Malaysian reform dynamics


December 8, 2018

Malaysian reform dynamics

 

by  Andrew Harding, NUS

http://www.eastasiaforum.org/2018/12/06/malaysian-reform-dynamics/

The pattern of political reform following a regime change is usually predictable: the reformers gain popular support, make changes to the constitution and then use constitutional politics to achieve their ends. But Malaysia’s current period of political change is straying far from this pattern. Instead, Malaysia is proving that peaceful transition and reform may be possible without debates about constitutional amendment.

 

Image result for asri and mahathir

 

The new Pakatan Harapan (PH) government — a coalition of four political parties — was unexpectedly elected to power on 9 May 2018, replacing the incumbent Barisan Nasional (BN) coalition government. Much of the PH’s current political leadership team were part of the BN’s largest member party and now discredited United Malays National Organisation (UMNO), including a former prime minister, two former deputy prime ministers and a slew of former ministers and members of parliament.

The election also revived the political career of former and now incumbent Prime Minister Mahathir Mohamad. Mahathir had gone down in history as one of the strong men of Asian authoritarianism. His recent campaign replaced this image with one of a moderate democrat who believes in a free press, a two-party parliamentary system and the rights of citizens.

Mahathir’s campaigning against his old party carried enough rural Malay voters into the PH fold to overturn the BN’s dominance. Voters were appalled at the level of corruption in former prime minister Najib Razak’s government. The contrast was stark between voters’ own economic struggles — including the extra burden of a goods and services tax — and the wanton expenditure of leaders like Najib and his wife.

While the PH have not yet changed a single word of the constitution, it has already redefined the state as one based on good governance, the rule of law, parliamentarism and the separation of powers. The PH has proposed signing the international human rights covenants (except for ICERD), abolishing the death penalty, and addressing the political and legislative autonomy of East Malaysian states Sabah and Sarawak.

The question now is whether the reform process is politically sustainable and can be constitutionally entrenched.

One challenge facing the PH coalition is that any ordinary legislative changes — let alone constitutional amendments — can easily be blocked in Malaysia’s upper house, which is still controlled by senators appointed by the former BN government. The upper house has already rejected a bill to repeal the Fake News Act that was rushed through parliament by Najib before the election to restrict criticism of the government regarding the 1Malaysia Development Berhad (1MDB) scandal.

There are fears that the PH coalition may simply revert to the Malaysian dominant-coalition stereotype. These are partly fears that the leader of the People’s Justice Party Anwar Ibrahim — the largest party of the PH coalition — will assert what he sees as his entitlement to the prime-ministership.

There are also worries about factionalism within Anwar’s party, quite apart from tensions between the four coalition partners. As matters stand, Mahathir is supposed to hand over to Anwar within two years of the election. At 93 years old, Mahathir could hardly plan to go on longer than that, whatever the politics dictates.

For the time being at least, the reformers are in charge.  Attorney General Tommy Thomas and Legal Affairs Minister Liew Vui Keong are implementing the PH’s campaign promises. These include the good-governance reforms that Mahathir wryly suggests would not have been so extensive had the PH expected to win the election. Bringing those guilty of corruption to account is the major priority at this point, and ensuring that problems such as the 1MDB scandal will not occur again is also high on the agenda.

Despite the flurry of reforms, announcements, prosecutions and policy changes since the election, most legal changes — such as abolition of the death penalty — remain to be implemented. These depend on parliamentary arithmetic.

But over the next two to three years, as current senators leave office, there will be opportunity for the PH government to gain much more control over the reform process. These reforms may well involve changes to the Senate itself, which has far too many appointed members and no longer fulfils its original purpose of protecting states’ rights. This of course assumes that PH will remain stable and reform-oriented.

Entrenching the reforms in the longer-term may also be a challenge. While an extended period of constitutional debate would be beneficial for the somewhat ad hoc current reform proposals, politics can change quickly. This could side-line reform and reemphasise ethnic and religious issues. The PH still has to establish its credentials with the majority of Malay voters. At the same time, Anwar has consistently advocated democratic reforms and suffered in jail as a result of overweening executive power.

