Soft Barriers to Malay Participation In Commerce


February 12, 2018

Soft Barriers to Malay Participation In Commerce

by Dr. M. Bakri Musa, Morgan-Hill, California
Image result for The Malays

The Malays are not hardworking, says Dr. Mahathir

Soft barriers to active participation in the money economy are especially pronounced in societies that still exist in or have just exited from the peasantry and subsistence living. That is Malay society at the time of colonization. It is still true for a vast segment even today. The concept of money and the “money economy” is alien to them. Money was equated with greed and unbridled materialism, not a suitable topic in polite conversations. To ask for the monetary value of anything or service was tantamount to insulting its owner or provider. Monetary value was only for showing off your social status as with how much was your dowry or car.

The traditional trading activities in such societies are primitive, restricted to bartering. The worth of such exchanges, as with trading a few coconuts for fixing a leaky roof, is not with the economic value of the coconuts or the repairing of the roof, rather the goodwill generated, one fellow villager helping another.

One can imagine the difficulty members of such a society would have in adjusting to a money economy. If this were to be imposed from the outside world, as with colonialism, free-flow immigration, or unrestrained globalization, the difficulties in adjusting would be compounded.

Typically that society would react in one of two ways. It either withdraws, effectively declaring that it does not want anything to do with this alien value system, or else it blindly embraces the new system enthusiastically and uncritically.

The first reaction is seen in many Muslim countries, and I will pursue this further in the section, “Imprisoned by Religion.” We also see this with North American Indians, India under Nehru, and today’s Myanmar.

With the second, what typically happens is the absorption of only the superficialities and excesses, as can be seen in the immediate post-Mao period of China. After spurning the outside world, China suddenly changed under Deng Xiaoping. In mature capitalistic societies such as America and Western Europe, there is an effective taxation system with redistributionist elements, and where philanthropy is an honored tradition which have evolved and been perfected over time.

Image result for The Malays

A Towering Malay–A Role Model for Young Malays on how to lie and be utterly corrupt

In China (as in many Third World societies) you are considered stupid if you do not conceal your income from the government and cheat on your taxes. As for charity, when Warren Buffet and Bill Gates, two billionaires known for their charitable deeds as much as their capitalistic instincts, visited China to interest its newly rich in philanthropy, the pair were greeted with silence if not derision. America has its Dukes and Stanfords, elite universities that are testaments to the generosities of their capitalist titans. China has none as yet, and possibly never will.

It is the rare society that gets it right immediately. The hope is that it will learn and stabilize eventually. Otherwise those excesses would lead to instability. The Chinese leadership today is very much aware of the severe negative consequences to the excesses and flamboyance of its politburo members and their children, especially when displayed abroad. There is as yet no such abhorrence with the excesses, corrupton, and flamboyance of the Malay elite–our sultans and UMNOputras.

It was only a generation or two ago that Malay society was deep in its subsistence and agrarian mode, typical of the kampong lifestyle. Most Malays lived off the land, and gotong-royong (communal effort) was the norm; bartering or trading of goods and services were strange concepts. Instead you helped each other, with no financial considerations.

With the coming of colonial rule and with it, capitalism, Malays were thrown into the money economy precipitously without any transition. The later influx of immigrants further compounded the issue. The immigrants by default and out of necessity had to adapt to the money economy to survive; they had no social or physical support system as with Malays and our kampong lifestyle. This earlier entry into the money economy by the immigrant population conferred significant advantages vis a vis the native peasant population.

Image result for The Malays
The Wira Melayu (The Malay Hero) heading towards extinction

 

It was no surprise that Malays, specifically those in UMNO, at the dawn of our country’s independence were clearly anti-capitalistic, except for its top leader, Tunku Abdul Rahman, who remained unabashedly committed to capitalism. To those in UMNO during its infancy, the term kaum kapitalis was derogatory, comparable and perhaps synonymous with kaum kolonialist (colonialist class/hordes). That soon changed when they saw the tangible results of profits and wealth. This Malay embrace of capitalism was accelerated under Mahathir.

Like the Chinese in China today, Malays embrace only the primitive or animalistic form of capitalism, its raw and exploitative version, and the associated quick bucks and short-term mindset. Also akin to modern China, corruption, collusion, and influence peddling rapidly became the norm.

If those are not formidable enough obstacles, then there is yet another significant “soft” barrier to Malay entry into commerce–our religion, or more accurately our particular and myopic interpretation of the Koran and Hadith (sayings and practices of Prophet Muhammad, s.a.w.).

Related image
The New Malay (as defined by the Malaysian Constitution)

I believe that Islam is fully consistent with and supportive of the ideals and practices of capitalism. Nothing in my reading tells me otherwise. After all, our Prophet Muhammad, s.a.w. (May Allah bless his soul) was a successful trader before receiving his prophethood. That reflected the profession’s high standing with Allah as much as His appraisal of the man.

One thing is certain; Islam cannot be supportive of atheistic communism or its close cousin, socialism. It is true that the egalitarian ideals of socialism may appeal and indeed have to many Muslims and can be construed as being consistent with those of Islam. On closer reading however, equality is not the ideal of Islam; indeed that would be against human nature. Allah in his wisdom has created us in all our diversities, with different skin colors, speaking different languages, and having diverse cultures. He has also endowed us with different talents and abilities.

Image result for oliver wendell holmes on equality

Equality in such a setting would be an elusive goal, as well as a cruel illusion. Those in power would determine what equality would mean. In America at the time of the declaration of independence, the “We, the people” phrase in the preamble of its constitution for whom “equality” would apply were restricted to only tax-paying white males. They alone were entitled to vote and have the protection of the constitution. Slaves, women, and those who did not own land were excluded. Only later was that “equality” extended to them.

Likewise with meritocracy; those already in power would determine what attributes are considered meritorious.  Meritocracy as a concept could easily be used to justify continued suppression and denial of opportunities to others not currently favored.

Islam emphasizes justice, not equality. We cannot treat an orphan in the same “equal” manner as the son of a privileged family. That would be the height of injustice. Indeed to be just, we should do more for the orphan, which would also be the right thing to do. The great American jurist Oliver Wendell Holmes said it best, “It is a wise man who said that there is no greater inequality than the equal treatment of people who are unequal.”

It is easy for today’s observers, Muslims included, to conclude that Islam is against capitalism, or at least wealth creation and accumulation. Muslim countries, even those blessed with abundant natural resources like oil and gas, are over represented in the poor and deprived category. In Malaysia, Malays, who by statutory definitions are Muslims, lag behind the other races in all socioeconomic indices. That there was a time when Muslims were ahead of the curve has been all but forgotten, and if recalled, only for syok sendiri (self-gratification) exercises and not as a learning opportunity.

