Hornbill Unleashed

November 3, 2011

Final Warning: Malaysia may be bankrupt sooner than 2019

Final Warning: Malaysia may be bankrupt sooner than 2019

Maclean Patrick

Alarm bells should be sounding by now, yet the nation’s leaders seem to be adamant on keeping things sounding rosy and well. The Auditor-General’s Report for 2010 has shown how far down the barrel, Malaysia has gone.

It must be noted that when Malaysia was formed in 1963, the British left her with a solid administrative template. Yet, after more than 50 years of rule by Barisan Nasional, the template has not been improved on. In fact, it has gone to the dogs; replaced instead by a form of government that encourages leakages and corruption of all forms.

Malaysia has a population of 28 million and a civil service of around 1.3 million. Out of the 28 million, only one percent are paying income tax. This clearly shows that 99% are either below that income tax bracket or merely earning too little to need to pay taxes. With inflation and the prices of goods continuing to rise, expect even fewer people to pay income tax in the near future.

Incredulous optimism

Yet, the Najib administration’s goal for 2012 is to grant perks to the civil service and give hand-outs to non-serving members of the society in the incredulous optimism that this will improve productivity and raise efficiency and so forth. There is a lot of hope, but as always, no real mechanism to bring about results. The AG’s report clearly shows that though there were improvements from last year, the large number of detected faults still means the government has a long way to go in order to be a world-class administration.

For comparison, Taiwan has a population of 24 million and a civil service of just 400,000. Yet, Taiwan has continued to emerge as a major player on the global economic scene. Not bad for a small island that has so few natural resources and at one time was chided for producing rip-offs of Japanese electronic goods. Obviously, a clean and efficient government allows for a growing nation and a growing nation shows up, regardless of its size.
But not only is it confirmed that the Malaysian economy and system is riddled with rampant corruption, widespread inefficiency and general incompetence, the country has reached near to the end of the line. Bankruptcy is visible and to the extent that a time frame can be drawn. Minister in the Prime Minister’s Department Idris Jala, who shocked the nation last year by warning of bankruptcy by 2019 if the government continues with its current spending pattern, reiterated his view on Tuesday.

In announcing the latest investment updates for the government’s economic transformation programme (ETP), Idris had this to say, “If our economy grows less than four per cent… and we don’t cut our operating expenditure, if we borrow at 12.5 per cent, if our annual debt rises to 12.5 per cent and our revenue does not grow, then it will happen.”

Bankruptcy happens when one overspends or makes a poor investment

Let us examine Idris’ statement. Exactly, what will happen and how will it happen? The answers are, Malaysia will go bankrupt and it may come sooner than 2019 unless the leaders get their act together. The awful signs of such a situation are when the country starts to be late in its repayment of debt or servicing of interest.

This happens because there is insufficient cash-flow. Revenue from income and corporate tax plus returns from investment in all productive sectors are insufficient to cover the outflows. How come? Because the past BN government frittered away the borrowings on overpriced, unproductive or loss-making projects and ventures!

According to the AG’s Report, Malaysia’s national debt rose by 12.3 per cent to over RM407 billion last year, and although the economy grew by 7.2 per cent in 2010, last year’s fiscal deficit maintained public debt at over 50 per cent of GDP for the second year running. The government owed 53.1 per cent of GDP, slightly down from 53.7 per cent last year.

This does not augur well for Malaysians who may now have to contend with additional taxes like the GST, just to raise government revenue in order to cover its operating expenditures such as subsidies. Yet even as the government grapples with the idea of reducing subsidies and implementing the GST, it must also clean up its own act.

Decisions based on political motives, not sound judgment

The latest news of Prime Minister Najib Razak’s daughter and wife going off on yet another spending spree in Australia surely does not help the cause in asking Malaysians to tighten their belts and to live frugally.

Then there is the scam of the RM3 meals. Najib may have paid RM3 for his meal when he came calling at the 1Malaysia restaurant, but other patrons had to pay in the region of RM4-6 for a meal equivalent to the one the prime minister had.

And while meals and shopping sprees are the order of the day, the AG’s report also points out the mob-like nature the government it runs. The latest round of never-ending corruption allegations against the BN involve the National Feedlot Corporation, a multi-million ringgit project aimed to get local production of beef to meet 40% of the national consumption.

