Najib and Mahathir locked in the Battle of The Social Media

May 30, 2015

 Najib and Mahathir locked in the Battle of The Social Media

Unlike the previous spats involving Dr Mahathir Mohamad and his rivals, the current war is waged online through blogs and social media.

Mahathir himself reserves his most potent bombshells for his blog postings and later expands on his points when addressing the media or a public function. Prime Minister Najib Abdul Razak also ducks, dodges and strikes back through his blog in the form of frequently asked questions (FAQ).

Then, there are the foot soldiers. On Mahathir’s side, there are former newspaper editors A Kadir Jasin, Firdaus Abdullah, Zainuddin Maidin and several others. As for Najib’s garrison, there are the ghostwriters in, JASA chief Puad Zakarshi and current Sabah state assembly speaker Salleh Keruak.

The war between Mahathir and Najib has been brewing in the quiet for long. There were the occasional snipes, but nothing serious. Then on April 2, Mahathir dropped an atomic bomb via his blog, warning that if Najib remained at the helm, Umno would be defeated come the 14th general election. He also hinted that Najib had a role in the  brutal murder of the Mongolian model, Altantuya Shaariibuu (picture above), which was once again denied.

Since then, it has been open season. And the one riddled with most bullet holes is 1MDB, which has come under attack from Mahathir as well as the Opposition. However, Najib has refused to cave in. On the contrary, he has accused the former Prime Minister of peddling lies and twisting facts.

Deeper down the gutter

Sharing his view on the online war, another former editor, Ahiruddin Atan, highlighted images targeting Mahathir that are circulating in the social media. “And we slide down deeper into the gutter by the day,” Ahiruddin lamented.

“You may see these efforts to counter the allegations as a dirty campaign against the old man, but those behind these posters (photo left) think it is only fair to defend Najib against the conspiracy to take him down,” he added on his blog, Rocky’s Bru.

Ahiruddin also noted that Mahathir’s people are not going to stop demonising Najib. “Why, some of them have been preparing for this war for years. The PM’s defenders aren’t going to stop, either. Only Mahathir and Najib can stop this from getting worse But what are the chances of that happening now?” he asked.

Malaysians are also growing weary of the protracted blogfight. There must be a knockout punch soon. But then again, Mahathir had campaigned for more than a year against Najib’s predecessor Abdullah Ahmad Badawi. So it might be another long haul match.

Cambodia economic update : maintaining high growth (English)

May 29, 2015

Cambodia economic update : maintaining high growth (English)


Angkor Wat

Cambodia continues to enjoy robust growth, albeit at a slightly slower pace. Real growth in 2014 is estimated to have reached 7.0 percent. The garment sector, together with construction and services, in particular finance and real estate, continues to propel growth. However, there are signs of weaknesses in garment and agricultural production that are slightly slowing growth.

Overall macroeconomic management remains appropriate. Fiscal consolidation continues with further improvements in revenue collection resulting from enhanced administration. Poverty continues to fall in Cambodia (poverty headcount rate in 2012 was 17.7 percent) although the pace of poverty reduction has declined significantly.

Cambodia-Battambang_ProvinzCambodia’s real growth rate is expected to moderate to 6.9 percent in 2015 and 2016, as it confronts stronger competition in garment exports, continued weak agriculture sector growth, and softer growth in the tourism sector. Recent developments include: the garment sector continues to be one of Cambodia’s main engines of growth, the external position remains stable, supported by healthy foreign direct investment inflows, underpinning the overall macroeconomic stability, Exchange rate targeting continues to support price stability, inflation has eased significantly with continuing depressed food prices and the recent decline in oil prices, and financial deepening continues, supporting economic expansion as deposit and credit growth accelerated quickly in 2014.–World Bank. 2015. Cambodia economic update 

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TK Chua: My 11th Malaysia Plan

May 24, 2015

Phnom Penh

TK Chua: My 11th Malaysia Plan

My question is, are we blind? We can’t see that people are made so often to queue up with pails and bottles for water trucks. We can’t see congestion and massive jams every day. We can’t see dilapidated flats and unhygienic living conditions everywhere. We can’t see half of the working population can’t afford decent housing.  We can’t see our education is not performing. We can’t see that the real income of the people is not growing, what more with more taxes and depreciating ringgit. But the irony is we have to wait for someone to write all these down and for our PM to read them out in the Parliament before we could pretend to know these are the important issues requiring attention. What a load of baloney.  –TK Chua

11th Malaysia Plan2Since the 11th Malaysia Plan was announced by the Prime Minister in Parliament on Thursday, there have been numerous comments and criticisms on the Plan.

Some said the Plan is a mere collection of ‘ideal state’ pronouncements; some said the projects and programmes in the Plan are mainly for the benefits of the cronies; some said it was more of a political statement, not an economic document since there are obvious exclusions which are irrational and illogical; and some have asked where are the money and other resources needed to implement the Plan coming from.

There are probably some truths in all of these criticisms and comments. As for me, the Five Year Development Plan as we know today has lost its lustre when compared with those of the bygone years of the 60s and 70s.

There are reasons for this. First, the world has changed, becoming more globalised, interconnected and unpredictable. Any event could trigger ramifications across the globe, rendering planning assumptions and forecasts useless. What more for a country like Malaysia, an economy that is very open and trade and foreign investment dependent?

