Does GDP truly reflect a nation’s progress?

 

March 18,2019

Opinion  |

by Lim Su Lin

Published: 17 Mar 2019, 6:37 am  |  Modified: 17 Mar 2019, 6:37 am

 

COMMENT | In the eyes of the world today, Malaysia is seen as a relatively affluent upper-middle income nation.

According to World Bank projections, we are expected to reach the high-income threshold sometime between 2020 and 2024.

Our economy has transformed impressively since post-Independence. From a primary resource-based, agriculture-dominant settings, Malaysia experienced industrial ‘boom and growth’ in the 1970s.

The heyday lasted roughly 30 years, followed by a gradual tapering of export-oriented industrialisation, and the tandem rise of the services sector, at the turn of the century.

Today, Malaysia’s economy continues to transform and advance, in the wake of digitalisation and accelerated technology adoption rates.

One of the ways that economists, politicians and top-level decision-makers measure our country’s progress is by referring to key national economic indicators, such as Gross Domestic Product (GDP).

Seen through the lens of GDP, Malaysia’s development story in the past decade has been one of steady progress, and encouraging year-on-year growth, as seen in the chart below.

While these are indeed comforting figures, has this economic progress also brought about improvements in other dimensions of our society? To what extent does GDP tell us the full story of socio-economic development?

A limited proxy of human well-being

To answer this question, we first need to ask ourselves if GDP is an accurate proxy for human well-being and quality of life. The brief answer to that is, not really.

GDP is typically measured by adding the following:

• a nation’s personal consumption expenditure (households’ payments for goods and services);
• government expenditures (public spending on the provision of goods and services, infrastructure, debt payments, etc.);
• net exports (the value of a country’s exports minus the value of imports); and
• net capital formation (the increase in value of a nation’s total stock of monetised capital goods).

In other words, it is a very specific tool designed for the particular purpose of measuring the flow of goods and services produced within the market, and which are publicly traded for money.

The US Bureau of Economic Analysis describes the purpose of measuring GDP as being to answer questions such as:

• how fast is the economy growing;
• what is the pattern of spending on goods and services;
• what percent of increase in production is due to inflation; and
• how much of income produced is being used for consumption, as opposed to investment or savings.

Today, many – though not all – governments continue to treat GDP not only as a measure of national economic activity, but also as if it were the default indicator of how well its people are faring.

However, this is a short-sighted view.

On the one hand, it might be true that increased economic activity spurs creation of more jobs, providing income for people to access basic necessities such as food, clothing and housing, and, over time, opportunities to accumulate capital and so enjoy more material comforts.

However, it is also important to recognise that human welfare is not exclusively based on material well-being.

Past a certain level, well-being and happiness is also determined by other social and environmental factors and activities, such as volunteer work, social capital formation within families, the costs of crime and depletion of natural resources.

These are all important indicators of economic welfare, societal well-being and quality of life, yet are entirely excluded from GDP measurements.

GDP conceals inequality

Another major weakness of using GDP as a measure of progress is that it measures how much economic activity there is, but not necessarily who might be benefitting from this economic activity.

The graph above depicts national trends in Malaysian household incomes, ranging over roughly the past two decades, sourced from the Department of Statistics (The figures shown are absolute, i.e. before adjusting for inflation.)

From 1997 to 2016, the figures show that top 20 percent earners (T20) saw their average household incomes rise from about RM8,000 to RM17,000, while income for the middle 40 percent (M40) increased at a slower pace, only from around RM3,000 to RM7,000.

What should be of greatest concern is that, compared to both these groups, the bottom 40 percent (B40) households experienced extremely lagging income growth, increasing from RM1,000 to a mere RM3,000 over two decades.

Comparing income differences at both start and end points, T20 and M40 households were initially separated by an absolute earnings gap of RM6,000 in 1997, increasing to RM11,000 in 2016.

Meanwhile, the original gap between T20 and B40 was RM8,000, and this stretched to RM15,000 in 2016.

In other words, the absolute earnings gap between the top 20 percent earners, versus the middle and bottom 40 percent households, have almost doubled in the past two decades.

