atans1

Mahathirnomics/ Luck of the devil

In Malaysia on 01/06/2018 at 11:18 am

Investors are concerned that Dr Mahathir’s government will struggle to curb debts while implementing populist campaign pledges to drop highway tolls, increase fuel subsidies and abolish the goods and services tax*, which was set to generate US$12 billion (S$16 billion) or a fifth of state revenues this year.

FT

Or as averageguysg posted on this blog

I find it interesting to see what Tun M does. Let’s look at the situation Msia is in now:

1) Supposedly 1 trillion of debt. Can’t raid the reserves.

2) At the same time, they need to raise wages, improve healthcare and poverty.

3) While mega projects can create jobs and investment, they got no money to do it.

4) Also don’t want to open legs to China, so that kind of “investment” will not be pursued.

5) Can recover a few hundred million from 1MDB, but still only tip of the iceberg.

6) Plenty of pro-BN civil servants still need jobs even if you sack them.

7) Can cut defense projects, but also this is small money and may piss China off.

8) Want to improve education system, abolish vernacular schools etc, all this takes money and the tangible benefit will only come much later.

So how**?

Tun wants to spend money on the people (Nor make them Pay And Pay) while cutting taxes, and reducing debts and deficits: sounds like Reagan’s “Vodoo economics***”

Well if oil goes to US$100 a barallel, he’ll manage this feat.

If it falls to US$30, M’sia will be really bankrupt.


Budget assumpions on oil

In the country’s 2018 Budget, the oil price was projected to be around US$52 instead of the above US$70 per barrel now. So now government would record an additional RM5.4bn revenue from higher oil prices, Cina minister said.

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If it trades within the zone of US$50- US$60, “In the hands of Allah” and Anwar might think twice about becoming PM and inheriting a poisoned chalice: Tun will have done a “Hail Mary” pass to Anwar, while smirking.

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Petrol subsidy

The prices of RON95 petrol and diesel will be maintained at the current levels of RM2.20 and RM2.18 per litre respectively, although after June 7, the price of RON97 petrol will be floated according to market prices.

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Whatever don’t underestimate Tun’s intuition (or luck?). Someone in his inner most circle who recommeded in 1998 that M’sia get an IMF loan (and who thrown out of that magic circle for that advice and other “crimes”, but now back in the circle circa 2010) told me in the noughties that Tun M got it right and people like him and other economic literate advisers got it wrong. He added that even the IMF had changed its mind on the use of capital controls: something that was haram to the IMF when Tun introduced them to M’sia.

Btw, Read this about how analysts who supported the need for GST in KL, now downplaying its importance: https://www.todayonline.com/world/economists-play-down-concerns-over-malaysias-fiscal-health-despite-governments-populist. Some things never change: the sucking up to power.

Related post: Either Tun or his Cina finance minister is wrong

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*”The scrapping of a Goods and Services Tax will blow a RM$21 billion (S$7.1 billion) hole in the Malaysian government’s wallet, but the country will still be able to meet its budget deficit target for 2018, said Finance Minister Lim Guan Eng on Thursday (May 31).

The lost revenue from the tax due to be axed on Friday would be offset by rising oil-related revenues, spending cuts on non-essential projects, increased dividends from govt-linked firms and a new sales tax expected to be introduced in September, he added.”

Agencies

**Easy leh. Shake down S’pore for money. We got the cybernuts ready and willing to help Tun subvert S’pore: Anti-PAP S’poreans sucking up to Tun. With S’poreans like these nuts, we need the PAP. If Tun M is still PM when the next GE is held: “Vote PAP to protect our right to Pay And Pay”.

Fortress Middle Islands could be such a shakedown ploy: Tun following Xi?

***Vodoo economics Also called “Reaganomics,” voodoo economics is the nickname for the hallmark economic policy of Ronald Reagan, the 40th President of the United States (1981-1989), who was trying to stimulate an economy that lay stagnant after the Jimmy Carter years.

http://www.investinganswers.com/financial-dictionary/economics/voodoo-economics-5170

 

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