Long live the Rome Statute! Long live idiocy?


April 10, 2019

Long live the Rome Statute! Long live idiocy?

Opinion  |  Azly Rahman

Published:  |  Modified:

 

COMMENT | Long live the Rome Statute! Long live Idiocy! What kind of government and society shall we be? From a cashless society we want to be a moral-less society, in a world plagued with genocide and the disease of violent ideologies.

The Pakatan Harapan government’s U-turns on the International Convention on the Elimination of Racism and Discrimination (ICERD) and now the Rome Statute signify our entry in our own Age of Mass Ignorance. If opposing war, genocide, crimes against humanity is opposed, we have a government that needs to be deposed.

Rome Statute as peace document

In Malaysia, will all the rallies against Israeli atrocities, Rohingya massacres, & bombing of churches & mosques be banned? Seems that the more we want to have flying cars and a cashless society, the more we show ignorance on issues of war, aggression, and global morality.

The Rome Statute is about stopping the rise of global fascism. What part of it does this PH government not understand? So shallow is our education system’s curriculum on race relations and global issues this idiocy on Rome Statute needs to be exposed?

From a self-proclaimed Asian tiger roaring in the UN condemning aggression, we have become a country mouse dying of ignorance of crimes against humanity. Most ridiculous arguments on “threatening Malay rights” are used to justify the defence of our ignorance on global issues!

They say ignorance is bliss. In Malaysia, on the Rome Statute issue, ignorance is blessed. Will our diplomats now abstain from voting on global aggressions, in order to respect the rights of kampong warriors? Insane!

In matters of universal human rights and global peace, no race or nation should be stupefied by its own leaders and rulers. What are we teaching our children? That it’s OK to discriminate and to condone war crimes? I thought the “lawmakers” in the PH government are more globally conscious? Are they falling now into a deep state of unconsciousness?

Resist mass idiocy

Committing to the principles of justice vis-a-viz international human rights in regards to the ICERD, the violation of human rights in Malaysia as in the recent missing person cases, and to the Rome Statute, is a no brainer.

The most ridiculous logic we hear is that if you oppose war crimes, enforced disappearances, aggression, and genocide, your power as a national government will be challenged, and that the bangsa, agama, and negara will be in danger.

There are principles crafted by the UN that are universal. There are those that are culturally-relative. But not the ICERD nor the Rome Statute. These are human principles that are meant to have us evolve into peaceful global citizens, by condemning mass murder and genocide.

Bebalism or incurable idiocy is what’s governing the new consciousness when it comes to speaking up against human rights injustices. Why is Pakatan Harapan losing the very principles that attracted people to vote for them? Insincerity? Hypocrisy? Idiocy?

As one who has been teaching global issues for years, it will be embarrassing to tell my students how idiotic Malaysia is. O’ Malays, revolt against any attempt by your leaders who attempt to spread ignorance and fear through issues of race and religion.

Hitler mounted ridiculous arguments on race, crafting falsehood to turn it into truth, creating fascism, committing war crimes. Kingdoms that survive on the power of ignorance cannot last long, in an age wherein power and wealth are challenged and eventually get destroyed.

The PH government seems to be surrendering to those wishing to see chaos take root. Did the people vote for cowardice? It has been my argument that education must address issues of polarization, class-based poverty, ecological destruction, and religious extremism.

Utterly shameful and gutless it is for a country claiming to be progressive and a promoter of regional peace, and advocating the global principle of “prosper thy neighbor”. What does opposing genocide, enforced disappearances, aggression, and war got to do with challenging “agama, bangsa, negara?” Are we going mad now?

A few leaders of the Pakatan said that those who criticized the prime minster and the PH government for pulling out of the Rome Statute are cowards who cannot be trusted. How is that logical?

Is the withdrawal due to confusion? Or cowardice? Why allow the tantrum of one man to deny the expression of the people of a nation? It is a basic expression of opposing violence as a global community, aspiring to be cosmopolitan citizens rather than trapped in the prison-nation-state of communalism, post-industrialism, ghetto-ism, and kampong-ism, is it not?

What must we do for the next generation to get out of this intellectual quagmire and the structuring of mass bebalisma?

We must turn to education as the only means for a sustainable personal, social, and cultural progress. Governments, monarchy, and those in power via whatever ideology come and go. But education should set us free.

Not the illusion of knowledge and wisdom. Not the installing of fear. These will not. They will turn the masses into people who continue to support leaders who are now on trial for corruption.

Educate for peace

Students need to be taught how to develop critical thinking and apply those skills in evaluating international systems, environmental issues, and human rights. We need to help them demonstrate the global dimensions of crucial contemporary issues, so that they could develop relational and rational thinking on how to study and think about global problems and relationships of war and conflict and how to address them and find peaceful solutions.

The urgent educational agenda is also to focus on global issues and how human rights, political-economy, ecological destruction, issues of power, wealth, powerlessness are all inter-related contributors to war and peace.

Students need to be taught to recognize the interdependence of the individual and the community in creating the challenges and opportunities in a global society through the examination of sustainability, human rights and peace and conflict. This is necessary so that when they become leaders and rulers, they will not be ridiculous, and not become people with money and power, but with no soul and morals.

Right now, this government is beginning to be a huge mess, unable to stand for the very basic principles of human rights, bowing down to some ridiculous tantrum not worth entertaining. What in the name of global sanity did Malaysians vote for?


AZLY RAHMAN is an educator, academic, international columnist, and author of seven books available here. He holds a doctorate in international education development and Master’s degrees in six areas: education, international affairs, peace studies communication, fiction and non-fiction writing. He is a member of the Kappa Delta Pi International Honour Society in Education. Twitter @azlyrahman. More writings here.

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

 

 

Liberalisation and empowerment the path to Malaysian prosperity


March 25, 2010

Liberalisation and empowerment the path to Malaysian prosperity

Author: Editorial Board, ANU

Hard road to Malaysian prosperity

It’s nearly a year since the Malaysian people overwhelmingly cast aside the domineering, divisive and corruption-riddled government of Najib Razak for an alternative led by Mohamad Mahathir that promised renewed focus on the people’s interests. The new Pakatan Harapan government undertook to restore good governance, raise the bar for ministers and civil servants, recover embezzled funds and deliver them back to Malaysians as cost of living relief.

A view of a building site beneath the Petronas Towers in Kuala Lumpur, Malaysia, 18 February 2016 (Photo: Reuters/Olivia Harris).

