Sabah MCA: The economy is in trouble, PH has failed

Sabah MCA Wanita chief Dr Pamela Yong has expressed concern over the continued weakening of the ringgit.

KOTA KINABALU: Sabah MCA Wanita chief Dr Pamela Yong does not believe the Pakatan Harapan government will be able to turn around the country’s finances despite promising to do so.

Yong said many Malaysians today were wondering whether the country’s economy would pick up anytime soon or whether the country’s reserves would continue on the current bleak downward spiral.

Sabah MCA Wanita chief Dr Pamela Yong.

“Instead of ushering in 2019 with great hopes for a New Malaysia, foreboding silence and apprehension instead fills the air.

“This is not unexpected as the recent economic forecasts are not bringing much jolly goodwill to the common Malaysian, with many feeling the pinch of the rising cost of living with year-end festivities just around the corner,” she said, in a statement here today.

For example, she said, the ringgit fell further against the US dollar by another 0.047% to 4.1770, in just 24 hours yesterday, adding that it also fell against the Singapore dollar and the Japanese Yen.

“With the continued weakening of the ringgit, the World Bank lowered yet again its gross domestic product (GDP) growth expectation for Malaysia this year to 4.7% from a 4.9% prediction set earlier in October this year.

“So that is not just one but two GDP downgrades in under three months,” Yong said.

She said the bad news continued with the MIDF Amanah Investment Bank Bhd Research reporting on Dec 17 that the foreign outflow of Malaysian equities of Bursa Malaysia widened further to RM314.3 million from RM80.3 million in just seven days.

She contended “the doom and gloom” trend in the Malaysian economy might have been a domino effect from the tabling of Budget 2019 by Finance Minister Lim Guan Eng.

This tottered on a deficit and yet sought a one-off special RM30 billion dividend from Petronas’s astute management, she added.

“Immediately following that, Moody’s Investors Service on Nov 8 downgraded Petronas’ ratings outlook from ‘stable’ to ‘negative’ due to its higher dividend payouts to the government,” Yong said.

Moody’s was quoted as saying “the negative outlook on Petronas’s ratings reflects our view that the financial profile of Petronas may deteriorate if the government continues to ask the company to keep dividend payments high, especially so should oil prices decline”.

With Citibank’s price forecast which projected Brent Crude Oil to hover around US$55 to US$65 per barrel, which is substantially below the assumed 2019 Budget price of US$70 per barrel, this certainly did not bode well and posed a risk to the government’s fiscal plans and finances, Yong said.

The “deterioration and the decay” of the Malaysian economy would be inevitable due to the Malaysian government’s dependence on oil-related revenue which had been set at a high 30.2% in Budget 2019 compared with a “very cautious” 20.9% in 2018, and “a realistic” 15% in 2017, she added.

Yong noted that the Brent crude oil price fell to US$56.45 per barrel due to concerns of oversupply yesterday as well.

“Now with the ringgit’s continued depreciation, how will the PH government look upon Petronas to bail out Malaysia’s economy? How will the government make up the shortfall in Petronas’ earnings and keep their Budget 2019 afloat?

“Certainly one cannot be all wrong to suggest that this steady foreign equity outflow and depreciation of the ringgit started when Putrajaya fell to PH on May 9.

“At this juncture, it seems that PH’s hopes of improving the economy, as touted during their GE14 campaign, seem to have failed miserably.

“And ironically this time, it is not a U-turn on one of their promises but rather a U-turn in our economy regressing towards the financial crisis some 20 years ago,” Yong said.