Capitalism is not un-Islamic. On the contrary, many of the practices and consequences of capitalism are very much in tune with the aspirations of our faith. Both capitalism and Islam are very adaptive. If the communist Chinese could adopt capitalism and imbue it with Chinese characteristics and sensibilities, and in the process emancipate hundreds of millions of its people out of poverty, I fail to see why we cannot do the same. Meaning, imbue capitalism with Islamic characteristics.

The Closing of the Malay Mind


January 30, 2018

The Closing of the Malay Mind

by Dennis Ignatius

The closing of the Malay mind

Image result for Najib and Rani Kulup

Role Models for The Malays: Between Najib Razak and Rani Kulup: Who is more stupid?

In his 1987 book, ‘The Closing of the American Mind: How Higher Education Has Failed Democracy and Impoverished the Souls of Today’s Students’, Allan Bloom, an American political philosopher, argued that the social/political crisis of 20th-century America was really an intellectual crisis resulting from an education system that rendered students incapable of critical thinking.

Given the statements emanating from the recent ‘Rise of the Ummah Convention’, one has to wonder if something similar might be going on here as well.

Image result for Malay racists

 

Have decades of politico-religious indoctrination led to the closing of the Malay-Muslim mind, diminishing their self-confidence and making it difficult for them to arrive at a realistic appreciation of the world they inhabit?

Are we, in fact, witnessing an intellectual and emotional retreat into a dark world of self-created fantasies and fears straight out of some ‘wayang kulit’ show?

The dominant narrative

Listening in on the very public discourse within significant segments of the Malay community, it appears that racial and religious issues have overtaken everything else to become the dominant narrative. Their whole world seems to have been reduced to something of an existential racial and religious struggle for survival against a plethora of enemies of their own making.

Image result for Racist Hishamuddin Hussein Onn

Western-educated Malays–Khairy Jamaluddin and Hishamuddin Hussein Onn–turned racists

This shift in mindset is finding expression in a number of different ways. For one thing, we are seeing a rising tide of segregationist ideas including Muslims-only laundrettes, barbershops and photo-studios. As well, there is growing acceptance of the idea that it is haram to wish others for Christmas, Diwali or Chinese New Year, attend functions in non-Malay/non-Muslim homes or even to vote for non-Muslims.

The underlying presumption, though unspoken, is that non-Muslims and non-Malays are somehow unclean, that their very presence is defiling and challenging to the Malay-Muslim sense of identity and that good Malays/Muslims ought to have as little to do with non-Malays as possible.

The animus towards non-Malays has reached such intensity that even the pathetically few senior positions held by non-Malays in public service attracts controversy. Have we gone from aspiring for a public service reflective of our diversity to one where even the few non-Malays in high office are a few too many?

Image result for Hadi Awang with Zakir Naik

India’s Islamic Extremist Zakir Naik and PAS’s Hadi Awang

And, by insisting that Islam does not permit non-Malays to hold senior positions in a Muslim-majority polity, PAS President Hadi Awang has conveniently provided a theological justification for institutionalizing discrimination against non-Muslims.

At the same time, we have government-affiliated think tanks and educational institutions regularly obsessing about cataclysmic threats to Islam from imaginary groups. Christians, in particular, are vilified and even their prayers for a better nation are considered subversive and disrespectful. The crusades ended in 1291 but apparently some have not yet received the memo.

The underlying sense of insecurity also extends to culture. Traditional Malay culture, with its rich infusion of Asian influences, for example, is now considered something of an embarrassment and is downplayed or denied while Arab culture is considered superior and extolled. In the process, key elements of Malay culture – dress, dance, art and custom – are being jettisoned in favour of the desert culture of Bedouins.

Surely, if there is a battle worth fighting, it is the battle to preserve Malay culture and its unique contribution to civilization.

Image result for Ismail Mina

 

And now we have clerics like Ismail Mina Ahmad attempting to rewrite non-Malays out of the history of our nation while educators like Datuk Raof Husin insist that even the meagre scholarships that non-Malays presently receive should be withdrawn on the spurious grounds that it is unconstitutional. Do they ever listen to themselves? What kind of a nation considers it okay to be so spiteful and discriminatory against its own citizens?

It is, I suppose, the next step in the evolution of the “pendatang” construct with minorities cast as interloping, unpatriotic, scheming idolaters who deserve nothing but contempt for daring to consider themselves Malaysian with equal rights and privileges.

Not by Accident

Of course, all this is not happening by accident; it is, rather, the result of a well-orchestrated though ultimately destructive strategy by UMNO deep-state (with the tacit support of PAS) to reshape and refocus the Malay-Muslim mind. The objective is to ensure the party’s own survival by diverting attention from scandal and failure to imaginary threats that the party itself has invented.

Image result for Malay women in tudungsUMNO Hoods

 

And they have been so successful at this game that a wide cross-section of Malay-Muslim society has now bought into their narrative, making it the dominant framework through which everything else is viewed. When even university professors start unthinkingly regurgitating this fabricated and bizarre narrative, the stage is set for intellectual, cultural and religious conformity and rigidity – groupthink on a national scale replete with dysfunctional decision-making, the suppression of dissenting views and isolationist tendencies.

As many observers have rightly noted, race and religion have been weaponized and employed to keep Malay-Muslims subservient and non-Malays on the defensive. In the process, UMNO has condemned all Malaysians – Malay and non-Malay, Muslim and non-Muslim – to forever run on the treadmill of an existential struggle for survival against each other while leaving the party to do as it pleases.

Descent into Absurdity

Image result for Malay women in tudungs

And so, at a time when our nation is faced with serious and very real problems from corruption and the plunder of national resources, institutional decay and the abuse of power, we have groups worrying about who should cut their hair or wash their clothes or take their photographs.

At a time when the real enemies of our nation are destroying it, we have no shortage of pseudo-nationalists ready to do battle against minorities, deviants, gays, liberals, atheists and, of course, Jews and Christians.

At a time when we are confronted with serious social problems, youth unemployment and falling living standards, we have people arguing about who is best qualified to carry out amputations for theft or proper procedures to ascertain the gender of men or women who might fall short of some airhead’s idea of what they should look like.

At a time when even Saudi Arabia wants to return to moderate Islam, we have zealots blindly pushing the nation towards an extremism that has proven so destructive elsewhere. Such is the extent of the lunacy that has descended upon the nation.

