President Donald Trump–Doing what he does Best


February 19, 2017

President Donald J. Trump–Doing what he does Best: Electioneering in stead of Governing

Listen to President of the United States at Melbourne, Florida and tell me what you think. His speech resonates with his supporters  no doubt, but it raises more concerns for the rest of us around the world. America, the Land of the Free and Home of the Brave, is not an Island onto itself. Under the 45th President, it is  also a fading City on a Hill.

As a  friend of America, I am disappointed at what is happening in America today. In less than a month in office, Mr Trump, you are not acting presidential, but more like a demagogue.

What America is in 2017 reminds me of 1968. To me, you are like the coming of another Richard Milhous Nixon. A divided, polarized, paranoiac, and inward looking America led by another toxic President is not good for a distracted America, and the world which depends on sanity and order in 1600 Pennsylvania Avenue, Washington DC.

Taking on the Press is not the solution. It is time for you, Mr. President, to tap the power of the  Press to support and promote your agenda for change. Antagonism towards the Media is, therefore, counterproductive.

So please get out of  your campaign mode, and start governing and making friends with the Media and the rest of the world. It has to be “I am Okay, You are Okay”(Eric Berne) paradigm for global peace and stability. You need, Mr. Trump, friends to keep America and the world safe from terrorism, racism and other forms of extremism, not just ISIS/Dash.–Din Merican.

HRH Sultan Nazrin Shah: Understand Malaysia better through its History


February 14, 2017

HRH Sultan Nazrin Shah:  Understand Malaysia better through its History

COMMENT: HRH Sultan Nazrin Shah, the Oxford and Harvard-educated political economist, is to be congratulated for publishing a monumental book on Malaysia’s economic history.

One cannot dispute His Royal Highness’ view that understanding the country’s economic, political and socio-cultural history is important since it enables us to appreciate the progress we have achieved since Independence in 1957 due to the contributions of our diverse communities, and learn from our policy failures, and follies and frailties of our past leaders and administrators.

Our achievements have been spectacular by any measure  to earn the respect of the world. The developing world used to look up to us for our economic success. But in recent years, while we enjoy continued economic growth (in GDP terms), albeit modest by comparison with our past attainments, the management of our economy has been increasingly disappointing and depressing. The level of corruption is now the worst I have ever witnessed in my nearly 45 years of public, corporate, academic and civil society life.

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It is obvious to me at least that our present generation of UMNO-BN leaders have not learned the lessons of history especially why nations can and have failed because of corruption, abuse of power and sheer incompetence. HRH Sultan of Perak would, therefore, be well advised to remind Prime Minister Najib Razak of the consequences of poor governance. Preaching to the converted like me and others is inconsequential since we are not in power.

Finally, I must add my disappointment with this piece by Hanis Zainal. While publicizing HRH Sultan Nazrin’s book, she chose not acknowledge that scholars and academics like James Puthucheary, Agoes Salim, Lin See Yan, Rais Saniman, Junid Saham, Jomo Kwame Sundaram, Edmund Terrence Gomez, Mohamed Ariff (formally with MIER),Kamal Salih (USM), Lim Teck Ghee, Johan  Saravanamuttu et.al have contributed immensely to our understanding of Malaysia’s political economy and history. They have, in fact, preceded HRH Sultan Nazrin Shah.–Din Merican

by Hanis Zainal@www.thestar.com.my

The key to understanding a country better is through its history, so it is logical to assume the key to studying a country’s economy is through studying its econo­mic history.

This was what Perak Ruler Sultan Nazrin Muizzuddin Shah set out to achieve in Charting the Economy: Early 20th Century Malaya and Contemporary Malaysian Contrasts which was launched yesterday.

The book charts the country’s economic activities under colonial rule and contrasts it with the economic growth and development in contemporary Malaysia.

During the launch at a hotel here, Sultan Nazrin said that lessons learned from history carry “great relevance” for overcoming the economic challenges of modern-era Malaysia.

