CPTPP is good for Malaysia

March 22, 2018

CPTPP is good for Malaysia


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Malaysia’s MITI Minister Dato’Mustap Mohamed

THE Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the rebranded TPPA, was finally signed by 11 countries on March 8.

The pact had earlier raised anxiety among certain parties that it would jeopardise Malaysia’s sovereignty and undermine the well-being of its citizens. But if we look at the bigger picture, the pact will benefit the country in the long run because our economy depends largely on trade activities.

According to Moody’s last week, Malaysia would be the biggest winner from the deal as the CPTPP covers a market of nearly 500 million despite the absence of the United States.

This fact was reinforced by the Peterson Institute for International Economics’ (PIIE) research, which showed that the CPTPP would benefit palm oil, rubber and electronics exporters like Malaysia with export access to new markets including Canada, Peru and Mexico.

Looking at current data by the Malaysia External Trade Develop­ment Corporation (Matrade), Malaysia’s dependence on trade is undeniable, recording RM935.39bil in exports last year and RM838.14bil in imports. Malaysia enjoyed a trade surplus of RM97.28bil.

The electrical and electronics sector remains the top exporter accounting for 36.7% while palm oil products stood at 5.8%. Malaysia is also currently the largest producer of gloves, controlling almost 65% of the world market.

In view of this, the CPTPP will encourage existing manufacturers to expand as it provides access to new or untapped markets. It will indirectly reduce our reliance on the US market as well.

Ahmad Shahir Abdul AzizUniversiti Sains Malaysia

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READ: http://www.ipsnews.net/2018/02/model-trade-deal-con –by Dr Kwame Jomo Sundaram

Voodoonomics: How successive governments impoverished Malaysians

March 15, 2018

Voodoonomics: How successive governments impoverished Malaysians

by P. Gunasegaran@www.malaysiakini.com

A QUESTION OF BUSINESS | At least two ways – both very wrong in the longer term – were used to support the export sector in Malaysia in believing that growth through exports was the right thing for a developing country like Malaysia.

Even though there was economic growth, which means more wealth was created, there was impoverishment too. But how could that be? Basically, those who were rich got richer and those who were poor got poorer.

How did the government achieve export competitiveness over the years? Through two measures. First, they reduced the number of things Malaysians generally could buy by opting for a policy which weakened the ringgit. And two, they imported poverty by allowing the uncontrolled import of cheap labour.

Both improved Malaysia’s competitiveness not by raising productivity, although there was some of that, but by cutting down the cost of labour through the import of cheap labour (imported poverty) and lowering the relative value of the currency or currency depreciation, effectively lowering costs in US dollars.

Let’s look at these measures in turn.

1. Currency Depreciation

The ringgit fell in value from around as strong as around RM2.2 to the US dollar in 1980 to around RM4.0 now. The US dollar appreciated by over 80% during the period and the ringgit lost over four-tenths of its value relative to the US dollar.

Consider what that does: if an imported food item cost US$1, it was RM2.2 in 1980. But it rises to RM4 now, an increase of some 82%. But consider it now from the exporter’s perspective: If he sells something for US$1 overseas now, he gets RM4 versus RM2.2 then, again 82% more.

Unless he shares this benefit equitably with the worker – and in practice, he does not – a depreciated currency is a subsidy to exporters and a tax on workers because everyone depends on imported goods and even services for a good part of what they consume. Think in terms of food, clothing and buying from foreign chains.

While a depreciated currency improves the appearance of export figures in ringgit terms, it is still not a long-term solution for the betterment of people because it directly impoverishes a major part of the public by reducing their purchasing power – the amount they can buy with the ringgit.

2. Importing poverty through cheap foreign labour

The next major stupid move successive governments did was to import cheap labour from overseas. Until today, this is largely from Indonesia, Philippines, Bangladesh and India.

In the 1980s, this happened in the plantations affecting mainly Indian Malaysians who were displaced from the estates due to cheap Indonesian legal and illegal labour. Soon, this imported cheap labour spread into all areas, heavily depressing labour wages, affecting all Malaysian labour including Malays.

