Answering A Kadir Jasin’s “Kewangan Kerajaan Pusat Genting” (government finance at critical level)
Yesterday, I had posted a reply to the irresponsible fake “Tun Daim” whatsapp message that is circulating.
I had pointed out that the message sole purpose seems to be spreading lies to incite hatred and fears about the economy which would stop people from spending and investing – a self-fulfiling prophecy that if left unchecked, will cause damage to our economy.
Today, yet another stalwart of Dr Mahathir Mohamad has published an article in Sinar Harian that also seems to have the same purpose as the “Tun Daim” message.
A Kadir Jasin, a long-time Mahathir supporter, said that Malaysia’s government debt had increased from RM250 billion in 2010 to RM656 billion in June this year.
Well, A Kadir is wrong.
The govt debt in 2010 is RM407.1 billion or 53.15% of our GDP.
How can Kadir make such a shocking mistake or was he trying to deceive?
Even at RM656 billion, our government debt is still within the 55% debt to GDP ratio limit as our economy has expanded since 2010.
Does Kadir also realise the size of Malaysia’s GDP/economy today is almost 3 1/2 times the size of what it was when Mahathir retired in 2003?
As long as our ratio is within limits, the overall debt can grow as our yearly income and economy size will also grow.
A simple illustration to show this:
Who is more likely to go bankrupt first?
A person whose income is RM36k per year but have debt of RM40k (Malaysia’s GDP in 1987 is USD36 billion and govt debt was USD40 billion) or a person whose income is now RM350k per year and have debt of RM130k?
Even though the actual debt amount is now 3 times more but the person whose income is RM36k per year will go bankrupt first.
Here is an excerpt from the 2012 book “Malaysia’s Development Challenges: Graduating from the Middle”.
You can also Google for Malaysia’s debt-to-GDP in the 1980s and what Mahathir did in his first seven years in charge.
We did not go bankrupt and our country crash and burn at more than 100% Debt-to-GDP so why should we go bankrupt now at 55%?
Here is a more comprehensive chart showing this relationship:
As mentioned yesterday, according to the CIA’s world fact book, Malaysia at 54% is at 71st place in the countries with the highest debt to GDP ratio.
According to PakaTun logic, this means that these 70 countries will have to go bankrupt before Malaysia’s turn.
Japan, Zimbabwe, Greece, Lebanon, Italy, Portugal, Eritrea, Jamaica, Cabo Verde, Grenada, Cyprus, Belgium, Singapore, Puerto Rico, Ireland, Barbados, Spain, Bhutan, France, Canada, Ukraine, Sao Tome and Principe, Yemen, Egypt, United Kingdom, Croatia, Antigua and Barbuda, European Union, Austria, Saint Kitts and Nevis, Iceland, Belize, Jordan, Saint Lucia, Ghana, Hungary, Serbia, Sri Lanka, United States, Morocco, Albania, Maldives, Sudan, Mongolia, Germany, Dominica, Netherlands, Uruguay, Guyana, Brazil, Saint Vincent and Grenadines, Aruba, Bahrain, El Salvador, Pakistan, Israel, Slovenia, Finaldn, Mauritius, Malawi, Malta, Zambia, Costa Rica, Montenegro, Mozambique, Bahamas, Syria, Angola, Senegal and Seychelles.
Those who hate our government and wishes for Malaysia will just simply have to wait in line behind those countries mentioned above.
Kadir also said that Malaysia is running a budget deficit but conceded that it has reduced from 6.7% in 2009 to 3.2% in 2015.
But does Kadir know that Najib ran a bigger deficit in 2009 and 2010 to save our economy from the ‘Great Global Recession’ (the worst since the Great Depression in the 1930s) but since 2011, have run a deficit that is smaller (and getting increasingly smaller) compared to the last 5 years that Mahathir ran the country up to 2003?
As you can see, Malaysia’s budget deficit is getting progressively smaller due to good management.
This is why the World Bank and IMF praises Najib’s government on economic management and the major international credit ratings agencies all have A- investment grade ratings and a stable outlook for Malaysia.
If Kadir really wants to warn someone regarding unrestrained government spending then I suggest he writes an open letter to Mahathir’s allies in the DAP-controlled Penang government as their state annual spending has jumped many folds since they took over in 2008.
They are definitely more in need of an “A Kadir Jasin” warning.
Kadir ended his article with saying that the government should be truthful to the people on the true state of the economy and that the “ekonomi tidak berbohong” or “The economy doesn’t lie”.
I agree but he did not say that Mahathir’s supporters won’t lie when writing about the economy.
Mahathir supporters and the opposition are the ones who should be truthful on the true state of the economy instead of inciting fears based on false data or faulty interpretation.
Najib saved us from the great recession following the U.S. sub-prime crash in the 2007-2008.
By all accounts and data (instead of air liur), the economy has been well managed despite a big slump in oil revenues amidst the commodities crash in second half 2014 until now.
Let’s have confidence that Najib’s government will continue to steer us well.
He has not failed like Mahathir had.
Throughout Mahathir’s 22 years in charge, he led us through two very severe recessions in the mid-1980s and in 1998, and three major slowdowns – the last of which was just before he retired.
In the face of the current Brexit and the China slowdown, which are global issues, it is better for people like Kadir and their gang to support and instill confidence in the economy rather than trying to intentionally or inadvertently harm the economy.
I wrote this yesterday but will repeat it again:
“The opposition frequently spread false, misleading lies such as this to destroy confidence in what is known as a ‘self-fulfilling prophecy’.
Imagine if everyone believes what is in this message then no one will spend and if no one will spend then all the shops will close down, the factories will also close down and then the banks will close down and et cetera.
Somewhere along the line, you and I and everyone else will also lose their jobs or business.
Therefore, spreading such lies is not helpful to Malaysia but you are harming Malaysia and ourselves.
These people don’t care what happens to Malaysia as long as they get what they want.
They think that if the economy is bad then it is easier for them to win power.
These people are despicable.
Do not fall for their lies and spread such negative messages to incite hate, create fear which will eventually end up hurting ourselves.
Stop it, you fake hateful people with hidden agenda.
Trying to destroy your own country’s economy and bringing harm to tens of millions just for your political agenda is not only treachery but brings to mind the following saying.” … Read More