Malaysia Practises KorekEconomics


June 12, 2017

Malaysia Practises KorekEconomics (Dig-Economics)

by Rais Hussin Mohamed Ariff

http://www.malaysiakini.com

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Finance Minister Najib Razak–The Proponent of KorekEconomics

COMMENT | The history of taxation is synonymous with the rise of the state. When kings and warlords could not go on plundering and pillaging the people, they switched to taxation to prevent the farmers and settlers from avoiding the punitive measures.

By soft pedalling on the extraction, the state was born. Mancur Olson, an economist, referred to the state as the evolution from the “stationary bandit”. Paul Collier, at Oxford University, spoke of the logic of using the state to collect rents systematically, rather than to steal sporadically and in a spurious manner too.

In Malaysia, under the current administration, the two concepts that separate stealing from collecting taxes have been collapsed into one. Both are two sides of the same coin.

By introducing the tourism tax, for example, it seems to be aimed at foreign tourists. Yet, does anyone remember “Cuti-Cuti Malaysia?” This is an ongoing campaign that encourages Malaysians of all ages to travel within the country.

Yet, the moment you do, any five-, four- or three-star hotels you stay in means you would incur an additional cost that will go to the current administration. This ranges from RM 20 per night in a five-star hotel to RM 5 per night in a three-star hotel.

Thus, it doesn’t matter if you are a high-end traveller or a low-end traveller. The administration of Prime Minister Najib Abdul Razak is there to extract a portion of your hard earned income that you have set aside for a family holiday.

Digging deep for ‘korek economics’

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In other words, in addition to the goods and services tax (GST), your income tax and potentially the service tax too, the government wants to put its hands into your pockets. And they will dig deep to get what they want, in what can only be known as “korek economics”.

“Korek economics” is not based on collection. It is driven by the degree to which the Malaysian economy has become ruined, or “koyak” in Malay, the lingua franca of Malaysia.

In 1MDB, Malaysians are now saddled with, allegedly, a debt in excess of RM44 billion. When the debt of other government-owned companies are taken into account, the debt is easily more than 80 percent of the GDP.

Not forgetting the on-budget and off-budget debts. Off budget debts are debts created through bond issuance by an entity wholly owned by the government, with guarantees by the government.

Debts like the astronomical ECRL project, which is priced at an inflated price of RM55 billion and funded through debts from China. With an estimated three percent interest rate, seven years deferred payment and 240 months of repayment instalment, it will cost the government or the taxpayers a whopping sum of RM99.6 billion!

If we use the East Coast passenger load to find the breakeven ticket price one way from KL to Kota Bahru, it will cost a whopping RM3,586 one way, the same price for a return economy class air ticket to Siberia, Russia. Get the point?

Not happy with the revenue drawn from GST, the Malaysian government has offered a mere 15 percent discount to more than half a million graduates who remain unable to pay back their PTPTN loan. This harms the ability of the graduates to live an ordinary life. Given the youth unemployment is three times the national average, they seem to resign to the fact that they are in hopeless zone.

Thus, the process to “korek” Malaysia has not merely happened in the heart of Kuala Lumpur, where a hole is dug deep, without any structures on it, but it is proliferating across the whole country. Welcome to Curi-curi Malaysia.


RAIS HUSSIN MOHAMED ARIFF is a supreme council member of Parti Pribumi Bersatu Malaysia (Bersatu). He also chairs the Bersatu Policy and Strategy Bureau.

 

Citizen Nades: Malaysians are suffering truth deficiency syndrome


June 8, 2017

Citizen Nades: Malaysians are suffering  truth deficiency syndrome

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by R. Nadeswaran @ http://www.malaysiakini.com

COMMENT | Every other day, the people of this country are jolted, shaken, stirred and dazed by the information put out by foreign news portals and newspapers. Like junkies hooked on opium, a good section of the population eagerly awaits the next fix via the Internet.

From the extravagance in the casinos in the United States running into millions to the six-figure ringside seats for a boxing match from allegedly stolen Malaysian funds, we have heard it all. But has there been an explanation by the parties involved?

