The Paradox of Globalization: Development Cooperation at Risk


August 22,  2018

The Paradox of Globalization: Development Cooperation at Risk

by Dr. Jomo Kwame Sundaram

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

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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.
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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.

A Hundred Days of Prevarication


August 15, 2018

A Hundred Days of Prevarication

Press statement by Kua Kia Soong, SUARAM Adviser

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The GE-14 election defeat of the BN which had ruled the country since 1957 was testimony to the determination of the Malaysian people and civil society who had opposed BN rule for decades. Sixty-one years of BN domination had included 22 years with Prime Minister Mahathir at the helm. The Malaysian people chose to cast their votes for the PH coalition because PH had promised in their GE14 manifesto to implement wide ranging reforms that made them seem radically different from the governance experienced under the BN.

In the first 100 days of the new PH government, we find that their report card scores around 20% based on their own promises alone. The flip flopping over the abolition of BTN and National Service shows the importance of civil society to voice our opposition to such bitterly toxic and noxious institutions in the country. Nor do their promises consider the more urgent comprehensive list of reforms that civil society has long argued is of higher priority. On top of all that, we have witnessed a disturbing trend of autocratic decision making and policies symptomatic of the old Mahathir 1.0 era.

Sacrifices at the altar of the trillion-ringgit debt mountain

The convenient opt out clause for the new government is to pile much of the blame on the previous administration including the accusation of them of having run up a debt of RM1 trillion, or 80% of our GDP and apparently stealing RM19 billion of GST refunds. That blame frame then provides the new government with an emotional basis for gaining sympathy by starting a ‘Tabung Harapan’ and appealing for donations. While the way in which this fund will be used remains unclear, it is probably the only fund in the world set up with the apparent aim of trying to plug a country’s debt hole. It is telling that while a little boy has contributed his piggy bank to the fund, the two richest men in the country who happen to sit in the “Council of Eminent Advisors” have not made a comparable sacrifice to the fund.

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As for the actual size of the national debt, there is dispute between economists depending on whether we include government guarantees and lease payments under public-private partnerships. The size of Malaysia’s government debt in international statistics for 2017 is actually 64% of GDP, compared to China’s 65%, Singapore’s 110%, US’ 108% and Japan’s 236%. Clearly, what is at stake is the country’s economic fundamentals, which the new Finance Minister assures us are still strong. It also depends on how the debt is financed since relying on overseas borrowing can carry higher risks. It also depends on the country’s prospects for economic growth. Japan has one of the largest public sector debts in the world but it also has a large pool of domestic savings on which to draw.

Nonetheless, this mythical “trillion-ringgit debt mountain” has become an altar on which promises made by PH in the GE14 manifesto are sacrificed – local government elections, new approved Chinese schools, minimum wage, abolishing highway tolls and postponing PTPTN loans. This is definitely not acceptable as an excuse for putting off these urgent election promises since PH had assured us that they could manage the economy once they had ousted BN.

But then the much-trumpeted review of all mega projects so as to reprioritise and reduce the debt mountain is not consistent with the approval of the Penang Transport Master Plan nor with the recently announced Proton 2.0 project by the PM. The Infrastructure Development Minister Peter Anthony has also announced that a dam costing RM2 billion will be built at Kampung Bisuang in Papar when Parti Warisan Sabah had promised to scrap the Kaiduan Dam project.

Back to privatising national assets and Proton 2.0

So far, the new PH government has not spelled out their fundamental difference in economic policy from the old BN regime. What we have heard so far is the alarming news of the return of the old discredited Mahathirist policies, namely, privatisation of our national assets in the name of Bumiputeraism and the revival of the national car, Proton 2.0.

