IT could hardly be business as usual for the new Cabinet members. These are extraordinary times and Malaysians aren’t a chirpy lot currently.
Unlike with the previous administration, where green horns and their flip flop decisions dominated, many in the present batch have served in government.
So, it’s only fair Malaysians expect more, given how the incumbent government was cobbled together controversially.
Seeing how the country’s economy is backsliding, these ministers are accorded little time to learn the ropes of their trade.
If the market was already in the doldrums before the Pakatan Harapan government collapsed, the economy is now perched on a slippery slope because of external factors and unforeseen circumstances.
The worsening Covid-19 situation, poor oil sales and political uncertainties have all not helped as the ringgit continues to depreciate while most businesses continue to take a beating.
When the Budget 2020 was presented, it was based on an average oil price of US$62 (RM265)per barrel for the year, but it has slid down to an average of US$30 (RM128) a barrel.
Malaysia will lose billions of ringgit in oil revenue, which translates to less money for us to spend on development. In fact, the government will now have to re-examine its Budget.
The government’s income compared with its spending will be found wanting, a situation of disparity called fiscal deficit. A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply, as total dollars spent in excess of income.
Apparently, when the price of oil was at US$48 (RM205) per barrel, Malaysia lost RM4.5bil from its oil revenue. And should the prices plummet to the range of US$20 to US$25 (RM85 to RM106) per barrel, the additional losses would be between RM11.1bil and RM12.6bil. Brent crude oil hovered at the US$36 (RM154) per barrel price range last week.
The global demand for oil has dipped because of severe restrictions on trade and travel since the Covid-19 outbreak.
Global benchmark oil prices took the biggest single day plunge in 30 years after Saudi Arabia decided to increase oil production and slash prices, retaliating against Russia’s move not to join the call to decrease oil production.
The problem with Malaysia is that we are wholly dependent on palm oil and crude oil, but the prices of these commodities are in free fall.
Crude oil prices have been volatile for a while now, but that hasn’t stopped our government leaders from looking at Petronas as a cash cow. Meanwhile, the states have continued requesting a greater percentage for oil royalty, although fossil fuel’s days are clearly numbered.
China might be trying its best to contain the Covid-19 calamity, but the Q1 takings for most companies certainly looks grim. Industries ravaged by the virus include aviation, tourism and hospitality, retail, food and beverage, and events. Venue operators have also registered losses in the millions because of event cancellations.
The media, which has been struggling to stay afloat, hasn’t been spared this scourge either, with advertisements withdrawn and events called off.
It has been a disastrous first half of the year, so the bottom line for most companies for Q1 of 2020 isn’t likely to look rosy.
Malaysian airline operators such as Malaysia Airlines, AirAsia, Firefly and Malindo have all resorted to a variety of drastic measures to save jobs, including instructing senior management staff to take pay cuts, enforcing no pay leave and banning unnecessary out-of-base meetings.
The cash registers are far from ringing in neighbouring countries, too, what with profitable routes cancelled and planes grounded, amounting to a bleak future.
It’s certainly a turbulent ride for airlines, but the multiplying effects are just as bad. Where our country is concerned, Visit Malaysia Year 2020 has crashed and burned.
When East Asia was hit, the plan was to look to European and American tourists as alternatives, even though their numbers are small compared to China and Asean, but now, everything has gone bust because the virus is pandemic.
Last week, the KL stock exchange received a rude shock with brand stocks turning into penny stocks. Many of the big brands in Malaysia saw their stocks going down to less than a ringgit. In fact, many counters closed at less than 50 sen.
Against this depressing backdrop, Malaysians find themselves in a precarious position as the political drama shows no sign of abating, even though a new prime minister has been sworn in and a new government installed.
The Perikatan Nasional government’s parliamentary seat count remains a mystery, but the new ruling party will surely aspire to increase its numbers by the Parliament session which will now only be in May.
The simple majority is 112 from the 222 Dewan Rakyat seats, but the new government must go beyond 114 to be on safe ground.
The Opposition bloc can be expected to be the strongest in the nation’s parliamentary history, and since many of its leaders have been Cabinet members for the last two years, they would have learned a fair bit about the status of the ministries. We hope to see better debates and greater scrutiny this time around.
Despite the larger size Cabinet, from the previous 55 under the Pakatan government to the present 70 minister and deputy minister posts, it has not satisfied the demands of the government partners.
Last Thursday, Umno voiced its frustrations clearly at the number of posts allocated and the portfolios the party deems lacking in importance.
Even before Tan Sri Muhyiddin Yassin announced the names, there were already grumblings as it became clear that Umno’s top brass could be left out.
Meanwhile, Tun Dr Mahathir Mohamad continues to blame everybody else except himself for the Pakatan government’s collapse. Muhyiddin, Datuk Seri Anwar Ibrahim, and now Datuk Seri Najib Tun Razak, have all been singled out by him.
Finally, the truth prevailed that Dr Mahathir has never wanted Anwar to take over, as he divulged in an interview.
Never mind the numerous pledges made publicly and the signed agreement between the four Pakatan parties, Anwar was ultimately deemed a liberal who adopted a multiracial approach. There were also complaints of him merely being good at rhetoric, and likely not being a good administrator.
Summing it up, Dr Mahathir had no intention to hand the reins to Anwar and neither was he pleased to pass the baton to Muhyiddin, although he seemed to endorse the idea at one point.
So, as we hear the politicians sulk, cry, celebrate and continue with their shenanigans, last week, the KLCI landed the title of being one of the worst performers in the Asia Pacific region, which is no longer news.
Last Tuesday, palm oil prices also dropped 8.9% to RM2,232. On a year-to-date basis, palm oil prices are now down some 27%.
We hope our ministers, and not just the Finance Minister, would diligently read the business news daily so they understand what corporate Malaysia – which pays the biggest amount of taxes and wages in the Malaysian labour force – is going through. There isn’t a whisper of good news for employers as they struggle to handle staff wages and operating costs.