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.

Image result for Mid-Term Review of the Eleventh Malaysia Plan

“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.

People voted for a newer Malaysia, not racialised Politics 2.0


November 1, 2018

People voted for a newer Malaysia,  Ketuanan Melayu 2.0

Image result for new melayu hilang di dunia

20th Century Mindset in A 21st  Century 4th Industrial Revolution Pluralist Era–The Kris Vs Technology and Innovation

“The voters in GE-14 voted for a new Malaysia. Equal opportunity in education, lessening of race-based politics, abolishing of tolls and whatever that was promised by the then opposition, the “Coalition of Hope” of the Mahathir-led campaign against kleptocracy and the materially, morally and ideologically corrupt regime of Najib.

At least that was the promise which then turned into a primarily false one, leaving the voters feeling lied to and short-changed”–Dr. Azly Rahman

Opinion  |
by Dr. Azly Rahman*

COMMENT | As we read about the “Operasi Lalang 2.0” or “Weed-Out-the-Corrupt Campaign of the New Regime” at play and in full throttle as in the McCarthyism of our cultural sensibility, as we see more leaders hauled up to be tried for grand theft, money-laundering and for bankrupting and corroding society, we ask: what next in this metamorphosis and game of political karma we are to see?

Image result for pakatan harapan

All these against the backdrop of talks of the third car project, crooked bridge, political-party border-crossings, renewed demands to strengthen Malay rights, postponed promises, and to rebrand fundamentalist Islamic identity in preparation for the challenges posed by the super liberals and the LGBT. What will the new coalition transform into in a country whose political parties are addicted to a race-based ideology?

Then, there is the crucial issue of a newer UMNO and newer BN emerging, with talk of 40 UMNO MPs crossing over to Bersatu. There was also the latest statement by a minister that Ketuanan Melayu will end soon, replaced by the idea of making every Malaysian prosperous. Then the idea was immediately repudiated by another minister, a former Deputy prime Minister in the regime of the Najib Abdul Razak.

I have a sense that the latest developments in the continuing chaos produced in PKR, the seemingly silent DAP in addressing the issues the party once opposed, the talk of a new Indian party, and, of course, the strengthening and enlarging of Bersatu – all this points not only to the emergence of a BN reloaded, a 2.0 version of Malaysia’s race-based politics.

I might be wrong. We shall observe the developments. We may even see more “Kajang Moves”, cross-overs, and more intense struggle for power within and amongst the coalition parties.

Image result for new UMNO?

The voters in GE14 voted for a new Malaysia. Equal opportunity in education, lessening of race-based politics, abolishing of tolls and whatever that was promised by the then opposition, the “Coalition of Hope” of the Mahathir-led campaign against kleptocracy and the materially, morally and ideologically corrupt regime of Najib.

At least that was the promise which then turned into a primarily false one, leaving the voters feeling lied to and short-changed.

The hope for the non-Malays, non-bumiputera to stop being treated as second-class citizens in the land called Malaysia they and their parents and grandparents, too, toiled for will not be realised after all. The rhetoric of today’s new Malaysia is the same old rhetoric of keeping the status quo alive.

Image result for DAP

DAP is the New MCA?–The Silent Partner in Pakatan Harapan

This means that there will be no push for the idea of “Malaysian Malaysia” and equal opportunities in education, especially for all non-Malays. Hope buried. When the new coalition has transformed into a newer version of the old politics, the non-Malays can expect another five decades of racialised politics affecting the future of their children.

This is not a grim view of what I see developing. I am sure some of my esteemed readers, too, share a similar perspective of a hope for the triumph of multiculturalism dashing. Unless the Harapan government can, in unison, with consistency and as a policy, state its commitment to make Malaysia a place in which no Malaysian will be left behind.

Where are we heading?

Back to Umno and its sudden death. The talk about more UMNO MPs leaving for Bersatu is of concern for those who voted for hope and for real change.