Translating rhetoric into action has thus far proven an uphill battle for an inexperienced government accustomed to life in opposition. It’s struggling to turn the vision into concrete reforms, as it tries to navigate a hostile upper house and entrenched vested interests. Progress has been confined to a handful of easy wins and the multiplication of committees to continue decades-old debates about well-understood policy failings. Malaysians are becoming restless for the government to deliver on the promise of a ‘New Malaysia’ that secures livings standards regardless of ethnicity.

Efforts to deconcentrate centralised power structures and break up state monopolies are central to reinvigorating the economy. This will enable more effective governance and help tackle endemic corruption. Malaysia’s Federal Government commands over 88 per cent of total government revenue and expenditure (the share is closer to 50 per cent in federations like Australia and the United States), leaving almost 170 states and local authorities with limited resources to address local needs. Imperious policymaking from the administrative capital of Putrajaya coupled with non-elected local governments bedevil the effective delivery of local services including law enforcement, education and healthcare.

This week’s lead article by Wing Thye Woo argues that ‘[g]rowth requires state governments that are empowered to plan and implement their own development strategies’. This would require a significant shift from the highly political allocation of development finance that penalised opposition-led states under the former government.

Government-linked corporations (GLCs) dominate the Malaysian economy and that needs to change. GLCs command a majority share of market capitalisation and key sectors of the economy including natural resources, utilities, construction and finance. Policies that reinforce GLC dominance stifle innovative and dynamic small and medium enterprises and competitiveness.

As Woo says, ‘GLCs may perform well in theory, but they don’t in practice — officials inevitably use them for political patronage and personal corruption. GLCs are political creatures, not economic instruments … Downsizing the state-related sector through privatisation is necessary for economic efficiency, political accountability and income equality’.

The government has acknowledged the problem but has been tentative in its approach to this critical reform. Its first substantive policy announcements and budget provided a major setback, reinforcing the role of GLCs in ethnic Malay development strategies and increasing government dependence on GLC dividends. It’s unclear whether the government now has the clout and political fortitude to pursue a privatisation and competition agenda.

Decentralisation is more than just government ownership and power-sharing; it encompasses a shift in the mentality of government from one underpinned by heavy-handed direction to one of empowerment. This requires the creation of institutional and regulatory environments that empower people to shape the policies that affect them, private business and entrepreneurship to fuel the engine room of economic growth, and all levels of government to deliver an enabling environment in which private actors flourish.

Empowerment means replacing ethnic discrimination with inclusive approaches to policy making, lifting up all low-income households. It means constructing a tax and transfer system that reduces rather than perpetuates inequality and cost of living pressures, positively reshaping the social contract between taxpayers and government. And it requires liberating the education system from the mechanistic, dictatorial, one-size-fits-all approach that has prioritised a one-eyed conception of nation-building over the development of inquisitive and adaptable minds.

Effective governance starts with a recognition that meaningful reforms may not please everyone but if done well can benefit all. It requires the strength of conviction to stay the course in the face of interest group pressures, avoiding discouraging U-turns like abandoning intentions to sign the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. It entails more than a solitary sugar tax to raise funds for development and social welfare when the tax revenue share of GDP is a third of the OECD average. And it requires delivering substantive reforms to education in the light (or in spite) of next month’s special task force report.

The government’s recent by-election defeat in Semenyih provides a wake-up call that its support among middle-class Malaysians depends on improving its performance not on disparaging its predecessor. That means harnessing the electorate’s heightened expectations towards charting a more prosperous course for the economy, governance and for the Malaysian people.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

 

Decentralisation the best bet for Malaysia’s growth

Author: by Dr. Wing Thye Woo, Sunway University

Malaysia’s burgeoning middle class has high expectations for future economic development. But the nation won’t escape the ‘middle-income trap’ and won’t have socially-inclusive growth under current government policies. A range of reforms that deliver decentralised decision-making is needed to build the knowledge-led economy to propel Malaysia to the next level of development.

A view of the Kuala Lumpur city skyline in Malaysia, 7 February 2018 (Photo: Reuters/Lai Seng Sin).

Malaysia’s current policy framework has its roots in the 1970 New Economic Policy (NEP) and its socio-political counterpart ‘Ketuanan Melayu’ (Supremacy of Malays). NEP has succeeded in building a large Malay middle class that is informed, skilled and confident about its identity. But it’s also well aware that these two policies rooted in the past are not capable of transforming Malaysia into a developed nation.

To meet these aspirations, reform is urgently needed in three key economic areas. Each area requires a common reform component: the careful entrenchment of decentralised decision-making.

First, the state’s administrative structure inhibits innovative policymaking and prevents effective oversight. The federal government is much larger and more cumbersome than state governments and has disproportionate power.

Image result for The Malaysian economy

Contrasting budgets and spending power reveal the imbalance between federal and state governments. The federal government has legal authority to impose income and sales taxes. But state governments must rely on land-related transactions and fees on small-ticket items like hawker licenses for independent revenue. The provision of most public services is done through branches of federal ministries operating at the state level.

State expenditure is determined by fiscal allocations from the federal government to state governments, and the amounts allocated depend on political considerations. Under the former Barisan Nasional (BN) government, opposition-controlled states received budgetary allocations that were proportionately much smaller than BN-controlled states. State governments are banned from borrowing to finance development projects, and that means they are unable to raise revenue to build the infrastructure needed to clear production bottlenecks in local industries.

Image result for The Malaysian economy

Growth requires state governments that are empowered to plan and implement their own development strategies. Effective decentralisation requires each state government to have its own civil service. States will also need much larger shares of tax revenue, based on factors like developmental stage and tax revenue contribution. They should also be allowed to borrow to finance local infrastructure projects — with the commitment that there will be no federal bailouts — and be invested with significant responsibilities that are currently held by federal ministries.

The second key task is reforming government-linked corporations (GLCs). GLCs are crowding out the private sector, reducing economic dynamism. They also enable corruption that increases income inequality.

GLCs may perform well in theory, but they don’t in practice — officials inevitably use them for political patronage and personal corruption. GLCs are political creatures, not economic instruments.

Competition between GLCs and private firms is intrinsically unfair and harmful for overall growth. No matter how inefficient GLCs are, they can always count on government bailouts. They undermine economic dynamism by buying up their more efficient private competitors. Worse still, they prevent the development of a dynamic Malay business community by pulling capable Malays entrepreneurs away from starting private businesses and into cosy, life-long GLC jobs.

Downsizing the state-related sector through privatisation is necessary for economic efficiency, political accountability and income equality. The only two considerations in choosing buyers should be the size of the bid and the promotion of industry competition. A well-prepared and transparent privatisation process is more important than a speedy one.

The third key economic reform task is diversifying and expanding the banking system. The financial sector’s monopoly structure damages economic performance and worsens income inequality by suppressing the operations of small and medium-sized enterprises (SMEs).

