Bank Negara Malaysia (BNM) issued a statement yesterday saying the introduction of the GST will remove trade mispricing issues widely blamed for Malaysia RM174 billion illicit capital outflow in 2011.
This is the most irresponsible and misleading statement by BNM not only to justify the implementation of the GST but also to confuse and mislead ordinary Malaysians that GST will miraculously solve the country’s illicit capital outflow.
Putrajaya cannot hide behind the “trade mispricing issue” and continue to ridicule and belittle the GFI report that Malaysia has lost RM174 billion of illicit capital outflow in 2011.
If Putrajaya wants to attribute the “trade mispricing issue” to Malaysia’s high trading volume, then the relevant questions Putrajaya must answer is, “Why is it that the United States which has a trade export of 6.5 times higher than Malaysia does not have “trade mispricing issues”?
Countries like United States, Germany, Japan, France, South Korea and Netherlands all have higher trade volume than Malaysia but none of them have “trade mispricing issues”.
If Putrajaya wants to blame the inclusion of re-export data by Singapore for overstating the trade mispricing, then GFI chief economist Dev Kar explanation could shed some light on the matter. The GFI report has considered the Hong Kong re-export data but did not take into account the re-export data by Singapore.
According to Dev Kar, “Because such a detailed breakdown of re-exports data are not published by Singapore, a similar adjustment of Malaysian exports and imports involving Singapore could not be made.”
“However, please note that the adjustment involving Singapore would be far smaller (due to the fact that Hong Kong eclipses Singapore as a trade entrepot, i.e., the volume of re-exports) and are unlikely to impact the misinvoicing estimates significantly.”
Obviously, Putrajaya is confused by the “trade volume between Malaysia and Singapore” and the “re-export of Malaysian exports to Singapore by Singapore”. The trade volume between Malaysia and Singapore are determined by the goods exported to Singapore and to be consumed in Singapore. The re-export by Singapore are Malaysian good exported to Singapore and re-exported to other countries by Singapore.
The “trade volume between Malaysia and Singapore” might be huge due to Singapore being one of Malaysia’s biggest trade partner but the “Singapore re-export volume” would be far smaller due to the fact Singapore is not a huge trade entrepot as compare to Hong Kong.
Nevertheless, the high trade volume between Malaysia and Singapore should not be an excuse for trade mispricing since Malaysia is only ranked 22nd in the list of the world’s largest countries by exports.
It has been five days since GFI released the annual report and the deafening silence from Najib Tun Razak will not help in solving Malaysia illicit capital outflow problem. Najib should come out openly and address this issue immediately as the Finance Minister.
Najib must also stop using Bank Negara Malaysia as a political tool to mislead and confuse the people.
Media Statement by Chong Zhemin, DAP Perak Economic Development Bureau Chief and Political Secretary to Taiping MP on 17th Dec 2013