The discovery of cash in the millions at the homes of officials of the Sabah Water Board made the transfer of RM2 million into the account of an unemployed housewife child’s play. Has anyone explained?

How would you describe such overindulgence? Crazy or madness or insanity? Yet, these people whose hands are tainted continue to lead lives, living up with the Joneses and pretend as if nothing had happened.

To the average Malaysian wage earner whose taxes have been used to pay for such opulence, there’s cause to be concerned. Not that there is no evidence to proceed.

From across the Causeway, came some dribs and drabs, if pieced together would give us some inkling into this whole fiasco and the key players and perpetrators who should be brought to book.

The trial of banker Yeo Jiawei last year revealed the many fears of that had been previously allayed and dismissed by our leaders. Following coverage of the trial through various media, it is now apparent that someone had put his hands in the till of what was supposed to be our sovereign fund – 1Malaysia Development Bhd (1MDB) and its then subsidiary, SRC International Ltd.

Yeo, described in court as former BSI banker for 1MDB, said in open court that the first structure he did for the Malaysian sovereign wealth fund was for US$100 million for SRC International Ltd. The scheme devised was for SRC, then a subsidiary of 1MDB, to invest in a fiduciary fund called Enterprise Emerging Market Fund (EEMF).

He told the court that SRC asked that EEMF extend a loan of US$100 million to a company called Blackstone whose beneficial owner is Eric Tan Kim Loong, an associate of Low Taek Jho or Jho Low. (We were to know later that Eric is allegedly Jho Low.)

Image result for jho low 1mdbThe Master of the Mother of Scandals–1Malaysia Development Berhad

From the box, Yeo said: “I asked what if the investment became zero and what would happen?” SRC then gave an indemnity that shielded BSI from responsibility should all the money be lost. Has anyone explained why SRC, a government-linked company, be giving such indemnity?

Low is also among the people named in civil lawsuits filed by the US Department of Justice, which alleged that more than US$3.5 billion was misappropriated from 1MDB.The latest episode of lawyer Muhammed Shafee Abdullah allegedly receiving RM9.5 million from the prime minister’s personal bank account once again reinforces the need for some plausible explanation.

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Najib Razak’s RM9.5 million Man–Muhammad Shafee Abdullah 

The quantum of fees paid in legal cases is something that is not tariffed. Like a willing buyer and a willing seller, the fees is agreed upon and no one can fault Shafee on the quantum. Like most other professions, there is always confidentiality with the client. But the mind wonders what kind of legal work would justify the quantum.

It is not in the least suggested that there had been any wrongdoing, but the timing of the payment leaves right-thinking Malaysians to ask if there was something sinister. Adding fuel to the already burning fire is the re-release of the exchanges of SMSes between Shafee and the prime minister immediately after the murder of a Mongolian woman, Altantuya Shaariibuu.

There has been hardly any riposte from the alleged giver or the taker. By maintaining stoic silence hoping the issue will fade away is no longer an option. While generally Malaysians tend to forget easily, this issue will continue to haunt the government, the leaders, parties involved and above all, citizens who are quick to make up their own minds after reading such reports.

These reports can be easily and summarily dismissed as “rubbish” or “one-sided” concocted by those who have axe to grind with the government. But when details including cheques and bank statements are thrown in for a good measure to support such accusations, it becomes a different ball game altogether.

Foreign conspiracy?

Malaysians are suffering from a disease called the truth deficiency syndrome. This has certainly been vindicated by the revelations in the court proceedings and what has been reported in prestigious and credible newspapers like the New York Times, the Financial Times and the Wall Street Journal.

At the height of the release of the findings of the Public Accounts Committee hearings and the related Auditor General’s Report last year, no effort was spared to paint a picture which depicted otherwise. So many other issues have been exposed. Has there been any response?

First, there was this accusation of a foreign conspiracy to overthrow the government; then we were told that the Western media is giving the wrong picture by publishing false reports; and there were even preposterous claims that the West was jealous of the progress made by the government.