Was wealth ever created?

How terribly short-sighted! While developed countries were importing skilled and white-collar workers from developing countries, Malaysia, still very much a developing country then (and still is despite what others say), was importing cheap labour from other countries, depressing wages of a large section – probably as much as 50% – of its own workforce.

What kind of a madness was this that at the same time inhibited improved productivity by opening the tap to cheap labour and delayed the invention and adoption of new processes to reduce labour input while improving productivity per person through training and automation?

Till this day, when employers complain of labour shortage, it irritates one to see imported labour at car parks, for instance, being used to hand out parking tickets even after the process has been automated at the entry points.

Drive further in and you see others directing traffic and blowing loudly on whistles. The price of labour is so cheap that imported labour is used for such menial tasks. Are Malaysians so illiterate that they can’t read and follow signs?

As if the whole situation is not ridiculous enough, government officials and ministers regularly regurgitate garbage by saying that labour imports are necessary because Malaysians do not want to do these jobs. Pay them enough and Malaysians will do the job. Perhaps the ministers should send their daughters and sons to do this kind of work for a pittance.

And as many millions of workers are imported, a thriving business sanctioned by the government sprouts up living off the blood and sweat of workers and exploiting employers by making both parties pay ridiculous amounts for legal import, driving them towards employing illegal workers.

One may ask, what then is the alternative? If you want a broad section of the public to get richer and more affluent, the only way is to create wealth for everyone.

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That means improving the overall productivity or output per person so that he or she deserves a higher wage. Not by creating wealth for some and impoverishing most via currency depreciation and depressing wages.

Ah, yes but how do you do that? There is only the hard way. First, improve the quality of education for all and focus on the right kind of education which will make people employable.

Next promote the kind of industries which will increase the dollar value of output per person and ensure that productivity gains drive wealth creation, not cost-cutting.

Third, ensure that as much as possible of the resources go towards improving educational opportunities and building the necessary infrastructure for continuing productivity improvements with as little leakage as possible.

How much of this has been done since independence? Little.

The frightening part

According to Khazanah Research Institute’s (KRI) ‘State of Household Report’ dated November 2014 and Employees Provident Fund (EPF) data on individual incomes which includes salary or wages, overtime payments and bonus in 2013:

  • 96 percent of active EPF members earned less than RM6,000 a month
  • 85 percent less than RM4,000
  • 62 percent less than RM2,000

That’s a telling figure – 62 percent of workers earn less than RM2,000 a month. How can many of them live comfortably with such an income, especially when they have children to support?

Meantime, the median monthly salaries and wages per month for individuals was RM1,700 in 2013 (see chart below). That means half of all workers get this much or less, KRI explains.

And what does an illegal Indonesian worker earn in a month these days? In March, there are 27 working days including Saturdays on which they typically work as well. Industry employers say Indonesian illegal workers cost RM70 a day, casual, that means not contracted. Multiply that figure by 27, we get RM1,890 for the month of March.

Now, the frightening part is that this is more than the RM1,700 median salary for Malaysia which means that 50% of Malaysians earn less than casual Indonesian workers!

Clearly, the majority of the country lives in poverty. Income gains for the wage-earner have not gone up enough. And for a country like Malaysia with abundant resources and which once had the highest income in Asia after Japan, that reflects a failure of government.

If one needs an example of successful economic development, you just need to look across the Causeway which started pretty much from where Malaysia did and look where it is now with the adoption of the right policy mix coupled with an incorruptible government.

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The currency–the Singapore Dollar– is now valued at three times Malaysia’s against about parity in 1980 and its per capita income is among the highest in the world.

We are not saying that Singapore is the perfect state but in terms of economic development, they have beaten us by far and continue to do so.

P GUNASEGARAM still hopes that sometime in the future (perhaps soon?) there will be a government not only of the people but for the people. E-mail him at t.p.guna@gmail.com

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

Trump’s Trade War in Perspective

March 13, 2018

Trump’s Trade War in Perspective

By Anis Chowdhury and Jomo Kwame Sundaram


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Sydney and Kuala Lumpur – US President Donald Trump’s recent announcement of steep tariffs on steel and aluminium imports seems to have shocked US allies, even though these were among his 2016 election promises. The European Union (EU), Australia and Canada reacted sharply, in contrast to the more restrained response from China, the main target of earlier actions.