 “To better understand contemporary economic performance, it is necessary for us to go back into history to understand long-term trends,” he said.

In his book, Sultan Nazrin charts the changes – from an economy based largely on agriculture and mining in the past to one that is more diversified and broad today.

One of the most important lessons he learned in his study was of people’s contributions to the economy, said Sultan Nazrin.

“The truly remarkable economic and social transformation that Malaysia has experienced is due to the outstanding contributions made by all of our diverse communities working together.”

Quoting novelist Henri Fauconnier, who wrote the Soul of Malaya, Sultan Nazrin said the soul of Malaysia “is found in the country’s diverse people”.

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In his address, Harvard University’s Professor of Political Economy Prof Dwight Perkins noted the book’s importance to the economic literature of Malaysia.

Charting the Economy is published by Oxford University Press and retails at RM99 at all major bookshops in Malaysia.

 

Book: The Econocracy Review


February 12, 2017

The Econocracy Reviewhow three students caused a global crisis in economics

by Aditya Chakraborthy

https://www.theguardian.com/books/2017/feb/09/the-econocracy-review-joe-earle-cahal-moran-zach-ward-perkins

Unhappy at how economics is out of touch with reality and defined by an elite, Joe Earle, Cahal Moran and Zach Ward-Perkins sum up their explosive call for change

By making their discipline all-pervasive, and pretending it is the physics of social science, economists have turned much of our democracy into a no-go zone for the public. This is the authors’ ultimate charge: “We live in a nation divided between a minority who feel they own the language of economics and a majority who don’t.”–Aditya Chakraborthy
Riot police clash with demonstrators outside parliament in Athens, October 2011, as anger breaks out over new austerity measures

Riot police clash with demonstrators outside Parliament in Athens, October 2011, as anger breaks out over new austerity measures Photograph: Angelos Tzortzinis/AFP/Getty Images

In the autumn of 2011, as the world’s financial system lurched from crash to crisis, the authors of this book began, as undergraduates, to study economics. While their lectures took place at the University of Manchester the eurozone was in flames. The students’ first term would last longer than the Greek government. Banks across the west were still on life support. And David Cameron was imposing on Britons year on year of swingeing spending cuts.

Yet the bushfires those teenagers saw raging each night on the news got barely a mention in the seminars they sat through, they say: the biggest economic catastrophe of our times “wasn’t mentioned in our lectures and what we were learning didn’t seem to have any relevance to understanding it”, they write in The Econocracy. “We were memorising and regurgitating abstract economic models for multiple-choice exams.

Part of this book describes what happened next: how the economic crisis turned into a crisis of economics. It deserves a good account, since the activities of these Manchester students rank among the most startling protest movements of the decade.

After a year of being force-fed irrelevancies, say the students, they formed the Post-Crash Economics Society, with a sympathetic lecturer giving them evening classes on the events and perspectives they weren’t being taught. They lobbied teachers for new modules, and when that didn’t work, they mobilised hundreds of undergraduates to express their disappointment in the influential National Student Survey. The economics department ended up with the lowest score of any at the university: the professors had been told by their pupils that they could do better.

The protests spread to other economics faculties – in Glasgow, Istanbul, Kolkata. Working at speed, students around the world published a joint letter to their professors calling for nothing less than a reformation of their discipline.

Economics has been challenged by would-be reformers before, but never on this scale. What made the difference was the crash of 2008. Students could now argue that their lecturers hadn’t called the biggest economic event of their lifetimes – so their commandments weren’t worth the stone they were carved on. They could also point to the way in which the economic model in the real world was broken and ask why the models they were using had barely changed.

The protests found an attentive audience among fellow undergraduates – the sort who in previous years would have kept their heads down and waited for the “milk round” to deliver an accountancy traineeship, but were now facing the prospect of hiring freezes, moving back home and paying off their giant student debt with poor wages.