The 1997 Asian financial crisis convinced the Malaysian government that the banking system would be less prone to crisis if regulators could more easily monitor them. The result was the forced consolidation of smaller banks into 10 big banks in 2000.

This action made state investment companies the controlling shareholders in most commercial banks, effectively creating a state-owned banking monopoly. These banks are slow in adopting better payment practices and providing new financial products, shoddy in their treatment of small retail customers, and biased in lending towards GLCs. The small number of banks and the extent of state control in the largest banks are to blame.

One serious defect of the bank consolidation was that Malaysian SMEs began experiencing difficulties in getting capital from the large banks, replicating the international experience that SME financing comes mostly from small and medium-sized banks. In response, the Malaysian government established the state-owned SME Bank in 2005. But the SME Bank is not meeting the sector’s capital needs. It also has the highest non-performing loan ratio in the banking industry. The slow growth of the SME sector means new Malay bus­­­inesses are not emerging and the distribution of income is worsening.

Reforming the banking sector will mean allowing private small and medium-sized banks to exist again, reducing the government’s bank share holdings, and removing restrictions on foreign banks and their activities.

The NEP is essentially ‘Ketuanan Centralisation’ (Supremacy of Centralisation) in the economic sphere, manifesting as ‘Ketuanan Federal Government’ in governance, ‘Ketuanan GLC’ in production, and ‘Ketuanan Monopoly Bank’ in finance.

NEP cannot mobilise the entire brain-power of Malaysia for knowledge-creation because it prevents entrenchment of excellence in socio-economic institutions, and induces brain drain and capital flight. For Malaysia to escape the middle-income trap, ‘Ketuanan Centralisation’ must be purged from the public policy framework to make way for knowledge-led growth.

Wing Thye Woo is President of the Jeffrey Cheah Institute on Southeast Asia and Director of the Jeffrey Sachs Center on Sustainable Development at Sunway University and Professor of Economics at the University of California at Davis; he holds adjunct academic positions at Fudan University and Chinese Academy of Social Sciences.

 

 

Daim’s appraisal of our academics


March 23 ,2019

Daim’s appraisal of our academics

by Tajuddin  Rasdi

Daim Zainuddin recently made two important points in his speech at Universiti Teknologi Malaysia in Skudai.

Image result for daim zainuddin

Firstly, he said the Malays are being fed a narrative bordering on the idea that their race and Islam are both under threat, and that more affirmative policies will be needed in the new Pakatan Harapan government in the coming years and decades.

Secondly, and this is the main point of my article, he said Malay academics appear to be doing nothing at all but are letting this narrative play out to the opportunism of certain political parties and selfish NGOs.

I have been writing to the media for 20 years, saying absolutely the same thing, but it has earned me a negative perception from the Malay establishment especially in the public universities and even the previous higher education ministry.

Daim’s statement came as a sweet surprise to me as he was never one of my favourite politicians.

I know him as a savvy businessman who grew up within the Malay patronage system. As the economic and corporate worlds are outside of my understanding, I have shied away from trying to know anything about the man himself.

But a few days ago, I was surprised to find him articulating a historical, religious and political construct of what I consider a “Malaysia-Malay construct” as opposed to what I term a “Melayu-Malaysia” one.

A Malaysia-Malay construct is simply a Malay who understands his or her own heritage and faith within a Malaysian constitutional, multi-religious and multi-ethnic acceptance of co-existence, while a Melayu-Malaysia construct is a Malay who is just a Malay, then, now and forever, living in a land geopolitically defined as “Malaysia”. No compromise, no apologies.

The Melayu-Malaysia expects others to change for the sake of his race and faith, without the need to understand, tolerate or even acknowledge the importance of the existence of others as partners in nation-building.

The academics of this country have become purely self-serving and disinterested in nation-building.

The story of a disinterested academia began in the 1980s.

The Universities and University Colleges Act, or UUCA, was instituted to kill off or control student political activities and also that of the academics.

Under UUCA, no academic can speak or write to the media or the public without getting permission from the authorities. That basically sums it up.

A few academics were charged under the act, one of them the late Fadzil Noor who was the PAS president and an academic at a public university.

The involvement of the academia in nation-building basically died. With this law, the culture of academia turned inwards to a concentration on teaching until the idea of “world class” and being “internationally recognised” in rankings came into being in the late 1990s.

With this new mantra, academics are said to be successful if they publish in “high impact” or Scopus journals and receive million ringgit grants.

It would also sweeten the deal if an MoU were signed with European or American or Western universities deemed to be “world class” and “international”. Whether such ties would produce a culture of research and inquiry was disregarded as long as universities “dapat nama”, and a minister was there to observe the deals being signed. That’s it.

After the turn of the 21st century, public universities went full blast on rankings by journals with overseas publications. Locally published books, encyclopaedias and journals were regarded as third rate.

In the old days, books and media writings commanded a high percentage and weightage but now there is hardly a column to put them in on an evaluation or KPI form.

Once, I had to put my books, articles and 200 encyclopaedia entries in a column marked “other publications”.

I used to read Aliran, whose writers are academics from universities in the north. I found their writings to be fresh, bold and highly academic.

After 10 years, I noticed their designation was still “associate professor” and wondered when these people would be called “professor”.

I soon found out that they had migrated to the National University of Singapore. There is no future in Malaysia for “public intellectuals”.

I was lucky enough to be appointed a full professor before all the crazy journal hype began to take place in universities. I managed to squeeze by with my books, papers and other writings after attending the professor interview twice.

As my writings increasingly touched on society and the nation, my appointments at committees on the national level became fewer and fewer.

I no longer got invitations to public talks from universities, because I was told that I am “controversial” in the corridors of the chancellery.

So the only appointment letters from public universities that came to me were to be an examiner for PhD candidates and evaluator of professorships and associate professorships in architecture.

The coup de grace came after I went on optional retirement, leaving after 27 years of teaching and writing at a public university, exiting the campus alone and uncelebrated.

My application as contract professor to two public universities was rejected on grounds of me being “controversial”.

I have mentioned that the key to our future is the reeducation process of the Malay mind by Malay academics who understand that Islam is strong only if you read and understand, and not sit in front of the TV or the mosque podium listening to an ustaz giving his half-baked ideas of religion and society.

The fate of our country hinges on academics changing the narratives of what is important for Malaysians in the coming decades and centuries, to be in line with the goals of sustainable development outlined by the United Nations.

We won’t go very far listening to Friday sermons condemning progressive thinkers or LGBT that may have caused Allah to turn the hot weather on us.

Forget about STEM education if academics do not speak about it.