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During his 2015-2016 election campaign, Trump repeatedly claimed that the US is being unfairly treated. He reiterated this recently, accusing the EU of being “particularly tough on the United States”, adding “They make it almost impossible for the United States to do business with them. And yet they send their cars and everything else …”.

This trade war has been raging for some time, especially since the 2008-2009 global financial crisis (GFC). The World Trade Organization (WTO) has been quite helpless in preventing the resurgence of protectionism, or stopping developed countries from effectively sending the WTO’s Doha Development Round (DDR) into a coma.

Slowing output, trade: chicken and egg?

The WTO’s World Trade Statistical Review 2017 showed that world merchandise trade growth slowed down from 2.6 per cent in 2015 to 1.3 per cent in 2016, the slowest since the GFC. World merchandise trade grew about 1.5 times faster than output after the Second World War, accelerating to more than twice in the 1990s. After the GFC, this ratio dropped to around one, and then to 0.6 in 2016, for the first time since 2001.

Explaining the trade growth slowdown by blaming prolonged slower global economic growth ignores the output-trade growth dialectic. It does not explain why trade expansion has been faster – or slower – than output growth at different times. After all, trade liberalization was associated with general economic liberalization and globalization despite slower world output growth during the 1990s.

The relationship between the output growth decline and the trade growth slowdown since the GFC raises similar doubts. Rising protectionism may explain trade growth falling below tepid output expansion. Yet, increasing protectionism is not only a response to slower growth, but may also contribute to it.

According to research by law firm Gowling WLG, the world’s top 60 economies adopted more than 7,000 protectionist trade measures between 2009 and 2016. It also found the US and EU mainly responsible for harmful trade policies! Since the GFC, the EU has adopted some 5,657 trade-restrictive measures, while the US has introduced 1,297 measures ‘harmful’ to international trade.

According to research by law firm Gowling WLG, the world’s top 60 economies adopted more than 7,000 protectionist trade measures between 2009 and 2016. It also found the US and EU mainly responsible for harmful trade policies! Since the GFC, the EU has adopted some 5,657 trade-restrictive measures, while the US has introduced 1,297 measures ‘harmful’ to international trade.

According to the WTO, G20 economies had implemented 1583 restrictive trade measures by October 2016 compared to around 300 eight years before, i.e., about 1300 more. Between mid-October 2015 and mid-May 2016, G20 economies applied 145 new trade-restrictive measures – averaging almost 21 monthly, up from 17 between mid-May and mid-October 2015. The latest WTO report observed that G20 economies have implemented less traditional and more opaque measures, making it more difficult to monitor and report.

All this despite G20 leaders repeatedly reiterating the mantra from their first Summit in Washington DC in 2008 declaring: “We underscore the critical importance of rejecting protectionism and not turning inward … Further, we shall strive to reach agreement … that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. ….. We also agree that our countries have the largest stake in the global trading system and therefore each must make the positive contributions necessary to achieve such an outcome”. As is well-known, subsequent actions did not match these words.

An earlier WTO report with wider geographic coverage found 2,557 new trade restrictions by October 2015, up 17% from the previous year. Countries have increasingly resorted to discretionary, non-transparent, non-tariff barriers (NTBs), instead of more traditional, transparent trade barriers such as tariffs. These NTBs include subsidies, domestic content requirements, health and safety requirements, state-owned enterprises and public procurement. They involve much discretion, and greatly affect developing country exports.

Trump’s difference

So, what is so special about Trump’s announcement? With characteristic bluster, he announced transparent tariff measures – rather than non-transparent NTBs. Equally significantly, they were to be imposed on all others – US ‘friends’ and ‘foes’ alike, without discrimination. The Trump difference lies in his ‘America First’ brazenness. Belatedly realizing the likely political impact of treating all other parties equally, Trump later announced possible exemptions for ‘national security’ reasons.

