2008 has been deemed by many to be a woeful year. Yet I see it differently. I see it as a year where excesses is finally curtailed; where the arrogant is humbled; and where great despair is slowly replaced by small glimmers of hope for better days ahead.
Global financial markets suffered huge volatility and trillions of market capitalisation were wiped out. Giant financial institutions once thought to be too big to fall, fell. We are all Keynesians now – as governments are now looked upon as the only saviours able to save their countries’ economies from further collapse. Massive government stimulus; re-regulation and ultra loose monetary policies are now the flavour of the day. The free market ideologies of the Chicago School are being quietly discarded as its disciples presided over the worst financial turmoil and scandals, brought about by their over-zealous beliefs that markets are self-regulating.
Politics-wise, well, some bad, some good. Zimbabwe is still ruled by a President who is perversely spending his energies in a desperate bid to cling to power, by instituting brutal oppression of any opposition. Meanwhile, epidemics, runaway inflation and hunger ravaged the country. The Middle East could not see a ceasefire last beyond 2008 between Israel and Hamas – and greeted the new year with hundreds dead and thousands injured in Gaza. On a brighter note, US saw the election of the first non-white President, which cast a warm glow of optimism around the world as many countries partake in the hope of a new era after the destructive foreign adventures of George Bush.
In Malaysia, we too had our ups and downs. BN losts its two-thirds majority. Five states, which together accounts for the major portion of the country’s GDP, fell to the Opposition. The destruction of BN saw the birth of a viable two-party system, and the emergence, hopefully, of a true democracy, where the people are the masters, not their political representatives. However, the BN seemed to have decided that its setback was only momentary, and that the people will come back to its senses in the next General Election. So out comes the usual “divide and conquer” politics – racially-charged statements; senseless use of ISA (for its detainee’s protection); and instructions to the media “to behave”.
President Ronald Reagan, in the 1992 GOP Convention, said, “Whatever else history may say about me when I am gone, I hope it will record that I appealed to your best hopes, not your worst fears, to your confidence rather than your doubts.” I certainly hope that for 2009, our new Prime Minister will echo the same thoughts – that in the face of immense challenges facing Malaysia, if the government insists on instilling fear by emphasizing what we can lose, instead of what we can gain, from meritocracy, transparency and the courage to reform our many failed institutions; then the seeds of opportunities brought about by the “creative destructive” forces of 2008 will be forever squandered. Malaysia will be further left behind, as governments around the world re-tool their economies and restructure their institutions in the face of a new global reality caused by the near collapse of the global financial system.
I prefer to remain optimistic that change is in the air for 2009. After all, we Malaysians are lucky in that there is still so much to hope for in this country of plenty.
Happy New Year to all you hopeful Malaysians out there.
Wednesday, December 31, 2008
Sunday, December 7, 2008
Petrol Tax at the Worst Possible Time
It is a fact that current pump prices are higher than what the market would dictate. This indicates that the government is effectively imposing a sales tax on petrol. The government has admitted to pocketing windfall revenue from the differential. The quantum of RM16m per day reported by the Star may be over-stated. But that is not important. The crucial issue here is that – is this the right time to collect petrol tax?
When the price of petrol was raised by a whopping 40% back in June, the government took a “shock therapy” approach – by announcing one huge price hike instead of a series of smaller increases, or the gradualist approach. Perhaps it was the spiralling costs of the subsidy that prompted the government to brave public backlash. Whatever the reasons, in one single day businesses saw their costs soaring as a result of higher energy costs while consumers have less money to spend after filling up their car. There was no adjustment period given.
In the 6 months since the 40% price hike was announced, crude oil prices has tumbled from above USD120 per barrel to about USD42 per barrel today. That is a fall of over 65%. In contrast to the manner in which petrol price was raised in one big swoop, the price reduction was announced in a series of small instalments. Traders were then taken to task for not reducing their prices quickly enough in tandem.
But can you really blame local businesses, whom the government hit with a double whammy – 1) unexpected huge increase in operating costs overnight; and 2) while reducing domestic spending power– for being cautious in re-adjusting their prices less crude oil prices reverse course and the government singularly increase price again? Without information on the government’s pricing mechanism, how does it expect businesses to plan their pricing strategies?
With the global economic crisis, the only silver lining for businesses and consumers is falling energy prices. Every penny counts for cash-strapped business owners and middle class Malaysians. Expectations of the future are bleak among most Malaysians. Under such dire circumstances, the responsible family head or company CEO will want to save more cash and spend less. Finance Minister Najib must find ways to put more money in these worried Malaysians’ pockets fast, as the only catalyst left for our economy’s growth is strong, sustained domestic consumption.
The government knows this – which is why they announced the 3% reduction in employees’ contributions to the EPF. But it is hypocritical to ask Malaysians to spend more now by dipping into their retirement savings fund, while the government sits on millions of windfall tax collected on a daily basis. We do not need more tax now. We need fewer taxes, and more government spending on those items which has high multiplier effect. If the government has no clue how to spend these windfall proceeds, let us have our money back by charging market prices for petrol in these difficult times. Responsible Malaysians are unlikely to be rushing out to drive more or switch en masse from public transportation to private ones as a result of substantially lower fuel prices. More likely, it will be a welcome relief for millions struggling to balance their stagnant real incomes against the significant increase in costs of living, caused by the fuel price jump in the first place.
Granted, petrol subsidy is not good for the economy – it distorts consumption choices and it is not particularly equitable. The billions should be spent on health care or education where everyone can benefit. But swinging from a petrol subsidy to a petrol tax just when every Malaysian is looking to tighten his or her belt is perverse, and does not make economic sense. With so many bad economic reports out there, give Malaysians a break – let us enjoy some savings, while the market still allows.
When the price of petrol was raised by a whopping 40% back in June, the government took a “shock therapy” approach – by announcing one huge price hike instead of a series of smaller increases, or the gradualist approach. Perhaps it was the spiralling costs of the subsidy that prompted the government to brave public backlash. Whatever the reasons, in one single day businesses saw their costs soaring as a result of higher energy costs while consumers have less money to spend after filling up their car. There was no adjustment period given.
In the 6 months since the 40% price hike was announced, crude oil prices has tumbled from above USD120 per barrel to about USD42 per barrel today. That is a fall of over 65%. In contrast to the manner in which petrol price was raised in one big swoop, the price reduction was announced in a series of small instalments. Traders were then taken to task for not reducing their prices quickly enough in tandem.
But can you really blame local businesses, whom the government hit with a double whammy – 1) unexpected huge increase in operating costs overnight; and 2) while reducing domestic spending power– for being cautious in re-adjusting their prices less crude oil prices reverse course and the government singularly increase price again? Without information on the government’s pricing mechanism, how does it expect businesses to plan their pricing strategies?
With the global economic crisis, the only silver lining for businesses and consumers is falling energy prices. Every penny counts for cash-strapped business owners and middle class Malaysians. Expectations of the future are bleak among most Malaysians. Under such dire circumstances, the responsible family head or company CEO will want to save more cash and spend less. Finance Minister Najib must find ways to put more money in these worried Malaysians’ pockets fast, as the only catalyst left for our economy’s growth is strong, sustained domestic consumption.
The government knows this – which is why they announced the 3% reduction in employees’ contributions to the EPF. But it is hypocritical to ask Malaysians to spend more now by dipping into their retirement savings fund, while the government sits on millions of windfall tax collected on a daily basis. We do not need more tax now. We need fewer taxes, and more government spending on those items which has high multiplier effect. If the government has no clue how to spend these windfall proceeds, let us have our money back by charging market prices for petrol in these difficult times. Responsible Malaysians are unlikely to be rushing out to drive more or switch en masse from public transportation to private ones as a result of substantially lower fuel prices. More likely, it will be a welcome relief for millions struggling to balance their stagnant real incomes against the significant increase in costs of living, caused by the fuel price jump in the first place.
Granted, petrol subsidy is not good for the economy – it distorts consumption choices and it is not particularly equitable. The billions should be spent on health care or education where everyone can benefit. But swinging from a petrol subsidy to a petrol tax just when every Malaysian is looking to tighten his or her belt is perverse, and does not make economic sense. With so many bad economic reports out there, give Malaysians a break – let us enjoy some savings, while the market still allows.
Wednesday, November 5, 2008
Daring Us to Dream Once More
America has every reason to celebrate the historic election of Barack Obama as President. It is important to remind ourselves again just how insurmountable the odds were against Obama when he decided to launch his presidential bid. Within his own Democratic Party, he has to secure nomination against what once assumed to be the Party’s natural choice – Hillary Clinton. Even after his party’s nomination, with the Democratic base deeply split, Barack has to face off against the candidate from Republican Party, traditionally, the party that has access to huge funds from businesses; a huge (some might say fanatical) religious base, and more critical, a party that tend to whip up religious and even racial overtones in order to secure the Presidency. What does a junior Senator who is of mixed blood, who is without political pedigree, has against McCain, an American war hero whose family has been in the service of the American Navy for generations?
Obama pulled of this momentous win because his campaign, as one political commentator put it so succinctly – was inclusive, engaging and empowering. He organized his support from the grassroots up. He uses the internet to reach out to young voters. Whereas the Republican Party continues to rely on big donors/businesses for funds, Obama democratize his campaign contribution receipts by actively seeking funds from everyone, whether $10 or $20, who yearned to see change through him. He dared Americans to embrace change, telling the young and old, the cynical and the apathetic, that they can restore the American dream by voting – that they have a role to play. Believed him they did – first time voters and the young came out in droves, braving long queues because they really believed they can make history by securing a better future for America and for themselves.
Obama’s closing statements in his victory speech, “…And where we are met with cynicism and doubts and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can”. Doesn’t this remind us of our very own failed leadership who is always holding us back from embracing a truly united Malaysia, without regard to colour and race? A tarnished political entity that has no courage to overturn its ludicrous beliefs that 50 years after Independence and into the 21st century, we Malaysians are not ready to be Malaysians first, and our respective race, second?