We are facing a Malay-Muslim society that has grown up with the Islamic resurgence of the 1980s with most Malays conscious about the afterlife and religious values for their children and society.

The International Islamic University Malaysia as well as Istac and Ikim were supposed to guide the Malays into a new era of modern and democratic understanding of Islam vis-a-vis nation-building and coexistence.

But where were these academics when two muftis encouraged the use of “kafir” on non-Muslim citizens, or when calls for “jihad” against the enemies of Islam came from the national mosque?

Daim’s speech must give pause to all the vice-chancellors of public universities to rethink their KPI for academics.

We need more public intellectuals to reform and rewrite the narratives of the nation, to bring social and religious harmony and sustainable wealth to the country.

We don’t need “high impact” journals to measure our success.

Just ask the man on the street whether he should vaccinate his children or whether the world is flat or defending minority groups would start a tsunami somewhere.

The views expressed are those of the author and do not necessarily reflect those of FMT.

 

Mujahid’s reformist facade


March 20, 2019

Mujahid’s reformist facade

 

Image result for Mahathir an Zakir Naik

 

Mujahid Yusof Rawa, the minister in charge of religious affairs, has carefully cultivated an image of himself as an open-minded political moderate and reformer, someone who stands apart from the rest of the extremist crowd.

Of late, however, his pronouncements and actions have led many to wonder just how deep his commitment to reform and moderation is.

His reaction to the recent International Women’s Day rally is a case in point. While he had nothing much to say about many of the legitimate issues concerning women’s rights that were raised, he expressed shock over the presence of members of the LGBT community who were also there to press for their rights.

Image result for Mujahid

Admittedly, the LGBT issue is controversial in Malaysia but to suggest that they were “abusing the democratic space” was simply outrageous. Clearly, he does not understand that in a democracy, everyone, including the LGBT community, has a right to be heard.

Image result for Mahathir an Zakir Naik

Harassing women fighting for their rights is common enough in a  Wahhabi state like Saudi Arabia. That it should happen in a secular democracy like Malaysia is cause for concern.

In the short span of a few months, Mujahid’s journey as a minister in Malaysia Baru has taken him from standing alongside a transgender activist and pleading with the public not to discriminate against the LGBT community, to open hostility against them.

Image result for Mujahid

 

He has gone from championing human rights to calling for greater restrictions on our democratic space. And he has shifted from insisting that Jakim and other Islamic agencies should be reformed to empowering them yet further.

Indeed, he is now defending Jakim’s excessive RM810 million budget as reasonable and justified.

Instead of moderating the worst excesses of agencies like Jakim, which he said was one of his priorities, he is allowing them to slowly radicalise his political views.

No surprise then that Mujahid met recently with the infamous Salafist preacher Zakir Naik, a fugitive wanted abroad for terrorism-related and money laundering offences and who remains blacklisted by several countries.

After the meeting, Mujahid shocked many Malaysians by declaring Naik, who he once criticised for demeaning other faiths, as “an inspiration”.

How Mujahid can bestow his admiration on the same man who, convinced that UMNO would win re-election, argued that it is better for Muslims to support a corrupt Muslim regime than an honest one that includes non-Muslims is also inexplicable.

Of course, as soon as UMNO lost power, Naik rushed over to kiss Dr Mahathir Mohamad’s hand and ingratiate himself with the new government.

His confidence in the absolute gullibility of Malaysia’s ruling elites was clearly not misplaced. Heroes, it seems, come quite cheaply in Malaysia.

Mujahid has since tried to justify his meeting as an attempt to educate Naik about the country’s Islamic administration. Few will be fooled by such a facile explanation.

Now that Mujahid has anointed Naik as a worthy role model, in effect Malaysia Baru’s new inspirer-in-chief, every ceramah door in the country will be open to him and his extremist teachings.

Don’t be surprised if Naik soon emerges as the most influential Islamic voice in the nation; quite a coup for a fugitive but what a setback for national unity!

But let’s face it: when it comes to Muslim radicals, the ruling elites seem to have tunnel vision. Even the police seem to go out of their way to avoid confronting the ugly reality that Malaysia is far too tolerant of extremism.

In explaining the increasing number of terrorists who use Malaysia as a base, for example, the police chief suggested that it was due to the fact that Malaysia has good air links with the rest of the world, as if somehow Malaysia is the only well-connected country in the region.

Image result for zakir naik quotes

A Life devoted to spreading a Message of Hate of the Other

The fact is terrorists choose Malaysia as their base of operations because they know that the religious culture here is more accommodating and supportive. Extremists only have to don the right religious garb and speak the same Ketuanan Melayu language and they are in.

Naik should have been kicked out of the country the moment Pakatan Harapan came to power. That he remains here – despite his fugitive status, his unsavoury background, his alleged links to terrorists, his taunting of religious minorities and his disgraceful support for the former regime – is just another indication of the misplaced priorities of Malaysia’s political elites.

Whatever it is, it’s a sad day for Malaysia when Mujahid, someone we were all hoping would help moderate the trend towards religious extremism in our nation, draws inspiration from the likes of Naik.

It really makes you wonder what lurks behind the reformist façade of some of these PH leaders.

The views expressed are those of the author and do not necessarily reflect those of FMT.

Mourning the Passing of Economist Alan Kruger


March 20, 2019

Normally this newsletter would be concerned with events in the wider world. But right now I just have to write about the shocking death — reportedly by suicide — of my former Princeton colleague, the economist Alan Krueger, at the age of 58.

I thought I knew Alan reasonably well and never saw a hint that something like this might be coming. But people’s lives often feel very different from the inside than they look on the outside.

What I can talk about is Alan’s work and why it mattered so much to other economists, myself very much included. For his research arguably did more to change how we view the economy than that of any other modern economist.

Alan’s most influential, paradigm-shifting work was his 1992 study with David Card on the effects of minimum-wage increases.

Before Card and Krueger, most economists just assumed that raising the minimum wage leads to lower employment. But Card and Krueger realized that this was a proposition you can test. Their initial study compared employment in New Jersey and Pennsylvania before and after New Jersey raised its minimum wage. And they found no adverse effect on employment — if anything, a small rise in New Jersey relative to its neighbor.

His study opened a new frontier in economic research. Economics is always bedeviled by the lack of controlled experiments; there are so many things going on in the economy that it’s hard to tell what’s causing what. But unilateral state wage hikes amount to natural experiments that tell you far more than standard economic methods.

Furthermore, this was a method that could be replicated many times, and has been over the years, right up to the recent round of minimum wage increases in a number of cities. And the preponderance of the results have confirmed Card and Krueger’s initial finding: raising minimum wages has far less negative impact on jobs than standard economics would have predicted.