But what will replace UMNO in this time of a “new Malaysia” in which race and religion continues to be the strongest force for the current regime as well, to continue policies inspired by her own apartheid system of divide and conquer with wealth, power, hegemony, and ideology as the hybrid of authoritarianism, continue to glue the still-cognitively unliberated society?

The question remains: what kind of Malaysian Malaysia do we wish to see? How will a rebranded Umno be an obstacle to this?

The key to dealing with any rot from happening is to educate for change. If the change we wish to see is for a Malaysia for all Malaysians, education, as the only means for a sustainable cognitive, cultural, personal and social progress should be the one taking lead.

When politics continues to travel the trajectory of ethnocentrism and only pays lip-service to multi-culturalism and the restructuring of society through a philosophy of education based on a truly Malaysian reconstructionism, we will fail as a people.

Education needs to step in and correct the political conveyor belt, changing course. As it is now, we are not seeing the Ministry of Education committed to producing such a change to reverse the major aspects of discrimination in the various levels of schooling. The issues of class, caste, race, religion and privilege is not addressed systemically.

Like many, I am concerned with the disjuncture between politics, education, economy, and national unity. There is an unhealthy development in the way party-politics is moving.

Our concerns may turn into fear of yet another wave of chaos as parties and followers and consumers of ideology and real and fake news alike prepare for another general election that will only bring stagnancy, not change.

Where are we heading? What then must we do to drum into the new regime that race-based politics should no longer be allowed to rear its ugly head?


*Dr. AZLY RAHMAN is an educator, academic, international columnist, and author of seven books available here. More writings here.

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

The Malays in Business–Summing Up


October 21, 2018

The Malays in Business–Summing Up    

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

Image result for Malay in Business

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.

Image result for Robert Kuok

 

 

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.

New regimes, old policies and a bumiputera reboot


September 20, 2018

New regimes, old policies and a bumiputera reboot

by Dr. Hwok-Aun Lee

http://www.newmandala.org/new-regimes-old-policies-bumiputera-reboot/

Image result for Hwok Aun-Lee

Dr. Hwok-Aun Lee is Senior Fellow at the Institute of Southeast Asian Studies (ISEAS), Singapore, with the Malaysian Studies and Regional Economic Studies programmes, Hwok- Aun has researched and published widely on affirmative action in Malaysia and South Africa. He was previously head of Development Studies, Faculty of Economics at University of Malaya.

Malaysia’s incipient Pakatan Harapan (PH) government, inheriting the country’s financial debacles and its extensive and complex ethnic policies, negotiates a three-cornered tussle.

Image result for pakatan harapan government

As a first order of business, it must clear a fiscal morass and deliver on election promises of integrity, transparency, and prudence. The government also strives to accommodate the interests of constituencies it won by a landslide, which brings various non-Malay concerns to the fore.

At the same time, PH seeks to allay anxieties of substantial segments of the Malay electorate that remain wary of the new dispensation, and perceived loss of privileges and sureties. This is a difficult balancing act, demanding delicate transitions and bold new mindsets.

Thus far, we see firm action on fiscal discipline, and familiar electoral overtures and concessions. But old mindsets endure. Their prevalence, exhibited in the open tender and ethnic reservation policies in public procurement, and in ethnic allocations in higher education, will hinder PH’s capacity to make headway in promoting Bumiputera capability and competitiveness, which are prerequisites for systematically rolling back ethnic preference.

New government, old policies?

Ten years apart, Lim Guan Eng (the Democratic Action Party chief) gave starkly similar policy assurances to Malay contractors – from vastly different positions. The first episode occurred in April 2008 when Lim was catapulted to high office following the 12th General Elections (GE12). As Penang Chief Minister, he assured Malay contractors that his administration’s open tender policy would not sideline them. While announcing the policy a few weeks prior, he justified it as a means to arrest the New Economic Policy’s (NEP) cronyism, corruption, and inefficiency. His words stoked anxiety and ire among some Malay groups. UMNO, hegemon of the Barisan Nasional (BN) federal government, capitalised on these sentiments to foment fiery public protests against Lim. Over 10 years, open tenders were implemented in Penang for larger contracts, while the smallest category was reserved for Malay contractors, in line with BN-prescribed federal policy.