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The PM has said that the sovereign wealth fund, Khazanah will be privatised for the benefit of Bumiputeras. Malaysians need to be reminded that during the financial crisis of 1997/98, it was Khazanah that had stepped in to take over the assets of the failed companies owned by the Bumiputra crony capitalists in Renong, MAS and TRI. After taking over the assets, Khazanah revamped these GLCs with professional managers and better rules of governance. Khazanah currently owns 51% of PLUS Expressways, with the EPF owning the other 49%. By end 2017, the net worth of companies under Khazanah was RM125.6bil. Thus, Khazanah is successfully achieving its purpose of creating a sovereign wealth fund for the benefit of ALL Malaysians. Its expressed purpose never has been to be privatised to Bumiputera crony capitalists.

Mahathir’s privatization drive during his first term (1981-2003) was a boon for private crony capital, especially those linked to UMNO. Malaysian tax payers were the losers since these erstwhile profitable public utilities were sold for a song to the private capitalists and we became captive to UMNO-linked monopolies, such as the North-South Highway operator. Furthermore, these failed crony capitalists had to be bailed out with our money during the financial crisis of 1997/98.

During these 100 days, the Prime Minister has also announced the revival of yet another national car, or Proton 2.0. After the fiasco of Proton 1.0 and the huge cost to Malaysian taxpayers, our public transport system and Malaysian consumers, it is unbelievable that such a failed enterprise could be supported by a PH leadership full of former critics of the first Proton project. Another national car project will surely fail with further losses to the national coffers and we will have to underwrite the losses. The PH government won’t have 1MDB to blame for that anymore. We should further note that one of Mahathir’s former crony capitalists, Syed Mokhtar Al-Bukhary, owns a majority 50.1% in Proton Holdings through DRB-Hicom. This hare-brained idea to start another national car project reminds me of what somebody said about politicians: “Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnels…”

Back to Mahathirist autocracy

It is truly alarming that no Cabinet member nor “eminent person” in the CEF has voiced any objections to Mahathir’s proposed plans to privatise Khazanah and to start another national car. They will have to bear collective responsibility for the consequences in the event of its failure. We are witnessing the same “silence of the lambs” culture for which the DAP used to criticise the BN leaders under Mahathir 1.0 with the new ministers saying “We’ll leave it to the prime minister” and “I’ll discuss this with the prime minister to let him decide”, ad nauseum.

The PH manifesto prohibits the PM from also taking over the Finance portfolio but Dr Mahathir has in the 100 days taken over the choicest companies, namely Khazanah, PNB & Petronas under his PMO. It is the return to the old Mahathirist autocracy. Was the Cabinet consulted in the decision to start Proton 2, privatise Khazanah, Malaysia Incorporated and the revival of the failed F1 circuit?

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The appointment of Prime Minister Dr Mahathir Mohamad and Economic Affairs Minister Azmin Ali to the board of Khazanah Nasional Berhad also goes against the PH manifesto promise of keeping politicians out of publicly-funded investments since it leads to poor accountability. Only by insisting on boards being comprised of professionals and on rigorous parliamentary checks and balances for bodies such as Khazanah can we ensure a high level of transparency and accountability. Mahathir’s response to this criticism was the old feudal justification: “I started Khazanah so why can’t I be in it?” In other words, “Stuff your high ideals and democratic principles!”

We will have to wait for Lim Guan Eng’s memoirs in the future to see how he responded to Mahathir leaving him out of Khazanah. Did the PM even discuss this with him? After all, Khazanah is still under MoF Inc. If the finance minister is left out of the Khazanah board, how will he be privy to what the Khazanah board is doing? No doubt Mahathir knew that having given the DAP Secretary-General the Finance Minister post, he could get away with anything…

Consistency in the war on kleptocracy

The new PH government had pledged to wipe out kleptocracy and this promise was key to the victory at GE14. They have disappointed the people of Malaysia and especially Sarawakians who have seen the wealth of their state sucked dry by the rapacious greed of the kleptocrats there. The PH government has not yet acted to make the former Chief Minister Taib Mahmud declare all his assets and those of his spouse and family’s. The PH Government has shown us that where there is a political will in getting to the root of the 1MDB scandal, there is a way to get rid Malaysia of corruption and crony capitalism. However, by letting off his long-time ally in Sarawak, Taib Mahmud, arguably the richest man in Malaysia, the Prime Minister makes his campaign against the former PM Najib look like a personal vendetta. The Prime Minister has also failed to lead by example and declare his assets and those of his spouse and children’s.