The staggering, and ever-increasing, gap between richer and poorer households tells us this: although rising GDP figures may tell a shining story of economic growth and progress, not everyone is benefitting from this growth.

Closer to reality is that scores of individuals and families have been left behind in the development story. These are Malaysians, who still lack the economic wherewithal to meet their basic living needs, let alone enjoy a good quality of life.

Disguised poverty

Talking about inequality brings us to confront poverty, another major issue that has largely been disguised in national indicators and statistics.

The graph above shows official poverty counts sourced from the Department of Statistics, and trends in the reduction of poverty over the years.

One glance at these figures, and it would seem as if there is almost no poverty left in Malaysia!

According to the data, the official poverty rate has fallen from nearly 50 percent in 1970 to just 0.4 percent in 2016 (the latest year available). This supposedly amounts to one of the lowest poverty rates in the region.

Yet, relative poverty (defined as earning less than 60 percent of the median income) has risen by more than 50 percent, to three million households since 1995, based on a 2018 Khazanah Research Institute report on the state of Malaysian households.

According to the same report, 40 percent of 7.5 million households nationwide are still considered relatively poor, pointing to a starkly different reality from the rosy picture of virtual poverty eradication depicted in official figures.

Poverty line set too low

One important reason for this discrepancy lies in the limitations of the Poverty Line Index (PLI), the official indicator used to measure poverty in Malaysia.

In simple terms, PLI is an income-based index which calculates the minimum monthly income requirements of households to fulfil basic survival needs, such as food, clothing, shelter and transport.

These calculations are used to determine a cut-off threshold for poverty.

The problem with measuring poverty using this ‘cost of basic needs’ approach is that it sets the bar at an extremely low threshold, and computes income needed to fulfil only the barest minimum of necessities, instead of realistically representing the standards of what an average family would need to survive.

Currently, Malaysia’s national PLI is set at RM920 per household per month, or a little over RM7 per person per day, at average household size.

Considering the high level of living costs, not to mention the diversity of needs and demographics of households across states and regions, RM920 clearly is far from what most Malaysian families would realistically need to thrive and live decently, let alone survive.

In the government’s Household Income Surveys, PLI is further broken down into regional categories: for Peninsular Malaysia, the cut off is RM 960, whereas for Sabah, it is RM 1,180 and Sarawak, RM 1,020. But even this threshold is too low.

In comparison, Japan defines poverty as being the income of a household at or below half of the median household income. This method of estimating poverty “relatively” is the same as that used in the UK and most other OECD (Organisation for Economic Co-operation and Development) nations.

Though still not a perfect definition, it is a far more meaningful interpretation compared to an absolute poverty line that is severely out of touch with current needs.

Key takeaways

To sum up, it is important to question indicators and “grand” statistics that are commonly bandied in Malaysia’s economic debates, and understand what they truly represent.

With the GDP example, it is important to remember that economic indicators may measure the size of a country’s economic activity, but not necessarily capture the true state of economic welfare, or society’s quality of life.

On the other hand, certain other indicators, like poverty rates and the PLI, might be better “barometers” of societal wellbeing.

Yet, as argued above, the current dimensions of measuring poverty in Malaysia do not translate to a meaningful index. Rather, what it does is hide the true extent of poverty in our country.

Often times, the power of simple, easy-to-grasp figures can mask the presence of critical issues that are setbacks to human-centred development and well-being: chronic income inequality among different households for instance, or lingering impoverished and vulnerable communities.

These matters require critical attention from the authorities and those involved in steering policy decisions.

There needs to be more criticism of how certain measures and indicators have been popularised as proxies for national progress, and collective effort to develop better measures, hand-in-hand with a strong and sustained reform process.

If we can collectively accept that the overall goal of an economy is to sustainably improve human well-being and quality of life, then we will not be satisfied with maintaining the status quo.

Instead, we will make it a priority to unmask the realities that have been shoved under the carpet, and push for necessary changes, so that there will be more equally balanced development, and a better future for all citizens of this country.

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LIM SU LIN is a policy analyst with the Penang Institute. A History graduate from Cambridge University, her research interests lie primarily in promoting good mental health as a criterion for public policy, and to carry out research into the social, economic and cultural factors that help to enhance mental well-being and support recovery from mental distress.

