KUALA LUMPUR (Sept 28): Although the government’s calculation of the national debt is not in line with universal practice, it is important to take note of the size of its liabilities and adopt a more disciplined approach to the use of government guarantees.
This is vital to protect the economic future of the country, says economist Prof KS Jomo.
“We need to be much, much stricter about the liabilities that the government gets into,” said Jomo at a talk on “The Way Forward for Malaysia” on Wednesday night.
Not many were aware that such liabilities were not subject to public scrutiny, he said.
“Government guaranteed liabilities do not even go to Parliament,” said Jomo.
What is published in the government’s Economic Report is only the aggregated figures of the public sector debt, he said.
“It is a mistake to describe everything as government debt, as there is a very narrow definition of what it constitutes, which is universally accepted for better or worse, and it is better to speak with that nomenclature,” he said, in reference to the new government’s inclusion of government guarantees in the calculation of the RM1 trillion national debt.
“However, it is important to recognise that there are huge liabilities for which the government is now responsible. Those liabilities need to be explained,” said Jomo.
“It is incumbent on all politicians on all sides, in Parliament and elsewhere, to help the people to understand what has gone on,” he said.
Jomo was responding to a comment by Rembau MP Khairy Jamaluddin, who was the other guest speaker at the event, that it was wrong to count contingent liabilities that were not being serviced by the government as part of the national debt.
The event was organised by the Universities of Oxford and Cambridge Alumni Network of Malaysia.
“To make a clean break with the past, I would urge Khairy and other like-minded politicians to make a critical study of what has gone wrong in order to move forward,” said Jomo.
Khairy, in his comments, said that the government needs to look beyond the issue of the government debt and focus on new engines of growth.
“Both the government and the opposition have to look at economic issues together in the coming years to chalk out the path for the country’s future growth,” he said.
Khairy said the previous government had started an initiative to look at demographic changes like the ageing population and the impacts of technological advances which could be useful for the current administration to build upon.
On the issue of change in Umno, he said that the idea that the message from voters in the 14th general election is lost on the party is a mistaken one.
In the Umno election in June, Khairy said, members who voted for reform-minded candidates for the presidency, which he contested, greatly outnumbered those for the winner, Datuk Seri Ahmad Zahid Hamidi.
Khairy said that Ahmad Zahid secured about 37,000 votes, against 52,000 for the two candidates who stood on the reformist platform. Khairy took 32,000 votes and Tengku Razaleigh Hamzah 20,000 in the contest to lead Umno.
“That tells you that the ground was ready for change,” said Khairy.
“It is easy to look at Umno as a fossilised party that hasn’t changed, but I think the members, the rank-and-file are ready for that change. I think that will take place in 2021,” he said.