These reforms are so long overdue that many of them could become fiats accomplis, or matters of consensus rather than contention. For the moment, the further down this road the reforms go, the harder it will be to reverse them.

On Malaysian Education


 

On Malaysian Education

by Dr. Sharifah Munirah Alatas

http://www.freemalaysiatoday.com

There is no need to revamp our higher education system, because there is a system already in place. On paper, at least, the system is spectacular.

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Just look at the facts that we are regularly bombarded with. Five of our 20 public universities have attained research university status. Five have also been given autonomy in administration, human resources, financial and academic management and student intake.

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This move, supposedly is to encourage excellence among our institutions of higher learning. Several initiatives have also been undertaken by the federal government in the past, including the establishment of Malaysian university branch campuses in other countries.

There are lofty plans to create more Malaysian Chairs at universities abroad and to improve the world ranking of Malaysian universities.

Currently, there are seven foreign universities with branch campuses in Malaysia. Part of the system too is that a target has been set of 100 researchers, scientists and engineers (RSE) per 100,000 workforce by 2020.

Also, the previous Malaysia Plan (10MP) had set a goal to improve the quality of academic staff in public universities, by increasing the number of academics with PhD’s. The ambition is to have 75% of academics with PhD’s in public universities.

Last but not least, we are proud of Setara, MyQUEST, MQA and numerous acts and accreditation agencies that allegedly regulate the provision of high quality public and private higher education in Malaysia.

What is all the fuss about our education system then? Why was there an uproar, and subsequently an increasing disappointment among parents and other citizens’ groups with the appointment of Maszlee Malik as our minister of education?

I think many older Malaysians have an intuitive sense about the reasons for the apparent under performance of our education system. However, to date, there has not been a critical and decisive articulation of what has really failed.

It is not the system as much as the mind, the thinking and the lack of an awakening which have failed in nurturing this system.

Australia’s former Prime Minister Kevin Rudd hosted a dialogue with Dr Mahathir Mohamad last month at the Asia Society in New York. Mahathir responded to a question about what needs to be done to improve Malaysia’s education standard and how to inculcate noble values among children in Malaysia. His key answer was to increase the use of English as it is a universal language.

Although I am in full support of this, our education ministry must dig deeper. There has been so much (too much in fact) talk about adopting the Finnish system of education.

Minister Maszlee said Malaysia should focus on a learning system that is technology-centric, with an emphasis on the English language.  Agreed.

What I disagree with, though, is his far-reaching ambition for Malaysian youth to embrace multiple languages.

We cannot be fluent in our mother tongue, let alone English, what more a third or fourth language?

Dr Maszlee did make an intelligent point, however, when he said that we needed to further the “formative years” in a student’s learning cycle by focusing on gathering information, critical thinking and “bringing out the humanity in them”.

These are indeed very noble values that all education policies should embrace. However, in what direction is the Education Ministry steering these goals? Was Maszlee actually conceptualising the need for future intellectuals? After all, Finland is known for it’s lively, rich and independent intellectual tradition.

The Finnish model

Five months since Maszlee’s statement about adopting the Finnish system of education, Malaysians are still in the dark about what that means and where we are heading. So, let me try to fill in the gaps.

Finland welcomes foreign students to study in Finland, in various fields, predominantly in forestry, information technology, green technology and medicine.

Part of the reason Finland is an attractive education hub is because of her low cost of living and the superior quality of Finnish universities in the global academic ranking system.

Also, in November 2017, Finnish Ambassador to Malaysia Petri Puhakka declared that his country was in talks with a few local public universities on possible collaboration “to enhance the education sector”.

Almost a year has passed since those talks, but Malaysian parents and educators have seen no such development in our public schools and institutions of higher education.

Will Maszlee ever articulate the essence of the Finnish system, which I believe to be it’s high regard for the intellectual.