Frustrated by the slow progress of protracted multilateral negotiations, many countries have turned to bilateral and plurilateral free trade agreements (FTAs), especially after the Obama administration and European Trade Commissioners put the DDR on hold. As Jagdish Bhagwati has long argued, such non-multilateral FTA ‘termites’ not only undermine multilateral solutions, but may – ironically – slow global trade growth.

The plurilateral Trans-Pacific Partnership (TPP) and its replacement, the Comprehensive and Progressive TPP, for the 11 other TPP countries after the January 2017 US withdrawal, have mainly been about non-trade issues. These include extending intellectual property protection and non-judicial investor-state dispute settlement, besides limiting state-owned enterprises and public procurement. Such measures involve other types of protectionism sacrificing the national interest, particularly of developing countries, while benefiting influential transnational corporations.

If the developed world really wants to avoid all-out trade war, they must return to and advance multilateralism for sustainable, comprehensive solutions. Fairly concluding the Doha Round, while keeping its development promise, as pledged by G20 leaders, will be prerequisites in this endeavour.


Trade is the Republican Party’s last stand

March 12, 2018

Trade is the Republican Party’s last stand

by Dr. Fareed Zakaria


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The tussle over tariffs is the most significant political battle taking place in America right now – much broader than a dispute over steel and aluminum imports. It is the Republican Party’s last stand against a total takeover by Donald Trump. Having ceded ground to the President on everything from personal character to immigration to entitlement reform, Republican leaders have chosen to draw the line at free trade. If they get rolled on this, Trump will have completed the transformation of the party.

“From Adam Smith to Milton Friedman, every great theorist of capitalism has recognized that free trade is at the heart of what makes capitalism work. And they have all pointed out that tariffs are precisely the kind of government intervention – with the state choosing which industries to favor, which companies to reward – that produces inefficiency and corruption. But Republicans are now comfortable with government intervention, as long as it’s for the right people”.–Dr. Fareed Zakaria

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In recent weeks, Trump seems to have remembered that he is a populist or at least is playing one on TV. After campaigning as the tribune of the forgotten working class, he handed over his presidency to the establishment wing of the Republican Party, which proceeded to attack Obamacare, roll back regulations and pass a huge tax cut for companies and wealthy Americans. But perhaps to shore up his base before the midterm elections, or because he does actually believe some of his own rhetoric, he is now moving hard on tariffs – and also immigration.

As is often the case, Trump is more in line with his party’s base than most of its leaders. A recent Quinnipiac University poll finds that voters, like the Republican establishment, overwhelmingly oppose Trump’s tariffs. But most Republican voters support them. In fact, over the last decade, Republican support for free trade has dropped a staggering 20 points (while Democratic support has risen by 15). This is one of the sharpest reversals on major public policy recorded in recent history.

The new Republican Party is coming into view. It is a party skeptical about free markets. It is important to remember that it is not really possible to be in favor of capitalism and against free trade. From Adam Smith to Milton Friedman, every great theorist of capitalism has recognized that free trade is at the heart of what makes capitalism work. And they have all pointed out that tariffs are precisely the kind of government intervention – with the state choosing which industries to favor, which companies to reward – that produces inefficiency and corruption. But Republicans are now comfortable with government intervention, as long as it’s for the right people.

It is also now a party that has developed a contempt for experts and expert analysis. In 1980, with liberalism ideologically smug and dominant, Democratic Sen. Daniel Patrick Moynihan remarked that all the new and interesting policy ideas were coming from people like William F. Buckley and Irving Kristol on the right. Today, the Republican Party is led intellectually by the likes of Sean Hannity and Rush Limbaugh.

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Consider that Trump’s tariffs are opposed by a remarkable array of scholars across the political spectrum, from the conservative Heritage Foundation to the libertarian Cato Institute to the center-left Brookings Institution to the left-wing Center for Economic and Policy Research. The White House barely offers serious arguments, instead providing a bogus justification for the tariffs, national security, even though China and Russia supply only a small portion of these goods to the U.S.