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I covered this uprising from the outset, and later served as an unpaid trustee for the network now called Rethinking Economics. To me, it has two key features in common with other social movements that sprang up in the aftermath of the banking crash. Like the Occupy protests, it was ultimately about democracy: who gets to have a say, and who gets silenced. It also shared with the student fees protests of 2010 deep discomfort at the state of modern British universities. What are supposed to be forums for speculative thought more often resemble costly finishing schools for the sons of Chinese communist party cadres and the daughters of wealthy Russians.

Much of the post-crash dissent has disintegrated into trace elements. A line can be drawn from Occupy to Bernie Sanders and Black Lives Matter; some of those undergraduates who were kettled by the police in 2010 are now signed-up Corbynistas. But the economics movement remains remarkably intact. Rethinking Economics has grown to 43 student campaigns across 15 countries, from America to China. Some of its alumni went into the civil service, where they have established an Exploring Economics network to push for alternative approaches to economics in policy making. There are evening classes, and then there is this book, which formalises and expands the case first made five years ago.

Joe Earle, foreground, with the Post-Crash Economics Society at Manchester University.

Joe Earle, centre, with the Post-Crash Economics Society at Manchester University. Photograph: Jon Super

The Econocracy makes three big arguments. First, economics has shoved its way into all aspects of our public life. Flick through any newspaper and you’ll find it is not enough for mental illness to cause suffering, or for people to enjoy paintings: both must have a specific cost or benefit to GDP. It is as if Gradgrind had set up a boutique consultancy, offering mandatory but spurious quantification for any passing cause.

Second, the economics being pushed is narrow and of recent invention. It sees the economy “as a distinct system that follows a particular, often mechanical logic” and believes this “can be managed using a scientific criteria”. It would not be recognised by Keynes or Marx or Adam Smith.

 

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In the 1930s, economists began describing the economy as a unitary entity. For decades, Treasury officials produced forecasts in English. That changed only in 1961, when they moved to formal equations and reams of numbers. By the end of the 1970s, 99 organisations were generating projections for the UK economy. Forecasting had become a numerical alchemy: turning base human assumptions and frailty into the marketable gold of rigorous-seeming science.

By making their discipline all-pervasive, and pretending it is the physics of social science, economists have turned much of our democracy into a no-go zone for the public. This is the authors’ ultimate charge: “We live in a nation divided between a minority who feel they own the language of economics and a majority who don’t.”

This status quo works well for the powerful and wealthy and it will be fiercely defended. As Ed Miliband and Jeremy Corbyn have found, suggest policies that challenge the narrow orthodoxy and you will be branded an economic illiterate – even if they add up. Academics who follow different schools of economic thought are often exiled from the big faculties and journals.

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The most devastating evidence in this book concerns what goes into making an economist. The authors analysed 174 economics modules for seven Russell Group universities, making this the most comprehensive curriculum review I know of. Focusing on the exams that undergraduates were asked to prepare for, they found a heavy reliance on multiple choice. The vast bulk of the questions asked students either to describe a model or theory, or to show how economic events could be explained by them. Rarely were they asked to assess the models themselves. In essence, they were being tested on whether they had memorised the catechism and could recite it under invigilation.

Critical thinking is not necessary to win a top economics degree. Of the core economics papers, only 8% of marks awarded asked for any critical evaluation or independent judgment. At one university, the authors write, 97% of all compulsory modules “entailed no form of critical or independent thinking whatsoever”.

Remember that these students shell out £9,000 a year for what is an elevated form of rote learning. Remember, too, that some of these graduates will go on to work in the City, handle multimillion pound budgets at FTSE businesses, head Whitehall departments, and set policy for the rest of us. Yet, as the authors write: “The people who are entrusted to run our economy are in almost no way taught to think about it critically.”

