MEET-UP BETWEEN MALAYSIANS IN DC
THE FINANCE MINISTER OF MALAYSIA
April 13 2019
Ladies and gentlemen,
1. Thank you for showing up today. I am always excited to meet Malaysians living, working and studying abroad as to find out what all of you really think about the Government back home. As an accountable and transparent government, we are ready to listen to opinion and criticism that can help us improve for the sake of our country, Malaysia.
THE CLEAN-UP JOBS
2. The Malaysia we inherited from the previous administration is broken. Yes, the country over the years has had its successes and some of the achievements are to be proud of. But we have hit a frustrating ceiling. For a long time, we had lived in our shadow and mired in various scandals that consumed us from the inside.
3. We needed to move on from those scandals and it is the job of this government to do that, and to start, we need to do some clean-up and then build the right foundation for Malaysia to rise up and retake our place among the leading economies globally.
4. These clean-ups among others involved solving the problems at places like 1MDB, Tabung Haji and Felda that were mismanaged under the old government. The Government is serious about the clean-up and is pumping RM17.8 billion into TH and RM6.3 billion into Felda to save these institutions from ruin and rebuild them into the respected institutions that they once were.
5.We have also cut significant fat from various public projects like the LRT3 and MRT2 by readjusting its scope to cater to more realistic traffic projections without hurting the quality of service and construction. For the LRT3, we have saved 47% or RM16.6 billion from the original cost. For MRT2, we have saved 22% or RM8.8 billion out of the construction cost (not including interest, land acquisition and other cost). These savings were possible because the previous models were overdesigned and overpriced to the point that it would be impossible to have affordable public transport for the masses. As a Government that is mindful of the living costs faced by the rakyat, it is our responsibility to make sure these projects are reasonably priced.
WIDER INSTITUTIONAL REFORMS
6. Despite criticism levelled at the government for being slow in fulfilling our election promises, we have successfully carried out a number of major reforms earlier on. For instance, the reason why I am standing here today is Pakatan Harapan’s commitment to address conflict of interest arising from having the same person holding the Prime Minister’s and the Finance Minister’s office.
7. Another example of completed reforms involved the clean-up of GLCs from political interference. In the few months in power, the Government ensured that all board members of all government-linked companies are made of professionals, and not political operatives, in order to improve these companies’ corporate governance. Without these clean-ups, we would not have been able to tackle the problem of mismanagement of GLCs heads-on.
8. And market reforms in the broadband industry that halved the price and doubled the speed should help drive growth in the digital economy. Success on this front that reduced living costs for all Malaysians at home is yet another promise fulfilled by the Pakatan Harapan Government.
9. The Government also no longer controls the media, unlike last time when Umno held Media Prima and MCA owned The Star while in power. Today, if you read the mainstream newspapers, you will find that these opposition-linked media can be quite courageous in their criticism of the government. The fact that the Government is not taking action against them proves the Government’s commitment towards freedom of the press.
10. But as the Minister of Finance, it is my duty to carry fiscal reforms and we take these reforms seriously. Within the Government itself, we have already instituted open tender system throughout the public sector to curb abuse of power and corruption. We have also applied zero-based budgeting. These measures should increase the efficiency of Government spending and reduce wasteful expenditure that we regularly read before in the Auditor General annual reports.
11. Additionally, we are migrating from cash-basis to accrual basis accounting. This will increase the level of accountability and transparency in public finance. This migration that will be completed by 2021 is important because it will consider off-balance sheet debt and off-budget spending more systematically into the Government’s books.
12. The previous government was prone to committing off-budget financing in order to achieve low fiscal deficit. But in truth is such low figures did not reflect the actual situation. After accounting for various off-budget expenditure into the government’s books, we have reset our 2018 deficit target to 3.7% of GDP, from the previous target of 2.8% set under the previous administration.
13. We will cut the deficit level from 3.7% in 2018 to 3.4% this year, 3.0% in 2020 and 2.8% or less in 2021 and we have shared this with Fitch, Moody’s and S&P. After listening to our plan, they have decided to keep the Malaysian government’s credit ratings at A-/A3 despite the fiscal challenges we face from prolificacy and corruption of the past.
14. This is the level of confidence the top three credit rating agencies have in Malaysia. Ultimately, they understand that these reforms are necessary to make sure that past abuses and corruption would not be repeated in the future. And they also understand that if a corrupt government deserved such A- or A3, then an honest cleaner government at least deserves the same rating. In fact, I believe once the clean-up is done in less than 3 years from now, the chances of us getting an upgrade should be quite bright.
CONFIDENCE IN MALAYSIA
15.There is confidence in Malaysia. Apart from the maintenance of our credit ratings, foreign investors are coming into Malaysia in grand fashion. Approved FDI rose 48% to RM80.5 billion last year from RM54.4 billion. Approved FDI numbers are a good leading indicator telling us the trend for actual investment in the next 1-3 years as they get realized.
16. And these approved FDI numbers also tell us that Malaysia is benefiting from the ongoing trade war. A huge chunk of the approved FDI came from China and the US, which highlights Malaysia’s role as a safe haven. Indeed, approved manufacturing FDI from China into Malaysia last year rose 410.8% to RM19.7 billion while from the US, it rose 184.9% to RM3.2 billion.
GROWTH AND INDUSTRY OF THE FUTURE
17. But this Government is not just about cleaning up and reforms. We are mindful of the need to generate high-quality growth and create jobs that people are proud to hold.
18.This Government is encouraging Malaysian industry to digitalize itself and make the leap towards Industry 4.0. The necessary policy has been put in place and several billion worth of scheme either in the form of guarantees and outright loans are available to support activities involving artificial intelligence, big data and robotics, regardless of industries.
19.This Government has a vision to turn Malaysia into the Asian Tiger we once was. 40 years ago, we used to compete with the likes of South Korea and Singapore but today, we worry about being overtaken by the Philippines and Vietnam. The Pakatan Harapan Government is changing this by first, reforming our institutions and then, building the industry of the future.
20. I cannot overemphasize the importance of institutional reforms. Malaysia can no longer grow by building more and more megaprojects. We have come to the point that the quality and not just the rate of growth matters. These institutional reforms will help raise our growth quality and make it inclusive so that everyone has a rightful place under the Malaysian sun.
21. However, it is positive outcomes which benefits the people that matter. The people of Malaysia must feel they made the right decision of changing the government. And that choice is only correct when they feel that "not only has life gotten better under the new PH government as compared to BN but their children has brighter futures". If we are unable to make the people feel that, then we are in trouble. That is why our economic policies, our fiscal consolidation, our institutional reforms and our clean governance based on competency, accountability and transparency must be able to be people-centric that generate growth, create jobs, improve incomes and purchasing power as well as enhance entrepreneurship to achieve this desired outcome. That is why we have to embrace IR 4.0 and establish a digital economy for a brighter future for our kids - preparing our young for the future and the future for our young.
22. It is by setting out foundation right that can we take back our place as the Asian Tiger.