This has implications that go far beyond minimum wages themselves. What Card, Krueger and the research that follows tell us is that labor markets are a lot more complicated than we thought, that market power matters a lot and that there may be much more room for public policy to raise wages in general than Econ 101 would have it.

This paper alone would secure Alan Krueger’s reputation as one of the greatest labor economists ever. But he did far more, on everything from growth and the environment to the effects of computers on wages — and he was a public servant too. He will be sorely missed.

 

Business as usual: regime change and GLCs in Malaysia


March 14, 2019

Business as usual: regime change and GLCs in Malaysia

By Dr. Edmund Terence Gomez

Business as usual: regime change and GLCs in Malaysia

 

  • Edmund Terence Gomez is Professor of Political Economy at the Faculty of Economics & Administration, University of Malaya. His publications include Malaysia’s Political Economy: Politics, Patronage and Profits (Cambridge University Press, 1997), Political Business in East Asia (Routledge, 2002), The New Economic Policy in Malaysia: Affirmative Action, Horizontal Inequalities and Social Justice (National University of Singapore Press, 2013) and Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia (Palgrave-Macmillan, 2017).

    When Pakatan Harapan unexpectedly secured power after Malaysia’s 14th General Elections (GE14) in May 2018, voters expected the coalition and Prime Minister Mahathir Mohamad to dismantle an extremely well-entrenched government–business institutional framework that had contributed to extensive clientelism, collusion, nepotism and embezzlement. After all, the institutionalisation of more transparent and accountable governance was a Pakatan campaign pledge.

    However, barely nine months after taking control of government, Pakatan appears to be re-instituting the practice of selective patronage in the conduct of politics and through the implementation of public policies. In this inter-connected domain of public policies and selective patronage, government-linked companies (GLCs) will play a key role.

    The core institutions employed by the Barisan Nasional coalition and the hegemonic party at its helm, the United Malays National Organisation (UMNO), that allowed for extensive profligacy are what are collectively known as GLCs. These GLCs are, in fact, a complex ensemble of statutory bodies, foundations, trust agencies, investment enterprises, a sovereign wealth fund, as well as companies, with representation in a wide array of industries. These institutions, controlled by the central and 13 state governments in the Malaysian federation, officially function primarily as “enablers” of domestic firms, to nurture a dynamic privately-owned enterprise base. But GLCs also constitute an estimated 42% of total market capitalisation of all publicly-listed firms. 67 quoted firms can be classified as GLCs, as the government, through various institutions, has a majority equity interest in them.

    Federal ministries, under the ambit of cabinet ministers, also control a vast number of quoted and unlisted GLCs that do a variety of things, including promoting development of strategic economic sectors, redressing spatial inequities by developing rural areas and industries, and financing research and development to drive industrialisation. However, of the 25 ministries in the federal cabinet in 2017, before the fall of Barisan, three in particular, the Prime Minister’s Department, Ministry of Finance (MoF) and Ministry of Rural and Regional Development (MRRD), had control of a huge assortment of companies that were deployed to channel government-generated rents to UMNO members and well-connected businesspeople.

    At the state level, different public institutions own GLCs through the states’ chief ministers, through holding firms known as Chief Minister Incorporated (CMI). CMIs establish companies to undertake activities in specific constituencies to mobilise electoral support. Party members are liberally appointed as directors of these GLCs, a major source of political financing as their stipends are used for political activities. Through the CMIs, what had emerged was the fusing of bureaucratic and party apparatuses, allowing politicians to selectively channel government resources in a manner that would help them consolidate or enhance their political base.

    Another factor shaped modes of GLC development: a communal perspective to policy implementation, in keeping with the government’s longstanding affirmative action-based redistributive agenda to transfer corporate equity to the Bumiputera (Malays and other indigenous groups). However, rents meant for poor Bumiputera were hijacked by UMNO members. Eventually, these GLCs became sites of political struggles among elites attempting to consolidate power through patronage, a reason why critics have persistently excoriated them as inefficient and loss-making concerns.

    Interestingly enough, this GLC framework became entrenched in the economy as well as the political system during Mahathir’s long 22-year reign as prime minister, from 1981 until 2003. Other key figures who shaped how this political–business nexus evolved while they served with Mahathir previously include then-Finance Minister Daim Zainuddin (1984–1990), now his economic advisor, and Anwar Ibrahim (1990–1997), then and now the designated prime minister-in-waiting. By the time of GE14, this GLC structure had become so huge—and so abused by Barisan—that Mahathir himself described it as a “monster”.

    Despite Pakatan’s promise of a new approach to shaping Malaysia’s political economy, experience thus far suggests a surprising degree of continuity. Rather than give up an appealingly effective lever for consolidating power, Pakatan leaders seem inclined to borrow the same tools on which Barisan had so detrimentally relied.

    Power struggles, persistent patronage

    Soon after Pakatan formed the government, a disturbing series of events occurred. Shortly after the election, Prime Minister Mahathir inaugurated the Ministry of Economic Affairs (MEA), led by Azmin Ali, deputy president of Parti Keadilan Rakyat (PKR), Anwar’s party. Even before GE14, PKR was mired in a serious factional row, reportedly due to problems between Anwar and Azmin. Meanwhile, Mahathir is widely thought to be uncomfortable with transferring power to Anwar, who he had removed from public office in 1998.

    Image result for Anwar. mahathir and Azmin

    A PKR insider insists that the party is split into two factions, one loyal to party supremo Anwar Ibrahim and the other to deputy president Mohamed Azmin Ali.

    The newly-minted MEA took control of numerous GLCs from the Ministry of Finance (MoF), under the jurisdiction of Lim Guan Eng, leader of the Democratic Action Party (DAP). In this discreet shuffling of GLCs between ministries, Malaysia’s only sovereign wealth fund, Khazanah Nasional, was channelled from MoF to the Prime Minister’s Department, under Mahathir’s control. The government did not explain why these GLCs were shifted between ministries, but MoF’s enormous influence over the corporate sector has been significantly diminished. Under Barisan, the Prime Minister had also functioned as the Finance Minister, a practice Mahathir had started in 2001, but Pakatan, while in opposition, had pledged to ensure the same politician would not hold both portfolios.

    Even though Khazanah was under the Prime Minister’s Department, Mahathir appointed himself as its chairman, which is, by convention, the practice. The convention also is that the Finance Minister serve on Khazanah’s board of directors. Instead, Minister of Economic Affairs Azmin was given this appointment. The appointment of Mahathir and Azmin as Khazanah board members was contentious as Pakatan had pledged in its election manifesto that politicians would not be appointed as directors of government enterprises.