It is thought that Malaysia ushered in a new era when for this first time in Malaysian politics we created a viable 2 party system after the March general election. Though it was a clear message to the ruling elite that Malaysians have found their voice, and that we have, and will, exercise our right as citizens to accord power only to those that uses them for the good of the country, alas, the ruling party continues to practice a divisive brand of politics. In his speech, Obama immediately reached out to those who had not voted for him, saying, “I will be your President too”. In contrast, the National Front is sidelining the PKR-ruled states, creating disunity within our own state borders, while trying to undermine the PKR by harping on the perceived racial/religious differences between its partners.
Meanwhile, the country slides into deep economic uncertainty. We are still waiting for judicial reforms; tougher legislation against corruption; lower crime rates. Changes we the people have been promised but yet to be delivered. We may have a change of leadership next year but great skepticism persists whether a PM-in-waiting whose name has been dragged into a sensational murder case and a questionable billion-dollar helicopter deal can effectively inspire change. While America may face a steep economic recession next year, it will be fighting with a sense of renewed purpose that in the midst of gloom, it can emerge with a bright future if they stand together, rallied on by an inclusive new President. For Malaysia, in 2009, we would most probably still be breathing in the same stale air of zany economic policies that encourages rent-seeking; backward politicians that still bicker how to divide a rapidly shrinking pie when other nations are busy expanding it; and the delusion that Malaysia is not ready for change simply because they themselves are not prepared to.
“We are ready for Change. We are one Nation, We are One People” so exclaimed the new US President-Elect. Malaysians are still waiting for a leader that has the courage to espouse this dream. Congratulations, America. You have once again given us hope and dared us to dream.
Obama pulled of this momentous win because his campaign, as one political commentator put it so succinctly – was inclusive, engaging and empowering. He organized his support from the grassroots up. He uses the internet to reach out to young voters. Whereas the Republican Party continues to rely on big donors/businesses for funds, Obama democratize his campaign contribution receipts by actively seeking funds from everyone, whether $10 or $20, who yearned to see change through him. He dared Americans to embrace change, telling the young and old, the cynical and the apathetic, that they can restore the American dream by voting – that they have a role to play. Believed him they did – first time voters and the young came out in droves, braving long queues because they really believed they can make history by securing a better future for America and for themselves.
Obama’s closing statements in his victory speech, “…And where we are met with cynicism and doubts and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can”. Doesn’t this remind us of our very own failed leadership who is always holding us back from embracing a truly united Malaysia, without regard to colour and race? A tarnished political entity that has no courage to overturn its ludicrous beliefs that 50 years after Independence and into the 21st century, we Malaysians are not ready to be Malaysians first, and our respective race, second?
It is thought that Malaysia ushered in a new era when for this first time in Malaysian politics we created a viable 2 party system after the March general election. Though it was a clear message to the ruling elite that Malaysians have found their voice, and that we have, and will, exercise our right as citizens to accord power only to those that uses them for the good of the country, alas, the ruling party continues to practice a divisive brand of politics. In his speech, Obama immediately reached out to those who had not voted for him, saying, “I will be your President too”. In contrast, the National Front is sidelining the PKR-ruled states, creating disunity within our own state borders, while trying to undermine the PKR by harping on the perceived racial/religious differences between its partners.
Meanwhile, the country slides into deep economic uncertainty. We are still waiting for judicial reforms; tougher legislation against corruption; lower crime rates. Changes we the people have been promised but yet to be delivered. We may have a change of leadership next year but great skepticism persists whether a PM-in-waiting whose name has been dragged into a sensational murder case and a questionable billion-dollar helicopter deal can effectively inspire change. While America may face a steep economic recession next year, it will be fighting with a sense of renewed purpose that in the midst of gloom, it can emerge with a bright future if they stand together, rallied on by an inclusive new President. For Malaysia, in 2009, we would most probably still be breathing in the same stale air of zany economic policies that encourages rent-seeking; backward politicians that still bicker how to divide a rapidly shrinking pie when other nations are busy expanding it; and the delusion that Malaysia is not ready for change simply because they themselves are not prepared to.
“We are ready for Change. We are one Nation, We are One People” so exclaimed the new US President-Elect. Malaysians are still waiting for a leader that has the courage to espouse this dream. Congratulations, America. You have once again given us hope and dared us to dream.
Monday, October 13, 2008
Minimum Wages and Foreign Labour in Malaysia
The argument for minimum wage is essentially a socialist one – the notion that there must be a government mandate that employers pay a statutory minimum wage, irregardless of the productivity levels or the skills set of a particular employee, runs counter to the free market mantra that the price of labour (i.e. wages) should be determined by market forces.
Dr. Toh (The case for a minimum wage, The Edge, October 13, 2008) did try to camouflage his support for minimum wage (and for the discontinuing of foreign labour usage) with free market arguments. I would like to state my disagreement with some of his points.
The shift to greater automation in the firms’ production functions in our country has been hampered by the practice of government to allow the liberal import of unskilled or semi-skilled workers from overseas. This at once distorts market forces of supply and demand of labour in the labour market. Labour shortage is augmented by unlimited supply from overseas.
The above is a contradictory statement of sorts. The free movement of labour across borders is not a distortion of market forces. Labour shortage is. In an environment of labour shortage, wages are artificially raised without a corresponding increase in output, simply because there are insufficient labour supply. Why is labour different from say, from apples? If Malaysia is short of apples, should we simply bear with the high prices of apples? Why shouldn’t we import apples from countries with surplus stocks and then let the market decide on the price?
Labour shortage is augmented by unlimited supply from overseas.
Dr. Toh acknowledged that there is a labour shortage crisis in Malaysia. This shortage is most acute in the so-called 3D work; dirty, dangerous and demeaning. Most foreign labour are found in industries such as construction, manufacturing and agriculture, jobs which Malaysians shunned anyway in favour of better-paying and more pleasant occupations. If these labour shortages cannot be overcome by supply from within or without Malaysia, then what does Dr. Toh suggest we do? Let constructions sites grind to a halt?
Many countries have adopted a minimum wage policy, yet their competitiveness remains high.
Competitiveness will surely be eroded when a minimum wage is introduced, at least initially. The consulting firm Booz & Co conducted a survey of 66 multinationals with operations in Shanghai and found that 54% suggested that China has become less competitive due to rising labour costs. The reason is straightforward – labour costs are a significant portion of a manufacturer’s total costs. When labour costs go up, profit margins fall. Pricing power is weakened, and competitiveness eroded. Note that the manufacturing sector is still the largest contributor to Malaysia’s GDP in 2007. The introduction of a minimum wage will definitely adversely affect manufacturers’ competitiveness from a cost perspective.
The question is how existing players and new entrants will react to a new minimum wage. If manufacturers have the resources and initiative to modernize their plants, hence preserving their profit margins by using less workers, then competitiveness is maintained or may even improved. If new entrants are encouraged to move up the commercial food chain by venturing into higher value products or services where the inputs are biased towards capital and knowledge as opposed to labour, Malaysia’s economy will be boosted.
However, these are very big if’s. Those huge multinational companies with operations in Malaysia are most probably already employing the latest technologies there are available. It would not be inaccurate to say that these MNC’s set up shop here in Malaysia precisely because of its better skilled workers but relatively lower wages vs. the more developed countries. This is our competitive edge. A minimum wage which erodes this advantage could spur these companies to uproot and relocate to a cheaper country with cheaper labour costs, and they will be welcomed with open arms by these less-developed countries. Also, only well-capitalized firms will be able to upgrade their processes. Weaker ones will be run out of business as their costs spiral and they are unable to compete. As for many local manufacturing companies which are by nature labour-intensive, they have limited ability to create or purchase new automated techniques that mitigate their increased labour costs. Automation can only go so far, and the savings made by using a little less labour may not necessarily render net savings. The result is that both international and local manufacturers, both large and small, may relocate, reduce labour, or simply close down; too quickly for new entrants to come into the market to take its place. As one economist commented on the closure of thousands of factories in China due to rising labour costs – “it is easy to push people out, but harder to create new industries”. At the end of day, Malaysians are priced out of work, without any net gain to the economy.
Dr. Toh, in his closing statements, said “one good reason to legislate a minimum wage is the moral consideration of ensuring that our workers live dignified as human beings. The minimum amount must be sufficient to buy the means of sustenance.”
This proposition is fair. Workers are stakeholders of a company, and it is in the company’s interest to look after the welfare of its employees. However, Dr. Toh is over-emphasizing the influence of the private enterprise. It is dangerous to suggest that the private firm is responsible overall for the social welfare of its employees, and thereby must be mandated to compensate its staff a sum that is required for a minimum standard of living. Ultimately, the role of a private enterprise in ensuring a minimum standard of living for its employees is limited, since it has no influence over a myriad of factors that may cause the costs of living to go up. This is within the domain of the government. What happens if runaway inflation causes costs of living to go perpetually up? Does the private firm need to raise its minimum wage again and again to compensate for the shortfall? Where does it end? Until the firm goes bust and the employees have zero income?
Dr. Toh also mentioned that “many workers are not paid subsistence or living wage....these workers will not be motivated to work hard and not likely to have high productivity”.
Then the right market solution must to pay based on productivity, not mandate a minimum pay level that may not correspond to skill levels. The government, instead of mandating a blanket minimum wage across industries, should embark on a study of the profitability of each industry, and then link pay with productivity that is commensurate with the individual firms’ surplus. Paying a higher (minimum) wage to workers who should received less because of their persistent low productivity creates a disincentive to upgrade themselves, while it may penalize productive ones because the firm has to subsidize inefficient workers while economic output remains the same. A uniform minimum wage across different industries is likely to be damaging to those that are barely surviving and the end result is both good and weak workers are thrown out of work.
Minimum wages is a market distortion. Obstructing movement of labour is also a market distortion. Market distortions are rarely good for the economy. While there is a weak economic case for minimum wages, there could be a social argument for it. Dr. Toh must make the distinction clear, and understand that the role of the private enterprise in serving a social purpose is at best limited and at worst, even damaging to the worker that Dr. Toh intends to “protect”, when the private enterprise is unable to compete in its natural form in the face of various market distortions that Dr. Toh is advocating for.