The second episode passed in June 2018. Freshly appointed Malaysian Finance Minister Lim Guan Eng affirmed an open tender policy for federal public procurement – backed by the PH’s groundbreaking occupation of Putrajaya. And yet, swift on the heels of this pronouncement, he again declared that the government would not sideline Malay contractors. He even appended a befuddling note that “open tender” means open to all Malay contractors (with more competitive selection). Malay contractors hadn’t protested in the streets, although they had met with the Council of Eminent Persons just two weeks after GE14. Perhaps they were given enough assurances to preempt public dissent, but Lim also strenuously avoided upsetting the status quo.

Hence, we see no indication that public procurement procedures may be enhanced and invigorated. Open tenders for medium and large contracts – where non-Bumiputera companies more actively participate – satisfy some electoral constituencies; continual reservation of small contracts for Bumiputera firms satisfies others.

This is unfortunate, because Malaysia cannot fulfill the ultimate goal of rolling back ethnic preferential policies – professed by both the PH and BN coalitions for the past decade – unless the country clarifies, enhances, and broadens the ways it develops Malay capability and competitiveness.

Public procurement has distributed enormous largesse over many decades, but has fallen far short of its goal of grooming Malay enterprise. To be sure, the policy has in the past been vitiated by UMNO patronage and ‘Ali-Baba’ arrangements where a politically connected UMNO fixer secures the deal and subcontracts the work – typically to a Chinese company. These fronting practices have been tackled in recent years, and the new administration shows added resolve to cleanse and depoliticise the system. But it remains unclear about how it will leverage government contracting for broader developmental objectives.

The current state of the sector, with a handful of dynamic large-scale Malay contractors and overwhelming concentration of protected, static small-scale contractors, may well be perpetuated. Three-quarters of Bumiputera contractors are classified as G1, the smallest of seven tiers needing paid-up capital of only RM5,000-10,000 (A$1690-3380), and almost all remain there. In 2011, less than 0.2% of them graduated to G2 or G3. G1 contractors must be 100% Bumiputera owned and qualify for contracts worth RM200,000 (A$67,581) or less, which are allocated via balloting, not tendering. Given these conditions, who would want to move up? The flip side of “not sidelining Bumiputera contractors” is not doing much at all to facilitate expansion, innovation, and competitiveness.

A similar scenario has played out in the higher education sphere. Matriculation colleges offer a faster track to enter university, and since their rapid expansion from the late 1990s, have been the predominant pre-university option for Bumiputera students. Matriculation programmes were originally fully reserved for Bumiputeras, but since 2003 they have applied a 10% non-Bumiputera quota.

The quota balance, and occasional special allocations, epitomise Malaysia’s political bargain, where size of the ethnic slice preoccupies policy considerations, much more than the efficacy and equitability of the intervention. Pre-GE14, BN promised 700 places in matriculation colleges to Indian students. Post-GE14, PH announced an extra allocation of 1,000 spaces to Chinese students from B40 households (the bottom 40%, based on household income). The addition of socioeconomic criteria marks a progressive step, but simultaneously raises questions over its selective application to one ethnic group. Facilitating more entry of disadvantaged students into higher education should be high on the agenda of a government declaring priority in expanding need-based policies.

Understandably, the programme must remain accessible to Bumiputera students. PH is studiously aware that it has not won over the majority of the Malay electorate; analysis of GE14 results show the community’s vote roughly split 35-40% for BN, 25-30% for PH , 30-33% for PAS. PAS has also heightened the volume and fervour of its Malay “privileges” advocacy, alongside its Islamist raison d’etre. Education Minister Maszlee Malik reiterated that the additional 1,000 matriculation spaces for B40 Chinese would not reduce the spaces for Bumiputeras. So matriculation colleges will remain predominantly reserved for Bumiputeras, perhaps with continual allotments to particular groups.