Zenith of Power, abyss of insecurity

Ironically, this shift in mindset is happening at a time when Malay power has reached a zenith unparalleled in history, and Islam itself more firmly entrenched and accepted than at any time since it first came to the country in the 12th century, courtesy of traders from India.

Image result for malay supremacy in malaysia

The Klepto-in-Chief, UMNO President Najib Razak

As well, one would have thought that some 60 years after independence, after more than 40 years of Bumiputraism, after securing near total dominance of the nation’s political and economic structures, the armed forces, the civil service and academia, and with the steadily declining non-Malay demographic, Malays would at least feel more confident and secure.

Instead, thanks to UMNO, a siege mentality has descended over a large segment of the Malay community making them fearful and resentful, bigoted and unsure of themselves. As well, it is obliging them to retreat behind self-defeating walls that will render them less able to compete and hold their own in a rapidly changing world. If they cannot be secure and confident within the narrow confines of a small multi-ethnic polity, how will they compete in a borderless world that respects neither race nor religion? It is, in many ways, the ultimate betrayal.

Battle for the Malay Mind

To be sure, the struggle for the Malay-Muslim mind is far from over. Alarmed by the emerging ethos, the slow extinction of Malay culture and the rising tide of intolerance, the Malay rulers, the ultimate custodians of Malay religion, culture and identity, are speaking out like never before, and in uncharacteristically strong terms.

A number of Malay groups and individuals have also risen to challenge the UMNO-inspired narrative. G25, the Patriots Association, PAGE and Islamic Renaissance Front, to name a few, have been outspoken opponents of bigotry and racism while championing an alternative vision of a Malay community at peace with itself, confident of its place in the world, open and tolerant.

They are about the only bright spot in an otherwise gloomy picture, and upon their success will rest the future not just of the Malays but of all Malaysians.

Ownership and Control in 21st century Malaysia


January 17, 2018

Ownership and Control in 21st century Malaysia

by Charles Brophy

http://www.newmandala.org/ownership-control-21st-century-malaysia/

Image result for terence gomez book

In a series of public lectures beginning in 2016, Professor Terence Gomez began to distil the findings of his latest research into corporate governance in Malaysia. The first finding was a marked reduction in the holding of private directorships by members of the ruling Barisan Nasional coalition. The second was a major growth in the influence and power of Government Linked Companies (GLCs; individual state-owned enterprises) and Government Linked Investment Companies (GLICs; state-owned investment vehicles) over the Malaysian economy.

What such findings did was to challenge typical understandings of “money politics”, and the relationship between politics and business, in Malaysia. The data pointed not towards the direct influence of the political class over private enterprise, but rather a growing centralisation of economic and political power in the Office of the Prime Minister and the Minister of Finance (an office which is today held concurrently), and the influence of the state over the economy through the GLCs and seven large GLICs. The resulting book, Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia, written alongside Gomez’s team of research assistants, has brought into the spotlight not only problems of political centralisation and GLC/GLIC governance reform, but also the effect of the very structure of the Malaysian economy on the country’s continuing prospects for development. (Disclosure: the author works for Gerakbudaya, the Malaysia/Singapore publisher of Prof Gomez’s book, but writes here in a personal capacity.)

Malaysia’s state developmentalism

Many of the GLICs have their origins in the period from the 1950s to the 1970s, and during this time came to play an important role in the project of state developmentalism. Gomez, however, marks the Asian Financial Crisis—and the political and economic crisis it produced—as a crucial moment in the emergence of GLCs and GLICs. With highly indebted, “too-big-to-fail” companies in the private sector bankrupted by the crisis, GLICs were mobilised by the government to bail them out. After Anwar Ibrahim’s failed challenge to the leadership of Prime Minister Mahathir Mohamad, GLICs were mobilised to appropriate the businesses of Anwar’s cronies.

Image result for Barry Wain's Book

The growth of GLICs was then a means to resolve the contradictions and limitations of the political and economic development that arose under Mahathir. This was to continue during the fallout of the conflict between Mahathir and Daim Zainuddin—which saw the assets of Daim’s allies and proxies transferred to GLICs—and a program of bank consolidation which, in the name of rationalisation, drastically increased the role of government in the banking sector.

The growing importance of the GLICs to economic development seen in the attention paid to them by Malaysia’s next two prime ministers. Under Abdullah Badawi the GLC Transformation Programme was launched. It sought to have GLCs operate on a more commercial basis, divesting from non-core investments, offering higher dividend returns, cooperating more with the private sector, and internationalising their operations. Just as significantly, through the emphasis on the vendor system, they were to help link up Malaysia’s large SME sector with local and foreign supply chains.

When Najib came to power with his transformation agenda, he noted the way in which rent seeking and patronage was harming the economy. Through the New Economic Model he called for the reduction in the role of the state in business, an overhaul of the system of race-based affirmative action, and the reform and privatisation of GLCs. Nevertheless, pushback from prominent politicians such as Mahathir and right-wing Malay NGOs led to a reversal of this policy. By 2013, Najib had unveiled the Bumiputera Economic Empowerment (BEE) policy which, against the prescriptions of the New Economic Model, mobilised GLCs to promote “market friendly affirmative action” through the Bumiputera Vendor Development Programme. From 2009 onwards, Najib would increasingly tap GLCs to generate growth and infrastructure development, as well as to draw investments from foreign State Owned Enterprises (SOEs), particularly from China, which saw the state come to play an increasingly dominant role in the economy.

This about turn was more than anything rooted in the political legacy of the New Economic Policy, with its twin-pronged focus on state intervention to correct race-based distributional inequalities and to promote continuous economic development.

Ownership and control

Image result for james puthucheary

When James Puthucheary, from his cell in Changi Prison, embarked on his investigation into the structure and organisation of the Malayan economy, it was to the twin problems of ownership and control that he turned. Defined, he argued, by an uneven and unequal model of colonial development, the central economic problem of Malaya was not the role played by the Chinese middleman but the domination of foreign clearing houses and foreign capital over key areas of economic life. This structure was, he said, central to understanding the exploitation of the peasant as well as the limitations on the future development of the Malayan economy. To overcome this, Puthucheary would argue for a program of state intervention in the economy to mobilise the state to overcome existing inequalities and unevenness and to transform the dominant model of ownership and control.

Post-1969, intervention occurred under the New Economic Policy, but without reaching a fundamental resolution to the uneven patterns of ownership and control. While foreign ownership of the economy was reduced, this was largely undertaken without radically affecting major foreign interests in the economy. Malaysia’s development was to continue to depend heavily on foreign direct investment rather than domestic capital, ensuring that, unlike South Korea and Taiwan, Malaysia wasn’t to nurture domestic giants such as Samsung or Foxconn. Rather, the state, in alliance with wealthy tycoons, was to play an increasing role in the economy, maintaining a centralisation and inequality of assets and wealth, both through systems of selective privatisation and later through the GLCs.