Dr. Toh (The case for a minimum wage, The Edge, October 13, 2008) did try to camouflage his support for minimum wage (and for the discontinuing of foreign labour usage) with free market arguments. I would like to state my disagreement with some of his points.
The shift to greater automation in the firms’ production functions in our country has been hampered by the practice of government to allow the liberal import of unskilled or semi-skilled workers from overseas. This at once distorts market forces of supply and demand of labour in the labour market. Labour shortage is augmented by unlimited supply from overseas.
The above is a contradictory statement of sorts. The free movement of labour across borders is not a distortion of market forces. Labour shortage is. In an environment of labour shortage, wages are artificially raised without a corresponding increase in output, simply because there are insufficient labour supply. Why is labour different from say, from apples? If Malaysia is short of apples, should we simply bear with the high prices of apples? Why shouldn’t we import apples from countries with surplus stocks and then let the market decide on the price?
Labour shortage is augmented by unlimited supply from overseas.
Dr. Toh acknowledged that there is a labour shortage crisis in Malaysia. This shortage is most acute in the so-called 3D work; dirty, dangerous and demeaning. Most foreign labour are found in industries such as construction, manufacturing and agriculture, jobs which Malaysians shunned anyway in favour of better-paying and more pleasant occupations. If these labour shortages cannot be overcome by supply from within or without Malaysia, then what does Dr. Toh suggest we do? Let constructions sites grind to a halt?
Many countries have adopted a minimum wage policy, yet their competitiveness remains high.
Competitiveness will surely be eroded when a minimum wage is introduced, at least initially. The consulting firm Booz & Co conducted a survey of 66 multinationals with operations in Shanghai and found that 54% suggested that China has become less competitive due to rising labour costs. The reason is straightforward – labour costs are a significant portion of a manufacturer’s total costs. When labour costs go up, profit margins fall. Pricing power is weakened, and competitiveness eroded. Note that the manufacturing sector is still the largest contributor to Malaysia’s GDP in 2007. The introduction of a minimum wage will definitely adversely affect manufacturers’ competitiveness from a cost perspective.
The question is how existing players and new entrants will react to a new minimum wage. If manufacturers have the resources and initiative to modernize their plants, hence preserving their profit margins by using less workers, then competitiveness is maintained or may even improved. If new entrants are encouraged to move up the commercial food chain by venturing into higher value products or services where the inputs are biased towards capital and knowledge as opposed to labour, Malaysia’s economy will be boosted.
However, these are very big if’s. Those huge multinational companies with operations in Malaysia are most probably already employing the latest technologies there are available. It would not be inaccurate to say that these MNC’s set up shop here in Malaysia precisely because of its better skilled workers but relatively lower wages vs. the more developed countries. This is our competitive edge. A minimum wage which erodes this advantage could spur these companies to uproot and relocate to a cheaper country with cheaper labour costs, and they will be welcomed with open arms by these less-developed countries. Also, only well-capitalized firms will be able to upgrade their processes. Weaker ones will be run out of business as their costs spiral and they are unable to compete. As for many local manufacturing companies which are by nature labour-intensive, they have limited ability to create or purchase new automated techniques that mitigate their increased labour costs. Automation can only go so far, and the savings made by using a little less labour may not necessarily render net savings. The result is that both international and local manufacturers, both large and small, may relocate, reduce labour, or simply close down; too quickly for new entrants to come into the market to take its place. As one economist commented on the closure of thousands of factories in China due to rising labour costs – “it is easy to push people out, but harder to create new industries”. At the end of day, Malaysians are priced out of work, without any net gain to the economy.
Dr. Toh, in his closing statements, said “one good reason to legislate a minimum wage is the moral consideration of ensuring that our workers live dignified as human beings. The minimum amount must be sufficient to buy the means of sustenance.”
This proposition is fair. Workers are stakeholders of a company, and it is in the company’s interest to look after the welfare of its employees. However, Dr. Toh is over-emphasizing the influence of the private enterprise. It is dangerous to suggest that the private firm is responsible overall for the social welfare of its employees, and thereby must be mandated to compensate its staff a sum that is required for a minimum standard of living. Ultimately, the role of a private enterprise in ensuring a minimum standard of living for its employees is limited, since it has no influence over a myriad of factors that may cause the costs of living to go up. This is within the domain of the government. What happens if runaway inflation causes costs of living to go perpetually up? Does the private firm need to raise its minimum wage again and again to compensate for the shortfall? Where does it end? Until the firm goes bust and the employees have zero income?
Dr. Toh also mentioned that “many workers are not paid subsistence or living wage....these workers will not be motivated to work hard and not likely to have high productivity”.
Then the right market solution must to pay based on productivity, not mandate a minimum pay level that may not correspond to skill levels. The government, instead of mandating a blanket minimum wage across industries, should embark on a study of the profitability of each industry, and then link pay with productivity that is commensurate with the individual firms’ surplus. Paying a higher (minimum) wage to workers who should received less because of their persistent low productivity creates a disincentive to upgrade themselves, while it may penalize productive ones because the firm has to subsidize inefficient workers while economic output remains the same. A uniform minimum wage across different industries is likely to be damaging to those that are barely surviving and the end result is both good and weak workers are thrown out of work.
Minimum wages is a market distortion. Obstructing movement of labour is also a market distortion. Market distortions are rarely good for the economy. While there is a weak economic case for minimum wages, there could be a social argument for it. Dr. Toh must make the distinction clear, and understand that the role of the private enterprise in serving a social purpose is at best limited and at worst, even damaging to the worker that Dr. Toh intends to “protect”, when the private enterprise is unable to compete in its natural form in the face of various market distortions that Dr. Toh is advocating for.
Saturday, September 13, 2008
Protection, not Detention....
Just a few weeks after PM Badawi told Malaysian journalists to do their job without fear, a young female reporter is arrested and detained for 24 hours before being released today. The reason for her arrest under ISA, according to the Home Minister, is for her own protection.
It is incredible that the Government can offer up such farcical explanation for the arrest. One can only draw 2 conclusions from this excuse given - either the government is totally clueless as to how absurb the explanation sounds OR it is a veiled message to the people that the ruling party has near totalitarian powers such that it need not give valid justifications for acting against its own citizens.
The ISA, by allowing the police to detain anyone swiftly and without due legal rights accorded to the detainee, should only be invoked under the most dire circumstances where the country's internal security is so compromised that without drastic and quick action, it will descend into utter chaos if the alleged perpetrator is allowed to hide behind the laws of the country while continuing his or her threat against national peace.
Such immense power should be exercised with great caution, what's more when it is used against one's own citizens. Sound-minded Malaysians must be wondering how is it that the Malaysia's peace can be so fragile, or that the Malaysia's legal system is so porous, such that three law-abiding citizens, has to be detained without trial.
It pains me to see the parents of Theresa Kok, who tearfully appealed to the authorities to disclose the whereabouts of their daughter. And mind you, Theresa is an elected Member of Parliament. She has denied any involvement in the allegations made by Selangor's former MB, and there she is, detained without any legal means to defend herself while the accuser is not even being investigated.
If the arrests are meant to project strength and control, it hasn't. Instead it smacked of desperation and despair.Any last ounce of goodwill that this current Badawi Administration has among the peace-loving, forward-looking Malaysians has just evaporated together with this unjustifiable ISA detentions.Come next elections, the party that has the courage to discard this archaic piece of legislation will win my vote; and I dare say, this is the same sentiment shared by millions of young Malaysians out there.
It is incredible that the Government can offer up such farcical explanation for the arrest. One can only draw 2 conclusions from this excuse given - either the government is totally clueless as to how absurb the explanation sounds OR it is a veiled message to the people that the ruling party has near totalitarian powers such that it need not give valid justifications for acting against its own citizens.
The ISA, by allowing the police to detain anyone swiftly and without due legal rights accorded to the detainee, should only be invoked under the most dire circumstances where the country's internal security is so compromised that without drastic and quick action, it will descend into utter chaos if the alleged perpetrator is allowed to hide behind the laws of the country while continuing his or her threat against national peace.
Such immense power should be exercised with great caution, what's more when it is used against one's own citizens. Sound-minded Malaysians must be wondering how is it that the Malaysia's peace can be so fragile, or that the Malaysia's legal system is so porous, such that three law-abiding citizens, has to be detained without trial.
It pains me to see the parents of Theresa Kok, who tearfully appealed to the authorities to disclose the whereabouts of their daughter. And mind you, Theresa is an elected Member of Parliament. She has denied any involvement in the allegations made by Selangor's former MB, and there she is, detained without any legal means to defend herself while the accuser is not even being investigated.
If the arrests are meant to project strength and control, it hasn't. Instead it smacked of desperation and despair.Any last ounce of goodwill that this current Badawi Administration has among the peace-loving, forward-looking Malaysians has just evaporated together with this unjustifiable ISA detentions.Come next elections, the party that has the courage to discard this archaic piece of legislation will win my vote; and I dare say, this is the same sentiment shared by millions of young Malaysians out there.
Monday, June 16, 2008
1-3 hours delay still considered "on-time" and of "5-star service"?
Air Asia today announced that in their efforts to offer a "5-star service" to passengers, any delay exceeding 3 hours from time of departure will mean affected passengers will receive compensation. This will come in the form of an e-gift voucher worth RM200. The e-voucher is part of its "On-time Guarantee" initiative.
Hmmm...the fuel increase must have really begun to affect airline service standards. Afterall, any delay under 3 hours is still considered "5-star" and "On-time"?!
Hmmm...the fuel increase must have really begun to affect airline service standards. Afterall, any delay under 3 hours is still considered "5-star" and "On-time"?!
Sunday, June 15, 2008
Wither the next generation
Our children face a bleak future. This is the result of the complacency and short-termism of our country’s leadership, whether past or present. We have squandered away precious resources and time, by embarking on one grandiose project after another, focussing narrowly on expensive infrastructures and monuments, while consistently neglecting the one resource that can maintain Malaysia’s place in the global economy – our human capital.
