Crunch time for Malaysia on economic reform


November 15, 2018

Crunch time for Malaysia on economic reform

by Stewart Nixon

http://www.eastasiaforum.org/2018/11/04/crunch-time-for-malaysia-on-economic-reform/

Image result for dr.mahathir mohamad

Prime Minister Mahathir Mohamad’s honeymoon period after he swept to power in Malaysia may now be facing an economic reality test. Mahathir’s recent admission that his pre-election promises exceeded what can possibly be delivered is just the start. Analysts and investors alike are now hanging on further details of the government’s economic policy priorities.

In the six months since Pakatan Harapan (Alliance of Hope) under Mahathir ended more than six decades of one-party rule in Malaysia, the new government has taken a measured approach to policy development, allowing inexperienced ministers to get on top of their portfolios while it enjoyed electoral grace.

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“Under-investment in human capital is perhaps the single biggest drag on Malaysia’s economic development. It is therefore a positive that human capital remains a high policy priority in Malaysia — commanding its own pillar in the Mid-Term Review and the highest share of budget expenditure. Some of the worthwhile measures include policies to address immediate skills mismatches, invest in school infrastructure and raise the quality of education.”– Stewart Nixon

The release of the Mid-Term Review of the Eleventh Malaysia Plan, as well as the government’s first budget, throws some light on where the government might head on economic policy. Stronger governance and alleviating cost of living pressures are underlined as priority areas, along with greater regional development, entrepreneurship and digitalisation. These priorities represent positive investment in government effectiveness and inclusiveness. But there are questions about economic policy direction.

The Mid-Term Review provides a blueprint loaded with high-level aspirations that would represent an impressive reform agenda if translated into successful policies. But aspects of the Review raise questions about the government’s real capacity to navigate medium-term risks. The 2020 balanced budget target has been abandoned and the budget deficit has widened to 3.7 per cent of GDP (with an aim to reduce this to 3 per cent of GDP by 2020), while public investment — most notably in major rail and pipeline projects — is set to contract.

The cancellation and postponement of mega rail and pipeline projects has rightly been applauded on governance grounds, but the fallout presents some economic risks. Debate about future infrastructure needs has been sidelined by fear mongering about debt. Investors also now face higher levels of uncertainty and risk. While Chinese investors have been hit hardest by the cancellations, both governments appear to have so far handled the diplomacy of recontracting deftly.

The Review also foreshadows a host of new expenditure in healthcare, social protection, rural infrastructure and the environment that will need to be financed by either undeclared budget cuts in other areas or additional revenues.

Revenue raising — or the failure to address the need for it — is a serious weakness in government plans. Tax revenue has fallen to around 13 per cent of GDP — compared to the OECD average of over 34 per cent — and the government’s decision to dump the goods and services tax (GST) for a narrower ‘sales and service’ tax will accelerate the decline. The budget estimates tax revenue at just 11.5 per cent of GDP in 2019.

The Mid-Term Review hints at plans to diversify indirect taxes and increase non-tax revenue. Increasing indirect taxes appears ambitious after the noisily populist anti-GST campaign, while non-tax revenue is code for increasing dependence on revenues from state-owned enterprises (SOEs). The budget highlights this, reporting a 33 per cent drop in indirect tax revenue in 2018 and dividend hikes on PETRONAS in particular amounting to a doubling of non-tax revenue by 2019.

The budget hits some easy targets with higher taxes on property gains, sugar beverages, casinos, imports and online services. However it ignores potential reforms to wealth and property taxes or to the income tax system that currently covers only 15 per cent of workers and transfers very little from rich to poor households.

While the Malaysian government’s footprint may be low in taxation and expenditure, its participation in the economy is pervasive. The highly centralised top-down federation (that cripples local government initiative) and government ownership of more than half the local stock market ensure that the vast majority of economic activity is directly affected by the state.

Despite enabling the corruption scandals that brought down the former government, SOE dominance is not earmarked for meaningful reform in the near future. The budget speech declares that stakes in ‘non-strategic’ government businesses are to be reduced, yet if anything the Mid-Term Review is a blueprint for reinforcing paternalistic control of local governments and enhancing the primacy of SOEs. This is moving the Malaysian economy in the wrong direction. Rather, the government needs to focus on decentralising local governance and diluting SOE market concentration.