Second, as time goes by, many have also become disillusioned with much of the grandeur stuff stated in our past development plans. Many of the objectives are either not achieved or totally hijacked toward attaining something else.

Hence, many marginalised Malaysians could no longer relate to or find meaning or attachment to the Plan any more. They find the opportunities and promises bypassing them. They find their needs denied in one plan after another.

On the contrary, they find the Goods and Services Tax (GST), 1Malaysia Development Berhad (1MDB), the National Feedlot Corporation (NFC), and the Port Klang Free Zone (PKFZ) with all their attendant problems and fiascoes have intruded into their life. Surely the people do not need a development plan to shoulder all the burdens but when it come to benefits, even repeated development plans have brought them only elusive dreams.

I think the best Malaysia Plan we can ever have today is a plan where we can identify changes and react to these changes quickly and robustly. If oil prices have collapsed, what flexibility and options does the government have other than imposing more taxes? If global growth has slowed, what viable alternatives do we have? If the value of ringgit has depreciated precipitously, do we know why and how to handle it going forward?

What reserves and capacity have we got to deal with continued security threats and kidnapping in Sabah and from other terrorist groups? I am aware of Eastern Sabah Security Command (Esscom), but is it effective?  What about the influx of boat people from Myanmar and Bangladesh now? Do we have clear ideas to deal with them?

These are all pertinent issues which will affect the vital interests of Malaysia and its people. But I don’t think we can ever write them out in development plans in concrete or predictable terms before they happen. I do not have to read the 11th Malaysia Plan to know that there are probably programmes and projects for water, electricity, roads, housing, public transport, environment preservation and protection, healthcare and education in it.

Are we blind?

Come and Steal Us again11th Malaysia Plan –What a load of baloney.

But my question is, are we blind? We can’t see that people are made so often to queue up with pails and bottles for water trucks. We can’t see congestion and massive jams every day. We can’t see dilapidated flats and unhygienic living conditions everywhere. We can’t see half of the working population can’t afford decent housing.   We can’t see our education is not performing. We can’t see that the real income of the people is not growing, what more with more taxes and depreciating ringgit.

But the irony is we have to wait for someone to write all these down and for our PM to read them out in the Parliament before we could pretend to know these are the important issues requiring attention. What a load of baloney.

University of Malaya Development Economist on 11MP

May 23, 2015

Phnom Penh

11th Malaysia Plan (2016-2020)

Highlights of the 11th Malaysia Plan (2016-2020)

* Private consumption and investment to drive growth, resulting in a 7.9% per annum rise in gross national income (GNI) per capita.

* Four strategies to boost economic fundamentals: 1) Unlocking the potential of productivity to ensure sustainable and inclusive growth; 2) Promoting investment to spearhead economic growth; 3) Increasing exports to improve trade balance; 4) Enhancing fiscal flexibility to ensure sustainable fiscal position.

* Real private consumption is expected to increase at an average rate of 6.4% per annum.

* Public investment to grow at 2.7% per annum, or an annual average of RM131bil in current prices, driven by the Federal Government development expenditure and capital spending of non-financial public enterprises (NFPEs).

* Private investment is expected to grow at 9.4% per annum, with an estimated average annual investment of RM291bil in current prices.

* Productivity GDP growth underpinned by significant increases in productivity, with less dependence on inputs from capital and labour. Contribution of multi-factor productivity to GDP growth is targeted to increase to 40%, while that of capital is expected to reduce to 44% and labour to 16%

Federal Government financial position:

* Federal Government revenue to increase from RM1.050 trillion in 10MP to RM1.408 trillion in 11MP.

* GST to bring in average of RM31.4bil revenue per year over the next five years compared to an average of RM15.5bil collected through the sales tax and services tax during the Tenth Plan, which will strengthen the fiscal position.

* Review of dividends received from Government-linked companies and undertaking greater joint audit efforts by the Inland Revenue Board and the Royal Malaysian Customs Department.

* Revenue is targeted to expand by 7.9% per annum and the dependence on oil-related revenue to decline to 15.5% by 2020 from 21.5% in 2015.

* Operating expenditure to increase from RM1.031 trillion in 10MP to RM1.289 trillion

*Development expenditure to increase from RM223.6bil to RM260bil — half of the amount for infrastructure. Focus will be on the economic and social sectors.

* Federal Government to reduce fiscal deficit from 3.2% to 0.6% by 2020.

* Federal Government total debt to be reduced from 53.3% of GDP to 43.5% by 2020.

* Current account balance of the balance of payments to remain in surplus and record RM46.5bil or 2.6% of GNI by 2020.

Equity ownership:

* Bumiputera individual equity ownership will be expanded by allowing withdrawal from Account 1 of the Employee Provident Fund to purchase ASB2 units, which provide competitive long-term returns at minimal risk.

* New funding mechanisms, such as waqf investment fund and private equity for investment will be created through crowd funding to invest in profitable and high potential companies.

Inflation and labour market:

* Accommodative monetary policy and administrative measures will continue to ensure price stability. Inflation during 11MP to remain low, averaging 2.5% to 3% per annum.

* Economy to maintain full employment with an estimated unemployment rate of 2.8% by 2020.

* Employment to grow at a slower rate of 2.1% per annum to reach 15.3 million by 2020, with additional 1.5 million jobs created.

* Inflation to remain low, averaging 2.5% and 3% per annum.

