ASEAN-US Security Relations Moving to a New Level


 
east-west-center-asia-pacific-bulletin
Number 256 | April 15, 2014
ANALYSIS

ASEAN-US Security Relations: Moving to a New Level

by Mary Fides Quintos and Joycee Teodoro

Chuck Hagel -The United States has just completed hosting a three-day forum with the ten ASEAN Defense Ministers in Hawai’i, fulfilling US Secretary of Defense Chuck Hagel’s invitation to his ASEAN counterparts during last year’s Shangri-La Dialogue in Singapore. The agenda of the US-ASEAN Defense Ministers’ Forum included a roundtable discussion on humanitarian assistance and disaster response (HA/DR), site visits to the National Oceanic and Atmospheric Administration’s (NOAA) Pacific Tsunami Warning Center and the USS Anchorage–an amphibious transport dock ship designed to respond to crises worldwide–and discussions on various pertinent security issues in the region.

The US-ASEAN Defense Ministers’ Forum marked the beginning of Secretary Hagel’s ten-day trip to Asia which included visits to Japan, China, and Mongolia and is his fourth official visit to the region in less than a year, all part of the ongoing US rebalance policy to Asia. This event was the first meeting that the US hosted, as previous gatherings were conducted on the sidelines of the ASEAN Defense Ministers’ Meeting (ADMM) Retreat and ASEAN Defense Ministers Meeting-Plus (ADMM-Plus) Summit.

The US-ASEAN Defense Ministers’ Forum was conducted under the ambit of the ADMM-Plus which was established in 2007 to serve as a venue for ASEAN to engage with eight dialogue partners–Australia, China, India, Japan, New Zealand, South Korea, Russia, and the United States–in promoting peace and security in the region. To date, ADMM-Plus has established five working groups for practical cooperation covering maritime security, counter-terrorism, humanitarian assistance and disaster management, peacekeeping operations, and military medicine.

This most recent meeting was held amid another wave of tensions on the Korean Peninsula and in the South China Sea. For ASEAN, a recent water cannon incident near Scarborough Shoal involving Filipino fishing vessels and Chinese Coastguard ships, the standoff at Ayungin (Second Thomas) Shoal again between the Philippines and China, and China’s naval exercises at James Shoal which is claimed by Malaysia are all issues of concern.

Indonesia’s strengthening of its military presence in the Natuna Islands which China included in its nine-dash line is another indication of the increasing insecurity and instability in the region. The meeting provided a good opportunity for informal dialogue on the overall security environment in Asia and the possible implications of developments in Ukraine for the principles of sovereignty and territorial integrity within the international order. It also served as an opportunity for the United States to reemphasize that it can be relied upon by ASEAN members in supporting the peaceful settlement of disputes in accordance with international law and in upholding the freedom of navigation and overflight in the region.

With regard to humanitarian assistance and disaster response, Typhoon Haiyan in the Philippines Hishamuddin Husseinlast year and the ongoing search for Malaysia Airlines Flight 370 has demonstrated the lack of capacity of individual ASEAN countries or ASEAN as a bloc to immediately respond to a crisis. Not disregarding the efforts made by the governments of the Philippines and Malaysia, these incidents highlighted the need for the participation of other states particularly in terms of sharing of expertise, technology, and information. The US-ASEAN Defense Ministers’ Forum explored areas where cooperation in these areas can be further strengthened. It was a reiteration of the need for multilateral cooperation in non-traditional security challenges that do not respect territorial boundaries.

The increased frequency of high-level visits by US officials to Asia, the provision of resources to its allies in the region, the reallocation of military hardware, along with ongoing military activities demonstrate that the US intent is to have a closer engagement with the region over the long term. These actions are also manifestations of the US commitment to Asia despite fiscal restraints and the looming crises in other regions where the US is also expected to be involved.

Moreover, they send a strong signal that the United States remains the region’s security guarantor regardless of doubts on its capacity to perform that role. However, the US-led hub-and-spokes alliance security model can be perceived as an act of containment against a particular country, hence the importance that bilateral alliances are supplemented by a multilateral institution that is open and inclusive such as ASEAN in shaping the regional security architecture.

The conclusion of the first US-initiated US-ASEAN Defense Ministers’ Forum highlights the growing importance of ASEAN to the United States, especially if the event becomes more institutionalized. The message is that the United States views ASEAN as a central and strategic player, not only in the US rebalance to Asia but more importantly in the building of a strong and credible regional security architecture for the Asia-Pacific.

The move by the United States to actively engage ASEAN in its rebalance also shows the maturation of ties between them. By acknowledging ASEAN as an important regional actor, the relationship between the two has clearly been elevated. This also raises a key point with regard to respecting ASEAN’s centrality in the region. Economic power and military size notwithstanding, major powers need to recognize that any credible regional security architecture must include ASEAN.

These deliberate and sustained efforts involving ASEAN in devising the region’s security architecture are clear manifestations that the United States is actively engaging more actors in the region for maintaining peace and stability. More importantly, by involving ASEAN, there is the added assurance that the region’s security environment will work under a framework that is not dominated by a single power.

ASEAN, for its part, should see changes in the regional security environment as both opportunities and challenges. While ASEAN has been successful in engaging the major powers in the region, its centrality must continuously be earned. First, it needs to maintain unity amid differences; it should not be influenced by any external actor that seeks to advance its national interests at the expense of regional interests. ASEAN members must learn how to pursue their respective interests not only through national strategies but also through regional unity.

As a community, ASEAN is expected to act as a bloc championing the group’s interests and not only those of the individual member-states. Second, there should be greater commitment to cooperation not only in HA/DR but also in other non-traditional areas of security. Non-traditional security challenges are often transnational in scope and include multiple stakeholders. ASEAN must continuously enhance regional cooperation and coordination in times of crisis, although individual countries must also develop domestic capacity to respond to security challenges.

ASEAN should start addressing this deficit now otherwise institutional mechanisms will remain only on paper. These challenges will force ASEAN to build and improve on its usual practices and move beyond its comfort zone, in the long run benefitting the bloc as it matures institutionally.

About the Authors: Ms. Mary Fides Quintos and Ms. Joycee Teodoro are both Foreign Affairs Research Specialists with the Center for International Relations and Strategic Studies at the Philippines Foreign Service Institute.

The views expressed here belong to the authors alone and do not reflect the institutional stand of the Philippines Foreign Service Institute. Ms. Quintos can be contacted at fides.quintos@gmail.com and Ms. Teodoro at joyteodoro@gmail.com.

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A Debate on William Easterly’s New Book: The Tyranny of Experts


April 14, 2014

Public Event
Easterly

A Debate on William Easterly’s New Book: The Tyranny of Experts

Wednesday, April 9, 2014 – 10:00am to 11:30am

Featuring

William Easterly

Professor of Economics and Co-director, Development Research Institute, New York University

Vs.
Owen Barder
Senior Fellow and Director for Europe, Center for Global Development

Moderated by
Nancy Birdsall
President, Center for Global Development

Why does poverty persist across so much of the world, despite billions of dollars in international aid and the efforts of development professionals? William Easterly’s answer, as proposed in his new book, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor, is a lack of respect for liberty—not just on the part of governments of impoverished countries but also, more provocatively, on the part of the development experts. Owen Barder, Director of CGD in Europe and a noted development expert himself, disagrees. A vote of the audience will determine who wins the debate, which will also be streamed live.

 

Dani Rodrik: Has sustained growth decoupled from industrialization?


April 9, 2014

The George Washington University, Washington DC–Growth Dialogue

http://www.growthdialogue.org/shared-views/dani-rodrikhas-sustained-growth-decoupled-industrialization

Dani Rodrik: Has sustained growth decoupled from industrialization?

Watch Prof. Dani Rodrik’s full presentation at the Symposium on Frontier Issues in Economic Growth.

Attracting Malaysian Talent Home is tough for Johan Merican


April 9, 2014

Malaysia struggles to woo Malaysian experts home due to ‘better life’ abroad–A Tough Job for Johan Merican

 by MD Izwan (04-08-14) @www.themalaysianinsider.com

TalentCorp CEO Johan Mahmood Merican says the agency has several incentives to make it easier for overseas Malaysians to come home, including tax exemptions on their cars. – The Malaysian Insider pic by Najjua Zulkefli, April 8, 2014.

TalentCorp CEO Johan Mahmood Merican says the agency has several incentives to make it easier for overseas Malaysians to come home, including tax exemptions on their cars.–  pic by Najjua Zulkefli, April 8, 2014.

Higher salaries, better professional opportunities and a comfortable life – these are the main reasons Malaysian professionals living abroad are reluctant to return to Malaysia, TalentCorp said.

According to its statistics, TalentCorp managed to bring back 2,500 Malaysians working abroad, but the figure is small when compared with a 2011 World Bank estimate that almost a million Malaysians are working outside the country.

TalentCorp has received almost 4,000 applications in the three years since it was established in 2011 to address the brain drain in the country.

“It is a combination of several factors. First, the quality of life is related to salaries, second, professional opportunities and third, a comfortable life, ” TalentCorp Chief Executive Officer Johan Mahmood Merican told The Malaysian Insider recently. However, the gap in quality of life is not too big when Malaysia is compared with other countries, he said.

“For example, the salaries in London are definitely high but we must increase their awareness about the quality of life after living costs are taken into account. Sometimes, the gap is not that big,” he added.

In terms of professional opportunities, Johan said Malaysia was still capable of offering the best opportunities as the country’s economic position was still good.

“In many other developing countries in the world, their economies are relatively slow but Malaysia’s is steadily progressing,” he said.

“The third factor, there are a lot of reasons for that. It’s true that there are some Malaysians who are worried about education, crime and the political scenario in the country,” he added.

The country which has the highest number of Malaysians wanting to come home is Singapore, followed by the United Kingdom, China, Australia and the Middle East.

According to a World Bank report, Malaysia’s Gross Domestic Product (GDP) was US$303.53 billion (RM995.43 billion) in 2012. Malaysia’s GDP represents 0.49% of the world’s economy.

“When they have been out of the country for too long, it will be hard for them to come home. At least, we appreciate their efforts by giving them incentives.”

