NAJIB’S MOMENT OF TRUTH

Prime Minister Datuk Seri Abdullah Ahmad Badawi ended months of speculation about the leadership transition by announcing that he would not be defending the Umno President’s post next March, effectively paving the way for his deputy Datuk Seri Mohd Najib Abdul Razak to become the Number One. Can the latter handle the task, considering the world is undergoing a financial crisis of epic proportions?

WHEN PRIME MINISTER DATUK SERI ABDULLAH Ahmad Badawi, on Oct 8, ended months of speculation and rumours by announcing a new retirement plan, the reaction was one of muted relief.

It was almost an anti-climax.

Abdullah told the meeting of the Barisan Nasional (BN) Supreme Council in Kuala Lumpur on that day that he would not defend the Umno president’s post, and would hasten the transition to his deputy, Datuk Seri Mohd Najib Abdul Razak.

The muted reaction was not unexpected. To be frank about the whole comedic episode, the people had grown tired of him long before the March 8 general election.

They used the general polls to send an unmistakable message that he has to go by depriving the National Front the two-thirds parliamentary majority for the second time in history, and defeating it in five peninsular states and the Federal Territory of Kuala Lumpur.

Even members of his own party, Umno, either boycotted the polls, sided with the enemies or cast spoilt votes in protest. Unfortunately, instead of being humbled by the experience, Abdullah was defiant and scoffed at any suggestion that he should consider an early retirement.

Using the state- and party-controlled media, Abdullah and his propaganda handlers went on the offensive, claiming that he had won big and accusing party members of betrayal.

Abdullah’s fate and, to a lesser degree, the fate of Umno and the BN parties, were sealed when Abdullah and his cabal of political, corporate and media operators used their might to buy loyalty and shut out the opponents.

Until senior Umno Vice-President Tan Sri Muhyiddin Yassin came out openly to criticise him and called for a speedier power transfer, the reaction from the Umno Supreme Council’s members was muted and hypocritical.

While pledging support for him at meetings of the council and the Cabinet, they bad-mouthed him behind his back. In the meantime, the affairs of the state appeared to be taking a backseat.

It was only in recent weeks, thanks to the global financial crisis, that Umno and the Cabinet gained enough courage to tell Abdullah that he ought to do something about the economy.

The clearest signal that Abdullah’s days were numbered came on Sept 17 when he swapped jobs with Mohd Najib – giving the latter the Finance post and taking over from him the Defence portfolio.

Reviving Umno and the economy

ABDULLAH’s March departure could pave the way for the rehabilitation of Umno, the BN, and, most of all, the sagging economy.

With him not defending his party post, the chances of Mohd Najib ascending to the top post

look bright. The only likely challenger is former vice-president and ex-Finance Minister Tengku

Razaleigh Hamzah.

The next few days will determine whether a fight will ensue between the mentor and the protégé.

The 191 Umno divisions will start nominating candidates for the March Supreme Council election from Oct 9.

Tengku Razaleigh was Mohd Najib’s political and corporate mentor back in the mid-1970s. Najib served under the Gua Musang Member of Parliament in Petronas where Tengku Razaleigh was chairman.

Tengku Razaleigh, in turn, was a trusted operator in the late Tun Abdul Razak Hussin’s cabinet and Umno. He was elected the youngest Umno vice president and was assigned the task of establishing Bank Bumiputra, Pernas and later Petronas.

The number two post is almost certain to go to Muhyiddin, who is seen as representing the voice of the ordinary party members and the person credited with hastening Abdullah’s departure.

The threat of a challenge by the novice Minister in the Prime Minister’s Department Datuk Ahmad Zahid Hamidi has fizzled out. He withdrew his candidacy.

But a new challenger has emerged in the person of former disgraced Selangor Menteri Besar and Abdullah loyalist Tan Sri Muhammad Muhammad Taib.

Another likely challenger is Melaka Chief Minister Datuk Mohd Ali Rustam.

Abdullah’s resignation alone is not enough to calm angry party members. They are likely to demand for the removal of those Supreme Council members who are seen as blindly loyal to Abdullah or are self-serving.

Mohd Najib needs Umno more than ever. He cannot afford to repeat Abdullah’s mistake of sidelining party machinery in favour of private operatives and friends, collectively known as the

Budak-Budak Tingkat Empat (4th Floor Boys).

A moot point that Mohd Najib may want to consider and make a lesson of is how rapidly Abdullah’s ‘Mr Nice’ and ‘Mr Clean’ image and his massive 2004 mandate turned into dust, thanks to his alien advisers, influence peddlers, handlers and spin-doctors.

Harsh as it may sound, Mohd Najib has to be reminded that he owes his job to the voters and

taxpayers. They voted for him. They did not elect his spouse, household friends, business associates and soothsayers (if any).

In a world driven as much by perception as it is by reality, the tragic end to Abdullah’s administration was hastened by the company he keeps – from his family members to old buddies, corporate hangerson and political has-beens.

To revive Umno and the economy, he has to consider the past, the present and the future. He has to revert to history and the struggle of the party and mine the experience of party veterans.