However, allocating more quotas for other groups lowers the academic bar for more beneficiaries. It continues to set back Bumiputera capability development, due to the deficiencies of the matriculation programme. Studies have shown that matriculation graduates fare poorer than STPM (Malaysia’s A-levels equivalent) graduates upon entry to university. Education disparities are deeply rooted. Advantage and disadvantage overlap with various factors, including ethnicity and geography, and can start from the pre-school stage, setting students on diverging academic trajectories. While matriculation colleges cannot be expected to close the achievement gaps they can arguably play a more meaningful and effective role in narrowing them. To Malaysia’s ultimate detriment, the content and rigour of the matriculation programme are never brought to the table.

Interestingly, Maszlee has mooted the notion of a single pre-university system, which entails merging the STPM, matriculation, and a host of other university entry channels. It’s a worthwhile consideration, but it does not seem possible until the average ethnic achievement gaps are narrowed, which in turn looks improbable unless the matriculation colleges are revamped.

Basic reset

Racial quotas and reservations remain because their removal risks alienating the beneficiaries. Surveys consistently show a substantial majority of Malays favour the continuation of preferential policies.

Despite bi-partisan rhetoric since 2010, of shifting away from race-based affirmative action to need-based affirmative action, the vast bulk of Bumiputera preferential programmes have remained untouched, from matriculation and contracting quotas mentioned above, to microfinance, technical training, business loans, scholarships and asset ownership schemes. The vast programmes deliver benefits, and embed expectations of continued special treatment.

Mindful of these realities and sentiments, both PH and BN governments underscored their support for the Bumiputera agenda before and after GE14. PH typically highlights the worst abuses of the system, involving UMNO patronage and utilisation of state-disbursed opportunity for private gratification. Cleansing UMNO-linked rapacity from the system addresses one problem – undoubtedly, a big problem – but omits the much wider interventions that reach out to ordinary Bumiputeras. This mindset neglects to pay critical attention to the manifold, massive programmes that serve Bumiputera masses. The sedentary and muddled state of Bumiputera policy warrants a basic reset.

The Future of Bumiputeras and the Nation Congress of September 1,  2018, organised by the Ministry of Economic Affairs, necessarily affirmed the Bumiputera agenda while sharply critiquing abuses and shortfalls of the UMNO-administered system, and exhorting Malay business to change mindset. However, the event offered few specific propositions, and omitted distinctions between higher education, enterprise development, employment, and wealth ownership policies.

How should the PH government proceed? First, by anchoring Bumiputera policies on the fundamental objective of broadly developing capability and competitiveness, and the prime missions of equipping and empowering the community to graduate out of receiving special assistance, toward rolling back the existing system of ethnic preference. Second, by recognising that Bumiputera policies operate differently in the specific sectors where they are embedded – higher education, high-level occupations, enterprise development, wealth and property ownership – which demands sector-specific reforms.

Third, by systematically integrating ways to reinforce needs-based and merit-based selection into the policy regime. Two main applications arise: the policy regime should expand the scope for needs-based selection, where appropriate, to target the disadvantaged and to impose sunset clauses and limits on those who have benefited. In some but not all policy sectors, need-based schemes can feasibly replace race-based schemes. The regime should also expand the scope for merit-based selection to select Bumiputera beneficiaries with capability and potential to showcase success and achieve competitiveness – as pathway to rolling back preferences.

The government contracting and matriculation college cases are illustrative, but of course the principles can be applied more broadly.

One of the barriers to reform seems to be the fear of introducing changes that may reduce access enjoyed by erstwhile beneficiaries. On this note, there may well be a window of opportunity to reconfigure public procurement, with contractors also expressing discontent at being marginalised by UMNO-linked “cronies”. Additionally, there is a broad acceptance of the need for the system to foster competitiveness.