Amidst these unanswered questions is a nagging, festering epidemic. Malaysia lacks a dignified pool of intellectuals in all fields of academia. We may have the PhD’s, the engineers, lawyers, doctors, MBAs and computer scientists, but knowledge of a certain subject or the possession of a degree does not make a person an intellectual.

The English philosopher Herbert Spencer had no academic qualifications but he was one of the leading intellectuals of his time.

What Malaysia needs are people who are not just servants of their own special interests (geopolitics, computer design, engine systems or sustainable development), but are dedicated to a larger responsibility.

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In many of Edward Said’s Reith Lectures, he eloquently defined the intellectual as “an exile and amateur whose role is to speak the truth to power, even at the risk of ostracism or imprisonment”. In Malaysia, it is more the norm to see academics and educators succumb to the lures of title, money, power or specialisation.

The intellectual

An intellectual is a person who engages in critical, honest thinking, research and reflection about society, and proposes solutions for its normative problems. When you gain authority, you become a “public” intellectual.

The object of intellectual activity is always related to the wider context of life and thought, penetrating into fundamental values and commitments. This is when an intellectual can become a game changer in our degenerative education quality.

Public university academics and Malaysian educators, on the whole, consistently encourage their students to study well so they can get better jobs and earnings.

Of course they are also told to “contribute to society”, “be a model citizen”, “help towards economic growth”, “be innovators in science and technology”, etc.

Platitudes, in my opinion. Many graduates will get good jobs eventually and they will earn comfortably. Even if lecturers do not tell them this, the majority of students are in institutions of higher learning because their goal is to enter the work force and contribute to the Malaysian economy.

If an intellectual was lecturing he or she would not be caught up with such platitudes. Here is an example of how an academic with intellectual attributes might conduct a class.

First, their mode of in-class instruction would not be a rehashing of facts and figures from the reading list assigned to students.

Second, only 40-50% of their lectures would involve audio-visual aides, especially for social science subjects. In a two-hour lecture, for instance, it is ludicrous to display 30-60 powerpoint slides (assuming a 2-4 minute display per slide) to lecture about the sociology of corruption.

I have witnessed such practices in an undergraduate lecture on media and mass communication in a Malaysian public university.

Third, audio-visual aides are exactly that—aides to assist in delivering the most important points and the fundamental theme of the lecture.

In a Political Philosophy class, one could have a few slides introducing the fundamental thoughts of Adolf Hitler, for instance, and key dates depicting his youth and early political career.

The lecturer would then proceed to relate the information on those slides with past, current and future trends in global geopolitics.

An intellectual would prefer this method because it highlights a certain level of consciousness and insight into vital problems. Universities in Malaysia must focus on the value of discourse in classrooms.

Lecturer-student interaction in a class of 30 students is still viable and more valuable for the development of the mind. After almost two decades as an academic,I have noticed that the trend of lecturers shying away from debate and discussions in a classroom is increasing.

Fourth, universities should be a breeding ground for the intellectual pursuit, the spirit of inquiry and the reverence of scientific and rational knowledge. If academics do not value this, how can we expect the students to develop such a tradition?

A step towards correcting Malaysia’s education woes would be to nurture the intellectual so we can have insight into the wider context of life.

Academics should instinctively direct their research to be relevant to society within the wider context of Malaysian life.

Academics should raise the standard and image of scholarship by abandoning the idea of publishing in order to get promoted.

An intellectual considers promotion a bonus, the key objective being a solution to the festering problems burdening society, be it racial, religious, political, social or economic problems.

* The views expressed are those of the author and do not necessarily reflect those of FMT.

Select Committee makes 22 recommendations to deal with fake news threat to Singapore


September 20, 2018

Select Committee makes 22 recommendations to deal with fake news threat to Singapore

Singapore “has been and can expect to be subject to foreign disinformation operations”, the report says.