* Labour productivity to increase from RM77,100 in 2015 to RM92,300 in 2020

* GNI per capita to reach RM54,100 (US$15,690) in 2020

* Average monthly household income to increase from RM6,141 in 2014 to RM10,540 in 2020

* Share of compensation of employees to GDP to increase from 34.9% in 2015 to at least 40% in 2020

* Malaysian Wellbeing Index to increase by 1.7% per annum, an indicator of improvement in the well-being of the rakyat.

University of Malaya Development Economist on 11MP

by Dr. Lee Hwok

COMMENT: The just released Eleventh Malaysia Plan (11MP) strives to inspire, cajole and rally us toward 2020. I have no problem in general with slogans, catchphrases, cheerleading, or even a dash of hyperbole. The document has to contain some of that. However, the mandate to tug at our hearts does not give licence to toy with the facts.

11th Malaysia Plan This 11MP handles some data in a bizarre, anomalous manner. The most prominent of 11MP’s six multidimensional goals rests on flawed foundations. And it is difficult to believe that errors and confusions – of a most rudimentary nature – are committed innocently.

I have confidence enough in the capability of our civil service to correctly and carefully present statistical analyses and projections. I suffer a confidence deficit with regard to the independence of this process from political influence.

The first two of the multidimensional goals for 2016-2020 in 11MP read as follows:

1. Real Gross Domestic Product (GDP) to expand at five to six percent per year.

2. The Gross National Income (GNI) per capita to reach RM54,100 (US$15,690) in 2020.

Of course, these two goals top the list; they are necessary to achieving a high income status for our country. And, by now, we may be familiar with the national target of US$15,000 in GNI per capita, the threshold for qualifying as a high income economy.

Goal No 2 is more definitive – GNI per capita summarises the overall level of economic development – while Goal No 1 constitutes the means to get there. GDP must maintain a certain growth rate to carry an economy to high income territory.

Monitor target growth in real values

But the 11MP goes against conventional practice and basic logic of evaluating income growth in real terms. Instead, the 11MP puts the GNI per capita target in nominal terms. In other words, it does not take inflation into account. This is mind boggling.

It is imperative to monitor and target growth in real values instead of nominal values. If income grows by five percent and inflation raises the price levels by six percent, one is actually worse off. Real income has registered a minus one percent  change; it has shrunk.

Let’s go back to where this high income business started. The New Economic Model (NEM) in 2010 established high income status as one of three key policy objectives, with the bar set at GNI per capita of US$15,000. Pass that mark and Malaysia qualifies as high income.

The NEM correctly put this threshold in real terms; that report specified that US$15,000 in 2020, in real terms, was the equivalent of US$17,725 in nominal terms (NEM Part 1, page 87). That’s about US$16,500 at today’s exchange rate. The 11MP has lowered that target to US$15,000 in nominal terms, or current prices (11MP, page 2-14).

Growth has fallen behind NEM schedule

The fact is, Malaysia’s economic growth has fallen behind the NEM’s schedule. But to get back on track requires substantially higher growth rates – which are obviously a very hard sell. Witness Goal  No 1:  Five to six percent real GDP growth per annum, a believable range.

According to the NEM’s projections and aspirations, Malaysia would register a real GDP growth rate of 6.5 percent a year over 2010-2020. We have only achieved 5.3 percent in the first half of this decade. By mathematical necessity, we will need to grow faster than 6.5 percent in the second half, to compensate for the prior shortfall.

Specifically, to remain on track for high income status by 2020, the Malaysian economy must sustain real growth of 7.7 percent per year over 2015-2020. Who would want to deliver that message to an informed, discerning, sceptical rakyat living in uncertain times and accustomed to steady but modest growth? I understand the reluctance to tell that story.

Instead of coming clean and saying that, well, it will be nearly impossible to reach the high income mark by 2020 (but our dignity is not bound up in such status; we’re still worthy as a nation), the government slides the goalpost. Instead of the NEM’s original high income target of US$17,725 in current prices, the 11MP now guns for US$15,000 in current prices, and pretends they’re the same.

Now, the empirical discrepancies

Thus UMNO-BN can declare success and extract gratitude. How might we respond to these empirical discrepancies? Some might say, it’s not a big deal, these are mere technicalities.

Yes, at one level this is a technical skirmish. Even so, there is a big, suspiciously deliberate aberration that must be addressed. Why target US$15,000 in nominal terms, instead of in real terms, like any almost fully-developed country would?

But this is far more than an issue of statistical correctness. This government is staking its legitimacy on driving Malaysia to a high income status, it is claiming credit for ushering us down this last leg to the many splendours of Vision 2020. Proper reporting and handling of data, at root, testify to the level of honesty, truthfulness and integrity of our policies.

Vision 2020 envisages a society that is progressive, confident, secure, scientific, mature, and virtuous in many other ways.This government declares interest in leading Malaysia in that direction. Then it effectively commits statistical doping.

Dr. LEE HWOK AUN is a Senior lecturer with the Department of Development Studies, University of Malaya, Pantai Valley, Kuala Lumpur, Malaysia

Ambiga on Human Rights In Malaysia

May 20, 2015

Phnom Penh

Ambiga Sreenevasan on Human Rights @ ASEAN People’s Forum


“What have we done to deserve this stifling of various freedoms by Putrajaya? (Government of Malaysia).”What a great question for us to ask ourselves and ask of this Barisan Nasional Government.