Despite research showing that previous protectionist policies have failed, that the steel industry has lost more jobs due to efficiency and automation than to trade, and that preserving one job in the steel or automobile industries through tariffs costs consumers a whopping $1.5 million, administration supporters no longer even offer a response. The data is simply dismissed as partisan spin or fake news.

Finally, the GOP is being transformed into a party that is hostile to foreigners and foreign countries. Under Ronald Reagan, the Republicans were the party of a generous immigration policy, strong alliances and faith in the advancement of democracy around the world.

Today, the party’s base doesn’t like foreigners or foreign countries. Even traditional allies like the Europeans are increasingly viewed with suspicion. It is bizarre to have chosen tariffs that mostly threaten American allies like Canada, the E.U., South Korea and Mexico. Trade does produce disruptions, especially severe ones in recent decades. The most sensible, cost-effective way to deal with them would be to provide subsidies to workers who lose their jobs because of trade, and invest in large scale retraining efforts. But that doesn’t quite have the bite that attacking foreigners and stoking trade conflict does.

Having transformed the party’s views on issues as diverse as immigration, fiscal discipline, foreign policy and law enforcement, if Trump wins the battle over trade with his party, he will have won the war. The Republican Party will be history. And given his long-demonstrated preferences in this regard, who knows, he will probably want to rename it the Trump Party.

Fareed Zakaria is published weekly by THE DAILY STAR.

A version of this article appeared in the print edition of The Daily Star on March 12, 2018, on page 7.

Trans-Pacific Partnership (CPTPP): Japan-led Pacific Rim Countries Desperate to appease Trump

March 9, 2018

Trans-Pacific Partnership (CPTPP): Japan-led Pacific Rim Countries Desperate to appease Trump

by Jomo Kwame Sundaram


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Dr. Jomo Kwame Sundaram  seen with Khazanah Nasional Berhad’s Tan Sri Azman Mokhtar

The grandiose sounding Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be signed in Santiago de Chile today, 8 March. Instead of doing something to advance the condition of women on International Women’s Day, trade representatives from 11 Pacific rim countries will sign the CPTPP, which some critics argue will further set back the progress of humanity, including women who hold up ‘half the sky’.

In fact, the resulting 6500 page agreement has, so far, only been used by Obama’s United States Trade Representative (USTR) to derail the already protracted Doha ‘Development’ Round negotiations under the auspices of the World Trade Organization (WTO), e.g., by ‘lame-duck’ USTR Michael Froman at the WTO ministerial in Nairobi in December 2016.

In January last year, newly elected US President Donald Trump withdrew from TPP, effectively killing the agreement. Since then, Japan has worked hard to keep it alive, with discreet help from Australia and others. Apparently, they hope to draw the US back in order to check China’s growing influence in the region while delaying other regional trade negotiations such as the Regional Comprehensive Economic Partnership (RCEP).

After signing it, at least six countries must ratify the CPTPP for the deal to come into effect. Even before signing, governments have announced plans to drag their feet, indicating they are signing under duress. Incredibly, no details of the new agreement were supposed to be released until after the signing, and few consultations have been held by the signing governments despite promises to do so.

Bad deal not improved by reheating

To make the case for the TPP, its advocates greatly exaggerated its negligible trade benefits. US government studies — by the Department of Agriculture’s Economic Research Service and the International Trade Council — projected very modest gains, even with the US in.

Despite the US absence from the CPTPP, its proponents have not hesitated to make even more exaggerated claims about supposed benefits. With already negligible trade gains from the original TPP, purported gains from the CPTPP without the US are even more paltry. Not surprisingly, the TPP11 have become even more desperate for US participation to maintain their original fictitious claims.

The old claim that trade liberalization lifts all boats is increasingly rejected in favour of more nuanced recognition that its costs may be as much as its benefits, and distributed very unevenly. Such recognition has enabled better understanding of the Brexit referendum outcome and Trump’s election following a campaign in which all major candidates were opposed to the TPP.

CPTPP losses, costs and risks are almost as great as with the TPP while actual gains are even more trivial. Meanwhile, CPTPP citizens must surely wonder why their governments are proceeding so secretively without public consultation or even the fig leaf of credible cost-benefit or other analyses.