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

FOCUS On POVERTY alleviation, not income creation for billionaires–Mahathir’s outdated policy prescriptions

January 16, 2019

FOCUS On POVERTY alleviation, not billionaires —Mahathir’s outdated policy prescriptions

by P. Gunasegaram

QUESTION TIME | When Prime Minister Dr Mahathir Mohamad sank low to say that wealth should be distributed equally among races, he indicated plainly that he has no solid plan to increase incomes and alleviate poverty for all Malays and Malaysians. His priorities are elsewhere.

Note that he talks about the distribution of wealth, not increasing incomes, which is more important because this is what will eventually result in a proper redistribution of wealth by valuing fairly everyone’s contribution  to wealth creation.

During his time as Prime Minister previously for a very long 22 years from 1981 to 2003 out of 46 years of independence at that time – nearly half the period of independence – he had plenty of opportunities, but squandered them.

He did not care for the common Malay, but was instead more focused on creating Malay billionaires overnight through the awarding of lucrative operations handled by the government or government companies previously, such as roads, power producers, telecommunications and others.

He depressed labour wages by bringing in millions of workers from Indonesia, and subsequently Bangladesh and the Philippines, to alter the religious balance in Sabah. A significant number of them became Malaysian citizens over the years, altering the overall racial and religious balance in the country.

By doing that he let his own race down, many of whom were workers and small entrepreneurs whose incomes were constrained by imported labour. Even now, Mahathir has not shown a great willingness to increase minimum wages, which will help many poor Malays and bumiputeras increase their incomes.

As Mahathir himself well knows, distribution is not an easy thing. Stakes held by others cannot be simply distributed, but they have to be sold, even if it is at depressed prices as it was under the New Economic Policy or NEP, when companies wanted to get listed.

Instant millionaires

There are not enough Malays rich enough to buy these stakes, but many of them in the Mahathir era and earlier, especially the connected elite, became rich by purchasing the 30 percent stakes for bumiputeras that had to be divested upon listing by taking bank loans.

By simply flipping the stakes on the market at a higher price after they were listed, they pocketed the difference and became instant millionaires.

It was Mahathir’s brother-in-law – the straight, honest and capable Ismail Ali – who was the architect behind the setting up of Permodalan Nasional Bhd or PNB to hold in trust for bumiputera stakes in major companies. PNB now has funds of some RM280 billion and has been enormously successful in this respect.

But Mahathir, with advice from Daim Zainuddin who became his Finance Minister, still cultivated selected bumiputera leaders, many of them Daim’s cronies, and gave them plum deals. A slew of them who were terribly over-leveraged got into trouble during the 1997-1998 financial crisis.

The government, often through Khazanah Nasional Bhd, had to rescue some of the biggest ones, resulting in Khazanah holding key stakes in many companies such as Axiata, CIMB, PLUS and so on. Recently, the government has been talking about, not surprisingly, selling these stakes to investors, accusing Khazanah of not developing bumiputera entrepreneurship, which was not anywhere in its original aims.

It becomes more obvious what Mahathir is talking about. Redistribution of wealth now will come out of the selling of government (Khazanah) and PNB stakes to individual Malay entrepreneurs to equalise wealth distribution among the races. To make it more palatable, some willing Indian entrepreneurs, too, may be found.

The modus operandi will be to sell the stakes when prices are depressed and perhaps even to offer a bulk discount to these so-called entrepreneurs who, of course, will not only be among the elite, but who are cronies. That will ensure a steady flow of funds into Bersatu in future from donations to help make it the premier party in the Pakatan Harapan coalition.

Mahathir knows full well that equal wealth distribution is impossible – it’s never been done anywhere before and makes wealth acquisition disproportionate to intelligent effort and hard work, a sure recipe for inefficiency, corruption and patronage. As eloquently argued by prominent political economy professor Terence Gomez, patronage is king in new Malaysia – if it was cash during Najib’s time.

Mahathir does not have the wherewithal to lead anymore, if he ever had it in the first place. Eight months after GE14, he is still bereft of a plan to increase incomes and improve livelihoods. He needs to recognise he does not have one and that he stays in power because of the strength of the other parties in the coalition.