More recently, one of the findings of Gomez’s research is the resurgence of foreign ownership in the Malaysian economy, with companies such as Digi, Nestlé, and British American Tobacco leading the list of Malaysian companies by market capitalisation, highlighting the continuing dependence and openness of the Malaysian economy. Meanwhile, in the realm of rural development, the focus was not on major land redistribution—which kickstarted economic miracles in South Korea and Taiwan—but more selective land distribution through FELDA and rural development schemes.

Central to Puthucheary’s analysis of ownership and control was the problem of national development, both in terms of the development of a nation out of the various races of Malaya and the mobilisation of the economy for the development and prosperity of such a nation. In similar terms, central to the critique of Gomez and others of the NEP has been its inability to promote such a meaningful and broad-based national development. Gomez’s research into relations between politics and business has been highly critical of the role of selective privatisation and bumiputera equity quotas in the promotion of money politics at the expense of meaningful economic development.

In a 2005 report, Gomez, alongside Lim Teck Ghee, was also to note how the focus on bumiputera equity had ignored the problem of the broad-based development of the Malay community and the growth of the country’s SMEs. He noted how within the SME sphere successful multi-ethnic business relations were being fostered outside of the scope of the NEP. In his latest book, Gomez has highlighted the role played by the concentration of economic control in the Ministry of Finance in disincentivising industrial growth and investment for fear of expropriation of business by the state—evidenced, he argues, by Malaysia’s premature deindustrialisation, and the growing dominance of the service sector within the Malaysian economy.

Image result for Malaysia Airlines

Here the problem of the middle-income trap emerges as central to the contemporary pattern of ownership and control as outlined by Gomez—and thus the problem of the inner limits of modes of development, as proposed by Puthucheary, becomes restated. Today, can a political economy model defined by high levels of centralisation, and dominated by the interests of GLICs, provide the kind of broad-based economic development that can move Malaysia, and bangsa Malaysia, towards high-income status? Or is a new model of ownership and control required?

The new developmentalism in Southeast Asia

In an earlier co-edited volume, Government-Linked Companies and Sustainable, Equitable Development, Gomez and other scholars highlighted the growing importance of GLCs and SOEs in the aftermath of the 2008 economic crisis in challenging liberal capitalist understandings of economic development. Taking a broader view, Joshua Kurtlantzick has highlighted the contemporary resurgence of state capitalism within global political economy. Fundamental to this has been the growing importance of SOEs, from Petrobras in Brazil to Gazprom in Russia or Deutsche Bahn in Germany.

This tendency is becoming increasingly evident in Southeast Asia’s contemporary political economy.

In Indonesia, SOEs have formed the centrepiece of Joko Widodo’s developmental agenda, being mobilised to fill the gaps in the development of major infrastructure projects, where the private sector has been reluctant to invest in high-risk or capital intensive projects, while busying itself with rent-seeking behaviour. More recently, Danang Widoyoko has read the fall of former Jakarta governor Ahok as a struggle between Ahok’s SOE-centric development agenda—evident in the major land clearance projects in Jakarta—and politically-connected private interests who came to resent the increased role of SOEs in key economic sectors. The struggle in Jakarta was thus, on Widoyoko’s reading, a struggle between two factions of capital: state, and crony.

In the Philippines, Rodrigo Duterte has begun to pursue a similarly ambitious development agenda, headlined by massive infrastructure plans, under his “Build, Build, Build” program. Similar to the case of Indonesia, in the face of private sector inertia in infrastructure development the state has moved in to directly finance and organise such infrastructure projects both through the mobilisation of SOEs as well as through the promotion of public-private partnerships. The emphasis in the Philippines, however, is on the public sector’s leading projects through “Hybrid PPPs”, with projects then subsequently bid out to the private sector. Such a program relies heavily on Chinese official development assistance, with Duterte keen to see the Philippines integrated into China’s Belt and Road initiative.

In Thailand, control and reform of SOEs has been a point of struggle between the military and the followers of Thaksin Shinawatra. SOE reform has emerged as an important plank of junta policy, led by an attempt to form a strategic holding company capable of managing SOEs, similar to Singapore’s Temasek or Malaysia’s Khazanah. More recently, in response to a slowdown in the Thai economy, the government has ramped up spending through SOEs, in particular through a new series of infrastructure projects with the aim of boosting growth.

Yet this trend does not represent the re-emergence of a postcolonial developmental state, of the kind Puthucheary and his contemporaries examined. Instead, a new model is emerging, one which tends to blur the difference between the state and market, led by the growing importance of substantially commercialised GLCs, GLICs and SOEs.

 

If in the 1980s the emergence of “state corporatism”—with concepts such as Malaysia Incorporated—saw close cooperation between the corporate sector and the state, the growing importance of GLCs and GLICs has increasingly promoted parts of the state which do themselves function as corporate entities.  Such arrangements allow the state to assume the organisational effectiveness of the market-driven corporate organisation, in combination with the executive authority of the state and offering governments the ability to both financialise assets and render debts “off the books”.

Such strategies are not only economically useful, but also relevant in electoral terms in Southeast Asia. In the context of Indonesia, Eve Warburton has talked of the emergence of a new developmentalism, which places a developmental nationalism at the heart of the political arena—not dissimilar to the effect of Dutertenomics in the Philippines. In the Malaysian context Bridget Welsh has talked of a commercialisation of electoral politics, highlighting the importance of financial transactions emanating from the state and big business in the accrual of electoral support.

Image result for petronas twin towers

In both of these forms, GLCs and GLICs have emerged as central to electoral politics. In the case of Malaysia they have formed the direct vehicles through which the government can raise (or launder) campaign finances, and provide electoral groups with patronage resources during election periods. More generally, they have become vehicles to fill the gap created by the demise of the classic developmental state, exemplified by the establishment of GLC foundations from Yayasan 1MDB, to Yayasan Rakyat 1Malaysia and Yayasan Hasanah, and through the practice of corporate social responsibility. In the same way, GLCs are increasingly used as vehicles for policies of affirmative action or “sustainable” and “inclusive” development.