We love our country, pay our taxes faithfully (albeit, grudgingly at times), volunteer for social causes, donate to needy causes, celebrate our diverse cultures and faith, live peaceably and in harmony with our neighbours and thank God for our many blessings as Malaysians. And what do we get in return?

We get plundered, lorded over, insulted and told to migrate if not happy by our public servants. Yes, please don’t ever forget, they are our servants! The word ‘minister’ was from the Latin word for ‘servants’. Let’s get that right from the start, lest we forget who the real boss is in a democracy.

When we want to protest about how we are treated we are told (by our servants) we have to get permission. When we speak we have to worry about 3 a.m raids by Police with balaclava and sub-machine guns. We draw cartoons or make satirical videos but must not offend ‘she with the big hairdo’ or get charged with sedition. We tweet but the King of Twit (The Inspector-General of Police Khalid Abu Bakar) monitors our tweets and sends his hounds after us.

Meanwhile we have delusional Ministers telling us not to worry. We have the best education and universities in the world. Our Manglish is better than our neighbour down south. Our Proton is better than BMW. We have the best democracy in the world. Yeah, best my  sweet charity. We don’t hear them boasting that we are Number 1 in corrupt business practices or that we conduct one of the worst election processes in the world.

Yet in everyday life all these self-congratulatory claims make no sense. Many of our graduates cannot get employed and when they do, they are paid RM2,000 a month or thereabouts. Our median monthly salary is RM1,500. Minimum wage is RM900, for many, before ‘deductions’.

How come after more than five decades of this government’s ‘management’ of our economy, over 4 million households and almost 3 million singles still qualify for Bantuan Rakyat 1Malaysia (BR1M) handouts. That’s almost 23 million of our 30 million population, 76 percent.

Where has all our wealth gone ? 1Malaysia Development Berhad, Bumiputra Malaysia Finance, Port Kelang Free Zone, MAS, Perwaja, Maminco, etc? To add salt to our many financial injuries, they tax us with the Goods and Services Tax (GST) because otherwise the country would go bankrupt! Cost of living is going up but our income is stagnant because we cannot compete. We cannot compete because they have messed up our education system, or to put it another way, they have messed up our children’s future!

Food costs will go up because we are a huge net importer of food and the Ringgit is sliding south against the US dollar. Our nasi lemak and wantan noodles have already gone up if you have not realised by now. And we have another minister assuring us that with GST, prices of goods will go down, if not, cook more at home or in your dorm. Cook with what? Our rice, flour, sugar, beef, milk, fish and vegetables are mostly imported with US dollar.

Ahmad MaslanAhmad Maslan (CGPA-3.85) and his Boss

Hello? You do not need a CGPA of 3.85 to know that, it is just common sense . Pride does not feed hungry stomachs

Blessed with arable land and good weather all year round, we should be exporting food worldwide. But no, we will have none of that. Instead of growing and cultivating edible crop and livestock, we cut down our thousand-year old forests and replace them with oil palm with which we cannot fill our stomach with (unless you want a quick death) and depend on cheap foreign labour to harvest.

My beef with oil palm is that it does not enrich the workers, only the already filthy rich tycoons. Maybe some of us are proud of our billionaires making it into Forbes’ top billionaires list but pride does not feed hungry stomachs.

To compete with other producers globally we use cheap foreign labour not only for our plantations but also for our factories. Paying them minimum wages, we suppress our own Malaysian workers and we do not bother with increasing productivity and investing in innovation so that we can earn higher income, so that more of us can “afford” to pay income tax and not ‘qualify’ for BR1M.

When our ministers boast of the millions qualifying for BR1M, it’s like saying, “Hooray! Look at the huge number of poor people we have to help.” How retarded can we get?

So again, we ask ourselves, what have we done to deserve this? Actually, come to think of it, we have brought this upon ourselves. We have faithfully voted in this same government all these past 13 general elections, in 10 of which we gave them two-third majorities to amend our federal constitution over 700 times. Malaysia Boleh (Malaysia Can).

Yes, perhaps we got the government we deserve. But better late than never as they say. As Malaysians we deserve better, much better. The next time we cast our votes, we should vote for a better future, remembering what a lousy management we have had for the past five decades. We should vote to take back our power to sack non-performing public servants and install competent, honest and selfless servants.

Sarawak Focus:Tengku Razaleigh Hamzah is the Prime Minister for Malaysia

May 14, 2015

Phnom Penh by The Mekong

Sarawak Focus:Tengku Razaleigh Hamzah is the Prime Minister for Malaysia

 sarawak--malaysiaSarawakians are not easily tempted into jumping into the political whirlpool former Premier Dr Mahathir Mohamad has created to drown Prime Minister Najib Razak so that he can install a successor.

Sarawakians know the problem facing UMNO now is a struggle for the coveted post of Prime Minister, and for Mahathir, he knows too well how powerful one can be if one is Malaysia’s No.1 politician. The temptations are there. Pointers are that Mahathir is gaining ground as one by one the UMNO big boys are beginning to voice their displeasure and dissatisfaction with Najib.

Even the Prime Minister’s Deputy Muhyiddin Yassin and some Cabinet members are asking him to come out clean on 1MDB, Altantuya, GST and the Tabung Haji land buy.