    Next, in September 2018, Azmin’s ministry convened a Congress on the Future of Bumiputeras & the Nation. Mahathir stressed at this congress the need to reinstitute the practice of selective patronage, targeting Bumiputera, a plan his economic advisor, Daim, endorsed. The following month, when Pakatan, through the MEA, released its first public policy document, the Mid-Term Review of the 11th Malaysia Plan, it emphasised the Bumiputera policy as being imperative. In the past, GLCs have been central to government efforts to advance Bumiputera interests.

    Meanwhile, numerous ministers began actively calling for the divestment of GLCs, an issue also in the 2019 budget. Subsequently, when Khazanah began reducing its equity holdings, including in CIMB, Malaysia’s second largest bank, rather than seeming simply a step toward the larger goal of scaling back government ownership, this divestment raised the question whether it marked the commencement of a transfer of control of key enterprises to well-connected business people, even proxies of politicians, a common practice by UMNO in the 1990s. In fact, in ensuing debates about such divestments, the question was raised whether such divestments were an attempt to create a new influential economic elite, even oligarchs, who could check politicians in power in the event of a leadership change.

    Then, another contentious issue occurred. Minister of Rural & Regional Development Rina Harun, of Mahathir’s Parti Pribumi Bersatu Malaysia (Bersatu), appointed politicians from her party to the boards of directors of GLCs under her control. Under UMNO, this ministry had persistently been embroiled in allegations of corruption, undermining the activities of its GLCs that had been created to redress spatial inequalities and reduce poverty. The practice of patronage through GLCs to draw electoral support was rampant under this ministry as its enterprises have an enormous 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. Hence, the minister’s directorial appointments suggested a worrying trend of continuity of irresponsible practices of the old regime.

    In December 2018, Bersatu leaders openly declared their intent to persist with the practice of selectively-targeted patronage. At its first convention after securing power, when its president, Muhyiddin Yassin, declared that “Bersatu should not be apologetic to champion the Bumiputera Agenda”, his statement was enthusiastically supported by members, suggesting an element of opportunism, even self-interested rent-seeking, in the party. UMNO leaders had made similar arguments in the past to justify state intervention, including through GLCs, a process that they abused to transfer government-generated rents to party members, to the detriment of poor Bumiputera. These trends suggested that Bersatu’s primary concern was its immediate need to consolidate power, not instituting appropriate long-term socioeconomic reforms, which might do less to muster support.

    The problem of instituting real change

    All told, then, these specific, sometimes discreet, steps since GE14 have called into question the extent of political economic reforms expected of Pakatan, based on its own manifesto. Moreover, under Pakatan, by its own admission, the volume of state intervention in the economy will still be substantial. Industrial development will be fostered through GLCs, as will attempts to nurture dynamic domestic Bumiputera-owned enterprises. Worryingly, what is absent is a coherently-structured industrial plan to cultivate entrepreneurial private firms. There is similarly no roadmap to reform these GLCs, or even to get them to target specific core industries requiring heavy capital investments and extensive research and development funding to rapidly industrialise the economy. Since politicians will control most of these GLCs as directors, they will determine the recipients of rents distributed to nurture domestic enterprises.

    The current state of play raises an important question about an interesting phenomenon: what happens, in terms of dismantling rent-seeking and patronage and instituting reforms to curb corruption, when a new regime comprises politicians who see this framework as a mechanism to consolidate power? A link between two core issues remains in place after regime change: elite domination and the continued practice of selective patronage, legitimised by advocating race-based policies that are to be implemented through GLCs. Under UMNO, elite domination was obvious, with Barisan component members subservient to then-Prime Minister Najib. In Pakatan, a multi-party coalition, Prime Minister Mahathir and Daim appear to have disproportionate influence when it comes to decision-making on core issues, though the parameters of their power remain unclear.

    Meanwhile, elite domination of the economy at the state level varies as several different parties are in power. State governments are controlled by UMNO, Bersatu, PKR, DAP, Parti Warisan Sabah, Parti Islam Se-Malaysia (PAS) and Parti Pesaka Bumiputera Bersatu (PBB). The latter two parties have long governed Kelantan and Sarawak respectively, while Bersatu and Warisan are new parties run by UMNO factions, though ostensibly with a reformist agenda. The governance dynamics of these parties in these state governments will differ, specifically in terms of how they employ GLCs, further indicating the ubiquity of these enterprises in the economy. These GLCs have persistently been used to distribute different types of rents such as financial aid, contracts, permits, licences, etc., to party members as well as others in the electorate in key constituencies. Even with regime change, the presence of covert networks of power created through GLCs in these states is unlikely to be reformed, thus contributing to continued serious wastage of scarce resources.

    There is plainly no clear method to the madness of how the new federal or state governments employ GLCs. Different sets of political and business elites operate at the national and state levels. In fact, before GE14, business elites were known to be creating ties with politicians in both UMNO and Pakatan parties, specifically PKR and DAP. Meanwhile, in Sarawak, wealthy businessmen had long since begun entering politics, even getting elected as parliamentarians, thus giving them access to federal government leaders. This diversity in political–business ties, where government institutions figure, is an indication of how complex the GLC problem has become. However, GLCs remain an opaque form of state intervention in the economy. And, since there is little public knowledge of GLCs, the opacity of these enterprises has allowed for their abuse by politicians.

    Fragile state and political economic outcomes

    Since Pakatan is a coalition of parties led by politicians who coalesced only because they had a common agenda—the removal of Najib from power—what prevails in the post-GE14 period can be described as a “fragile state”. This fragility is also because of the uneasy relationship between Mahathir, who leads the second-smallest party in Pakatan, and his long-time-nemesis-now-political-ally Anwar, who leads the party with the highest number of parliamentary seats. PKR, however, is ridden with serious factionalism, including an uneasy truce between Anwar and Azmin, who apparently is closely associated with Mahathir.

    What is emerging is new forms of power relations through the unhealthy circulation of political elites from the old regime into Pakatan, as well as alliances between leaders from different parties in this coalition. UMNO parliamentarians are lining up to join Bersatu, a quick route back to power for them after their unexpected ouster. By co-opting them, Mahathir’s new party can swiftly fortify its extremely weak base in Bumiputera-dominant states. Bersatu’s co-optation of discredited UMNO members is, however, seriously undermining support for Pakatan among the urban middle class, as well as Mahathir’s credibility. In fact, there has been recent talk in the public domain that a no-confidence motion against Mahathir as Prime Minister may be tabled in the March sitting of parliament, led apparently by leaders within Pakatan. Because of this complex situation of political in-fighting, there is much fear that politicians in power may move to create, through the divestment of GLCs, powerful

    Since a structural framework that allowed politicians to exploit institutions in various ways to serve vested political and economic interests remains in place, a key question has emerged. What are the possible political outcomes to this situation, in which contending elites in the new regime struggle to consolidate their respective power bases? Political outcomes can involve protecting the property rights—through ongoing and much-needed institutional reforms—of business elites who acquire privatised GLCs, thereby preventing expropriation of these companies by the government in the event of a change of premiership. Political outcomes can also entail endorsing entitlements that give one large segment of society privileged access to government-generated rents, as is already actively occurring. Inevitably, a related issue is the necessity of targeted race-based policies. These policies serve as a mechanism to retain patronage-based networks and consolidate power bases. This approach can, however, stymie domestic investments by non-Bumiputera, a serious and persistent problem during Barisan’s rule.

