Jomo Kwame Sundaram–Need to Speak Truth to Power


October 16, 2017

Jomo Kwame Sundaram–Need to Speak Truth to Power

by Malaysiakini Team

http://www.malaysiakini.com

Tomorrow: Jomo on why Malaysians are worse off today

INTERVIEW | Jomo Kwame Sundaram, former Assistant Secretary-General for Economic Development at the United Nations, talks about the need to “speak truth to power,” among others.

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Question: In a recent speech, Prime Minister Najib Razak accused you of taking “every opportunity to attack me and my policies, from our participation in the TPPA, to the administration of welfare payments, to foreign investment in Malaysia.” What do you have to say?

Jomo: What can I say? One should not read him out of context. He said this as proof of freedom of speech and democracy in the country. Obviously, I appreciate his commitment to freedom of speech, and presumably, freedom after speech [laughs]. In fact, some people now tease me as the PM’s “poster boy” for free speech in Malaysia.

But unfortunately, his fact-checkers did not do their homework, or perhaps facts don’t matter in this age of fake news. As many know, I have also been criticised by the PM’s critics for supporting several of his policy initiatives, most notably BR1M (Bantuan Rakyat 1Malaysia) and the minimum wage policy.

BR1M goes directly to beneficiaries and is hence much appreciated by recipients. Understandably, as with the mid-year deal for Felda settlers, opposition politicians see BR1M as bribing the electorate, but one should not condemn BR1M itself.

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However, labour market interventions, such as the minimum wage policy, have been far more significant for improving a lot of low-income earners although the public may not realise it.

I recently lauded the Health Ministry initiative to get an affordable Hepatitis C treatment, for a small fraction of the US price, for the almost half million Malaysians who suffer from it.

So factually, his speechwriters were wrong. But he was right to say that I do not blindly support everything his government has done, and have been critical of specific policies, which I have done for decades, long before he became PM.

Najib said you have been critical of the Trans-Pacific Partnership Agreement (TPPA).

Jomo: He is correct that I have long been critical of the TPPA. Before I came back to Malaysia last year, I joined some UN colleagues to critically assess the TPPA. The report was launched in Washington DC in early 2016, soon after I left the UN.

That work was not focused on Malaysia, and simply pointed out that the methodology used simply assumed away the problems the TPPA would generate, including for the US. In the US, both Democrats and Republicans cited our work to oppose the TPPA.

After returning to Malaysia, I felt obliged to point out that the gains promised by the TPPA, even by its most fervent US advocates, were actually very modest and exaggerated by its Malaysian proponents.

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I also pointed out that most of the gains to the US were at our expense. Strengthened intellectual property rights (IPRs) would raise the costs of medicines, for example.

The TPPA’s investor-state dispute settlement (ISDS) provisions would allow private tribunals to make rulings in favour of powerful foreign corporations at potentially great expense to the Malaysian government.

Even now, although the TPPA is dead in law because President (Donald) Trump rejected it, there are those trying to push TPP 11 through while the government and public are distracted by other matters.

This would be worse as it would sell out the national and public interest for next to no gain. My concern throughout has been the Malaysian public interest, including the government interest.

What about foreign investments?

Jomo: As for foreign investment, again he is correct that I am concerned about how the government is encouraging foreign portfolio investment, as in the period before the 1997-98 crisis.

Unlike Thailand and Indonesia then, the government and Malaysian corporations had not borrowed very heavily from abroad. But we were vulnerable because of the sudden exit of mainly foreign holdings from the Malaysian stock market.

Such investments have grown so much in the last decade that some estimates suggest that they exceed foreign share ownership in the mid-1970s, more than four decades ago. It is also misleading to think that because Malaysians have been encouraged to invest abroad, we should encourage foreign portfolio investments here.

 

Greenfield foreign direct investments are a different story as they may bring in new productive capacities and capabilities, including technology, management and market access. But my concern remains that Malaysian industrial capacities and capabilities remain modest, and we still have relatively few internationally competitive industrial firms.

My concerns have been expressed with the country’s interests and future progress foremost. I pray that the space for such discussion and debate will be expanded, not diminished. The PM’s affirmation of freedom of speech should, therefore, be welcomed, not feared.

So, what inspires you to do what you do?

Jomo: Many people have inspired me. Those who fought to free us from imperialism, oppression and exploitation. While in school, especially at the Royal Military College, I was inspired by Malcolm X, Martin Luther King, Yasser Arafat, Kwame Nkrumah, Ho Chi Minh and Nelson Mandela.

And yes, I do not identify with the other man I was named after – Jomo Kenyatta, father of Kenya’s current president, who was unfairly jailed by the British from 1952 until 1959, but became increasingly corrupt and tribalistic after becoming president in 1963.

Chinua Achebe’s writings turned from the disruptive colonial impact to the gangrene of corruption. Then, in 1983, I was shaken by the brutal torture and murder of my senior in school, the late Jalil Ibrahim, in Hong Kong.

We are all enjoined to “speak truth to power.” Initially, when I was at UKM (Universiti Kebangsaan Malaysia) with the late Ishak Shari, Osman Rani and Ismail Muhd Salleh, and later with others after I moved to Universiti Malaya.

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During Dr Mahathir (Mohamad)’s long tenure, I was also known as a critic, even though I appreciated many aspects of particular policy initiatives. Although I was quite outspoken in those days, BN politicians did not harass me.

 

Rather, petty university administrators who had ambitions or agendas of their own were the vindictive ones. But most left me alone as I had no ambitions in terms of university positions.

Also, there is no personal animus on my part towards the Prime Minister. As is well-known, I greatly admire his late father (Tun Abdul Razak )for many reasons. In fact, I wrote an article early last year, just after leaving the UN, on the occasion of the 40th anniversary of his untimely passing.

As a student then, in the cold winter of early 1976, we organised a memorial meeting at MIT (Massachusetts Institute of Technology) to honour his contributions soon after he passed.

