MALAYSIA’S poor handling of public finances is a subject matter that has very often lit controversy. It is not only during the Datuk Seri Najib Tun Razak government but stretches back to the days of our new ‘old’ Prime Minister, Tun Dr Mahathir Mohamad.
However, on Thursday night when Dr Mahathir was sworn in as the seventh Prime Minister of Malaysia, many shed tears of joy. Among others, they see the 92-year-old veteran as the person to reform government spending, instil the rule of law and improve governance.
In the early days, very often, projects were awarded to favoured personalities and implemented at inflated figures. Over the years, the situation exacerbated to the extent of public officials being caught with millions in their homes and funds in government companies being misused with nobody being held accountable.
Some RM114mil was seized from the homes and offices of two top Sabah Water Department officials in October 2016. Needless to say, the 1Malaysia Development Bhd (1MDB) fiasco has been brewing since 2010 and exploded in 2015, setting off major investigations in many other countries.
Such incidences, although not weighing high on the list of people’s concerns, had got tongues wagging even before the general election.
Every year, the Auditor-General’s (AG) report gains publicity but sees little rectification. The AG prepared a report on 1MDB but it has been classified as an official document and not for public viewing for reasons that are not clear.
Now, with a new government in place, expectations of public funds being handled better are high on the list of the people. Already, fund managers are looking forward to a government showing a higher degree of accountability and transparency in its finances.
Dr Mahathir is not the most liked of persons by the capital markets. He is still remembered for his authoritarian ways and unorthodox economic measures such as imposing capital controls in 1998.
Although capital controls are now an accepted weapon to fight currency speculation, it is used as a tool only for a limited period of time. Most countries remove the restrictions on the inflow and outflow of funds after a short term.
Dr Mahathir does not believe in absolute freedom and has several times during his retirement in the last 15 years espoused views that he is not favourable to western ideas and text-book solutions to resolving economic and financial problems.
Nevertheless, Malaysians voted for him and Pakatan Harapan in a remarkable victory that nobody gave a ghost of a chance up to the eve of voting day. The surveys and political pundits all got it wrong.
To some extent, only the stock market got it right.
Two days before Malaysia went to vote, the share prices of Opcom Bhd, a company that manufactures fibre optic cables and belonging to Datuk Seri Mukhriz Mahathir, and property developer THRIVEN GLOBAL BHD gained significantly. Thriven is a company controlled by Tan Sri Muhyiddin Yassin’s son.
Very few times does Malaysia hit the international news scene for the right reason. Pakatan Harapan’s shock victory in ousting a 61-year-old coalition has been equated to Britain’s surprise decision to vote for Brexit and America choosing Donald Trump for the presidency.
The victory came despite the odds heavily stacked against Dr Mahathir’s Pakatan Harapan. The coalition overcame challenges such as a re-delineation exercise that favoured Barisan Nasional to fighting the government machinery such as the Election Commission.
Dr Mahathir also had to convince his sceptics that he was a changed person and determined to uphold the highest standards in fighting corruption and managing public finances.
However, Pakatan Harapan and Dr Mahathir prevailed on the promise of bringing about a new Malaysia.
In its manifesto, there are several areas that touch on ensuring that there would be no compromise in handling public finances.
The fact that the coalition got overwhelming support from Malaysians despite the obstacles thrown at Pakatan and Dr Mahathir is testament to the deep-rooted frustration and the strong desire to see change, especially against corruption and the handling of public finances.
Generally, people are unhappy about the rising cost of living. Some, especially in the semi-rural and rural areas, tend to tolerate it because they get assistance.
In this election, it was obvious that the bad handling of public funds was something that had finally resonated with the semi-rural and rural people, thanks to social media.
Even in the interior of Kapit, Sarawak, the folks at the longhouses were well aware of issues at the federal level such as the bad management of finances in 1MDB and Felda Global Ventures Holdings Bhd.
Barisan won the war of the flags in the rural and semi-rural areas, but could not overcome the digital media war that was fought through WhatsApp and Facebook.
The fact that an estimated 23 out of the 54 parliamentary seats determined by Felda settlers fell to Pakatan Harapan and PAS is evidence that the people are looking at beyond bread-and-butter issues.
Normally, when there is a stunning upset in the political dynamics of the country, it sets the framework for a major change in governance. This leads to better management of the general economy and national finances.
The corporate sector gains confidence and finally the people will benefit. Dr Mahathir has stressed on the governance of public finances and the management of the government through the rule of law.
If he is able to display both qualities, investors would be happy to put their money in Malaysia.
When they put money into the stock market, they want to see that companies are allowed to run based on the rule of law. When they see public contracts being awarded fairly and to companies with the know-how rather than the ‘know-who’ factor, they would be convinced of improved governance standards.
Government spending generally drives the Malaysian economy.
That is why we have persistently been having a deficit in the federal government budget, something that has been brought down gradually by the Najib administration. In fact, the target was a near balanced budget by 2020.
Under Dr Mahathir, the fear is that Malaysia’s budget deficit will worsen. That may not be the case.
If Dr Mahathir is able to implement his plans to reform the government, he may be able to gain investor confidence. We will see a new corporate landscape being shaped with new ways of doing business. Malaysia will then join the likes of South Africa, Brazil and South Korea in fighting corruption, upholding the rule of law and instilling discipline in the handling of public finances.