What does KJ know?

FMT:

What does KJ know?

Government economic policy needs clearer communication but the criticisms from Khairy Jamaluddin reflect his limited understanding of economics and political ambitions more than anything else.





Politicians in the wilderness often start thinking. Perhaps they should have started before being sacked but thinking is always good.

Malaysia’s most famous erstwhile politician Khairy Jamaluddin has started navel gazing at a think tank in Singapore, strangely not at his own think tank here in Malaysia.

After minutes of thought he sees a “clear lack of economic direction” since we have been without him for seven months. The ringgit is sliding and the cost of living is rising. All of this is Anwar Ibrahim’s fault and will cost Pakatan Harapan dearly in the upcoming state elections according to him.

First, Khairy has never held an economic portfolio. At his last job as health minister he failed to solve any of the problems crushing Malaysia’s health system. He has equally nothing to suggest on economic reforms to help the rakyat now.

Second, the unity government has inherited all the current economic problems and is not the cause of them. Structural problems are a consequence of decades of failure in governments in which KJ played a leading role before being kicked out of his own party.

Third, we had two recessions and an inflationary boom under the governments KJ was part of. These caused high interest rates, closed tens of thousands of businesses, lost hundreds of thousands of jobs and wiped out the pensions of millions of people. This is the cause of Malay and Malaysian discontent, not Anwar or his government.

The economy is facing headwinds from international factors which had been expected from the start of the year, or even before Anwar became prime minister.

The depreciation of the ringgit is because of international developments outside of Malaysia’s control. It is wrong to suggest the government caused it or can solve it.

There have been plenty of positive developments since Anwar became finance minister. Inflation is falling and growth is more stable. The economy and financial markets are calmer.

Anwar is well-known and well-respected internationally with a reputation for sound economic policy. His idea for an Asian Monetary Fund has been well-received. His international engagements have secured RM750 billion in foreign investment opportunities.

Domestically Budget 2023 was pragmatic, not populist, and it shows Anwar is moving away from the subsidy dependency toward economic reform.

Reforming utility tariffs benefits millions of households and 98% of firms and will hold down prices. It has saved RM4 billion and can save RM4 billion more this year.

Re-scheduling and re-tendering development projects has brought billions in savings and overall development spending has increased.

Combating corruption led to the discovery of a RM10 billion loss in diesel fraud and RM7.2 billion in leakages under the Jana Wibawa in one ministry alone. These can now be stopped.

Addressing supply-side issues, easing import restrictions and breaking up monopolies and cartels help to open markets, improve supplies and keep prices lower. Inflation is falling towards 2.5% by the end of the year.

Bringing forward social assistance payments to January helped with the cost of living for millions of people.

The government has provided more help especially to the B10 group whose incomes are below RM2,500. Cutting RM2.5 million for 222 MPs saves RM555 million, enough to give a monthly cash allowance of RM364 to all the 127,000 hardcore poor households showing that direct assistance as the start of a universal basic income scheme is very much better than the waste and patronage of the MPs allowance scheme. The government should be more assertive about this.

So while it is true that communications could be better, there are clear policy initiatives that will have positive impact in the short-term while beginning the process of long-term structural reforms.