There is a need for a rational or more balanced TIP measurement for Malaysia.

MANY Malaysians are, by now, aware that Malaysia sits on Tier 3 of the US State Department’s recently released 2021 Trafficking in Persons report.

This is the second year running that we’ve been placed in the bottom rank and it’s hard to accept or even fathom.

Tier 3 countries are those which don’t adhere to the minimum standards and fail to make significant efforts to comply.

Unbelievable as it may sound, Malaysia has been dumped together with the likes of Afghanistan, Myanmar, Iran, North Korea and Eritrea, among others.

And Curacao, which only a search on the Internet revealed its location and informed me is a Dutch Caribbean Island.

Naturally, Russia and China – the two enemies of the United States – grace Tier 3, too. No prizes for anticipating those rankings.

While Malaysia isn’t exactly the paragon of labour laws, especially for migrant workers, we really shouldn’t accept this report as the gospel truth.

Unfortunately, there’s not much we can do because this is a report from the very powerful US of A, but we should oppose it, nevertheless, even if the government’s silence is hardly exemplary.

The TIP report may have irked us but we have little choice except to face the implications of it.

After all, the US is a big trading partner at No 17 spot with bilateral trade in goods at US$71.4bil (RM317.8bil) in 2021.

China has been Malaysia’s No 1 trading partner for the last 13 consecutive years hitting US$176.8bil (RM786.8bil) in 2021.

The impact of this report is serious because any form of bans or seizure of our palm oil and rubber gloves, due to allegations of forced labour, would cost us millions and a dented reputation.

The 634-page report even has a section on the powers of the US president, which allows him to penalise errant countries if he deems necessary, and his jurisdiction covers a wide area.

Most of us would also not take the trouble to find the link to the lengthy report and read the contents in its entirety, including politicians and journalists who have freely offered their opinions.

It’s hard to comprehend, especially when, with due respect, the Philippines is in Tier 1. In Tier 2, the notable countries include Benin, Bangladesh, Burundi, Congo, Guatemala, Ecuador, Gambia, Liberia, Mozambique, Niger, Sierra Leone, Guatemala, Cote D’Ivore (Ivory Coast), Nigeria, Rwanda and Lesotho.

Tier 2 countries are those whose governments do not fully comply with the US Victims of Trafficking and Violence Protection Act’s minimum standards but are making significant efforts to bring themselves into compliance.

The Tier 2 watch list includes Burkina Faso, Cameroon, Chad, Comoros, Djibouti, El Salvador, Ethiopia, Gabon, Eswatini (ex-Swaziland), Mali, Guinea and more.

And Malaysia is in Tier 3 – far away from some of these countries, where human lives mean nothing. Something’s wrong here.

So, how does the US define violations of human trafficking? They include forced labour, prostitution, imposition of debts, restrictions of movement, contract violation, wage fraud, assault, passport retention and threats of deportation.

At page 364, the report says, “the government of Malaysia does not fully meet the minimum standards for the elimination of trafficking and is not making significant efforts to do so, even considering the impact of the Covid-19 pandemic on its anti-trafficking capacity; therefore, Malaysia remained on Tier 3.”

But it concedes that “the government took some steps to address trafficking. The government amended its anti-trafficking law and Employment Act to include more expansive definition of forced labour, convicted more traffickers than the previous reporting period; issued more freedom of movement passes for identified victims in government-funded shelters, increased the number of interpreters and victim assistance specialists (VAS) to assist victim through judicial process, and adopted a five-year national action plan.”

The sectors mentioned involved trafficking victims such as household workers, and those in palm oil and rubber manufacturing sectors.

The TIP report hardly had the good grace to use the word “allegedly” in many instances in the report. Instead, it expects everything to be taken as fact without evidential backing.

It harps a lot on employers holding the passports of workers. However, most Malaysian employers have long known that workers who run away are barely perturbed about losing these documents.

The impression given is that their embassies issue replacements with minimum fuss.

Employers have suffered huge losses signing contracts to recruit foreign workers – only to see them run away to another employer for higher wages.

Certainly, our weaknesses need to be addressed. Many may be mere allegations and even cultural differences in the American interpretations and definitions, but there are many areas in which we need to improve.

Fine-tuning the law and going after corrupt officials are surely matters of concern.

Malaysian employers have expressed disappointment that the revisions of the Malaysian Sustainable Palm Oil (MPSO) certification scheme for palm oil plantations to improve workers’ rights, had not been acknowledged in the TIP report.