From our primary schools to public universities, standards have been falling for years. Our PM has been busy criss-crossing the country officially launching economic corridors here and there. Perhaps the PM should be visiting schools and universities to see how well our young generation will be able to cope when they enter the workforce. For all the multi-billion dollar super-corridors, which is basically just hardware, what good is it to have IT hubs, biotechnology facilities; R&D centres; when we cannot have competent and qualified professionals to work in them?
Education policies aren’t “sexy”. A comprehensive, well-thought out and laboriously implemented education blueprint might take years, even decades before its results became apparent. Hence, given the short attention span of the Malaysian public,politicians do not want to waste time outlining good education proposals when fiscal policies like tax cuts will generate instant popular support (hence votes). Furthermore, our government tends to go for the quick-fix, short cut solutions. It revels in instant success that takes little effort. Just throw money, loads of money at the problem and you will get a fast solution. Want a Malaysian in space? Why, just hold a Malaysian Idol-like Contest, spend millions to buy a ticket from the Russians, and voila!, after a couple of months, you have your very own Malaysian Angkasawan. Why bother spending the same millions (and years) in developing a space programme that actually sends qualified Malaysians into space? National unity failing? No problem! Cobble some training camps together, supply some crisp new uniforms, install some vigorous physical training programmes, and presto!, after 3 months, our National Servicemen will go back to their daily routine fully immersed with the spirit of Muhibah.
It is then not surprising that when it comes to our education policies, our government is guilty of not having a consistent, coherent and well-executed plan. The Education portfolio is often seen as a stepping stone to a higher office. As a result, every Education Minister that comes in tends to wants to stamp his mark by introducing new ideas, which is then hastily implemented, often discarding the previous’ structure, both good and bad. Substance does not matter here– what matters is we have something new. A case in point – we are still debating whether teaching Science and Mathematics in English is a viable idea.
In an article in the Edge, it stated that a 2007 World Bank report reaffirms the poor standards of our public universities. Our primary and secondary schools can’t be that much better off. The report went on to say that Malaysia would lose its competitive edge if it fails to produce a world class education system to propel the country into an innovative economy. Already, Malaysia’s strength in manufacturing is fast eroded by countries such as China who have vast supply of labour who are gaining in sophistication. In the services sector too, other developing countries has been furiously pouring in billions to upgrade their knowledge-based economy, and at the same time engaging the best brains to develop their future scientists.
So where does that leave us? Not only have Malaysia failed to carve out a niche to replace its waning dominance in manufacturing and to an extent services, our future generations of local graduates are ill-equipped with the creativity and knowledge in order to compete with the rest of the world. Because our manufacturing and services sector has no clear advantage over other countries, this can only mean our graduates will end up with jobs that are easily replaceable in other parts of the world. This in turn means the jobs available to our less-than-competent graduates will most likely offer remunerations that reflect its commoditized nature.
Parents of young children have not much choice. Those who can afford it will likely enrol their kids in private schools. Many of the young professionals today will no doubt do whatever they can to ensure their offsprings will be able to enter into foreign universities in the future, in order that they can secure a globally-recognized education that will give them that extra edge in getting good paying jobs. And where will these jobs come from? At this rate, no one will be putting their money on Malaysia. So we have a vicious circle – the Malaysian economy is stuck in the 20th century because our education system could not produce sufficient scientists, engineers and finance wizards who can transform it to a knowledge-based economy, whilst those with the knowledge will most likely offer their services to other countries because they could not find high-value employment back home. In the meantime, our neighbours have leapfrogged us, with our best brains contributing to their advancements.
How about parents who have no choice but to send their children to government schools? They can only pray for a miracle that somehow the standard of teaching improves; that the government appoints school administrators based on competence, not political obedience; that the entire education system is predicated on merit; that deserving students are given the means and support all the way from primary school to university to pursue their dreams.
If the government continues in its slumber by its fixation on billion-dollar infrastructures, and ignore the crucial need to revamp our education system now, our children will suffer the consequences of low-paying jobs in a less-than-competitive economy in the future. Coming at a time when we are running out of oil and high inflation looks to be a permanent fixture; our next generation will be the ones bearing the costs of our profligate and myopic ways. Low paying jobs in a less than dynamic economy; no more oil; high fuel and food prices – aren’t we condemning our next generation to a lifetime of meaningless slog, struggling to earn just enough to cover their bills with no light at the end of the tunnel? Can someone wake the government up now?
From our primary schools to public universities, standards have been falling for years. Our PM has been busy criss-crossing the country officially launching economic corridors here and there. Perhaps the PM should be visiting schools and universities to see how well our young generation will be able to cope when they enter the workforce. For all the multi-billion dollar super-corridors, which is basically just hardware, what good is it to have IT hubs, biotechnology facilities; R&D centres; when we cannot have competent and qualified professionals to work in them?
Education policies aren’t “sexy”. A comprehensive, well-thought out and laboriously implemented education blueprint might take years, even decades before its results became apparent. Hence, given the short attention span of the Malaysian public,politicians do not want to waste time outlining good education proposals when fiscal policies like tax cuts will generate instant popular support (hence votes). Furthermore, our government tends to go for the quick-fix, short cut solutions. It revels in instant success that takes little effort. Just throw money, loads of money at the problem and you will get a fast solution. Want a Malaysian in space? Why, just hold a Malaysian Idol-like Contest, spend millions to buy a ticket from the Russians, and voila!, after a couple of months, you have your very own Malaysian Angkasawan. Why bother spending the same millions (and years) in developing a space programme that actually sends qualified Malaysians into space? National unity failing? No problem! Cobble some training camps together, supply some crisp new uniforms, install some vigorous physical training programmes, and presto!, after 3 months, our National Servicemen will go back to their daily routine fully immersed with the spirit of Muhibah.
It is then not surprising that when it comes to our education policies, our government is guilty of not having a consistent, coherent and well-executed plan. The Education portfolio is often seen as a stepping stone to a higher office. As a result, every Education Minister that comes in tends to wants to stamp his mark by introducing new ideas, which is then hastily implemented, often discarding the previous’ structure, both good and bad. Substance does not matter here– what matters is we have something new. A case in point – we are still debating whether teaching Science and Mathematics in English is a viable idea.
In an article in the Edge, it stated that a 2007 World Bank report reaffirms the poor standards of our public universities. Our primary and secondary schools can’t be that much better off. The report went on to say that Malaysia would lose its competitive edge if it fails to produce a world class education system to propel the country into an innovative economy. Already, Malaysia’s strength in manufacturing is fast eroded by countries such as China who have vast supply of labour who are gaining in sophistication. In the services sector too, other developing countries has been furiously pouring in billions to upgrade their knowledge-based economy, and at the same time engaging the best brains to develop their future scientists.
So where does that leave us? Not only have Malaysia failed to carve out a niche to replace its waning dominance in manufacturing and to an extent services, our future generations of local graduates are ill-equipped with the creativity and knowledge in order to compete with the rest of the world. Because our manufacturing and services sector has no clear advantage over other countries, this can only mean our graduates will end up with jobs that are easily replaceable in other parts of the world. This in turn means the jobs available to our less-than-competent graduates will most likely offer remunerations that reflect its commoditized nature.
Parents of young children have not much choice. Those who can afford it will likely enrol their kids in private schools. Many of the young professionals today will no doubt do whatever they can to ensure their offsprings will be able to enter into foreign universities in the future, in order that they can secure a globally-recognized education that will give them that extra edge in getting good paying jobs. And where will these jobs come from? At this rate, no one will be putting their money on Malaysia. So we have a vicious circle – the Malaysian economy is stuck in the 20th century because our education system could not produce sufficient scientists, engineers and finance wizards who can transform it to a knowledge-based economy, whilst those with the knowledge will most likely offer their services to other countries because they could not find high-value employment back home. In the meantime, our neighbours have leapfrogged us, with our best brains contributing to their advancements.
How about parents who have no choice but to send their children to government schools? They can only pray for a miracle that somehow the standard of teaching improves; that the government appoints school administrators based on competence, not political obedience; that the entire education system is predicated on merit; that deserving students are given the means and support all the way from primary school to university to pursue their dreams.
If the government continues in its slumber by its fixation on billion-dollar infrastructures, and ignore the crucial need to revamp our education system now, our children will suffer the consequences of low-paying jobs in a less-than-competitive economy in the future. Coming at a time when we are running out of oil and high inflation looks to be a permanent fixture; our next generation will be the ones bearing the costs of our profligate and myopic ways. Low paying jobs in a less than dynamic economy; no more oil; high fuel and food prices – aren’t we condemning our next generation to a lifetime of meaningless slog, struggling to earn just enough to cover their bills with no light at the end of the tunnel? Can someone wake the government up now?
Wednesday, April 16, 2008
Stop Squandering the People's Money
Yet another study – a cost analysis to be exact – will be carried out to determine if it is viable to send a second Malaysian into outer space.
Why is it that that the government seemed so intent on wasting public funds on grandiose projects, at a time when costs of basic necessities such as food and fuel are hurting the people deeply? Just recently, the 2nd Finance Minister announced that the government may not be able to keep to its budget deficit target. Isn’t this a clear sign that expensive expenditures that do not yield any economic or tangible social returns should be discarded straightaway? Why are we looking towards space when we are facing a potential socio-economic crisis on the ground?
First of all, I have no idea what the learned Minister meant by a cost analysis. Does he not know the costs of a ticket into space? It must have cost the Malaysian government at least USD25m, since that was what other space tourists, e.g. American billionaire Charles Simonyi paid for his space trip on board the Russian craft Soyuz. The Minister must have meant a costs-benefit analysis. Perhaps he realized it is extremely difficult to quantify the benefits side of sending a Malaysian into space, hence omitting the most important consideration of the equation.
If there is indeed any commercial benefits of the space “programme”, there must be hundreds of companies lining up to sponsor the trip in return for some work carried out in space. The reality is that there is little commercial value that can be extracted from this space programme as there is no long-term plan being spelled out.
What about national pride? Can we put a price on this? A blog suggested that assuming the programme benefitted 3 million Malaysians, the cost per person is minimal, and the Angkasawan programme is worth every penny. Can the 3 million Malaysian please come forward and identify themselves?
