Light At The End Of The Tunnel
The post-GE14 has indeed shined an extraordinary light at the end of the 60-year old independence tunnel. In his first press conference as the new prime minister, Tun Dr. Mahathir had emphasised the nation’s concern over the country’s economic situation that had disappeared from the world radar. For quite some time, Malaysians had lost hope even with our prospects of remarkable resources, for we had regrettably sank in a bad fiscal and monetary policy.
Tun did not waste time in getting down to business. He first called for hard work from the rakyat and the new line-up of cabinet ministers were the first few actions taken to put Malaysia back on track again. Next, a shared vision and mission for the country shall form as part of the challenges. Members of the press also need to play their role in totally avoiding news spin. With all these in place first, we should now be able to re-evaluate the internal and external current state of affairs and henceforth, plan strategically for the future.
Internally, our currency will certainly be strengthening as it is a direct relation to the restoration of trust toward the new government. Other aspects that critically need attention are inflation, productivity, cost efficiency in government expenditure, ventures into profitable projects, reducing of government debt burden, as well as capitalising advantages and resources.
While at the international arena, we should initiate exploration for ventures with competitive advantages and technological transfer elements in particular for the case of foreign direct investments (FDI). For international trade settlement, we should also revisit the idea of using gold as a medium of international exchange. In the present technological advancement, especially the distributed ledger technology (DLT), the settlement can possibly be made via digital token. The least that we could pass through is a foreign exchange risk.
The world is indeed leading to digital economy and cashless society. Digital economy creates the level of accessibility even more favourably with its low cost and high liquidity. Development of the infrastructure toward expanding an untapped Internet of Things (IoT) shall be put on the national agenda in order to facilitate the digital marketplace.
Throughout time, the Malaysian economy has been transformed from labour intensive to technological-based. However, what concerns most is the ability to produce and facilitate the market. An equitability market share shall first be established and not only do we become customers, we should also strive to become exporters of our own products.
Next, Malaysia is known to be the champion for Islamic banking and finance products and services. The financial sector is said to be the economic lubricant. To move the economy forward, the financial sector needs first to be restructured.
History has shown us that money is manipulated to justify banking and interest. This has only been achieved by defining money as a commodity which comes at a price, that is, interest. Whereas in Islam, money is “like a mirror, which has no colour, but it reflects all colours…it is an instrument to lead to all objectives…” (Ihya’ Ulumuddin by Al-Ghazali).
Studies have shown that fiat-based money is a currency prone to inflation, an untrustworthy store of value, and it is difficult to be considered as an equitable standard of differed payment. Malaysia should start the world financial reform by concentrating on a particular country as a pilot project for trade settlement via gold-based digital token. Hence, this is a clarion call to all academia to study the possibilities and risks associated with it.
In a recent development in the industry, the government of Turkey has managed to introduce a gold-lease sukuk as a new asset class and it has gained quite a significant amount of money out of the new asset issuance. This year alone, the sukuk collected TRY1.11 billion (US$273.93 million) to the total accumulation of TRY2.43 billion (US$599.7 million). If the government is thinking of a venture or project financing, such a new type of funding deserves attention.
While borrowing is inevitable for a country’s development, it is just like a time bomb. What more if the borrowing is done for the sake of funding the country expenditures. If the country continues to fund expenditure by exploiting loaned money, it is just like being trapped in a quicksand. The more we move, the faster we will sink to the bottom.
Thus, economic focus should be emphasised on real economic sectors as income improvement to balance expenditure. The Quran captures such a spirit in the following verse: “And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate” (al-Furqan: 67). Above all, continuous support and concern from all the rakyat for the national interest will definitely be able to put Malaysia to the fore.