Alternative visions

This process does not continue uncontested. In Malaysia, a debate is emerging regarding the role played by GLCs and GLICs, and around the role of the state in the corporate sector. The liberal Institute for Democracy and Economic Affairs (IDEAS) has called for government divestment from GLCs, particularly highlighting the tendencies for GLCs to crowd out private sector investment (to which one prominent GLIC responded at length). The G25, a group of Malay thought leaders, has called in a new report for a review of the economic efficacy and impact of GLCs and GLICs, urging the privatisation of non-strategic GLCs and the regulation of existing GLCs to turn them into a catalyst of private sector growth.

Image result for Felda

 

Political contestation has also emerged within UMNO over the management of GLICs. Members of Najib’s inner circle and UMNO Youth executive council member Rahman Hussin have accused Khazanah Nasional of underperformance resulting in low dividend returns and a lack of reinvestment into the Malaysian economy. This comes at a time when Khazanah prepares for a change of top management in 2019 amid calls for a new strategic direction.

The opposition coalition Pakatan Harapan used its 2018 Alternative Budget to note the contemporary problem of premature deindustrialisation, and argued for an industrialisation policy driven by SMEs. A key component of this is the privatisation of GLCs, to produce a more level playing field for private enterprise. To this end, Pakatan Harapan proposes to promote a better environment for FDI as well as incentivising domestic direct investments through tax cuts. Yet whether or not this will remain possible, and whether or not it would lapse into FDI-driven privatisation and liberalisation, remains an important question.

 

For his part, Gomez has noted the ability of GLCs to perform well and contribute towards economic growth. Yet he remains a critic of their centralised political control, and of their use as mechanisms for race-based affirmative action by a predatory state. Such a dichotomy is also applicable to many developing states: while SOEs can help resolve some of the contradictions of economic liberalisation and privatisation, and can act as engines for growth, their ability to act as engines of economic transformation—raising states up the economic value chain—remains more doubtful, as does their ability to produce broad-based and inclusive economic development.

Today this realisation is itself at the centre of ongoing processes of reform within the developmental state. Yet such projects of reform have been undertaken within the context of self-imposed limits, guaranteeing such reforms remain largely conservative: the resurgence of the developmental state in its contemporary form does not imply a substantial redistribution of economic power, let alone its democratisation.

The political power of labour has continuously been suppressed through a curtailment of labour organisation. Welfare policy has been restricted to hardcore poverty alleviation largely through micro-credit schemes and cash transfers, as against more robust responses to marketplace disadvantage. In the area of investment, the emphasis upon fiscal restraint and debt management has meant not only a lack of industrial investment programs, but also a lack of meaningful investment in education and skills, particularly through higher education reform. Similarly, while the rationalisation of the state apparatus has been a central theme for many governments, a more meaningful redistribution of public funds towards development and away from traditional power centres, such as the security sector or bureaucracy, has been ignored. Most importantly, the question of inequality has been constrained to the arena of populist politics, leaving the economic and political problems of unequal distributions of wealth, income, and opportunity unresolved. In short, the “revolution from above” has been particularly wary of any “revolution from below”.

Image result for Duterte's Reform of GLCs

This program of limited reformism has reproduced a limited model of development, one which a growing source of discontent. On the one hand a politician such as Rodrigo Duterte has been able to rise to power on an impatience with the outcomes of state-led reform, while on the other hand there has emerged a growing politicisation of current models of development in the form of growing labour activism, popular protests (such as those in Malaysia against GST and the TPP), as well the growth of political movements that place at the centre of their politics problems of labour, welfare, investment, state reform, and inequality.

What is needed today is a critique of contemporary processes of reform capable of exposing their limitations and contradictions, and which therefore lays the groundwork for a politics of development that brings into question contemporary patterns of ownership and control, and their effect on development. Terence Gomez’s critique of government–business ties in Malaysia’s current model of development, and their relationship to the rise of GLCs and GLICs, marks a particularly important step in this direction.

 

 

Mahathir Changes Malaysia’s Political Equation


January 10, 2018

Mahathir Changes Malaysia’s Political Equation

by Mariam Mokhtar

https://www.asiasentinel.com

Image result for Mahathir Mohamad

The battle lines for Malaysia’s 14th General Election have been laid, with the 92-year-old former Prime Minister, Mahathir Mohamad, teaming up with Malaysian opposition parties in a bid to oust the current premier, Najib Abdul Razak, and wrest power away from the United Malays National Organization, which has led the ruling Barisan Nasional coalition since independence in 1963.

According to UMNO insiders, Najib is extremely confident. He believes the Barisan, which also includes the Malaysian Chinese Association and the Malaysian Indian Congress, could – with the help of almost-brutal gerrymandering – win as 140 seats in the 222-member parliament and, if things break their way, even take back 148-vote two-thirds majority that the coalition had held for decades

Mahathir’s selection as potential premier, opposition leaders say, could dramatically change that equation and bring down a party and coalition rife with corruption and cronyism. Individuals close to Najib have been charged in the biggest kleptocracy case ever brought by the United States Justice Department, which has confiscated a vast array of Malaysian-owned assets in the United States.

At the center of Malaysia’s politics is a racial calculus in which Malays fear that the Chinese, who dominate the country’s business world, would come to dominate the political one as well.

Image result for Najib Razak

Prime Minister Najib Razak needs PAS and the moronic Hadi Awang to secure rural Malay voters who have been conditioned to think that Islam is under threat.

With Mahathir at the helm, analysts say, Najib – picked as a protégé decades ago by Mahathir – can’t blame the Chinese-dominated Democratic Action Party for being the driving force for the opposition Pakatan Harapan coalition. During his years as Prime Minister, Mahathir was a Malay supremacist even though he is only half-Malay. His father came from the Indian subcontinent (Kerala).

Nor could Najib use the argument that the Chinese will take over the nation, which has been a hobgoblin to frighten the rural Malay electorate for decades. Mahathir, who dominated UMNO and Malaysian politics as head of UMNO for 23 years from 1981 to 2003, is legally a Malay Muslim.

Mahathir is the undisputed come-back kid. The party he founded, Parti Pribumi Bersatu Malaysia (PPBM), has managed to unite the leaders of Parti Keadilan Rakyat (PKR), the Democratic Action Party (DAP), and Aminah, a splinter that split away from the rural-based, fundamentalist Parti Islam se-Malaysia, or PAS.

The much-awaited GE-14 is expected to be a viciously contested general election. It will also be Najib’s toughest. On January 8, Pakatan Harapan announced that Mahathir would be their interim Prime Minister until Anwar Ibrahim, the charismatic opposition figure who has been imprisoned on what many consider to be spurious charges since 2015, would be freed. This was not the news that Najib wanted.