There are much cheaper and effective ways to get young Malaysians to be interested in space. If we want to have a Malaysian in space, lets do it the proper (albeit the hard way). Let a Malaysian astronaut do more than simply strap himself into the spaceship when it takes off and unstrapped himself when it lands. We want a Malaysian that truly qualifies as an Astronaut. And is USD25m a small price to pay to for national prestige? Perhaps. However, when we still have pockets of poverty that will face severe hardships with rising food prices, it is time to turn our dreamy eyes away from space and focus on thousands of Malaysians who have trouble standing on their own two feet. Please Minister, junk the costs analysis and let common sense prevail.
Why is it that that the government seemed so intent on wasting public funds on grandiose projects, at a time when costs of basic necessities such as food and fuel are hurting the people deeply? Just recently, the 2nd Finance Minister announced that the government may not be able to keep to its budget deficit target. Isn’t this a clear sign that expensive expenditures that do not yield any economic or tangible social returns should be discarded straightaway? Why are we looking towards space when we are facing a potential socio-economic crisis on the ground?
First of all, I have no idea what the learned Minister meant by a cost analysis. Does he not know the costs of a ticket into space? It must have cost the Malaysian government at least USD25m, since that was what other space tourists, e.g. American billionaire Charles Simonyi paid for his space trip on board the Russian craft Soyuz. The Minister must have meant a costs-benefit analysis. Perhaps he realized it is extremely difficult to quantify the benefits side of sending a Malaysian into space, hence omitting the most important consideration of the equation.
If there is indeed any commercial benefits of the space “programme”, there must be hundreds of companies lining up to sponsor the trip in return for some work carried out in space. The reality is that there is little commercial value that can be extracted from this space programme as there is no long-term plan being spelled out.
What about national pride? Can we put a price on this? A blog suggested that assuming the programme benefitted 3 million Malaysians, the cost per person is minimal, and the Angkasawan programme is worth every penny. Can the 3 million Malaysian please come forward and identify themselves?
There are much cheaper and effective ways to get young Malaysians to be interested in space. If we want to have a Malaysian in space, lets do it the proper (albeit the hard way). Let a Malaysian astronaut do more than simply strap himself into the spaceship when it takes off and unstrapped himself when it lands. We want a Malaysian that truly qualifies as an Astronaut. And is USD25m a small price to pay to for national prestige? Perhaps. However, when we still have pockets of poverty that will face severe hardships with rising food prices, it is time to turn our dreamy eyes away from space and focus on thousands of Malaysians who have trouble standing on their own two feet. Please Minister, junk the costs analysis and let common sense prevail.
Tuesday, April 1, 2008
Open Tenders and Crazy Economics
I am very perplexed by a recent statement made by our Finance Minister. He opined that open tenders are not necessarily equitable, as it prevents financially-weak companies from competing. This is crazy economics.
A company with weak financial fundamentals (Company A) is likely to obtain a bank loan with higher interest rates (given the higher risk), vs. another one (Company B) with solid financial standing. This means for any project that Company A tenders for, it is going to demand a higher rate of return to compensate for its higher interest costs, which translates into higher tender price. This essentially means that it will lose to a lower bid by Company B if price was the only determining criteria.
Yet the Finance Minister is saying this is “unfair”. Is it fair to the tax-payers (if Company A was chosen) who will end up paying more, for say, a bridge, when some companies are willing to build it for less? The Government has no business to prop up companies by awarding plum projects to them, as it is akin to gambling with the rakyat’s money. What if Company A fails to deliver the project? Why take this risk when there are other companies who are far more reliable and cheaper?
Of course, there is nothing to prevent Company A from subcontracting the project to Company B, who can pull off the project with lower costs and hence price. Company A ends up with a profit by doing nothing, apart from securing the fat government tender. Company B gets the project it is fully qualified for in the first place, albeit from the “winning” bidder, and delivers. However, we, the tax-payers end up with a higher tab. Is this fair?
Ultimately, the Government, as custodians of the people’s money, must have the interests of the people in mind. So what if “only the strong and those with financial capacity” benefit from open tenders, if the people also benefits? After all, it is the rakyat that the Government is subservient to, not businesses. Equity to the People first, not companies!
A company with weak financial fundamentals (Company A) is likely to obtain a bank loan with higher interest rates (given the higher risk), vs. another one (Company B) with solid financial standing. This means for any project that Company A tenders for, it is going to demand a higher rate of return to compensate for its higher interest costs, which translates into higher tender price. This essentially means that it will lose to a lower bid by Company B if price was the only determining criteria.
Yet the Finance Minister is saying this is “unfair”. Is it fair to the tax-payers (if Company A was chosen) who will end up paying more, for say, a bridge, when some companies are willing to build it for less? The Government has no business to prop up companies by awarding plum projects to them, as it is akin to gambling with the rakyat’s money. What if Company A fails to deliver the project? Why take this risk when there are other companies who are far more reliable and cheaper?
Of course, there is nothing to prevent Company A from subcontracting the project to Company B, who can pull off the project with lower costs and hence price. Company A ends up with a profit by doing nothing, apart from securing the fat government tender. Company B gets the project it is fully qualified for in the first place, albeit from the “winning” bidder, and delivers. However, we, the tax-payers end up with a higher tab. Is this fair?
Ultimately, the Government, as custodians of the people’s money, must have the interests of the people in mind. So what if “only the strong and those with financial capacity” benefit from open tenders, if the people also benefits? After all, it is the rakyat that the Government is subservient to, not businesses. Equity to the People first, not companies!
Wednesday, March 26, 2008
Open Revolt
Time is fast running out for PM Badawi to make a graceful exit and ease the transition of power for the nation’s sake.
The electorate registered a huge protest vote against his leadership by stripping the BN of their two-thirds majority in March 2008. This is a massive swing from his 2004 landslide win. In addition to Kelantan, the people of Penang, Perak, Kedah and Selangor punished his complacency by putting an Opposition government in power.
Right after the elections, in the states of Perlis and Terengganu, His Majesties delivered a huge blow to his credibility as Prime Minister by rejecting his choice of Menteri Besar. His own UMNO assemblymen gave him a slap in his face by accepting the appointments with the full knowledge that it is a direct challenge to his authority.
In his recent Cabinet announcements, 2 of his appointees declined his nomination.
The Prime Minister’s Office, as an institution, is bigger than any one man. It is clear than the current holder can no longer wield the full power and influence that this office bestows. By postponing the UMNO General Assembly, he is telling Malaysians that even his UMNO Presidency (and hence PM of Malaysia) is under threat. This means right until May 2009, PM Badawi will be embroiled in an internal fight to keep him in office, instead of exercising his Prime Ministerial duties in the face of what has been billed the biggest economic challenge since the Great Depression.
Malaysians from all walks of life has spoken, and for a PM with “big ears”, isn’t the message clear enough?
The electorate registered a huge protest vote against his leadership by stripping the BN of their two-thirds majority in March 2008. This is a massive swing from his 2004 landslide win. In addition to Kelantan, the people of Penang, Perak, Kedah and Selangor punished his complacency by putting an Opposition government in power.
Right after the elections, in the states of Perlis and Terengganu, His Majesties delivered a huge blow to his credibility as Prime Minister by rejecting his choice of Menteri Besar. His own UMNO assemblymen gave him a slap in his face by accepting the appointments with the full knowledge that it is a direct challenge to his authority.
In his recent Cabinet announcements, 2 of his appointees declined his nomination.
The Prime Minister’s Office, as an institution, is bigger than any one man. It is clear than the current holder can no longer wield the full power and influence that this office bestows. By postponing the UMNO General Assembly, he is telling Malaysians that even his UMNO Presidency (and hence PM of Malaysia) is under threat. This means right until May 2009, PM Badawi will be embroiled in an internal fight to keep him in office, instead of exercising his Prime Ministerial duties in the face of what has been billed the biggest economic challenge since the Great Depression.
Malaysians from all walks of life has spoken, and for a PM with “big ears”, isn’t the message clear enough?
Sunday, March 16, 2008
Lazy Sunday Afternoon
2 statements by RANDY DAVID (Sunday Star, 16 March 2008) caught my eye. It is from an article titled " When modern institutions work", illustrating how a fast-rising Democrat and potential presidential nominee Elliot Spitzer being brought crashing down to earth due to a sex scandal exposed no less by the banking system, the internal revenue office, the FBI and the courts.
"Institutions are the evolutionary achievements of society, the means by which stable collective life is assured. They begin to malfunction when they get corrupted, when they allow themselves to become the extension of personal power."
"The legal system is represented in the form of a blindfolded lady holding the scale of justice. The law weights the evidence, but is blind to the social standing or power of those appearing before it".
Democracy may have prevailed in the 12th GE, however, our judicial system, as evidenced by the shambolic revelations in the Lingam Royal Commision hearing, remains crippled and beholden to executive powers and manipulation by big names. Lets see if the wind of change will blow through the courts as well.
"Institutions are the evolutionary achievements of society, the means by which stable collective life is assured. They begin to malfunction when they get corrupted, when they allow themselves to become the extension of personal power."
"The legal system is represented in the form of a blindfolded lady holding the scale of justice. The law weights the evidence, but is blind to the social standing or power of those appearing before it".
Democracy may have prevailed in the 12th GE, however, our judicial system, as evidenced by the shambolic revelations in the Lingam Royal Commision hearing, remains crippled and beholden to executive powers and manipulation by big names. Lets see if the wind of change will blow through the courts as well.
Thursday, March 13, 2008
Perak MB Swearing-In Cancelled
The Opposition coalition has to quickly recognize the position it finds itself now –a position of 2 polar opposites – they are Governments in the 5 States that they have won, and they are Opposition at the Federal level. This calls for careful re-evaluation of their strategies because the realities have changed, which can work for or against their favour. The two starkest changes are obvious: Power and Media.