Some may have accepted a “Yahudi” (Jewish) or “Western” plot to de-stabilise the government. But with advent of the Internet and instantaneous communication, like-minded citizens have dismissed these as mere propaganda for political expediency.

The problem is that no one in the officialdom comes forward to address the claims. Usually, they are third parties, “hound dogs” or minor officials who come to the fore, making valiant but yet disastrous attempts to allay the fears of Malaysians.

Banning newspapers and blocking websites is not even a solution. Sarawak Report, Malaysian Chronicle, OutSyed the Box and other portals have been blocked, but one does not need a degree in rocket science to get around this.

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Who’s Who in RoguesLand led by the Notorious Malaysian Official No.1–All Alive and Hearty

It has been said before and it is worth repeating: The people must have trust and faith in the government. For this to happen, it must be open, transparent and accountable to the people.

Mistakes have been made. Misinformation has been fed. Laws have been broken. Punishment must be meted out. Put simply, the people have not been told the truth.

Turning a deaf ear to the issues that have and will continue to emerge does not bode well for the government, the prime minister and the cabinet. As more and more dirt continues to be unearthed, it will come a time when any government announcement will be treated with contempt.

The government must look to the future and that starts with coming clean on this whole 1MDB issue which has had tongues wagging – correctly and incorrectly – for the past three years.

Only the truth will help to re-build our country to be a united nation. Perhaps, an amnesty programme will help the emergence of the truth which will put an end to all the politicking and other issues that are distracting us from achieving our goals.


R NADESWARAN is an award-winning veteran journalist who writes on bread and butter issues with one agenda – a better quality of life for all Malaysians irrespective of colour, creed or religion. He can be reached at: citizen.nades22@gmail.com.

Thank You, Prime Minister Najib Razak for more 1MDB Financial Mess


May 4, 2017

Thank You, Prime Minister Najib Razak for  more 1MDB Financial Mess

By Stephen Ng@www.malaysiakini.com

The collapse of a RM7.41 billion deal to develop Bandar Malaysia is a clear sign of bigger problems ahead for Prime Minister Najib Abdul Razak and the state investment fund, 1Malaysia Development Bhd (1MDB).

Even Moody’s said that 1MDB’s agreement to resolve a debt dispute with Abu Dhabi’s International Petroleum Investment Co (IPIC) may not be the end of the tunnel, as market sentiment depends largely on how 1MDB will settle bond payments in the future.

Now, with the latest development on Bandar Malaysia, we know we are in deeper mess as the debts would have to be paid by Malaysian taxpayers.

According to the Wall Street Journal, despite 12 extensions were given to the consortium, the Chinese government had refused to authorise the investment by the China Railway Engineering Corporation to acquire 60 percent stake in Bandar Malaysia on the basis that “the 1MDB fund hasn’t published financial statements for 2015 or 2016, so its current financial situation is unclear”.

This is seen as a slap in the face of Najib, who had recently visited China and took home what he calls “big investments”.

The initial announcements included a RM55 billion East Coast Rail Link (ECRL) project which was revealed later as nothing but a 20-year low-interest soft loan by the Export-Import Bank of China (Exim) and the main contractor would be China Communications Construction Co.

While China may see it as taking money from the left pocket to put into the right pocket (at least in my opinion), Najib has incurred another major debt of RM55 billion.

The noose is tightening

Najib, who has been in the middle of the storm since the US Department of Justice (DOJ) filed a civil suit against several individuals to seize assets worth more than US$1 billion last year, may find it hard to hold his head up after the deal did not materialise.

According to the Wall Street Journal, the US authorities intend to file criminal charges against son of a Malaysian tycoon, Jho Low, who is a prominent figure in one of the biggest civil lawsuits filed by the DOJ. We will be hearing more of this in the near future.

The US DOJ claimed that a sum of RM2.6 billion, which had allegedly gone into Najib’s personal accounts, originated from the 1MDB fund. Based on the DOJ’s investigations, there is no Arab prince in Najib’s fairy tale story.

In the suit, he was dubbed the Malaysian Official No 1 (MO1), which later Minister in the Prime Minister’s Department, Abdul Rahman Dahlan (photo), announced to the whole world that MO1 referred to Najib.

