White Paper needed to explain falling reserves

ramon-bank negara2Bank Negara’s announcement last Thursday that our foreign reserves fell dramatically by RM36 billion in 2014 is worrying. It calls for a full explanation in a White Paper.

Malaysians need a full explanation as to why the decline is happening and what will be done to arrest this serious problem. We need to be assured that the authorities have plans to overcome this declining trend in our national reserves and the related economic weaknesses.

Ramon Navaratnam made this commentary which appears this morning in Free Malaysia Today. Ramon says:

One major implication of this severe decline is the pressure on the weakening ringgit. If the decline continues, our inflation rate could worsen. The prices of goods and services could rise significantly and cause much hardship to low-income earners. The rural poor and the urban poor, particularly the latter, will be badly hit.

This kind of economic regress is not new. But in our earlier experiences of bad times, the public was widely consulted, with the government explaining its plans for buttressing the economy and cushioning the rakyat against hardship.

Admittedly, other economies are also facing poor prospects in the socio economic outlook. Nevertheless, many countries are already bracing themselves to meet the critical challenges ahead. Hence Malaysians are now seeking answers to many questions. How bad is the economic outlook for our country? How will we fare? Does the budget need to be reviewed and refined in the light of these new unfavourable developments?

Is this massive capital outflow the result of decreasing confidence in our capacity to manage the economy, particularly with the loss in oil revenue? Is foreign confidence and investment also softening due to continuing corruption, the brain drain, wastage in public expenditure, and growing racial and religious extremism?

Some theories suggest that economic growth gets restricted and income distribution becomes uneven when bad governance persists. Wealth is then unjustly accumulated by elitist and powerful groups at the expense of the poor and underprivileged.

The question is whether there is such a trend in Malaysia. If so, we have to quickly abandon poor polices and bad practices before it’s too late. We must nip the rot in the bud. Otherwise, as has happened before in many countries, social dissatisfaction and frustration will grow and can even get out of control. We must prevent such unrest at all costs.

Hence the need for moderation in all aspects of our national development. This need is paramount. But are we doing enough in the practice and promotion of real moderation, or are we paying only lip service?

All these serious concerns and public questioning are reinforced by worries that the people in power lack the political will to firmly address these vital issues and to take the bull by the horns.

I would therefore appeal to the authorities to address these public concerns by presenting a strategy to counter the adverse economic developments. This will give some assurance to the rakyat that the government is fully aware of the challenges that Malaysia is facing and has a sound strategy and specific package of solid measures to get on top of the threats facing us all.

It would indeed be useful for the government to present a White Paper in Parliament that assesses the changing socio-economic situation and provides solutions that would increase our sagging national confidence.

Tan Sri Ramon Navaratnam is the Chairman of the ASLI Centre of Public Policy.

Source:  http://www.freemalaysiatoday.com/category/opinion/2015/01/12/white-paper-needed-to-explain-falling-reserves/