The administration of Prime Minister Datuk Seri Najib Razak has targetted Malaysia to become a high-income nation by 2020 through Vision 2020, which was introduced by former Prime Minister Tun Dr Mahathir Mohamad.

As part of efforts to achieve the goal, Najib also introduced fiscal steps to reduce the country’s deficit, but that have affected the inflation rate.

Up till 2013, TalentCorp was allocated RM65 million, but it has received criticism over the huge allocation as it did not reflect in the number of talents brought home.

“TalentCorp is not only about bringing workers from overseas, we also have other programmes such as graduate employability and helping foreign talents,” Johan said.

The area in which most talents have decided to come back to is the business service sector, followed by oil and gas, finance, electronics, information technology and health.

“We support the Economic Transformational Programme (ETP) and not just overseas programmes. We help drive the ETP,” he said, adding that TalentCorp was in line with the government’s goal of achieving a high-income nation by 2020.

Johan also said that TalentCorp does not take on the role of a “recruitment agency” for the talents brought home.

“We do not operate like a recruitment agency because we are a government agency. We do not look for jobs for them; it is up to them to find jobs.However, we realise that Malaysians who have worked overseas for too long will not necessarily be used to the local professional culture so we are prepared to help them to get in touch with recruitment agencies or executives,” he said.

Realising that the move to bring back talent is not easy, Johan said TalentCorp has prepared several incentives to make it easier for them to return to Malaysia.

“When they have been out of the country for too long, it will be hard for them to come home. At least, we appreciate their efforts by giving them incentives.”

Among the incentives are tax exemptions on cars the applicants would like to bring back to Malaysia under the Return Expertise Programme (REP).Johan said it was not fair for others to judge TalentCorp’s work just based on allocations to the agency, as there were other activities that they take on.

“You cannot take a whole amount of allocation and divide it by one activity… we have other different activities.Maybe our activities hardly get any coverage, but we are managing talents in a different aspect,” he said.

In 2011, a World Bank Report revealed that Malaysia was experiencing a huge brain drain to other countries, with almost a million of the country’s professional workforce reported to be working overseas.

According to the report, the migration is caused by the imbalances of the New Economic Policy (NEP), with Indians and Chinese making the highest numbers.

The World Bank warned that if the situation was not addressed as soon as possible, it would slow down the economy and halt the country’s development.

Following the report, Putrajaya set up TalentCorp and introduced programmes to lure Malaysian talents from overseas. – April 8, 2014.

Tengku Razaleigh’s Speech at the launching of “Rich Malaysia, Poor Malaysians”


April 4, 2014

Tengku Razaleigh’s Speech at Sultan Sulaiman Club, Kg Baru, Kuala Lumpur, 8 pm on April 3, 2014 on the occasion of the launching of “RICH MALAYSIA, POOR MALAYSIANS”, authored by Anas Alam Faizli

Ku LiYBM Tengku Razaleigh Hamzah

I am honoured at having been invited by Anas Alam Faizli to launch his book, “Rich Malaysia, Poor Malaysians”, a collection of essays reflecting his thoughts on energy, the economy and education of our beloved country. I applaud Anas for his intellectual discipline to pursue writing which demands mental toughness, quiet tenacity and absolute patience. Indeed, he deserves our admiration.

He deserves our respect given that Malaysians are notoriously apathetic to reading, let alone writing. I respectfully submit that we do not write enough, both fiction and otherwise in comparison to, say, our sprawling archipelagic neighbour to the south. It is in this context that our author deserves our commendation – my commendation in particular – for a task well done, even though the themes are serious and difficult. Well done, Anas.

Book Launch on April 3, 2014Having skimmed through the book, I must admit that I have more than just a passing interest in it; and at least for two reasons. I am always interested in writings on the subject of energy, be they articles for lay reading or academic treatises. I feel especially close when oil and petroleum are discussed. This is because of my task previously to see through the legislation of the Petroleum Development Act, 1974; the negotiation of the production sharing contracts with oil majors whose roles were redefined as contractors to the national oil company in the post-PDA era; and, establishing and developing PETRONAS into a professionally reputable and internationally respectable national oil company.

Secondly, having been schooled in economics, I follow its development keenly, both at the national and international levels. This is strengthened further by my having once been the Minister of Finance charged with the financial and economic management of the country. And of course, given the collective responsibility of the Cabinet, national policies on such subjects as education interest me greatly.

Let us reflect, for a moment, upon the situation regarding the supply and consumption of petroleum in the country and the downstream role of PETRONAS in the retailing of this essential and strategic product. Given our continuous inability to guide the country out of the middle income trap into the high income bracket, we have been using, for long spells, petroleum subsidisation to solve the problem of its affordability by ordinary people in the lower strata of the economic chain. While the subsidising of consumer goods is not the most efficient of ways in managing the high cost of living, it is fairly understandable if the government extends a helping hand to the small man in that manner.

What is sinful and cannot be forgiven is the ease with which the power that be had been dishing out subsidies to such entities as the national power supplier, the independent power producers and some other non-power outfits. As has been pointed out by Anas, since 1997 this subsidy has amounted to RM136.5 billion. The sad part is that while these power producers continue to enjoy subsidised fuel price, petroleum subsidy to the consumers – which purportedly cost the government RM14 billion in 2011 – was partly discontinued recently.

It is glaringly obvious that the government has been treating PETRONAS as a cash cow. Anas continues to point out that over 37 years from 1974 – 2011, the government had been paid some RM529 billion in dividends, taxes, petroleum proceeds and export duties from the national oil company. The reliance on PETRONAS to help outfits with strong linkages to the government out of financial trouble has been going on from as far back as 1985. In that year it rescued Bank Bumiputera with a RM2.5 billion bailout and again in 1991 when it coughed up another RM1 billion. In 1997, Petronas had to rescue the financially ailing Konsortium Perkapalan Berhad for RM2 billion.

The national oil company was also made to underwrite the construction of the Twin Towers in the heart of the KL golden triangle for RM6 billion and the building of the extravagant Putrajaya for RM22 billion. In all, more than a half trillion ringgit have been spent. This amount could have been used more productively to fund a national pension programme for Malaysians as has been done by a certain Scandinavian country.

This extravagance that had been forced on to PETRONAS has also deprived the company from the much needed cash build-up for reinvestment which would ensure its business sustainability. Given the finite nature of hydrocarbon as a resource, it is important for PETRONAS to look further afield at investments in businesses outside of oil and gas.

Looked at from this perspective, it is all the more critical for the corporation to have a strong cash reserve for reinvestment purposes. It was this need for prudence that had led Tun Razak, the Prime Minister of the day, to impress upon me the need to ensure that Petronas would enjoy parity with such multinational companies as the once much touted seven sisters, two of which ultimately became its contractors.

Today PETRONAS is at par with the oil majors and it is ranked as one of Fortune 500’s largest and most profitable oil and gas companies. But sadly, it is being abused and treated as the piggy bank whenever the government needs cash in a hurry.

Ladies and gentlemen, why is this so? Why is there a discrepancy between what was visualised by the founding fathers of PETRONAS and what it has turned out to be 40 years on; that is, as a banker of sorts to the government.

The truth is that there had been consistent political interference and this had affected PETRONAS, even though it is a professionally well run corporation. There is a blurring of lines demarcating the party in power and government, and by extension, the party supremo and the head of government. Cynics would contend that it was done on purpose to facilitate the development of politics of patronage. This, in turn, led to the growth of crony capitalism.

This inter-ethnic dichotomy is no more than a duplication of effort which result in the inefficient application of resources. It is worsened by the economic disparity that continues to be persistently reflected along racial line, notwithstanding the efforts made to blur and wipe it out. As explained by Anas, the bottom 40% of Malaysia in economic terms is still made up of Bumiputera households.

Transpose this against the notion that about 90% of their incomes are made up of wages and salaries which are hardly commensurate with the relatively more rapid increases in living costs, this problem takes on a much darker hue. As an illustration of how low Malaysian income generally is, it is worthwhile noting that the EPF had been known to report that about 79% of its contributors earn RM3,000 or less a month.

This reality becomes more significant when we realise that disposable income contributes much to purchasing power, especially among the relatively poor as opposed to the wealthy where purchasing power is additionally sourced from assets other than salaries and wages. A report on the national human development goes further to say that the “Chinese has a higher purchasing power compared to other ethnic groups…” More problematic and easily a potential source of politico-economic problem is the assertion by the report that there is “homogeneity in the purchasing power gap.” It asserts that the super-rich, regardless of ethnicity, has about 18 to 20 times more purchasing power.

Purchasing power has a graver ramification from the standpoint of economic wellbeing. This has to do with the reality that a person who enjoys a high income is not necessarily guaranteed a better quality of life. Neither does the effort to improve the quality of life through high income mean much if the cost of living rises rampantly. Again, an observation by Anas is very illuminating here. He contends that a graduate who entered the job market for the first time, say, in 1978 on a monthly salary of RM1,000 could afford a lower-end car of RM12,400 or 12 months’ salary and take out a mortgage, perhaps, on a RM62,000 house in a fairly upscale Kuala Lumpur suburb.

Today, a fresh entrant into the labour market on a monthly salary of RM2,500, which is two and half times higher than his earlier counterpart, would find a roughly similar car costing him RM178,000, roughly 71 months of his salary. A house outside the Greater Kelang Valley area, in Nilai for example, would set him back by RM350,000. This situation could get worse in all probability.

Ladies and gentlemen, the challenge before us is to mitigate the socio-political issues and problems to a minimum. This will ensure that they do not become a part of our political culture and, by extension, our way of life. We must have the will to stop patronage and cronyism. In this way rent-seekers would be cut off. But herein lies the problem.

Political leaders are loath to upsetting the apple cart and disturb their cosy symbiosis with rent-seeking cronies. More often than not, these are the people whom they rely upon for political funds in their effort to continue to latch on to power.

What then could be done given this near-checkmate type of a situation? I say pressure must be brought to bear and it must be made known that we will not tolerate any more politics that is less than ethical. We must clearly and loudly make it known that politics must be practised with a high level of integrity. No, politics is not dirty but its practitioners, more often than not, are. In the longer run and in order to ensure that ethical politics of impeccable integrity is practised, we must overhaul our education system.