Wrong direction

The only way to close the wealth gap is to increase future incomes across all races. Anything else is the expropriation of other people’s wealth. In the meantime, the holding of wealth in trust by state agencies is perfectly acceptable because the income comes back to the government.

This can be wisely used to improve the quality of education, get better quality investments, raise productivity and hence labour wages, and provide equal opportunities for growth and innovation among all communities. As so many people have said before me, you can equalise opportunities, but not outcomes.

So far, 61 years of UMNO-BN have not managed to equalise opportunities for all as the government education system is in shambles, among others. And eight months of Harapan is heading in the wrong direction under Mahathir.

Despite Bersatu being a party expressly formed to fight for Malay rights, Mahathir’s party had the lowest support from Malays of parties looking after Malay rights, including Umno, PAS, PKR and Amanah.

He is still stuck in a mode to widen his rather narrow and vulnerable power base (his Bersatu won only 13 seats of 52 contested, the worst win rate of any party in the coalition) unethically by attracting tarnished MPs from Umno into the Bersatu fold, in the process willing to break agreements with other coalition partners and doing/advocating things which are against the principles of a properly functioning democracy.

He has also said he will not honour some manifesto promises, saying that these were made when Harapan did not expect to win the elections – a rather lame excuse. He has not even made solid moves to undo repressive laws introduced by his predecessor Najib Abdul Razak.

Mahathir, obviously, has no intention plan to improve the livelihood of the common Malay and all Malaysians;  he is stuck in old-school forced distribution which is injurious to the economy, maybe even fatal in the long term.

 Malaysians don’t want the creation of Malay (or any other ) billionaires from government wealth.

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Old wine in a new bottle is still sour. E-mail: t.p.guna@gmail.com

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

 

 

Patronage is king in new Malaysia?

January 12, 2019

by Dr.Terence Gomez

https://www.malaysiakini.com/news/459903

 

COMMENT | When Dr. Mahathir Mohamad led the opposition to a stunning election victory, he had an effective rallying cry that reflected why Umno’s form of governance was problematic: “Cash is king.”

If Mahathir is not careful, worrying recent trends indicate a similarly disconcerting problem about Pakatan Harapan’s government: “Patronage is king.”

When Harapan wanted to capture power, the coalition’s leaders told Malaysians to expect real change if UMNO was expelled from government. These reforms included ending ethnically-based policies, unfailingly applied since the 1970s to justify patronage favouring bumiputera, though extremely abused to enrich politicians in power.

The Prime Minister would also no longer concurrently serve as finance minister who had under his control a slew of GLCs like 1MDB and Tabung Haji, enterprises that had been persistently abused by UMNOo. Politicians would not be appointed as directors of GLCs.

These pledges contributed to Harapan’s considerable achievement of ending authoritarian rule in Malaysia. However, Harapan has been in power barely eight months and already alarming trends are appearing which suggest that this coalition is finding ways and means to renege on its pledges.

Equally troubling is a gradual and perceptible attempt to reinstitute the practice of selective patronage in the conduct of politics and in the implementation of policies, hallmarks of UMNO politics that led to its fall.

Soon after Harapan formed the government, it created the Economic Affairs Ministry, led by Mohamed Azmin Ali. Subsequently, numerous GLCs controlled by the Finance Ministry, under the jurisdiction of Lim Guan Eng, were transferred to the Economic Affairs Ministry.

Malaysia’s only sovereign wealth fund, Khazanah Nasional, was channelled from the Finance Ministry to the Prime Minister’s Department. The government did not publicly disclose why the shifting of these GLCs between ministries was necessary, but it is now clear that the Finance Ministry no longer holds enormous influence over the corporate sector.

With Khazanah under his ministry, Mahathir, though not also functioning as the Finance Minister, had secured control of Malaysia’s leading investment arm. When Mahathir argued that Khazanah had deviated from performing one of its original objectives, helping the bumiputera, this contention was disputed by numerous analysts.

Mahathir went on to appoint himself as chairperson of Khazanah, though this was, by convention, the practice. The convention also was that the finance minister should be a member of Khazanah’s board.