Tomorrow: Jomo on why Malaysians are worse off today

Sustainable Development Goals Achievable?


September 28, 2017

Sustainable Development Goals Achievable?

by Andrew Sheng and Xiao Geng*

https://www.project-syndicate.org/commentary/sdgs-global-cooperation-trump-un-speech-by-andrew-sheng-and-xiao-geng-2017-09

The SDGs were always bound to meet strong headwinds, owing to technological disruption, geopolitical rivalry, and widening social inequality. But populist calls for nationalist policies, including trade protectionism, have intensified those headwinds considerably.

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US President Donald Trump’s recent speech at the United Nations has gotten a lot of attention for its bizarre and bellicose rhetoric, including threats to dismantle the Iran nuclear deal and “totally destroy” North Korea. Underlying his declarations was a clear message: the sovereign state still reigns supreme, with national interests overshadowing shared objectives. This does not bode well for the Sustainable Development Goals.

Adopted by the UN just a year before Trump’s election, the SDGs will require that countries cooperate on crucial global targets related to climate change, poverty, public health, and much else. In an age of contempt for international cooperation, not to mention entrenched climate-change denial in the Trump administration, is achieving the SDGs wishful thinking?

The SDGs were always bound to meet strong headwinds, owing to technological disruption, geopolitical rivalry, and widening social inequality. But populist calls for nationalist policies, including trade protectionism, have intensified those headwinds considerably. Simply put, populations are losing faith that the global development orthodoxy of good governance (including monetary and fiscal discipline) and free markets can benefit them.

With all of the advanced countries confronting serious fiscal constraints, and emerging markets weakened by lower commodity prices, paying for global public goods has become all the more unappealing. Budget cuts – together with accountability issues and new technological challenges – are also hurting those tasked with delivering good governance. And markets increasingly seem to be captured by vested interests.

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Economic outcomes often have their origins in politics. Harvard Law School’s Roberto Unger has argued that overcoming the challenges of knowledge-based development will demand “inclusive vanguardism.” The democratization of the market economy, he says, is possible only with “a corresponding deepening of democratic politics,” which implies “the institutional reconstruction of the market itself.”

Yet, in the US, the political system seems unlikely to produce such a reconstruction. Harvard Business School Professors Katherine Gehl and Michael Porter argue that America’s two-party system “has become the major barrier to solving nearly every important challenge” facing the country.

Political leaders, Gehl and Porter continue, “compete on ideology and unrealistic promises, not on action and results,” and “divide voters and serve special interests” – all while facing little accountability. A forthcoming book by University of San Francisco Professor Shalendra Sharma corroborates this view. Comparing economic inequality in China, India, and the US, Sharma argues that both democratic and authoritarian governance have failed to promote equitable development.

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There are four potential combinations of outcomes for countries: (1) good governance and good economic policies; (2) good politics and bad economics; (3) bad politics and good economics; and (4) bad politics and bad economics. Other things being equal, there is only a one-in-four chance of arriving at a win-win situation of good governance and strong economic performance. That chance is diminished further by other disruptions, from natural disasters to external interference.

There are those who believe that technology will help to overcome such disruptions, by spurring enough growth to generate the resources needed to mitigate their impact. But while technology is consumer-friendly, it produces its own considerable costs.

Technology kills jobs in the short term and demands re-skilling of the labor force. Moreover, knowledge-intensive technology has a winner-take-all network effect, whereby hubs seize access to knowledge and power, leaving less-privileged groups, classes, sectors, and regions struggling to compete.

Thanks to social media, the resulting discontent now spreads faster than ever, leading to destructive politics. This can invite geopolitical interference, which quickly deteriorates into a lose-lose scenario, like that already apparent in water-stressed and conflict-affected countries, where governments are fragile or failing.

The combination of bad politics and economics in one country can easily produce contagion, as rising migration spreads political stress and instability to other countries. According to the UN High Commission for Refugees, there were 65 million refugees last year, compared to just 1.6 million in 1960. Given the endurance of geopolitical conflict, not to mention the rapidly growing impact of climate change, migration levels are not expected to decline anytime soon.

The SDGs aim to relieve these pressures, by protecting the environment and improving the lives of people within their home countries. But achieving them will require far more responsible politics and a much stronger social consensus. And that will require a fundamental shift in mindset, from one of competition to one that emphasizes cooperation.

Just as we have no global tax mechanism to ensure the provision of global public goods, we have no global monetary or welfare policies to maintain price stability and social peace. That is why multilateral institutions need to be upgraded and restructured, with effective decision-making and implementation mechanisms for managing global development challenges such as infrastructure gaps, migration, climate change, and financial instability. Such a system would go a long way toward supporting progress toward the SDGs.

Unger argues that all of today’s democracies “are flawed, low-energy democracies,” in which “no trauma” – in the form of economic ruin or military conflict – means “no transformation.” He is right. In this environment, reflected in Trump’s embrace of the antiquated Westphalian model of nation-states, achieving the SDGs will probably be impossible.

*Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

*Xiao Geng, President of the Hong Kong Institution for International Finance, is a professor at the University of Hong Kong.

ASEAN needs a strategic rethink–4th Industrial Revolution


September 11, 2017

ASEAN needs a strategic rethink–4th Industrial Revolution

by Dr. Munir Majid*

http://www.thestar.com.my

AFTER the deserved 50th anniversary celebrations, ASEAN needs to take a long, hard look into the future, and to be ready for it.

The trouble is the future is here. And ASEAN might just fall short.

In my contribution to the book ASEAN Future Forward: Anticipating the Next Fifty Years”, published by the Institute for Strategic and International Studies, I highlighted two developments that threaten to tear up the script on ASEAN’s future shape.

Leaving aside the definite rise of China which will, planned or otherwise, rewrite and disrupt assumed intra-ASEAN relationships, I would like in today’s column to draw attention to the other deterministic development – Digitisation.

