known as Galmore Resources Sdn Bhd and was a fully-owned subsidiary of Suniwang Sdn Bhd which was owned by J Ambrose Sdn Bhd.

As at the end of December 2006, Borneo Marble suffered a pre-tax loss of RM108,793. There are no records of its financial filings from 2007 to 2009.

Ambrose boasted that his NBT owned 200,000 acres of timber land under Forest Management Unit which was bought by someone else.

Officials said what he failed to say was that NBT was in debt to the tune that the company was worthless and the timber land was pledged to a bank as collateral. The property was sold by the bank to recover its loan to NBT.

Ambrose had banked on the Sabah government to bail him out which it had rightly refused.

By his own admission, he has a Receiving Order of the court placed on his assets under the control of an official assignee. He has not been adjudicated a bankrupt yet.

Any chance of the Sabah government bailing him out now hinges on the remote chance of Yong Teck Lee becoming Sabah’s Chief Minister again. And why shouldn’t he? After all it was Yong’s late father, Yong Yun, who financed Ambrose’s law studies in London.


Yesterday, Malaysian Anti Corruption Commission (MACC) had detained Datuk Richard Christopher Barnes a senior lawyer, a confidant of Sabah Chief Minister Musa Aman on links to Micheal Chai and his alleged smuggling of 16 million cash out of Hong Kong airport. 5 MACC officials went to Richard Barnes legal firm, Shelley Yap Leong Tseu Chong Chai and Co in Kota Kinabalu, and took away boxes of files in relation to this case. As of now, Richard Barnes is in remand for 5 days in the MACC office in Putrajaya.

Yes, Premier Najib Tun Razak’s fight against corruption is closing in on Sabah Chief Minister Musa Aman. Initially, the Premier was in a quandary and was unwilling to pass a routine political directive for the arrest and prosecution of Musa Aman’s cronies for the allegedly involvement in illegal foreign currency dealings and the smuggling of 16 million cash out of Hong Kong airport by the adopted brother Micheal Chai‏. But not for now. Premier Najib Tun Razak is going after one by one, all of Musa Aman’s timber cronies and nominees and so far 14 have already been roped in by the MACC. Well done!

In Malaysia no arrest or prosecution takes place without Premier Najib’s sanction and this is a fact. It is a political formality that the police or MACC and Attorney General adhere to.

The MACC’s criminal investigations department started to investigate Musa Aman’s close allies, for flouting exchange control regulations and running Mafia-type shelf companies in Hong Kong, Switzerland and Singapore which runs to hundreds of million. Most of the money is under-table payments from timber kickbacks from Yayasan Sabah Concession areas made to Hong Kong-registered companies said to be linked to Musa Aman.

These companies would buy and trade foreign currency on the black market with money from the timber kickbacks. Micheal Chai and GANG then made weekly transfers involving millions of dollars which amounts to sabotaging our economic reforms by trading on the black market and flouting the Exchange Control Act in both Malaysia and Hong Kong, an offence punishable with jail time or a fine.

Since Mahathir’s pegging of the US Dollar in the late nineties, when the exchange rate was fixed, several business people, timber tycoons, hoteliers and bankers have been arrested for illegally dealing in foreign currency. However, it appears that no one had the guts to go after Musa Aman’s Cronies, Micheal Chai and Gang of 14 including Freddy Lim— whom many have dubbed the Godfather of murky foreign currency dealings in Malaysia. Freddy Lim was at one time put under the Internal Security Act ISA for economic sabotage.

The Hong Kong Independent Commission Against Corruption (ICAC) revealed that a docket was opened last year and handed to MACC for action. But no political directive was forthcoming, so MACC put an end to the investigation.

I was reliably informed that a second probe was conducted by the MACC only after the Hong Kong Independent Commission Against Corruption (ICAC) officials came to Sabah to investigate Musa Aman personally last year. Sometimes January this year, the Hong Kong Independent Commission Against Corruption (ICAC) officials had informed their Malaysian counterparts that if they do not act on the individuals link to the money laundering in Hong Kong, the ICAC Hong Kong would get an arrest warrant in Hong Kong for the arrest of the Chief Minister Musa Aman as his name had been implicated in the smuggling of the 16 million cash out of the Hong Kong International Airport.