The MPSO revisions included clear emphasis on worker rights. But why did the TIP report ignore these changes, invariably raising suspicion to whether there was a predetermined conclusion for the report on Malaysia?

“The report is also clear that it does not take responses by non-governmental and commercial sectors into account. In other words, it is supposed to be a critique of government policies.

“There is a problem with this approach; sectors that are doing the right thing – and even attempting to remedy the situation – are nonetheless penalised for their actions,” reads the rebuttal from Malaysian Palm Oil Labor Facts.

It said the report “appears to be authored by the Fair Labor Association – an NGO that many of Malaysia’s plantation companies have engaged with directly to improve labour rights situation in Malaysia” and “in fact, the highlights that one of the recommendations that the TIP report made to Malaysia was greater engagement with NGOs – something the industry was already doing.”

It pointed out that in one entry in the TIP report, it used “the same quote for three years running,” so, “does this mean the TIP report has just become something of a box-ticking exercise?”

The TIP report is admittedly useful, but the US also needs to acknowledge that many steps have been taken to improve human and labour rights, especially in the palm oil sector.

Malaysia also recently formally ratified the International Labour Organisation forced labour convention, known as Protocol 29, to commit Malaysia’s efforts to eliminate forced labour.

Last year, Malaysia even signed up with Alliance 8.7, a global partnership to accelerate efforts to eradicate force labour, modern slavery and child labour around the world.

Malaysia depends on oil, gas and palm oil, which have become the life savers of this country, and these commodities have helped improve the lives of many Malaysians, especially for those from the rural areas.

The Gross Domestic Product from the palm oil industry, according to 2020 figures, was estimated at RM36.87bil.

More than 650,000 smallholders and over a million people rely on the palm oil industry as their source of income.

Malaysia is also a net exporter of crude petroleum as it exported over RM53bil worth of petroleum in 2020.

But palm oil producers seem to have a harder time with continuously bad press and unfair tactics applied by European countries.

Basically, this is just a bitter fight between palm oil, sunflower oil and soybean, of which the US is the world’s leading producer.

Deforestation and its impact on animals have always been emotive issues used effectively against the palm oil industry – of which Malaysia and Indonesia make up the bulk of.

In the peninsula, oil palm planted area in 2021 covered around 5.74 million hectare (45.5%), Sabah (26.6 %) and Sarawak (28%).

Although Johor covers about 699,217ha, it is much lower than Pahang at 755,906ha, but the former has found itself in the spotlight recently. Palm oil is not even Johor’s main revenue source.

No one has, however, reported that elephant paths have been set up in Johor plantations to ensure these animals have access to food, since planters are aware that if their homes are affected, their plantations, too, would be compromised.

Two recent issues – the claims by the Sulu heirs on Sabah and the TIP reports – have certainly affected Malaysia.

Instead of jumping on the naysayer bandwagon, which seems fashionable to some of us, it’s time Malaysians rally to defend our country.

A HORRENDOUS claim has been making the rounds on social media. It says that Malaysia is buried in debt and is the next country, after Sri Lanka, to go bankrupt.

Curiously, many have chosen to believe this is the gospel truth. There have been plenty of rational explanations by economists debunking this myth, but they are buried mainly in the business sections of newspapers. So the general population may have missed the more reliable information.

Meanwhile, social media narratives, unfortunately, move faster and spread wider in the age of “forwarded” messages.

So it’s good that Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has taken to social media to explain these economic issues, including how rising interest rates in the United States affect the ringgit as well as other currencies.

I was informed about a pastor in a particular church who told his congregation that Malaysia is sinking financially, and he, presumably, based his sermon on this false social media news.

He purportedly even said we are the next Sri Lanka. The worshippers were then told to pray for Malaysia. It’s blasphemous because the words of preachers, regardless of their faiths, are often believed wholeheartedly.

We can argue that Malaysia is falling behind, but we haven’t arrived at the point of being a failed or bankrupt nation.

Countries with external debts running into trillions of US dollars include China, Japan, Germany and the United States, and certainly, none of them are failed states even though their debts eat into a large part of their GDP.

Sri Lanka’s economy has collapsed with debt in foreign currencies totalling US$51bil (RM227bil), and they have run out of reserves. According to one report, the country only has US$1.92bil (RM8.5bil) in reserves, which is a pittance to secure imports such as fuel.

Malaysia has a respectable amount of foreign exchange reserves while our debt in foreign currencies is a small percentage of total debt. We had a stockpile of US$116bil (RM516.4bil) at the end of last year while our debt in foreign currencies is US$6bil (RM26.7bil).