We need to shift our education paradigm from a system that emphasises regurgitating what is learnt by rote to amass distinctions to one that puts a premium on logical and critical thinking in which source as well as general reading is a major activity in providing the primary material. We must revisit our educational philosophy in order that we may give equal importance to classroom and off-classroom activities in educating the young Malaysian into a potential leader material for the public or private domains. Of course, this is a huge and important subject that needs proper addressing at, perhaps, another forum.

Ladies and gentlemen, in the last several minutes I have shared with you my thoughts on the subjects addressed by Anas in his book. I hope it has generated enough interest to trigger off your critical thoughts on the subjects or other related subjects. In the process it is hoped that some of you will go a step further to put pen to paper as Anas had done. On that note, I take this opportunity to congratulate the author for making the book available to the public which I have much pleasure in introducing. Thank you and I wish you a pleasant day ahead.

*This speech was delivered by former Finance Minister Tengku Razaleigh Hamzah at the launch of the book “Rich Malaysia, Poor Malaysians” by Anas Alam Faizli.

Anas Alam Faizli speaks in Bahasa Malaysia on his book, “Rich Malaysia, Poor Malaysians at Kelab Sultan Sulaiman, Kg. Baru. Kuala Lumpur, Malaysia on April 3, 2014 (below):

Book, Rich Malaysia, Poor Malaysians

Yang dihormati dif-dif jemputan yang terhormat,

YBM Tengku Razaleigh

Dr Syed Husin Ali, YB Saari Sungib, Tan Sri Kamal Salih, TokSu Norizam,

Pak Chong, Siraj, Azlan, Dato Din Merican, Sharaad,…

Para hadirin-hadirat yang dihormati sekalian,

Assalamualaikum warahmatullahi wabarakatuh dan salam sejahtera,

 Saya ingin merakamkan setinggi-tinggi penghargaan kepada YBM Tengku Razaleigh yang sudi merasmikan buku Rich Malaysia, Poor Malaysians dan Malaysia Kaya, Rakyat Miskin. Kredibiliti Tengku tidak dapat dipersoalkan – pengalaman Tengku sebagai Founding Chairman dan CEO Petronas yang juga pernah memegang tampuk kementerian kewangan dan perdagangan antarabangsa serta mantan pengerusi Bank Bumiputra.

Dalam pendidikan pula, Tengku pernah mengatakan pada bulan Julai yang lalu bahawa “Sistem pendidikan negara kita gagal dan kita tidak boleh mempertahankannya lagi. Tambah beliau, satu tindakan yang ikhlas, berani dan radikal diperlukan bagi mempercepatkan proses pembaharuan dalam pelajaran dan pembelajaran.”

Buku kerdil ini juga telah diangkat nilainya ke tahap yang lebih tinggi kerana sumbangan dua orang pemimpin yang saya sangat kagumi dan hormati- pemimpin yang mewakili gen-Y dan juga generasi veteran. Terima kasih yang tidak terhingga diucapkan kepada YB Nurul Izzah dan Senator Dr Syed Husin Ali yang telah mencurahkan pemikiran mereka seterusnya menyuntik kehebatan permulaan kepada buku kerdil ini. Terima kasih juga buat barisan panelis yang sangat tersohor, En Mohamed Siraj, En Azlan Awang, Dato’ Din Merican dan juga moderator Mr Sharaad Kuttan.

Anas Alam FaizliBuku ini merupakan himpunan esei yang telah ditulis dalam tempoh setahun. Manuskrip versi Inggeris dan Bahasa telah siap serentak tetapi versi Inggeris diterbitkan dahulu untuk menilai sambutannya. Walaupun ia merupakan himpunan esei tetapi Alhamdulillah berjaya disusun dalam satu bentuk kronologi yang mempunyai kekuataan tersendiri. Sebuah himpunan esei yang berbicara tentang isu-isu nasional dan global seperti isu tenaga, ekonomi, pendidikan dan kesukarelawan, yang saya harap mampu mencetuskan wadah bicara kritis dan berguna untuk semua.

 Penulisan dimulakan dengan berkongsi amanat almarhum Atok saya, Mohd Zain bin Abu dengan tiga prinsipnya iaitu:

1-  Pendidikan ialah perkara paling penting dan akan sentiasa menjadi keutamaan

2- Elakkanlah seberapa banyak permusuhan dengan orang lain

3-  Dan jadilah orang yang memberikan banyak manfaat kepada orang lain

Buku ini antara lainnya satu usaha untuk memenuhi wasiat Atok, dengan kerendahan diri, satu percubaan kecil untuk menjadi seorang yang bermanfaat.

Idea utama buku ini ialah satu penerimaan bahawa , Malaysia ialah sebuah negara kaya dengan hasil mahsul bumi.  Beratus tahun di jajah dan hasil kekayaan di larikan penjajah,  kita kembali memegang daulat sebuah tanah yang kaya dan mewah. Maka kerana itu,  sebaik sahaja merdeka, tanah ini tidak pernah  putus memberi sumbangannya baik daripada bijih timah, getah, kelapa sawit, bijih besi, bauksit, kayu balak dan terkini minyak dan gas yang menyumbang 40% hasil pendapatan negara.  Semua ini ialah sumber tidak ternilai yang perlu dihargai dan digunakan sebaik mungkin.  Oleh itu,  adalah sangat penting masyarakat umum memahami sebanyak mungkin mengenai industri yang menjadi “cash cow” negara ini.

Bahagian sumber petroleum Malaysia ini dimulakan dengan persoalan adakah kisah Petronas ialah kisah si tanggang? Beberapa soalan penting seperti – bilakah minyak akan habis? Dimanakah industri perkhidmatan tempatan dan isu-isu yang lain telah dikupas malah diakhirnya turut diberikan beberapa cadangan penyelesaian. Kemudiannya, satu penerangan mengenai sejarah Petronas, bagaimanakah ia beroperasi dan sistem fiskal Malaysia diperjelaskan. Konsesi vs PSC. Persengketaan Royalti Minyak juga telah disampaikan secara terperinci daripada perspektif semua negeri yang terlibat. Bahagian ini ditutup dengan cadangan pemberian ekuiti Petronas kepada negeri pengeluar minyak berbanding penambahan Royalti.

Bahagian Sosio-Ekonomi pula dimulakan dengan merungkai 8 realiti Malaysia dan mengapa pendidikan tinggi wajar dibiayai oleh kerajaan. Saya ambil jalan berbeza dan tidak membandingkan dengan negara lain tetapi melihat perspektif kaca mata Malaysia itu sendiri dan menyimpulkan mengapa kita perlukan pendidikan tinggi. Slogan saya dalam buku ini, 1 Keluarga 1 Graduan.

Esei berikutnya menghuraikan dengan panjang lebar apa yang dimaksudkan dengan Negara Berpendapatan Tinggi, Rakyat Berpendapatan Rendah. Malaysia Kaya, Rakyat Miskin.

Ilustrasi disampaikan dengan fakta dan diterangkan secara halus. Kemudiannya saya membuka kisah Mitos Si Kaya dan Si Miskin diikuti dengan penerangan bagaimana sebuah Negara Berkebajikan akan meluncurkan Malaysia kearah masa depan yang jauh lebih baik.

Menuju kearah demokrasi yang lebih kukuh dengan dua parti dominan negara, saya juga menulis bagaimana kaedahnya untuk memahami dan membuat analisis kritikal ke atas manifesto yang dijanjikan oleh parti-parti bertanding.

Bahagian ini ditutup dengan penjelasan panjang mengenai perjanjian TPPA yang sedang dirunding oleh Malaysia.

Seterusnya,  saya mengupas isu pendidikan dengan analisis pencapaian ranking antarabangsa Malaysia. Saya kemudiannya menyeru membina budaya membaca buat menuju mentaliti negara dunia pertama. 1996 – 2 muka surat, terkini 2 buku berbanding Jepun Perancis 10, AS dan Kanada 17 buku. Kemudiannya saya menyeru kepada penyemaian budaya berfikir dengan beberapa cadangan. Saya juga mempersoalkan jika sekolah moden itu satu pengkhianat kepada pendidikan. Bahagian ini ditutup dengan cadangan mendefinisikan semula falsafah pendidikan negara dengan cadangan Cinta sebagai Pedagogi dan FPN yang baru.

Saya percaya pendidikan boleh dijadikan penyelesaian kepada semua masalah yang dihadapi negara.

Bahagian terakhir menyentuh mengenai kesukarelawanan dan satu penulisan panjang yang menghuraikan mengenai bagaimana kesukarelawanan boleh berjaya dan menyumbang kearah pendidikan yang lebih baik. Saya juga nukilkan konsep kuasa ketiga dan bagaimana kesukarelawanan boleh menjadi agen menyubur demokrasi dengan memberi ruang suara kepada semua pihak.

 Buku ditutup dengan epilog bahawa gerakan massa Reformasi adalah milik semua  dan rakyat perlukan satu Rejuvenasi.  Seperti yang saya sering utarakan, penulisan ini adalah milik umum, dan saya seru warga umum untuk mengulas, mencabar dan memperkembangkan idea-idea di dalam buku ini. Usul-usul kritis yang padat di dalam buku ini saya mohon diperhaluskan dan semoga dapat dimanfaatkan oleh semua.

Akhir kata, Baca, Faham, Fikir dan Bertindak. Berjuanglah!

Terima Kasih.

 

Inside Singapore’s Socio-Economic Success


April 2, 2014

Singaporean Finance Minister Tharman Shanmugaratnam  on Singapore’s Socio-Economic Success

port-of-singaporePort of Singapore

Rich Guys Pay Taxes, says Tun Dr. Mahathir Mohamad. Do You Agree?


March 22, 2014

Rich Guys Pay Taxes, says Tun Dr. Mahathir Mohamad. Do You Agree?

by Lawrence Yong (March 20, 2014)

@http://www.malaysiakini.com

TDM--21 MarchFormer Prime Minister Mahathir Mohamad today said that Malaysia needs rich people who can pay taxes, and this is not cronyism even if some of them are now his friends.

