Malaysia's debt at alarming level of S$337 billion, says Dr Mahathir

PUTRAJAYA ― Malaysia's debt has reached an alarming RM1 trillion (S$337 billion), said Malaysian Prime Minister Tun Dr Mahathir Mohamad on Monday (May 21), as he pledged to restore the nation to its former glory.

Blaming the previous government led by former protégé Datuk Seri Najib Razak, who now faces domestic graft investigations, Dr Mahathir said important measures must be taken for the South-east Asian country to quickly recover from the situation, pointing out Malaysia had debts of about RM300 billion only when he was previously prime minister for 22 years.

"We find that the country’s finances for example, was abused in a way that now we are facing trouble settling debts that have risen to a trillion ringgit," he said in his maiden address to civil servants of the Prime Minister's Department.

"We have never had to deal with this before. Before we never faced debts higher than RM300 billion, but now it has climbed to RM1 trillion."

Dr Mahathir, 92, was Malaysia's prime minister from 1981 and 2003. He came out of retirement and joined hands with the then Pakatan Harapan (PH) opposition pact to oust Mr Najib, whom he accused of corruption.

At the momentous May 9 general election, PH defeated the Barisan Nasional (BN) coalition that has ruled the nation for six decades since independence from Britain.

Dr Mahathir was sworn in as the country's seventh prime minister the next day.

In his first week in charge, Dr Mahathir announced that a broad-based goods and services tax (GST) would be zero-rated from June 1, as his government works to replace it with a reinstated sales and services tax (SST).

Besides doing away with GST, Dr Mahathir had also promised to reintroduce fuel subsidies — all part of his coalition’s pledge to tamp down rising living costs.

Dr Mahathir’s fiscal measures, however, would widen Malaysia’s fiscal deficit and are credit negative without any offsetting measures, according to ratings agency Moody’s.

Datuk Seri Najib’s government had planned to collect RM43.8 billion in 2018 in GST, about 18 per cent of total revenue.

During the election campaign, Datuk Seri Najib had warned that Dr Mahathir’s economic proposals would result in debt ballooning to over 1 trillion ringgit.

Datuk Seri Najib also rebutted opposition claims that federal debt had risen to alarming levels under his governance, and said that debt amounted to about 50.9 per cent of its GDP at June 2017, which was below the government’s limit of 55 per cent.

Dr Mahathir said last week that many of the figures recording the country’s financial position may be false.

The new prime minister on Monday also lamented the decline in respect for the country, which was "once looked up upon as among the best in Commonwealth countries".

"Our country was well-respected previously, but now it is not the same as in the past. We must restore the country to ensure that it will be looked highly upon and respected once again," he said.

He also said it was imperative to keep the country’s institutions independent and separate.

“The separation of powers among us must be maintained, as only through this way we can make sure there is not embezzlement in the country’s administration. We have to separate the lawmakers, the enforcers of the law, and the judiciary,” he said.

Allowing the three pillars of government to intermingle would erode their accountability and allow one to dominate the others to the point that they could no longer check each other, he said.

Co-mingling of powers could even facilitate actions that were against the laws, as those entrusted to enforce these would be complicit with those breaking them, he added.

Critics had previously accused Mr Najib of concentrating power in the hands of the executive that he controlled, neutering the powers of the legislature and judiciary to act as watchdogs to his administration.

Dr Mahathir said many changes needed to be made, but he was heartened that it could be done with the help of civil servants.

"We are confident that we can overcome the challenges but we need civil servants who are efficient and trustworthy to achieve these changes.

"As administrators, one must put the rule of law above all else and those tasked to carry out their duties must help to clean things up so that Malaysia can be on the road of recovery. All of us must work together to achieve this".

He said that possible changes were being thoroughly studied, but it was too soon to disclose what they were.

He wanted undivided support of the civil servants to get Malaysia back on the right track of economic recovery.

"It won't take too long for the country to recover and be respected once again, if all of us work together," he added. AGENCIES