They aren’t the only ones worried. Soon after Earle and co started at university, the Bank of England held a day-long conference titled Are Economics Graduates Fit for Purpose?. Interviewing Andy Haldane, chief economist at the Bank of England, in 2014, I asked: what was the answer? There was an audible gulp, and a pause that lasted most of a minute. Finally, an answer limped out: “Not yet.”

The Manchester undergraduates were told by an academic that alternative approaches were as much use as a tobacco-smoke enema. Which is to say, he was as likely to take Friedrich Hayek or Joseph Schumpeter seriously as he was to blow smoke up someone’s ass.

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The students’ entrepreneurialism is evident in this book. Packed with original research, it comes with pages of endorsements, evidently harvested by the students themselves, from Vince Cable to Noam Chomsky. Yet the text is rarely angry. Its tone is of a strained politeness, as if the authors were talking politics with a putative father-in-law.

More thoughtful academics have accepted the need for change – but strictly on their own terms, within the limits only they decide. That professional defensiveness has done them no favours. When Michael Gove compared economists to the scientists who worked for Nazi Germany and declared the “people of this country have had enough of experts”, he was shamelessly courting a certain type of Brexiter. But that he felt able to say it at all says a lot about how low the standing of economists has sunk.

The high priests of economics still hold power, but they no longer have legitimacy. In proving so resistant to serious reform, they have sent the message to a sceptical public that they are unreformable. Which makes The Econocracy a case study for the question we should all be asking since the crash: how, after all that, have the elites – in Westminster, in the City, in economics – stayed in charge?

The Econocracy is published by Manchester University.

The State of Asia Pacific Free Trade


February 11, 2017

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Number 370 | February 10, 2017
ANALYSIS

The State of Asia Pacific Free Trade

By Eduardo Pedrosa

On January 23, three days after taking office, President Donald Trump issued a memorandum to permanently withdraw the United States from the Trans-Pacific Partnership (TPP), fulfilling one of his campaign promises. The decision came amidst rising concerns about the future of globalization. Since 2006, the Pacific Economic Cooperation Council (PECC) has been undertaking an annual survey of policy experts to provide insights into the debate about free trade and globalization. The belief that the best route to growth is through freer trade is under siege, with accusations from seemingly opposite poles of the political spectrum, that globalization only benefits the top ten or even 1 percent of citizens of a particular country.

Trade-skeptic sentiments are strongest in high income economies. As seen in the PECC survey, respondents from high income economies like the United States gave the lowest assessment of the political environment for freer trade with a net favorability rating of only +16 percent, compared to +41 percent in emerging economies. While the decision to withdraw the US from the TPP may have been driven by opposition to this particular trade deal rather than free trade generally, it will nonetheless hamper attempts to modernize trade rules already out of synch with commercial reality.

In place of the TPP, the Trump administration has said that it will pursue a series of bilateral deals, an approach that runs counter to a trend to consolidate multi-member trade deals in the Asia-Pacific region.  The Regional Comprehensive Economic Partnership (RCEP) negotiations, for example, are an attempt to consolidate ASEAN’s existing bilateral agreements, and the Pacific Alliance (PA) consolidates a series of bilateral agreements among Latin American economies.

The reason for this consolidation was that the “spaghetti bowl” of bilateral agreements was making it harder and more costly to do business, especially for smaller firms. Much of the increase in global trade in recent years has come from the emergence of global value chains. These international chains of production require components to cross borders multiple times. Global value chains have led to a significant reduction in the prices of goods such as cars and mobile phones, making them more affordable for consumers. However, complex rules of origin in bilateral deals made them hard to use and hence costs were passed on to the consumer.