If one must choose sides, now is probably the time to decide between Mahathir and Najib. But not for Sarawakians. Not yet. But why?  The answer is Mahathir himself is not too sure about the successor he has in mind. There has only been general perception of possibilities – Muhyiddin because he is the No. 2 and therefore the natural choice, or for whatever reason, Hishammuddin Hussein.Unfortunately, to Sarawakians there is nothing to show these two gentlemen will make better Prime Minister than Najib.

najib and his deputySarawakians know Putrajaya’s political game well, that whoever becomes Prime Minister will have to come from UMNO. But be that as it may, there has to be someone far better than Muhyiddin and Hishammuddin in UMNO. Someone who needs not be in Mahathir’s radar. Someone not out to do Mahathir’s bidding for him. Someone not known for his extremist views.

Someone more accommodating of all Malaysians irrespective of their race and religion as opposed to someone who insists on ‘Ketuanan Melayu’.If there is such a person, it is Tengku Razaleigh Hamzah.

Tengku Razaleigh HamzahIf Mahathir’s Najib ouster campaign is to save the Malays, Sarawakians will not want to be part of that struggle because there is nothing wrong with the Malays. There is only something badly wrong with some UMNO Malays. But if he wants to save Malaysia and Malaysians, all he needs to do is allow the right UMNO Malay gentleman to do it–Tengku Razaleigh Hamzah.

If Mahathir is genuine about saving Malaysia from going bankrupt, Sarawakians are willing to bank their hopes on Tengku Hamzah, a true Malay gentleman politician without any dark records of misappropriation of public funds or pawning and misuse of national resources and wealth.

The following is an Iban translation of the above for the benefit of readers in rural Sarawak:
Enda mudah urang Sarawak terjun ngagai ulak di gaga Mantan Perdana Menteri Dr Mahathir Mohamad ngicha Najib Razak tau lemas, alai ia ulih nuduk siko penganti. Urang Sarawak nemu penusah ti napi UMNO diatu laya berebut kuasa jadi Perdana Menteri, lebih agi Mahathir nemu amat naka pemesai kuasa enti jadi urang politik No. 1 Malaysia.

Sanjung-keris-Datuk-Seri-Hishammuddin-Hussein2UMNO–Ketuanan Melayu

Tau ngeliur jamah taju remaung. Mahathir majak bulih laban udah siko, siko pemesai Umno mantai pemerani diri nangkan Najib. Sapit Perdana Menteri Muhyiddin Yassin enggau sekeda sida dalam Kabinet Najib sama bela udah ngasuh ia beterus terang dalam hal 1MDB, Altantuya, GST enggau kes meli tanah Tabung Haji.

Enti patut milih sapa dititih antara Mahathir enggau Najib, nyangka diatu meh maya ia. Tang urang Sarawak enggai. Bedau maya. Kediatu urang Sarawak agi enda setuju enggau Mahathir laban ia enda nyemetak madah sapa patut nganti Najib. Muhyiddin enggau Hishammuddin Hussein semina peragam bala maioh. Muhiyiddin laban ia ti Sapit Perdana Menteri, badu Najib ia meh nganti; Hishammuddin enti tau nganti Najib, tak naka ia meh dia.Tang di mata urang Sarawak, nadai utai tau ngasuh Muhyiddin enggau Hishammuddin ulih jadi Perdana Menteri lebih manah ari Najib.

Urang Sarawak nemu dalam main politik Putrajaya, sapa jadi Perdana menteri mesti ari UMNO. Taja pia, enda patut nadai siko mensia dalam UMNO ti lebih manah ari Muhyiddin enggau Hishammuddin. Mensia ti enda dalam mesti pilih Mahathir. Mensia ti ukai peneka Mahathir ngena. Mensia ti enda kelalu bechiping ati. Mensia ti bisi pengasih ka semua rakyat, enda milih bansa enggau agama, enda baka bala sida ti nekan bansa bukai ngena politik ‘Ketuanan Melayu’.

Urang UMNO ti ulih nangkup pemanah tu semina Tengku Razaleigh Hamzah. Enti kempen Mahathir ka muai Najib laban ti deka nyelamat bansa Melayu, urang Sarawak enda nyukung ia laban ukai urang Melayu ke merinsa. Ti pandak seputnya semina sekeda urang Melayu dalam UMNO.

Tang enti Mahathir amai ka nyelamat Malaysia enggau rakyat Malaysia, ukai ngena urang Melayu UMNO baka Muhyiddin enggau Hishammuddin, tang Tengku Razaleigh.

Enti amai Mahathir, munyi ku ia ngelamatu, ka nyelamat Malaysia awakka enda seranta, papa kedana, rakyat Sarawak bisi pengarap ka Tengku Razaleigh, siko lelaki bansa Melayu ti nadai rekod kamah, nadai ngelap duit rayat serta nadai mega ngadai reta-tengkira menua.

Malaysia: The Politics of GST

May 11, 2015

Phnom Penh by The Mekong

Malaysia: The Politics of GST

by Bridget Welsh

Najib as 1MDB advisorThe April 1st introduction of the Goods and Service Tax (GST) has changed Malaysia’s political landscape. In the last few months the Najib administration has significantly redefined the rights of citizens, reducing freedoms while simultaneously adding to their responsibilities. Valuable analyses have focused on the worrying changes in the rule of law, particularly the political use and legal expansion of sedition and the negative implications of potentially introducing hudud, but less attention has centered on the measure that arguably directly affects more people, the GST. This tax is highly contested and has the potential to serve as a catalyst for further conflict in Malaysia’s already increasingly fractious polity. For Malaysia’s Prime Minister Najib Tun Razak, the GST has emerged as his policy Achilles Heel that has the potential to undermine his leadership.