Conflict of interest having corporate heads in Councils

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The Constitutional status of the appointed ‘Council of Eminent Persons’ has already been called into question especially when the Chairman of the Council, Daim Zainuddin is in a position in which he is able to call up judges and even represent the Government in negotiating with the Chinese Government over their investments in Malaysia. Now it has been reported that the Perak government has established the State Economic Advisory Council (SEAC) with corporate heads of MK Land Bhd, KL Kepong Bhd and Gamuda Bhd as “eminent advisors”.

There is gross conflict of interest with such arrangements when these corporate leaders still have interests in the local and international corporate scene. It is well known that Daim Zainuddin has corporate and banking interests all over the world. His business interests extend beyond banking to other key sectors of the country’s economy such as plantations, manufacturing, retailing, property development and construction.

Delaying urgent reforms is unacceptable

Using the excuse of the government debt to delay local government elections which have been suspended in our country since 1965 is not acceptable. It is a simple matter of abolishing a provision under the Local Government Act 1976 and reviving the Local Government Election Act in order to introduce local government elections. If the PH government is prepared to see billions going down the drain with the revived Proton 2.0 project, don’t tell us there is no money for running local council elections please.

It is equally absurd to tell Malaysian Independent Chinese Secondary School graduates that their UEC certificate can only be recognised in five years’ time. The UEC certificate went unrecognised by the BN for 61 years even though it has internationally proven its efficacy with thousands of graduates since 1975. This is a serious breach of promise in the PH GE14 manifesto since more than 80 per cent of Chinese voters voted for PH because of this promised reform. The only steadfast decision made by the Education Minister so far is the decision that students will have to wear black shoes instead of white ones.

Many lawyers have pointed out that the repeal or review of our laws that violate basic human rights can be expeditiously accomplished within the first 100 days of the new PH government. These include abolishing laws that allow detention without trial, namely, the Security Offences (Special Measures) Act 2012 (Sosma), Prevention of Crime Act 1959 (Poca), and the Prevention of Terrorism Act (Pota) 2015.

It is alarming to hear the Law Minister Datuk Liew Vui Keong say recently that the PH government is now reconsidering its initial pledge to abolish several contentious laws including, the Sedition Act 1948, Prevention of Crime Act (Poca) 1959, Universities and University Colleges Act 1971, Printing Presses and Publications (PPPA) Act 1984 and the National Security Council (NSC) Act 2016. This is totally unethical backtracking on the PH GE14 manifesto.

The death penalty is a violation of human rights and must be abolished. Meanwhile, there ought to have been an immediate moratorium on all executions pending abolition and commuting the sentences of all persons currently on death row. The implementation of the Independent Police Complaints & Misconduct Commission (IPCMC) and other recommendations of the Royal Police Commission in 2005 is long overdue to ensure transparency and accountability by the police and other enforcement agencies such as the MACC.

During the 100 days under the PH government, we have witnessed the Sedition Act and the CMA still being used against activists and prevarication on the issue of child marriages. We have also seen the rule of law being flouted when a Minister in the PM’s Department can order the removal of portraits of LGBTQ Malaysians from an exhibition in Penang. Just as alarming is the statement by another Minister that cyanide used by gold miners in Bukit Koman is perfectly safe and non-hazardous to people or the environment.