The introduction of more border taxes will raise costs for consumers, and is unlikely to create the kinds of jobs people hope for. Where businesses choose to base production depends on a variety of factors – proximity to the market, availability of skills, ease of doing business, and the applicable tax regime. The current uncertainty over policy is adding to the economic volatility evident since the 2008 Global Financial Crisis, with businesses taking a ‘wait and see’ attitude towards hiring and capital expenditure. One reason for this attitude is uncertainty and negative expectations for future global growth. Increased trade frictions are likely to lead to even greater caution from members of the corporate sector, encouraging them to keep even more cash on their balance sheets. Concerns about protectionism are rising dramatically, with 32 percent of respondents to the PECC survey selecting it as a top five risk to economic growth compared to 16 percent two years ago. North Americans were the most worried about the impact of rising protectionism on their economies with 52 percent of respondents picking it as a top five risk to growth (making it the 2nd highest risk).

“If progress is made on trade deals such as the RCEP and PA, businesses will view the economies involved as beneficial locations to operate.”

If progress is made on trade deals such as the RCEP and PA, businesses will view the economies involved as beneficial locations to operate because of lower costs, a predictable trade environment, and proximity to the world’s fastest growing markets. A fifth of North American respondents to the PECC survey thought that the RCEP would have a negative impact on their economy – echoing a concern from an earlier era about ‘drawing a line down the Pacific.’ This uncertainty about transpacific cooperation comes at a critical juncture – over the next 5 years the Asia-Pacific is expected to account for almost two-thirds of all global growth.

The PECC survey results also give some indication of the challenges to freer trade today. Respondents were asked to rate different factors that influence attitudes toward freer trade: income inequality, job security, failure to communicate the benefits of trade, slower global economic growth, and sustained political leadership. Two findings stand out: First, North American respondents were much more concerned about all factors compared to all other survey respondents; and second, there are problems with perceptions about trade (the failure to communicate) and other deeper problems such as rising income inequality and job insecurity.

While a lot of energy and time will be expended on the future of globalization, the critical question is: where are jobs and growth going to come from? Over the past 4 years two-thirds of the region’s growth has come from the services sector, compared to 28 percent from the manufacturing sector. At an average of 57 percent of total output, the services sector in the region’s emerging economies is smaller compared to 80 percent of total output in more advanced economies. Moreover, the way in which services are being delivered is changing – 70 percent of respondents to PECC’s survey thought that digital trade, e-commerce, and the internet economy would be very or extremely important to the future growth of their economies.

While tariffs and border taxes have come down from an average of 17 percent to less than 6 percent, many of the barriers that remain are regulatory in nature. Two-thirds of respondents to PECC’s survey selected transparency, multiple layers of authority, and predictability of regulations as serious or very serious impediments to services trade. These issues are not easily dealt with in the context of trade negotiations – for the most part they are not designed with foreign trade in mind, but are put in place to protect other concerns such as consumer safety. A forward-looking trade agenda needs to find ways to reduce the burden on businesses to allow them to grow – creating jobs and lowering prices.

The Asia-Pacific is undergoing a period of historic change and its trajectory, now more than ever, is unclear. Given the large populations and rising incomes, it is most likely to remain the center of global growth for decades. While the Asia-Pacific policy community remains committed to freer trade, there are significant differences on the domestic political economy of freer trade. A trade agenda that addresses the concerns of those negatively impacted by trade will be critical to continuing the forward momentum in making free trade more desirable and sustainable.

About the Author

Eduardo Pedrosa is the Secretary General of the Pacific Economic Cooperation Council (PECC). He can be contacted at Eduardo.Pedrosa@PECC.org
The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia-Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington

APB Series Coordinator: Peter Valente, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

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50 Year Old ASEAN–No Longer Business As Usual


February 10, 2017

50 Year Old ASEAN–No Longer Business As Usual

by Dr. Munir Majid@www.thestar.com.my

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IT is not business as usual. As ASEAN’s array of official and private sector meetings roll out for the year, urgent thought must be given to dramatically new challenges beyond the stubborn issues that continue to arrest the region’s meaningful integration.

The advent of Donald Trump as President of the United States has overturned many regional assumptions and threatens to cause economic as well as political turmoil. These developments should make ASEAN think crisis management – even if, in the end, the worst does not happen.