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Now popularly dubbed the Fourth Industrial Revolution, the Digital Economy is already upon us, while in the ASEAN narrative its greater economic integration will attract foreign manufacturing investment based on low labour cost in such destinations as Myanmar, Indonesia, even Vietnam.

Not too many months ago, studies and surveys were being done – including by the private sector – on foreign investments planned in such countries, predicated also on the large, integrated ASEAN market of 630 million people.

Yet even now, intelligent robotics, particularly robotic manufacturing, is readily available to displace human labour. What happens then to the expectant millions waiting to attain employment from the huge investments that would, if they did come, be looking to more efficient, perhaps even cheaper, means of production afforded by robots and artificial intelligent manufacturing?

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Beyond 50–Inclusive, Cohesive, Integrated, Peaceful, Competitive, Prosperous and People-Centered ASEAN

What would happen also to existent MSME (micro, small and medium) manufacturing employment, that would be displaced by digital means of production, and to the competitiveness of that sector – bearing in mind it is hobbling along looking for access to finance – against products whose quality and cost could sweep them out of business?

The level of underemployment in economies such as Indonesia is high. Without new jobs with new investment, expectations of growing populations are going to be dashed. Employment in the MSME sector in ASEAN as a whole is overwhelming, reaching over 90% in some member states.

ASEAN is sitting on a socio-economic time bomb which could blow apart its economic integration assumptions and, indeed, its much vaunted political stability. Already there are so many social and political forces threatening Asean together and separately. If there are no jobs as well and there is economic deprivation, the situation becomes explosive.

All this is just in relation to the challenge of the digital economy to manufacturing employment. The challenge actually cuts across all sectors, including services. A study in Malaysia across all sectors puts the probability factor of “computerisable jobs” at 0.8 for unskilled and semi-skilled jobs. Where the extant of such jobs is greater in less developed ASEAN economies, the threat obviously will be more extensive.

Of course new technologies can also facilitate growth through greater efficiency and productivity, but the main risk I am emphasising is to employment. Even if MSMEs get on to e-commerce platforms or are able to link up with the supply chains of large and globally connected companies – which remains a huge struggle for them across the region – the competition among them demands better quality and lower cost products and services which imply greater application of labour-displacing processes.

It is also true new jobs will be created in the digital economy. When motor cars, for instance, replaced horse coaches in the 1920s, new jobs in automobile manufacturing, car repair, mass tourism, road building and the petrol business were created. The same will follow the advent of new technologies in the digital economy.

However, investment in data and digital infrastructure is first essential to support innovation, growth and jobs in the new economy. Such investment is limited everywhere in the region, with Singapore being the striking exception, and the less developed economies of Myanmar, Indonesia, Laos, Cambodia and the Philippines way behind.

Entrepreneurship is an important part of the digital economy, but what is essential is not present – a regulatory environment in which businesses can thrive and fail, with easier access to finance for small innovative firms and lighter procedures for start-ups and lower failure costs.

The new jobs – by no means in numbers represented in conventional economy activity today – that will be available too require skills not delivered by current education systems across ASEAN.

Overhaul of education systems takes time. The least expressed change that must take place, because of political correctness, is the disposition across ASEAN among the political establishment against argument and questioning. But cognitive skills are the most needed in the digital economy. Apart from this, other specific abilities are also essential.

The Web Analyst has to have digital and marketing knowledge apart from the skills of an analyst. The Business Intelligence Manager has to have a background in computer engineering, economics or mathematics. Other demanding sets of skills are required for the Digital Analyst, Virtual Reality Architect or Virtual Data Scientist.

And we are just talking about high level, new job categories. Lower down the scale, the upskilling requirements are a struggle to meet among those doing less skillful jobs. Serious retraining is required. In ASEAN today, only Singapore has an effective upskilling retraining system to meet the needs of the digital economy.

In America, it has been found, actually three quarters of the jobs lost among the middle and working classes are due to inability to move up the new skills ladder. (Only a quarter is due to imports which President Trump so likes to blame).

The magnitude of the challenge posed to ASEAN by the digital economy is huge. It is a game changer which present ASEAN integration planning fails to even begin to address. It is a sweeping revolution which the lackadaisical ASEAN way of doing things will not be able to contend with.

It requires new thinking in ASEAN if ASEAN is going to be the way forward. There needs to be a regional social and education policy direction, if it is not going to be left to individual ASEAN countries to face up to the challenge with different levels of adequacy, or rather inadequacies. The disparities in ASEAN will otherwise widen. The centre will then not hold.

After 50 years, ASEAN cannot live in the past when the future is upon it. Many cynics have often said ASEAN is only an option to its members – when everything else fails. The more optimistic have always contended that ASEAN to its members is the first, if not exclusive, choice.

In the already current future if ASEAN does not plan to face the challenge of the digital economy together, it is likely to become just an addendum.

*Dr. Munir Majid, Visiting Senior Fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also Chairman of CIMB ASEAN Research Institute.

Malaysia’s Economic Report Card: Positive


July 26, 2017

Malaysia’s Economic Report Card:  “Malaysia is on the right course”, says Prime Minister Najib Razak

In delivering his keynote address at InvestMalaysia 2017 in Kuala Lumpur today (July 25), Prime Minister Najib Abdul Razak highlighted the economic transformation under his leadership.

He also launched a scathing broadside at the opposition coalition Pakatan Harapan, whose chairperson is his former mentor turned nemesis Dr Mahathir Mohamad.

Among others, Najib claimed that there has been a concerted campaign to send misinformation overseas to damage Malaysia’s economy for selfish political objectives.