Mahathir said that since the British left in 1957, Malaysia has mostly taken a ‘pragmatic’ approach to its economy – neither free-market capitalist nor socialist – and he therefore shot down critics who said he enriched only an elite class of people during his 22 years as prime minister.

He said that while government borrowed some socialist ideas – backing affirmative action for Malays, created state enterprises and gave land away, it also gave businesses a free hand to profit
handsomely.

He was giving the primary lecture for the Centre of Poverty and Development Studies at the Universiti Malaya campus in Kuala Lumpur.

After his talk which was titled ‘Poverty issues in Malaysia’s economic development’, human rights activist and lawyer Haris Ibrahim stood up to grill Mahathir for letting Malaysia’s inequality get out of hand.

Haris (left) pointed out that some households now live on RM29 a day amidst Kuala Lumpur’s famous Twin Towers, while just one percent of the richest Malaysians control over 10 percent of the country’s wealth. This is despite Malaysia’s oil wealth which has flowed since 1974.

Haris then asked Mahathir to explain “What went wrong?” and insisted that the elder statesman apologise for failing to eradicate poverty.

The audience cheered and applauded before waiting in anticipation for Mahathir’s expected comeback.

“You will find that the rich people are useful people. We were a business-friendly government and I told these people, when you make money, 28 percent belongs to us (through taxes)… that’s why we were helping them.

“Now suppose these people are absent… who are you going to tax? You can’t tax the poor. We need the rich!” Mahathir said, reading from his little notebook which he used to busily take notes when Haris spoke.

Mahathir also then quickly answered Haris’ three questions: “Do I ever drive in KL? I drive every weekend because I love driving. In the past, I used to drive around the check the construction sites.

“What went wrong? You don’t expect every prime minister to follow what the previous prime ministers have done… that you will have to ask them.”

And then he finished off with: “As for apologising… I should expect the questioner to apologise to me!” The audience erupted in applause. Mahathir’s solution was modernisation. In his speech earlier, Mahathir noted that when Malaysia gained independence, more than half were living in poverty.

He added that this disparity, which was marked along racial lines, was one of the reasons for the May 1969 racial riots.

Multiracial and multireligious Malaysia could not survive with such instability, said Mahathir, whose most famous economic writing was the formerly banned book ‘The Malay Dilemma’.

“How do we solve that problem? Dole out money like BR1M (Bantuan Rakyat 1Malaysia)? But we didn’t have money back then,” Mahathir said, adding that his own solution was modernisation to expand the economic pie.

“In fact, we grew the economic cake so large that people who were poor at one time are now rather rich.”

Looking around at international students and undergraduates who were among the attendees at the lecture, the octogenarian medical doctor who became a politician ended his speech with this advice for fighting poverty.

“Reject ideologies. We are pragmatic people – do what we think will give results,” he said.

Later, a law undergraduate also stood up to ask the doctor for his solutions to the perceived crony capitalism and the middle-income trap problems.

He cited the recent study from The Economist which put Malaysia as one of the top three countries in the world for rent-seeking behaviour which let the rich get richer.

Mahathir again defended his past economic policies, saying that students who wanted income equality had no idea what they were really asking for.

“Who are these cronies? They were unknown people… for example, I didn’t know these people until they were successful. Now supposing I have a million dollars to give as capital and I give it to a trishaw rider – what does he do with the money? He will spend the money.

“But if I give it to someone who understands business, he will succeed – the moment he succeeds… ahh, he is a crony! So in order to avoid this accusation that there is cronyism, you must ensure that everyone in this country fails.”

Pointing to Malay entrepreneur Syed Mokhtar Al-Bukhary (right), who is said to be the government’s most preferred business partner, Mahathir applauded the billionaire for giving jobs to over 120,000 people through his huge chain of enterprises which spans from carmakers to post offices and book shops.

“But he wasn’t always that. He started off selling cows and sugar and rice and now he’s a billionaire. What’s wrong with that?

“You want him to be a rickshaw puller? That’s easy… just take away all the opportunities from him and he will become a rickshaw puller but what good does that do? You can’t tax a rickshaw puller and you will have no money,” Mahathir said.

On the middle income trap, Mahathir said that it isn’t so bad as it could be worse. Malaysia could be stuck in a “poor income trap”, and the audience laughed politely.

Water Deal between Selangor and Putrajaya: Time to Come Clean, Khalid Ibrahim


March 1, 2014

Water Deal between Selangor and Putrajaya: Time to Come  Clean, Khalid Ibrahim

Commentary by the Malaysian Insider

UAE had written to Prime Minister Datuk Seri Najib Razak and Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim last April 12, seeking their intervention on the dispute, but no reply was received, lead counsel Rosli Dahlan said last month.

What’s the real deal, Mr. Khalid Ibrahim?

The Putrajaya-Selangor memorandum of understanding (MOU) for the acquisition of state water assets and construction of a RM1.2 billion water treatment plant does not seem to pass the smell test.

And if something does not smell right, it is not right.First off, Deputy Prime Minister Tan Sri Muhyiddin Yassin today described the MOU signed on Wednesday as a binding agreement, although PAS central committee member Dr Dzukefly Ahmad pointed out it was not, unlike a memorandum of agreement (MOA).

Lawyers have chipped in too on the matter, saying MOUs are not legally binding as they just reflect an intention to work together to a common goal.

“It is normally signed when two parties want to work together, but do not want a legally binding agreement with each other,” lawyer Syahredzan Johan told The Malaysian Insider.

“However, I am speaking from the perspective of not having seen the contents of the MoU signed between the Selangor state government and the Federal government.”

“What is important is the contents of the document, not the labeling. One can have a perfectly legally binding document and still call it a MoU,” Syahredzan said.

The lawyer zoomed in on the main contents of the MOU, saying, “I think in the instance of the current MoU signed by Selangor and Putrajaya, it is in relation to buying over the water concessionaires and the approval for the Langat 2 water treatment plant.”

For the two components to conclude, he said there would be legal agreements to acquire the water concessionaires and also to build the RM1.2 billion water treatment plant in Langat, Selangor.

Would the MOU expire if any of the two components do not take off? Does the MOU have a time-frame for each component? The only thing that is public knowledge is that the Selangor government must approve Langat 2 once the tender is issued for the construction.

Is it just about water supply or who will benefit from the construction contracts, one wonders.

While connected businessmen can shout with glee that they would get RM9.65 billion for the four concession holders, others will be happy that there is another infrastructure project to profit from after five years of haggling.

Media reports last year said three companies — Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) — have been shortlisted to build the RM1.2 billion Langat 2 water treatment plant project.

The Pahang-Selangor interstate water transfer tunnel is being built with a soft loan of RM2 billion from the Japanese International Cooperation Agency (JICA). There is a 40-year repayment period for the 45km tunnel through the Titiwangsa mountain range.

Apart from that, the project entails the building of a dam and a pumphouse in Pahang, and a water treatment plant in Selangor with the total value said to be about RM7 billion.

While those living in Selangor and Kuala Lumpur will benefit from the project once it is completed as early as 2017, critics say the Langat 2 water treatment plant can only provide water capacity until 2025, and the government would require more plants and dams built after that in the country’s most densely populated area.

That would mean more projects in the future, and higher costs. Unless Putrajaya and Selangor insist that the water concessionaires take steps to cut down leaks that lead to a higher portion of non-revenue water (NRW).

There is a need for more treated water to cater to the rising population, but in the rush to provide that, the government should look into more ways to conserve water because more projects just means the taxpayers will have to bear the burden of underwriting the deals, while companies show the profits.

Muhyiddin also said today, “The MoU between the federal and state governments are for the benefit of the people to alleviate the water crisis in the Klang Valley with the construction of the Langat 2 treatment plant.”

This would take another three years. Nowhere does the MOU talk about ways to stop leakages and NRW. If PKR and Barisan Nasioanl (BN) politicians think they are doing Selangor a favour with the deal, they have to think again. The only ones benefitting appear to be the contractors. — February 28, 2014.

 

Controversial Muslim Thinker and Politics


February 23, 2014

Controversial Muslim Thinker sets the cat among the canaries, again

by Terence Netto@http://www.malaysiakini.com

COMMENT They say politics makes for strange bedfellows. It looks like religion also does the same. Consider thinker Kassim Ahmad’s ties to former Prime Minister Dr Mahathir Mohamad – on Islamic exegesis, the two are birds of a feather.

kassim thinkerThe Controversial Muslim Thinker

This is best understood in the context of Voltaire’s famous criticism of Christian belief and practice at the onset of the Enlightenment in the 18th century – that incantations can kill a flock of sheep if administered with a certain quantity of arsenic.

In other words, faith should not be blind and unexamined beliefs are for bovines, not homo-sapiens.

In 1986, Kassim published a book – ‘Hadis: Satu Penilaian Semula (Hadith: A Reappraisal)’ – that espoused a subversive idea.This was that certain bases of Islamic practice and belief cannot sustain critical scrutiny. The book proposed the Quran as sole basis for sound Muslim belief and best practices.

That view Kassim reiterated to a conference which reviewed his thought held last Sunday at the Perdana Leadership Foundation, a think-tank associated with Mahathir (right).

The former Premier officiated at the conference’s opening and days later, after controversy flared over what Kassim had said, allowed that Kassim was a thinker whose opinions are easily misunderstood.

Like the publication of his book 28 years ago, Kassim’s latest musings have caused a furore. Its magnitude can be gauged in the days to come as Islamic authorities mull action against him.

It’s a safe bet, though, that none of them will take him on in a debate because they know that Kassim is a formidable foe to joust with; he will not easily recant his views.

Kassim blames Anwar Ibrahim – the Education Minister in the mid-1980s – for squelching the debate that ‘Hadis’ was obviously intended to provoke.Till today, Kassim nurses an enduring antipathy towards Anwar for the turn of events following publication of Kassim’s book in early 1986.

The ironies in history

Although all this occurred 28 years ago, the passage of decades has not had a becalming effect on the visceral feelings the controversy evoked at that time.