In this light, some possible reforms – for small to medium scale projects – include:

  • Incentives for partnerships and consortia to bid for larger contracts (e.g. set aside some G4 contracts for G2 and G3 to jointly pursue)
  • Points for moving up a tier (e.g. award points for a G1 contractor who moves up to G2, applicable for the first 2-3 years after that move)
  • Sunset clauses that limit the number of contracts or time periods one can receive preferential treatment (e.g. 3 contracts, or 6 years)
  • Measures to address the funding constraints that Bumiputera contractors repeatedly identify as their main hurdle to growth.

None of these measures will disrupt contract availability in the near term, but in combination, apply pressures and incentives to upscale and graduate out of preferential treatment. The emphasis must be on learning and acquiring capability. An additional point on “needs-based” policies should be emphasised. In public procurement, and enterprise development programmes in general, the proper application of the principle runs counter to the popular notion of helping the poor. When it comes to delivering on government contracts or building competitive firms, one cannot give priority to the poor, which may adversely allocate opportunities to less capable firms, or perversely incentivise firms to remain low-earning and static. Rather than qualify poorer firms to receive special treatment, the “need” principle can apply conversely – that is, to disqualify firms that have received special treatment after reaching certain limits or sunset clauses.

In the matriculation system, and for promoting Bumiputera participation in higher education more generally, whether through pre-university programmes, university admissions, or scholarships and financial aid, there is broader scope to reach out to the disadvantaged. It is justifiable for youths from disadvantaged backgrounds to be granted preference based on those circumstances – which are not of their choosing. This intervention, occurring at the pre-adult stage of life, also potentially facilitates inter-generational upward mobility, providing further basis for preferential treatment based on “need” or “class”.

Opponents of racism in Malaysia need to understand that proponents of racial politics do believe in race—and only by understanding the appeal of racial thinking can racism be defeated.

Along these lines, Malaysia can explore ways to phase in more preferential entry for disadvantaged students into matriculation colleges, and concomitantly roll back the 90% Bumiputera quota. However, the ultimate goal of building Bumiputera capacity and competitiveness still applies. Hence, academic rigour and quality of training, as well as talent, are vital. Matriculation programmes, in particular, should look into revamping the syllabus, and Bumiputera academic achievement broadly must be overseen such that the system produces graduates who are capable and confident.

Will current levels of caution and placation on Bumiputera policies persist into the future, or will the PH government seize the opportunity to reform the pro-Bumiputera policy regime? Will it remain fearful of being accused of sidelining Malays, or will it venture forth to make Malays more capable and competitive?

Early in the post-election season, we do expect PH to pluck the low-hanging fruit of cleaning up their predecessor’s mess. But the government should not tarry too long before devising long-term strategies beyond electoral overtures and concessions. Time will tell whether PH embraces or squanders the opportunities presented by Malaysia’s monumental GE-14.

References:

 

“Lim’s remarks spark protest”, The Star, 15 March 2008 (https://www.thestar.com.my/news/nation/2008/03/15/lims-remarks-spark-protest/)

“Guan Eng prepared to face any action against him on NEP statement”, The Sun, 1 April 2008 (http://www.thesundaily.my/node/167260)

‘It was Umno, not Harapan, who oppressed Malays’ Malaysiakini, 18 July 2018 https://www.malaysiakini.com/news/434840

“Open tender system will not sideline Bumiputera contractors: Guan Eng”, The Sun, 4 June 2018 (http://www.thesundaily.my/news/2018/06/04/open-tender-system-will-not-sideline-bumiputera-contractors-guan-eng)

“Govt guarantees help for bumiputera contractors”, Bernama, 24 May 2018 (http://www.bernama.com/en/news.php?id=1466579)

“Prepare to compete, Daim tells Malay contractors”, The Malaysian Insight, 24 May 2018 (https://www.themalaysianinsight.com/s/50013)

“Bumiputera contractors told to prove their worth”, New Straits Times, 8 July 2018 (https://www.nst.com.my/news/nation/2018/07/388774/bumiputera-contractors-told-prove-their-worth)

“Open tender system for government projects – Baru”, Bernama, 7 July 2018 (http://www.bernama.com/en/general/news.php?id=1478212)