At the moment, PKR lawmaker Rafizi Ramli is exposing alleged leaked documents that have since been blocked by the Malaysian Communications and Multimedia Commission (MCMC), which are said to be related to the money trail of SRC International. This could further implicate Najib in the court of public opinion.

Although Attorney-General Mohd Apandi Ali claimed that Najib was unaware of the amount of RM41 million banked into his private bank accounts, the evidence unearthed by international investigators who are on the money trail will put Najib in a tight spot, especially since the 1MDB scandal has reached international notoriety.

According to the latest Financial Times report, Italy is joining the fray as the 10th nation currently investigating the allegations of insider trading linked to the 1MDB scandal. The other nations include the US, United Kingdom, Switzerland, Luxembourg, UAE, Hong Kong, Thailand, Singapore and Australia.

The failed TRX City deal would have been Najib’s final major milestone in the 1MDB rationalisation plan. Things are certainly not working out well for Najib, as it is obvious that not even the Chinese government thinks the investment was worth the consideration.

Bigger headache for 1MDB

Now that the deal has been called off, Najib and 1MDB are left in the lurch on how to explain to all Malaysians about the final settlement of the debts owing to the IPIC.

Finance Minister II, Johari Abdul Ghani has gone on record citing a letter dated August 11, 2016, from the Registrar of Corporate Affairs, which he claimed stated that Aabar Investment registered in the British Virgin Islands (BVI) belongs to IPIC.

However, it is strange that the letter was not used to defend 1MDB’s case filed by IPIC in the London Court of Arbitration. Despite calls by several people, including Rafizi, to publish the said letter, neither Johari nor Najib had attempted to clear the air. The truth, after all, could not be told.

Even if the letter is published, it does not absolve either 1MDB or Najib, as the Minister of Finance, of any wrongdoing, since the money had been transferred to some dubious company registered in the British Virgin Islands.

The fact that 1MDB will have to pay the Abu Dhabi state investment firm US$1.205 billion in two equal payments on July 31 and Dec 31 clearly shows that the RM3.51 billion paid to the dubious company registered in BVI had gone unaccounted for. Yet, the Malaysian government has done nothing to recover the money from the Aabar Investment (BVI).

For this reason, most Malaysians no longer have confidence in the Najib administration, since he has never been able to provide any concrete explanations since the 1MDB scandal came out into the open. In the arbitration, IPIC had, in fact, said that it has no links to Aabar BVI.

1MDB claimed that it will pay the debts by selling off its investment units in Brazen Sky Ltd, but even on that, former deputy prime minister Muhyiddin Yassin has asked, “Who is the buyer of these investments and for how much? Does this investment unit actually exist?”

It is because too many lies have been told that Malaysians are becoming very sceptical about everything said by Najib or his ministers.

It is also interesting that both the Public Accounts Committee (PAC) and the Auditor-General’s Department have not started looking into the allegations made by Rafizi, even after fresh evidence surfaced regarding the mentmoney from SRC.

Whatever it is, we are really in deep mess and you, Najib, are fully responsible for it. The problem could have been solved much earlier.

STEPHEN NG is an ordinary citizen with an avid interest in following political developments in the country since 2008.

Najib Razak’s Baloney Economics


April 22, 2017

Najib  Razak’s Baloney  Economics

by TK Chua

http://www.freemalaysiatoday.com

Since when is inflation not due to bad policies, poor macroeconomics management, inefficiency, massive corruption and loss of confidence? Sorry, are there new economic theories emerging?

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A Political Baloney

Why single out some external factors igniting inflation when these factors are also applicable and affecting other economies?

Malaysia is a net oil exporting country, but global oil prices have now become a major factor accounting for our high inflation. Can we not see the baloney and the irony here? What about countries with no oil to begin with? Would they not be affected by high or low prices of oil as well?

The “Trump phenomenon” is a uniform factor likely to affect most countries. Why should Malaysia suffer more than others if indeed Trump has caused reverse capital flows and currency realignments globally?