Not only was there alleged hanky-panky in the project’s management, there were also allegations of abuse of power in the federal government’s RM250 million soft loan to the company awarded the beef project. And guess what? The company is owned by Cabinet minister Shahrizat Jalil’s husband!

‘Winnable’ entrepreneurs, not cronies

But Najib, who is also Finance minister, chose to defend such questionable practises. The PM said in a written reply to a parliamentary question that the company — Agroscience Sdn Bhd — had been selected to operate the NFC project to create Malaysia’s “Beef Valley” after a tender process involving five other companies.

However, as PKR strategy director Rafizi Ramli pointed out, 6 firms making private representations to the government on a project that had not been announced to the people hardly constituted an open or public tender. To rub in the salt, the AG’s Report also criticised the project, and pointed out that it was now “in a mess”.

Perhaps the Beef Valley project says it all. A project of national importance because the supply of reasonably priced food is actually of topmost priority, a national security in fact. But the money allocated and the ‘talents’ to whom the project is given, are not based merit, capability or track record.

Any lay person can see the conflict of interest of this messy affair, yet Najib seems to be blind to it. Perhaps, the PM should view it in the context of the ‘winnable candidates’ that he is always harping on for the BN’s of candidates to contest in the coming general election!

It really is as simple as that. Choose a wrong candidate, and BN will lose. Choose the wrong entrepreneur, and Malaysia will lose. This is the state of the nation as it stands now, and truth be told, all final warning signs are clear to see – Malaysia may well and truly be bankrupt sooner than 2019.


  1. Rubbish.

    Comment by Jo — April 5, 2017 @ 1:36 PM | Reply

    • When you start raiding the epf then you have got real problems
      The can has been kicked down the road, sooner or later the chickens gonna come home to roost
      Malaysia should learn from Singapore to be debt free
      The use of debt to grow your economy can be tricky Korea found it the hard way.

      Comment by Frank — August 5, 2017 @ 11:10 PM | Reply

  2. This so-called ‘bankrupt story’ has been played since 1959…

    Long Live Malaysia! Long Live The Malay Kings! Long Live harmoniously The Malaysians!

    Comment by Halim Tuah — September 16, 2016 @ 10:05 PM | Reply

  3. Allah will protect our economy!
    Islam is the superior way.

    Comment by Abul — December 30, 2012 @ 1:59 PM | Reply

    • why isn’t god helping other economy around the world? but will help ours?

      Comment by wertr — September 15, 2016 @ 11:35 PM | Reply

  4. Time for me to panic and start selling my Malaysian stocks, and withdraw all my money from Malaysian banks.

    Comment by Gabriel — December 30, 2012 @ 12:54 PM | Reply

  5. Since the formation of UMNO BARU with the leadership of Mamak Kutty from 1981 till 2003, Malaysia has been destined to fail under BN. The country did not go bankrupt earlier due to her rich natural resources. As times go by, these God given wealth is diminishing.
    The nation wealth has been hijacking by those in the corridor of power, especially the unruly pseudo Malays in UMNO Baru, they are ABUSIVE, BULLSHITTING and CORRUPT.
    How are we not going bankrupt if our country is under the Utterly Manipulating National Obligation By Abusing Rakyat’s Urbanity regime together with the Malaysian Chinese Associates, Malaysian Indian Cohorts and ten other morons?
    Come GE13 vote ABU/ABBN.
    With the awakening of our young generation, the truly Malaysians starting from the students of UIA and UM for standing up for academic freedom combined with people power, will truly be a force for change, which the corrupt regime cannot beat with all the bullets in its armoury.

    Comment by Jimmy Loong — November 4, 2011 @ 9:17 PM | Reply

  6. Nobody except UMNO top leaders know how much is left in the coffer of KWSP and Petronas whose accounts have been the most guarded secret. MACC, Police and AG are all toothless. Only people power can stop the rot, clean up the system and prevent our nation from bankruptcy.