The docket was made available to the MACC by a high-ranking source in the government of Hong Kong. It is all there.

License to govern does not mean license to be corrupt and Musa Aman has to learn this the hard way.

One wonders when there will be enough awareness in this country that citizens would learn to question the ‘civilised robbers’, question them, fight them and fix them. Newspapers in the meantime will be busy with Anwar’s sodomy or Ketuanan Melayu debates or New Parliament in Putrajaya, while this nation is being robbed by those who are supposed to be guardians.


An oil producing offshore area, Block M and Block L belonging to Sabah near Brunei in the South China Sea is no longer a part of Sabah. It now belongs to Brunei. This Block M and Block L is close to 6000 square kilometers in size, which is like 10 times the size of Singapore. Both the blocks can produce 1 billion barrels of oil  or US$100 billion in revenue and it belongs to Sabah.

Our Chief Minister from Sabah, Musa Aman together with Abdullah Ahmad Badawi negotiated with the Sultan of Brunei to get back Limbang for Sarawak, in exchange they agreed to surrender this Block M and Block L belonging to Sabah. Can you believe this? Yes, Musa Aman with Badawi,  on march 17th, 2009 in Brunei, had signed away US100 billion dollars of oil to the Sultan of Brunei.

And this was not brought up at all by Musa Aman to the Sabah State Legislative Assembly. More importantly by giving up the Blocks L and M, both Musa  Aman and Pak Lah were altering the boundaries to Sabah, and the Constitution under Clause 2 (b) provides that this will require the consent of the state and as well as the Conference of Rulers.

To give away or demarcate boundaries of Borneo States, Badawi must first consult Parliament, then under the Federation Agreement with Sabah, Badawi must ask Musa Aman to convene an emergency sitting of the Sabah State Legislative Assembly and then take a vote in the  State Assembly. Musa Aman did not just do that.  Musa Aman concealed this whole thing, Brunei, Block M and Block L from Sabahans. This Musa Aman, did not bring this matter to the State Assembly at all and why was he hiding this from Sabahans? Musa Aman owes Sabahans and explanation.

Besides, only if  Sabah had cleared this matter in the assembly, then only, can this be brought to the Agong for a royal consent to the demarcation of the new boundaries. The Conference of Rulers MUST also agree and that too has to come BEFORE the signing of the Agreement with Brunei. But they did not.

Then why was Pak Lah and Musa Aman in a hurry to sign the Agreement with the Sultan? Why the rush? Pak Lah says he has got the approval from his Cabinet and so everything is in order. But is this true? Was the  process done constitutionally, as per the Federation Agreement?

To me this is like TREASON! Musa Aman  should be charged for Treason for concealing, hiding or aiding the crime of TREASON. Musa Aman concealed this action from the Sabah State Assembly, and for any public servant To conceal, hide, or aid the crime of TREASON is to be guilty of the same offence.

The facts are :

1. Malaysia, Sabah no longer has any sovereignty over the 2 areas i.e Block L and Block M.
2. Malaysian oil companies can only participate in jointly developing the areas for 40 years (with Brunei’s permission).
3. Limbang remains a disputed area with Brunei.

I stand by my opinion that Musa Aman and  Abdullah  Badawi should be tried for Treachery and TREASON for losing territory belonging to Sabah, Malaysia.

Then if  the KL boys were to say that the Blocks L & M are not within the Sabah State waters and therefore under the purview of the Federal Government, then I will say, why this not brought to Parliament, and not brought to The Agong, and then to the Conference of Rulers, as we are after all altering the boundaries of the federation? Is it because it comes under the Federal Territory of LABUAN?

Explain lah!

Dato’ Sri Anifah bin Haji Aman, the Malaysian Minister of Foreign Affairs the brother of Chief Minister Datuk Musa Aman, you are the right person, please explain? You and your brother claim fighting for Sabah’s rights, show us lah! Sorry Anifah I have to bring you into this picture although you are just recuperating from a massive attack following surgery to clear blocked arteries in your heart. I hear you are recovering well following coronary bypass surgery in Singapore. I wish you speedy recovery my friend!

Read here my earlier post on this.


