Tuesday, June 01, 2010

Economic Crisis Prediction

I've done a fair bit of writing even before I was elected into office in March 2008. I was just reminded about some of the things which I wrote and said by a friend, and it looks like 3 years later, my worries and concerns are becoming the reality.

I wrote about our Oil & Gas Windfall: Malaysia's Boon or Bane? (Part I and Part II) in July 2007 but The New Straits Times rejected its publication. It was subsequently published in Aliran's September issue that year. I wrote about how the Malaysian government has become addicted to rising oil revenues, failing to put in place expenditure safeguards and neglecting the other sectors of the economy, resulting in stagnant productivity. I also wrote about "political dutch disease" infecting our economic and governing institutions, how "easy-money" from oil revenues create and entrench rent-seeking behaviours.

Well, we see the result today. We have rapidly rising debt levels from RM240 billion in 2004 to RM363 billion in 2009, accounting for 53% of our GDP. Based on projections by the Government itself, we are faced with potential bankruptcy in 2019.

I've also made some predictions then as to how Barisan Nasional will fall within a decade, and the cause of its fall. On partial hindsight, I believe that the perfect storm is brewing for the ultimate fall.

I had in my presentation in September 2007 "After 50 years of Independence: What is the Road Ahead?" concluded with the hypothesis that the BN government will fall after an impending economic crisis which I had predicted to occur within 5-8 years. That will mean between 2012 to 2015. The economic crisis is caused by the fact that Petronas contribution to the Government will ultimately fall due to falling prices or depleting oil reserves, and our BN government's big spending habits will be difficult and painful to curtail.

The outcome is a civil service upheaval due to stagnating income, lack of bonus exacerbated by its bloated size due to the government's policy of being the employer of the last resort for unemployed graduates. The 1 million civil service vote will no longer be a fixed deposit for the BN government.

There will be a major crisis in UMNO which is held together by a intricate system of patronage, rent-seeking behaviour and money politics. But when the Government treasury dries up, and the largesse stops flowing, the glue disappears and UMNO will fall apart.

The failure of the economy will be the ultimate cause for a new government to take over from Barisan Nasional. Nearly 3 years after I've made the presentation, we see the relevant events unfolding right before our eyes.  It will happen, be it during the 13th or 14th General Elections. Watch this space.


Shawn Tan said...

Cost of living increases will affect the rural votes too. The question is what happens if/when the opposition government takes over a country with empty coffers.

hobbes said...

couldn't agree more. If pakatan does not win the 13th GE, i'll have to make plans to move my money to Singapore or Australia, maybe gold too.

Anonymous said...

YB, my wish and my prayer that the fall will be in the next 13th GE. The sooner the better.

Anonymous said...

That UMNO/BN system will collapse is a certainty. All evidence suggest that Najib understand the system is unsustainable. Its just his self-interest exceed his patriotism. If you look down the leadership pipeline though, the understanding of the issue is less. Muhiyiddin may be technically proficient but lacks the emotional intelligence and global awareness to see through the flaws of the system that have enriched him and his co-horts. Go further down and its clear the simple complexity of the issue is beyond the grasp of those in Perkasa.

They can't come up with a plan to fix the impending collapse. I predict it even more simply.

You believe oil price will collapse. I put it to you that oil prices will shoot up after we become an oil importer. Because our consumption is bigger than Petronas production, there is no way subsidy will be enough and currency will depreciate causing runaway inflation. Cuts in wages of govt employees will see them vote against BN.

I don't know when its going to happen but it will.

TYKO said...

Hi Tony,

While I would fully agree that BN government will fall, mostly due to the self-inflicted economy crisis and hence a new government by PR; I do hope too that PR will be taking over the governing of Malaysia not just because of the incompetency or imprudent of BN, it is also because PR is capable, competent and ready to take over as the effective government of the day.

Anonymous said...

Dear Tony ,

Our MDec chief Gazhali also spend like hell ...please help to reveal this misuse of taxed money based on your sharp business acument :

1) TheStar May 27 2010 : MDeC builds rendering facility for public use . Last paragraph : " MDeC declined to reveal the cost of setting up the facility "

2) Our anti-Crusader hero - Saladin is yet to alive although 20 million ringgit spent for only 6 minutes trailer ( check with Teresa Kok)

Why not promoting programming and other IT skill , why over the years just on animation ..

Anonymous said...

Hi there YB Tony,

if ever this country goes bankrupt, the first to be hit will be those who bought government bonds via amanah sahams, sukuk etc which are predominantly malays (since most of them have been reserved only for bumis).

it is important for pakatan to really sit down, plan a method to explain the financial problems this country is facing in laymans term. not only that its very helpful if specific actions are also spelled out to reduce the deficit and wastage.

this country is going supernova if BNs raping of our country does not stop by this coming general election. coz if they are in power for another term, i think its safe to say this country is definately going bankrupt.


Habib RAK said...

Tony, keep chipping away. I agree with you that UMNO/BN will fall for sure. Despite Idris Jala clearly pointing out the unsustainable debt growth, he is being dimissed as ridiculous. So, what else can we say. Please keep at it for the sake of our beloved nation.

Lee Wee Tak said...

lemme play devil advocate

BN power base s built on racism, ignorant hillbillies, meek & well looked after coalition partners, gerrymandering and hardly air election practices

the hillbillies who live on their own land will not be affected eventhough the country is pookai. they will still happy to vote the very people who promote tension and waste money

the next GE would pit the urban and rural voters; and there is where the key battle field is.

Pakatan needs to make significant inroads...UMNO is clobbered in cyberspace...but it is the ulu ulu places that the reign supreme

my next question: how the hell I can be of assistance?

Anonymous said...

Most important the opposition MUST BE READY to take over the administration of the country when the time comes. Work on ruling the present states with uphold dignity and transparency. Most of all have leaders who are interested in the welfare of the country than their pockets.