“So if you receive these smears, or you read it in publications that do not check the facts properly, please beware,” he told his audience, comprising local and foreign investors.–www.malaysiakini.com

Full Text of Prime Minister Najib Razak’s Keynote Address (Salutations Removed)

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Prime Minister Datuk Seri Najib Razak, addressing some 2,000 local and international investors attending the Invest Malaysia 2017 Forum–July 25, 2017

As the Prime Minister of Malaysia, I want to lay out the foundations needed for our nation to be counted among the very top countries in the world. We want that competitive edge, and to be a knowledge-based society – but we must always work towards those goals in ways that are sustainable, inclusive and equitable. No Malaysian must ever be left behind. All must participate and benefit from this amazing journey that we are on.–Prime Minister Najib Razak

Seven years ago, in 2010, I introduced our New Economic Model – right here, at Invest Malaysia. This model was designed to transform Malaysia into a high- income nation, and our country into a more inclusive, equitable and sustainable society, with no one left behind, opportunity made available for all, and the right fundamentals put in place to secure a stable and successful future.

We had a plan of reform – economic transformation and taking the tough but responsible choices. And it is clear today, that, aided by the hard work of millions of Malaysians, the plan has worked and is continuing to work.

Let the facts speak for themselves:

Between 2009 and 2016, Gross National Income has increased by nearly 50 percent, and GNI per capita using the Atlas method increased to US$9,850. Based on the World Bank’s latest high-income threshold of US$12,235, we have narrowed the gap towards the high-income target from 33 percent to 19 percent.

2.26 million jobs have been created, which represents 69 percent of the 3.3 million target we want to reach by 2020. Clearly, we are making the right progress towards those goals.

Inflation and unemployment have been kept low. We have attracted unprecedented levels of Foreign Direct Investment, which shows the confidence the world has in Malaysia.

But no wonder. For our growth has been the envy of the advanced economies, even during years of turmoil in the global economy. This year, the World Bank has upped their estimate. We are expected to record a rise in GDP of 4.9 percent, considerably higher than their earlier prediction of 4.3 percent.

Others have also increased their predictions – Morgan Stanley now says 5 percent, while Nomura’s forecast is for the Malaysian economy to grow by 5.3 percent this year. Only yesterday, the IMF has reviewed their forecast from 4.5 percent to 4.8 percent. And growth is expected to be higher next year. So we are on the right trajectory.

Other sets of figures support confidence in Malaysia. In the first quarter of 2017 our trade, for instance, recorded an increase of 24.3 percent – up to RM430.5 billion – compared with the same period last year.

In March, exports breached the RM80 billion mark for the first time. At RM82.63 billion, it was the highest monthly figure for Malaysian exports ever recorded.

The capital market increased by nine percent to a level of RM3.1 trillion in the first six months of this year, and now ranks fifth in Asia relative to GDP. It continues to attract wide interest from both domestic and foreign investors. In fact, in the equity market, there were net inflows of RM11 billion in the first half of 2017, compared with RM3 billion of net outflows during the whole of 2016.

The Malaysian bond market grew to RM1.2 trillion in 2016, while our Islamic capital market has recorded a hugely impressive average annual growth of 10 percent over the last six years, reaching RM1.8 trillion in June 2017.

Malaysia is also home to the largest number of listed companies in ASEAN. At US$29 billion, Bursa Malaysia also recorded the highest amount of funds raised in the last five years in any country in our 10-nation association.

And our currency, the ringgit, has been described by Bloomberg recently as, and I quote, “easily the strongest major Asian currency this quarter, climbing twice as much as the next best, the Chinese yuan”.

All of this can point to only one conclusion – our economy continues to prosper, and we are stronger than ever as a result of the reforms and the programmes the government has put in place.

The markets, the business community and companies like strength and stability. They want the certainty provided by a government that understands that the prosperity of its people is best served by being business-friendly, and that sovereignty is not compromised one inch by the record Foreign Direct Investment this government has secured.

No. It will help build the new Malaysia of the 21st century, and bring many benefits, from knowledge and skills transfers to a rise in the standard of living for the people.

The business community wants the certainty of knowing that the government is committed to the necessary reforms, and is committed to fostering a culture of entrepreneurship and to transparency, accountability, and good regulation.

On that note, I can announce that the government has, in principle, agreed to the establishment of an Integrity and Governance Unit at all GLCs, and state and ministry-owned business entities, under the supervision of the Malaysian Anti-Corruption Commission, precisely to strengthen the confidence all can, should, and do have in Malaysia.

The international business community knows that it has that certainty – with this government. Indeed, they are voting with their feet. HSBC is investing over RM1 billion to build its future regional headquarters in the Tun Razak Exchange, recognising Malaysia’s increasing status as an international financial and business centre.

Broadcom Limited, one of the world’s largest semiconductor companies with a market capitalisation of nearly half-a-trillion dollars, is going to transfer its Global Distribution Hub from Singapore to Malaysia in 2017, from where it will manage the group’s global inventory of RM64 billion a year.

Huawei, a leading global ICT solutions provider which serves more than one- third of the world’s population, has made Malaysia its global operation headquarters, data hosting centre and global training centre, with a total project cost of RM2.2 billion and employing more than 2,370 people.

Saudi Aramco is investing US$7 billion – that’s its biggest downstream investment outside the kingdom – for a 50 percent stake in Petronas’ Refinery and Petrochemical Integrated Development in Johor. That is the single largest investment in Malaysia, and shows the confidence Saudi Arabia has in our people, our technology, and our ability to be a strong partner with their most important business.

Others who are already here are expanding their operations. Finisar Corporation, a global technology leader in optical communications, will invest a further RM610 million in its operation in Perak – bringing its total investment in Malaysia to RM1 billion.

Coca-Cola has already invested RM1 billion in Malaysia since 2010. It announced in March an additional RM500 million investment to expand the size and production capacity of its plant at Bandar Enstek.

I could go on and on. The point is that the confidence and certainty global businesses have in Malaysia brings jobs, lifts wages and helps our workforce upskill.

It is this government that offers that certainty to businesses both in Malaysia and overseas. The opposition offers none at all. They are in chaos. Two leading members of one party can’t agree if the old opposition alliance still exists in the state of Selangor. “Yes, it does”, says one. “Oh no it doesn’t!” says the other. It’s like a Punch and Judy show!