Social media has been abuzz with views about Mahathir’s nomination, including a report that Najib’s adviser, Habibur Rahman, had approached both DAP leader Lim Guan Eng and Anwar’s daughter Nurul separately to offer them “attractive incentives” to try and broker a deal. His request was simple. He did not want DAP or PKR to withdraw from the election, or to support BN in GE-14. He merely wanted them to reject the nomination of Mahathir as the interim candidate for the opposition coalition. The request was reportedly rejected outright.

Image result for Anti-Mahathir civil society

The Malay Dilemma–Mahathir’s Malay Supremacy (Ketuanan Melayu)

Anti-Mahathir critics have issued stark warnings amid signs that they are ganging-up on the former premier, an authoritarian figure who ruled the country with an iron fist, at one point triggering a roundup called Operation Lalang (1987) that swept up journalists, civil libertarians and the opposition figures with whom he is now making common cause without habeas corpus and jailing them for months under the country’s colonial-era Internal Security Act.

It is unknown if Mahathir has belatedly discovered, now that he is on the other side, the value of a free press and an independent parliament and judiciary and the other institutions that he neutered as the country’s leader.

One Perak based-political observer called Mahathir “damaged goods. His gambles and ego projects, such as attempting to corner the tin market, huge forex losses, (the Proton national car project) and the Petronas Twin Tower, have cost the nation too much.

“He caused irreparable damage to our judiciary; entrenched institutional racism in the country and started the slide in our educational standards. He cannot be trusted to run the country again – even for a day.”

Image result for dr. kua kia soong

Dr Kua  Kia Soong and Dr Anne Munro-Kua–Civil Society’s Intellectual Couple.

Kua Kia Soong, the Director of Suaram, a Human Rights NGO, who was jailed Operation Lalang, has continued to demand that Mahathir enumerate the sins he has committed and apologize for each of them.

Kua has been slammed for his intransigence and his refusal to see the bigger picture, which is to get rid of Najib and win GE-14. One person said, “Can he not see that Mahathir can win over more Malay voters? Does he think that the opposition will allow themselves to be under Mahathir’s yoke, if they win GE-14?”

Another political observer from Singapore said, “Dr M can shift 5 percent of Malay votes, which no other leader could. That can be critical.”

Last December, when it was first mooted that Mahathir would become the interim PM, Minister in the Prime Minister’s Department, Abdul Rahman Dahlan, described it as a “sad day” for the opposition, and said, “…they have been in the political arena for so long, but they couldn’t find a younger candidate or fresh blood to become the leader of Malaysia. It’s sad and actually surprising, and I do not think it will go down well with the people.”

Khairy Jamaluddin, the Sports and Youth Minister, has waded into the debate about Mahathir’s nomination and said that the country will be plunged into chaos and political instability.

When Mahathir wrote his controversial book “The Malay Dilemma,” he was not afraid to list the Malays’ shortcomings, but he gave them a new sense of identity. The Ketuanan (Malays first) myth.

One political analyst said, “Although Ketuanan Melayu was detrimental to the young democracy, it provided the desired momentum to drive the Malays from their feudal mentality. With Mahathir’s affirmative action policies, the Malay middle class grew, but so did their ego and greed. They cast aside their moral values. For many, there was no going back.”

The upcoming general election will undisputedly be one of many firsts and ironies.

Image result for The greedy and Corrupt Rosmah MansorPower hungry, corrupt, greedy,  and ambitious Rosmah Mansor is believed to be the driving force behind the hen-pecked Prime Minister Najib Razak.

In GE-14, the PM and his former mentor will face one another from opposite sides of the political divide. Mahathir didn’t figure the “self-styled First Lady of Malaysia” (FLOM) into the mentoring equation. The equally power hungry, corrupt, greedy,  and ambitious Rosmah Mansor is believed to be the driving force behind Najib, who redrew the political script.

The other irony is that Mahathir was rescued from the political wilderness by Razak Hussein, Najib’s father, when he was banned from UMNO in 1969 for insubordination towards Tunku Abdul Rahman, Malaysia’s first Prime Minister. Today, Mahathir seeks to destroy the political future of his savior’s son.

The problems such as cronyism and Malay nationalism that plague Malaysia today had their roots during Mahathir’s tenure. The controls that the nation’s founding fathers formulated, such as the independence of the judiciary, were dismantled by Mahathir.

Mahathir clipped the wings of the country’s nine sultans, whom he felt were abusing their power, especially when it was alleged that he had to rescue at least one sultan from gambling debts and placate an angry public when another sultan was accused of inflicting grievous bodily harm on a subject.

If he were to win GE-14, would he continue to follow this path? Some members of the rakyat would like to think that he would.Today, despite criticizing Mahathir for his past policies, Najib has honed them.

Najib has until August 2018 to call the elections, but he is aware that timing is everything. The indications are that he will call GE-14 after the Chinese New Year, which falls on 16 February. He will not wait till after June, because that is when Anwar Ibrahim is due to be released. With his release, a newly energized rakyat would demand that Anwar be pardoned and be made the PM. Najib cannot afford to have this happen.

Najib cannot hold GE-14 now, because the Selangor state’s redistricting exercise will not be complete until March. Selangor is the jewel in the economic crown. If he could wrest Selangor from the opposition, it would be a political coup.

Najib had hoped to put Pakatan Harapan on the spot, and to capitalize on the fact that the opposition coalition is currently leaderless. But the announcement of Mahathir’s opposition leadership put paid to that. Mahathir as interim PM does not auger well for Najib.

In the past, Najib and his political machinery focused their attacks on Anwar, then shifted the focus onto the DAP. Observers will have noticed the drip-drip effect of perceived “manufactured” threats against Islam, such as a baseless claim by a pro-UMNO lecturer that Selangor State Assembly speaker Hannah Yeoh, in her book, “Becoming Hannah” was advocating converting Malays to Christianity.

In recent months, the party apparatchiks have increased their attacks against Mahathir, tell-tale signs that they see him as a serious threat. That will explain the increasing criticisms of Mahathir, his past policies and his closest aides.

The internal revenue department has scrutinized both his business friends’ and sons’ income tax returns. Even family members have not been spared. Mukhriz, Mahathir’s son, was horrified to discover that his daughter’s jet-set lifestyle was exposed.

Mahathir as the interim PM is disastrous for Najib. This will stymie UMNO’s attempt to denounce a PH PM such as Lim Kit Siang or Lim Guan Eng, because he is Chinese. Najib cannot then say that the DAP or the Chinese are dictating the charge of the Opposition.