Seducing Trump

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Japan’s Prime Minister Abe appeasing US President Donald Trump

Minor amendments have been made to the original TPP agreement, largely drafted by US corporations during the Obama presidency. But the new CPTPP Preamble can only guide its interpretation, and does not replace problematic TPP provisions. Some TPP11 countries have secured ‘side letters’, exempting them from some of its provisions.

Meanwhile, several onerous provisions have been suspended, including some of those extending the scope and duration of pharmaceutical patents. Well over a thousand provisions remain, most not even challenged by the CPTPP negotiators. The 22 suspended provisions can easily be restored if the US chooses to rejoin the TPP.

At his World Economic Forum charm offensive at Davos in January, Trump stated that he “would do TPP if we were able to make a substantially better deal” despite his anti-TPP presidential campaign and post-election rhetoric. No one can be sure what he means anymore, especially following his more recent declarations celebrating trade warfare.

US positions in the ongoing North American Free Trade Area (NAFTA) re-negotiations suggest his administration will demand stronger intellectual property rights, especially pharmaceutical patent protection; this can be easily accommodated by the TPP11 by reinstating suspended TPP provisions.

However, in light of the new USTR’s pronouncements, it is likely that the White House will insist on removing ISDS provisions from the TPP to be consistent with Trump’s ‘sovereigntist’ approach of putting ‘America first’. Or worse, ISDS provisions may not be reciprocal, i.e., US corporations abroad can use ISDS, but TPP11 investors cannot make such claims against the US government.


Malaysia: PH or BN, what is the difference?

March 8, 2018

PH or BN, what is the difference?–Malay-centric New Economic Policy will continue

By Kua Kia Soong


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I believe young Malaysians like Wan Saiful Wan Jan should have a go at the political game, which is like a merry-go-round at a fun fair, and that the ageing politicians who have been hogging the horses for nearly half a century should get off and let other youngsters have a go.

Having said that, I expected young intellectuals like Wan Saiful would at least have some intellectual honesty to avoid the discredited road of race-based parties which have been the bane of Malaysian society since independence. He has joined the “Pribumi” party which is not only closed to “non-Pribumis” like myself, but is led by Malaysia’s most well-known autocrat and father of crony capitalism.

Now why does an erstwhile “liberal” like Wan Saiful want to exclude a fellow Malaysian and human being from his party? After all, isn’t liberalism a political philosophy founded on ideas of liberty and equality? So, what has happened to his liberal thinking?

Image result for Malaysia's New economic policyHe is not Malay, but a Bumiputera who is being sidelined


Furthermore, he now states that the Malay agenda remains relevant and any change will come slowly. That is great for the Malay crony capitalists who have been milking the country all these years since May 13, 1969. It is also a very effective populist ideology to get “Pribumi” votes in elections.

Looks like PH still wants Malay agenda

This is all bad news for those who have been dreaming the Malaysian dream of equality, justice and democracy.

Image result for Mahathir the Malay UltraThe Malay–eccentric Liberal Democrat leads Pakatan Harapan (Hope Coalition)


I have been monitoring Pakatan Harapan’s (PH) statements and I have observed a loud silence on the extension of the New Economic Policy.

Now with PH having embraced the leader of PPBM as the prospective Prime Minister, I can bet anybody that there will be no mention of an end to the NEP in PH’s 14th general election (GE14) manifesto when it is announced.

This is indeed bad news for those who had hopes of a more liberal economic policy and for all who have criticised the government for its racially discriminatory economic and educational policies.

Wan Saiful, who is supposed to be their policy maker, has already said as much: “But now, having entered party politics, I am more or less resigned to the fact that the (Malaysian Agenda) you are talking about is not going to happen in my lifetime as this is in the constitutional provision.”

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Wan Saiful said while PH must maintain its idealism, it also needs to prioritise the reforms that it can push through.

First, as a policy maker, Wan Saiful should be reminded that the so-called “Malay Agenda” was twisted from its 1957 form to a different “Bumiputera” form in 1971 with amendment 8A to Article 153 which allowed the quota system and all the other excesses of racial discrimination.