And the latest leadership structure the opposition announced is farcical, sounding a bit like a return-to-work programme for old-age political pensioners!

It is also cynical and deceptive, with three leaders but no clarity on who has executive power among them, and DAP kept deliberately invisible despite controlling the opposition behind the scenes with the vast majority of their parliamentary seats.

As for their Prime Minister candidate, the opposition is so desperate that they are now trying to make the people believe it will be a nonagenarian – who isn’t even a member of parliament, and whose party has just one seat!

But the truth is that in a democracy numbers don’t lie, and DAP remains by far the most dominant party in the opposition. The DAP leader of the last half century is now hiding behind the man who jailed him, trying to deceive Malays into thinking that former leader is their interim candidate for Prime Minister.

Neither can the word of the opposition be relied on. Just recently, a leading member in one party said that, if Malaysia had such good relations with Saudi Arabia, why had the hajj quota not been increased? But it has! Twice this year, from 22,230 to 27,900 and then up to 30,200.

That’s another example of the benefits this government’s policies bring to the people of Malaysia – in this case, our foreign policy of forging friendship abroad, rather than holding grudges for decades, as that certain former leader still does.

But you won’t hear about the very real benefits from our engagement with Saudi Arabia, China, India or anywhere else from the opposition. In fact, they’ll tell barefaced lies about it, just as they have been feeding lies about the economy and stoking fears of economic disaster in Malaysia.

There has in fact been a concerted campaign to send such misinformation overseas to damage Malaysia’s economy for their own selfish political objectives. So if you receive these smears, or you read it in publications that do not check the facts properly, please beware.

It is not fair to the Malaysian people, and it’s not fair to the business community, both at home and abroad.

They, and you, deserve the truth. So let me tell you what a cross-section of respected international bodies has to say about this government’s record.

The OECD’s most recent economic assessment of Malaysia stated, and I quote: “Malaysia is one of the most successful Southeast Asian economies… thanks to sound macroeconomic fundamentals and its success in transforming its economy into a well-diversified and inclusive one.”

We are ranked second in ASEAN in the World Bank’s Doing Business Report 2017 – and 23rd overall, among 190 economies globally.

We were ranked second among the Southeast Asian nations in the World Economic Forum’s Human Capital Index 2016, up one place from last year’s third spot.

We are ranked third among 190 economies, worldwide, for Protecting Minority Investors, by the World Bank Doing Business Report 2017.

The World Economic Forum’s Global Competitiveness Report 2016-2017 ranks Malaysia fourth among 138 economies for Strength of Investor Protection.

We rank eleventh out of 125 countries in the Venture Capital and Private Equity Attractiveness Index, by the IESE Business School in Spain.

The ratings agency Fitch recently reaffirmed our A- rating and stable outlook.

And a recent survey by BAV Consulting and the Wharton School at the University of Pennsylvania declared Malaysia to be the “best country to invest In”. It said, and I quote, “Malaysia is the clear frontrunner in this ranking, scoring at least 30 points more than any other country on a 100 point scale.”

There is clear international unanimity that Malaysia is on the right course, and the figures and accolades I have reported to you today are the direct results of this government’s steering of the economy through uncertain and choppy global waters.

IMF reported that the resilience of our economy was due, and I quote, to “sound macroeconomic policy responses in the face of significant headwinds and risks”. And these sound policies are the reason why they said that: “Malaysia is among the fastest growing economies among peers.”

And lastly, the World Bank has shown that it agrees as well. In its latest report, issued just last month, it said that the government’s “macroeconomic management has been constantly proactive and effective in navigating near-term challenges in the economic environment”.

It concluded, and I quote: “The Malaysian economy is progressing from a position of strength.”

Does that really sound like the Malaysian economy is failing, and that we are in danger of going bankrupt, as the opposition would have you believe?

I think the World Bank, the OECD and the IMF know what they are talking about – and I’m sure, ladies and gentlemen, that you do too.

We have only arrived at that position of strength because we put in place a far-reaching economic plan; and because we have been unafraid to take the tough decisions to build up the resilience of the Malaysian economy.

We have diversified government sources of income, including reducing reliance on oil and gas revenues from 41 percent in 2009 to 14 percent today. Given the huge drop in the price of oil, just imagine how we would be suffering if we had not done that.

We also needed to widen the tax base, and so, in common with around 160 other countries, we introduced a goods and services tax, or GST. It was not popular, but it was the right thing to do – as every reputable economist has confirmed.

GST has helped us in our determination to steadily reduce the deficit – we are on course to reduce it to three percent this year, from 6.7 percent in 2009 – and GST has been crucial to retaining our good assessments by the international ratings agencies.

Yet the opposition says they would abolish it. Tell me, from where exactly would they produce the RM41 billion collected in GST revenue last year? Out of a hat?

If GST was abolished, it would not just be a matter of a revenue shortfall. The deficit would rise from 3.1 percent to 5 percent. Our ability to fund the construction of schools, hospitals and other essentials would be affected.

Government debt would rise above our self-imposed level of 55 percent of GDP. Our sovereign credit ratings would then be downgraded. Lending costs for all, such as loans for personal use, for business and for housing, would increase. The people would suffer, and they would suffer directly.

One of Malaysia’s prominent independent analysts, the Director of Economics at the Institute of Strategic and International Studies Malaysia, had it right when he said the idea of getting rid of GST was, and I quote, “preposterous” and “economically nonsensical”. “I don’t think anyone in their right mind would want to do that,” he said.

It is another example of what the opposition do when faced with tough decisions: they seek the easy or the populist way out, regardless of whether it makes sense or is even possible. They are not being straight with the Malaysian people.

This government, however, will always be straight with the people and we will always do right by the people. We will always put their interests first, from economic welfare to security. Even if it is not the most popular thing to do, we will not hesitate – because it is the responsible thing to do for the country.