With Mahathir at the helm, the Malays, both urban and rural, are more confident to support the Opposition. Indoctrination is strongest amongst the Malays, unlike the non-Malay community. Malays are still fearful and wary of being dominated by the Chinese. Issues like 1MDB have little traction amongst them, but the rising cost of living, and the scandals surrounding FELDA, have hurt them most.

GE-14 means different things, to different people. The rakyat sees GE-14 as a means to remove an oppressive government and put Malaysia on the right track.

Najib and UMNO see GE-14 as a struggle for political survival and physical freedom. And while a few may see the election as a clash between a mentor and his pupil, or a clash between two warlords Mahathir himself sees it as a means to restore his tarnished reputation after the decline in the moral values of the Malays, that his policies have created.

Mariam Mokhtar is a regular correspondent for Asia Sentinel

Politics and the Changing Face of Corporate Malaysia


January 3, 2018

Politics and the Changing Face of Corporate Malaysia

by Chua Su-Ann

 

http://www.theedgemarkets.com/article/state-nation-politics-and-changing-face-corporate-malaysia

Image result for terence gomez book

Dr. Edmund Terence Gomez and Dr. Jomo Kwame Sundaram

THE face of Corporate Malaysia has changed many times over the decades and it is not driven by pure market forces. Instead, it is inextricably linked to state intervention in the economy and politics, says Universiti Malaya’s Prof. Dr. Edmund Terence Gomez.

“The nature of state intervention in the economy is very much driven by the politics of the country,” Gomez says at a lecture at Monash University Malaysia in Bandar Sunway, Selangor.

His lecture illustrated the scale and implication of the nexus between politics and business. These are among the findings that will appear in his book Minister of Finance Inc: Ownership and Control of Corporate Malaysia.

Image result for terence gomez book

From Gomez’s research, there are several defining moments that are inextricably linked to Malaysia’s politics and history.

“Many of the outcomes we see today have been shaped by who was the prime minister at particular moments in Malaysian history,” says Gomez.

The first defining moment, according to him, was in 1970 when the New Economic Policy (NEP) was introduced by then Prime Minister Tun Abdul Razak Hussein (dec 1976) to fight poverty and redistribute wealth more equitably. It was then that the government decided to cast away its laissez-faire policy and actively intervene in the corporate sector.

“The NEP was a policy that the country needed. It involves state intervention to rectify the problems that had occurred under colonial rule where the bypassing of Malays in business was a key problem,” says Gomez.

According to his analysis of the most valuable companies in 1971, the key players in the economy were foreign-owned firms and family businesses — owned mostly by the Chinese — which controlled 61% and 23% of the economy respectively.

It was in the 1970s that the state intervened by creating well-funded public enterprises that went out and acquired the assets of foreign companies.

The next turning point came in 1981, when Tun Dr Mahathir Mohamad became Prime Minister.

Image result for dr. mahathir mohamad

Malaysia’s Father of Crony Capitalism

“He decided that the purpose of the NEP was to create bumiputera capitalists or bumiputera businessmen, not GLCs (government-linked companies). The [NEP’s] emphasis on education diminished and its focus moved to business,” says Gomez.

This is notwithstanding the fact that the most valuable companies in 1997 were still government controlled, including Telekom Malaysia Bhd, Tenaga Nasional Bhd, Malayan Banking Bhd and Petronas Gas Bhd, all in the top four.

But it marked the start of an era where many public enterprises were privatised in order to help create a class of bumiputera capitalists.

Gomez’s analysis of the top 30 most valuable Malaysian companies in 1997 shows that prominent businessmen controlled 11 of the top 30 firms. They included Tan Sri Halim Saad (United Engineers Malaysia Bhd, Renong Bhd), Tan Sri Tajudin Ramli (TR Industries Bhd, Malaysian Airline System Bhd), Tan Sri Rashid Hussain (Development and Commercial Bank Bhd), Tan Sri Yahaya Ahmad (Edaran Otomobil Nasional Bhd, Perusahaan Otomobil Nasional Bhd, Heavy Industries Corp of Malaysia Bhd) and Tan Sri Azman Hashim (AMMB Holdings Bhd).

Then came the 1997 Asian financial crisis, another turning point. “The financial crisis came and all this fell apart. We see the move from private businesses to GLCs coming to the fore and taking control,” says Gomez.

Analysis of the most valuable companies in 2001, after the financial crisis was over, shows the fall of the bumiputera capitalist class. Among the top 30 most valuable firms, Rashid’s RHB Capital comes in at No 14 and Azman’s AMMB Holdings clocked in at 23rd.

Similarly, in 2013, the year of the last general election, the only two bumiputera-controlled companies in the top 30 list were SapuraKencana Petroleum Bhd (controlled by the Shamsudin family) and Azman’s AMMB Holdings at No 15 and 20 respectively.

“The key figures in 2001 were the GLCs, and 12 years later, in 2013, the key figures in the corporate sectors were still the GLCs. The GLCs have emerged as key players in the economy and have sustained themselves,” say Gomez.

What does this say about the GLCs? Gomez cautions against assuming that GLCs are underperformers or run-of-the-mill firms. “What we are seeing here are dynamic firms maintaining their performance as the top companies in the country.”

By 2013, seven of the top 10 companies were GLCs, which also made half of the top 30.

During Tun Abdullah Ahmad Badawi’s time, he pushed for GLC transformation, which saw a new class of professional managers take the reins at important companies.

The other interesting development in 2013 is that foreign-controlled firms were re-emerging as important players in the economy. They included DiGi.Com Bhd, British American Tobacco (M) Bhd and Nestlé (M) Bhd, which are among the top 30 most valuable companies in Malaysia in 2013.

Gomez also points out another important finding — manufacturing firms are no longer a major force in the economy. “The industrial elite of old have fallen away. Industrial companies have not been investing in R&D. They have been fearful of the state,” says Gomez.

“Where are all the companies involved in the high-technology sector or highly innovative companies? If you look at this list, we are looking at companies involved in utilities, finance, construction and property development. It’s not going to take you anywhere in the long run.”

Where does it leave us today?

The first phase of Gomez’s research focuses on the government-linked investment companies (GLICs), which are major players in the economy by virtue of their web of ownership and control over a vast empire of companies.

The seven GLICs analysed by Gomez’s team are Minister of Finance Inc, Permodalan Nasional Bhd, Khazanah Nasional Bhd, Kumpulan Wang Persaraan (KWAP), the Employees Provident Fund (EPF), Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentera.

These GLICs control over 68,000 companies directly and indirectly with minority interest. “The seven GLICs control important companies in the economy. They have majority ownership of 35 public-listed companies and in terms of market capitalisation, they control about 42% of the entire Bursa Malaysia,” Gomez says.