Reneging on manifesto promises

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From the failure by the PH government to fulfil their election promises in the 100 days, it is clear that the GE14 manifesto was drafted in a slipshod manner in order to secure populist votes. These include the promises to abolish toll from the highways within the stipulated time promised; no firm position regarding the PTPTN loan repayments; wavering on the promise to pay a 20 per cent instead of 5 per cent royalty to oil producing states based on revenue from gross production; the deduction of a percentage from a husband’s EPF contributions to go into the accounts of his wife, etc. PH has so far implemented less than half of their election promises. Will the PM apologise for reneging on these election promises?

Real reforms we expect in “new” Malaysia

Within the first year of the PH administration, Malaysians expect serious transformational reforms that will reconstitute truly democratic institutions and improve the lives of the 99 per cent and especially the B40 Malaysians. Of the highest priority, we expect urgent initiatives to implement the 8 key reforms including:

1. An end to race-based parties and policies especially replacing race-based policies with needs-based measures that truly benefit the lower-income and marginalized sectors and basing recruitment and promotion in the civil and armed services strictly on merit;

2. Re-instatement of our democratic institutions including bringing back elected local councils and enacting a Freedom of Information (FoI) Act at federal and state levels;

3. Zero tolerance for corruption and political leaders who have been charged with corruption must step down while their case is pending in the courts;

4. A progressive economic policy that will renationalize privatised assets, especially land, water, energy, which belong to the Malaysian people instead of local and foreign capitalists, opening up GLCs to democratic control of the people and directing them to implement good labour and environmental policies;

5. Redistribute wealth fairly through progressive taxation on the high-income earners, their wealth and property and effective tax laws to ensure there are no tax loopholes for the super-rich;

6. A far-sighted and fair education policy with equal opportunities for all without any racial discrimination with regard to enrolment into all schools including tertiary educational institutions;

7. Defend workers’ rights and interests especially their right to unionise and a progressive guaranteed living wage for all workers, including foreign workers;

8. People-centred and caring social policies including an effective low-cost public housing programme for rental or ownership throughout the country for the poor and marginalized communities;

9. Prioritise Orang Asal rights and livelihood by recognizing their rights over the land they have been occupying for centuries, prohibiting logging in Orang Asal land and ensuring all Orang Asal villages have adequate social facilities and services;

10. Sustainable development & environmental protection by allowing all local people to be consulted before any development projects and all permanent forest and wildlife reserves are gazetted.

The lesson of the first 100 days of the PH administration teaches us that, as always, civil society must be ever vigilant to push for these reforms because the government of the day will drag its feet and renege on these election promises when they have the opportunity.

 

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Dr Kua Kia Soong hits out at PH ‘flip-flops’ ahead of 100-day milestone


August 15, 2018

Dr Kua Kia Soong hits out at PH ‘flip-flops’ ahead of 100-day milestone

Suaram Adviser Kua Kia Soong also says Putrajaya appears more interested in playing the blame game than getting down to business.

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Dr Kua Kia Soong, prominent activist,former Isa detainee, and prolific analyst, today accused the Pakatan Harapan (PH) government of flip-flopping on a number of issues, just days before the administration led by Dr Mahathir Mohamad marks its first 100 days in power.

Giving the example of the Unified Examination Certificate (UEC), Kua Kia Soong asked why it would take five years to recognise it when PH had stated in its manifesto that it was ready to accept it. He said other issues included the oil royalty promised to East Malaysia and the abolition of highway tolls.

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In July, Mahathir announced in Parliament that Putrajaya would honour its promise to provide 20% royalty to petroleum-producing states. But he later clarified the statement, saying the 20% payment would be based on profit instead of royalty.

The Suaram Adviser said it was also unacceptable that local elections could only be held after three years. “Delaying reforms in unacceptable. A really important reform we want to see concerns the redistribution of wealth,” he added.

Dr. Kua was speaking at Suaram’s presentation of its report card for PH’s first 100 days in government.He said following the election, Putrajaya seemed more interested in playing the blame game than getting down to business.

“We read news of the missing goods and services tax (GST) money, yet there has been no movement. Have the Police or Attorney-General acted on it? We should be told what happened to the money within a week,” he said.