The large program of policies favouring Malays and other indigenous groups (Bumiputera) in the Mid-Term Review is another possible economic destabiliser. There was much hope that Mahathir’s more representative government would bring an end to the country’s long-running and ill-targeted affirmative action program. Yet the Review simply reaffirms the government’s commitment to continuing it. Outdated and divisive policies serve to perpetuate negative perceptions of the majority Malays, deter investment and encourage the brain drain of discriminated-against minorities.

Underinvestment in human capital is perhaps the single biggest drag on Malaysia’s economic development. It is therefore a positive that human capital remains a high policy priority in Malaysia — commanding its own pillar in the Mid-Term Review and the highest share of budget expenditure. Some of the worthwhile measures include policies to address immediate skills mismatches, invest in school infrastructure and raise the quality of education.

Still, the perpetuation of myths that low-skilled foreign workers are a drag on the economy and misguided plans to curb migrant inflows through increased levies and by further outsourcing responsibility to businesses with a vested interest in increasing numbers raise doubts about whether the government understands the extent and causes of Malaysia’s human capital deficiencies.

In the face of headwinds from global economic crises and trade wars, ambitious reforms are a must for Malaysia’s new government. Replacing current unproductive and populist measures with a medium-term policy platform that tackles distortions and disadvantage would not only enhance the country’s economy but also give needed weight to the government’s economic credentials.

Stewart Nixon is a Research Scholar in the Crawford School of Public Policy, The Australian National University. He is lead author of a new report from the Asian Bureau of Economic Research in the Crawford School on the Malaysian economy and was co-author of the OECD’s inaugural Economic Assessment of Malaysia.

The Coming of ‘Disruptive Politics’ in Asia


November 12, 2018

The Coming of ‘Disruptive Politics’ in Asia

Khmer Times

ttps://www.khmertimeskh.com/category/opinion/

A few years back, the world was shocked by the political developments in Europe which saw the rise of right-wing nationalism across several countries in the continent. Despite the hope of globalisation being kept alive by the election (and re-election) of pro-establishment forces in France and the Netherlands, the same cannot be said for its other European counterparts.

To the north, the British are certainly grappling on how to make a soft landing for its Brexit move, with many parties now calling for a second referendum to be held to resolve the on-going crisis. Months ago, the same unexpected situation also occurred in Sweden in which Prime Minister Stefan Lovren, as well as his Cabinet, was ousted from power following the post-election’s motion of confidence in the parliament, Riksdag. For sure, this is a blow to the EU as the country that accepted the most migrants, Sweden, is expected to depart from its existing migrant policy in the coming years or so. Germany, on the other hand, recently witnessed the emergence of the right-wing party, Alternative for Germany (AfD).

Whilst the European countries are struggling with right-wing nationalism in a wider scale, we, in Asia are also experiencing a new political wave that is relatively different than the former. The year 2018 is the most crucial year for the continent as there is an emerging trend of (political) regime changes in countries not expected to undergo regime changes in the first place. The main ramification, of course, is potential conflicts with the expansion of Chinese investments as well as China’s push for the Belt and Road Initiative (BRI) in these countries.

There are two types of political regime changes that are occurring in this part of the world.

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The first stunner to the world and China will be the watershed victory of Malaysia’s Pakatan Harapan (PH) in the May general election this year. One of the longest surviving political regimes in the world, the then ruling coalition, Barisan Nasional (BN), had been overthrown from power since 1957. With its ouster from power, it further showed to other long serving regimes in Asia that it is totally possible for such deep-rooted political regimes to collapse through democratic electoral process.

As for China, the PH’s victory proved to be a challenging risk to infrastructure projects which it participated with the Najib administration. Adding to this is the property development and plastic recycling projects that are now being evaluated by the PH government for its multiplier effects and adverse impacts. The Malaysia case, therefore, is the clearest example of how political regime change is affecting not just Chinese projects but also China’s BRI push in Asia.