There are a number of “what ifs” which should be addressed.What if Trump causes a trade war to break out between America and China by imposing the punitive import duties on Chinese goods that he has threatened?

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It will then not be a simple outcome of relocation of manufacturing centres from China to low-cost Vietnam, for instance, as some have rather sanguinely suggested. The supply chains to which many ASEAN exports are linked for the finished Chinese product would be broken. There will be export disruption – not just for China.

There are countries in ASEAN, apart from Vietnam (90%), like Singapore (176%), Thailand (69%) and Malaysia (71%) whose exports amount to a substantial proportion of their GDP.

On top of exports through China, their own direct exports to the US will also be affected, as will any relocated exports from Vietnam.

There will be no winners in a trade war, no benefits to be derived from China’s apparently singular predicament. The knock-on effect will be widespread. In time, as excess capacity looks for export sales, dumping will become a problem, as will protection against it.

Motor cars that cannot get into America will have to go somewhere. Steel turned away from the US as Trump seeks to protect mills and jobs in the mid-west will have to be shipped somewhere else. Even the textile industry will be spinning in different directions as Trump has promised to revive it in America.

The whole global free trade ecosystem will go topsy-turvy. How will free trade within the ASEAN Economic Community, such as it is, be maintained? Can ASEAN+6 move on to the Regional Comprehensive Economic Partnership (RCEP) as the fallout from Trump’s America First trade policy hits the world?

Asia – and ASEAN – will have to stick together and carry on with the open, albeit reduced, global free trade and investment system. Will that happen?

Some ASEAN states with larger domestic economies are less dependent on international trade than others. Already, now, they take a different position on opening up their market. Will it get worse in the situation of stress, should it come about?

ASEAN must talk about these possibilities now, before they happen. Someone must take the lead. Too often this does not happen in ASEAN. Can the officials, or the secretariat, or the private sector do this scenario-setting for the ministers, for the leaders? Or is ASEAN going to carry on as if everything is not changing around it?

I am reminded of what George Orwell has been said to have remarked: In a time of universal deceit, telling the truth is a revolutionary act. The tendency to take to the ASEAN level what routinely happens in many ASEAN domestic systems should be snapped. Some functionary in ASEAN must warn the regional grouping of the dire threat facing it.

The other challenge facing Asia and ASEAN is the risk Trump poses to regional peace and stability. This comes from the challenge again thrown at China, this time in respect of its claim to the South China Sea. As China’s predominance in the disputed expanse of territory is by no means ideal, its exposure to a more counter-assertive and belligerent American stance under Trump – no Chinese access to islands artificial or militarised that do not belong to China “under international law” – may encourage claimant ASEAN states to be less compliant with the China-set path of dispute management.

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Since the law of the sea tribunal decision last July, there has been a lowering of temperature in the South China Sea dispute, even if at the cost of not highlighting the baselessness and futility of China’s claims under international law. The return has been a commitment by China in the diplomatic channeling with ASEAN to having a code of conduct (COC) finally in place this year – although only in framework form.

It has been a long-term ASEAN objective to have this COC for peaceful conduct in the South China Sea. China has hitherto been dragging its feet on this. With a more assertive American policy against China, would there be among ASEAN states a disposition to push with the US to get a better deal on the South China Sea?

This kind of geopolitical arbitrage may be attractive, but it would come at a longer-term cost to regional cooperation, which has become critical because of Trump’s foreign economic and trade policies. This is a dilemma ASEAN states would do well to address together.

Already, beyond ASEAN, India appears attracted to taking advantage of the predicament China might be in with Trump. India, of course, has long-standing border disputes with China, which Beijing has been happy to keep unresolved. At the same time, there is strategic competition between the two over their regional place in Asia.

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Another could be Japan which, again, has many unresolved disputes and issues with China. India, in particular, appears to want to flirt with Trump even at the cost of frustrating conclusion of the RCEP. The cost to India, however, could be isolation from the Asia-Pacific region for an uncertain alliance with Trump’s America.