This is also one of the reasons I am not very popular with that certain nonagenarian. Under his leadership many corners were cut, and the Malaysian people had to pay a very high price so that a few of his friends benefited, even when symbols of national pride had horrendous and catastrophic decisions inflicted on them.

But I say to you now that under this government, we are cracking down on crony capitalism. No more sweetheart deals. No more national follies kept going to stroke the ego of one man. No more treating national companies as though they were personal property.

Because it is the people who suffer, and we will not tolerate a few succeeding – and not on their own merits – while the many are denied opportunities, all for the interests of a selfish few.

Now some of you may be thinking that I have not mentioned national companies where there have been issues. At 1MDB it is now clear that there were lapses in governance.

However, rather than bury our heads in the sand, we ordered investigations into the company at a scale unprecedented in our nation’s history. Rather than funnel good money after bad to cover up any issues 1MDB may have faced – the model embraced by a former leader – I instructed the rationalisation of the company.

And it is progressing well. Indeed, many of the assets formerly owned by 1MDB are thriving. One only needs to drive past Tun Razak Exchange to see the new construction for confirmation.

But let’s not forget that while there were issues at 1MDB, certain politicians blew them out of proportion, and tried to sabotage the company, in an attempt to topple the government in-between election cycles.

At the time we knew the real issue was not 1MDB, and that if 1MDB hadn’t been around they would have chosen another line of attack to try to illegitimately change the government. So we stood steadfast, and resolute, in the face of this orchestrated campaign. Because we will not be deterred from our duty, as the democratically elected government, to serve the nation.

Our priorities were made crystal clear when we introduced the concepts of the “capital economy” – which refers to the macro perspective – and the “people economy”, which is focused entirely on the people, the most precious asset of our great country.

We face challenges ahead, of course. We need to improve productivity. We need to raise the levels of education and skills. We need to put innovation and creativity at the heart of the economy of the future.

This why we have partnered with the Chinese technology leader Alibaba to create the Digital Free Trade Zone, the world’s first special trade zone that will promote the growth of e-commerce, and provide a state-of-the-art platform for both SMEs and larger enterprises to conduct their digital businesses and services.

This initiative is part of the digital roadmap which aims to double e-commerce growth from 10.8 per cent to 20.8 per cent by 2020.

But we can only achieve such targets with the people, and by empowering the people. To ensure the dignity of all, we have virtually eliminated poverty, to less than one percent. We are delighted that the income of the bottom 40 percent households has been increasing at a compound annual growth rate of 12 percent since 2009, when I took office.

But we know that cost of living issues hit those with low incomes the hardest; which is why we distributed RM5.36 billion in 1Malaysia People’s Aid, or BR1M, to 7.28 million households in 2016. This is why we ensured that essential foods and necessities are zero-rated for GST.

At the same time, we have many agencies promoting affordable housing programmes, and why we built and restored nearly 95,000 houses for the rural poor last year. Other affordable housing projects include PPA1M, for civil servants; PR1MA, for the urban middle income group; and the People’s Housing Programme for the lower income group, or Bottom 40, with monthly rents as low as RM124.

Infrastructure, too, is absolutely vital. It is crucial for our cities, and life-changing for rural communities. From 2010 to 2016 we delivered 6,042 kilometres of new rural roads, provided 350,000 houses with access to clean water, and connected 154,000 houses to electrical services.

At the end of last year, the first phase of the Mass Rapid Transit project was completed, and recently, the second phase of the Sungai Buloh-Kajang MRT Line has been launched. We now have 51 kilometres of operational line with 31 stations.

This will take 160,000 cars off road, making Kuala Lumpur more liveable. It created 130,000 new jobs, of which 70,000 are direct employment. And best of all, it was completed ahead of schedule and RM2 billion below budget. We are now planning for MRT 2 and 3.

The Pan Borneo Highway in Sarawak and Sabah will be a game changer for our people there, encouraging greater mobility, boosting industry and tourism and creating thousands of new jobs.

In a few years time, we will have the first high-speed rail link connecting Kuala Lumpur to Singapore, which will cut travel time between the two cities to 90 minutes, as compared to more than four hours by car.

And the East Coast Rail Link will bring huge benefits, jobs and a new connectedness to the people of Pahang, Terengganu and Kelantan in particular.

In other areas, we are seeing the benefits of our programmes for all the people. The national pre-school enrolment rate rose to 85.6 percent in 2016, for instance, as opposed to 67 percent in 2009; and we have achieved almost universal enrollment for the five years and upwards age group.

Women have seen great strides as well. The female labour force participation rate has increased from 46 percent in 2009 to 54.3 percent last year. That’s over 700,000 more women in the workforce.

And I am delighted to be able to announce that Malaysia has reached its target of women making up 30 percent of top management – that’s 1,446 women, out of a total of 4,960 in top management excluding CEOs, as of December 2016.

We want to go further, though, and have set 2020 as the date by which we want all public listed companies (PLCs) to have at least 30 percent women at board level. Because we know that when women succeed, we all succeed.

Unfortunately, we still have 17 “top 100” PLCs that have no women at all on their board. This just is not good enough, and I call on these companies to immediately address this lack of diversity. I would like to announce that, from 2018, the Government will name and shame PLCs with no women on their boards.

As many of you will know, SMEs make up 97 percent of businesses in Malaysia, and one of the hallmarks of my administration has been its support and encouragement for this backbone of our economy.

So I am pleased to be able to officially launch today the Leading Entrepreneur Accelerator Platform Market, or LEAP Market, by Bursa Malaysia. This is a new qualified market which will offer an alternative way for small and medium companies to raise funds and grow their business to the next level.

It is in line with our SME Masterplan which aims to raise the share of GDP contributed by SMEs, their numbers of employees, and their volume of exports.

And it is another of the many initiatives that my government has put in place in pursuit of our transformation, and that prove our trustworthiness as a business-friendly government of a vibrant economy.