As recently as the middle of 2012, Kassim remained choleric at the mention of Anwar’s name, denouncing the Pakatan Rakyat leader with a vituperation that was ugly to behold.

It is not clear that Anwar had anything to do with the banning of Kassim’s book or with foreclosure of the debate.What’s less incontestable is that had the book not been banned, matters to do with Islamic thought and understanding in Malaysia would plausibly have transcended the present moment where some peninsula Muslim Malaysians insist that the term ‘Allah’ is exclusive to them.

In one of those ironies in which history abounds, in the debate over the ‘Allah’ issue, Anwar (left) is not opposed to non-Muslim use of the term – provided it is not abused – whereas Mahathir is for prohibition of the term to non-Muslims.

Kassim’s position on the issue is not known, but judging from what can be deduced of the man’s intellect, it would be a huge surprise if he agreed with Mahathir’s stance.

There is a strong strain of the iconoclast in Kassim, evident from half a century ago when he suggested that Malay folklore was wrong to view Hang Tuah as a hero because the real hero was Tuah’s friend, Hang Jebat, whom Tuah had killed.

Because of his tendency to examine the received wisdom on a subject, it wasn’t surprising that Kassim, who tuned 80 last September, gave vent at last Sunday’s conference to views that were even more controversial than the ones he aired in his 1986 work.

In what was purported to be his final testament – rendered at the conference themed ‘Thoughts of Kassim Ahmad: A Review’ – the man who started his intellectual journey as a cultural iconoclast and doctrinaire socialist, invited Muslims to return to the teachings of the Islamic faith as revealed in the Quran.

He said that believers would find Quranic teachings to be cognate with natural law (undang-undang alamiah).Kassim also espoused the view that Muslims do not need, like he claimed Christians did, a “priestly caste” to know what God commands of them and to perceive those commands’ consonance with what natural law tells them.

He argued that the female practice of wearing a headscarf (tudung) was a wrong interpretation of the Quranic stricture against bodily exposure, claiming that hair on a woman’s head is not included in the ‘aurat’ that is required by the Quran to be covered. He said that head hair must be aired for health (natural law) reasons.

An interesting tack to take

Thus, he took an example from nature to elucidate a Quranic teaching, demonstrating in the process the supposed truth of his argument that sound interpretation of Quranic revelation would necessarily be found to be compatible with what natural law teaches.

This is an interesting tack to take and is at variance to the asharite (God is power/God is will) school of Islamic thought. The asharite has been the dominant school since the 12th century when it gained the upper hand over the mutazilite (God is also reason) school of Islamic interpretation.

Since the victory of the asharite school, Islam’s answer to what is called “the Socratic puzzle” has been emphatic.But, pray, what is the Socratic puzzle?

It is a question that is so abstruse, it gives philosophy a bad name: Is a good action good because it is approved by God? Or is it approved by God because it is good?

In other words, do the categories of good and evil, right and wrong, have an existence independent of the divine will?

To this, the answer of the Asharite school is: An action is good because it is approved by Allah.

The asharites hold that there is no independent criterion of morality outside the will of Allah. And since the Quran is an absolutely literal and accurate account of that will – indeed in a deep sense, the Quran itself actually incarnates that will – there is no independent criterion of morality outside the text of the Quran.

In other words, if the Quran says something that seems morally offensive, it is morality that is mistaken, not the Quran.

The Mutazilites are inclined to find an interpretation of the Quran that accords with what natural law teaches. This is because they believe that there is an objective moral order to the universe and that this is discoverable through reason. That is why the Mutazilities are called rationalists.

Because these are febrile questions of religious interpretation and philosophy, and apt to foment divisive and emotional effects on believers – Voltaire advised that discussion of complex religious questions be held behind closed doors and out of the hearing of servants – Muslim thinkers approach them with circumspection.

Now and then, one or the other of them saunters on to the turf and inevitable detonations ensue.

Last Sunday, Kassim Ahmad walked into a blast-prone area and set off subversive ripples of resonance. He is likely to enjoy immunity because he did it at the Perdana Leadership Foundation

Last year about this time, Ibrahim Ali (right) escaped a sedition rap for threatening to burn bibles after Mahathir offered extenuations on the Perkasa chief’s behalf, following former attorney-general Abu Talib Othman’s admonishing incumbent AG Abdul Gani Patail against dilly-dallying on pressing charges.

This time round, Mahathir’s extenuations on behalf of Kassim are likely to have intellectually more beneficent uses.

The irony is that Kassim – like the man he detests, Anwar Ibrahim – is not likely to think much of the argument that the term ‘Allah’ ought to be the exclusive preserve of Peninsula Muslims; more certainly, he will laugh Mahathir’s reservation of the term for Peninsula Malays, to scorn.Not just politics, religion, too, makes for strange bedfellows.

Malaysia in 2014–A Perspective from Singapore


February 22, 2014

Malaysia in 2014–A Perspective from Singapore

For Singapore, due to history, geography, demography, economy and recent political experiences, Malaysia has perpetually been its lynchpin concern and preoccupation. In the past, S Rajaratnam, the Republic’s first foreign minister, had described Singapore’s relations with Malaysia as ‘special’ and there is nothing to suggest that this has changed in anyway. If anything, the ‘specialness’ has been intensified and further reinforced due to a whole array of factors, not least being the imperatives of national, regional and international economics. A weakening United States, an assertive China, an unstable Thailand and a new nationalistic leader in Indonesia can change the political and security architecture in the region to the detriment of both states and hence, their bilateral ties.

MALAYSIA-SINGAPORE-DIPLOMACYIn the 1950s and 1960s, culminating in Singapore’s expulsion from Malaysia in August 1965, the emotive dimension of Singapore’s view of Malaysia was dominant. Even though this has largely dissipated, it is not totally absent. Still, the pragmatism with which both states have moved forward is definitely a milestone achievement in bilateral ties in Southeast Asia.

For Singapore, continuity rather than change remains its key perspective on Malaysia. This was especially true after the May 2013 general elections where the Barisan Nasional (BN: National Front) was returned to power albeit with a weaker majority. Still, Prime Minister Najib, the United Malay National Organisation (UMNO) and the BN are in power and that is what matters even though the winds of change must also be disconcerting. The disquiet would be more, not so much from the economic aspect as it would be from the rising racial and religious polarisation of Malaysia in the last few years that was brought to the forefront during the last general elections.

The ‘Allah’ issue has not been helpful and the recent firebombing of a church in Penang has merely raised the ante of what this will mean for Malaysia and possibly, even multiracial and multi-religious Singapore. All that aside, the single most important development of late has been the rising warmth in Singapore-Malaysia bilateral ties under Lee Hsien Loong and Najib Tun Razak. While past imperatives of history, geography and demography remain relevant, most dominant in the new narrative has been the personal warmth of the two Prime Ministers (Lee and Najib) and the strategic nature of their bilateral ties.

Most of the past issues have been addressed or settled such as relocation of Customs and Immigration Complex, land reclamation and even water. Most importantly, has been the breakthroughs that both leaders have made vis-à-vis two issues, namely, the resolution of the Tanjong Pagar Railway Station and the land exchange deal as well as Singapore’s support for the Iskandar Development Project in Johor. Other positive developments in ties include the holding of annual leader’s retreats, re-establishment of links between both countries’ stock exchanges, Malaysia’s agreement to sell electricity to Singapore, the agreement to build high speed train link from Kuala Lumpur to Singapore, the amicable post-Pedra Branca technical talks to resolve legacy issues over the islands’ dispute and finally, the establishment of a Singapore consulate in Johor Baru.

If there is one key factor that has brought bilateral ties to a new height, it is the cooperation in the Iskandar Project. Not only is the Singapore Government supporting investments in the project through Government-linked companies such as Temasek Holding but also playing an important role in encouraging the private sector to invest in the project. Additionally, thousands of Singaporeans are expected to be permanently based in the Iskandar region and Johor as a whole, bringing interdependence to a level that was never seen before. To that extent, Iskandar has been the key game changer in Singapore-Malaysia bilateral ties of late.

The breakthrough in bilateral ties was a function of a number of factors. First, the decision by both sides to adopt a new approach to bilateral ties in order to garner win-win results. Second, the personal warmth of the top leaders was extremely helpful. Third, the calculation of the mutual benefits that would be gained by both sides in view of the increasing regional and global competition. Fourth, over the years, there has also been increasing economic interdependence with Singapore as one of the top investors in Malaysia over the last two decades or so. Two-way trade and investments are among the highest between the two states. Fifth, there is also the realisation of increasing security indivisibility of both states. Finally, the ideological pragmatism of both sides has also helped in boosting bilateral ties.

While Singapore expects Malaysia in 2014 to have a largely ‘normal’ year barring any unexpected events – all the more to be the case as the UMNO annual assembly has opted for status quo – the Republic is also mindful of the many uncertainties that can unexpectedly crop up to affect bilateral ties. While 2014 can expect the warming of ties to continue, this cannot be taken for granted. First, the warm ties of two Prime Minister, both of whom are sons of two former prime ministers  who were not close, may not survive personalities if a more nationalistic prime minister takes over in Singapore or Malaysia. Second, tensions could surface if the promised cooperation proves futile or produces one-sided benefits, say in Iskandar Project. Finally, growing domestic tensions in Malaysia, especially among the Malay and Chinese communities in Johor or in Malaysia could spill over into Singapore-Malaysia relations.

Hence, for Singapore, while Malaysia in 2014 is expected to continue ‘good business as normal’, there are also potential minefields that might explode, and hence, the need for caution. ‘Special relations’ are important but can never be taken for granted, and this also holds true of Singapore’s view of Malaysia in 2014.

Bilveer Singh is Associate Professor at the Department of Political Science, National University of Singapore, adjunct senior fellow at the S Rajaratnam School of International Studies and President of the Political Science Association of Singapore.

Dear Anwar Ibrahim


February 12, 2014

Dear Anwar Ibrahim…

You have done a lot politically but little or nothing productively, the writer tells Anwar in an open letter.

