Finance Minister Zafrul Abdul Aziz previously said that he expected the Malaysian economy to shrink by 4.5% in 2020, despite the Coronavirus pandemic. To paint a rosy picture, the government had even said at one point that the economic growth would be just -3.5%. As usual, the clueless finance minister lied through his teeth as he had no idea what he was talking about.
The overly optimistic economic figures were deliberately cooked up to make the backdoor government look good on paper. But the reality would soon emerge as you can’t wrap fire with paper. Sending a boy to do a man’s job is a recipe for disaster. But backdoor Prime Minister Muhyiddin had no choice but to trust his crony Zafrul, the man who is linked to his families through marriages.
Born with a silver spoon, Zafrul, thanks to his marriage to the great granddaughter to the fifth Sultan of Selangor, managed to climb up the corporate ladder largely due to his royal title “Tengku”. He was the chief executive of Malaysian banking group CIMB before handpicked and promoted by Muhyiddin as the Minister of Finance in March 2020 after a political coup.
But Zafrul is also infamous for being the superstar singer in a music video for Najib’s 2018 Election Campaign. Instead of running a company, Zafrul was one of 53 Chief Executives of GLCs (government-linked companies) who had shamelessly sung songs of praise for former PM Najib Razak, the crook who had misappropriated at least US$4.5 billion from 1MDB sovereign funds.
Today, the chickens have come home to roost. Malaysia’s economy declined further in the fourth quarter of 2020, leading to a worse contraction in GDP (Gross Domestic Product) than initially trumpeted by Zafrul. The 4th quarter GDP fell by 3.4%, worse than the 2.7% decline in the 3rd quarter. Overall GDP plunged by 5.6% – the worst contraction since the 1998 Asian Financial Crisis.
Essentially, Finance Minister Zafrul has done an excellent job in screwing up the economy. Had Lim Guan Eng remained as the finance minister, all hell will break loose due to his ethnicity. The racist UMNO Malay nationalist party and the extremist PAS Islamist party would scream until foaming at the mouth that the Chinese have destroyed the Malays economy, making them poorer.
Yes, despite rolling out four stimulus packages totalling around RM305 billion – the largest ever in the history of Malaysia – the nation’s 2020 GDP still plunged by 5.6%. According to backdoor PM Muhyiddin, the RM305 billion packages were equivalent to about 21% of the nation’s GDP. And the genius Zafrul said the stimulus measures would add 3.7%-4% to the nation’s 2020 GDP.
In other words, without the RM305 billion stimulus packages, Malaysia’s 2020 GDP would have shrunk by 9.6%. In comparison, during the 1998 Asian Financial Crisis, the country’s economy contracted by 6.7%. That means under Muhyiddin and Zafrul, the 2020 GDP performance was 50% more horrible than the financial meltdown in 1998.
In fact, last year’s economy was almost as bad as the 1985 recession, when it contracted by about 10%. Malaysia recorded 4.3% GDP growth in 2019 under the previous Pakatan Harapan government. This means between a 4.3% growth (2019) and a 5.6% contraction (2020), the economy had actually plunged a total of 9.9 percentage points after Muhyiddin seized power in March 2020.
To make matters worse, the incompetent Muhyiddin government raised debt ceiling from 55% to 60% in August 2020 as part of measures to mitigate the effects of the Covid-19 pandemic. The last time the country raised the debt ceiling from 45% to 55% was in July 2009 under Najib administration during the 2008-09 global financial crises, also known as the Great Recession.
Despite the fact that the government had to borrow money to fund the RM305 billion stimulus packages, the finance minister had arrogantly said the government had sufficient cash to spend. And despite having splashed RM305 billion, the economy fell by 5.6%. But mismanagement of the economy was not confined to GDP growth alone.
Last month, (Jan 24), the United Nations Conference on Trade and Development (UNCTAD) released some humiliating figures. Mr Zafrul thought he could hoodwink the business community with 10 months of chest-thumping and self-praising. But the UN body that deals with trade, investment, and development issues finally revealed the fact – Malaysia was the worst performer in the region.
Inflow of foreign direct investments (FDI) into Malaysia stunningly dropped by 68% from US$7.8 billion (RM31.5 billion) in 2019 to US$2.5 billion (RM10.1 billion) in 2020. To put it in another perspective, even though FDI inflows to Southeast Asia contracted by 31% to US$107 billion in 2020 due to Covid-19 pandemic, Malaysia only managed to attract 2.3% of total FDI last year.
It means not only the previous Pakatan Harapan had performed better than the current Perikatan Nasional government, but also proves that foreign investors were not convinced of Muhyiddin and his finance minister’s ability. Adding salt to the wound, there were complaints that lazy Zafrul refused to meet the European business chamber to discuss matters concerning commerce and trades.
But with a clueless and arrogant finance minister like Zafrul, you can count on him to find some statistics to claim victory despite the pathetic GDP growth last year. He has claimed that the 5.6% contraction is better than projections by the International Monetary Fund (-5.8%), the World Bank (-5.8%) and the Asian Development Bank (-6.0%).
He conveniently hides the fact that the IMF had actually consistently revised downwards the economic contractions for Malaysia, from -1.7% to -3.8% to -6.0%. Likewise, the World Bank had revised the country’s 2020 economy, from 3.1% to 4.9% to 5.8%. The fact that Zafrul felt proud, instead of shameful, about the deteriorating economic growth speaks volumes about how moronic he is.
In denial, “Tengku (Prince)” Zafrul had – hilariously – claimed that the country was on track to economic recovery, never mind Fitch Ratings’ downgrade for Malaysia’s credit rating from A- to BBB+. Burying his head in the sand, he has refused to address Fitch’s criticisms of weak governance, corruption and enhanced debt under the Muhyiddin regime.
Exactly how could he say that nothing is affected when the government’s cost of borrowing will increase with the Fitch’s downgrade in December, not to mention complaints by the EU-Malaysia Chamber of Commerce and Industry (EUROCHAM Malaysia) about a lazy finance minister? He also ignores how foreign investors were fleeing the country due to unstable politics as a result of a dictator clinging to power.
In reality, as early as August 2020, the writing was already on the wall. A Bloomberg survey of economists had warned that Malaysia’s economy was contracting by the most since the Asian financial crisis more than two decades ago. More importantly, it said the country’s relative success at containing the Covid-19 outbreak hadn’t translated into economic performance.
So, for 6 months, the lazy and clueless finance minister had been sitting on his hands when he should be working hard to figure out why the economy didn’t improve despite the initial success at flattening the Coronavirus wave. To crow every day about the brilliance of pumping RM305 billion of stimulus packages would not miraculously boost the GDP or FDI.
Last month, Zafrul insisted a GDP growth of between 6.5% and 7.5% for 2021 despite a controversial emergency declaration and the second round of the movement control order (MCO 2.0) lockdown. However, Fitch Solutions, the research arm of the Fitch Group, said on Feb 1 that Malaysia’s economic outlook is set to worsen this year because of “muted private consumption”.
Source : Finance Twitter