The ringgit has depreciated not just against the US dollar, but also against the Singapore dollar, Chinese Renminbi and Thai baht, just to name a few.Malaysia’s inflation is unprecedented in recent months. When global oil prices were more than US$100 per barrel, did Malaysia’s inflation reach 8%?

I hope some of us have heard of this statement before, “Inflation is always and everywhere a monetary phenomenon.” The primary cause is always too much money chasing after too few goods.

The Shrinking Ringgit

We can argue and debate whatever we want, but inflation is invariably caused by the following factors:

First, high taxes and unproductive use of tax money. I have lived in this country long enough to know that the GST is a major culprit of inflation, causing prices to escalate higher than the GST rate due to our half-baked implementation.

 Second, when there is too much fat or unproductivity in the economy. When there are sectors that get the bulk of the income/subsidies/wages for doing nothing, they cause inflation.

Third, when we have too many over-priced projects and contracts. When contractors and promoters get too much profit, the people must pay for it through higher prices. There are no free lunches in this world.

Fourth, when government borrows and spends too much. Fiscal deficit is a given in Malaysia, regardless of the state of the economy. Borrowing to finance deficit from inflationary sources could make the situation worse.

Fifth, when policies favour the cronies. When we have massive distortions and profiteering due to collusion and complicity, prices will escalate. Prices of homes are high because developers have always got what they wanted at the expense of the buyers.

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Najib Razak’s Non-Bumiputra Crony

Sixth, when foreign monies are allowed to pour in indiscriminately. When we have too much foreign money going into our real estate and property sector, it is almost certain the locals, including the middle class, would not be able to compete. Probably, the purchasing power of 5% of rich Chinese is bigger than the whole middle class of this country.

Seventh, we have too much “bad news”. It is almost a daily affair for us, hearing of mega deals going wrong. I must say Malaysia is a strong young man but has subjected himself to constant drugging, drinking and smoking. Sooner than later, something must give.

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International Rogues Gallery

This is the essence of lack of confidence being manifested in our country today. I believe the ringgit is suffering not just because foreigners are pulling out. I think many high net worth Malaysians too are hedging to protect themselves.

We owe ourselves the responsibility to look at issues confronting us honestly and objectively. Even if there are external factors affecting inflation, we must still avail ourselves macroeconomic tools to mitigate them.

Have we resolved issues that are likely to restore confidence? Have we reduced the distortions and inefficiency prevailing in the economy? Some have argued that Pakatan Harapan-controlled states, namely Penang and Selangor, are also suffering from high inflation and hence, it is something to be accepted.

I think this is a “political” argument devoid of economic logic and reality. Penang and Selangor are subjected to the same economic and political environment as the rest of the federation. They are not exempted from the effects of bad policies or the erosion of confidence arising from bad policies.

TK Chua is an FMT reader.

 

Najib’s Criminal State of Mind


March 8, 2017

Najib’s Criminal State of Mind

by Manjit Bhatia

http://www.newmandala.org

Image result for Najib Razak the ciminalThe Face of a Troubled Prime Minister of Malaysia

The Jong-nam case is serious — on legal paper. His killing hasn’t caused Beijing’s eunuchs a twitch. But Najib is using the assassination to his own political ends. It’s what dastardly regimes or political leaders in trouble or on the people’s noses would do — exploit an awful criminal matter to cement their illegitimate and immoral positions.    

Malaysian PM Najib Razak is using the assassination of Kim Jong-nam to deflect heat from ongoing scandal and economic slowdown ahead of scheduled elections, writes Manjit Bhatia.

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The Man from Pornorogo now Malaysia’s Deputy Prime Minister

It’s comical when Malaysia’s Deputy Prime Minister Zahid Hamidi demands that criminals backed by North Korea, China’s client rogue state, respect the “sovereignty” of his country’s laws. As Home Minister , in 2013, Zahid had lavished praise on Tiga Line, the outlawed Malay gangsters. He also called on police to “shoot first” if non-Malay thugs threaten or kill his fellow Malays.