Instead, Azmin was given this appointment. Whether the prime minister and the economic affairs minister should have been appointed board members of Khazanah merited debate as Harapan had pledged that politicians would not be appointed as directors of government enterprises.

On Sept 1, 2018, a Congress on the Future of Bumiputeras and the Nation was convened by Azmin’s Ministry. Mahathir stressed at this convention the need to reinstitute the practice of selective patronage, targeting bumiputeras, though no longer would the government allow for the distribution of what he referred to as “easy contracts.”

Daim Zainuddin, the chair of the Committee of Eminent Persons (CEP), established to prepare a report reviewing the state of the economy, endorsed the need for such a bumiputera policy, though he acknowledged problems of the past when he said: “We want to get it right this time.” Daim also stressed that the government would strive to change the mindset of bumiputera.

The nation was not told how this policy will be altered to get it right, nor how mindsets will be changed. Meanwhile, the CEP report, though submitted to the government, was not publicly disclosed.

Instead, the bumiputera policy was stressed when the Economic Affairs Ministry released its Mid-Term Review of the 11th Malaysia Plan, while other ministers have actively affirmed that GLCs will be divested, an issue also in the 2019 budget. Given Malaysia’s long history of political patronage, worrying questions come to mind of these divestments.

For example, one important equity sale by Khazanah, an issue that barely secured any analysis in the press, was that of its interests in CIMB, the country’s second-largest bank. Khazanah reduced its equity holding in CIMB by 0.66 percent, a seemingly small divestment.

However, does this sale mark the beginning of the transfer of control of CIMB to well-connected business people, even proxies of politicians, a common practice by UMNO in the 1990s? Will Harapan, through such divestments, move to create a new breed of powerful well-connected business groups, even oligarchs, a trend seen in other countries transiting from authoritarian rule to democracy?

‘Dr M should know better’

Another worrying issue occurred recently. Rural and Regional Development Minister Rina Harun of Mahathir’s party, Bersatu, approved the appointment of politicians from her party to the boards of directors of GLCs under her control.

This is extremely worrying because, under UMNO, the Rural and Regional Development Ministry was persistently embroiled in allegations of corruption, with MARA being the prime example.

The practice of patronage through GLCs to draw electoral support was rampant under this ministry as it has a huge presence in states with a bumiputera-majority population.

So important is this ministry, in terms of mobilising electoral support, that it was always placed under the control of a senior UMNO leader. During Najib Abdul Razak’s administration, then UMNO Vice- President, Mohd Shafie Apdal, served as its minister before he was unceremoniously removed from office. Shafie was replaced by Ismail Sabri Yaakob, Najib’s close ally.

What Rina, once an UMNO member, has done by appointing politicians to GLCs under her authority is so reminiscent of patronage practices that had undermined the activities of these enterprises.

Azmin subsequently endorsed what Rina had done on the grounds that “there are some politicians who have professional background, such as accountants, engineers or architects, who can contribute to GLCs”.

Mahathir should know better than to allow this. After all, he had stressed that GLCs function to fulfil a “noble vision”, including the alleviation of poverty, equitable wealth distribution and spatial development, promotion of rural industries and the fostering of entrepreneurial companies in new sectors of the economy. Mahathir had also persistently referred to Malaysia’s complex ensemble of GLCs as a “monster.”

During Najib’s administration, this vast GLC network, created primarily to fulfil the bumiputera agenda, became tools easily exploited by UMNO, so visibly manifested in serious corruption associated with Felda and Tabung Haji.

However, Harapan has refused to establish an independent committee to review this extremely complex GLC network that operates at the federal and state levels. Is this reluctance because Harapan plans to similarly employ GLCs for the practice of patronage, as recent trends suggest?

What is clear, even becoming the norm, is Harapan’s consistent message to the nation: selectively targeted patronage will continue. The primary advocate of this message is Bersatu, an UMNO off-shoot.

 

At Bersatu’s first convention after securing power, held two weeks ago, its president, Muhyiddin Yassin, was quoted as saying: “As a party for the ‘pribumi’ or indigenous group, Bersatu should not be apologetic to champion the bumiputera agenda”.