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Ibrahim Mohamed Solih, the opposition Maldivian Democratic Party’s candidate, emerged victorious over incumbent president Abdulla Yameen in the election held on September 23.(Reuters Photo)

The other clear example will be Maldives. After its own watershed election, the Maldivian electorate sent Ibrahim Mohamed Solih to power and ousted incumbent president Abdulla Yameen. This is yet another shocking development that rattled the world. Not to mention China which provided millions of dollars in loan to the island nation during the Yammen administration? More importantly, Mr Solih’s victory injected a sense of sanguinity to India as the former is seen to be closer to New Delhi instead of Beijing. Again, the political development in Maldives is worthy to be observed if such claims by Indian and foreign media will be translated into Malé’s different approach to the Chinese projects and the BRI push.

As for Pakistan, the victory of Imran Khan’s Pakistan Tehreek e-Insaf (PTI) in the July election is unexpected in that pundits and media certainly did not foresee the big majority being garnered by the party. Adding to that is the victory of a political establishment which is not from either the Sharif or the Bhutto political dynasties.

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Also, the Pakistan case remains to be relatively clear example of how political regime change will affect both the Chinese investments as well as China’s BRI push in Asia. Following his election, Mr Khan declared his intention to strike a ‘balance’ between its all-weather partner, Beijing and its once ally, the US. Compounding the complexity will be Islamabad’s search for a rescue package from the US-dominated IMF — which in turn, asked the new government to reveal its Chinese debts as a pre-condition for such financial assistance — as well as China’s new loan offers to Pakistan to help solve its national debt crisis.

In all, the three cases of Malaysia, Maldives and Pakistan scenarios indicate that political regime change is an emerging trend in the Asian continent. Considering the fact that it comes at the time Beijing is expanding its footprints in the region and beyond, such trend of regime change is bound to affect in one way or another, Chinese investments as well as China’s BRI push in Asia.

Anbound Research Center (Malaysia) is a subsidiary of ANBOUND, a leading independent think tank headquartered in Beijing. The think tank is also a consultancy firm specializing in China-ASEAN cooperation. For any feedback, please contact: malaysia@anbound.com.

The Malays in Business–Summing Up


October 21, 2018

The Malays in Business–Summing Up    

by  Dr. M.Bakri Musa, Morgan-Hill, California

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Dr. The many soft barriers to Malay participation in commerce such as our poor quality of human capital and inadequate financial capital are at least correctable. Build better schools and have credit facilities a la Grameen’s micro-credit, for example.

Others are more problematic. The World Bank’s 2014 Report places Malaysia among the top ten in terms of ease of starting a business. However, ask a Malay would-be (or any small) businessman on the obstacles he faces, and you get a different picture.

The Bank studied only major corporations with their lawyers, accountants, and consultants. If you are a hawker dealing with City Hall, Kuala Lumpur, be prepared for the “hassle” factors. Witness the annual circus for its Ramadan stalls. The government is doing everything to discourge Malays at this most basic level.

I cringe whenever I see overzealous Bandaraya enforcers evict hawkers and destroy their stalls. We should be nurturing their enterprising spirit. If they are blocking traffic, provide alternate spaces. If their standard of hygiene is appalling and poses significant public health dangers, then supply portable water, cheap power, and help improve the physical facilities.

If they are successful, the government would save in not having to pay for their welfare. They would also not be tempted to protest on the streets. Their would then employ their teenage sons, reducing the Mat Rempit menace. Most of all they would gain self-respect.

Another elemental enterprise is driving taxis. Malaysian taxi drivers are at the bottom of capitalism’s food chain. In addition to high operating costs, he has to lease the license from a politician, pay usurious interest rates to buy his vehicle, and pay retail for its maintainence. Imagine if taxi licenses were given only to owner-operators and they have a co-op and could enjoy fleet discounts for their cars and servicing. You would remove or reduce two or three layers of costs, thus enhancing their income.

When Malaysian policymakers think of grooming entrepreneurs, they aspire producing a local Jeff Bezos, Bill Gates, or Jack Ma. Those are outlyers, the black swans of entrepreneurs. You cannot groom them; they are in their own class. Focus on simple hawkers and taxi drivers. Begin at this most elemental level where mistakes would be less costly and the consequences less damaging. If you begin with multibillion-dollar GLCs, you are courting disaster. Witness the still evolving 1MDB saga.