Meanwhile, Police Chief Khalid Abu Bakar requested the same abominable Pyongyang “authorities” to extradite suspects in Kim Jong-nam’s assassination at Kuala Lumpur’s budget carrier airport on 13 February. Khalid’s lightning-fast move here isn’t surprising, seeking fame and kudos. Yet, when it comes to netting official corruption’s big fish, including corporate leaders, and independently investigating Prime Minister Najib Razak, he disinclines at every turn.

Strictly speaking, Malaysia has not a single independent institution. Instead, patron-client relations rule. Others call it patronage. Simple example: Khalid is subservient to Zahid who is subservient to Najib who holds Malaysia’s purse-strings as finance minister. This buys him allegiance and serious protection in a country racked by state-ordained corruption, cronyism and some of the worst forms of racism. What has this to do with the Jong-nam case? Everything. And just as well — Malaysia-North Korea diplomatic ties are flexing for bust-up.    

As baffling as the assassination was, it couldn’t have happened sooner. Malaysian elections are due mid-2018. Zahid and Khalid, like Najib, are hoping the matter of the half-brother of North Korea’s insane leader Kim Jong-un will grip Malaysians like a John Le Carre thriller. The state-controlled media is acting to orders of ensuring the case is lead news, 24/7. After all, Malaysians need distractions. Being a Muslim country — not an Islamic state,at least not yet — the visit of the King of Saudi Arabia this week has somewhat displaced the Jong-nam as the lead story, albeit temporarily.   

Interestingly, the North Korean Ambassador has had unprecedented scope in being seen to attempt to interfere in police investigations. Also curiously, Malaysian officials didn’t refute the Ambassador’s claim that South Korea and Malaysia were in cahoots, ostensibly to bring down the Jong-un dynastic regime. But when news outlets ran stories of a North Korean spy network operating in Malaysia, the episode moved from the bizarre to the whacky. Still, that’s exactly what Najib needs.

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Najib Razak–The Corruption Delivery Man

Problem is, the Jong-nam murder hasn’t absorbed Malaysians. They’re far more worried about their jobs future. Some factories have closed down; some others are moving offshore, to Vietnam, Burma and Bangladesh. The old ways of enticing foreign firms, via tax and other incentives, no longer work. These days China demands 99-year leases among its preconditions of investing in Malaysia. Like Singapore, Malaysia is struggling to establish anew its global competitiveness. For over a decade the international division of labor has shifted away from Asia’s first and second-tier ‘miracle economies’. 

Nonetheless, Najib boasts a high economic growth rate for the country. At 4.2 per cent GDP for 2016, it is significantly lower than 5 per cent in 2015. Between 2000 to 2016, average GDP has been 4.73 per cent. The jobs outlook is even bleaker. Official statistics put unemployment averaging 3 per cent; last year it climbed to 3.6 per cent, with 3.5 per cent in 2015. Most credible economists, even the market type,  know Malaysia’s official numbers are as rubbery as North Korea’s or China’s.

There’s no data for job participation rate in Malaysia. Yet it makes a better unemployment indicator, regardless or perhaps especially given the Najib regime’s propensity to embellish everything, including statistics. There’s sufficient anecdotal evidence to suggest joblessness is far higher among Malays and Indians, the groups increasingly engaged in crime. There’s also extensive under-employment among Malays, Chinese and Indians. And Malaysians are struggling on a single income, where the ‘minimum’ monthly wage of MYR900 ($US200) is scarcely enforced.

Exacerbating Malaysians’ worries is inflation. At 3.2 per cent, it spiked after the introduction of a consumption tax. In Kuala Lumpur alone, credible estimates put inflation at least twice the “official” number. At 6 per cent GST, Malaysia was never ready for it, in the structural sense. Add the measly value of the Malaysian ringgit, inflation hits close to double-digits, in real terms, according to some investment banks’ research. Meanwhile, Najib will maintain taxpayer-funded personal income subsidies, mostly for the Malays, and he’ll boost ‘free money’ ahead of next year’s polls.