He also took issue with Tabung Harapan Malaysia, a fund established to help settle the country’s RM1 trillion debt, saying he could not accept “sob stories” related to the initiative.

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“It’s about the management of the economy to plug the leaks, not the piggy banks of little boys,” he said, referring to the story of a youth who donated his savings to the fund.

As for the government’s war on kleptocracy, Kua asked why authorities had yet to zoom in on former Sarawak chief minister Taib Mahmud, who was accused of corruption in the past.

“And why haven’t Mahathir and his children declared their assets?”

Demonizing State-Owned Enterprises


August 14, 2018

Demonizing State-Owned Enterprises

 

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Historically, the private sector has been unable or unwilling to affordably provide needed services. Hence, meeting such needs could not be left to the market or private interests. Thus, state-owned enterprises (SOEs) emerged, often under colonial rule, due to such ‘market failure’ as the private sector could not meet the needs of colonial capitalist expansion.

Thus, the establishment of government departments, statutory bodies or even government-owned private companies were deemed essential for maintaining the status quo and to advance state and private, particularly powerful and influential commercial interests.

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SOEs have also been established to advance national public policy priorities. Again, these emerged owing to ‘market failures’ to those who believe that markets would serve the national interest or purpose.However, neoliberal or libertarian economists do not recognize the existence of national or public interests, characterizing all associated policies as mere subterfuges for advancing particular interests under such guises.

Nevertheless, regardless of their original rationale or intent, many SOEs have undoubtedly become problematic and often inefficient. Yet, privatization is not, and has never been a universal panacea for the myriad problems faced by SOEs.

Causes of inefficiency

Undoubtedly, the track records of SOEs are very mixed and often vary by sector, activity and performance, with different governance and accountability arrangements. While many SOEs may have been quite inefficient, it is crucial to recognize the causes of and address such inefficiencies, rather than simply expect improvements from privatization.

First, SOEs often suffer from unclear, or sometimes even contradictory objectives. Some SOEs may be expected to deliver services to the entire population or to reduce geographical imbalances. Other SOEs may be expected to enhance growth, promote technological progress or generate jobs. Over-regulation may worsen such problems by imposing contradictory rules.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed. To be sure, unclear and contradictory objectives – e.g., to simultaneously maximize sales revenue, address disparities and generate employment — often mean ambiguous performance criteria, open to abuse.

Typically, SOE failure by one criterion (such as cost efficiency) could be excused by citing fulfillment of other objectives (such as employment generation). Importantly, such ambiguity of objectives is not due to public or state ownership per se.

Second, performance criteria for evaluating SOEs — and privatization — are often ambiguous. SOE inefficiencies have often been justified by public policy objectives, such as employment generation, industrial or agricultural development, accelerating technological progress, regional development, affirmative action, or other considerations.

Ineffective monitoring, poor transparency and ambiguous accountability typically compromise SOE performance. Inadequate accountability requirements were a major problem as some public sectors grew rapidly, with policy objectives very loosely and broadly interpreted.

Third, coordination problems have often been exacerbated by inter-ministerial, inter-agency or inter-departmental rivalries. Some consequences included ineffective monitoring, inadequate accountability, or alternatively, over-regulation.

Hazard

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Moral hazard has also been a problem as many SOE managements expected sustained financial support from the government due to weak fiscal discipline or ‘soft budget constraints’. In many former state-socialist countries, such as the Soviet Union and Yugoslavia, SOEs continued to be financed regardless of performance.

Excessive regulation has not helped as it generally proves counter-productive and ultimately ineffective. The powers of SOEs are widely acknowledged to have been abused, but privatization would simply transfer such powers to private hands.

Very often, inadequate managerial and technical skills and experience have weakened SOE performance, especially in developing countries, where the problem has sometimes been exacerbated by efforts to ‘nationalize’ managerial personnel.

Often, SOE managements have lacked adequate or relevant skills, but have also been constrained from addressing them expeditiously. Privatization, however, does not automatically overcome poor managerial capacities and capabilities.

