The myth of a failed state
PM Najib-led federal government has delivered some spectacular, sustainable, growth and prosperity even in turbulent conditions.
Gopal Raj Kumar, Malaysia Outlook
Portugal, Italy, Ireland, Greece and Spain are an integral part of western Europe.
For centuries these countries (excepting Ireland) enjoyed unparalleled economic prosperity and wealth.
Portugal and Spain alone had colonies that covered more than half the surface of the globe.
Ireland as part of the British Empire benefitted from Britain’s domination of the other half of the world.
Greece once famous for its shipping industry that dominated world shipping is today a basket case in economic ruin.
Spain with its debt levels and uncompetitive industries comes a close second.
Portugal is a distinctly third world.
Italy with its engineering, design and innovation in automobiles, clothing, aircraft, shipbuilding and fashion, pharmaceuticals, tourism, food and beverages competed once for world domination alongside the UK, Spain, France and Portugal.
For centuries these countries appeared to have no competitors to whatever it is they put their names to.
As Asia began to emerge in the latter half of the last century following the opening up of capital markets and a free flow of investments, the myths of about the invincibility of European products and services began to crumble.
In its place the Japanese, Taiwanese then the Koreans began to make serious inroads into European domination till the Asian financial crisis.
This was quickly followed in succession by a number of other man-made financial market disasters designed to correct the rapid inroads made into western markets by usurpers from the east.
Malaysia was a relative late entrant into global economics.
Initially, a supplier of raw materials the 1980’s, it saw Japanese, American and Korean manufacturers move into what was a relatively cheap skilled market for manufacturing their goods for re-export to Europe and the US.
As the Asian Tigers began to grow in global importance, a range of regional and domestic political events began to shake and reshape the markets of Asia.
The Asian currency crisis of 1997, the emergence of China as a formidable source of cheap competent labour began displacing many a southeast Asia’s labour markets overnight.
The Mahathir government was unable to stabilise a wavering unstable economy, forcing the man to create diversions domestically in a desperate attempt to hide his incompetence as a crisis leader.
Malaysia reverted to being a raw materials and primary industries dependent nation, relying heavily on the steady and high price of oil, oil palm, rubber and tin to shore up its weak economic fundamentals.
The perception of an unfriendly government with Mahathir at the helm did not help.
Neither did the string of multi-billion scandals under his rule ranging from the forex scandal, the Maminco tin market scandal and the Bank Bumiputera scandal do much to instill international confidence in Malaysia as a reliable and dependable destination for foreign investors.
As western nations began to reel under the seemingly insurmountable weight of the Global Financial Crisis (GFC) in 2008, a crisis of their own making, smaller nations such as Malaysia bereft of the high end expertise possessed by western nations who created then dominated the global financial system had to rely on their own instincts and scarce resources to steady the country in a tempestuous ocean of international financial instability.
An indolent Abdullah Ahmad Badawi had nothing to contribute to the volatility of the situation and perhaps to his credit stayed out of any corrective measures being planned by others.
On Abdullah’s departure from centre stage, the current Prime Minister Najib Razak a quiet but confident operator emerged from the shadows and took on more than an international financial crisis threatening the stability of his country.
Singapore admitted at the time that its sovereign fund with all of the brains money could buy them could not help the country recover an estimated US$80 billion in losses incurred by its sovereign fund, Temasek Holdings.
Bad investments in European and US banks mainly.
Temasek’s poor performance was not isolated to the GFC.
Its net portfolio value fell to S$242 billion for the financial year ended March 31, down from S$266 billion in 2015.
Its one-year total shareholder return came in at a negative 9.02%, reflecting share price declines of its listed investments.
Putting things into a clearer perspective, the island state for all its reputation as a ‘genius’ commercial hub has been unable to weather the instability of global markets it seems.
So it embarked on an investigative expedition of Malaysia’s 1MDB at the behest of the Clinton Global Initiative (another failed enterprise) with equally disastrous results for its reputation as a sovereign state and a banking centre.
In Greece, they had to shut down state hospitals, water, electricity and gas supplies and cease broadcasting from their national broadcaster for their inability to pay their debts.
International condemnation came in thick and fast.
None of their European friends were prepared to help without stringent controls and austerity measures in place.
Not even after May 13 or the Indonesian confrontation period did Malaysia have to face such measures.
Spain and Italy, it is said, only tolerate refugees in order that these desperate people will displace their overpaid uncompetitive local workforce.
In the agricultural sector, it appears to be working.
An African refugee costs about 10% the wages of a European.
Whilst the European failed states were busy licking their wounds feeling sorry for themselves, in contrast to a time gone by, young Malaysians joined Indian and Chinese middle classes buying up holidays and holiday homes in Europe for a song, being waited for head to foot by begrudging European hosts.
The failed state symptoms were beginning to show in Paris, London and Germany too.
Working hard with his team of dedicated economists and managers, on the other side of the world, Najib did not even have the time to fend off those very personal insults and injury to his family and to himself hurled at them by European funded opposition led NGO’s.
The PM was focused instead with a single purpose of mind on developing and strengthening the economy and political stability of his country.
In the end, it appears to have paid dividends … huge dividends.
The five largest Asean economies – Malaysia, Thailand, Indonesia, the Philippines and Vietnam, have all been improving fast.
But only one, Malaysia, made it into the world top 20 according to the World Economic Forum’s East Asian Regional Conference held not long ago in Singapore.
