by DR RAIS HUSSIN
POLICY debates cannot necessarily lead to governance. Just as live telecast debates in the Parliament overtime did not improve the management and governance of the legislature, one should not expect the debate between Datuk Seri Anwar Ibrahim against Datuk Seri Mohd Najib Razak to produce a major breakthrough for Malaysia, which is wrenching from the aftermath of the pandemic of Covid19 and corruption that have become endemic.
To make matters worse for Malaysia, Ukraine and the US signed the Charter of Cooperation in November 2021. Therein began the nightmarish scenario of a double whammy, not only for the world but Malaysia too. The component and or ingredient of GDP of Malàysia is similar to that of Singapore. Not unlike Singapore, Malaysia is a top trading nation too.
By this token, our GDP is deeply vulnerable to external perturbations, especially when Malaysia imports close to 70% of our food. With a GDP that is exposed to global supply chain disruption, to the tune of 320% of Malaysia’s GDP, Malaysia is facing the twin impact of a SARS-CoV-2 virus that has evolved from the highly transmissible Omicron to sub-variants that have developed the ability to evade all vaccines. Factor in the variable of Ukraine, which is known as the “breadbasket of Europe”, what the country is facing is the proverbial perfect storm that is hitting the owners of more than 300,000 small and medium enterprises, millions of fixed-wage earners from B40 (bottom 40% group) and B60 (bottom 60% group). And, yes of course the political instability, plus monumental corruption that has become a way of life.
With only 3% of the Employees Provident Fund accountholders having more than RM250,000, where 15% of the total population of 32 million Malaysians being over the age of 60, Malaysia is trapped.
The country is not merely trapped as a middle-income country, but Malaysia is backsliding economically and politically, with a change of three prime ministers (PM) between March 2020 and August 2021.
In the debate between Anwar, the Opposition leader of Malaysia, against Najib, the former PM of Malaysia, it was clear that both understood that one of the critical issue facing Malaysia is the rising cost of living, apart from the good governance or lack thereof, lack of integrity and corruption as a way of life.
What is good about the debate is that the entire focus was on “governance” with Najib using the analogy of a cake to describe how the national economy should be grown bigger to allow the people to participate and partake in the process.
While this is an argument originally used by the late PM of Singapore, Lee Kuan Yew, who passed away in February 2015, Anwar was quick to emphasise a critical and simple point. Sensible as this approach may be, the structural and systemic issue at work is one of 3Cs — Corruption, Collusion and Connivance — between the powers that be and special vested interest that may even be criminal in nature.
Hence, while the well-connected individuals certainly get a bigger piece of the cake, the people are given the crumbs with which they can’t even survive on at all, let alone to invest in their own education or evolution to be a digitally savvy entrepreneur, to participate in the cyber commerce that is indeed thriving the world over.
In this vein, this makes Najib’s preliminary opening statement almost moot if not impossible to implement. The former insists that entities such as Samsung, Lucky Goldstar and Hyundai should be attracted into Malaysia. They should. But would they if the 3Cs remain the root problem of Malaysia? In South Korea, the former Attorney General known for holding big wigs and small fries to full account of any illicit activities in South Korea is soon to be the president.
Why would the CEOs of the “chaebols” take the risk of investing abroad, when 3Cs could have a whiplash effect of how they are seen to be managing their parent holdings.
Now, let’s turn to an issue that did not emerge with any specificity in the debate: Ukraine.
Ukraine, in peacetime, is responsible for 12% of the world’s wheat. The ingredients that are needed to create fertilisers are nitrate, potassium and ironically, CO2, of which the latter is needed for the packaging/packing of the fertilisers.
The rise in the prices of fertilisers is a global phenomenon since the summer of 2021 due to the pandemic and supply shocks. It has hit the US just as badly as it affects the UK and the whole of Europe, even Africa. Naturally, Malaysia is not spared.
As of May 6, the price of fertilisers per tonne in UK has rose from £650 (RM3,522) to £1,000. The US, the whole of Europe, Africa, Asia and Latin America are all witnessing the same rise in the costs of production.
Everything rose in two months. Although the consumer price index is registering 8.3%, this is the highest inflation to hit the US since 1941. But the worse is yet to come.
In Europe, farmers said they were likely to offset the price rises by buying less fertiliser than usual this season for cereal crops, potentially leading to lower production at a time when there is a threat to supplies from Ukraine. The agricultural inflation in Europe is real. Although Asians don’t consume so much wheat, oatmeal, barleys, cereals and corn, these are the things which Malaysia does import in the form of animal feed.
Therefore, Malaysian producers and consumers will also face imported agricultural and fertiliser inflation.
Some farmers in Europe may try to use more organic fertilisers by partnering livestock producers (that produce animal feed) or those running anaerobic digesters, which make energy from organic matter, to try to offset the cost of high fertilisers, but whatever Europe does, even Africa, they are producing everything on the back of higher fertiliser and organic fertiliser costs, which the World Bank explained.
In Malaysia, with a weak national economy that is also marked by an increasingly wild and turbulent weather, as marked by more than 2,500mm of rain between Dec 15 and Dec 18, 2021, alone — equalling the entire annual rainfall of 2020! — Malaysian farmers may not have the risk appetite to plant more at all. This is because the risk of being hit by severe and bad weather are now higher than ever. One wild weather can wipe out the entire production.
The Malaysian farmers will also plant less and make less fertilisers, even if the prices of fertilisers appear to be on an uptick.
In a globalised world that is only in the middle of being de-globalised between the West on one side and China and Russia on the other, the geopolitics and by implication the geo-economics of Malaysia could not be more dire.
This is why the decision-makers of Putrajaya must not be impervious to the structural and systemic problems of the 3Cs now. Najib may argue that his track record stood for itself over nine years. But if the trajectory of growth was strong to begin with, Malaysians, especially the farmers in Felda in 26 out of 54 constituencies would not have bolted to Pakatan Harapan to begin with.
That is food for thought for all sides now battling for the Malay hearts and minds in order to engineer their coalition’s respective victory in the impending general election that could be held between September 2022 and July 2023.
Dr Rais Hussin is president and CEO of Emir Research, an independent think tank focused on strategic policy recommendations based on rigorous research.