Muhyiddin went on to say: “No one in our society will be left behind. Hence, this agenda is not a racial agenda, but a national agenda.” These statements are strikingly similar to what Umno had stressed when in power.

These trends suggest that for Harapan, and Bersatu in particular, consolidating power, by marshalling bumiputera support, is its primary concern, not instituting appropriate economic and social reforms.

If the government hopes to change mindsets, Harapan must focus on just universal-based policies that assist all Malaysians. In the process, disenfranchised bumiputera will also be supported. Patronage need not be king.

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TERENCE GOMEZ is a professor of political economy at the Faculty of Economics and Administration, Universiti Malaya.

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

S

 

Public policy and the role of the public intellectual

Opinion  

byDr, Lim Chee Han, Penang Institute

https://www.malaysiakini.com/columns/459052

COMMENT | How can the government encourage more people to adopt public transport so as to solve the problem of traffic jams?

Should local elections – if these are re-introduced – consider the issue of racial composition and representation?

Would the proposal to transform our current healthcare system into a social insurance model enable more people to have accessible and affordable healthcare?

Out of the various models of sustainable development, which would be the most suitable for particular places in Malaysia to adopt, in order to preserve our natural environment and also promote our cultural heritage?

Finally, would changing our country’s electoral system from first-past-the-post to proportional representation give our citizens a more democratic voice?

The questions above involve public policy discussions to a certain extent. Some may be ideologically oriented, while others may be more technical.

The influence and consequences of public policy may vary, from issues with huge implications that might potentially decide your individual rights as a citizen or foreign resident, to basic needs such as a right to shelter and food; or its impact might appear to be so insignificant that you feel it has nothing to do with you.

Some policies could have long-term impacts on groups of people several generations down the line, such as the New Economic Policy (NEP) in the 1970s.

Some policies also could bring about permanent and irreversible changes, such as certain forest land management policies which permit oil palm plantations to convert and replace primary forests.

Knowledge is power

In Malaysia, policy making decisions seem to habitually stem from a top-down process. Sometimes, it could be rooted in a certain political actor’s will or out-of-the-blue ‘creative’ thoughts, such as the third national car and property ‘crowdfunding’ policy.

To many people, the ability to influence public policy debates seems to be confined to the political elite.

Some may believe that the realm of public policy is out of their reach, leading them to forfeit any opportunity to participate in meaningful public policy discussions.

This self-defeating mentality probably has to do with the impression that policy making is technically too complex, or that they are unable to fully grasp the nuances of policy debates.

Furthermore, others may have lost faith and hope in the country’s political system. The euphoria that has been generated from witnessing the change of federal government for the first time in history has long gone.

Instead, they are more inclined to believe that policy discussion would change nothing, because it is politics akin to Game of Thrones – whereby politicians would act in a similar way to serve their self-interest by keeping the status quo when it comes to politically advantageous policies.

Former United Nations Secretary-General and Nobel Peace Laureate the Late Kofi Annan once said: “Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.”

The statement should also apply to our political and civil education. This is because if the people can understand the issues and policies better, then they could be more aware of their own rights, and will not be easily swayed or cheated.

In that way, public opinion could be recognized and turned into a formidable force to oppose and resist unreasonable or unjust policies. It would also help to promote a rational, progressive, democratically mature society.

Policy discussions may take place in a kopitiam, grassroots style, or be held in a posh and premium hotel ballroom and rigorously debated by fellow academics. Despite all that, the outcome still has to go back to the discussant, and whether he or she has conducted any study.

Serious public policy work must show professionalism and integrity in taking account all possible facets of evidence (within a reasonable limitation), that would determine whether the analyses and deductions can convince the public.

If a public policy does not go through a deep and thorough research process, or does not rely on facts and evidence for future projections, it would lack robust theoretical support and a foundation in widely accepted international best practices. The probability of such a policy failing to reach its intended goals is high.

In the end, who should answer for the consequences, cost, and responsibility for such policy failures? Instead of delegating the task of scrutinising government policies to opposition parties, could the public themselves effectively monitor the government’s performance, and directly hold them accountable?

