Thursday, April 3, 2014

Worrying state of our nation

Worrying state of our nation

 | April 4, 2014
Our people, our businesses and our government are fueling growth by unsustainable borrowing.
COMMENT
Economy-Malaysia-300x202On the economic front Malaysia is in crisis. Cars and houses are literally burying Malaysians under a sea of debt.
Easy credit and low lending rates from our banks mean that our household debt to GDP has been growing at a rate of 12 percent annually since 2008 – making Malaysia household debt to GDP ratio at 83 percent, Southeast Asia’s highest.
Forty-seven percent of Malaysians are now in “serious debts” having to spend 30 percent of their gross income paying for their car, house and credit card debts.
Since 2008:
· Loans increased by 80 percent in the private sector.
· Car registration is up by 50%.
· Year on year increase in property prices.
· Mortgage loan accounts for 50% of household debt.
In the business sector, corporate bonds and bank loans are at 95.8 percent of GDP in 2013.
This mountain of debt in Malaysian households and its business sector is part of the reason for the continued growth of Malaysia’s USD$303 billion economy at an average six per cent in recent years.
The other factor fueling this growth is our government incurring fiscal deficits for the past 15 years to bolster the country’s economy.
Today Malaysia’s public debt-to-GDP stands at 53.2 percent – second only to Sri Lanka among Asian countries.
What all these say is simply this: Our people, our businesses and our government are fueling growth by unsustainable borrowing – and we are all heading for a fall even as another Asian Financial Crisis similar to the one in 1977 looms in the not too distant future.
We need a strong, confident and knowledgeable federal government in Putrajaya to steer us through this coming financial crisis.
Given the prevailing political demise of Umno’s hegemony over all things politics in Malaysia as reflected in the 13th general election when the Barisan Nasional coalition lost its popular mandate to govern to Pakatan Rakyat, that does seem a remote possibility.
On the political front, political power in Malaysia is no longer the purview of race, religion or money.
Ordinary Malaysians
It now lies in the hands of ordinary Malaysians of all races, all religions driven not by any particular political persuasion but more by the belief that in their hands now lie the future of their country.
They are not content to just wait for the next election to cast their votes to decide who will form government.
No! This generation of Malaysian are now taking things into their own hands and dragging an obstinate BN and Pakatan Rakyat screaming into the future that they want.
A future where corrupt, arrogant and irresponsible politicians have no place in government and where government is held accountable for their every action.
Apart from the unsustainable borrowing by households, the business sector and the government, there is a need to hold this BN government accountable for the illicit money outflow amounting to RM251.6 billion in just 2013.
If we go back to the period between 2000 to 2008, the sum of RM930 billion was lost in the same way.
What portion of this illicit money outflow can be attributed to the connivance of corrupt politicians and their cronies remains to be seen but suffice to say that the illicit outflow is much greater than the inflow of foreign investment into Malaysia.
All this is happening at a time when Malaysia’s current account surplus is deteriorating due to weaker export earnings.
All is not well with the state of our nation today.
CT Ali is a reformist who believes in Pakatan Rakyat’s ideologies. He is a FMT columnist.

No comments: