Pakatan Harapan’s future may hinge on Mahathir’s Japan trip

Dr Mahathir Mohamad requested Japanese premier Shinzo Abe to extend Malaysia a ¥1 trillion loan.

The request was communicated by Mahathir himself to Abe during the former’s working visit to Japan in June.

Should Abe deny the loan, Daim will force the local banking scene to consolidate debts incurred by Felda settlers and contractors whose projects were cancelled by the Government of Malaysia (GoM).

He will then introduce a series of rationalisation schemes that will afford him control of certain banking institutions by proxy.

THE THIRD FORCE

There is an air of desperation creeping into the Pakatan Harapan administration.

It’s lord and master, Dr Mahathir Mohamad, is out on a limb hoping that Japan will extend to Malaysia one trillion in yen credit before the end of this fiscal year. A request for that credit was communicated by Mahathir himself to Japanese premier Shinzo Abe during the former’s working visit to Japan a month after his swearing in as Malaysia’s seventh premier. Should Abe refuse the loan, our palm oil industry will suffer a blow so hard that it will weaken Pakatan Harapan’s grip on the Felda vote for good.

Wait. Did you say one trillion yen?

Yes, but there’s no cause for alarm here.

One Malaysian Ringgit, or RM1, is worth ¥27.31 by today’s exchange rate. Do the math, and you will see that ¥1 trillion is worth only RM36,662,599,594.87, which, on a cross-border trade scale, appears moderate when compared to the value of a blanket agreement Daim Zainuddin was supposed to have sealed off with China’s State Council.

What sort of agreement?

Well, on the 18th of July 2018, Daim was scheduled to meet Chinese Foreign Minister Wang Yi to discuss the creation and expansion of infrastructure and energy related projects in Malaysia, said to be worth some RM200 billion or so. But the discussion never took off. Moments before the scheduled meeting, the MACC was instructed by its head, Dato’ Seri Mohd Shukri Abdull, to conduct two raids on offices linked to a Chinese state-owned firm that the DAP’s Tony Pua informed Shukri was linked to 1MDB.

So Pua’s info wasn’t accurate?

Of course not. But the damage was done.

The raids infuriated Wang to such a degree that he warned Daim “never to cross the diplomatic line” ever again. Despite the good words he eventually spared Mahathir during his recent stopover at Putrajaya, Wang triggered a ‘temporary’ ban on the signing of new deals with Malaysia and convinced Chinese premier Li Keqiang to cut down drastically on China’s purchase of Malaysian palm oil. The move is set to impact close to a million Felda settlers nationwide who, prior to the 14th general election (GE14), were told by Mahathir to reject Najib at all cost.

Why? Did Najib not do well for the palm oil industry?

You kidding me?

Just five years into his administration, in 2014 alone, Malaysia exported 2.13 million tonnes of bleached and deodorised red (RBD) palm olein and 0.48 million tonnes of RBD palm stearin to China. These products accounted for 92% of the total exports of palm oil products to China and generated over RM 9 billion in revenue for the country. Four years later, on the 2nd of February 2018, Chinese Ambassador to Malaysia Bai Tian went on record to state that China would set no limits on imports of palm oil and palm oil based products from Malaysia.

Did Bai Tian keep his promise?

Well, technically, he did.

Although, one must remember that his promise was made to Najib, not Mahathir. The minute Mahathir took over government, relations between Malaysia and China went straight down from being “outstandingly spectacular” to pot. No thanks to him, China is doing the exact opposite of what Bai Tian promised and has absolutely no regard for the Malaysian administration. The Third Force is made to understand that the Chinese government may consider foregoing Malaysia altogether and depend solely upon Indonesia to fulfil its palm olein needs.

Is Palm Oil the only commodity affected?

No.

The Third Force is also made to understand that the Chinese government brought to a standstill the import of durians and bird nests from Malaysia. A quick check revealed that the freeze badly affected thousands upon thousands of durian planters and nest farmers who are already facing problems servicing their loans. It is only a matter of time before these farmers and planters are served bankruptcy notices unless the Government of Malaysia (GoM) steps in to rationalise their debts.

Will the government ever do that?

Well, it depends a lot on Abe’s willingness to extend Malaysia the ¥1 trillion loan.

A rationalisation exercise on a national scale would involve Felda settlers and even contractors whose projects were deliberately cancelled by the GoM. These groups are likely to incur the GoM hundreds upon billions of ringgit if at all the mission is to prevent them from going bankrupt. But the GoM itself will be forced to hoard a lot of those billions should Abe deny Malaysia the loan.

Under the circumstances, the local banking scene would be forced to consolidate those debts through rationalisation schemes that Daim has already contrived. Should history serve us well, some of those schemes will involve the consolidation of certain financial institutions that Daim will not hesitate to control using proxy and nominee companies.

And the Malaysian economy?

That was never on the books.

Mahathir is 93 going 94. He really doesn’t give a damn how badly the economy suffers as his biological clock could soon tick its last tock. What concerns him most is the opportunity for him to feather a nest for his kids before the time comes for him to meet his creator. Daim’s visit to China was supposed to present him that opportunity but ended on a very tangy note. With the opportunity gone bust, Mahathir now realises that the Prime Minister of Japan may be his only hope to sign billion dollar deals his kids could ‘administer’ upon his death.

So the country is finally going to the dogs?

We’re right about there, yes.

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