Image result for Singapore: Members of the Select Committee on Deliberate Online Falsehoods addressing media on Sep 20, 2018. (Photo: Hanidah Amin)

Members of the Select Committee on deliberate online falsehoods, (from left) Mr K Shanmugam, Mr Charles Chong, Dr Janil Puthucheary and Mr Pritam Singh. (Photo: Hanidah Amin)

 

Read more at https://www.channelnewsasia.com/news/singapore/select-committee-fake-news-online-falsehoods-recommendations-10739834

SINGAPORE: The Select Committee tasked to look into the problem of combating deliberate online falsehoods has made 22 recommendations to deal with the issue, saying in its report released on Thursday (Sep 20) that Singapore has “been the subject of foreign, state-sponsored disinformation operations”.

In the voluminous report, numbering hundreds of pages, the committee detailed the process through which it sought the views of industry players and the public, which include 170 written representations. Oral representations from 65 individuals and organisations were also heard during the eight-day public hearings in March this year.

During a media briefing on Thursday, Senior Minister of State for Transport and Communications and Information Janil Puthucheary said the committee, of which he is a member, is convinced that deliberate online falsehoods are a “live and serious threat” that puts Singapore’s national security at risk, based on the evidence and representations put forward.

Through these, it said the findings that relate to Singapore could be categorised into three observations: Foreign disinformation has likely occurred and can be expected to happen again, the country’s societal conditions make it “fertile ground for insidious ‘slow drip’ falsehoods that can cause long-term damage” and the region’s tensions and circumstances are a source of vulnerability.

For the first observation, the committee said the evidence showed that disinformation campaigns have been conducted by “various states”. It cited S Rajaratnam School of International Studies’ (RSIS) Dr Gulizar Haciyakupoglu who described some indicators of such information warfare conducted here, including an unnamed state’s use of news articles and social media to influence the minds of segments of the local population and to legitimise the state’s actions in the international arena.

It was also given a confidential briefing by a security agency which provided information that “Singapore has indeed been the subject of foreign, state-sponsored disinformation campaigns”.

READ: ‘Some indicators’ Singapore was target of information warfare recently, says academic

The report noted that besides disinformation campaigns, cyberattacks are part of a set of tools that external parties rely on to wage a kind of non-physical or “non-kinetic” warfare. And there have been a number of such online attacks against the country, including the one against healthcare provider SingHealth earlier this year, it added.

Reasons for why Singapore remains an attractive target for such disinformation campaigns were also fleshed out. They include the alleged availability of the means and tools for such campaigns in the region that can easily be turned against the country.

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“For example, some national security experts pointed out that cyber armies which have been deployed to aid sectarian or political agendas exist in several of our neighbouring countries, which can easily be repurposed and deployed against Singapore,” the report stated.

Insidious Nature of “SLOW DRIP” Falsehoods

As for the second observation, the report called out “slow drip” falsehoods as insidious to Singapore society given its multiracial, multi-ethnic nature. National University of Singapore’s Mathew Mathews was cited as saying that “low-level” falsehoods could raise tensions little by little. “Emotions may not be high initially, but falsehoods could make them stronger,” the report stated.

One example cited was the false news spread by now-defunct online site The Real Singapore, purportedly about a complaint by a Filipino family that resulted in a commotion between Hindu participants and the police during a Thaipusam procession in 2015. The story gained traction quickly and led to xenophobic comments online, the report noted.

Another instance cited in the report was the written representation by Prakash Kumar Hetamsaria, who related how another online site, All Singapore Stuff, posted a fake story about a new citizen who was purportedly disappointed with Singapore and thinking of giving up his citizenship, and used his picture to accompany it.

“The article was shared over 44,000 times. Mr Hetamsaria and his family, including his young daughter, were impacted by the xenophobic comments that followed. The falsehood hence also inflamed xenophobic and anti-immigrant sentiments in Singapore,” the committee’s report said.

Thirdly, the committee also received evidence on how Singapore’s regional context can contribute to its vulnerability to harmful falsehoods online.