You cannot do strategy with a counter-party whose leitmotif is transactional. With Trump it is not going to be win-win. It is going to be win-win-win for America.

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Trump’s Win For America First Foreign Policy

ASEAN states should want to address these profound issues. Even dissuade member and partner countries from wanting to sup with the devil, as it were.

China, of course, has not been the ideal big country partner beyond platitudinous statements and suffocation of ASEAN by money. Its actions in the South China Sea are not indicative of a great power that will not grind your face in the dirt if you did not do its bidding.

Will China become the good big brother it claims it wants to be, even as America becomes the bad and ugly one?

It looks like ASEAN might be caught between a rock and a hard place. Individual member states no doubt will be doing their calculation with the hope to position themselves in a better than survival mode.

However they will all be better off if they also worked together among themselves and partnered Asia-Pacific countries to achieve better economic integration, whose benefit will discourage them from playing dangerous geopolitical games.

So, as ASEAN under Philippines leadership looks at themes such as inclusive growth, an excellent focus, and addresses the many stubborn issues that are barriers to better integration, it must prepare also for the very difficult economic and political environment which will be fashioned by the Trump administration.

Tan Sri Munir Majid, Chairman of Bank Muamalat and visiting senior fellow at LSE IDEAS (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute.

 

The NEP:”A Magical Touch” or Systemic State-Sponsored Discrimination?


February 9, 2017

COMMENT: The objectives of the Tun Abdul Razak’s  New Economic Policy (1970)  were (1) to eradicate poverty regardless of race and (2) to create a Malay Commercial and Industrial Community to eliminate the identification of race with economic function. It was intended to deal the root causes of  the May 13 1969 riots that shook Malaysia and promote national unity.

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It was Tun Dr. Ismail Abdul Rahman, Tun Razak’s Deputy, who likened it to a golf handicap system to enable the Malays to compete against the more economically successful Malaysian other. It was  to  “serve as a temporary affirmative action policy with a 20 year lifespan but which now appears to have been extended ad infinitum.”(Lim Teck Ghee).

Tun Dr. Mahathir Mohamad used it to create a UMNO crony capitalism and make the Malays beholden to the UMNO state for handouts. In the name of “democratization of education” our fourth Prime Minister also lowered university entrance requirements to enable Malays to attend our public universities, the consequences of which are quite well-known to all of us.

If the Malays are to compete in a globalized world, they must learn to be self-reliant and resilient in the face of adversity. Like my friend Teck Ghee, I feel that empowerment of the Malays, not dependence on UMNO handouts, is the way forward  in the pursuit of national unity.–Din Merican

The  NEP –“A Magical Touch” or  Systemic State-Sponsored Discrimination against The Malaysian Other?

by Lim Teck Ghee

Surely our well informed Royalty must also be aware of the collateral damage that pro-Malay bumiputra policies have had on governance, economy, social cohesion and race and religious relations. Surely Sultan Nazrin, with degrees from Oxford and Harvard, must be aware of the vast literature available, in English and the national language, of the downside of maintaining the NEP past its original shelf-life of 1990.–Dr. Lim Teck Ghee

Recently the Sultan of Perak, Sultan Dr.Nazrin Shah, officiating at a religious discourse described the NEP (New Economic Policy) as a “magical touch”. The word “magic” is associated with the the power of influencing the course of events by using mysterious or supernatural forces. It is a word whose synonyms include “sorcery, witchcraft, wizardry, necromancy, enchantment,the supernatural, occultism, the occult, black magic,the black arts, shamanism” and the like.

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Malaysia’s Oxford and Harvard Educated Sultan

The “magical touch” of the NEP which gave more opportunities for the Malays to participate in mainstream development and encouraged the growth of youths especially from the rural areas to have a strong foundation of race and religion. of course, did not come from the waving of any supernatural or magical wand, although some of the superstitious in the audience may believe it.