Similarly, the privatization of SOEs which are natural monopolies (such as public utilities) will not overcome inefficiencies due to the monopolistic or monopsonistic nature of the industry or market. The key remaining question is whether privatization is an adequate or appropriate response to address SOE problems.

Throwing baby out with bathwater

SOEs often enjoy monopolistic powers, which can be abused, and hence require appropriate checks and balances. In this regard, there are instances where privatization may well be best. Two examples from Britain and Hungary may be helpful.

The most successful case of privatization in the United Kingdom during the Thatcher period involved National Freight, through a successful Employee Stock Ownership Plan (ESOP). Thus, truck drivers and other staff co-owned National Freight and developed personal stakes in ensuring its success.

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In Hungary, the state became involved in running small stores. Many were poorly run due to over-centralized control. After privatization, most were more successfully run by the new owners who were previously store managers. Hence, there are circumstances when privatization can result in desirable outcomes, but a few such examples do not mean that privatization is the answer to all SOE problems.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed.

 

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.

 

 

Malaysia’s May 2018 General Election and Foreign Policy


August 8, 2018

Malaysia’s May 2018 General Election and Foreign Policy

by Thomas Daniel

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Asia Pacific Bulletin, No. 433

Publisher: Washington, DC: East-West Center
Available From: August 7, 2018
Publication Date: August 7, 2018
Binding: Electronic
Pages: 2
Free Download: PDF
Thomas Daniel, Analyst at the Institute of Strategic and International Studies in Malaysia, explains that “In Malaysia’s May 2018 elections, foreign policy appears to have been a significant part of the campaign…but  the claim that foreign policy was a major deciding factor in Malaysian elections is still a bit of a stretch “

The 14th Malaysian General Elections (GE14) held in May saw the then main opposition alliance of Pakatan Harapan, together with an allied party from East Malaysia, win a surprising 121 of 222 Parliamentary seats, allowing them to form a simple majority government. Former Prime Minister Dr Mahathir Mohamad is once again leading the nation at the age of 92. The Barisan Nasional coalition, which ruled from even before independence, now sits on the opposition bench alongside the Islamist party PAS, while Barisan’s election allies from Sarawak in East Malaysia already have left the coalition to form an independent block of their own.

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What role did foreign policy play in Malaysia’s recent elections? Foreign policy by itself has rarely been an issue in Malaysian elections. Some external observers might consider this odd for a nation whose prosperity depends significantly on regional and international trade and peace. Domestic issues – the economy, social dynamics, internal peace and security – have always been dominant concerns of the Malaysian electorate. Where foreign policy matters have popped up, they are limited to rather specific issues, often the flavour of the day. Traditionally, politicians from both sides of the divide have often – and rather flippantly – attempted to use Malaysian involvement or positions on global and regional affairs against each other as a smear tactic. For the most part however, foreign policy as a subject has largely been a domain of the few – policymakers, diplomats, academics and other practitioners.

At first glance, in Malaysia’s May 2018 elections, foreign policy — both directly and indirectly — appears to have been a significant part of the campaign – driven mainly by Pakatan Harapan. A large part of this has to do with former Prime Minister Najib Razak himself and the fallout from the 1 Malaysia Development Berhad (1MDB) scandal.

After vast sums of money initially linked to 1MDB which were deposited in Najib’s personal accounts turned out to be a ‘donation’ by a Saudi royal to Malaysia channelled directly to the former Prime Minister, there was chatter amongst Malaysians on the nature and impact of such ‘donations’ by friendly countries and what countries could be considered as ‘allies’ of Malaysia. This led to further conversations on whether non-alignment and neutrality was still a central tenet in Malaysian foreign policy and on the extent of Malaysia’s involvement in the Saudi-led Islamic Military Counter Terrorism Coalition, including even whether Malaysia was a silent participant of the Saudi offensive in Yemen.