If Bank Negara, the central bank, isn’t manipulating the low currency, then it’s a ‘market godsend’ for this heavily export-dependent, natural resource-based economy. Yet after two years of the collapsing ringgit, Malaysia’s competitiveness hasn’t improved. Its budget deficit and national debt are ballooning. Najib is banking on a commodities boom as the manufacturing base is routed by global forces. Take the long-failed local auto industry: Proton is effectively sold off to cheap China money. Selling the farm is the last resort of a scoundrel. But don’t expect Najib to sell the family jewels.

Blockbusting official corruption remains front and centre in Malaysian minds. Najib’s sudden great wealth humiliates Malays and irks the others. Nobody believe a rich Saudi or the Saudi state had “donated” $US1.4 billion to Najib; almost everyone, including the Malays, believe it was siphoned from bankrupt state firm 1MDB – brainchild of its chairman, Najib. And those proceeds miraculously wound up in Najib’s personal bank accounts.

The 2018 polls should humiliate Najib but it won’t defeat him or the ruling UMNO party. Many Malays feel especially aggrieved at how easily the ruling class has enriched itself while Malay villagers eke out a meagre living from plots of land Najib has ‘given’ them. No similar generosity has been extended to non-Malays. Some Malays agree this is unfair; most, however, subscribe to Machiavellian politics. But it’s Malaysia’s banal inter-racial harmony that’ll suffer the more as a consequence.

The Jong-nam case is serious — on legal paper. His killing hasn’t caused Beijing’s eunuchs a twitch. But Najib is using the assassination to his own political ends. It’s what dastardly regimes or political leaders in trouble or on the people’s noses would do — exploit an awful criminal matter to cement their illegitimate and immoral positions.    

 

 

Malaysia: Impact of defunding Public Universities


January 24, 2017

Malaysia: Impact of defunding Public Universities

by Dr. Lee Hwok Aun
Published in The Edge, January  16, 2017

Malaysia’s public universities are headed for troubled waters and it is unclear whether our policy makers and executers are even on the lookout. The university rankings business is a debatable one, but I bring it up here because it is the government’s ultimate performance benchmark, and recent developments underscore the detachment of officialdom from the institutions’ woes.–Dr. Lee Hwok-Aun

Image result for Defunding Malaysian Public UniversitiesMalaysia’s Finance Minister Najib Razak–Presiding over a soon to be financially insolvent nation

Malaysia’s public universities are headed for troubled waters and it is unclear whether our policy makers and executers are even on the lookout. The university rankings business is a debatable one, but I bring it up here because it is the government’s ultimate performance benchmark, and recent developments underscore the detachment of officialdom from the institutions’ woes.

The University of Malaya’s rise to #133 on the QS World Universities score sheet in 2016, its best position ever on this rankings scheme, was greeted on campus with surprise, nonchalance, and a dash of despair. The sentiments are distinct from previous years. When UM inched up the rankings, from #156 in 2012 to #146 in 2015, these small and steady gains brought relief, and a bigger hop from #167 in 2011 to #156 in 2012 infused a sense of accomplishment. Research grants were quite abundant, there was support for internationalization, for recruiting and retaining talent. Universities were basically supported, we seemed to be doing things better; improvement in the rankings made sense.

Then came the funding cuts. Federal budget allocations for universities were slashed by 12% in 2015, 15% in 2016, and 19% in 2017. UM took the biggest hit in 2016, when it suffered a 27% shortfall from the previous year. And here lies the trigger of despair. This defunding spree, coinciding with a major leap in the rankings, might be taken as vindication, and perhaps embolden further budgetary constriction.

The government will be perilously mistaken to do so. Continual aggressive defunding brings three significant deficits on Malaysia’s public universities.

First, a personnel deficit. Severe fund-slashing compels severe cost-cutting, shock therapy induces desperate measures. Contract staff are one of the first on the chopping block because the funds for this specific category of employees have dried up. Many contracts have not been renewed, and they are not substituted with allocations for part-time instructors or new recruits. Financial dispensability, however, does not equate with importance to core activity and service. Numerous academic departments count on contract academic staff to teach core courses and produce research and publications.