    Comment by Mata Kuching — November 4, 2011 @ 3:46 PM | Reply

  7. MACC had hastily concluded that “no graft or abuse of power was involved, merely non-compliance of ministry of finance guidelines and governmental tendering procedures”. It is obvious that MACC had chickened out and meekly passed the “hot potato” back to the Marine Park Department, proposing that the department take disciplinary action against the errand officers and blacklist the relevant suppliers.
    The conclusion made by MACC is a huge disservice to taxpayers and there is an overwhelming sense of disappointment all around.

    Comment by Ron — November 4, 2011 @ 1:53 PM | Reply

  8. Most of the rich corrupted politicians have stashed their money outside Malaysia so they don’t really care.

    Comment by RC — November 3, 2011 @ 10:18 PM | Reply

  9. Please look at this on wikipedia about government debt.


    Malaysia’s debt is about 50% of GDP. Some readers don’t understand the article. Yes, it seems “not bad now”, but if the government CONTINUE to SPEND like there is no tomorrow, than we will become another Greece or Zimbabwe. People also need to understand that , as the level of debt goes up, lenders will be more cautious in lending more money and may only lend us at higher interest rates. Don’t spend away our children’s and grandchildren’s future.

    Comment by Tiger — November 3, 2011 @ 9:51 PM | Reply

  10. If Malaysia ever go bankrupt or whatever mess ,they can always blame the convenient scapegoats…..you-know-who…and the cycle returns ! We must be alert and must never ever allow them to play this dirty and heinous political game….

    Comment by Oncebitten — November 3, 2011 @ 3:22 PM | Reply

  11. malaysia debt to GDP is still low as compared to other countries..stupid!

    Comment by no — November 3, 2011 @ 1:36 PM | Reply

  12. The government of the day is responsible for the mess we are in. BN has been doing it for years too long to count but the fault really lies with the shortsighted,blind or self serving voters who voted them in GE after GE, turning a blind eye to the government excesses. Unless we, as voters, come to our senses and exercise our democratic rights sensibly, we cannot blame anyone but the people who put the corrupt, inept and downright useless politicians there. Let us not forget that the government of the day is the choice of the people.

    Comment by fedup — November 3, 2011 @ 12:22 PM | Reply

  13. Exercise prudence……. No matter who is ruling the country….. Don’t forget, many rich countries in the world had gone down the drain. Malaysia is no exception.

    Comment by Just as concerned — November 3, 2011 @ 12:22 PM | Reply

  14. The reported debt level of about 50% of GDP may itself be suspect. Many advanced EU countries are having sovereign debt levels at closer to 100% – and they have far less annual leakages, more citizens paying income taxes (at least greater than 1% of the population!) and they have GST to boot. Maybe they produce less oil, but they are also on the whole generally more productive and export greater value-added goods and services. Malaysian statistics somehow leave a very unconvincing afterthought.

    Comment by Che Heng — November 3, 2011 @ 12:21 PM | Reply

  15. can someone list down the entire financial mismanagement, bad investments, project cost overruns, crazy purchases, print it all out in electronic media and also conventional media (say 10 million copies) and distribute to as many people as possible? It is getting too much, and many people are not hearing the actual story of the mismanagement of BN all these years..the people need to know !! publish and distribute !!!

    Comment by sad and angry malaysian — November 3, 2011 @ 12:01 PM | Reply

  16. Actually the award to Agroscience S/B was a coincidence rather than through an open tender.

    Comment by Talok Singh — November 3, 2011 @ 11:55 AM | Reply

  17. To clarify, , please head on over to the ETP’s blog to view the full video and his exact statement on Idris Jala’s misquoted statement about Malaysia going bankrupt.


    Comment by ETP Roadmap — November 3, 2011 @ 10:26 AM | Reply

  18. The sad fact is Malaysians want its own country to go bankrupt as they keep on voting for the BN thief.
    As it is, Malaysians deserve what they get and they have to take the responsibility for the impending mess because its their choice.
    Foolish Malaysians.

    Comment by Leeband — November 3, 2011 @ 9:06 AM | Reply


    Comment by Amuraria — November 3, 2011 @ 8:00 AM | Reply

  20. I based on the AG report year in and year out the misappropriation and abuse of procedures in the administration. Is it not good enough to say that the country is going bankrupt. Think people of Malaysia…..please for goodness sake.