READ: Strong trust in public institutions essential to combat fake news, says Select Committee

For one, societal fault lines run across national borders, it said. Nanyang Technological University’s Liew Kai Khiun was mentioned citing an example relating to the crisis faced by Muslims in the Rakhine state of Myanmar and how reports by local media on the crisis would attract comments on their social media pages refuting the reports.

“These denials appeared to come from Myanmar-based user accounts, and were accompanied by comments with Islamophobic overtones, triggering backlash from accounts that appeared to belong to Singaporean Muslim users,” the report said.

The spillover of tensions from the region into Singapore is also a cause for concern, and the committee cited media academic Cherian George’s study of hate propaganda as an example. Dr George’s study found that hate groups in the region and around the world “are far more formidable than anything we have needed to deal with”, and he cautioned that it would be reckless to assume Singapore would not be impacted by the religious and racial policies of its neighbours.

“Response must be multi-pronged”

Concluding that the phenomenon of deliberate online falsehoods is a “real and serious problem” here and around the world, the committee in its report said Singapore’s response should be guided by the core values and aspirations of its society.

To this end, it said that the response must be “multi-pronged”, such as addressing the capacity of people’s ability to discern falsehoods as well as supporting journalists and fact-checkers in their work. It should also look into supporting the wider digital ecosystem, particularly the role of technology companies, the committee added.

The response should also address the lopsided nature between the growing power of technology and the capacity of society and countries.

“The phenomenon and its problems demonstrate a growing gap between the power of technological developments and the capacity of societies and governments to deal with them,” the report said.

READ: Select Committee – tech giants need to be more accountable; new laws possible

The committee is also of the view that legislative and non-legislative measures are required and “there is no silver bullet”.

“While building the capacity of individuals and other stakeholders through non-legislative measures is crucial, these alone are insufficient to deal with the strength and serious consequences of deliberate online falsehoods,” it said.

That said, the committee is aware that government intervention requires calibration as falsehoods can appear in a broad spectrum of circumstances – from deliberately fabricated content to satire and parodies – as well as varying degrees of impact. Intervention should thus be calibrated to take these factors into consideration, it said.

It is also aware of the “valid and important” concerns involving the impact of such intervention on free speech, and proposed for “calibrated interventions and legal and institutional safeguards”.

With these in mind, the committee recommended 22 measures to achieve the following objectives:

– Nurture an informed public.

– Reinforce social cohesion and trust.

– Promote fact-checking.

– Disrupt online falsehoods.

– Deal with threats to national security and sovereignty.

“Ultimately, what is desired is a public that is informed and respects the facts, a society that is cohesive and resilient, and a people whose sovereignty and freedom are safeguarded,” the committee said.

READ: Public education necessary to fight against deliberate online falsehoods, says committee

In response, the Ministry of Culture, Community and Youth (MCCY) said it has received a summary of recommendations on how it can strengthen trust between the people and the Government.

These recommendations, it said, revolve around the principles of communication, accountability, transparency and participation in the Government’s policy- and decision-making processes.

The ministry said it already builds capability across the people, private and public sector “so that there can be broader involvement among Singaporeans and organisations to partner the government and each other, to build the Singapore we want to see”.

“These efforts speak to the recommendations received by the Select Committee, and the Government is heartened that we are on the right track,” MCCY said.

“However, we acknowledge that there is always room for improvement and we will strive to do so, as a collective effort with Singaporeans.”

The committee was also asked on Thursday when the Government can be expected to formulate a bill on the recommendations, to which chairman Charles Chong said: “I don’t have a time frame … I’m not sure how long (the Government) would take. We look forward to their response.”

 

Source: CNA/cy

Can Anwar be PM this time around?


August 15, 2018

Can Anwar be PM this time around?

P Ramasamy

 

ADUN SPEAKS | Anwar Ibrahim nearly succeeded in taking up the post of Prime Minister when he was the Deputy UMNO Chief and Deputy Prime Minister when Dr Mahathir Mohamad was in his first role as prime minister of the country.

However, Anwar’s quick rise within the ranks of the party and government led to his dismissal and subsequent imprisonment on a charge of sodomy.