THE GLOBAL ECONOMIC CRISIS AND THE FUTURE OF ASEAN
(Keynote Address by Anwar Ibrahim at Chulalongkorn University, March 30th 2009)

When I first uttered the unutterable in Hong Kong sometime late last year that Hayek is history I was then bombarded with accusations of having turned my back on Adam Smith. Not too long later however, we heard reluctant acquiescence from liberal institutions that the free-market principles that guided American financial development would no longer count as biblical injunctions.

In the presence of such an erudite audience today, let me take the liberty to indulge further in the discourse. Just to be clear, I make no claim to pioneering new ideas but suffice to say that I am a mere commentator having had some experience in managing an economy which was also going through one of the worst financial turmoil in Asia. We need to remember only the boom-and-bust cycles articulated by the 19th century economists such as John Stuart Mill or Alfred Marshall, before we get carried away with the modern orthodoxy, which depicts financial markets as effective, stable, and self-correcting mechanisms.

The advocates of spontaneous order which had hitherto attained the level of religious orthodoxy having rammed free market strictures about self correction and deregulation are now conspicuously silent. What went wrong?

True, the reaction against command economies of the Orwellian kind as exemplified by the Soviet Union and other Communist countries in the past was well founded. But was there really a need to subscribe to a theory where absolute reliance is placed on the law of chaos? The issue here is not whether the free market system and the pricing mechanism based on competition is viable; but in stubbornly holding on to the view that markets are benign, championed by the likes of Hayek and a distinguished pedigree of Nobel laureates such as Milton Friedman and his Chicago protégés, with Alan Greenspan as the turn of the century poster boy, Wall Street enjoyed more than two decades of financial deregulation. During this time, we witnessed the unfolding of Enron, Worldcom, and so on and the Sarbanes-Oxley laws dealt only piecemeal. But what was left unchecked was the proliferation of the weapons of financial mass destruction —such as mortgage-backed securities and collateral debt obligations. In place of the earlier institutional giants, we now have on parade the largest financial institutions in the world, brought down to their knees.

The unprecedented government bail outs nailed the lie to the dictum that the State should not interfere in the free market processes. Hayek’s devotional mantra that the invisible hand will eventually work to rectify things has vaporized into mere Harry Potter hocus pocus.

The stimulus packages in America, the UK and some other EU countries are so massive that even die hard Keynesians are spoofed. It is true that the Keynesians believe that pump priming itself with the necessary checks and balances is indeed the most effective way of powering economies out of their recessionary corners but the concern we have is the unfettered adoption of polices of reducing the cost of funds to near zero, while government goes on a spending spree on even more borrowed money. The Federal Reserve and other central banks buy up Treasury bonds and other government papers in order to give that much needed shot in the arm for the economy still waiting for the invisible hand to appear. They call this “quantitative easing” but everyone knows this is just a euphemism for borrowing one’s way out of debt.

It remains to be seen whether this phase of irrational exuberance in borrowing is different from the Keynesian prescriptions to counter the 1930s Great Depression. To be sure, the once unassailable doctrine of spontaneous order has been dealt a body blow that is destined to consign it to the dustbin of economic history. That America is opting to bail out its banks and insurance companies at arbitrary values rather than allowing the law of free market supply and demand to take its course is therefore a damning indictment of its fundamental economic principles.

What then is the real lesson to be learned from this crisis?

Is this a systemic failure arising from the unbridled practice of free-market principles or is it a case of the prophetic truth coming home to roost, that is, he who sows the wind must reap the whirlwind?

One of the strongest arguments today is that deregulation has led to the current fiasco. To go further some have made the case that regulations were always there but the regulators slept on the job. Some finger pointing here is inevitable. Alan Greenspan has already been whipped. Fannie Mae and Freddie Mac, they say, is a classic case of regulators failing to detect the cheating by accountants, something that would have been easily uncovered by a bit of fraud specific forensic accounting. It would have required just a bit more diligence perhaps but certainly it was no rocket science.

The underlying causes however must go back to the question of easy money which remained the substratum of the American political economy for the last three decades. This came on the back of a new religion of financial alchemy spawned from the fertile womb of Wall Street, a religion using sophisticated financial reengineering calculated to transform debt into wealth. This was the philosopher’s stone by which the largest economy in the world by sheer consumption alone was able to not just eke out an existence but to thrive and prosper.