We want you to see Malaysia as a gateway to ASEAN and the region, and with the eventual conclusion of the Regional Comprehensive Economic Partnership or RCEP, we want you to see Malaysia as a base from which to access almost 50 percent of the world’s population, and over 30 percent of global GDP.

This year, we are celebrating the 60th anniversary of independence. From relatively humble beginnings, we have grown and evolved into a modern economy and society with a record to be proud of. But we are looking to the future as well – which is why we have produced the 2050 National Transformation, or TN50, initiative.

Through TN50, we want to listen to our rakyat. We want them to be heard. And through our dialogue sessions, we are listening to the aspirations of our youth for what they want the Malaysia of 2050 to be.

As the Prime Minister of Malaysia, I want to lay out the foundations needed for our nation to be counted among the very top countries in the world. We want that competitive edge, and to be a knowledge-based society – but we must always work towards those goals in ways that are sustainable, inclusive and equitable. No Malaysian must ever be left behind. All must participate and benefit from this amazing journey that we are on.

We invite you be to part of that journey, and I hope today we are able to shed light on the tremendous opportunities that Malaysia has to offer. We urge to you to look at our potential; to look at the great achievements the government’s transformation programme has delivered, and continues to deliver; and invest in Malaysia.

 

South-East Asia’s future looks prosperous but illiberal


July 24, 2017

More money, less freedom

South-East Asia’s future looks prosperous but illiberal

Democracy is losing ground even as the region grows richer

Print edition | Asia

Image result for ASEAN Forging ahead --Economic Intelligence Unit

ASEAN–Peace, Stability and Economic Development First

THE young woman with the microphone cajoles, hectors and wheedles customers with the breathless enthusiasm of a livestock auctioneer at a county fair. She is standing behind a table stacked high with blue jeans; most of the milling crowd is dressed in lungyis, Myanmar’s skirt-like national dress. The fancy mall around them is anchored by a huge department store, dotted with banks and mobile-phone stalls and topped by a cinema and video arcade.

Myanmar has been growing so fast—by an average of 7.5% a year for the past five years—that the boom is reverberating in Mae Sot, just across the border in Thailand. Two years ago, says a longtime resident, the site of the mall was a swamp, and Mae Sot was a poky little border town with two small grocery stores. Today huge supermarkets, car dealers, electronics outlets and farm-equipment showrooms line the wide new road from the border into town, patronised by a steady stream of Burmese shoppers. Skeletons of future apartment blocks loom; the Thai government is building a new international airport. The Asian Development Bank (ADB) forecasts that Myanmar’s growth will hit 8% next year.

The region is full of such stories. Cambodia, Laos, the Philippines and Vietnam have been growing only slightly more slowly. Overall, the ten countries of the Association of South-East Asian Nations (ASEAN) grew at an annual rate of 5% over the past five years: not quite as fast as China or India, but much faster than Europe, Japan or America. The region’s 625m-odd people are growing richer and better educated; they will live longer, healthier and more prosperous lives than their parents. Of course, plenty of poverty remains—most people in Myanmar are still subsistence farmers—but the region’s economic trends are promising.

Back from the red

It was not always obvious that the South-East Asian economies would do so well. Only a generation ago Myanmar was cut off from the world by despotic generals; Cambodia’s 25-year-old civil war was still sputtering; and Vietnam was only just beginning to experiment with some timid market reforms. The wealthier countries in the region, meanwhile, had seen their economies, and the underlying models of growth, shattered by the Asian financial crisis of 1997.

The crisis proved salutary. Indonesia, the Philippines and Thailand all adopted sounder macroeconomic policies and made some effort to curb the cronyism that had accompanied earlier growth. Nominally communist Laos and Vietnam and autarkic Myanmar all embraced free markets, up to a point. The days of nationalisation and central planning seem to be over. In much of the region inefficient and coddled state-owned businesses endure, and rent-seeking, corruption and protectionism are all more common than they should be. But across South-East Asia, liberal economics has won the argument.

Politically, however, the region is moving in the opposite direction. The Asian crisis may have brought huge economic hardship, but it did at least unseat Suharto, Indonesia’s strongman of 32 years, and instigate political reforms elsewhere. In the years that followed, imperfect democracies in Malaysia, the Philippines and Thailand appeared to be gaining strength. And Myanmar, after years of isolation and repression, embarked on an unexpected transition to democracy.

But hoped-for openings never came in Laos and Vietnam, where the Communist Party has always been nakedly repressive. Singapore remains an illiberal, albeit effective, technocracy. The leaders of Malaysia and Cambodia, Najib Razak and Hun Sen, have proved depressingly adept at locking up critics and persecuting opponents. Cambodia’s most prominent opposition politician, Sam Rainsy, lives in exile to avoid imprisonment for a spurious conviction for defamation. Opposition figures in Malaysia find themselves in court on charges as varied as corruption and sodomy.

The junta that seized power in Thailand three years ago promises an election next year. Even in the unlikely event that it is free and fair, the constitution—which the army wrote and the new king signed in May—creates a junta-led Senate, imposes the generals’ 20-year plan on the country and provides ample grounds to remove any elected leader whom the army finds lacking. All this is designed to prevent voters from electing the “wrong” leaders, in the army’s view, as they have done at every opportunity over the past 15 years.

Image result for ASEAN Forging ahead --Economic Intelligence Unit

Democratic institutions are not yet quite that weak in the region’s two biggest countries, Indonesia and the Philippines, but in both liberals have more cause for fear than hope. Filipino voters, justifiably frustrated by the way that a few prominent families dominate politics, and by how recent economic growth has failed to reduce the high poverty rate, elected Rodrigo Duterte as president last year. Alone among the five candidates, he seemed to care about ordinary people; his brutal anti-drug campaign has appalled foreigners but is popular at home.