This urge to start or think big right away when you are ill equipped with respect to talent, skills, experience, or social structure comes in the way of grooming Malay entrepreneurs. There are others.

 

One is exemplified by a recent video clip going viral on social media of a Malay salesgirl at a convenience store refusing to scan a beer bought by her customer. Her excuse? Alcohol is haram. Her personal salvation was more important than doing what she was paid to do–attend to her customers. What a misguided interpretation of our religion. More startling, her superior, also a Malay, defended her! I had expected him to at least apologize to their customer.

When these obstacles are cited, they elicit smug smiles from non-Malays, confirming for them the many presumed deficiencies of Malay culture. This apparent cultural aversion to commerce is not unique unto Malays. In ancient China and Japan, traders and merchants were in the lowest social class. They did not produce anything, unlike farmers who were held second only to scholars.

Expectations too are important. Make it too rosy and you set yourself up for failure. Be too pessimistic and you discourage many from even trying.

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Malay leaders endlessly exhort their followers to emulate the Chinese tycoons. “Be like them!” is the endless nauseating line. If Malays were to be reminded not of the Robert Kuoks and Vincent Tans, but those Chinese who early in the last century idled their time smoking opium, frolicking with prostitutes, and endlessly dreaming of Balik Tongsan, then Malays would have a more realistic appreciation of the hard work needed to be successful. Better yet, translate Robert Kuok’s biography into Malay!

Many Malay entrepreneurs failed because they assumed that securing the contracts, permits, and loans was all they needed. They were under the misguided impression that the hard part was over, when in reality it had just begun.

The crucial question arises. How did this negative mindset get embedded among Malays? Current “successful” Malay entrepreneurs and their policymaker enablers bear much of the responsibility for this virulent socioeconomic malignancy.

It afflicts not just small-time village entrepreneurs. In the early 1980s I was involved with a group of bright young Malay doctors in starting a group practice in Malaysia. They already had a thriving practice, and one of its leaders was high up in UMNO. He was the rainmaker, and a very productive one, securing major contracts from federal agencies, GLCs, and other big corporations.

I visited their facilities and was impressed. Their waiting rooms were packed. The government too was eager to support the group as it was among the few made up of mostly Malay doctors.

Beyond that favorable first impression I was stunned to discover that they had no formal agreement. Their working relationship was:  “We trust each other; we are Malays!” To make matters worse, the rainmaker was busy with his political aspirations.

To make a long story short, I did not join. That proved prescient. Shortly thereafter the key players left to set up competing practices across the street. Incredibly, they had no “non-compete” clause preventing them from doing so. As for the rainmaker’s political career, that too went downhill. He thought that running a group practice was simple–just get the doctors and the contracts!

Those bright young doctors were no different from the simple villagers as far as their business acumen or expectations were concerned. This is what I mean by the soft obstacles being much more formidable.

Small states must play smart


October 5, 2018

Small states must play smart

by Chheang Vannarith

Cambodia Flag
“Cambodia is pursuing a light hedging strategy and striving to strengthen multi-lateralism through an omi-enmeshment strategy – a diversification strategy to create an interlocking network of partners with common economic and security interests.”– Chheang Vannarith

The foreign policy of small states is constrained by the size and location of the country and its natural resources and population. Small states are more vulnerable to external changes and shocks, the level of dependency on external sources for security and development, and the perception of their national roles.

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Size does matter for small states. They find it difficult to have favourable foreign policy outcomes than larger nations. To make up for this, small states tend to focus on their immediate geographic area and economic diplomacy, with an emphasis on international rules and norms, while promoting multilateralism and international cooperation.

The primary objective of small states is to ensure their survival and strengthen their position and relevance in a fluid or even anarchic international system. The fast-evolving international system together with global power shifts is posing more challenges for small states to adjust and realise their foreign policy objective. Hence they must play smart and be innovative in order to achieve their foreign policy goals.

Cambodia is thriving to stay relevant in the international system through the implementation of a dual-track diplomacy: bilateral and multilateral diplomacy. Recently, Cambodia has taken a relatively proactive approach in strengthening multilateralism and a rules-based international order as these two norms are under stress and threat caused by unilateralism and protectionism. The US retreat from multilateral institutions has caused severe disruptions and turbulence in the international liberal order.

