Messy politics trumps economics at KL investors' conference

Kuala Lumpur

THE event was an investors' conference, but the audience appeared more interested in Malaysia's ongoing political imbroglio than in the country's economic fundamentals.

The keynote speaker at Invest Malaysia 2015 on Thursday, Prime Minister Najib Razak, also alluded to the current situation, which was triggered by a concerted push by former premier Mahathir Mohamad to oust him from office on the grounds of his poor leadership, and how this is damaging the chances of coalition government Barisan Nasional (BN) at the next national polls due by 2018.

Dr Mahathir has been warning that previous (irregular) deals would come to light if the opposition Pakatan Rakyat takes over at the helm, but acknowledged that his was likely a lone voice, given the powers of incumbency and Mr Najib's consolidation of his base within Umno, the lynchpin of BN.

Referring to this, Mr Najib said: "There has been some talk in Malaysia about how it can be lonely telling the truth. Well, I can tell you that I don't feel lonely standing here in front of you all today.

"And I am equally confident that, given the well-known stability and growth of Malaysia under this government, I will be able to look forward to the pleasure of your company both next year and for years to come," he added, eliciting muted applause.

The audience perked up when he turned to the subject of the Employees Provident Fund (EPF), announcing that workers would retain their right to a full withdrawal of their funds kept with the EPF at the age of 55, rather than 60 as has been controversially proposed. He added that enhancements would apply only to fresh contributions made by those who decide to work beyond 55.

Mr Najib, who is also the finance minister and chairman of the board of advisers of 1Malaysia Development Board (1MDB), has been put on the back foot by allegations of mismanagement and breach of trust involving the strategic national development company, which in five years racked up RM42 billion of debts - but not the operational cash flow to service them.

The opposition's highlighting of missteps, combined with Dr Mahathir's potshots, cannot be dismissed, given the former premier's still-considerable influence with Umno members, many of whom served under him during his 22 years in power.

Mr Najib's perceived inability to keep in check the right-wing elements who constantly harp on race and religion have also marginalised vast sections of society and left them disgruntled.

At this time of crumbling oil prices and a new consumption tax which has raised daily expenses, the politicking has been seen as a distraction that is taking the government away from the business of tending to the economy. Although growth is projected to hit a reasonable 4.5 to 5.5 per cent, business sentiments are grim, and consumers are wary.

Asked about the political climate - "the elephant in the room", as moderator Rishaad Salamat put it during a panel discussion - Khazanah Nasional managing director Azman Mokhtar pointed out that foreign direct investments were at record levels, and that investors remained confident about the country's economic fundamentals and stability, some fluctuations to Malaysian government securities notwithstanding.

But Mr Azman acknowledged that problem areas - he identified crime and corruption as two - and the white noise have to be dealt with. "It's not rocket science - we have just got to do the simple things."

Central bank governor Zeti Akhtar Aziz also alluded to better governance as requisite reform. Price distortions have to be removed so the economy can operate more efficiently, she said, and institutions must be strengthened to plug leakages that raise costs. This would also ensure allocation of resources to areas where they can have the highest impact, she added.

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