    Comment by Yusoff Desa — November 3, 2011 @ 7:57 AM | Reply

  21. This fiasco was highlighted by Raja Petra Kamaruddin in Malaysia Today a long time ago before the AG’s report was released. But then he mentioned only RM25 million in grants and an even bigger amount in soft loan. Anyway the truth in what he said is now confirmed. The only way to stem this hemorrhage of public fund and prevent Malaysia from going bankrupt is a change in government. Is there a better alternative for a new government?

    Comment by Pak Tua — November 3, 2011 @ 7:20 AM | Reply

  22. It is imposssible for Malaysia to go bankrupt before Australia. Malaysia is rich in resoures just like Australia. More over the Australians only know how to go surfing and go on unemployment benefits. As you can see Malaysians are much more productive than Australains who are now asking for more. In Malaysia it is a totally free market. Now you try to set up a company/business in Australia, you have to jump through hoops and rings of fire.
    What is the different paying your fines to the cop on the spot or court? End of the day the offender is still punished. So what is the big deal here? about corruption?
    So Malaysians, don’t worry you are doing just fine.
    Who is this Maclean Patrick? Was he the person we called Not Clean But Trick?

    Comment by Yen Yap — November 3, 2011 @ 6:41 AM | Reply

    • It was also impossible for a housing loan scheme to bring down the world economy… but it did. The ability to underestimate poor management is a trait commonly seen in third world countries, wait a minute, isn’t malaysia STILL one after all these years???.
      Dubai borrows more money just to keep its public service functioning and the emirate has virtually stagnated its development rate. It has gone from Dubai statistic to UAE statistic indicating spin doctors still rule the roost.
      So yes, malaysia can go broke. Greece already has. Spain ain’t far behind. Complacency and sticking out collective heads in the sand is Malaysia Boeh ya….

      Comment by Bravoland — November 3, 2011 @ 9:40 AM | Reply

    • You are living in a KATAK DI BAWAH TEMPURONG environment. The article is a warning before it happen like Greece.

      Please wake up.

      Comment by Annie See — November 3, 2011 @ 9:56 AM | Reply

    • You currently residing on Mars or what?

      Comment by Talok Singh — November 3, 2011 @ 11:58 AM | Reply

    • The unemployment benefits in australia is not easy to get on a long term basis. After a few months of offering you jobs and you refuse they will want you to attend school to be trained and then they will offer you jobs again. If you reject all these employment they will just deny you the benefits. I think that’s fair and caring.

      Their programs to help someone start up a company is very comprehensive. The support is incredible as compared with what we are having here – which is literally non existence.

      Australia is more productive than malaysia.

      Comment by Amus — November 3, 2011 @ 3:11 PM | Reply

      • Total agree with Amus. Currently Australia is one of the country still strong in economy despite with Euro and American in bad shape. Look at the AUD is constantly above parity to USD. Infrastructures and environment are good because government spend the money for the community and public to enjoy. Not like Malaysia, politicians are getting richer but the rakayat struggle to made end meet.

        Comment by Annie See — November 3, 2011 @ 9:45 PM | Reply

    • YY….dont rely to much on the natural resource is Malaysia(Swak & Sabah). With current govt….no amount of money or resources can satisfy thsi bastard…..so end of the day Msia still be bankrupt!

      I travel all over middle east especially UAE….. the govt created a “huge hole” in their banking system and the govt coffer…yes same as Greece, Italy, Spain, ETC. Msian style of governing is no different with these country and the result be no different as well!

      With only less then 2% of the Msian population is paying tax….with dwelling FDI and tax money, how cna the govt runs the country?

      Can someone recall….one lady minister(forget which country in Europe) has to answer to the cabinet why she used the “people” money (govt issued credit card) to buy petrol for her car and got fired or demoted!? She on the way to work when somehow she dont have cash on her and the car is out of fuel!

      In msia… our minister mismanaged millions/billions of the tax payer money..they still goes free with their loots.

      Comment by HH2H — November 5, 2011 @ 4:21 PM | Reply

  23. Jibby the hit, your C4 friendly 1Leader: “2019 is a long time away. By that time I would have migrated elsewhere, so what me worry as it is $emua-nya OK now”

    Comment by Nstpravda — November 3, 2011 @ 6:21 AM | Reply

    • Bye bye….

      Comment by Jo — April 5, 2017 @ 1:46 PM | Reply

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