Cambodia’s foreign policy is at a critical juncture as the country remains at the frontline of geopolitical rivalry in the Mekong region – a new growth center and strategic frontier of Asia. Geopolitical risks are heightening as major powers are vying to create their own sphere of influence in the region. The Kingdom is very much vulnerable to becoming a pawn of major power politics if foreign policy is not managed carefully. The evolving geopolitical dynamics thus demands that Cambodian leaders be more adaptive, flexible, resilient, and pragmatic.

As geopolitical risks and vulnerabilities rise further, Cambodia’s foreign policy options could be more constrained. The strategic space for Cambodia to manoeuver is getting narrower. Once geopolitical power rivalry becomes clear-cut and all-out, Cambodia could lose its balance and would be structurally forced to hop on the bandwagon of a major power for its survival.

At the moment, Cambodia is pursuing a light hedging strategy and striving to strengthen multi-lateralism through an omi-enmeshment strategy – a diversification strategy to create an interlocking network of partners with common economic and security interests.

Hedging is the best strategic option for Cambodia, especially in dealing with uncertainty. However, implementing this strategy is a huge challenge. It requires strategic articulation on certain issues and strategic ambiguity on others. Even sometimes it requires to have contradictory views on certain issues but it must be implemented smartly in order not to lose trust with any major power.

The key challenge now for Cambodia is how it could gain trust from all major powers. At the moment, Cambodia’s relations with the US faces a serious trust deficit. It is urgent that Cambodia and the US find common grounds and explore innovative pathways to restore trust and normalize their bilateral relationship.

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Economic pragmatism, strategic diversification, a denial to a regional hegemonic power, and regime legitimization are the key components of a hedging strategy. ASEAN as a regional grouping is an important shield for Cambodia and the group’s other members to neutralize and cushion the adverse effects created by rivalry between the major powers.

Yet ASEAN faces the risk of being marginalized by two competing institutional frameworks – China’s Belt and Road Initiative and the US-initiated Free and Open Indo-Pacific. Unless ASEAN member states are able to stay united and forge a common foreign policy position, they risk becoming the proxy states of major powers. Consequently, the region will be divided into two diametric poles: the pro-China camp versus the pro-US camp.

To avert these risks, ASEAN must be more innovative and adopt a bolder approach to protect common regional interests. Just playing it safe and keeping a low profile is not a solution. ASEAN must be bold enough to stand up against any major power that intends to build its hegemonic dominence in the region at the expense of the core interests of its member countries.

Cambodia is of the view that ASEAN driven multilateral institutions and mechanisms play a critical role in constructing an open and inclusive regional order that can accommodate all major powers. ASEAN is widely regarded as the main vehicle for its members to engage and integrate major powers, and hopefully shape the behaviour of major powers.

Engaging major powers is a viable strategic option for small states. Engagement is a means to integration. Small states like Cambodia can partially contribute to constructing an international order by engaging and integrating major powers into a rules-based international system and getting them to assume responsible leadership role in multilateral institutions.

Dr. Chheang Vannarith is a board member and Senior Fellow at the Cambodian Institute for Cooperation and Peace (CICP).

Mahathir’s Bersatu– A Reformed UMNO?


June 25, 2018

Mahathir’s Bersatu– A Reformed UMNO?

by S. Thayaparan

http://www.malaysiakini.com

“We belong to a plural society and in this society, the Malay-bumiputera agenda must be carried out.”

– UMNO Acting President Dr. Ahmad Zahid Hamidi

 

COMMENT | Since I fancy myself as a sort of political Cassandra as opposed to a political Pollyanna, I am always interested in what former political prisoner Anwar Ibrahim has to say about Malay politics. His recent comments about how UMNO is not completely destroyed and has to reinvent itself has become a political Rorschach test for people who voted for Pakatan Harapan.

Image result for Najib Razak visits Anwar in Hospital

 

I wrote about this when Prime Minister (then) Najib Abdul Razak visited Anwar when he was recovering from surgery last year – “Despite establishment narratives that non-Malays – the Chinese specifically – seek to supplant Malay/Muslim power in Malaysia, the reality is that this could never happen. Why this is the case is beyond the scope of this article, but since Malay powerbrokers hold the keys to Putrajaya, the sight of Malay political opponents meeting always arouses speculation and yes, insecurity amongst the non-Malay demographic, especially those invested in regime change.”