“Bumiputera Empowerment Agenda helped contractors be more competitive: PKMM”, New Straits Times, 26 September 2017 (https://www.nst.com.my/news/nation/2017/09/284220/bumiputera-empowerment-agenda-helped-contractors-be-more-competitive-pkmm)

Lee, Hwok-Aun (2017) “Malaysia’s Bumiputera preferential regime and transformation agenda: Modified programmes, unchanged system” Trends in Southeast Asia 2017 No. 22. Singapore: ISEAS (https://www.iseas.edu.sg/images/pdf/TRS22_17.pdf)

Lee, Hwok-Aun (2017) “Surveys reveal fault lines – and common ground – in Malaysia’s ethnic relations and policies” ISEAS Perspective 2017 No. 63. Singapore: ISEAS (https://www.iseas.edu.sg/images/pdf/ISEAS_Perspective_2017_63.pdf)

Mahathir the Disappointed Leader–Father


September 12, 2018

Mahathir the Disappointed Leader–Father

Opinion

by Nathaniel Tan

 

COMMENT | Over the (very many) years, Prime Minister Dr Mahathir Mohamed has kept a fairly consistent tone regarding what I suppose he might term the Malay Dilemma – a tone that we saw again during the recently held Future of Bumiputeras and the Nation Congress (KBN 2018), at the Bersatu anniversary,  and a recent interview.

I suppose I might term this tone that of the Disappointed Leader–Father.

I have this image in my head of Mahathir, himself a successful bumiputera, looking down and shaking his head while sighing, maybe face in hand, constantly disappointed at what he sees to be an endemic failure of his fellow bumiputeras to live up to his hopes and expectations.

We get the sense that Mahathir has a very clear idea of the kind of attitude and character you need to succeed as an individual and as a community, and that a big part of his persona seems to be having to deal with his view that the bumiputera do not live up to these standards.

Mahathir’s favourite counterpoint appears to be the Japanese, a fact reiterated by his recent visit to Japan and specifically named once again in the interview, where once he again he has held them up as the paragons of self-sacrificing patriots whose self-worth is tied to how diligently they can contribute to the betterment of their nation.

He then likes to ask: “Why can’t the Malays be more like the Japanese?”, in the same tone perhaps a dad would ask his kid, “Why can’t you be more like your older brother?”

Unhelpful comparisons

Mahathir’s other big go to, of course, is to compare Malays with other ethnic groups, notably the Chinese. A common theme of his seems to be something along the lines of the Chinese are successful because they are hardworking, and the Malays are not, because they are lazy.

“Mahathir’s sincerity is not doubted, and he has a great many strengths. Effective motivation, however, may not be one of them. His recent comments show that while he has changed in many positive ways, he still seems to rely on a certain amount of BN era fearmongering, his trademark sarcasm, and a degree of condescension.”

Most recently, at KBN 2018, Mahathir has taken this a step further:

Prime Minister Dr. Mahathir Mohamad today questioned whether the bumiputera will be able to compete with a new wave of skilled and business-savvy entrepreneurs from China making their way to Malaysia.

Speaking during a dialogue session on bumiputera economy, Mahathir said the new wave of immigrants will be unlike early Chinese settlers in Malaysia – who were then mostly involved in small businesses, and whose children have now gained control of major developments in the cities.

“These are the Chinese already in Malaysia whose attitudes we can accept. But if we bring in three million more people from China, what will happen to us?” he asked.

“They are hardworking and skilled in business. The ones who are coming, they are not labourers, but those who are already successful. Will we be able to compete with them?” he said in response to a question on China nationals buying property in Malaysia.”

In the West nowadays, this kind of framing would likely be denounced as having considerable elements of racism. Sadly, the truth is that this rhetoric retains the culture of fearmongering perpetrated by UMNO over so many decades – a variation on the theme that the bumiputera are under constant threat by other ethnic groups.