As contract staff are ushered out, the same workload gets distributed among the remaining staff, increasing their burden and contributing to the second deficit, in morale. Academics will likely see burdens increased, while concerns toward the funding cuts are typically dismissed by invoking the seemingly non-negotiable policy of reducing public subsidization of university expenditure. The Higher Education Blueprint 2015-2025 outlined new funding formulae, with performance-based allocations and per student funding as appealing new features. This formulae is to be rolled out on a “gradual”, “gate-staged” basis.

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ISEAS-Yusuf Ishak Institute Senior Fellow, Dr Lee Hwok-Aun

“Performance funding” is especially contentious. If fixated on numbers and not adequately anchored to the public interest and long-term objectives, as seems to be the case, there is every potential for the system to be gamed, for example, by lowering academic rigour to boost completion rates and student satisfaction, or pursuing quantity over quality of research. Given these complexities, one would expect the policy to be agonizingly deliberated, and gradual and systematic if implemented.

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But Universiti Malaya and Universiti Kebangsaan Malaysia have already, for 2016 and 2017 respectively, been administered huge funding cuts of 27% and 31%. Why? Enrolments have not fallen precipitously, nor have the universities massively scaled down operations. Have they performed so badly? The lack of coherence and transparency in the targeting of funding cuts, compounded by drained research grant reservoirs, are disconcerting, and cannot be good for morale in the academic community.

Some initiatives with good potential risk derailment. At the University of Malaya, to allow for academics to play to their relative interests and strengths, different career tracks – focused on research or teaching – are also being rolled out. But in the hasty pursuit of extracting more output from less resources, research track targets have been made frighteningly difficult to hit. Few select that option, and some – the more diligent, productive, conscientious ones – have been forced to take it against their wishes, to the detriment of their morale.

What of the next generation of academics? Policy brims with rhetoric of talent development, and reference to the Higher Education Talent Roadmap, but the Malaysian approach diverges from the practices in recognized institutions. Globally leading universities excel by attracting talent, then trusting them, through their dynamism, creativity and self-motivation, to research, teach and contribute to public knowledge with light monitoring. Malaysian universities are increasingly inclined to do the opposite – micromanaging rewards for formulaic outcomes, distrusting the industry and capability of staff, monitoring for compliance and resisting change, which seriously risk repelling and losing talents that are drawn to institutions that safeguard trust, autonomy and freedom.

Which brings us to a third deficit that can grow as public financing shrinks: our international profile. Malaysia’s public universities, having made inroads in internationalization, could see these gains reversed. The public universities are subject to the public services employment scheme, including the rule that a non-citizen cannot be hired on a permanent basis. All non-Malaysian academics are on contract, predominantly short term. The more contracts are not renewed, the less international our profile. Will Malaysia’s public higher learning institutions, especially the research universities, become more domestic, less global? That might happen, and if so, our presence on the world academic stage will fade. A specific recruitment scheme for public universities, promoting secure employment of international academic staff, is worth considering.

The presumption that rebalancing of university funding sources and reducing of government subsidy necessitates budget cuts also warrants scrutiny. These can be achieved by maintaining the federal allocations, while facilitating growth in other sources. There is currently a baffling downward spiral and multiple moving targets. Both the share of government subsidies and the overall expenditure of universities are falling – why?

Suppose a university currently spends RM100 million and receives RM90 million from government, in line with the current 90% subsidization rate. Expenditure of RM120 million in ten years would be a reasonable projection. If the government share declines to 70%, then in ten years – a “gradual” rollout as the Blueprint stipulates – the government’s contribution would amount to RM84 million, or basically holding steady, not dropping steeply.

Will the government assess the impact of the funding cuts and reconsider the policy – at least its pace and severity? This will take courage, since reducing public funding has been high on the higher education agenda for a decade, and the government defends the deep cuts apparently as a mark of its resolve.

But at the rate we are cutting funds, it will be impossible to avoid deficits in personnel, morale, and international profile.

Dr. Lee Hwok Aun is Senior Fellow at ISEAS-Yusuf Ishak Institute.