A learning process

The Penang Institute

Public policy research is a learning process. As a member of the Penang state government’s think-tank and a public policy research analyst, it is my duty not just to amass knowledge but also to spread the seeds of thought, hoping that a new perspective could influence or change society or at least create public discussion.

In order to gain the public’s trust and confidence, what is most important is to be persistent in maintaining the standards of one’s objectivity and professionalism when expressing and defending one’s research outcome in a fair and transparent manner.

If public policy research is publicly funded, it should imply that public interest is very much involved, and thus the research outcomes should be shared with the public. In other words, I believe that I should be seen as an employee of taxpayers, and therefore held accountable to the public.

So, here I am in my position of some influence, and therefore I have to honour my obligation as a public intellectual. For that reason, I have to walk out of my ‘armchair and air-conditioned room’ comfort zone and walk into the daily lived experiences of the man on the street. Only then would my proposed policy be worth anyone’s salt.

If policy making were to be compared to a battle of ideas, policy advocates pacing around this ‘battlefield’ must recognise the current situation and be well-versed in the ‘topography’ of issues that one feels strongly about.

He or she could then be in control of the defensive-offensive strategy in winning the battle of influencing and implementing the said policy. There could be room for the omission of menial details, but policymakers or advocates must ensure that the crux of a policy should be steered in the right direction.

Penang is my base, and my work as a public intellectual originates from there. However, my work should not be constrained within the aforementioned locality.

In what is being identified as a strongly federated nation such as Malaysia, the most contentious policy ideas are arguably centred around Parliament in Kuala Lumpur and the corridors of power in Putrajaya.

We have witnessed the historic moment in the 14th general election when the peaceful democratic transition of federal power took place in Putrajaya. The new ruling coalition was named after ‘hope’ and consists of parties which fought for a long period persistently on the ideals of Reformasi and an overarching multiracial philosophy of ‘Malaysian Malaysia’.

The remaining question is, what are the policies and strategies in place to build a progressive and hopeful new multiracial Malaysia?

I would argue that policies that truly solve the needs of the public are the real backbone of reforms that are badly required in a country which had been mismanaged for decades.

For the coming weekends, my colleagues from the Penang Institute will talk about issues and policies, and share their stories in this space, hopefully to continue inspiring new narratives in the new political era of Malaysia.

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Dr. LIM CHEE HAN is a senior analyst in the political studies section at Penang Institute. He holds a PhD in infection biology from Hannover Medical School, Germany. He believes that a nation would advance significantly if policy making were taken seriously.

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

Note: The Techo Sen Sen School of Government and International Relations,@The University Of Cambodia, Phnom Penh offers postgraduate programmes in Public Policy. http://www.tss.uc.edu.kh

 

Jomo named National Academic Figure

November 28, 2018

by Bernama 

Economist Jomo Kwame Sundaram was announced as the 12th National Academic Figure at the National Academic Awards (AAN) ceremony in Putrajaya last night.

 

Jomo, 66, a former assistant secretary-general for Economic Development in the United Nations, is an expert in political economy of development, especially in the Southeast Asian region .Jomo received RM200,000, a trophy and a certificate.

 

 

The National Academic Figure award is presented to academicians who are committed, wholly engaged and always contributing to the discovery and development of knowledge, wealth generation and fulfilling the aspirations of the tertiary institution as a national development vehicle.

Meanwhile, Juan Joon Ching, a professor with Universiti Malaya, was announced as the most promising academician award winner. This award is given to affluent scholars under the age of 40.

Earlier, Mahathir in his speech expressed hope that the awards would motivate the individuals to pursue further excellence while setting a benchmark for others to emulate.

“Without their (academicians’) support, I believe we cannot build a knowledgeable generation that is par excellence, and at the same time produce balanced individuals for the development and progress of the country,” the Prime Minister said.

– Bernama

 

The Paradox of Globalization: Development Cooperation at Risk

August 22,  2018

by Dr. Jomo Kwame Sundaram

http://www.ipsnews.net/2018/08/globalization-enhanced-development-cooperation/

Protracted economic stagnation in rich countries continues to threaten the development prospects of poorer countries. Globalization and economic liberalization over the last few decades have integrated developing countries into the world economy, but now that very integration is becoming a threat as developing countries are shackled by the knock-on effects of the rich world’s troubles.