To my mind, this financial maelstrom undermines not only the economic foundation but the political and moral substructure of Western capitalism. We still believe that market economies which stand solely on the feet of homo economicus are doomed to fail because the dictates of a humane economy impel us to consider ideas about right and wrong, social justice and the dignity of man. Shakespeare’s dictum against making “the orphan pine while the oppressor feeds” is a timely reminder. It must jolt us back to the issues involving the great divide between general welfare and distributive justice.

We don’t say this perched on any kind of moral high ground. It was a similar kind of profligate spending that had got us into the 1997 Asian financial crisis. And we lectured and hectored. But unlike the scenario in the U.S. there was certainly greater oversight in Asia and more regulatory control. Corruption and abuse of power featured more prominently in the case of Asia. In fact, there was a case that rogue institutions were working hand in glove with lawyers and accountants to maneuver their way through the regulatory process.

In Asia it was a case of over legislation providing a labyrinthine cover for shady and questionable transactions. And the rich were bailed out at the expense of the poor. This is where the question of accountability and transparency reigns high.

To be sure the lessons of moral hazard were relentlessly knocked on our heads in the wake of the Asian crisis and at the risk of sounding repetitive, let me say again that the massive bail outs that we are seeing today in America are nothing if not classic instances of moral hazard going bezerk, made all the more ironic considering that we are looking at the bastion of free market capitalism.

Perhaps it’s time we took another look at the factor-price equalization (FPE) theorem. We know that it was through exuberantly inflated prices of goods and services that made it possible for Americans to carry on indulging in overconsumption while the rest of the world particularly Asia had to settle for much less. As those trained in economics and international trade will tell you, this mirage will be shattered eventually as the FPE theorem sets in to bring into equilibrium the relative prices of these goods and services across the world. This may have been a tad too theoretical in the distant past but with the pace of globalization and international finance and free trade flowing the way it is now, the impact can be real.

And it is one of the great ironies that this poster nation of liberal democracy and free market capitalism is so heavily indebted to the poster nation of autocracy and command economy. Indeed it is well known that China is the biggest funder of the US federal deficit. Other Asian nations as well as Middle Eastern countries not renowned for open and liberal governments are also substantial investors.

There is the dynamics of economic self-interest and geopolitical imperatives. The question is still how long will Asian and Arab investors continue to prop up these prices?

Yes, the world has had a good five years or so of robust economic growth spearheaded no doubt by the emerging economies, but the policy shift in Asia is already under way from monetary tightening to monetary loosening. The East Asian juggernauts are moving fast with the billions in spending package proposed by Taiwan, Japan and China together with de rigueur tax cuts and interest rates lowering.

While at the start of the financial implosion, there were still brave echoes of decoupling immunity shielding Asian countries, any suggestions today would have been dismissed by the bloodbath that went on in the Asian equity markets. While it is true that generally banks in Asia are still holding up, the fact is that our economies are too closely intertwined with those in the locus of the financial meltdown. The upside of globalization that allowed export-oriented countries to thrive has a very sharp downside as well so a recession on one side of the world spreads quickly to the other. The 9% reduction in global trade predicted for this year is rendering a crushing blow to once vibrant and thriving economies.

The myth that if your exports dry up for the U.S. market there is always the emerging economies as a buyer of last resort is all but shattered. All domestic demand indices until only several weeks ago were falling. Property prices are heading south in India and construction figures in China show the steepest ever decline particularly for Shenzhen.

Growth through productivity and competitiveness remains our pathway to prosperity. It has liberated millions from the scourge of poverty and destitution and enabled our people to enjoy freedom and decent living conditions.

The temptation to explode the government bureaucracy during recessionary times must be avoided. The weight of a bloated and inefficient bureaucracy can do more harm in the long term. Money invested in entrepreneurship and stimulating the private sector will generate more value for the economy in the short and long term.

Adequate measures for ensuring good governance are essential. Government spending guided by a policy that shows little transparency in the award of contracts is a clear warning sign of mismanagement of the economy.

More importantly the spending packages that have been announced should focus on projects that are good for business and good for people. A social agenda during recessionary times would ensure that critical institutions such as public health and education are not neglected. Infrastructure development should seek growth areas in industry, public housing and strengthening transportation and communication between urban and rural areas. Fiscal intervention could then find areas to increase demand through tax cuts and incentives to hire workers and enhance their human capital through training and development.

