In a world where bizarre crowdfunding campaigns have become all the rage, with good samaritans even venturing to raise $30,000 so that a cash-strapped Kim Jong-Un can stay in his Trump Summit hotel…
… a politically turbulent Malaysia, whose currency and stock market recently plunged, then spiked after a shock political outcome in last month’s election, likened by many to Trump’s unexpected presidential victory, has decided to take crowdfunding to the next level, and as the BBC reports, last Wednesday the local finance ministry resorted to an unorthodox way of raising money to pay off their country’s debt: beginning online.
Perhaps because they felt in a “historically” generous mood after the first change in government in over 60 years, Malaysians gave nearly $2 million in the 24 hours after authorities announced a fund would be set up to raise cash.
Sadly, the amount raised was far too little to make even the tiniest dent on the country’s massive, multi-billion-dollar debt pile, which probably means that just like the 1MDB scandal, the money will be promptly pilfered by one or more corrupt government officials, never to be seen again; however, the fundraising process did spark a social media debate about whether other countries should follow.
The government initiative came after a 27-year-old Malaysian, who is “very much in love and proud” of her country, set up private fundraising effort that attracted interest.
“The rakyat (people) voluntarily want to share their earnings with the government to help ease the burden,” said Finance Minister Lim Guan Eng, as he announced the fund to provide a “systematic and transparent” platform for contribution. He gave bank details where Malaysians can deposit their donations.
Surprisingly, the fund promptly raised 7 million Malaysian ringgit ($1.8MM) in just the first day of its existence, a spokesperson at the finance ministry told the BBC, but was not able to give the overall amount to date.
To be sure, it wasn’t quite clear where this selfless altruism comes from, especially considering that we live in a world in which investors will line up around the block to buy Malaysia’s debt (the 10Y closed Friday at 4.195%) in exchange for a modest yield; The move was reminiscent of the late 1990s when South Koreans queued to donate wedding rings and other valuables to help their struggling economy amid Asia’s financial crisis (we doubt they will donate their bitcoin to pay down the country’s record consumer debt).
Perhaps the impetus to pay down the national debt finds its basis in some peculiar form of patriotic transferrence; recently Malaysia’s new government, led by Prime Minister Mahathir Mohamad, who achieved a shock victory last month, said it was committed to tackling the country’s debt burden. Alternatively, Mahathir could simply track down where his corrupt predecessor, Najib Razak, parked the billions in embezzled funds from 1MBD and use that to pay down the country’s debt.
Even that, however, won’t do much in the grand scheme of things: the government said its current debt and liabilities stand at more than 1tr Malaysian ringgit ($251 billion), roughly 80% of GDP. Analysts also said the move was unlikely to have any impact: “It’s very unlikely given the scale of debt we are looking at in Malaysia,” said Krystal Tan, Asian economist at Capital Economics. “There is a very long way to go.”
Amusingly, several US Twitter users were quick to draw parallels, with America’s own soaring debt pile
“With the US deficit ballooning, I wonder how long before we try this.” commented one person.
With the US deficit ballooning, I wonder how long before we try this….
— maquis2015 (@maquisprice) May 30, 2018
Well, actually it’s been tried for a long time: the US Treasury has for years had a website allowing the public to make generous, or not so generous, contributions to reduce the public debt.
The difference is that Americans know better, and that any debt repaid will promptly disappear into some politician’s pork bill.
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