Why the financial leadership is so disappointing even after discounting yet to be proven allegations

Malaysians are clearly not happy with the financial leadership in Malaysia and have probably reached breaking point. 1MDB, Mara, GST and subsidy rationalisation are among the major points of dissatisfaction.

Right now people are hotly debating about personal misappropriation, tampered emails, blackmail and many other things which are difficult to verify unless further evidence is shown. So, I do think that we should reserve judgement until a clearer picture emerges.

However, even with the current information already available, there is so much to be disappointed about. While I generally think that subsidy rationalization is necessary and GST may be positive (although difficult for the rakyat), you cannot ask the people to bear the burden of saving the country without the leadership being financially responsible themselves.

Even after discounting various yet to be proven allegations, the hugely questionable developments below are difficult to take:
  • Overpaying for the purchase of energy assets. I understand the need to pay a premium but I've not seen anyone, except 1MDB, who agreed that they paid a reasonable price.
  • Getting a so called CSR donation from the company from which the asset is purchased.
  • Not knowing the difference between cash and units. I don't think it is possible for anyone at any level to make such a mistake let alone at the top levels of the corporate world and government.
  • Not being able to say what the units represent. Even people will little financial knowledge know what fund they are buying and will know how to call their agent to find out the value of their investments.
  • Paying too much to Goldman Sachs for a debt offering. No satisfactory answer was given.
  • Overpaying for some coal asset in some faraway land and see its value dwindle.
  • 1MDB getting TRX land cheaply thereby underpaying the Government, which means less money for the rakyat. 
  • 1MDB using government guarantees to get loans. If you want to go into business and get a loan, it should be commercially viable. A normal viable project should be able to obtain a loan without a government guarantee. A government guarantee effectively means guaranteed by the rakyat.
  • There is no need for 1MDB involvement in property projects such as TRX and Bandar Malaysia. Why not use existing property companies and deal directly with them and extract maximum value.
  • Getting involved with Petrosaudi and certain individuals. We don't know whose version of the story about the emails is the truth but they are definitely involved. 
  • Why deal with people who are principally skilled  in deal-making, rather than those who build and operate real businesses?
  • How can you get a business into trouble during a period (2009 - 2014) of good business conditions conducive to growth and increasing asset prices?    
  • The case of Mara overpaying for properties in Australia.
  • We only found out because a contractor got fleeced and foreign news portal ran the story.
  • Which begs the question how many more transactions like this have occurred? These types of deals are almost impossible to detect when the players are not so greedy and the kickback is small.
  • The failure by anybody from the administration to explain subsidy rationalization and GST properly and in a coherent manner.
  • Instead of telling that it will be better for them, you need to tell people honestly that they will feel the effect temporarily and explain why they are needed. No need to sugarcoat, just tell the truth.  
The problem right now is that you cannot expect the rakyat to bear the burden of saving the country when your track record in financial management of the resources of this country is poor. You cannot cut the budget here and there and then waste so much money at the top level. People will not understand.

There are many reasons why subsidy cuts are necessary and GST can be positive for the country, but I think its a waste of time arguing on behalf of the people in charge of the finances of Malaysia.

Recently Fitch Ratings maintained their ratings on Malaysia with an upgraded outlook and they were quick to claim credit. Yes, they can claim credit for the upgraded outlook which avoided a lot of trouble for the country but ultimately it was the rakyat who saved Malaysia.


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