Absolute power corrupts, abrupt Power intoxicates. The initial signs are that the Opposition has allowed the euphoria of winning to make them forget what clinched them the historic victory in the first place. It was the people who were willing to give the Opposition coalition – PKR, DAP and PAS a chance – by voting across racial and religious lines – Chinese for PAS, Malay for DAP/PKR. And they rightfully demand that they work together and prove to them they are a better alternative to the ruling BN. And how they have let the people down. The Opposition has already started to engage in internal bickering to see who gets what. Have they lost sight of the real prize? The real prize is the Federal Government, and the Opposition coalition has less than 4 years to get their act together to prove that what they preach in Opposition, they can deliver in Government in the 5 states they now rule. Stop fighting for scraps under the dinner table. The people has given you power, so start governing!
Secondly, whereas before the Opposition has to resort to alternative media to get their voices heard, they are now the media darlings. All mainstream newspapers and broadcasters want to get a piece of them. This Britney-Spears attention has obviously got them unprepared, as they are still fumbling to get out a coherent, unified message. Instead of exploiting the current BN shaky foundations, they allowed themselves to become the focal attention of a coalition in disarray. Press statements are given by various Opposition Leaders without conferring with each other, eliciting swift contradictory statements and perpetuating the notion of disunity and confusion in the Opposition ranks.
I echo one statement made by a prominent blogger - can all the Opposition Leaders shut up? You are now a YB, not a MC. Your job now is to govern, not to give press statements. Create a media team that has to get any media release approved by the 3 respective Parties’ central committees. Issue press releases that are with substance – new state policies that are transparent, fair and beneficial to the people. Expose any corruption of previous state administrations. Let the media focus on BN – they are the ones with a weak foundation and an infighting that will eventually unravel.
In a nutshell, welcome to the adults’ table – now, please start to act like one.
Absolute power corrupts, abrupt Power intoxicates. The initial signs are that the Opposition has allowed the euphoria of winning to make them forget what clinched them the historic victory in the first place. It was the people who were willing to give the Opposition coalition – PKR, DAP and PAS a chance – by voting across racial and religious lines – Chinese for PAS, Malay for DAP/PKR. And they rightfully demand that they work together and prove to them they are a better alternative to the ruling BN. And how they have let the people down. The Opposition has already started to engage in internal bickering to see who gets what. Have they lost sight of the real prize? The real prize is the Federal Government, and the Opposition coalition has less than 4 years to get their act together to prove that what they preach in Opposition, they can deliver in Government in the 5 states they now rule. Stop fighting for scraps under the dinner table. The people has given you power, so start governing!
Secondly, whereas before the Opposition has to resort to alternative media to get their voices heard, they are now the media darlings. All mainstream newspapers and broadcasters want to get a piece of them. This Britney-Spears attention has obviously got them unprepared, as they are still fumbling to get out a coherent, unified message. Instead of exploiting the current BN shaky foundations, they allowed themselves to become the focal attention of a coalition in disarray. Press statements are given by various Opposition Leaders without conferring with each other, eliciting swift contradictory statements and perpetuating the notion of disunity and confusion in the Opposition ranks.
I echo one statement made by a prominent blogger - can all the Opposition Leaders shut up? You are now a YB, not a MC. Your job now is to govern, not to give press statements. Create a media team that has to get any media release approved by the 3 respective Parties’ central committees. Issue press releases that are with substance – new state policies that are transparent, fair and beneficial to the people. Expose any corruption of previous state administrations. Let the media focus on BN – they are the ones with a weak foundation and an infighting that will eventually unravel.
In a nutshell, welcome to the adults’ table – now, please start to act like one.
Wednesday, March 12, 2008
The Fish Rots from the Head
BN has not learnt its lesson. It fielded many new faces in the 12th General Election in its bid to convince the electorate that it is in a process of rejuvenation. Its severe loss however, clearly showed that the strategy failed. In contrast, many new faces from the Opposition went on to thump veteran BN candidates. How is it that the same rejuvenation strategy yielded huge defeats to one party but handsomely rewards another?
The answer is so obvious, that the BN leadership must be in denial as it seeks to absolve itself of its responsibility. A rejuvenation process has to start from the top-down, not bottom-up. Whereas the Opposition presented a clear new direction, with its leadership espousing brave changes to the way it wanted to govern the country, the BN leadership stuck to its old agenda. Whereas the Opposition leadership is ready to stake its credibility by challenging the status quo, the BN leadership stuck to its old tired formula of “if it ain’t broken, don’t fix it”.
Hence, even with many fresh faces in the line-up, the people have no reason to believe the renewal process is a genuine one, when old hands in the leadership is still steering the ship. Fresh faces are needed at the top, not at the bottom!
(For example, in the UK, Tony Blair’s transformation of the Labour Party into New Labour convinced the British people to break more than a decade of Conservative rule and gave him a landslide majority. New Labour was successful because Tony Blair himself presented a fresh change from “Old” Labour (under John Smith), and he successfully moved the Party to the centre by purging the leadership of veterans who were still clinging to the left. )
In the aftermath of their heavy loss, the BN leadership is still living the illusion that they can “rejuvenate” the party. If they have failed to convince the electorate before the 8th of March 2008, what makes them think they can after this historic day? If the BN leadership genuinely wants to rejuvenate the party, it has to hand over the reins to a new leadership. Only a new leadership can convince the people that change is at hand. Save yourselves, destroy the party. Leave now, and there is hope for BN.
As Barack Obama says so eloquently, give us “Change We Can Believe In”.
The answer is so obvious, that the BN leadership must be in denial as it seeks to absolve itself of its responsibility. A rejuvenation process has to start from the top-down, not bottom-up. Whereas the Opposition presented a clear new direction, with its leadership espousing brave changes to the way it wanted to govern the country, the BN leadership stuck to its old agenda. Whereas the Opposition leadership is ready to stake its credibility by challenging the status quo, the BN leadership stuck to its old tired formula of “if it ain’t broken, don’t fix it”.
Hence, even with many fresh faces in the line-up, the people have no reason to believe the renewal process is a genuine one, when old hands in the leadership is still steering the ship. Fresh faces are needed at the top, not at the bottom!
(For example, in the UK, Tony Blair’s transformation of the Labour Party into New Labour convinced the British people to break more than a decade of Conservative rule and gave him a landslide majority. New Labour was successful because Tony Blair himself presented a fresh change from “Old” Labour (under John Smith), and he successfully moved the Party to the centre by purging the leadership of veterans who were still clinging to the left. )
In the aftermath of their heavy loss, the BN leadership is still living the illusion that they can “rejuvenate” the party. If they have failed to convince the electorate before the 8th of March 2008, what makes them think they can after this historic day? If the BN leadership genuinely wants to rejuvenate the party, it has to hand over the reins to a new leadership. Only a new leadership can convince the people that change is at hand. Save yourselves, destroy the party. Leave now, and there is hope for BN.
As Barack Obama says so eloquently, give us “Change We Can Believe In”.
Sunday, March 9, 2008
A Letter to the Star Editor
Dear Sir
It is not the Opposition that has broken the National Front’s seemingly invincible two-thirds majority. It is the People. It is not that the Opposition wrested the states of Selangor, Penang, Perak, Kelantan and Kedah. It was the People that consented to the new governments.
This was despite the extreme biased reporting on the part of the mainstream media, of which Star was part of. I have never seen such one-sided opinion in favour of the ruling party. Positive spin was poured on ruling coalition candidates’ campaign rounds, while the opposition’s campaigns were barely covered. And when it was, it was mostly negative commentaries.
Where is the responsible and fair journalism? Do not mock our intelligence. By demonstrating such blatant disregard for unbiased reporting, the Star failed in its duty to play a role as an important pillar of Malaysia’s democratic process. It only serves to push the readers to resort to alternative media, while the Star’s reports was read with great scepticism, and in some instances, even anger at the complete disregard for fair competition in a democratic country.
Of course we know that the Star is not an independent corporate entity, since its ultimate owner is a component party of the ruling BN. However, unless it wants to maintain its relevance as an important institution in the Malaysian society whose editorials are respected and read without preset prejudices, it has to break its shackles from its political masters. Let us form our own opinions by giving us both sides of the stories. If the Star continues to neglect its role as a provider of balanced views and genuine news to the People, then it will be a matter of time before its readers forsake the Star and turn to other sources that will.
It is not the Opposition that has broken the National Front’s seemingly invincible two-thirds majority. It is the People. It is not that the Opposition wrested the states of Selangor, Penang, Perak, Kelantan and Kedah. It was the People that consented to the new governments.
This was despite the extreme biased reporting on the part of the mainstream media, of which Star was part of. I have never seen such one-sided opinion in favour of the ruling party. Positive spin was poured on ruling coalition candidates’ campaign rounds, while the opposition’s campaigns were barely covered. And when it was, it was mostly negative commentaries.
Where is the responsible and fair journalism? Do not mock our intelligence. By demonstrating such blatant disregard for unbiased reporting, the Star failed in its duty to play a role as an important pillar of Malaysia’s democratic process. It only serves to push the readers to resort to alternative media, while the Star’s reports was read with great scepticism, and in some instances, even anger at the complete disregard for fair competition in a democratic country.
Of course we know that the Star is not an independent corporate entity, since its ultimate owner is a component party of the ruling BN. However, unless it wants to maintain its relevance as an important institution in the Malaysian society whose editorials are respected and read without preset prejudices, it has to break its shackles from its political masters. Let us form our own opinions by giving us both sides of the stories. If the Star continues to neglect its role as a provider of balanced views and genuine news to the People, then it will be a matter of time before its readers forsake the Star and turn to other sources that will.
Saturday, March 8, 2008
8th March 2008 - A Glorious Day
I woke up today to a glorious morning. A perfect storm has swept, leaving not destruction in its wake, but an upheaval in the political structure and a fresh beginning throughout the peninsula.
Malaysians today can proudly proclaim that their thunderous message can be heard through-out the entire country. No more political hegemony. No more race-based politics. The opposition coalition, led by the multi-racial Party Keadilan Rakyat, has delivered a huge blow to the seemingly invincible two-thirds Parliamentary majority that has been held by the ruling party for so long.
BN has only itself to blame. This time, its substantial loss of seats is not due to one particular race switching to the opposition camp. Malays, Chinese and the Indians have indicated that PKR, DAP and PAS is a viable alternative coalition. How did the BN, from a formidable 90% majority in the 2004 elections, could have stumped to substantial loss in a matter of 4 years, a huge pendulum swing?