Politically-Loaded Interpretations

There are three interrelated issues that underscore why the GST is so divisive and damaging. This first of which is the polarizing views of the tax itself. Based on the results of Asia Barometer Survey late last year (detailed below), Malaysians were evenly divided over the GST even before it was implemented, with the majority opposed to the measure. Ethnic groups were similarly divided. Majorities in all ethnic groups opposed the GST, with more Chinese Malaysians opposed compared to other communities. The divide that stands out however is partisanship, with BN and opposition supporters strongly in favor and opposed respectively. This indicates that the GST is highly polarizing, reflecting Malaysia’s deep political divisions. In fact, the views are so strong that 5.9% of Malaysians feel that the GST is among the most important problems facing the country.

Favor GST (%) Oppose GST (%) Decline Answer/Don’t Know
All Malaysians 40.0 56.7 3.3
Malays 45.8 51.8 2.4
Chinese 28.3 66.2 5.5
Indians 39.8 57.0 3.2
Others 44.5 53.9 1.6
BN Supporters 53.2 44.1 2.7
Pakatan Supporters 18.6 79.8 1.6
Undecided 31.3 63.9 4.8

Source: Asia Barometer Survey, Malaysia Third Wave

The interpretations of the GST have been politicized in other ways as well, with racial politics at play. For some Chinese, the GST is portrayed as Malays finally paying their dues. For some Malays, the GST has been painted as getting at Chinese who have purportedly evaded taxes. These misperceptions have been fed by years of negative stereotyping. The racial mobilization around GST has gone further, with the government attempting to deflect the blame for the policy on others. Within UMNO, there has been a campaign on the ground, especially in the heartland, to lay the blame of the GST on the supposed ‘exploitation’ of the Chinese middlemen and traders. All of these lens reflect the ethnic fragmentation of Malaysia, point to the continued attempts to divide Malaysians along racial lines, and to blame other communities rather than the government for policies. They also reflect the persistence of the mobilization of race for political ends.

If the racial dimensions of the GST were not enough, there has been a religious heuristic as well. The GST has been labeled ‘haram’ and officially in a fatwa as ‘halal’. Some religious figures have gone as far to call for Muslims who already receive considerable tax benefits by being able to write off their zakat contributions on their taxes (often well beyond the legal 2%) while other faiths lack this right, to excuse Muslims from paying the GST. This development reveals not only how much religion has become part of Malaysia’s political fabric, but shows that some Malaysians Muslims do not believe they have a responsibility to the nation as a whole. The religious divide is even more cutting, in that it is cloaked in a false sense of ‘morality’ that has lost any real sense of justice and community.

As the tax has come into effect in the last month, the interpretation that has resonated the most is that the Najib government is taking from the people. With views extending from ‘robbery’ to grudged acceptance, the public is now aware of taxation more than ever before and sentiment is overwhelmingly negative. This ‘forced marriage’ (to coin the label of the GST given by UMNO veteran leader Mohd Ali Rustam) has led to greater reflection of what is being paid and what is being delivered by government, with the dominant view that the government is falling short in delivery and even ‘uncaring’. Najib’s close association with the GST has led to him receiving the bulk of the blame and reevaluation of governance, with views of his leadership becoming increasingly antagonistic. The premier now has the lowest popularity rating of any of his predecessors, to the extent that his presence has been intentionally minimized in the country’s ongoing by-elections.

Burden Transfers: Tax Incidence     

The divisive perceptions of the GST are enhanced by debate over who pays taxes generally and who will bear the burden of the GST. Any reliable analysis of tax incidence requires detailed household information and greater transparency in data than currently is available in the public domain. Twenty years ago there were regular published works on tax incidence by class and race in Malaysia, but today these are in short supply, and estimates have to be made with what little information is available.

Malaysia stands out in the region for its relatively low payment of direct taxes. According to published figures by the Department of Statistics in 2013, less than three million taxpayers paid income tax, or roughly 22% of the labor force. A higher percentage of corporations pay, especially local businesses that do not have the lucrative benefits of the tax incentives and foreign multi-nationals who adeptly use loopholes to avoid tax. In 2013, 261,000 businesses paid taxes, roughly 25% of registered companies. The amounts paid by business reach a share of GDP in line with rates in OECD countries, but the actual number of payees of both individuals and companies is comparatively low. This is compounded by the fact that there is considerable tax evasion. Despite the vigilant efforts of Malaysia’s Inland Revenue, there remains serious gaps in collection, as there is systemic underreporting, and capital flight. Nevertheless, direct taxes comprise nearly 80% of national tax revenue. Proponents of the GST have argued that indirect taxation is needed to address the shortcomings in direct taxation. This has underscored the rally toward the most popular form of indirect taxation, the GST.