“Their [Sri Lanka’s] trade balance was negative US$8bil (RM35.6bil) for 2020, ours was a positive US$63bil (RM280bil) for 2021 – we earn a considerable amount of foreign exchange to purchase our imports, they didn’t, which is why they can’t buy foreign goods,” wrote senior business writer P. Gunasegaram at Malaysiakini.com recently.

“Their debts are 101% of gross domestic product or GDP, the sum of goods and services produced in a year, ours is 68%. Importantly, they don’t have enough foreign exchange to service their foreign debts, we have more than enough,” Gunasegaram wrote.

He rightly pointed out that “right now, it’s really not a fair or reasonable comparison at all” to equate Malaysia with Sri Lanka.

Gunasegaram further wrote that “Malaysia’s is A3 – it signifies that the issuer has financial backing and some cash reserves with a low risk of default. A-/A3 is the seventh-highest rating a debt issuer can receive and is four rankings above the cut-off for junk bonds – not great but not bad either.”

There are also a lot of misconceptions about debt. So we have economists, politicians – and journalists, sometimes – talking about various sums of money, small and large. If the point is about the country’s total debt, then it would run into trillions. It’s nothing unusual since most countries are in similar situations. However, the political agenda on social media wants us to believe that our entire generation will have to settle these debts.

It’s mind-boggling for the common man to digest that Malaysia has a total public sector debt of RM1.36tril.

But this amount includes borrowings by the federal government, statutory bodies and non-financial public corporations. The government also issues debt papers in what is one of the largest and most developed debt markets in the region. These bonds will eventually need to be repaid, too.

The federal government’s external debt is about RM28bil (US$6bil). Again, it seems big, yet it’s very manageable.

The question here is how we’re managing it, as debt is weighed based on a percentage of GDP. Currently, it’s about 63.8% of GDP and it used to be 53% before the Covid-19 pandemic. This merely means we need to be prudent and bring the numbers down over the next few years.

Another big difference between Sri Lanka and Malaysia is that we are net exporters of natural gas, and we can afford to subsidise fuel and keep inflation under control. On the other hand, Sri Lanka’s major exports are tea, garments and textiles.

But that doesn’t mean all is hunky dory down the road for Malaysia if we don’t get our act together. Disturbing signs have already prevailed.

Mismanagement and the results of corruption, leakages and incompetency usually only surface a decade later in most cases.

We are not Sri Lanka, but neither should we be content with what’s happening in Malaysia. We deserve better.

Despite what our politicians may want to say, we must gradually lower our subsidy bills. We are spoilt. We live in one of the most subsidised nations on Earth, yet many are clueless about this.

Given this situation, any reduction can only be done gradually without hurting the people’s pockets too much.

As it is now, Malaysians are already struggling. Had the government stuck to its earlier decision to remove ceiling prices on chicken, eggs and cooking oil, the effects would have been disastrous and could possibly have even resulted in massive street protests.

The central bank’s foreign reserves of US$109.2bil (RM480.9bil) as of June 15, 2022, is reportedly the lowest since early 2021, and the drop of US$3.6bil from May 31, 2022, is also the largest in seven years. While economists don’t think the decline is alarming, we certainly need to recover our revenue.

Our leaders need to talk more about growth. Please stop wasting time on unproductive and contentious issues which divide the nation and bring no value to the country.

What we need to do is to improve our competitiveness, employment, public finance, productivity and efficiency.

To be fair, Malaysia attracted RM42.8bil in approved investments until March this year.

Yes, Covid-19 has caused Malaysia to slip seven notches to 32nd in the 2022 International Institute for Management Development World Competitiveness Ranking, so we need to get back on our feet now.

If we can’t even resolve our labour shortage issue, it means we’re still on the starting blocks while everyone else is eyeing the finish line.

Oil palm fruits are left rotting, restaurants can’t open, and businesses are struggling because of this simple issue – which should have been sorted out in the last two years when we were stagnant.

Billions of ringgit are going down the drain as Malaysia squabbles over hiring methods and protocols.

It’s often said that Malaysia is a lucky country as we have crude oil and palm oil, but it’s a waste when we don’t have people to harvest these fruits, and the peak season is right now, unfortunately.

So we really need to sell the Malaysian story better to ourselves and to the world because we’re ailing from an image problem.

Time to move forward: In less than a year, we will be voting for new Dewan Rakyat members, but some of the current batch of MPs are still squabbling over government leadership posts instead of dealing with the urgent economic problems. – FAIHAN GHANI/The Star.