It was the incarceration of Anwar that led to the reform movement with far-reaching political implications.

The reform movement that galvanised people across racial and religious lines sowed the seeds of the political decay of Umno and BN. The victory of the Pakatan Harapan coalition, and with PKR winning the most number parliamentary seats, is testimony to the powerful forces having their roots in the reform movement.

Anwar must be credited for being the force and personality who gave hope and trust to those Malaysians who wanted a better Malaysia.

Anwar was perceived as a threat and was charged, with sodomy again, and jailed the second time by the BN regime under Najib Abdul Razak. And, with the election victory by Harapan this year, on terms agreed by its component parties, Anwar was pardoned and released from his captivity.

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It was also agreed that Mahathir would serve as the Prime Minister for two years following which Anwar would take over as Prime Minister.

Anwar has been released and he recently he won the presidency of PKR, uncontested. The question now is when is he going to stand for election to Parliament – provided someone in his party is willing to vacate a seat.

As per the agreement before the election, Mahathir will be the prime minister for two years after which he will relinquish the post to Anwar.

Mahathir, being a man of his words, there is no question of him not stepping down.

Spoilers bent on derailing the process…

As we understand, he entered the political arena merely to oust the kleptocratic Najib government from power and to pave the way for better governance of the country.

 

While everything seems to point in the direction of a smooth transition of power from Mahathir to Anwar, there, however, are spoilers who are bent on derailing the process of this smooth democratic transfer.

It has not been proven, despite the challenge thrown by Mahathir, that there those within PKR who have joined forces with one or two powerful figures to ensure that Anwar does not assume the post of prime minister after the two-year period.

There are some who are claiming that Mahathir might not easily give up his post and that he had hinted a few times in the past that he might stay longer if the situation warranted it.

I am not sure whether we can create mountains of these insinuations and indirect statements, but nowhere is there solid proof that Mahathir might overstay in the post.

Mahathir might be credited for providing the critical leadership to Harapan in unseating the BN regime. However, let us not forget the formidable role of Anwar in creating and sustaining the forces, together with the DAP leadership, in creating a new Malaysia.

Twice Anwar has been “cheated” of the opportunity to become Prime Minister. I hope this time around he succeeds!


P RAMASAMY is Penang Deputy Chief Minister (II) and Perai Assemblyperson.

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

Jho Low And The China Issue


July 19, 2018

Jho Low And The China Issue

by Sarawak Report

http://www.sarawakreport.org/2018/07/jho-low-and-the-china-issue/

Image result for malaysia most hated man Najib Razak

They seek him here and they seek him there, but best bets are back on China.  Indeed, earlier today, a Hong Kong radio station reported that Jho Low had most recently fled back from Hong Kong into China, where it claimed he has now been detained pending Dr Mahathir’s visit next month.

Certainly, Malaysia’s newly reinstated veteran leader has made clear he is champing at the bit to get to see the Chinese President, since there are plenty of highly pertinent issues he wishes to discuss, albeit embarrassing to China.

 

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Xi Met Mahathir during his visit in 2013,

 

These, of course, relate to a series of multi-billion dollar mega-projects that Chinese state controlled companies signed up to with the previous premier, Najib Razak, star patron of the man on the run, Jho Low.

All of them have been frozen by the new government, which has been issuing toe-curling statements confirming everyone’s suspicions that the contracts were prime examples of super-corruption, which the Chinese had been prepared to pander to in return for digging its economic tentacles into Malaysia and cementing a strategic control over the region.

They include two pipe-line deals in East Malaysia with the China Petroleum Pipeline Bureau (CPPB), which the Finance Ministry recently disclosed had already received 88% of the agreed payment two years early and when only 13% of the work had been completed.

The Finance Minister and his team have not minced their words when indicating their firm suspicion that the reason for this outrageous outlay was that the project were being used as a front to channel money to repay billions of dollars of debts owed by Najib’s notorious multi-billion dollar slush fund 1MDB.