Add to this, Najib’s telephone conversations with Anwar on the night of May 9, the seemingly never-ending public squabbles of PKR, the narratives of how Anwar “can’t be trusted”, the perception that PKR’s schism is the foundation for collusion with UMNO or PAS, and anything Anwar says is an invitation to vilify the former political operative who laid the foundation for the eventual takeover of Putrajaya.

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“It is no longer enough to remove Najib Razak from power. UMNO itself must be defeated”, Dr. Mahathir said. Will he  break up the political party he created in 1985 and abandon the Malay agenda he initiated when he first came to power in 1981 and held to the premiership for 22+ years?

I have always cautioned that this idea that UMNO and all it stands for is a relic of bygone Malaysia is foolish. Race and religious politics are sown into the fabric of Harapan with materials provided by the former UMNO regime. UMNO and PAS, and those that voted for them – comprising about 52 percent of the popular votes in GE-14 – are a formidable base which is currently being ignored by the numerous changes taking place in this country.

Let us forget about the narratives of a possible collusion by elements in Harapan and UMNO for a moment. Some folks have said that the people are the opposition. Great, but who do Malaysians vote for if Harapan does not live up to expectations in the Peninsular?

I doubt Chinese support for DAP will end anytime soon and since the “running dog” narratives take some time take root, it’s all good on their front. But if you are Malay, you got a “reformed UMNO” and PAS to choose from and this is where things get dicey real fast. By “reformed”, I mean an UMNO that is still entrenched in its ideology but with a new coat of paint to regain support from the Malays who voted against Najib.

Bridge between Bersatu and DAP

In all these think pieces I read online, it is PKR that is described as the bridge between Bersatu and DAP. In other words, the bridge between the so-called rural Malays and the urban Chinese. This, of course, is often portrayed as a class issue, but public comments from various Harapan leaders betray the reality that this is a race issue.

Bersatu was supposed to be the UMNO of Harapan – the linchpin for the new deal that would ensure that the races would cooperate in the old alliance way before the dark times of UMNO ‘ketuanan’ hegemony. It did not work out that way. UMNO still commands the Malay base and now PAS is slowly demonstrating that its outlier status is a political advantage in this new Malaysia.

Public comments from certain UMNO leaders – Khairy Jamaluddin for instance – of turning UMNO into a multiracial party could be post-traumatic stress from the recent elections. However, what he does represent even though the old guard of UMNO may not like it, is a leader who balances ‘ketuanan’ ideology with the pragmatism of compromise that is needed to win the cash cows which are the so-called “urban centres” that PKR is supposedly a bridge to. The UMNO meet-up will determine which forces in the party hold sway, of course.

It remains to be seen how exactly Bersatu handles the challenge of reforming the rural polities which was needed to take Putrajaya, or so we are told. And this also involves the greater need to reform the system where dominant race-based Malay power structures rely on to sustain them.

This is important because dismantling the architecture that enables the propagandising of race and religion is needed for the survival of non-Malay power structures in the long run.  Bersatu didn’t win this election for Harapan; it was a former UMNO grand poobah, Dr. Mahathir Mohamad, who did. Systemic reform without any thought or consideration to reforming structures that enable race and religious imperatives to remain entrenched  is foolhardy.

Take this lowering the voting age to 18 for instance. Great idea but I really hope Harapan strategists are discovering how deep the radicalisation process is when it comes to religious schools and the like. Young Muslims from these types of schools have to wait a few years before voting but 18 is just about the right age when the propaganda and religious delusions are still fresh in their minds and they want an avenue to express them. Not to mention, the years of indoctrination by a system created by the very person who has gained messianic status by true believers.

This is where UMNO or PAS could benefit more than a regime which has to compromise on its racial and religious imperatives – Bersatu – for the sake of the multiracial power-sharing formula that BN never paid much attention to. This, of course, is but one example of the fault lines that exist when making policy.