Indirect taxes have long been an integral part of Malaysia’s tax regime, from ‘sin’ taxes on liquor, and cigarettes inherited from the colonial era to the sales and service taxes introduced in the 1970s. Before April, the sales and services taxes have been limited in scope, concentrated on particular goods such as imported cars and a narrow range of services. The introduction of the GST significantly widened the scope of items subjected to the 6% GST tax. Now indirect taxes affect everyone, assuring that the 78% of individuals and 75% of companies not taxed directly are now contributing to government coffers. Premier Najib has already tweeted that there is will be estimated 35% increase in the revenue collected from indirect taxes, to reach RM47.7 billion this year.

Fed Govt Tax MalaysiaThe widening of who pays indirect taxes has sparked public debate. The focus has been the impact on those with lower incomes, as a majority of Malaysians earn incomes of less the RM4,000 monthly. Competing studies by the government and DAP-government’s Penang Institute last year argued over the monthly costs imposed on those most economically vulnerable. They differed in the amounts (and their studies are now irrelevant as the list of exemptions/zero rated items has changed), but both agreed that those with lower incomes would now be part of the country’s tax base.

The GST is a regressive tax, and although there are exemptions and zero-rated items, there is no getting away from a higher tax burden in everyday life. Malaysians have experienced this over the last month. A 6% increase in costs has already brought an additional tax burden on ordinary citizens, even with the exemptions. With Malaysia’s household debt at over 80%, one of the highest in the world, this burden has been especially hard for those living on the financial edge. The long-term ramifications remain unknown. These added financial pressures from the GST on the majority of Malaysians have the potential to contribute to rising indebtedness and strains on families to increases in crime and add to the tensions in society as a whole. Independent studies are needed to measure the socioeconomic effects.

The widening of Malaysia’s tax burden has nevertheless resonated politically in a short time. This tax has especially hit UMNO’s political base. Disproportionately the incumbent government receives its political support from the lower classes, many of whom have not paid taxes in this level before, or ever. Many of those in favor of the GST initially are no longer as positive. The GST is thus not only a seismic shift in the relationship between the Malaysian government and its citizens, it has become a major shift in the dynamic between UMNO and its supporters. This is one of the reasons why veteran UMNO politicians – including former premier Mahathir Mohamad – are openly calling for the GST not to be implemented.  They are worried about the potential losses for UMNO from GST under Najib’s leadership. As the fuel subsidies did for his predecessor Abdullah Badawi, the GST serves as a rallying cry against Najib within his own ranks.

To understand Najib’s GST initiative one has to step back and look at his economic management and outlook. Najib has depended heavily on foreign advisors in shaping his economic policy, and appears to follow their ideological lens. The Najib administration has worked hard to conform to external orthodox expectations, with the hope that this will attract capital and strengthen Najib himself. Following the right–wing Margaret Thatcher who nearly doubled England’s VAT from 8 to 15%, Najib believes that the GST as a needed measure to assure that those with capital can drive the economy. He argues that the GST will increase GDP growth, although the more common pattern is an initial slowdown in an economy. He has indicated that the GST will rise to 10% in the coming years. He has coupled the introduction of the GST with a promised reduction in the corporate tax rate next year – fitting this neo-conservative policy paradigm.

This Thatcherite view of economic growth is not going down well at home. Najib is increasingly perceived as taking from everyone but giving breaks to a few. This perception reinforces the perception that his government is for the rich, not the struggling middle and lower classes. This image is enhanced by the reported wealthy lavish lifestyle of Najib and his immediate family. As Mahathir’s nationalist campaign against the premier has gained traction, Najib has been quietly portrayed as appeasing foreigners at the expense of Malaysians.

One irony of the GST is that it is being introduced at one of the weakest points in Najib’s tenure. His leadership is currently tainted with arguably the worst and most expensive corruption scandals in the country’s history, with a number of these (notably 1MDB) negatively affecting the country’s financial credibility and revenue position. Concerns have also been raised about public debt. His premiership has spent (and borrowed) the most money to shore up his political support, reflecting his insecurity as a leader. There is a genuine need for more money in government coffers, but public confidence in how it will be spent is low. There is even lower confidence in Najib’s leadership over the spending.  Najib’s efforts to win foreign investor support by introducing the GST is not gaining the ground he expected.

Questions of Competency: Flawed Implementation

Despite the political criticism surrounding the GST, there are strong supporters of the measure, who see the tax as part of the modernisation of Malaysia’s taxation system and place less emphasis on the transfer of the tax burden. They see this as a needed and justified reform. They argue correctly that good implementation of a GST can indeed ameliorate the most serious socio-economic effects of a GST, especially if these measures are coupled with other policies that widen the social safety net. Yet, this is not what has happened to date under Najib’s administration of the measure. In fact, as noted by UMNO veteran politician and former trade minister Rafidah Abdul Aziz, the problems in GST implementation are serious. This is arguably the most damaging for Najib, as he is the minister in charge of finance.

The administration was given eighteen months to prepare for GST. Every country that implements the tax has teething problems, but Malaysia’s problems go beyond the norm. Almost one month after the GST was introduced, Malaysians still do not fully know what is or isn’t taxable. As the parody Cantonese song by Eugene Chung reveals, confusion reigns. A proper list of zero-rated and exempt items was not circulated before implementation and even now (one month later) there are contradictory reports. Inadequate preparation was spent on educating the public and communicating the tax to the public. The public relations campaign concentrated on shoring up support for the tax itself, in a RM2 million cartoon campaign, rather than engaging businesses and citizens on the fundamentals of the GST.