Trade interdependence at risk

As a consequence of increased global integration, growth in developing countries relies more than ever on access to international markets. That access is needed, not only to export products, but also to import food and other requirements. Interdependence nowadays, however asymmetric, is a two-way street, but with very different traffic flows.

Unfortunately, the trade effects of the crisis have been compounded by their impact on development cooperation efforts, which have been floundering lately. In 1969, OECD countries committed to devote 0.7% of their Gross National Income in official development assistance (ODA) to developing countries. But the total in 2017 reached only $146.6 billion, or 0.31% of aggregate gross national income – less than half of what was promised.

In 2000, UN member states adopted the Millennium Development Goals to provide benchmarks for tackling world poverty, revised a decade and a half later with the successor Sustainable Development Goals. But all serious audits since show major shortfalls in international efforts to achieve the goals, a sober reminder of the need to step up efforts and meet longstanding international commitments, especially in the current global financial crisis.

Aid less forthcoming

Individual countries’ promises of aid to the least developed countries (LDCs) have fared no better, while the G-7 countries have failed to fulfill their pledges of debt forgiveness and aid for poorer countries that they have made at various summits over the decades.

At the turn of the century, development aid seemed to rise as a priority for richer countries. But, having declined precipitously following the Cold War’s end almost three decades ago, ODA flows only picked up after the 9/11 or September 11, 2001, terrorist attacks. The Monterrey Consensus, the outcome of the 2002 first ever UN conference on Financing for Development, is now the major reference for international development financing.

But, perhaps more than ever before, much bilateral ODA remains ‘tied’, or used for donor government projects, rendering the prospects of national budgetary support more remote than ever. Tied aid requires the recipient country to spend the aid received in the donor country, often on overpriced goods and services or unnecessary technical assistance. Increasingly, ODA is being used to promote private corporate interests from the donor country itself through ostensible ‘public-private partnerships’ and other similar arrangements.

Not surprisingly, even International Monetary Fund staff have become increasingly critical of ODA, citing failure to contribute to economic growth. However, UN research shows that if blatantly politically-driven aid is excluded from consideration, the evidence points to a robust positive relationship. Despite recent efforts to enhance aid effectiveness, progress has been modest at best, not least because average project financing has fallen by more than two-thirds!

Debt

Debt is another side of the development dilemma. In the last decade, the joint IMF-World Bank Heavily Indebted Poor Countries initiative and its extension, the supplementary Multilateral Debt Relief initiative, made some progress on debt sustainability. But debt relief is still not treated as additional to ODA. The result is ‘double counting’ as what is first counted as a concessional loan is then booked again as a debt write-off.

At the 2001 LDCs summit in Brussels, developed countries committed to providing 100% duty-free and quota-free (DFQF) access for LDC exports. But actual access is only available for 80% of products, and anything short of full DFQF allows importing countries to exclude the very products that LDCs can successfully export.

Unfortunately, many of the poorest countries have been unable to cope with unsustainable debt burdens following the 2008-2009 financial crisis. Meanwhile, there has been little progress towards an equitable and effective sovereign-debt workout framework despite the debilitating Argentine, Greek and other crises.

Technology gap

In addition to facing export obstacles, declining aid inflows, and unsustainable debt, the poorest countries remain far behind developed countries technologically. Affordable and equitable access to existing and new technologies is crucial for human progress and sustainable development in many areas, including food security and climate-change mitigation and adaptation.

The decline of public-sector research and agricultural-extension efforts, stronger intellectual-property claims and greater reliance on privately owned technologies have ominous implications, especially for the poor. The same is true for affordable access to essential medicines, on which progress remains modest.

An international survey in recent years found that such medicines were available in less than half of poor countries’ public facilities and less than two-thirds of private facilities. Meanwhile, median prices were almost thrice international reference prices in the public sector, and over six times as much in the private sector!

Thus, with the recent protracted stagnation in many rich countries, fiscal austerity measures, growing protectionism and other recent developments have made things worse for international development cooperation.

Dr. Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.