It was a human and politically-crafted public policy in the aftermath of the racial violence in May 1969 and it was intended to serve as a temporary affirmative action policy with a 20 year lifespan but which now appears to have been extended ad infinitum.

The assertion that the the NEP benefited Malay individuals and families and also injected a new confidence and pride into the Malays is also well-known and is incontestable. No one can deny that the younger generation Malays, especially women, “filled Malay secondary classes in bigger numbers, held high positions in their careers, especially in the public sector, enjoyed influence and underwent a cultural transformation, including in the workplace and home” as a direct outcome of the NEP.

But there were other ripple effects from the application of the “magic” touch which the Sultan did not bring to the attention of his audience. These effects – principally relating to the non-Malay community but also now impacting on the Malays – are also important and necessary to bring to the attention of those who continue to advocate it as the panacea for the ills and shortcomings of the Malay community.

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Such a critical, empirically-grounded ]and non-romantic analysis is especially necessary to emphasise in religious and Malay-centric fora that are held ostensibly to instill “Islamic values” of justice, moderation, equality, and the other ethics deemed as central to the practice of the religion; or during events intended to uplift Malay pride and self-esteem.

Who Lost Out With The NEP

That magic wand waved to secure the employment of Malays in the public sector and their accelerated promotion and advancement in it, as well as in other sectors, has required the suppression and holding back of other citizens in their employment, career and even life prospects, however deserving or qualified they may have been, simply on account of their minority ethnic identity. Enough has been written about this for so long that even the most out-of-touch or uneducated in the country is fully aware of it.

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UMNO-BN Election Gimmick?

The loss has not only been to the many hundreds of thousands of non-Malays who have had to make personal sacrifice or have been denied fair treatment as a result of a policy pushed down their throats to ensure ‘national unity’ and so that Malay politicians (and Royalty) can have what these dominant groups consider to be a fair share of the nation’s wealth.

The loss is also that of the nation as a whole.

Surely our well informed Royalty must also be aware of the collateral damage that pro-Malay bumiputra policies have had on governance, economy, social cohesion and race and religious relations. Surely Dr, Sultan Nazrin, with degrees from Oxford and Harvard, must be aware of the vast literature available, in English and the national language, of the downside of maintaining the NEP past its original shelf-life of 1990.

Sultan Dr.Nazrin who is also the Financial Ambassador of the Malaysian International Islamic Financial Centre (MIFC) also said that Malaysia is always described as a modern Islamic nation which is developed, progressive, peaceful and moderate. According to him, “Islamic leadership in Malaysia is highly respected. The wisdom of the Malay leaders in implementing programmes for the development of the people and the country has been acknowledged throughout the world.”

OECD’s Damning Analysis

As Financial Ambassador, he would do well to read the recent Organisation for Economic Cooperation and Development (OECD) Review of Innovation Policy report which categorially states that the NEP is among the causes of Putrajaya’s limited success in upgrading the economy through science, technology and innovation policies since the mid-1980s. The recently released Malaysia report noted that “[s]ocial equity rules associated with the New Economic Policy, affecting a wide range of domains including education and businesses, did not allow sufficient mobility of resources which, in the end, hindered innovation activities”.

The report also noted that the domination of government-linked companies (GLCs) and major family-owned conglomerates – all factors the Sultan should be very familiar with – have tended to block competition, innovation and entrepreneurship.

Finally the reported noted that “[e]ven the best initiatives have suffered from a lack of sustainable efforts, political interference or, in some cases, clientelism and corruption”.

The NEP and its successor policies need an open, rigorous and transparent stocktaking to ensure that the Malay community and other Malaysians do not continue to be led astray or become victims of an anachronistic, increasingly elite-favouring, corrupt and indefensible policy.

The magic has been long gone and will never return. Perhaps the Sultan’s next speech may see him provide some ideas on the replacement policy to the NEP.  Empowerment of the Malays, not dependence of UMNO handouts is the way forward  in the pursuit of national unity.