Prime Minister Badawi has to shoulder the responsibility as the BN leader that has led the coalition to its first two-thirds majority loss in its entire history. He won a huge mandate in the 2004 elections, by promising to be a PM to all Malaysians, by promising to act on corruption and reduce excess spending, by promising to improve the civil service. But he failed to deliver - crime became more rampant; there was no open tender of projects; virtually no convictions for exposed cases of corruption. He said he is a PM to all Malaysians, yet engage in a scare tactic to cower Chinese and Indian to vote for MCA and MIC, otherwise, their voice will be lost in the Cabinet, and hence, excluded from decision-making that will affect their livelihoods.
Malaysians did give PM Badawi more time to fulfil his promises. We still elected BN into government in this 2008 elections. However, this time, we are telling the BN party, we want to see results this time. No more empty rhetoric. No more arrogance that we should be told what is best for us. Whether we are Malays, Indians or Chinese, we want to see transparency; tolerance and respect in the way Malaysia is governed.
It is a healthy development for Malaysian politics. 8th March 2008 is a day I will remember forever. It is the day my faith in Malaysia is restored. It is the day where I smiled even though I haven’t slept in the last 22 hours, knowing my daughters can look forward to a brighter future in Malaysia. It is the day, where we the Malaysian rakyat finally did something which the ruling party BN has preach but never practice religiously, that it is just possible, for the Malays, Chinese and Indians, to find a common voice in order to achieve a common good that transcends race and religion. This is not so much a defeat for the ruling BN, or a win for the opposition. It is a victory for Malaysian politics – for all Malaysians.
It is a glorious day.
Malaysians today can proudly proclaim that their thunderous message can be heard through-out the entire country. No more political hegemony. No more race-based politics. The opposition coalition, led by the multi-racial Party Keadilan Rakyat, has delivered a huge blow to the seemingly invincible two-thirds Parliamentary majority that has been held by the ruling party for so long.
BN has only itself to blame. This time, its substantial loss of seats is not due to one particular race switching to the opposition camp. Malays, Chinese and the Indians have indicated that PKR, DAP and PAS is a viable alternative coalition. How did the BN, from a formidable 90% majority in the 2004 elections, could have stumped to substantial loss in a matter of 4 years, a huge pendulum swing?
Prime Minister Badawi has to shoulder the responsibility as the BN leader that has led the coalition to its first two-thirds majority loss in its entire history. He won a huge mandate in the 2004 elections, by promising to be a PM to all Malaysians, by promising to act on corruption and reduce excess spending, by promising to improve the civil service. But he failed to deliver - crime became more rampant; there was no open tender of projects; virtually no convictions for exposed cases of corruption. He said he is a PM to all Malaysians, yet engage in a scare tactic to cower Chinese and Indian to vote for MCA and MIC, otherwise, their voice will be lost in the Cabinet, and hence, excluded from decision-making that will affect their livelihoods.
Malaysians did give PM Badawi more time to fulfil his promises. We still elected BN into government in this 2008 elections. However, this time, we are telling the BN party, we want to see results this time. No more empty rhetoric. No more arrogance that we should be told what is best for us. Whether we are Malays, Indians or Chinese, we want to see transparency; tolerance and respect in the way Malaysia is governed.
It is a healthy development for Malaysian politics. 8th March 2008 is a day I will remember forever. It is the day my faith in Malaysia is restored. It is the day where I smiled even though I haven’t slept in the last 22 hours, knowing my daughters can look forward to a brighter future in Malaysia. It is the day, where we the Malaysian rakyat finally did something which the ruling party BN has preach but never practice religiously, that it is just possible, for the Malays, Chinese and Indians, to find a common voice in order to achieve a common good that transcends race and religion. This is not so much a defeat for the ruling BN, or a win for the opposition. It is a victory for Malaysian politics – for all Malaysians.
It is a glorious day.
Sunday, February 24, 2008
Malaysia Chooses 2008
"Let our track record speak for itself." This the the rallying cry coming from all Barisan Nasional candidates. Indeed, it is an impressive track record. Since independence, Malaysia has been transformed by successive Prime Ministers into a modern country with many achievements to be proud of. I am proud to be a Malaysian, and I stand in awe of the work and accomplishments that our leaders has brought to our nation.
However, lets not confuse past performance with future performance. Malaysians are generally avid stock punters, and those with long memories of the local stock market will tell anyone who would listen how they were burnt by a "darling stock" - a stock that was previously touted to be a blue chip investment based on its track record and strong fundamentals, only to be routed to penny stock status when the reality is exactly the opposite.
Apart from that, we need to ask, "Whose track record?" The present leadership of BN, under the current Prime Minister, has been in power for 4 years. To critically access whether it has been a successful one, we need to ask: whether the new administration has advanced the track record it has inherited from its predecessors; whether it has made positive changes to rectify obvious weaknesses in the previous administration; and finally, whether the new leadership has made any concrete changes in policies and governance that benefit the people.
PM Badawi got a landslide victory in 2004 because many people, myself included, believed that he is a breath of fresh air, a noble man who will fulfill the true destiny of Malaysia by being a PM to all races. A PM who will push Malaysians to reach their potential via hard work and intellect, not via connections. A PM who will strive to reward competence and success, and penalize mediocrity and failure. A PM who will lead a responsible and transparent government, one who will unite the various race, so we compete not with each other but against other countries (say Singapore) whom has exceeded our achievements.
However, what we have seen in the 4 years since PM Badawi's victory is disheartening. The pain is made worse when we have given such a strong mandate to the PM, only to see the mandate being squandered away. BN MPs are openly raking the May 13 incident, when we should be looking forward, not backwards. Zero marks for tolerance. BN MPs are openly humiliating women in parliament. Zero marks for respect. BN's elected representatives who broke the law are getting away with it, while ordinary rakyat are hauled up for the same offence. Zero marks for integrity.
Prices of essential goods have risen substantially. This cannot be blamed on the current administration, since it is a worldwide phenomenon as commodities prices surged. Yet, instead of practicing responsible governance, the current BN leadership espoused the rakyat to "change our lifestyles". Instead of tightening its pursestrings, the current leadership continue to splurge on prestige events (the Monsoon Cup), proposed to build a sports centre in a foreign land that costs hundreds of millions of ringgit, sending a Malaysian on a tour of space, to name a few. Low marks for prudence.
How about the promise to revamp the police force? Where is the independent commission recommended by the Royal Commision? Why has the ACA not produced any conviction?
PM Badawi asked for more time, and it is given that he will be given more time. With the formidable resources and organization that the BN has in this General Election against the Opposition, the outcome is heavily in the former's favour. With the mainstream media skewed to paint a favourable picture of the government, we will not get to enjoy the robust workings of democracy in action. In the US, the media is an integral part of the democratic system where investigative journalism and critical editorials let the voters decide if either side are speaking the truth. In Malaysia, the broadsheets display little independence from their business owners, who are the ruling political parties or affiliated to them.
The election will yield huge wins for BN. This is a certainty. However, lets hope there will be one or two major upsets, one or two surprises, one or two miracles. Lets send out a message, that we the people matters.
However, lets not confuse past performance with future performance. Malaysians are generally avid stock punters, and those with long memories of the local stock market will tell anyone who would listen how they were burnt by a "darling stock" - a stock that was previously touted to be a blue chip investment based on its track record and strong fundamentals, only to be routed to penny stock status when the reality is exactly the opposite.
Apart from that, we need to ask, "Whose track record?" The present leadership of BN, under the current Prime Minister, has been in power for 4 years. To critically access whether it has been a successful one, we need to ask: whether the new administration has advanced the track record it has inherited from its predecessors; whether it has made positive changes to rectify obvious weaknesses in the previous administration; and finally, whether the new leadership has made any concrete changes in policies and governance that benefit the people.
PM Badawi got a landslide victory in 2004 because many people, myself included, believed that he is a breath of fresh air, a noble man who will fulfill the true destiny of Malaysia by being a PM to all races. A PM who will push Malaysians to reach their potential via hard work and intellect, not via connections. A PM who will strive to reward competence and success, and penalize mediocrity and failure. A PM who will lead a responsible and transparent government, one who will unite the various race, so we compete not with each other but against other countries (say Singapore) whom has exceeded our achievements.
However, what we have seen in the 4 years since PM Badawi's victory is disheartening. The pain is made worse when we have given such a strong mandate to the PM, only to see the mandate being squandered away. BN MPs are openly raking the May 13 incident, when we should be looking forward, not backwards. Zero marks for tolerance. BN MPs are openly humiliating women in parliament. Zero marks for respect. BN's elected representatives who broke the law are getting away with it, while ordinary rakyat are hauled up for the same offence. Zero marks for integrity.
Prices of essential goods have risen substantially. This cannot be blamed on the current administration, since it is a worldwide phenomenon as commodities prices surged. Yet, instead of practicing responsible governance, the current BN leadership espoused the rakyat to "change our lifestyles". Instead of tightening its pursestrings, the current leadership continue to splurge on prestige events (the Monsoon Cup), proposed to build a sports centre in a foreign land that costs hundreds of millions of ringgit, sending a Malaysian on a tour of space, to name a few. Low marks for prudence.
How about the promise to revamp the police force? Where is the independent commission recommended by the Royal Commision? Why has the ACA not produced any conviction?
PM Badawi asked for more time, and it is given that he will be given more time. With the formidable resources and organization that the BN has in this General Election against the Opposition, the outcome is heavily in the former's favour. With the mainstream media skewed to paint a favourable picture of the government, we will not get to enjoy the robust workings of democracy in action. In the US, the media is an integral part of the democratic system where investigative journalism and critical editorials let the voters decide if either side are speaking the truth. In Malaysia, the broadsheets display little independence from their business owners, who are the ruling political parties or affiliated to them.
The election will yield huge wins for BN. This is a certainty. However, lets hope there will be one or two major upsets, one or two surprises, one or two miracles. Lets send out a message, that we the people matters.