Likewise, the grossly inflated East Coast Railway, contracted by Najib to China’s unfortunately named China Communications Construction Corporation – or CCCC (C4 was the explosive used to murder a young woman in a particularly murky case linked to Najib and the has become synonymous with cover-up and corruption in Malaysia).

It was Sarawak Report which exclusively revealed leaked documents back in 2016 that showed how this C4 contract also was inflated by 100% at the last moment, following negotiations with Najib to again write of debts and liabilities connected to 1MDB and Jho Low.  The exact repayment details over the next decade were written into a secret annex to the contract, which on the surface had provided merely broad brush calculations to justify the increased expenditure.

Throughout the period when these contracts were being drawn up the already fugitive Jho Low was based in Shanghai, and it is generally agreed that he was acting as Najib’s agent to use the Chinese to get the prime minister off the hook financially and politically after the United States Department of Justice published the exact details of the 1MDB theft in July 2016.

In other words, to save his own skin Najib proved willing to tie up his country in a mountain of debt and obligation to its neighbouring predatory super-power.Image result for forest city johor

Numerous other Chinese funded projects were likewise put underway, in particular the evironmentally catastrophic Forest City, deemed to provide a helpful financial boon to the Sultan of Johore.  Not only was the development a perfect conduit for Chinese wishing to export cash, the project envisaged providing citizenship to a million new immigrants.

READ ON:  https://www.nst.com.my/opinion/columnists/2018/05/375032/embracing-common-future

Mahathir and his reformist allies in the new Harapan government are naturally furious at all these thefts and deceptions and are demanding a re-negotiation with China, should these projects go ahead at all.  However, the entire episode represents a humiliating debacle for China, which like the rest of the world had mistakenly placed its bets on the politial survival of the unmasked kleptocrat Najib.

President Xi Jinping will hardly relish the prospect of the extent of his country’s bad behaviour and complicity in corruption being paraded on the world stage and it makes Malaysia’s top wanted man into a useful bargaining chip to help save face in the up-coming diplomatic wranglings and renegotiations.

Image result for malaysia most wanted man Jho Low

The Long Arm of the Law will get at him shoot.

It remains to be seen if China will hang on to Malaysia’s wanted man, who can tell all over Najib’s kleptocratic dealings (and China’s own involvement) or bargain a deal that includes the renegotiation of key projects in Malaysia’s favour, in return for a polite silence over the more embarrassing aspects of China’s corrupt part in propping up Najib?

Malaysia has its strong advocate in the trenchant Mahathir, but it appears China has a valuable hostage in its hands.

Taming Malaysia’s GLC ‘monsters’


June 24, 2018

Image result for Malaysia's GLCs
1MDB Top Honcho–Arul Kanda Kandasamy

“…recent revelations show Malaysia’s debt position may be more precarious than first thought. The new government has correctly highlighted the need to include certain off-balance-sheet items and contingent liabilities such as government guarantees and public–private partnership lease payments in any complete assessment of debt outstanding, as the use of offshoot companies and special purpose vehicles in the deliberate reconfiguration of certain obligations mean that traditional debt calculations underestimate Malaysia’s actual debt.”–Jayant Menon

About a month before Malaysia’s parliamentary election in May, then-opposition leader Mahathir Mohamad raised concerns over the role that government-linked companies (GLCs) were playing in the economy, being ‘huge and rich’ enough to be considered ‘monsters’.Data support his description — GLCs account for about half of the benchmark Kuala Lumpur Composite Index, and they constitute seven out of the top-10 listed firms in 2018. They are present in almost every sector, sometimes in a towering way. Globally, Malaysia ranks fifth-highest in terms of GLC influence on the economy.

Calls to do something about GLCs have increased since the election following the release of more damning information, although most of it relates to the GLCs’ investment arm: government-linked investment companies (GLICs). Recent reports confirm that the former government had been using Malaysia’s central bank and Khazanah (a sovereign wealth fund) to service the debt obligations of the scandal-laden 1 Malaysia Development Berhad government fund. The central bank governor has since resigned.