The 1MDB saga itself was a major part of the campaign against the Najib and his ruling party. Various local investigations into the scandal had cleared him of wrongdoing. Nevertheless, the financial irregularities of 1MDB continued to be investigated by authorities in seven countries – including the United States. This further eroded the credibility and reputation of both the government and its associated institutions in the eyes of the Malaysian electorate, which came to see them as damaged goods when articulating Malaysia’s interests and reputation on the global stage.

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Another major foreign policy factor was the nature of the Malaysia-China relationship, and perceived notions of the influence that the latter has over the former. It became part and parcel of the campaign against Najib and his party. A key driver here was the rapid and staggering rise of investment and acquisitions by Chinese companies – both private and state-linked – in Malaysia. Foreign direct investment from China, which stood at RM4.8 billion in 2013, surged to nearly RM21 billion by the end of 2016. It now encompasses diverse sectors like construction, real estate, manufacturing, ports and power generation facilities. Concerns remain over how much of the money coming in were investments, and how much were in fact loans for various projects, and if the previous government was honest to Malaysians about the nature of such transactions.The fact that Chinese companies or capital can be seen in almost every major ongoing or planned project in Malaysia unnerved many – especially the average man-on-the-street. The purchase of majority stakes in several key Malaysian companies which are household names in Malaysia by Chinese interests did not help the perception.

1MBD related scandals come into the picture once again as some of these deals include the purchase of investments and assets previously owned by the wealth fund, which helped the troubled company meet its debt payments. The allegation that China helped bail out the troubled Malaysian sovereign fund and by extension the Prime Minister thus making him beholden to China, possibly compromising Malaysia’s national interests, was a popular narrative amongst the anti-Najib camp.

Despite the above mentioned issues, the claim that foreign policy was a major deciding factor in Malaysian elections is still a bit of a stretch. The campaign for the GE14 might be one where certain aspects of foreign policy and external relations played a role – at least more than previous elections. However, they are issue-specific, or in this case, personality-specific, and driven primarily by a domestic undertone. The ‘foreign policy’ approach used by the opposition when speaking about these issues ultimately relate back to local narratives that the electorate holds dear – the price of living, the future of their children, and to an extent, national prestige. Additionally, the manifestos released by the contesting parties also barely touched on foreign policy. There were, at best, vague remarks on continuing or restoring (depending on who the author was) Malaysia’s reputation and record within global institutions.

Nevertheless, moving forward, policymakers and campaign managers need to take into account that foreign policy issues could become a more common fixture in Malaysian political campaigns. The signs, despite being faint, are there. Conversations about Malaysia’s relationship with China and the Saudi Arabian royal family, for example, persist in a post-GE14 Malaysia both amongst politicians and voters. The situation becomes ever more pertinent when one takes into account that Malaysia has a combination of a relatively high internet penetration rate and coupled with an active social media presence amongst its connected citizenry.

 

Dr.Bakri Musa’s Advice to Education Minister Maszlee


August 7, 2018

Dr.Bakri Musa’s Advice to Education Minister Maszlee Malik : Be More An Executive, Less A Professor

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

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New Education Minister Maszlee Malik should be more an executive and less a professor. He leads an organization with a budget in excess of RM280B and a staff of over half a million to lead. That ministry, like all others, is not known for its crispness.

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Forget about grand plans and overarching policies. All would be for naught if your staff and organization cannot execute them, or if they are consumed with such trivia as campus newspaper subscriptions and pupils’ shoe color. If Maszlee is still obsessed with policies, delegate a committee to work on them.

Maszlee should first focus on shaping up that flabby organization. Enlist someone with a solid MBA or credible business experience to help him be an effective and efficient executive. There is a universe of difference in being a professor and an executive. Likewise, business meetings are unlike academic seminars. You want results and decisions, not endless intellectual musings and more research.