In all cases, deradicalisation should be central even in the more obvious of policy shifts. Is the Harapan regime up to this? Only time will tell, and there is only a small window of opportunity because personalities are old and the young blood is waiting in the wings.

So how do we combat the grand narratives of Malay supremacy in Harapan and UMNO and PAS? How do we ensure that these narratives are weakened over time? Here are some points to consider.

Decentralisation

Another Malaysiakini columnist Nathaniel Tan talks about regionalism. That is an important starting point I think. Federal power should be decentralised. This halts grander narratives of Malay and Islamic hegemony with local issues that could be dealt with state power. When people have a sense that their state governments can solve their immediate needs, there is no need to kowtow to federal power which brings with it forms of subservience that is detrimental to the democratic process.

This also should extend to local council elections. This brings communities together on issues of needs. If all politics are local, then people from communities rather than political parties determine what is important to them and this also safeguards against political interference.

More importantly, the media should be regional as well. Mainstream media news outlets shape the news often ignoring state level and local community level issues. This creates the impression that federal narratives – those that involve race and religion – are monolithic. This really isn’t the case. This is not something that the state governments or the federal governments should be involved with but rather independent regional media outlets, discussing local issues and ensuring that local politics remains in the forefront.

If you are really serious about people being the opposition – whatever that means – this is a good way to do it, further weakening the grand narratives of race and religion by concentrating on local issues which sometimes have nothing to do with what goes on in the urban polities.

In order to weaken racial and religious hegemony, it is important to diffuse power. The question has always been, is there a coalition willing to do this?

When people ask me who the clear winners are in this election, my answer is always PAS. What PAS has demonstrated is that it can survive definitely without BN and time will tell if it can survive without the Harapan regime. Mind you, the relationship between PAS and Harapan has not been as fraught as it has been with UMNO.

UMNO and PAS, and once the former gets their acts together, could turn out to be a formidable opposition, especially considering that sooner rather than later, Harapan will have to tackle issues concerning race and religion. We have witnessed a distinct lack of commitment among Malay power structures to buck the Islamic and Malay trend when it comes to voting on major issues involving race and religion. Will this change now that Harapan has taken federal power?

It is nonsensical to make the argument that UMNO needs to reform – become multiracial – when the there is a Malay power structure like Bersatu in Harapan chasing the same base. The great fear of UMNO has materialised – that is, the Malays are divided.

What people should be concerned with is the interactions between diffused Malay power structures in this new political terrain, and concomitant to this, the shape these interactions coalesce into.

 

S THAYAPARAN is Commander (Rtd) of the Royal Malaysian Navy.

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

Our Infant Information Revolution


June 15, 2018

Our Infant Information Revolution

 

In the middle of the twentieth century, people feared that advances in computers and communications would lead to the type of centralized control depicted in George Orwell’s 1984. Today, billions of people have eagerly put Big Brother in their pockets.

Toddler concentrated with a tablet

 

CAMBRIDGE – It is frequently said that we are experiencing an information revolution. But what does that mean, and where is the revolution taking us?

Information revolutions are not new. In 1439, Johannes Gutenberg’s printing press launched the era of mass communication. Our current revolution, which began in Silicon Valley in the 1960s, is bound up with Moore’s Law: the number of transistors on a computer chip doubles every couple of years.

Information provides power, and more people have access to more information than ever before, for good and for ill. That power can be used not only by governments, but also by non-state actors ranging from large corporations and non-profit organizations to criminals, terrorists, and informal ad hoc groups.–Joseph S. Nye

By the beginning of the twenty-first century, computing power cost one-thousandth of what it did in the early 1970s. Now the Internet connects almost everything. In mid-1993, there were about 130 websites in the world; by 2000, that number had surpassed 15 million. Today, more than 3.5 billion people are online; experts project that, by 2020, the “Internet of Things” will connect 20 billion devices. Our information revolution is still in its infancy.

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The key characteristic of the current revolution is not the speed of communications; instantaneous communication by telegraph dates back to the mid-nineteenth century. The crucial change is the enormous reduction in the cost of transmitting and storing information. If the price of an automobile had declined as rapidly as the price of computing power, one could buy a car today for the same price as a cheap lunch. When a technology’s price declines so rapidly, it becomes widely accessible, and barriers to entry fall. For all practical purposes, the amount of information that can be transmitted worldwide is virtually infinite.