TALK about being deluded – some of our politicians have turned it into an artform. We surely can’t be blamed for doubting that they’re clued in to our pressing concerns, or worse, even bothered about them.

While the rest of us struggle with the increasing cost of living, we have politicians squabbling over filling the Deputy Prime Minister position.

Realistically, do the rest of us even care if there was indeed a promise made to appoint someone to the post, especially when we’re barely a year away from the “expiry date” for the Dewan Rakyat members?

And even if there was such an agreement, would it even be valid, knowing the minute relevance to a political agreement, where accountability and integrity aren’t top essentials?

Now, that explains why the Yang di-Pertuan Agong has always insisted on meeting the Members of Parliament in person each time they sign a statutory declaration to back a leader.

It’s no longer news that some of them have changed their minds along the way, turning the SDs into worthless pieces of scrap. Conveniently, some have even denied putting pen to paper.

So, if SDs have no value, what more an agreement for a DPM.

More incredible, there are now allegations that the signatories of the agreement had signed it without the knowledge of their party heads.

Either these party leaders have suddenly developed dementia, intentionally or otherwise, or their senior leaders have sealed deals behind their backs.

PAS president Tan Sri Abdul Hadi Awang said he wasn’t aware of the agreement to appoint a DPM from Bersatu while the party’s secretary-general Datuk Seri Takiyuddin Hassan has admitted to drafting the agreement.

Umno leaders said they had no idea that vice-president Datuk Seri Ismail Sabri Yaakob had made his stand on the issue as PM.

If it’s confusing to the rakyat, as a consolation, at least, we know the respective top party leaders are, likewise, in the same boat.

Here’s the point. The rakyat doesn’t give two hoots. After all, we’ve been suffering from political fatigue.

All these political aspirants who want to be PM or DPM have not made any constructive proposals on how they intend to tackle the inflationary trend, depleting foreign reserves and sustaining the subsidy bill.

Perhaps some of us missed their clever speeches.

But have you heard anyone pitch how we can increase our food products, especially from the agri-industry sector, and how we need to strengthen our food security policy and even develop our own food safety law?

Many related issues on food security have emerged, such as food price hikes, and shortage of essential foods including oil and chicken.

Yes, the Prime Minister has said the Economic Action Council has discussed food security, simplifying business procedures in Malaysia and addressing the skilled workers shortage in the electric and electronic sectors.

It was heartening to hear the PM speak about the involvement of Felda in food security last week.

But to ensure food security, Malaysia needs to galvanise the nation. For example, the Singapore Food Agency adopts the strategy of “three food baskets” – the foremost being the diversification of food sources including boosting local food production through funding for agriculture research and technology adoption, creative planning of farm spaces and efforts to drum up community support for local farmers.

Although Singapore is a tiny country with only 1% capacity for food production and over 90% of food imported, it has managed to generate public interest, concern and commitment to food security.

Some may argue that Singapore is hardly a good example as it can’t rear its own chickens and eggs but it has managed to steer national interest and a narrative.

Across the world, the Covid-19 pandemic, disruptions to food supply chains and now, the Ukraine War, have all wreaked havoc on food supplies, and our weakening ringgit can only mean our food import bill will balloon.

Contenders for the Prime Minister’s job in Britain must talk about how they can take the country forward amid high inflation and the tough tax laws there.

They also want to project to their countrymen that they are the ideal candidates to take the nation forward.

It’s fair to suggest that Malaysians don’t see any inspiring, progressive and competent leaders who can promise us a brighter future and take Malaysia to greater heights.

Leadership is surely lacking in Malaysia, although our politicians would like to think they are leaders. Of their own respective political parties, perhaps.

The issue here isn’t filling a vacancy for the DPM post but a void for a leader who can command the respect, confidence and trust of the people – a national leader who can lead us, and one who genuinely represents the interests of all Malaysians, regardless of their race and religion.

Diversity is to be embraced, practised and celebrated every day, and not presented merely as a hollow message drafted, or worse, cut-and-pasted by a press officer for a particular festival.

Perhaps we shouldn’t wait until the next general election before we begin our own elimination process for candidates who don’t even deserve our time.

High prices: The weak ringgit has led to the rising cost of imported goods, especially food. – GLENN GUAN/The Star

THE coming months will be rough. No one knows for sure how long it will last as the world grapples with inflation and the prospect of a global recession.

It has hit nearly every country in the world and Malaysia hasn’t been exempted.