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Dr. Maszlee Malik–Malaysia’s New Education Minister

Maszlee should assess the capabilities and weaknesses of his staff . Forget about wacanas, town hall meetings, or press conferences. To his credit, he has already made many personal visits for first-hand assessments.

The challenges facing Malaysian education are as overwhelming as they are obvious, the consequence of long neglect, incompetent leadership, and political meddling. The difficulty is not in identifying them but to pick three or four of the more pressing ones and tackle those.

Maszlee has articulated some of those–greater university autonomy, making our students at least bilingual, enhancing English and STEM, as well as fixing our dilapidated schools. Those four would occupy and challenge him for some time. There is little need and would serve little purpose to go beyond as with recognizing UEC, sending a team to Finland, or issuing edicts on students’ shoe color.

Maszlee’s first and continuing public task, as with all the other ministers, is to “walk the talk.” He cannot profess to champion university autonomy and then order the dismantling of campus gates and make the campuses have speakers’ corners! The universities should do those things on their own initiative. By issuing that directive Maszlee missed out on a splendid opportunity to assess his Vice-Chancellors’ (VCs) responsiveness to the rising expectation for greater openness.

Maszlee should elicit from them their three or four most immediate challenges and ask how he as minister could help. They, not him, know best (or should) as they are closest to the problems. If they cannot articulate them or are more concerned with a welcoming ceremony for him, fire them.

Firing university leaders should be done only if they are found wanting or fail to gain the confidence of the greater campus community, and not because they were appointed by the previous administration. Doing so would only perpetuate the blight of political interference that is the bane of local institutions.

Likewise with stressing the importance of English. Maszlee would best demonstrate that not through endless speeches but with an executive decision to make MUET mandatory for universities and teachers’ colleges. Likewise if he were to give extra allowances and preferential choice for quarters to teachers of English (as well as STEM). He could also direct schools to increase their hours of instruction in English and have another subject be taught in that language.

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Former MITI Minister Rafidah Aziz–An Excellent Dare to Do  and dynamic executive

 

Another would be to have his staff communicate in English and make its proficiency a requirement for promotions and entry into the permanent establishment. Emulate what Rafidah Aziz did at MITI. She was an “excellent dare to do” dynamic executive.

Make 12 years of schooling the norm. Bring back Form VI and reduce it to one year and start it in January together with the rest of the school. Make the transition from Form V to VI as seamless as going from Form IV to V. That would bring order to the current chaos for school-leavers.

For those academically inclined, the current seven-month hiatus following Form V is a colossal waste of time and precious loss of learning opportunity. The rich enroll their children in private colleges. Most Malays idle their time away. Much attrition of good study habits occurs. Beyond that, idle time is the devil’s workshop.

Get rid of matrikulasi and universities’ foundation courses. Both are a waste of scarce and expensive resources. Universities should focus on undergraduate, graduate, and professional education, not high school work.

As for fixing schools, Maszlee has demonstrated the dire need for that by his many photo-ops showing him sitting at pupils’ broken desks. At the macro level the best solution would be to prevail upon Treasury to have MOE’s tenders be open to competitive bidding. That would achieve more with less.

At the micro level, the Minister would achieve even more and much faster while at the same time streamline the process if he were to give the money directly to the headmasters. Let them prioritize the repairs and choose the local contractors. If you entrust them with the nation’s most precious assets–the brains of our young–then you could also trust them with a few million ringgit.

Back to the teachers, Maszlee should not get bogged down with administrative trivia as with requests for their transfers and maternity leave. Let your human resources people deal with those. Stay out of it by letting the teachers deal with the schools directly.

Execute these well and Maszlee would earn the heartfelt gratitude of millions of Malaysians, quite apart from making a significant contribution to the betterment of the nation. Get off the public lectern and buckle down at your desk.

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Note: I have explored these and other ideas in greater depth in my book, An Education System Worthy of Malaysia (2003,  ISBN 983 2535 06-9 (Malaysian edition), 0-595-26590-1 (US Edition).