Shahid Bolsen on the Heart of a Healthy Economy

I am very surprised by the excessive reaction to my comments on the Anwar Ibrahim government, and what I perceive as a lack of vision or planning. I did not expect my comments to generate so much of a response. While the overwhelming reaction was one of agreement, I had a few people saying, as is expected, “you criticize without offering any suggestions”. Well, of course, criticism is free, and advice comes with a fee. That is a professional service. But ok, let’s talk about it anyway.

Obviously, in many of my videos, I HAVE offered suggestions. Not only for Malaysia, but Indonesia, the UAE, Saudi Arabia, and other Muslim countries, as well as other countries across the global south. Given the format, these are only going to be general recommendations, of course, just, again, brainstorming.

As I have said repeatedly on my channel, my personal priority is for Muslim-majority countries, and the countries in the global south generally, to secure their economic sovereignty and political independence; and particularly at this pivotal moment in history when the global order is going through a major transition. The Post WWII world order is being dismantled, and there are enormous opportunities for all the countries that were the victims of so-called globalisation, or western corporate imperialism, to break free from economic exploitation and political subjugation. That is why so many of my videos have focused on the destabilisation of Europe, and how the owners and controllers of global financialized capital are pivoting away from the old economic model that prioritized maintaining Western prosperity. Because that era is ending, and a new one is beginning; and the countries of the global south, and the Muslim world, have to recalibrate their whole approach to the world, especially in terms of their economies.

So, let’s look at the issue of the devaluation of the Malaysian Ringgit; and this is just an example, it could be applied to most instances of currency devaluation in a developing economy. OK. Whether you think that the cause of devaluation is that Malaysia has maintained an interest rate that is too low, or whether you think it is because global oil prices have declined over the past 6 months, or whether you think it is because everyone is bracing for rate hikes from the US Federal Reserve; the underlying structural issue that gives any and all of those plausible factors any weight; is Malaysia’s uneven integration into the global economic system, and more specifically, its connection to Western economies and dollar-dependence. This leaves Malaysia — or any other similarly positioned country — vulnerable to external shocks. And the only way they are allowed (in this position) to cushion themselves, or remedy those shocks, is to make their economic management conform with the needs of Western economies. It’s like if you are squeezed in to a seat on an airplane next to some giant passenger; every time he shifts his position, you have to shift yours. Your position is dictated entirely by his position. OK, that is not economic sovereignty.

So, your real problem is not this or that external shock that happens as a result of Western economies shifting their positions, your problem is that you are exposed to those shocks, you are vulnerable to those shocks. And THAT is the problem you have to solve. And that means de-coupling as much as possible from domineering Western economies, growing your domestic economy, and building stronger and more active trading partnerships with regional economies as well as with smaller economies outside your region.

The most viable approach to effectively combatting both inflation and currency devaluation is to foster the growth of a larger domestic market while reducing dependence on imports and relying less on raw commodity exports.

Now, for a country like Malaysia, easily the most crucial area in which decoupling should be prioritized is food. Malaysia is far too reliant on food imports. This creates perhaps the most dangerous type of uneven integration with the global economic system, and it makes Malaysia incredibly vulnerable.

Any economic plan to combat the devaluation of the Ringgit, as well as inflation, should begin with agriculture and food production. The government’s first priority should be the expansion of the domestic food market through fully localized supply chains, this would generate a ripple effect that would enhance and diversify other sectors of the domestic economy, even including high technologies. So, step one: promote domestic production; give incentives to farmers, including small farmers, ranchers and so on; and to local agribusinesses. Diversify crops, increase fertilizer production, improve farming, transport, and logistical infrastructure; increase research and development in agriculture to increase productivity and efficiency, and so on. And, of course, promote domestic consumption of locally produced food (and other goods), to reduce the dependence on, and eventually, the presence of imported products, including food products.

Food security is at the heart of a healthy, independent economy, and a stable currency, because you are insulating yourself from the impact of external shocks.