COMMENT:

by Medecci Lineil@http://www.freemalaysiatoday.com

Let me declare something here. First of all. I am very concerned about the political crisis in Malaysia. There is too much faith and hypocrisy in the solutions offered to address the crisis, which I think smacks of naïvety.

For Pakatan Rakyat, your brilliant strategist, your so called Majlis Pimpinan Pakatan Rakyat, your consensus members and supporters, the crisis might be celebrated as an endorsement of progressive or new politics.

Second, as a Sarawakian and Malaysian, I am very frustrated by the pervasive attitude and failure of you and Pakatan Rakyat leaders which has brought Malaysia to a new low in confidence.

This is why I oppose and never trust politicians and governments because you and your allies in principles are unreliable, you don’t improve the people’s lives, you manipulate the people with rhetoric and oratory skills instead.

I am frustrated by your thinking, public policies and your government’s steadfast refusal to recognise that people are suffering from the combined results of government intervention and control of our economy.

Young Malaysians can’ find jobs. Young entrepreneurs can’t get credit. High cost of living. Inflation. Large government spending. Mounting national debt. Low real wages. Too much taxation. Too low personal savings. Over consumption. Welfare state. Price control and a lot more. All of which you are very aware of.

My question is what have you done? You have done a lot politically but nothing productively. As I’ve said earlier in my articles, the main reason for the existence of government is to destroy production, money and the people. That’s it!

Have faith in the market system

You know the cause and effect of these economic problems and I know you are smarter than this. You’re just too cowardly to admit that the government and politicians are the opposite force of freedom and liberty.

I’ve read enough of your Orange Book, party manifesto, policy speeches in Parliament, your dozens of intellectual lectures but I am not convinced simply because capitalism is incompatible with people like you and government.

You engineered an election to show off to your opponents, naming candidates, press conferences, public forums, media interviews and polling the votes; decide who should win, who should lose. This is your routine, right?

For you and your brilliant strategist, it is good political engineering but if you think this election would bring ‘whatever’ crisis to an end, I am sorry because it seems to me, insolvable and remarkably stupid.

The more government there is and the more elections there are the more waste of taxpayers’ money. You cannot improve our lives because you are not a ‘gift’ from God. I think that is insane.

You know what? Because of your ignorance, you harm the very people you wish to protect – the rakyat. If you really want to do the right thing as mentioned by your brilliant strategist, instead of an unproductive by-election, go around the country and tell the people that the government cannot manage their world morally and economically.

Tell them to have faith in the market system. Mr Anwar, please go back to liberty principles for the sake of Malaysians.

Medecci Lineil is an Austrian Libertarian who lives in Kampung Tematu, Kuching, Sarawak. He is also the Founding Board Member at Institute for Leadership and Development Studies (Lead) and former senior executive at Institute for Democracy and Economic Affairs (Ideas).

IMF reform and isolationism in the US Congress


February 3, 2014

IMF reform and isolationism in the US Congress

29 January 2014

Author: Jeffrey Frankel, Harvard Universityhttp://www.eastasiaforum.org/2014/01/29/imf-reform-and-isolationism-in-the-us-congress/

A long-awaited reform of the International Monetary Fund has now been carelessly blocked by the US Congress. This decision is just the latest in a series of self-inflicted blows since the turn of the century that have needlessly undermined the claim of the United States to global leadership.

The IMF reform would have been an important step in updating the allocations of quotas among member countries. From the negative congressional reaction, one might infer that the US was being asked either to contribute more money or to give up some voting power. (Quotas allocations in the IMF determine both monetary contributions of the member states and their voting power.) But one would then be wrong. The agreement among the IMF members had been to allocate greater shares to China, India, Brazil and other emerging market countries, coming primarily at the expense of European countries. The United States was neither to pay a higher budget share nor to lose its voting weight, which has always given it a unique veto power in the institution.

The change in IMF quotas is a partial and overdue adjustment in response to the rising economic weight of the newcomers and the outdated dominance of Europe. Voting share in the IMF is supposed to be in proportion to economic weight, not equal per capita or per country. This acknowledgement of reality, the principle of matching the representation to the taxation, is sometimes known as the Golden Rule: ‘He who has the gold, rules’. The principle is probably one of the reasons why the IMF has usually been a more effective organisation than others such as the UN General Assembly.

It’s not that President Obama hasn’t tried to exercise global leadership, as just about any US president would. He pushed for this agreement to reform the IMF at the G20 summit in Seoul in November 2010 (the first meeting of the group of leaders to have been hosted by a non-G7 country). He prevailed despite understandable European reluctance to cede ground.

Some American congressmen may not be aware of the extent to which the IMF reform agreement represented the successful efforts of the US executive to determine the course of the international negotiations. But then the rejection by the US Congress of an international agreement that the President had painstakingly persuaded the rest of the world to accept is not a new pattern. It goes back a century, to the inability of President Woodrow Wilson to persuade a myopically isolationist US Congress to approve the League of Nations (1919). Examples over the last century also include the International Trade Organization (1948), SALT II (1979), and the Kyoto Protocol (1997), among others.

A past history of trying to re-open international negotiations that the executive has already concluded is also the reason why Congress has to give President Obama trade promotion authority (that is, the usual commitment to fast-track congressional votes on trade agreements), or else Washington’s trading partners will not negotiate seriously. This would impede ongoing talks in the Pacific, with Europe, and globally (in the venues, respectively, of the Trans-Pacific Partnership, Trans-Atlantic Trade and Investment Partnership, and the World Trade Organization).

Commentators have been warning since the 1980s that the US may lose global hegemony for economic reasons, as an effect of budget deficits, a declining share of global GDP, and the switch from net international creditor to net debtor. One version is the historical hypothesis of imperial overstretch.

But the main problem seems to be a lack of will rather than a lack of wallet. Or perhaps it would be more accurate to describe the problem with US domestic politics as wild swings of the pendulum between excessive isolationism and excessive foreign intervention in reaction to short-term events, untempered by any longer term historical perspective.

After the United States lost 18 rangers in Somalia in October 1993 (Black Hawk Down), Congress became highly resistant to just about any foreign intervention, no matter how big the ‘bang for the buck’. Then, after 11 September 2001, it was prepared to follow President George W. Bush into just about any military intervention, no matter how dubious the benefit or how high the cost. The total cost of the wars in Iraq and Afghanistan has recently been estimated at US$4 trillion by Linda Bilmes. (It’s not just that the wars lasted for 10 years; the biggest costs of such wars come subsequently, particularly for medical care that veterans need for the rest of their lives.) These days, the pendulum has apparently swung back to the isolationist direction once again.

One had hoped that myopic congressmen had been made aware that among the costs of the foolish US government shutdown three months ago was damage to the country’s global credibility and leadership. Most visibly, to deal with the shutdown, the White House in October had to cancel its participation at the leaders’ summit of APEC in Bali and thereby stymie progress on the US-led Trans-Pacific Partnership. It was widely reported that the Asian countries drew from Obama’s absence the conclusion that they should play ball with China instead.

obama-xiThe increasing power of China and other major emerging market countries is a reality. It is precisely what makes it important that the United States support a greater role for these countries in international institutions such as the IMF, the G20, and APEC.

The rise of China could go well or badly for international relations. It depends in part on whether the status quo powers make room for the newcomer. This historical pattern famously goes back to Thucydides’ description of the rising power of ancient Athens and the resulting war with Sparta (History of the Peloponnesian War). Examples of the consequences of failing to accommodate the new arrival include the role of Germany’s rise in the origins of World War I 100 years ago.

The new Chinese President, Xi Jinping, has used the phrase ‘New Type of Great Power Relationship’. It sounds anodyne but may carry greater significance. The phrase apparently demonstrates awareness of the historical ‘Thucydides trap’. It signals China’s openness to working with other countries to avoid the tragedies of 460 BCE and 1914 CE. It is only sensible to take him up on his offer and smooth international relations into the future.

The potential for US leadership has survived remarkably well the loss of national status as an international creditor. This has partly been a matter of luck. In Asia, historical and territorial frictions among Japan, Korea and China, have kept US participation far more welcome in the Pacific than it would otherwise be. Meanwhile, in Europe, fiscal follies have been even more egregious than America’s.

Asians are aware that the IMF has stretched the rules to lend into the euro crisis on a greater scale than it did during the Asian crisis of 1997–98. They understandably feel entitled to a greater say in the running of the Fund. But the emerging market countries have been so disunited, for example, that no two of them could come together in 2011 to support a common candidate for IMF Managing Director, notwithstanding that the three previous incumbents were European men who flamed out before completing their terms in office. (The result was a European woman, Christine Lagarde. She has done a good job rather than kowtowing to Europe; but that is beside the point.)

The latent demand around the globe for enlightened US leadership, which first appeared at the end of World War I, is still there. It can survive budgetary constraints (and apparently can survive misguided military interventions). But it cannot survive an abdication of interest on the part of the US Congress.

Jeffrey Frankel is the Harpel Professor of Capital Formation and Growth at the Kennedy School of Government, Harvard University, and is the Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research, USA.

This article is an extended version of the article ‘Absent America’ that was first published on Project Syndicate. The author would like to thank Joe Nye and Ted Truman for comments.

The Great Moderniser of Thailand: King Chulalongkorn


January 27, 2014

BOOK REVIEW:

The Great Moderniser of Thailand: King Chulalongkorn

Irene Stengs, Worshipping the Great Moderniser: King Chulalongkorn, Patron Saint of the Thai Middle Class

Singapore and Seattle: NUS Press and University of Washington Press, 2009. Pp. xiii, 316; photographs, notes, bibliography, index.

Reviewed by Erick D. White.

http://asiapacific.anu.edu.au/newmandala/2014/01/07/review-of-worshipping-great-moderniser-tlc-nmrev-lxvi/

the-great-visionary-king-chulalongkorn

The dramatic heyday of the cult of Chulalongkorn has passed. Arising in the early 1990s, in the middle of the Thai economic boom that lasted from the mid-1980s until the crash of 1997, its prominence has nonetheless persisted into the post-crash 2000s and beyond. Along the way it has gradually declined from a feverish public passion into an accepted and persistent modality of faith and ritual on the kingdom’s mainstream religious landscape. Bangkokians still gather at the Equestrian Statue on the Royal Plaza on Tuesday evenings to show their devotional respect. Practitioners across the nation still petition the deceased monarch before his statues in a myriad of temples and public spaces. Consumers still buy amulets and portraits of Chulalongkorn to adorn their bodies and home altars.