He has to go beyond rhetoric in engaging the grass root and attracting those in the 20-to-40 age bracket.

Just how prepared is Mohd Najib?

THE million-dollar question is: Does our government fully understand the ramifications of the

ongoing crisis and is it prepared to shield the economy from the full and devastating effects of this global economic meltdown?

The answer, for now, rests with Mohd Najib as Finance Minister and anointed successor to the

Prime Minister’s post.

His first reaction upon the announcement of Abdullah’s retirement plan was to assure the public that the country’s economy is stable despite the financial crisis being faced by the global community.

For the general public, the assurance means nothing if prices of goods and services continue to rise, jobs are hard to come by and the promise of a clean and efficient government remains

unfulfilled.

Convincing the business community is even harder when demand for goods and services is falling, trade debtors are rising and return on investment is shrinking.

Sooner or later, the government has to address non-performing loans of the banking system and the ability of businesses to obtain and service loans visà- vis the depressed Bursa Malaysia.

I wish I were totally out of turn and unequivocally wrong in questioning the preparedness of our

government in facing the widening global economic and financial crisis.

For the record, we have been repeatedly assured that our economy is doing well and the banking system is solid.

But those doing business and dependent on the banking system and the capital market are saying otherwise. Their coffers are shrinking. So are the ordinary consumers’.

Production costs have been on the rise since the big jump in domestic fuel prices in 2006 and a further crippling rise last June. The fractional lowering of prices since then has not helped to reduce consumer prices.

Sales have either fallen or stagnated. Just take a look at the prevalence of ‘for sale’, ‘for rent’ and ‘closing down sales’ advertisements and posters in the big cities.

The ‘for sale’ and ‘for rent’ signs are an indication of the declining economy and the unproductive nature of some economic sectors, in particular, construction and property.

Whereas the crude economic growth would have taken into account the tens of thousands of houses and business premises that come on stream annually, the worrying fact is that these properties are not being sold or occupied. Thus, in real terms, they are not generating additional wealth for the economy.

They, in fact, constitute a misappropriation of economic resources. Yet, the government

continues to encourage and approve new real estate projects.

There will come a time when the banking system must face the reckoning that the assets pledged to it are not generating income, and sooner or later, the bubble will burst or at the very least deflate.

As the experience of the 1997/98 crisis has shown, the deflation of the economy and the NPL crunch started largely with the property market.

Remember the collapse of Sime Bank and the formation of Danamodal to recapitalise the banks and Danaharta to bail out the property companies?

Unfortunately, with so much lobbying and corrupt practices in the construction and real estate sector, hard economic facts, good banking practices and good governance are taking a backseat.

Mohd Najib would do well to broaden his economic and financial information and intelligence base to include people who have had the experience of managing past crises.

Winds of change …. for the better?

CAPITALISM and free enterprise, as the current American experience shows, are neither fail-safe nor sacred. America’s commitment to it is not unbridled after all.

The sub-prime lending crisis that is threatening to undo the US banking system and the financial markets has forced the government to effectively abandon market capitalism and free enterprise, albeit temporarily.

In one fell swoop, the Bush Administration, known for its purveying of globalisation and foreign wars, launched the biggest bailout in the history of modern economy.

After weeks of haggling, the Senate and the House of Representatives have more or less agreed to give the President the power to dish out US$ 700 billion to save the banking and financial systems, and to stop the systemic effects of the ongoing crisis.

The superpower that a decade ago condemned East Asian countries for bailing out businesses amidst the 1997/98 regional financial crisis has grudgingly acknowledged that the unbridled pursuit of free market capitalism is as dangerous as the rejection of it.

The systemic effects of the US crisis have already spread to Europe, forcing European governments to step in with a flurry of major bank bailouts from Iceland to Germany.

Despite the bailout and the Federal Reserve Board’s interference with the short-term debt

markets, Wall Street and the global stock markets remain unconvinced.

On Oct 7, for instance, the Dow lost more than 500 points and all the major indices slid more than 5%.

The Standard & Poor’s 500 index saw its first close below 1,000 points in five years.

On Oct 9, the Dow Jones industrial average fell 679 points or more than 7% to its lowest level in five years. Stocks took a nosedive after a major creditrating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting about the impact of tight credit on the economy.

Tracking Wall Street, Bursa Malaysia has fallen by 34 points since the collapse of Lehman Brothers on Sept 16 to 997.23 points on Oct 7.

The market value of stocks on Bursa has decreased by a whopping RM601.4 billion from RM1,057.33 billion at the beginning of the year to RM755 billion on Oct 7.

At these levels, many mutual and pension funds, which are key players in Bursa Malaysia, will face difficulty in guaranteeing sufficiently good returns to their investors.

Even the Fed Chairman, Ben Bernanke, is not upbeat about the prospects on an early recovery

despite the massive bailout and his own interference in the debt markets.

He warned in a speech on Oct 8 that the financial crisis could prolong the difficulty the economy was facing.

So, is Mohd Najib ready for this tough job and do we have a choice? As the legendry Bob Dylan put it, ‘The answer my friend is blowing in the wind’. Let’s hope that it’s not an ill wind.

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