Mahathir’s approach is marginally better in that his conclusion is not “Therefore you need UMNO to protect you” but “Therefore you need to work much harder.” Of course, this is not to say that Mahathir’s tone has not changed at all. He now says that it is foolhardy to blame other races for the shortcomings of the Malays. On the whole, though, we should ask: is this a truly helpful approach?

Has Mahathir’s approach worked?

Mahathir’s sincerity is not doubted, and he has a great many strengths. Effective motivation, however, may not be one of them. His recent comments show that while he has changed in many positive ways, he still seems to rely on a certain amount of BN era fearmongering, his trademark sarcasm, and a degree of condescension.

If you have ever been on either end of questions like “Why can’t you be more like your brother?” being repeated over and over, I think you know the ultimately negative end result – a lot of resentment, and almost never any actual change towards becoming like the said brother.

After all the years of Mahathir’s Look East Policy, do we actually see any significant movement of Malays or Malaysians adopting Japanese values? (Anime does not count.)

I am also most curious as to where this idea of letting in three million new Chinese nationals came from. Is this a thing? Or was it plucked from thin air, to be used as the convenient bogeyman?

It’s true that global competitiveness should always be a cause for concern, but bringing up the sceptre of some sort of invasion by foreigners who bear a striking resemblance to Chinese Malaysians in a Malay-only conference could easily be seen as striking the wrong note.

The dichotomy of the ‘successful’ Chinese nationals of today compared to the ‘inferior’ Chinese labourers from whom today’s Chinese Malaysians descended could also rub people the wrong way.

Inspire hope, don’t fearmonger

Some say that the biggest two motivators are hope and fear. One might have hoped that a coalition named Pakatan Harapan might be intrinsically inclined towards one instead of the other.

At the end of the day, Malaysians are Malaysians, and the Japanese are Japanese. Each has their strengths and weaknesses, and each can learn something from one another.

If, however, you keep expecting one to become the other – something they simply are not – only disaster awaits. Your children may be siblings, but they are each unique individuals.

Instead of constantly berating or belittling Malays with fearmongering, unflattering comparisons or sarcastic jibes at every turn, think about how you can motivate them positively.

It is good that we start addressing practices like Ali Baba schemes out in the open, but why not focus more on success stories? Highlight successful bumiputera entrepreneurs and how and why they succeeded. Use them as inspiration.

Sometimes all that is needed is the reminder that having only ‘becoming rich’ as the goal is a recipe for failure.

We need only look at the lives of successful Malaysians – from any ethnic group at all – to see that the right goal is to develop the attitude, character and habits that breed success, and that once that goal is achieved, riches come fairly easily.

Abandoning the racial lens

As a Malaysiakini commentator correctly said, it is in the interests of all Malaysians for Malays to be successful. That said, perhaps a big part of the problem is looking at it as a Malay or bumiputera problem.

 

Perhaps what we need to solve racial inequality, somewhat counterintuitively, is to stop seeing everything through a racial lens, and stop obsessing about comparing one ethnic group with another.

If, for example, you have never met a lazy Chinese, you simply haven’t met enough Chinese.

It’s not accurate to go so far as to say that culture plays zero role in the welfare of a community. Sometimes, historical factors such as living in harsh climates where saving for the winter is essential to survival, breeds a slightly different work ethic than living in temperate climates, where food is easily available all year round.

That said, any type of biological determinism is inherently unhelpful, and not relevant to the question of how we can best move forward.

Play to each individual’s and community’s strengths

People react much better to being inspired and encouraged than they do to being belittled or scared–especially when it comes to becoming self-motivated achievers. Every sibling has unique strengths and talents to contribute.

The role of the parent is to play to those strengths, encourage those talents, and help each child maximise their potential – on a road that they themselves determine.

Ultimately, helping each Malaysian achieve their unique potential is the single best way to help the Malaysian family as a whole.

The way to do this is to reverse this habit of public dressing downs and bemoaning, and adopt instead an approach that does not ignore reality, but acts on that reality in a manner that is less negative, and more one of positive encouragement.


NATHANIEL TAN is eager to serve.

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