Spirit mediums are still regularly possessed by the monarch and thus able to offer advice and assistance to those in need. But since the dramatic emergence of the cult in the heady boom times of the 1990s, other devotional movements, centered on other deities (Princess Suphankalaya and Jatukamramathep, for example) have by now come and gone, part of the relentless churn of religious innovation and inspiration that characterizes popular religiosity in contemporary Thailand. That devotionalism to Chulalongkorn remains popular is not surprising: it is centered on a Chakri monarch in an age of high royalist revival and continuing, if more contested, general public reverence.  Nonetheless, the cult of Chulalongkorn no longer evokes quite the same excitement, quite the same breathlessness, or quite the same exuberance. The cult of Chulalongkorn also does not evoke scholarly investigation and analysis as it once did.

And yet its settled, conventional, accepted, and taken-for-granted status as a devotional movement is itself instructive about not only contemporary Thai religiosity and social change, but also the deeper relationship among monarchy, royalism, Buddhism, and popular religiosity in the increasingly unsettled twilight of King Bhumibol’s reign.

Irene Stengs’s monograph, Worshipping the Great Moderniser: King Chulalongkorn, Patron Saint of the Thai Middle Class, critically analyses and insightfully opens up for investigation a range of questions about royalty, religiosity, and devotionalism amidst nationalism and consumer society. Her study is based on multi-sited field research carried out between 1996 and 1998 in Bangkok and Chiang Mai. In Bangkok her fieldwork centered primarily on the Equestrian Statue and an organization called the “Prayers Society”, while in Chiang Mai she focused on a temple that was a center of Chulalongkorn worship as well as the abode of a spirit medium possessed by the king.

The study’s long incubation allowed the author to step back and take a somewhat more measured approach, one informed by the passage of time and new or additional scholarship. As a modestly revised version of her dissertation, the monograph’s substance and argument retain much of their original thematic focus and analytic tack, with a limited number of topics expanded or highlighted.

The remainder of this review is accessible here.

When America Becomes Number Two


January 27, 2014

When America Becomes Number Two

by Kishore Mahbubani(01-21-14)

professor-kishore-mahbubaniKishore Mahbubani is Dean of the Lee Kuan Yew School of Public Policy and author of “The Great Convergence: Asia, the West and the Logic of One World.” 

In 2019, barely five years away, the world will pass one of its most significant historical milestones. For the first time in 200 years, a non-Western power, China, will become the number one economy in purchasing power parity (PPP) terms. America will become number two. Yes, it will take longer for China’s economy to overtake America’s in nominal terms but the trend line is irresistible. And in PPP terms, China’s economy could be twice that of America’s by 2020.

The big question for our time therefore is this: is America ready to become number two? Sadly, it is not, even though Bill Clinton wisely tried to wake up his fellow Americans as far back as 2003. In a very subtle speech at Yale, he asked whether “we should be trying to create a world with rules and partnerships and habits of behavior that we would like to live in when we’re no longer the military political economic superpower in the world.”

Unfortunately, Bill Clinton was too subtle. He was trying to hint to his fellow Americans that America should create a model of rules-based behavior that would then serve as a model for China when it emerged as the number one power in the world. His hint was ignored. Hence, few Americans today are aware that America’s national interests change dramatically when it becomes number two in the world. When it is number one, it is in America’s interests to see that the number one power has complete freedom to do whatever it wants to do. When it is number two, it is not in America’s interests to see that the number one power has complete freedom to do whatever it wants to do. Catch the difference?

Why have American leaders failed to prepare the American population for this significant change of interests? There are at least three reasons. Firstly, it is political suicide for any American politician in office to speak on America as number two. As I document in The Great Convergence, no serving American politician can use the words, “If America is number two…” or “When America becomes number two…” In the land of free speech, there is no effective freedom for serving politicians to speak undeniable truths.

Secondly, most American intellectuals continue to indulge in wishful thinking. In their minds, there is a deep ideological conviction that democracy represents the future and Communism represents the past. Since China is still run by the Chinese Communist Party, it can only represent the past, not the future. Many American intellectuals also believe that since they live in the world’s freest society, they cannot possibly be prisoners of any ideology. This is massive self-deception. When it comes to understanding China, Americans have allowed ideology to trump mountains of empirical data. This is why they cannot even conceive of China becoming number one.

Thirdly, and very sadly, China’s emergence is taking place at a moment of great political paralysis and disunity in the American body politic. If Nixon and Kissinger were managing American foreign policy today, they would have focused on the most critical challenge that America faces and found ingenious ways and means of implementing the wise advice that Bill Clinton offered in 2003 and prepared for a new geopolitical environment. The days of wise foreign policy management are long gone in Washington, DC. Furthermore, with Washington, DC being completely divided and polarized, the challenge of dealing with becoming number two is the last thing on the minds of American policymakers.

Sadly, the last thing on the minds of American policymakers will come true in five years. Will America wake up to this new reality before or after it happens?

http://www.huffingtonpost.com/kishore-mahbubani/when-america-becomes-numb_b_4603125.html 

Autocratic Ethnocracy is UGLY for Malaysia


January 21, 2014

Autocratic Ethnocracy is UGLY for Malaysia

by Dr. Lim Teck Ghee, CEO, Center for Policy Initiatives

TeckGheeIn early 2011, I provided a paper to the United Nations system in Malaysia on various scenarios facing the country, giving special emphasis to the impact of political and economic issues on social development. In it, I explored three scenarios:

• A best case one where the government can achieve its goals and targets as set out in various government documents;
• A midway scenario where targets are partially achieved; and
• A worst case scenario where targets are mostly not achieved and where the economic, political and social situation deteriorates significantly over the medium-term.

Unfortunately, the worst case scenario is becoming a reality. Excerpts from the report below identify the key steps and processes leading to the establishment of an autocratic ethnocracy which would be a huge step backwards for the country.

It is still not too late for the Prime Minister and other leaders, especially from the BN and UMNO, to lead the country away from the worst case scenario outlined in the paper.But time is running out.

Socio-cultural scenarios

The possibility of a best case socio-cultural situation is tied to the government’s determination to advance its 1Malaysia concept and its removal of constraints and obstacles that stand in the way. Minimum proactive measures include removing or neutralising those institutions and individuals most guilty of sowing and escalating racial distrust and religious disharmony, in particular that emanating from the ruling circles and the bureaucracy, especially from UMNO ranks and the official or UMNO-owned print and electronic media, particularly Utusan Malaysia and TV3.

It also includes supporting the inter-faith panel and other similar nation building bodies and providing them with a higher profile in improving inter-faith and ethnic relations. In this scenario, the leaders of the other Barisan Nasional component parties that have previously been silent, indifferent or impotent towards the escalation of the hate politics of race and religion find their voices and successfully put pressure on the BN government to be even handed in the management of ethnic and religious relations in the country.

Other key stake players such as PAS and Muslim NGOs in this scenario also play a positive role by dampening hard line Islamist positions. External events such as growing freedoms and liberalisation in the Middle East countries and key Islamic nations can also play an indirect role through influencing Islamic elements in the country towards more progressive positions that can contribute to improved relations between the various communities and religions.

The middle case scenario sees a holding pattern in ethnic and religious relations and the socio-cultural situation. New tensions and conflicts at local or sector levels will erupt and even if they do not get out of control, they have the effect of generating mistrust and rifts between the various communities and religions as a result of weak leadership and poor management skills.

The growth of ethnic group consciousness that has a strong emotive content continues unabated, dividing individuals and communities into “us” versus “them”. The Malay print and electronic media and Malay-Muslim bureaucracy continue to play on the racial and religious insecurities of the community, and Muslim NGOs import into the country sympathy for extreme Muslim positions from the outside that will further radicalise Muslim values and attitudes. At the same time, non-Malay and non-Muslims individuals and groups also pander to the insecurities of their communities and remain skeptical of the government’s 1Malaysia programme.

In the middle case scenario, a few encouraging signs are also to be found. Some integration and convergence in culture takes place and lesser importance is attached to ethnic identity and consciousness, especially due to Malaysians from East Malaysia where there has been greater inter-ethnic marriage, and racial and religious polarisation is less pronounced. Some moderate or reformist Muslims organisations also speak out against state dominance and religious orthodoxy, and cultural dissidents encourage the younger generation towards greater tolerance and acceptance of pluralist forms and messages.

At the same time, the middle class continues to grow and is better educated and more informed about the issues pertaining to the nation’s survival. Finally most Malaysians continue to be generally tolerant, accept the plurality of cultures, way of life, etc and are not stressed out by the fragile co-existence that has been a characteristic of the country for so long.

In the worst case socio-cultural scenario, the country’s racial and religious tensions and divisions reach a breaking point, with the minorities very much on the defensive. The politicians are no longer able to maintain control and the authorities are reluctant to intervene or act except in favour of the majority.

The rule of law becomes the rule of the majority, and the business community and most ordinary Malaysians lose respect for it whilst perpetrators of racial and religious hate feel that they can get away with actions aimed at maintaining dominance or curbing dissent. The country’s basic tolerance gives way to hardened and polarised positions on all sides, setting the stage for instability and social strife.

Autocratic ethnocracy 

The final obstacle in the country’s progress to a highly developed society is the way in whichKu Li the state institutions have been politicised to maintain the current government in power. Tengku Razaleigh Hamzah, one of the country’s most respected political leaders, has placed the blame for the loss in credibility and integrity of state institutions such as the Judiciary, Police, electoral agencies and others on the corruption that has seeped deeply into UMNO.

Similar views on the need to change the authoritarian character of Government, and its manipulation of the institutions of the state to perpetuate BN rule have long been expressed by the opposition parties and many civil society organisations. In the Pakatan Rakyat’s “Common Framework” document, the emphasis on change and transformation is not solely directed towards an economic agenda as appears to be the case with the BN.  It provides just as much attention to issues of ethnic and religious relations management and the reform of state institutions and political life necessary to preserve communal harmony should the opposition come to power.