Image result for bank negara malaysia's Governor resigns

The GLCs have not been immune from scandals either. The most recent relates to a massive land scandal involving Felda Global Ventures, which is the world’s largest plantation operator. There have also been a series of massive bailouts of GLCs over the years, the cumulative value of which is disputed but could be as high as RM85 billion (US$21 billion). All of this led one prominent critic to proclaim that ‘GLCs are a nest for plunderers’ and that the government should ‘sell them all’. Although this may be extreme, it does raise a critical question — what, if anything, should the government do?

Some experts have proposed the formation of an independent body with operational oversight for GLICs after institutional autonomy is established and internal managerial reforms are introduced. Unlike most GLCs, GLICs are not publicly listed and face little scrutiny. The same applies to the various funds at the constituent state level.

Image result for Terence Edmund Gomez on Malaysian GLCs

 

For GLCs, the answer is less straightforward. Mahathir claims that GLCs have lost track of their original function. Before the Malaysian government decides on what to do, it needs to examine the role GLCs should play — as opposed to the role they currently play — and to examine their impact on the economy.

In Malaysia, GLCs were uniquely tasked to assist in the government’s affirmative action program to improve the absolute and relative position of ethnic Malays and other indigenous people (Bumiputera). The intention was to help create a new class of Bumiputera entrepreneurs — first through the GLCs themselves and then through a process of divestment.

Given the amounts of money involved and the cost of the distortions introduced, the benefits to Bumiputera were unjustifiably small and unequally distributed. The approach of using GLCs as instruments of affirmative action failed because it led to a rise in crony capitalism, state dependence, regulatory capture and grand corruption. There is also empirical evidence that GLCs have been crowding out private investment, a concern raised in the New Economic Model as early as 2011.

Image result for Malaysia's GLCs

Malaysia’s National Debt is said to be around 65 percent of current GDP

Additionally, recent revelations show Malaysia’s debt position may be more precarious than first thought. The new government has correctly highlighted the need to include certain off-balance-sheet items and contingent liabilities such as government guarantees and public–private partnership lease payments in any complete assessment of debt outstanding, as the use of offshoot companies and special purpose vehicles in the deliberate reconfiguration of certain obligations mean that traditional debt calculations underestimate Malaysia’s actual debt.

All these factors combine to place new impetus on reconsidering the extent of government involvement in business. Divestment will not solve Malaysia’s debt problem, but it can help if there are good reasons to pursue it. So how should the government proceed?

It is important to recognise at the outset that there is a legitimate role for government in business — providing public goods, addressing market failures or promoting social advancement. And like in most other countries, there are good and bad GLCs in Malaysia. If a GLC is not crowding out private enterprise, operates efficiently and performs a social function effectively, then there is no reason to consider divestment. But a GLC that crowds out private enterprise in a sector with no public or social function or one that is inefficiently run should be a candidate for divestment.

In assessing performance, one needs to separate results that arise from true efficiency versus preferential treatment that generates artificial rents for the GLC. The latter is a drain on public resources and a tax on consumers. Divestment in this case will likely provide more than a one-off financial injection to government coffers — it will provide ongoing benefits through fiscal savings or better allocation of public resources.

The divestment process should be carefully managed to ensure that public assets are disposed at fair market value and that the divestment process does not concentrate market power or wealth in the hands of a few. This has apparently happened before.

The new government has committed itself to addressing corruption and improving the management of public resources. As part of this process, one must re-examine just how much government is involved in business. This is one of the many tasks that the Council of Eminent Persons is undertaking in the first 100 days of the new government. If done correctly, this should rejuvenate the private sector while enabling good GLCs to thrive, and it should fortify Malaysia’s fiscal position in the process. This is what Malaysians should expect — and indeed demand — of the ‘new Malaysia’.

Jayant Menon is Lead Economist in the Economic Research and Regional Cooperation Department at the Asian Development Bank and Adjunct Fellow of the Arndt–Corden Department of Economics, The Australian National University.