The citizen education effort was hampered by delays in settling the list of items, which were being negotiated and changed in the days prior to the GST introduction. These negotiations, behind closed doors and without public accountability, have contributed to Malaysia’s list of zero-rated and exempt items not conforming to international standards, a dimension that has added to the confusion over the GST itself. Questions are also being raised about who was able to secure exemption and why, given the anomalies. The persistent debate among ministers in the government itself over who has to pay what, in areas such as phone charges, highlights the unresolved mechanics of the GST.

The public was not properly brought into the GST implementation. The lack of adequate public consultation on the GST is evident with the confusion over the ‘service charge,’ a measure that companies have used to provide compensation for workers but has been interpreted as ‘services.’ Debates have addressed whether the service charge should be subject to the 6% GST. The problem is not just about the service charge itself but the way in which many companies pay their employees, as they have used the ‘service charge’ to keep wages low. The public (including businesses) is confused on what is to be paid and why.

This is compounded by a lack of understanding in some of the administrative departments themselves. When citizens and businesses call the Custom’s Department’s hotline for answers, they are not getting the answers they need. There is often general knowledge on the line, but there are difficulties in getting answers to technical questions, especially from Malaysians who do not speak Malay. The training and preparation to handle the public enquiries could have been improved, as this has contributed to frustrations. Questions are being rightly asked whether the Customs Department is the right collecting body, or whether the collection might have been better served by coming under Inland Revenue.

Legitimate concerns also have been raised about implementing GST at this point of time, when the region’s economy and Malaysia’s economy have been slowing down. Similar issues have been raised about coinciding the GST with rises in transportation costs.  The government’s introduction of the policy did not coincide with any meaningful measures of offset the burdens on citizens. This timing of the policy introduction appears not to have been assessed holistically.

The flawed implementation has raised fundamental questions of preparedness. Najib has claimed that studies were done to assess the GST. These studies have not been properly shared with the public, or debated in parliament. One alleged study is based on year 2000 numbers, using fifteen-year old projections to analyze the impact of the GST. It is little wonder there are comprehension challenges. There appears to be a deficit in studies looking at important questions associated with the GST – the impact on small businesses, the impact on growth in the economy, the disparate effects on different communities, including women and East Malaysians, the relationship with other policies such as the fuel subsidy removal and distribution of BR1M payments. Importantly, there has been no connection of the GST with the social safety net or public discussion of the transfer of the tax burden on citizens.

To make matters worse, the implementation focus has been on punishment of those who do not conform to the GST. Rather than spend more funds on public education, allocations have been primarily allocated to enforcers, with fines already imposed on confused businesses. The structure put in place for payments for Malaysia’s GST is extremely burdensome, requiring payments twelve times a year rather than the international norm of quarterly. The penalties are harsh at RM100,000, including multiple high fines for each payment period and jail time. Practically, these many points of engagement with enforcement increase the potential for corruption and avoidance rather than encourage revenue generation and public cooperation.

Poor implementation of the GST already accounts for the negative effects on small businesses, with sundry shops, traditional retailers and small hawkers closing down. The media is full of stories of closures, with the overall numbers increasing as the October business compliance date arrives. Most of these closures are the product of poor communication about the GST itself. This dynamic has hurt local communities, who now have to rely on more impersonal outlets for their medicines and provisions rather than their neighbors.

From communication and consultation to preparedness and timing, Najib’s poor record in implementation has enhanced frustrations. Of all the issues of ineffective implementation, the one that is affecting Malaysians the most is the use of the GST to increase prices. While Asia as a whole experiences deflation, Malaysians are now facing the worst level of inflation in over three decades with unofficial estimates reaching as high as 20%. The inflation rate is a highly contested number in Malaysia as a result of how it is calculated, with many of the exempt and zero-rated items included, but the number that matters most is ordinary perceptions. This are sadly high. There are major discrepancies in the prices charged post-GST well beyond the GST levels. The Federation of Malaysian Consumers Association (FOMCA) has highlighted this regularly in reports, stating that this is ‘unacceptable’. From the fees of foreign workers to send remittances moving from RM8 to RM11 ‘due to GST’ to the sticker shock on groceries and food, often coupled the smaller portions, individuals and businesses alike are struggling to deal with this more expensive reality. Some of the price increases are due to higher inputs and relatively low profit margins, but there are many incidents of companies taking advantage of the GST to increase profits without effective oversight by the government. The Najib government is ultimately being held responsible. The GST has translated in a loss of support for Najib on multiple fronts.

Each bill, each charge, each fee all at 6% or above are reminding Malaysians of their contributions as citizens and putting Najib into the spotlight. Views of government and governance and questions of rights and responsibilities are changing. Increasing taxes in Malaysia historically served to provoke rebellion in 1895 in Pahang, 1915 in Kelantan, 1929 in Terengganu and more. Time will tell whether Najib’s GST will have a similar response, but the reality is that one month after the GST implementation the grumbling has gotten louder, protests over taxation and governance have started, and the GST has become the main policy issue of Najib’s tenure. In contrast to the flexibility and increased opportunities the introduction of indirect taxes usually provide for leaders globally, the GST has become a problem for Najib and this problem is only likely to intensify as the politics surrounding the measure grow more contentious.

Bridget Welsh is a Senior Research Associate of the Center for East Asia Democratic Studies of the National Taiwan University where she conducts research on democracy and politics in Southeast Asia.