These expressions of concern on the authoritarian and repressive nature of the state mainly articulated by opposition politicians and civil society dissidents are also being voiced by the business elite, including supporters of the BN government, though in nuanced and less explicit terms. According to the constitution, Malaysians enjoy constitutional rights such as the right to personal freedom, freedom of thought, conscience and religion; freedom of peaceful assembly; freedom of expression; freedom of association; and equality before the law without discrimination. However, a thicket of arbitrary laws has stood in the way of the objective of a democratic and liberal society as envisaged in the country’s Vision 2020.

The impact of repressive legislation selectively applied, the politicisation of state institutions, and the authoritarian nature of the state clearly affects every sector and every population group in the country. This – together with its ethnocentric character (a single ethnic group dominates and controls virtually all key positions in the judiciary, public administrative organs, the police and the armed forces) and a trend of increasing Islamisation – is the biggest stumbling block to the development of a robust democracy.

In this context, it would be too optimistic to expect meaningful change in the country’s political and socio-economic situation unless there is wide ranging political reform. For such reform to take place, a higher calibre of leadership is required than has been demonstrated.

Overall future scenario

The most likely scenario then, in the country in the next five years (or at least until the 14th general elections is held), is maintenance of the current status quo with time running out on attainment of economic targets and with further fraying of an already dangerously fragile social fabric.

najib-frowningThe momentum of continued political bickering and ethnic and religious discord if not broken – especially against a backdrop of economic stagnation – could set the stage for the next momentous development in the country’s evolution: either a dramatic break with the past through deep reforms – this appears a distinctly unlikely possibility; a sharper turn towards an Islamic conservative future; or a retreat to emergency rule in which UMNO-led right wingers, and other powerful stake players including the monarchy – tied to maintaining an authoritarian ethnocracy – make a bid for, and successfully seize power.

 

The Malaysian Consumer and the Fight against Inflation


January 21, 2014

The Malaysian Consumer and the Fight against Inflation

by Tan Sri Dr. Mahboob Sulaiman@www.nst.com.my

As a society, we too have a role to play in ensuring that inflation is controlled. Let us exercise our power, as consumers, to control unreasonable price increases by judicious spending and economising on our energy use as well as changing our consumption spending pattern.–Dr. Mahboob Sulaiman

THE interest on inflation is reactivated now with the Consumer Price Index (CPI) approaching  three per cent.

Dr Mahboob SulaimanMalaysians are used to price stability for a long time, except for a few years, such as in 1973/1974, 1998, and in 2008. The inflation in 1973/74 and in 2008 was caused by an increase in oil and rice prices at the same time.

Some agitators recently conducted a demonstration on the eve of this new year, using the rising prices as an issue to air their grievances.I wonder what would they do if the country was experiencing an inflation rate of eight to 12 per cent annually as is being experienced for many years in China and India, given the countries’ rapid economic growth.

Blaming the authorities alone for the price pressure reflects a poor understanding of market forces. There is a market involving producers and consumers out there whose total effect determines the prices of products. This is the famous Adam Smith’s invisible hand or the market forces. The government’s policy to control prices only covers essential goods and services, enforced especially during festive seasons.

Inflation and high prices are two different things; inflation is a rate of change in general price level. One can have low inflation despite prevailing high prices of goods and services or high inflation at low price levels. It is the rate of annual price increase that is defined as inflation. Nevertheless, high price increases will invariably be translated into inflationary pressures.

High prices can be caused by high level of aggregate demand (demand-pull factor) when the economy grows beyond its sustainable levels. Our current rate of economic growth is still below our growth potential of about six to seven per cent per annum. Hence we cannot say that our current inflation is caused by excessive demand. There are also other contributing factors, such as rising cost of production including high wages, high cost of imports, and supply shortages as well as market imperfection.

One factor that may also cause increase in price level is declining rates of exchange which result in rising cost of imports. The Malaysian ringgit declined recently, with the rising value of the dollar under the impetus of the tapering policy of the Federal Reserve which led to outflows of fund from the region back to the United States, thus strengthening the US dollar vis-a-vis other currencies.

Hopefully, the decline in the ringgit will spur increases in exports thus helping our balance of payments position again. An improved external demand will help the nation to increase industrial production and a higher rate of economic growth.

The current increase in price level has not pressured our central bank to undertake monetary policy measures, such as raising interest rates and initiating open market operations. The bank is therefore still monitoring the price development.

Inflationary expectations by consumers and suppliers may result in price increases, too, as the nation is deliberating on toll increases, wage increases, increases in local government assessment rates and revision in electricity tariffs. Suppliers may have also increased the prices of certain goods now that the government has raised fuel price (RON95) and reduced sugar subsidy.

Powerful supply chain organisations can indeed raise prices much higher than the expected increase brought about by the 20 sen increase in RON95 fuel price and doing away with sugar subsidy. Analysing the supply chain using the input-output technique, tells us that supplies account for the bulk of costs of products and services. Thus, market intermediaries have a lot to explain the price increases if the resultant price adjustment after subsidy rationalisation appears unreasonable.

As usual, we as consumers are again at the disadvantage with price increases because of our weaker position as well as the lack of information on price conditions to enable us to exercise our purchasing power effectively and contribute to price stabilisation. However, this should not be the case. Consumers must exercise their power to ensure suppliers do not willy-nilly increase prices.

A detailed and comprehensive study of the causes of the current high prices needs to be donenajib-razak1 immediately so as to enable an accurate policy prescription to be implemented.

If supply is the cause of price increase then policy prescription may include import liberalisation and reducing domestic supply bottlenecks to increase domestic production and supply. In such a case, the policy response to increase KR1M (Kedai Rakyat Satu Malaysia) outlets therefore appears quite right.

Given the above explanation, one should not jump into conclusion that public policies have failed to arrest price increases. As a society, we too have a role to play in ensuring that inflation is controlled. Let us exercise our power, as consumers, to control unreasonable price increases by judicious spending and economising on our energy use as well as changing our consumption spending pattern.

France’s real scandal: Hollande’s Economics


January 19, 2013

France’s real scandal: Hollande’s Economics

by Paul Krugman

WEAKNESS: Hollande’s plans to change economic course make for despair

Paul KrugmanI HAVEN’T paid much attention to François Hollande, the President of France, since it became clear that he wasn’t going to break with Europe’s destructive, austerity-minded policy orthodoxy. But now he has done something truly scandalous.

I am not, of course, talking about his alleged affair with an actress, which, even if true, is neither surprising (hey, it’s France) nor disturbing. No, what’s shocking is his embrace of discredited right-wing economic doctrines. It’s a reminder that Europe’s ongoing economic woes can’t be attributed solely to the bad ideas of the right.

Yes, callous, wrongheaded conservatives have been driving policy, but they have been abetted and enabled by spineless, muddleheaded politicians on the moderate left.

Right now, Europe seems to be emerging from its double-dip recession and growing a bit. But this slight uptick follows years of disastrous performance.How disastrous? Consider: By 1936, seven years into the Great Depression, much of Europe was growing rapidly, with real GDP per capita steadily reaching new highs.

By contrast, European real GDP per capita today is still well below its 2007 peak — and rising slowly at best.

Doing worse than you did in the Great Depression is, one might say, a remarkable achievement. How did the Europeans pull it off? Well, in the 1930s most European countries eventually abandoned economic orthodoxy: They went off the gold standard; they stopped trying to balance their budgets; and some of them began large military buildups that had the side effect of providing economic stimulus. The result was a strong recovery from 1933 onward.

Modern Europe is a much better place, morally, politically, and in human terms. A shared commitment to democracy has brought durable peace; social safety nets have limited the suffering from high unemployment; coordinated action has contained the threat of financial collapse. Unfortunately, the Continent’s success in avoiding disaster has had the side effect of letting governments cling to orthodox policies.

Nobody has left the euro, even though it’s a monetary straitjacket. With no need to boost military spending, nobody has broken with fiscal austerity. Everyone is doing the safe, supposedly responsible thing — and the slump persists.

In this depressed and depressing landscape, France isn’t an especially bad performer. Obviously it has lagged behind Germany, which has been buoyed by its formidable export sector.

But French performance has been better than that of most European nations. And I’m not just talking about the debt-crisis countries. French growth has outpaced that of such pillars of orthodoxy as Finland and the Netherlands.

It’s true that the latest data show France failing to share in Europe’s general uptick. Most observers, including the International Monetary Fund, attribute this recent weakness largely to austerity policies.

But now Hollande has spoken up about his plans to change France’s course — and it’s hard nothollande2 to feel a sense of despair. For Hollande, in announcing his intention to reduce taxes on businesses while cutting (unspecified) spending to offset the cost, declared; “It is upon supply that we need to act”, further declaring that “supply actually creates demand”.

Oh, boy. That echoes, almost verbatim, the long-debunked fallacy known as Say’s Law — the claim that overall shortfalls in demand can’t happen, because people have to spend their income on something.

This just isn’t true, and it’s very much not true as a practical matter at the beginning of 2014. All the evidence says that France is awash in productive resources, both labour and capital, that are sitting idle because demand is inadequate.

For proof, one need only look at inflation, which is sliding fast. Indeed, both France and Europe as a whole are getting dangerously close to Japan-style deflation.

So what’s the significance of the fact that, at this of all times, Hollande has adopted this discredited doctrine? As I said, it’s a sign of the haplessness of the European centre-left.

For four years, Europe has been in the grip of austerity fever, with mostly disastrous results; it’s telling that the current slight upturn is being hailed as if it were a policy triumph. Given the hardship these policies have inflicted, you might have expected left-of-centre politicians to argue strenuously for a change in course.

Yet everywhere in Europe, the centre-left has at best (for example, in Britain) offered weak, half-hearted criticism, and often simply cringed in submission.

When Hollande became leader of the second-ranked euro economy, some of us hoped that he might take a stand. Instead, he fell into the usual cringe — a cringe that has now turned into intellectual collapse. And Europe’s second depression goes on and on. New York Times/http://www.nst.com.my