Politicians who’ve called for street demonstrations protesting the rising prices of essential items or to demand a return of subsidies are just being opportunistic.

And it’s not because they have any real solutions to resolve the economic headaches either.

These politicians know the public is upset, even if the people are aware of the effects of the Ukraine war and supply chain disruptions.

Last week, Bank Negara Malaysia decided to increase the OPR (overnight policy rate) by another 25 basis points (bps) to 2.25%.

So, the rising interest rates will make borrowing or loan servicing more expensive, especially for businesses and households with existing loans, but it will be good news for those with savings in banks.

The increase will reportedly ease inflation and help support the weakening ringgit, not just against the US dollar but other currencies, too.

The depreciating ringgit has long been a source of frustration for Malaysians. The weak ringgit has led to the rising cost of imported goods, especially food.

We spent in excess of a whopping RM55bil on our food import bill in 2020.

“The weakening ringgit will have a strong impact on imported inflation. This would result in transfer pricing to consumers as cost of living will rise.

“There is a high risk for some under the M40 group to fall into B40 and more of the B40 sliding further,” revealed Ambank Research last week.

It’s hard to explain to ordinary Malaysians that the weak ringgit is because of the stronger dollar from the super-sized rate hikes by the US Federal Reserve, especially when most people prefer to believe what social media feeds tell them.

When times are bad, especially when the pocket is pinched, reasoning takes a back seat. Economics and business analysis don’t make the sexiest news bites.

Perhaps it’s best that only selected Cabinet ministers who understand the issues be allowed to talk to the media.

Malaysians are sick of incompetent politicians and officials who are incapable of engaging intelligently.

For God’s sake, please don’t advise the public to eat fewer eggs when that’s the cheapest source of protein for most Malaysians.

But that’s what happened when one state official from the Domestic Trade and Consumer Affairs Ministry shared her economic nous. I would suggest that our politicians and officials research how other countries have tackled inflation, with practical austerity ideas, sans being condescending or insulting our intelligence.

I salute Mydin Hypermarket boss, Datuk Ameer Ali Mydin, for uploading a video on social media on what value RM50, RM100 and RM200 can offer at his outlets.

It’s a clever marketing and advertising plan that’s executed simply and cleverly – without having to spend millions of ringgit.

If our ministers lack a proper communication strategy, the fallout will be costly because inaccurate social media messages will only generate negative traction.

Many irate Malaysians only want to know why the ringgit is sliding, even against our neighbours’ currencies.

More importantly, while we struggle, politicians are busy squabbling over who should be Deputy Prime Minister, replacing a Minister who has hopped to another party and worse, indulging in inconsequential issues which make a mockery of Malaysia.

The federal government has now found itself in a bind. The window period for a general election is gone as the predicted inflation has hit home.

If it holds on until July 15, 2023, when the term of Parliament expires, the government better hope the Ukraine War would have ended and the world’s food production has recovered.

Somehow, it doesn’t look likely, especially with most economists predicting tougher months ahead.

Without the subsidies, the biggest in Malaysia’s history, it will be impossible to retain Malaysia’s official inflation rate of 2.3%, which is among the lowest in the world.

Malaysia is one of the most subsidised nations on Earth, a fact which most Malaysians have taken for granted. Unfortunately, that’s also unsustainable in the long run.

“Without subsidies, inflation should be around 11% as opposed to 2.8%. And the subsidy is costing the government over RM71bil. The weakening ringgit will add more to the import bills,” Ambank said.

The central bank’s foreign reserves of US$109.2bil (RM483bil) as of June 15, 2022, was the lowest since early 2021, and the drop of US$3.6bil (RM16bil) from May 31, 2022, was also the largest in seven years, according to Bloomberg calculations, The Edge reported.

However, it said, economists don’t think the decline in international reserves has reached alarming levels yet as the reserves’ position is sufficient to finance 5.5 months of imports of goods and services and is 1.1 times the total short term external debt.

In a nutshell, we are holding well. We are not like Sri Lanka, but we can’t afford to allow the fall in our reserves to continue at this rate.

There are expectations that there will be further increases in lending rates, with Ambank saying “we gather that a 50bps one-off seems highly unlikely.”

“We are of the view that OPR will end at 2.5% – 2.75%, suggesting another 1-2 more rate hikes with another two hikes in 2023 to 3.00% – 3.25%,” it added.

The Edge also reported that a hike is expected in September to 2.5%.

The most effective way to increase our reserves is to simply build up our revenue. Spending is the easy part, but we need to earn more to halt the slide, too.