The cost of information storage has also declined dramatically, enabling our current era of big data. Information that once would fill a warehouse now fits in your shirt pocket.

In the middle of the twentieth century, people feared that the computers and communications of the current information revolution would lead to the type of centralized control depicted in George Orwell’s dystopian novel 1984. Big Brother would monitor us from a central computer, making individual autonomy meaningless.

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Instead, as the cost of computing power has decreased and computers have shrunk to the size of smart phones, watches, and other portable devices, their decentralizing effects have complemented their centralizing effects, enabling peer-to-peer communication and mobilization of new groups. Yet, ironically, this technological trend has also decentralized surveillance: billions of people nowadays voluntarily carry a tracking device that continually violates their privacy as it searches for cell towers. We have put Big Brother in our pockets.

Likewise, ubiquitous social media generate new transnational groups, but also create opportunities for manipulation by governments and others. Facebook connects more than two billion people, and, as Russian meddling in the 2016 US presidential election showed, these connections and groups can be exploited for political ends. Europe has tried to establish rules for privacy protection with its new General Data Protection Regulation, but its success is still uncertain. In the meantime, China is combining surveillance with the development of social credit rankings that will restrict personal freedoms such as travel.

Information provides power, and more people have access to more information than ever before, for good and for ill. That power can be used not only by governments, but also by non-state actors ranging from large corporations and non-profit organizations to criminals, terrorists, and informal ad hoc groups.

This does not mean the end of the nation-state. Governments remain the most powerful actors on the global stage; but the stage has become more crowded, and many of the new players can compete effectively in the realm of soft power. A powerful navy is important in controlling sea-lanes; but it does not provide much help on the Internet. In nineteenth-century Europe, the mark of a great power was its ability to prevail in war, but, as the American analyst John Arquilla has pointed out, in today’s global information age, victory often depends not on whose army wins, but on whose story wins.

Public diplomacy and the power to attract and persuade become increasingly important, but public diplomacy is changing. Long gone are the days when foreign service officers carted film projectors to the hinterlands to show movies to isolated audiences, or people behind the Iron Curtain huddled over short-wave radios to listen to the BBC. Technological advances have led to an explosion of information, and that has produced a “paradox of plenty”: an abundance of information leads to scarcity of attention.

When people are overwhelmed by the volume of information confronting them, it is hard to know what to focus on. Attention, not information, becomes the scarce resource. The soft power of attraction becomes an even more vital power resource than in the past, but so does the hard, sharp power of information warfare. And as reputation becomes more vital, political struggles over the creation and destruction of credibility multiply. Information that appears to be propaganda may not only be scorned, but may also prove counterproductive if it undermines a country’s reputation for credibility.

During the Iraq War, for example, the treatment of prisoners at Abu Ghraib and Guantanamo Bay in a manner inconsistent with America’s declared values led to perceptions of hypocrisy that could not be reversed by broadcasting images of Muslims living well in America. Similarly, President Donald Trump’s tweets that prove to be demonstrably false undercut American credibility and reduce its soft power.

Public diplomacy and the power to attract and persuade become increasingly important, but public diplomacy is changing. Long gone are the days when foreign service officers carted film projectors to the hinterlands to show movies to isolated audiences, or people behind the Iron Curtain huddled over short-wave radios to listen to the BBC. Technological advances have led to an explosion of information, and that has produced a “paradox of plenty”: an abundance of information leads to scarcity of attention.–Joseph S. Nye

The effectiveness of public diplomacy is judged by the number of minds changed (as measured by interviews or polls), not dollars spent. It is interesting to note that polls and the Portland index of the Soft Power 30 show a decline in American soft power since the beginning of the Trump administration. Tweets can help to set the global agenda, but they do not produce soft power if they are not credible.

Now the rapidly advancing technology of artificial intelligence or machine learning is accelerating all of these processes. Robotic messages are often difficult to detect. But it remains to be seen whether credibility and a compelling narrative can be fully automated.

Joseph S. Nye, Jr., a former US assistant secretary of defense and chairman of the US National Intelligence Council, is University Professor at Harvard University. He is the author of Is the American Century Over?