Apart from anything else, the term “Bumiputera” is not even in our independence constitution. Does Wan Saiful not remember that the 1971 NEP had an expiry date of 1990? Can the Malay elite keep changing the rules as they go along?

So how does the ‘Malay Agenda’ operate?

The Bumiputera/immigrant differentiation to justify racial discrimination against non-Bumiputeras continues to be peddled by the ruling Malay elite right up to the present day.

By some conceptual trick, these favoured people are defined as strictly “Malays” no matter where they come from (even Kerala or the Middle East) and therefore qualify as “Bumiputeras” who are entitled to special “rights”. PPBM may have another conceptual trick up its sleeve; we don’t know yet.

It is astounding that the bugbear that was thrown into the independence struggle to put the anti-colonial forces on the defensive – viz who are the “pribumi” (indigenous people) and who are the “pendatang” (immigrants)? – continues to be thrown at Malaysians in order to divide our nation to the present day.

The keepers of the pribumi estate overlooked an elementary point of logic – namely, how could a “non-pribumi” become a “pribumi” simply by assimilating when the latter is strictly a historical category?

Isn’t it amazing that with all the current hype about the “1Malaysia” slogan, this reference to non-Malay Malaysians as immigrants continues unabated?

These Malay elites are obsessed with race which is not surprising when there is so much at stake for them in terms of economic gain. Dr Mahathir Mohamad’s “Malay Dilemma” is rooted in that paradigm.

This obsession with race has little currency in the anthropology or sociology disciplines, not to speak of human rights in the international community.

Roland Braddel, former President of the Council of the Malayan Branch of the Royal Asiatic Society and once legal adviser to Umno has pointed out: “There is, strictly speaking, no such thing as the Malay race; there are Malay people, the Malay culture and the Malay language, etc.”

A liberal intellectual should know that.

Needs-based, not race-based policies

It still amazes me that intellectuals in the government cannot conceive of ways to help the poor and marginalised without raising the issue of race.

With all those years of training in the UK, is Wan Saiful really incapable of proposing policies that are not race-based? Admit that the so-called “Malay Agenda” is really a populist agenda to secure votes in the elections and not because there is no other choice.

Sixty years of racially-based policies have divided us while enriching the well-connected crony capitalists linked to the political elite.

It is time to replace race-based policies with needs-based measures that target the lower-income and marginalised sectors.

The NEP was scheduled to end in 1990 but has become a populist, never-ending policy to win over the Bumiputeras while benefiting mainly the political elite.

It is common sense that poor rural Malaysians should be assisted based on their needs according to the particular economic sectors in which they live and work.

Today, with the lack of ethnic diversity in the civil and armed forces, it is high time that recruitment and promotion in these services are based on merit.

As a policy maker, Wan Saiful will no doubt be familiar with international reports that point to a compelling need for Malaysia to shift from a race-based to a needs-based policy in order to address imbalances in society and improve the democratic process to ensure good governance and rule of law.

With the “Malay Agenda”, Malaysia’s economic progress continues to be plagued by a lack of innovation and skills, a low level of investments in technology, declining standards in education, relatively high labour costs and sluggish growth in productivity.

The cost and consequences of the racially discriminatory policy in Malaysia have been immense especially since the NEP in 1971. It has caused a crippling polarisation of Malaysian society and a costly brain drain.

According to the World Bank: “The diaspora likely reached about one million people in 2010, compared to about 750,000 in 2000… the brain drain is estimated at a third of the total diaspora. This translates into a number of 335,000 in 2010, which is up from 217,000 in 2000.”

While the Chinese middle class in Malaysia has largely adapted to this public-sector discrimination by finding ways to make a living in the private sector, this has not been so easy for working-class Indians, Chinese and other marginalised communities including the Orang Asli.

More potentially dangerous and insidious is the effect this widespread racial discrimination has had on ethnic relations in this country. Unity can only be promoted through an affirmative action policy based on need, sector or class, never on race.

Kua Kia Soong is the adviser for Suaram.