He argues that this is of concern because this points to extreme concentration of power in Minister of Finance Inc.

The nature of corporate control was different under the different prime ministers. “The nexus between state and business is under constant transition. Under Razak, it was about public enterprises, Mahathir was about big business, Abdullah was focused on SMEs and [Datuk Seri] Najib [Razak] is back to the GLICs.”

As Gomez describes it, Dr Mahathir was “extremely involved” in the economy while Abdullah was not very involved. Najib, on the other hand, is selectively involved in the economy.

“There is an unprecedented concentration of power in the executive. The key company here is MoF Inc, the super entity … What does this control allow the executive to do?” he asks.

Gomez is proposing several reforms to reduce this concentration of power. He says that to ensure proper checks and balances, the prime minister cannot also maintain the finance portfolio.

Gomez is also calling for an operational oversight body for GLICs and GLCs, instead of concentrating it in the Ministry of Finance. This could provide policy coherence and coordinate GLIC and GLC activities to achieve specific social and economic objectives.

Gomez points out that the professional managers of the GLICs and GLCs should be given autonomy to run their respective companies. “Professional managers with autonomy but accountable to parliamentary select committees headed by opposition members. This can be done tomorrow.”

 

 

Beware Public Private Partnerships


November 29, 2017

Beware Public Private Partnerships

Image result for jomo kwame sundaram
Prof. Jomo Kwame Sundaram

Public-private partnerships (PPPs) are essentially long-term contracts, underwritten by government guarantees, with which the private sector builds (and sometimes runs) major infrastructure projects or services traditionally provided by the state, such as hospitals, schools, roads, railways, water, sanitation and energy.

Embracing PPPs

PPPs are promoted by many OECD governments, and some multilateral development banks – especially the World Bank – as the solution to the shortfall in financing needed to achieve development including the Sustainable Development Goals (SDGs).

Since the late 1990s, many countries have embraced PPPs for areas ranging from healthcare and education to transport and infrastructure with problematic consequences. They were less common in developing countries, but that is changing rapidly, with many countries in Asia, Latin America and Africa now passing enabling legislation and initiating PPP projects.

Image result for crony capitalism

Nevertheless, experiences with PPPs have been largely, although not exclusively negative, and very few PPPs have delivered results in the public interest. However, the recent period has seen tremendous enthusiasm for PPPs.

Financing PPPs

Undoubtedly, there has been some success with infrastructure PPPs, but these appear to have been due to the financing arrangements. Generally, PPPs for social services, e.g., for hospitals and schools, have much poorer records compared to some infrastructure projects.

One can have good financing arrangements, e.g., due to low interest rates, for a bad PPP project. All over the world, private finance still accounts for a small share of infrastructure financing. However, concessional financing arrangements cannot save a poor project although they may reduce its financial burden.

PPPs often involve public financing for developing countries to ‘sweeten’ the bid from an influential private company from the country concerned. ‘Blended finance’, export financing, and new aid arrangements have become means for governments to support their corporations’ bids for PPP contracts abroad, especially in developing countries. Such business support arrangements are increasingly passed off and counted as overseas development assistance (ODA).

Undermining rights

PPPs often increase fees or charges for users of services. PPP contracts often undermine consumer, citizen and human rights, and the state’s obligation to regulate in the public interest. PPPs can limit government capacity to enact new policies – e.g., strengthened environmental or social regulations – that might affect certain projects.

PPPs are now an increasingly popular way to finance ‘mega-infrastructure projects’, but dams, highways, large-scale plantations, pipelines, and energy or transport infrastructure can ruin habitats, displace communities and devastate natural resources. PPPs have also led to forced displacement, repression and other abuses of local communities and indigenous peoples.

There are also growing numbers of ‘dirty’ energy PPPs, exacerbating environmental destruction, undermining progressive environmental conservation efforts and worsening climate change. Typically, social and environmental legislation is weakened to create attractive business environments for PPPs.

PPPs often expensive, risky

Image result for PPPs often expensive, risky

Since the late 1990s, many countries have embraced Public-Private Partnerships for areas ranging from healthcare and education to transport and infrastructure as a solution to persistent underdevelopment. Credit: IPS

 

In many cases, PPPs are the most expensive financing option, and hardly cost-effective compared to good government procurement. They cost governments – and citizens – significantly more in the long run than if the projects had been directly financed with government borrowing.

It is important to establish the circumstances required to make efficiency gains, and to recognize the longer term fiscal implications due to PPP-related ‘contingent liabilities’. Shifting public debt to government guaranteed debt does not really reduce government debt liabilities, but obscures accountability as it is taken ‘off-budget’ and no longer subject to parliamentary, let alone public scrutiny.

Hence, PPPs are attractive because they can be hidden ‘off balance sheet’ so they do not show up in budget and government debt figures, giving the illusion of ‘free money’. Hence, despite claims to the contrary, PPPs are often riskier for governments than for the private companies involved, as the government may be required to step in to assume costs if things go wrong.

Marginalizing public interest

Image result for Najib Razak the corrupter

Malaysia’s Corrupter-in-Chief Najib Razak

Undoubtedly, PPP contracts are typically complex. Negotiations are subject to commercial confidentiality, making it hard for parliamentarians, let alone civil society, to scrutinize them. This lack of transparency significantly increases the likelihood of corruption and undermines democratic accountability.

PPPs also undermine democracy and national sovereignty as contracts tend to be opaque and subject to unaccountable international adjudication due to investor-state dispute settlement (ISDS) commitments rather than national or international courts. Under World Bank-proposed PPP contracts, national governments can even be liable for losses due to strikes by workers.

Thus, PPPs tend to exacerbate inequality by enriching the wealthy who invest in and profit from PPP projects, thus accumulating even more wealth at the expense of others, especially the poor and the vulnerable. The more governments pay to private firms, the less they can spend on essential social services, such as universal social protection and healthcare. Hence, PPP experiences suggest not only higher financial costs, but also modest efficiency gains.

Government procurement viable

One alternative, of course, is government or public procurement. Generally, PPPs are much more expensive than government procurement despite government subsidized credit. With a competent government doing good work, government procurement can be efficient and low cost.

Yet, international trade and investment agreements are eroding the rights of governments to pursue such alternatives in the national interest. With a competent government and an incorruptible civil service or competent accountable consultants doing good work, efficient government procurement has generally proved far more cost-effective than PPP alternatives. It is therefore important to establish under what circumstances one can achieve gains and when these are unlikely.

http://www.ipsnews.net/2017/11/beware-public-private-partnerships/