Tuesday, January 8, 2008
Hypocrisy
Every day, our learned politicians urged the people to "change our mindset"; "live in harmony"; "improve our skills", "practice tolerance". Our national newspapers are full of these slogans. No wonder more people are turning to blogs and international papers for real news and debates.
Mahatma Gandhi said, "We must be the change we wish to see in the world.".
To our leaders - please lead by example - have the courage to take the first step.
Mahatma Gandhi said, "We must be the change we wish to see in the world.".
To our leaders - please lead by example - have the courage to take the first step.
Sunday, January 6, 2008
Defining the National Cake
All Malaysians, including myself, have been beneficiaries of the strong economic growth that Malaysia has enjoyed for the past few decades. Affirmative action in Malaysia, notably via the NEP, has never created any obstacles in my way – whether in pursuit of a good education or a good employment. If the NEP is designed to make Malaysia more equitable, without holding back any one particular group, I say, go for it. No nation can enjoy prosperity, hand in hand with peace, when the minority consumes a huge chunk of the national cake whilst the majority scrambles for scraps. Nor could any country claimed to be truly developed when a significant minority lives in squalor while the country can afford to build the tallest towers in the world or the most beautiful administrative capital.
The NEP has some measure of success. Poverty rate is down, and sizeable middle-class families are created amongst the Bumiputera’s and across other ethnic groups. However, the NEP’s target of increasing Bumiputera’s ownership in the nation’s corporate wealth to 30% still falls short. The question is; is corporate wealth an appropriate yardstick of Malaysia’s economic wealth? Put it another way, is 30% of the nation’s corporate wealth equivalent to 30% of the nation’s economic wealth? Are there any other targets that the government should consider for inclusion?
Taking corporate wealth as the only yardstick is flawed. For one, it is “leaky”, i.e. shares and equity ownership is extremely fluid. It is difficult to ensure it stays within the intended beneficiary group, whether in bad times or in good times. In bad times, certain quarters are susceptible to liquidate their holdings even where the realized value is lower than the initial purchase price, in order to reap some temporary financial reprieve. In good times, some may sell equity/make redemptions to make quick profits, but the proceeds are not channeled to another class of assets which generates returns or capital gains. The fact that the Bumiputera’s ownership of share capital declined during the 1997 Asian financial crisis indicates that wealth retention in the form of corporate equity is inherently unstable. A more “sticky” class of assets needs to be included.
“Sticky” assets in this sense must fulfill two conditions: – Firstly, it must not only retain its value, but the value should grow steadily over the owners’ lifetimes. Secondly, it must equip the owners with the lifetime ability to secure more income and wealth. Home ownership serves the first purpose; whilst education fulfils the second. Indeed, the previous NEP has incorporated programmes to provide housing and education entitlements for the poor. What is lacking, however, is a visible, concrete target for each of these enabling factors. A new programme of poverty eradication must include setting targets for, 1) percentage of home ownership among the low-income groups; and 2) percentage of education participation among children from low income groups.
A home is a basic necessity that every Malaysian household must possess. Good homes provide a conducive environment to raise harmonious and productive family units, in addition to providing a sense of financial security to the household. House values tend to appreciate, at least in tandem with inflation over a lifetime. As house purchases easily constitutes the largest lifetime expenditure of any families, it is even more critical to assist poor families to attain this basic right. The poor has almost no access to bank loans; hence the government has to step in to provide cheap housing loans to the poor to widen home ownership. Bumiputera house discounts should also be restructured. For homes prices exceeding, say RM300, 000, Bumiputera purchasers should pay the full price, and the discount proceeds are channeled to a central housing fund for the less fortunate Bumiputera’s. It is surely an equitable and progressive move to ensure those who can afford expensive homes are not subsidized, whilst there are those who can’t even decent homes.
It is also important not to create clusters of cheap homes merely to fulfill the objective of increasing home ownership amongst the poor. Those from low-income groups also demand, rightfully, houses of adequate quality, and they do not wish to be segregated into “poor neighbourhoods” reminiscent of the ghettos and slums in the US. The government must integrate poor families into the mainstream Malaysian society, and not sidelined them into a separate environment where despair and low self esteem is allowed to fester.
A second target, the percentage of children from poor families enrolled in primary to tertiary schools, must be defined. Households who fall below the poverty line (or indeed, just above) tends to neglect education for their children. Poor families tend to have larger families, and thus have a high dependency on their off-springs to bring home some income to sustain the whole family. Hence, these underprivileged children will never have the opportunity to break free from their parents’ financial predicament. Generations to come are mired in a low-income trap as their job opportunities are extremely narrow without any solid academic credentials. The enrollment percentages must be continuously monitored, to ensure every underprivileged child completes his or her education all the way to attaining a university degree. This can be achieved via an assortment of full scholarships; incentives to parents for every child put through school; and if necessarily, reserved quota of university places.
John F. Kennedy once quoted, “a rising tide lifts all ships.” The fruits of strong economic growth are spread, though not necessarily equitably, among the low-income groups to the high net worth individuals. When the national cake is expanding, each citizen’s slice, though unequal in size, gets bigger. That keeps most happy. Nevertheless, there will come a time when the Malaysian economy stop growing strongly, or even contracts. When that happens, income and consequently wealth distribution will be even more skewed. Should the Malaysian economy stalls, then redistribution will be a zero-sum gain, a term economists coined which basically means someone else’ gain will be someone else’s loss. Poverty eradication works best when the economy is still expanding, and when measurable targets that matters to the man on the street are set. No Malaysians can be disenfranchised from the abundance of fruits that our blessed nation has to offer. The NEP, or any other poverty eradication programme, must be sustained until this poverty scourge is eliminated from our society, albeit with some serious policy changes.
The NEP has some measure of success. Poverty rate is down, and sizeable middle-class families are created amongst the Bumiputera’s and across other ethnic groups. However, the NEP’s target of increasing Bumiputera’s ownership in the nation’s corporate wealth to 30% still falls short. The question is; is corporate wealth an appropriate yardstick of Malaysia’s economic wealth? Put it another way, is 30% of the nation’s corporate wealth equivalent to 30% of the nation’s economic wealth? Are there any other targets that the government should consider for inclusion?
Taking corporate wealth as the only yardstick is flawed. For one, it is “leaky”, i.e. shares and equity ownership is extremely fluid. It is difficult to ensure it stays within the intended beneficiary group, whether in bad times or in good times. In bad times, certain quarters are susceptible to liquidate their holdings even where the realized value is lower than the initial purchase price, in order to reap some temporary financial reprieve. In good times, some may sell equity/make redemptions to make quick profits, but the proceeds are not channeled to another class of assets which generates returns or capital gains. The fact that the Bumiputera’s ownership of share capital declined during the 1997 Asian financial crisis indicates that wealth retention in the form of corporate equity is inherently unstable. A more “sticky” class of assets needs to be included.
“Sticky” assets in this sense must fulfill two conditions: – Firstly, it must not only retain its value, but the value should grow steadily over the owners’ lifetimes. Secondly, it must equip the owners with the lifetime ability to secure more income and wealth. Home ownership serves the first purpose; whilst education fulfils the second. Indeed, the previous NEP has incorporated programmes to provide housing and education entitlements for the poor. What is lacking, however, is a visible, concrete target for each of these enabling factors. A new programme of poverty eradication must include setting targets for, 1) percentage of home ownership among the low-income groups; and 2) percentage of education participation among children from low income groups.
A home is a basic necessity that every Malaysian household must possess. Good homes provide a conducive environment to raise harmonious and productive family units, in addition to providing a sense of financial security to the household. House values tend to appreciate, at least in tandem with inflation over a lifetime. As house purchases easily constitutes the largest lifetime expenditure of any families, it is even more critical to assist poor families to attain this basic right. The poor has almost no access to bank loans; hence the government has to step in to provide cheap housing loans to the poor to widen home ownership. Bumiputera house discounts should also be restructured. For homes prices exceeding, say RM300, 000, Bumiputera purchasers should pay the full price, and the discount proceeds are channeled to a central housing fund for the less fortunate Bumiputera’s. It is surely an equitable and progressive move to ensure those who can afford expensive homes are not subsidized, whilst there are those who can’t even decent homes.
It is also important not to create clusters of cheap homes merely to fulfill the objective of increasing home ownership amongst the poor. Those from low-income groups also demand, rightfully, houses of adequate quality, and they do not wish to be segregated into “poor neighbourhoods” reminiscent of the ghettos and slums in the US. The government must integrate poor families into the mainstream Malaysian society, and not sidelined them into a separate environment where despair and low self esteem is allowed to fester.
A second target, the percentage of children from poor families enrolled in primary to tertiary schools, must be defined. Households who fall below the poverty line (or indeed, just above) tends to neglect education for their children. Poor families tend to have larger families, and thus have a high dependency on their off-springs to bring home some income to sustain the whole family. Hence, these underprivileged children will never have the opportunity to break free from their parents’ financial predicament. Generations to come are mired in a low-income trap as their job opportunities are extremely narrow without any solid academic credentials. The enrollment percentages must be continuously monitored, to ensure every underprivileged child completes his or her education all the way to attaining a university degree. This can be achieved via an assortment of full scholarships; incentives to parents for every child put through school; and if necessarily, reserved quota of university places.
John F. Kennedy once quoted, “a rising tide lifts all ships.” The fruits of strong economic growth are spread, though not necessarily equitably, among the low-income groups to the high net worth individuals. When the national cake is expanding, each citizen’s slice, though unequal in size, gets bigger. That keeps most happy. Nevertheless, there will come a time when the Malaysian economy stop growing strongly, or even contracts. When that happens, income and consequently wealth distribution will be even more skewed. Should the Malaysian economy stalls, then redistribution will be a zero-sum gain, a term economists coined which basically means someone else’ gain will be someone else’s loss. Poverty eradication works best when the economy is still expanding, and when measurable targets that matters to the man on the street are set. No Malaysians can be disenfranchised from the abundance of fruits that our blessed nation has to offer. The NEP, or any other poverty eradication programme, must be sustained until this poverty scourge is eliminated from our society, albeit with some serious policy changes.
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