    Ironically, it was these forms of unproductive government–business networks that Pakatan had promised to dismantle when in opposition, in order to forge a “New Malaysia”. This New Malaysia was supposed to be devoid of race-based political discourses and policies, with the GLCs deployed to promote equitable development and redress social inequities. The GLCs were not to be led by politicians who have no clue how to utilise them productively in the economy. These pledges have been broken. Evidently, consolidating power is more important for Malaysia’s new political elites than restructuring an economy in dire need of reform.
    itutions, has a majority equity interest in them.
    The core institutions employed by the Barisan Nasional coalition and the hegemonic party at its helm, the United Malays National Organisation (UMNO), that allowed for extensive profligacy are what are collectively known as GLCs. These GLCs are, in fact, a complex ensemble of statutory bodies, foundations, trust agencies, investment enterprises, a sovereign wealth fund, as well as companies, with representation in a wide array of industries. These institutions, controlled by the central and 13 state governments in the Malaysian federation, officially function primarily as “enablers” of domestic firms, to nurture a dynamic privately-owned enterprise base. But GLCs also constitute an estimated 42% of total market capitalisation of all publicly-listed firms. 67 quoted firms can be classified as GLCs, as the government, through various institutions, has a majority equity interest in them.

    At the state level, different public institutions own GLCs through the states’ chief ministers, through holding firms known as Chief Minister Incorporated (CMI). CMIs establish companies to undertake activities in specific constituencies to mobilise electoral support. Party members are liberally appointed as directors of these GLCs, a major source of political financing as their stipends are used for political activities. Through the CMIs, what had emerged was the fusing of bureaucratic and party apparatuses, allowing politicians to selectively channel government resources in a manner that would help them consolidate or enhance their political base.
    Another factor shaped modes of GLC development: a communal perspective to policy implementation, in keeping with the government’s longstanding affirmative action-based redistributive agenda to transfer corporate equity to the Bumiputera (Malays and other indigenous groups). However, rents meant for poor Bumiputera were hijacked by UMNO members. Eventually, these GLCs became sites of political struggles among elites attempting to consolidate power through patronage, a reason why critics have persistently excoriated them as inefficient and loss-making concerns.
    Interestingly enough, this GLC framework became entrenched in the economy as well as the political system during Mahathir’s long 22-year reign as prime minister, from 1981 until 2003. Other key figures who shaped how this political–business nexus evolved while they served with Mahathir previously include then-Finance Minister Daim Zainuddin (1984–1990), now his economic advisor, and Anwar Ibrahim (1990–1997), then and now the designated prime minister-in-waiting. By the time of GE14, this GLC structure had become so huge—and so abused by Barisan—that Mahathir himself described it as a “monster”.
    Despite Pakatan’s promise of a new approach to shaping Malaysia’s political economy, experience thus far suggests a surprising degree of continuity. Rather than give up an appealingly effective lever for consolidating power, Pakatan leaders seem inclined to borrow the same tools on which Barisan had so detrimentally relied.

    Power struggles, persistent patronage
    Soon after Pakatan formed the government, a disturbing series of events occurred. Shortly after the election, Prime Minister Mahathir inaugurated the Ministry of Economic Affairs (MEA), led by Azmin Ali, deputy president of Parti Keadilan Rakyat (PKR), Anwar’s party. Even before GE14, PKR was mired in a serious factional row, reportedly due to problems between Anwar and Azmin. Meanwhile, Mahathir is widely thought to be uncomfortable with transferring power to Anwar, who he had removed from public office in 1998.
    The newly-minted MEA took control of numerous GLCs from the Ministry of Finance (MoF), under the jurisdiction of Lim Guan Eng, leader of the Democratic Action Party (DAP). In this discreet shuffling of GLCs between ministries, Malaysia’s only sovereign wealth fund, Khazanah Nasional, was channelled from MoF to the Prime Minister’s Department, under Mahathir’s control. The government did not explain why these GLCs were shifted between ministries, but MoF’s enormous influence over the corporate sector has been significantly diminished. Under Barisan, the Prime Minister had also functioned as the Finance Minister, a practice Mahathir had started in 2001, but Pakatan, while in opposition, had pledged to ensure the same politician would not hold both portfolios.
    Even though Khazanah was under the Prime Minister’s Department, Mahathir appointed himself as its chairman, which is, by convention, the practice. The convention also is that the Finance Minister serve on Khazanah’s board of directors. Instead, Minister of Economic Affairs Azmin was given this appointment. The appointment of Mahathir and Azmin as Khazanah board members was contentious as Pakatan had pledged in its election manifesto that politicians would not be appointed as directors of government enterprises.

    Next, in September 2018, Azmin’s ministry convened a Congress on the Future of Bumiputeras & the Nation. Mahathir stressed at this congress the need to reinstitute the practice of selective patronage, targeting Bumiputera, a plan his economic advisor, Daim, endorsed. The following month, when Pakatan, through the MEA, released its first public policy document, the Mid-Term Review of the 11th Malaysia Plan, it emphasised the Bumiputera policy as being imperative. In the past, GLCs have been central to government efforts to advance Bumiputera interests.
    Meanwhile, numerous ministers began actively calling for the divestment of GLCs, an issue also in the 2019 budget. Subsequently, when Khazanah began reducing its equity holdings, including in CIMB, Malaysia’s second largest bank, rather than seeming simply a step toward the larger goal of scaling back government ownership, this divestment raised the question whether it marked the commencement of a transfer of control of key enterprises to well-connected business people, even proxies of politicians, a common practice by UMNO in the 1990s. In fact, in ensuing debates about such divestments, the question was raised whether such divestments were an attempt to create a new influential economic elite, even oligarchs, who could check politicians in power in the event of a leadership change.
    Then, another contentious issue occurred. Minister of Rural & Regional Development Rina Harun, of Mahathir’s Parti Pribumi Bersatu Malaysia (Bersatu), appointed politicians from her party to the boards of directors of GLCs under her control. Under UMNO, this ministry had persistently been embroiled in allegations of corruption, undermining the activities of its GLCs that had been created to redress spatial inequalities and reduce poverty. The practice of patronage through GLCs to draw electoral support was rampant under this ministry as its enterprises have an enormous 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. Hence, the minister’s directorial appointments suggested a worrying trend of continuity of irresponsible practices of the old regime.
    In December 2018, Bersatu leaders openly declared their intent to persist with the practice of selectively-targeted patronage. At its first convention after securing power, when its president, Muhyiddin Yassin, declared that “Bersatu should not be apologetic to champion the Bumiputera Agenda”, his statement was enthusiastically supported by members, suggesting an element of opportunism, even self-interested rent-seeking, in the party. UMNO leaders had made similar arguments in the past to justify state intervention, including through GLCs, a process that they abused to transfer government-generated rents to party members, to the detriment of poor Bumiputera. These trends suggested that Bersatu’s primary concern was its immediate need to consolidate power, not instituting appropriate long-term socioeconomic reforms, which might do less to muster support.