Mr Duterte reminisces fondly about the dictatorship of Ferdinand Marcos and seems to crave dictatorial power himself. He has declared martial law on the southern island of Mindanao (see Banyan), and often muses about doing the same nationally. He veers between indifference and hostility to troublesome principles such as due process, the separation of powers and the rule of law—all of which need shoring up, not weakening.

An election for Governor of Jakarta in April, meanwhile, has harmed Indonesia’s reputation for religious tolerance (see next story). Islamist agitators campaigned against the Christian incumbent, Basuki Tjahaja Purnama, falsely claiming that he had insulted the Koran. Anies Baswedan, one of his rivals, embraced their shameless attempt to stir up sectarian tension, and won. Prabowo Subianto, a tub-thumping nationalist who lost the presidential election in 2014, backed Mr Baswedan. The fear is that Mr Prabowo, inspired by Mr Baswedan’s success, will try to foster similar divisions at the national level.

But it is Myanmar that most encapsulates the region’s democratic reversal. When the army ceded power last year to Aung San Suu Kyi, its Nobel-prize-winning opponent of 30 years, expectations were astronomically high, even though the constitution the generals had written severely limited her powers. That has made her government’s craven and repressive acts all the more bewildering. It has charged more reporters with defamation than did her military-backed predecessor. She has been shamefully silent about the continuing persecution of the Rohingya, a Muslim minority, not even admitting, let alone trying to stop, the army’s well-documented campaign of rape, murder and destruction against Rohingya villages. It does not help that since Donald Trump became president, America, long the loudest champion of liberal values in the region, has more or less let the subject drop.

This article appeared in the Asia section of the print edition under the headline “More money, less freedom”–The Economist

 

Trump and the Truth About Climate Change


July 22, 2017

Trump and the Truth About Climate Change

by Joseph E. Stiglitz

http://www.project-syndicate.com

Image result for trump and climate change cartoon

Under President Donald Trump’s leadership, the United States took another major step toward establishing itself as a rogue state on June 1, when it withdrew from the Paris climate agreement. For years, Trump has indulged the strange conspiracy theory that, as he put it in 2012, “The concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive.” But this was not the reason Trump advanced for withdrawing the US from the Paris accord. Rather, the agreement, he alleged, was bad for the US and implicitly unfair to it.

While fairness, like beauty, is in the eye of the beholder, Trump’s claim is difficult to justify. On the contrary, the Paris accord is very good for America, and it is the US that continues to impose an unfair burden on others.

Historically, the US has added disproportionately to the rising concentration of greenhouse gases in the atmosphere, and among large countries it remains the biggest per capita emitter of carbon dioxide by far – more than twice China’s rate and nearly 2.5 times more than Europe in 2013 (the latest year for which the World Bank has reported complete data). With its high income, the US is in a far better position to adapt to the challenges of climate change than poor countries like India and China, let alone a low-income country in Africa.

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After 6 months in office, Trump has shown that he is incapable of getting his agenda going. He cannot get at the issues which require his leadership.

In fact, the major flaw in Trump’s reasoning is that combating climate change would strengthen the US, not weaken it. Trump is looking toward the past – a past that, ironically, was not that great. His promise to restore coal-mining jobs (which now number 51,000, less than 0.04% of the country’s non-farm employment) overlooks the harsh conditions and health risks endemic in that industry, not to mention the technological advances that would continue to reduce employment in the industry even if coal production were revived.

In fact, far more jobs are being created in solar panel installation than are being lost in coal. More generally, moving to a green economy would increase US income today and economic growth in the future. In this, as in so many things, Trump is hopelessly mired in the past.

Just a few weeks before Trump’s decision to withdraw from the Paris accord, the global High-Level Commission on Carbon Prices, which I co-chaired with Nicholas Stern, highlighted the potential of a green transition. The Commission’s report, released at the end of May, argues that reducing CO2 emissions could result in an even stronger economy.

The logic is straightforward. A key problem holding back the global economy today is deficient aggregate demand. At the same time, many countries’ governments face revenue shortfalls. But we can address both issues simultaneously and reduce emissions by imposing a charge (a tax) for CO2 emissions.

It is always better to tax bad things than good things. By taxing CO2, firms and households would have an incentive to retrofit for the world of the future. The tax would also provide firms with incentives to innovate in ways that reduce energy usage and emissions – giving them a dynamic competitive advantage.

The Commission analyzed the level of carbon price that would be required to achieve the goals set forth in the Paris climate agreement – a far higher price than in most of Europe today, but still manageable. The commissioners pointed out that the appropriate price may differ across countries. In particular, they noted, a better regulatory system – one that restrains coal-fired power generation, for example – reduces the burden that must be placed on the tax system.

Interestingly, one of the world’s best-performing economies, Sweden, has already adopted a carbon tax at a rate substantially higher than that discussed in our report. And the Swedes have simultaneously sustained their strong growth without US-level emissions.

America under Trump has gone from being a world leader to an object of derision. In the aftermath of Trump’s withdrawal of the US from the Paris accord, a large sign was hung over Rome’s city hall: “The Planet First.” Likewise, France’s new president, Emmanuel Macron, poked fun at Trump’s campaign slogan, declaring “Make Our Planet Great Again.”

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But the consequences of Trump’s actions are no laughing matter. If the US continues to emit as it has, it will continue to impose enormous costs on the rest of the world, including on much poorer countries. Those who are being harmed by America’s recklessness are justifiably angry.

Fortunately, large parts of the US, including the most economically dynamic regions, have shown that Trump is, if not irrelevant, at least less relevant than he would like to believe. Large numbers of states and corporations have announced that they will proceed with their commitments – and perhaps go even further, offsetting the failures of other parts of the US.

In the meantime, the world must protect itself against rogue states. Climate change poses an existential threat to the planet that is no less dire than that posed by North Korea’s nuclear ambitions. In both cases, the world cannot escape the inevitable question: what is to be done about countries that refuse to do their part in preserving our planet?