For us in Asia, history has proven that growth through increased productivity and competitiveness is the only path to achieve prosperity. It has liberated millions from the scourge of poverty and destitution and it has enabled our people to enjoy freedom and decent living conditions. In region dominated by the economic powers of China and India the 600 million people living within Asean represent a formidable foundation upon which to regain prosperity.

It is true that our interests have never been more closely intertwined. As Asean nations buy and sell more from and to each other, as our economies become even more intimately linked by investment flows and multinational operations, and as our national borders become more porous, our fortunes will become even more inseparable and indivisible. A determined effort will be necessary to crystallize these bilateral ties into a firm and coherent pact.

A cohesive Asean regional cooperation remains an elusive goal and history has taught us that when push comes to shove Asean nations will tend towards unilateralism. This should be avoided at all costs. We would agree with Prime Minister Abhiset’s view that “As the financial crisis deepens, the world will look towards our region for action and for confidence.”

There is a greater calling that we face during these uncertain times. A looming recession and the risk of social upheaval make for a volatile political situation. Growth oriented policies that ignore the social dimension will spurn greater disenchantment. The overall societal objectives of distributive justice and fairness must not be ignored as we identify a way forward. With millions at risk of sinking into poverty as jobs become scarce the steps taken to revive ailing economies must not overlook the needs of the poor and marginalized.

We are likely to witness some leaders revive the mantra of Asian Values – that in the pursuit of economic growth the rights of the individual are peripheral. Unpopular governments would certainly need a pretext upon which they can silence dissent against policies that fail to address the problem of unemployment, poor public infrastructure and lack of quality social services.

On the contrary a prosperous Asia is merely an illusion if material wealth is subsumed in a sea of repression and denial of basic human rights. True prosperity must be accompanied by with political empowerment of the ordinary citizen. Fundamental freedoms such as the freedom from hunger, freedom from fear and exploitation, and the freedom to peacefully practice one’s religious beliefs are so basic for the growth of a truly humane society.

The growth of civil society and renewed economic prosperity will not be possible without regional stability. The political resolve to formulate an Asean pact with a mechanism to institutionalize agreements on trade, finance and human rights is necessary. This has proven no easy task but is still attainable. We must establish strong interdependibility, economic and political. The nurturing of democracy and civil society, in tandem with economic growth — for democracy and growth are not mutually exclusive — is our best guarantee of regional peace and security for future generations.


According to Bank Negara, over the last eight months, Malaysia’s foreign reserves has plunged by US$34 billion. It has dropped from a high of RM125.8 billion on 30 June 2008 to US$91.6 billion as at 13 February 2009.

What is happening here? It is difficult to understand how claims are made that our country is marching towards progress and that everything is honky-dory.

There is stark contrast between what is reported in the newspapers by politicalmasters and what is happening in real life as though there is nothing wrong in our proverbial State of Denmark. The political masters keep spinning and they say if there are problems, it is all due to the unreasonableness of the Opposition. This approach is disturbing to say the least.

Malaysia today is on a downward spiral. Unfortunately, discipline, impartiality, fairness and honesty — all such elements, are becoming rare indeed.

 I feel genuinely worried for this country.We can move forward only if there is accountability. Do we?


As far as I can see, this is just a bailout exercise. The 5 billion from EPF via Valuecap Sdn Bhd is to bailout UMNO link corporations in the KLSE which has taken a real beating the last 6 months after March 6th. They are putting wool into our eyes by using our hard-earned EPF contributions trying to solve their problems.

There should be NO BAILOUT! Besides, greed got them into trouble. Bad money practices got them into trouble. Corruption got them into problems. They don’t have financial prudence’s and they are all overrated. They know now to make money by only selling assets . Let them get themselves out of it. They did not pay any taxes on the excess profits that they made getting themselves into trouble. They dug their own grave. Let them claw their way out on their own. They got into trouble trying to justify their high priced executive packages with risky financial instruments back by imaginary money.

I really feel sorry for them that they can no longer make payments on their Bangsar Apartment and London escapades and the shopping sprees in Hong Kong. 

These fellows are running the country down so fast down the slippery slope and its getting more and more cloudy.  We are in a mess.

Malaysia needs help!