    The problem of instituting real change
    All told, then, these specific, sometimes discreet, steps since GE14 have called into question the extent of political economic reforms expected of Pakatan, based on its own manifesto. Moreover, under Pakatan, by its own admission, the volume of state intervention in the economy will still be substantial. Industrial development will be fostered through GLCs, as will attempts to nurture dynamic domestic Bumiputera-owned enterprises. Worryingly, what is absent is a coherently-structured industrial plan to cultivate entrepreneurial private firms. There is similarly no roadmap to reform these GLCs, or even to get them to target specific core industries requiring heavy capital investments and extensive research and development funding to rapidly industrialise the economy. Since politicians will control most of these GLCs as directors, they will determine the recipients of rents distributed to nurture domestic enterprises.
    The current state of play raises an important question about an interesting phenomenon: what happens, in terms of dismantling rent-seeking and patronage and instituting reforms to curb corruption, when a new regime comprises politicians who see this framework as a mechanism to consolidate power? A link between two core issues remains in place after regime change: elite domination and the continued practice of selective patronage, legitimised by advocating race-based policies that are to be implemented through GLCs. Under UMNO, elite domination was obvious, with Barisan component members subservient to then-Prime Minister Najib. In Pakatan, a multi-party coalition, Prime Minister Mahathir and Daim appear to have disproportionate influence when it comes to decision-making on core issues, though the parameters of their power remain unclear.
    Meanwhile, elite domination of the economy at the state level varies as several different parties are in power. State governments are controlled by UMNO, Bersatu, PKR, DAP, Parti Warisan Sabah, Parti Islam Se-Malaysia (PAS) and Parti Pesaka Bumiputera Bersatu (PBB). The latter two parties have long governed Kelantan and Sarawak respectively, while Bersatu and Warisan are new parties run by UMNO factions, though ostensibly with a reformist agenda. The governance dynamics of these parties in these state governments will differ, specifically in terms of how they employ GLCs, further indicating the ubiquity of these enterprises in the economy. These GLCs have persistently been used to distribute different types of rents such as financial aid, contracts, permits, licences, etc., to party members as well as others in the electorate in key constituencies. Even with regime change, the presence of covert networks of power created through GLCs in these states is unlikely to be reformed, thus contributing to continued serious wastage of scarce resources.
    There is plainly no clear method to the madness of how the new federal or state governments employ GLCs. Different sets of political and business elites operate at the national and state levels. In fact, before GE14, business elites were known to be creating ties with politicians in both UMNO and Pakatan parties, specifically PKR and DAP. Meanwhile, in Sarawak, wealthy businessmen had long since begun entering politics, even getting elected as parliamentarians, thus giving them access to federal government leaders. This diversity in political–business ties, where government institutions figure, is an indication of how complex the GLC problem has become. However, GLCs remain an opaque form of state intervention in the economy. And, since there is little public knowledge of GLCs, the opacity of these enterprises has allowed for their abuse by politicians.

    Fragile state and political economic outcomes
    Since Pakatan is a coalition of parties led by politicians who coalesced only because they had a common agenda—the removal of Najib from power—what prevails in the post-GE14 period can be described as a “fragile state”. This fragility is also because of the uneasy relationship between Mahathir, who leads the second-smallest party in Pakatan, and his long-time-nemesis-now-political-ally Anwar, who leads the party with the highest number of parliamentary seats. PKR, however, is ridden with serious factionalism, including an uneasy truce between Anwar and Azmin, who apparently is closely associated with Mahathir.
    What is emerging is new forms of power relations through the unhealthy circulation of political elites from the old regime into Pakatan, as well as alliances between leaders from different parties in this coalition. UMNO parliamentarians are lining up to join Bersatu, a quick route back to power for them after their unexpected ouster. By co-opting them, Mahathir’s new party can swiftly fortify its extremely weak base in Bumiputera-dominant states. Bersatu’s co-optation of discredited UMNO members is, however, seriously undermining support for Pakatan among the urban middle class, as well as Mahathir’s credibility. In fact, there has been recent talk in the public domain that a no-confidence motion against Mahathir as Prime Minister may be tabled in the March sitting of parliament, led apparently by leaders within Pakatan. Because of this complex situation of political in-fighting, there is much fear that politicians in power may move to create, through the divestment of GLCs, powerful business elites or even oligarchs to check other political elites.
    Since a structural framework that allowed politicians to exploit institutions in various ways to serve vested political and economic interests remains in place, a key question has emerged. What are the possible political outcomes to this situation, in which contending elites in the new regime struggle to consolidate their respective power bases? Political outcomes can involve protecting the property rights—through ongoing and much-needed institutional reforms—of business elites who acquire privatised GLCs, thereby preventing expropriation of these companies by the government in the event of a change of premiership. Political outcomes can also entail endorsing entitlements that give one large segment of society privileged access to government-generated rents, as is already actively occurring. Inevitably, a related issue is the necessity of targeted race-based policies. These policies serve as a mechanism to retain patronage-based networks and consolidate power bases. This approach can, however, stymie domestic investments by non-Bumiputera, a serious and persistent problem during Barisan’s rule.

    Ironically, it was these forms of unproductive government–business networks that Pakatan had promised to dismantle when in opposition, in order to forge a “New Malaysia”. This New Malaysia was supposed to be devoid of race-based political discourses and policies, with the GLCs deployed to promote equitable development and redress social inequities. The GLCs were not to be led by politicians who have no clue how to utilise them productively in the economy. These pledges have been broken. Evidently, consolidating power is more important for Malaysia’s new political elites than restructuring an economy in dire need of reform.