By Rais Hussin
There are legions of people who pass themselves off as specialists and experts on Malaysia only to fail in the test of their actual credentials and experience.
One of these “experts” is Euben Paracuelles, a senior economist at Nomura Research in Japan.
It was Nomura’s leading economist Richard Koo who coined the concept of balance sheet recession. In a balance sheet recession, the companies in Japan piled up on their debts, both foreign and domestic.
Invariably, during the decades of the bubble economy, Japan’s debts and borrowings shot up by several hundred per cent, with the assumption that Japan Inc, in the words of former Japanese prime minister Yasuhiro Nakasone, would be the “unsinkable aircraft carrier” of the United States too.
But Japan Inc sank in 1989 and has only begun to recover recently. But the irony is, despite the recent growth of Japan, indeed a reset of its balance sheet recession, as Richard Koo of Nomura had advised, which involves a heavy write-off and reduction of its private sector debt, the Liberal Democratic Party led by Prime Minister Shinzo Abe was completely whitewashed in the recent Tokyo municipal elections.
Japanese growth, in other words, meant zilch. In fact, when the growth cannot be enjoyed and experienced by the people first hand, the voters will revolt.
Not surprisingly, the Tomin First no Kai (Tokyo Citizens First Party), led by Yukiko Koike, a former newscaster, who is now 63, won more than 176 seats, as opposed to the 26 seats received by Shinzo Abe’s LDP.
So if LDP could face such a huge backlash in Japan, a country where the average voter turnout is only 50%, in spite of the growth that is ostensibly obtained from Abe-nomics, what chance does the Barisan Nasional have here?
Indeed who is Euben to claim that the Barisan Nasional can win the 14th general election? Euben is not even a Japanese economist who specialises on Japan, let alone Malaysia.
More importantly, the analogy with LDP is not misplaced. Between 1945 and 1991, the LDP was unbeatable, too. But came 1992, and it was swept away by the people power of Japan. Since then, the LDP has not been able to maintain a permanent stronghold in Japan.
This is the fate awaiting the Barisan Nasional. The growth projections that the Barisan Nasional has been providing to the world have been meaningless.
Notwithstanding the mega scandal of 1MDB, which is amplifying in gravity and seriousness, Malaysian inflation has been growing at more than 5%.
With a weak ringgit and an oil price of less than US$50 per barrel, the Malaysian government is importing inflation, not containing it.
With the US Federal Reserve having raised the interest rate four times over the last one year, the US dollar will continue to remain strong.
Euben’s prediction of RM4.30 per US dollar may be correct but would depend on cyclical rebounds and a suspicious sustainability as there are no significant changes in the structure or fundamentals.
Euben’s prediction of 5.1% GDP growth is another number rendered without context when the cost of living is increasing all round, and the government has run out of options to subsidise the political economy of Malaysia. Some have started screaming that people cannot “eat GDP”.
Without a subsidy on food, energy and rice, the cost of these commodities in Malaysia will creep up on the people, as has already been the case over the last 10 years.
In the Malay rural constituencies alone, research shows that most, if not all, 119 rural constituencies with a Malay majority are unhappy with the fast escalating cost of living and have to resort to debts to survive.
Already the personal household debts to GDP, as reported by Khazanah Research Institute, is high at 89.1% in 2015.
Of these parliamentary electoral constituencies, 54 belong to the Felda settlements, which constitute a major chunk of the parliamentary seats held by the Barisan Nasional.
Another mega scandal involving Felda and FGV, running into billions of ringgit, has negatively affected its shares and cash flows which, in turn, have impacted the livelihood of the settlers. The settlers are angry and one should not underestimate people’s anger any more. Election goodies may not be able to act as a pacifier, too.
Rais Hussin is a supreme council member of Parti Peribumi Bersatu Malaysia (PPBM). He also heads the Policy and Strategy Bureau of PPBM.
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