And there needs to be a different mindset regarding FDI, too, for instance. For too long, we have accepted as truisms the neoliberalist perspective about trade and investment and having a so-called “open economy”. Everybody wanted to reach the coveted top positions in the World Bank’s “ease of doing business” index. The easier it was for foreign investors and multinational corporations to enter your market, the better. The one who gets the most FDI wins. But FDI is not an absolute good. FDI can be either good or bad, depending on the terms and conditions applied to it, and depending on whether or not that investment helps to develop domestic industries or overtake them. The Neoliberal system tends towards enabling Western economies to exploit weaker economies and to undermine the economic sovereignty of countries in the global south; and a great deal of this is accomplished through FDI. We have learned to console ourselves with the argument that exploitation does still create jobs; even if those jobs mean embedding our countries and our workforces within the value chains of foreign companies. As if multinationals are doing us a favour by using our workers to boost their profits. That mindset has to change. We cannot base our economic growth and stability on being cogs in the wheels of foreign profiteering machines. Foreign investment must boost domestic business, domestic skills, domestic technology, domestic industry, and so on. It must make our industry more competitive, not take us out of the competition.

In a lot of ways, I think Malaysia has done quite well in this regard. In semiconductors, for instance. Malaysia is not exclusively a factory for Intel or Texas Instruments, but has created its own vibrant companies in this sector. So, even though a good deal of Malaysia’s export of integrated circuits are still actually just transfers of goods internal to Western companies, a growing proportion are legitimately Malaysian products for Malaysian profits. This can be further supported, and replicated potentially in other industries. They have done very well with the automotive industry as well, in my opinion. Most of the top 10 most popular cars in Malaysia are Malaysian-made. Wallahi, Malaysia has so much going for it, it can definitely become a economic regional superpower and manufacturing hub; no question about it. And it CAN secure economic sovereignty and independence. There just has to be a confident and clear vision for that.

And again, now is the time to do this. Now is the time for that kind of shift in how Malaysia, Indonesia, and all the countries of the global south and the Muslim world, deal with the west. Because the owners and controllers of global financialized capital are pivoting to the global south. In part precisely BECAUSE Neoliberal globalization has facilitated the transcendence of corporate power and created an obscenely wealthy financial elite who are no longer connected to particular nations, and have no vested interest in maintaining the prosperity of any particular nation; because they are a nation unto themselves; they are less interested in making sure that profits exclusively flow westwards. The consumer pools and workforces of Europe are depleting, but they remain robust in the global south, particularly Asia; so our countries are in a position now to be more confident and demanding in setting conditions for investment, and focusing on self-centred economic and industrial development. But, of course, if we fail to set such terms, western multinationals and investors will still be happy to exploit us.

We have to develop an approach whereby we can treat our labour as a raw commodity; the same as coal, or nickel, or rubber, or palm oil. And the same way that, for instance, Jokowi banned the export of raw nickel from Indonesia to force investment in and development of Indonesia’s own refining capabilities; so that they could produce and sell higher end products made with their raw materials, rather than others using their raw materials to make profits for themselves; we have to figure out a way to do that with our labour. In other words, if you want to use our labour to make higher end products downstream, no, instead you have to help US make those products here, not components of those products, not assembly of those products, not packaging of those products; but the products themselves.

Look, the developed economies developed by doing all the things they are telling us not to do. They were self-centred, they were isolationist, they imposed import restrictions, they had capital controls, and so on — and that is how they became advanced economies. Now they are saying all of those things are impediments to the free market, that they are unfair to trade, that they interfere with an even playing field and so on. But they only talk about an even playing field to distract you from the fact that the players on that field are not even. Absolutely, a country should be biased in favour of its own companies, its own workers, its own industry, its own businesses. When our straw-weight companies become super heavyweights like yours, we can talk about an even playing field.

So, yes, the first step really, to becoming a heavyweight is food security, food independence. And treating your workforce as a precious raw material that will no longer be sold to produce downstream profits for foreign multinationals, but can only be utilized in conjunction with the development of domestic industry.

It’s not the 90s anymore. It’s not the early 2000s. We don’t have to just kowtow to rich western nations, and get happy because they are generous enough to let us have our own McDonalds or Starbucks in our countries. We don’t have to feel that the presence of Western goods in our markets means our economies are prospering. Our economies are prospering when our markets are dominated by our own goods, produced by our own companies, and when our economies are insulated from external shocks. Integration into Western economies is no longer the criteria for success — I mean, have you LOOKED at their economies lately? The most powerful economy in Europe — Germany — is grinding to a halt. Most people in the United States can barely pay their bills, and everyone is drowning in debt. Who are they to integrate with? Their economies carry a contagion at this point. And the devaluation of the Ringgit is a symptom of that contagion. Decoupling and de-dollarization have to be the cornerstones of economic policy for not only Malaysia, but for countries throughout the global south, and the time is ripe for pursuing this.