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A brave new world on horizon
Lee Su Shyan
Mon, May 26, 2008
The Straits Times
ON MARCH 8, Malaysians sent a clear message to the powers that they would not continue to tolerate a corrupt and incompetent government.

After being in power for five decades, the ruling Barisan Nasional is still in a comatose state, while its dominant and dominating anchor party Umno is in turmoil.

To my mind, March 8 was the birth of a new era where the millstone of race and religion has finally been shattered. According to a recent survey, young Malaysians are now open to more multiracial socio-economic policies as opposed to race-based ones.

The general consensus is that affirmative action should be given to the poor and the marginalised regardless of race or religion. Notions of social dominance and racial superiority find no resonance among the people.

That is why (the opposition Pakatan Rakyat's) New Economic Agenda is not purely economic. Its viability depends very much on observing the principles of democracy, socio-economic justice, equal economic opportunities and religious freedom.

There is no contradiction in talking about affirmative action while waving the banner of equal opportunity, for a level playing field can never be level unless and until the poor are taken out of the vicious cycle (of poverty).

Ostentatious projects will be shelved. Public expenditure will be focused on infrastructure, such as transportation, health and education. We will be pro-business but also redress the social inequities unleashed by the forces of the free market. Rent-seeking activities will be kept at bay. Predatory marketing will be outlawed. A more comprehensive regulatory structure will be crafted.

What is Malaysia's current status?

We hear politicians talking of how rich Malaysia is compared to some of her neighbours. The truth, however, is that South Korea and Taiwan were much poorer than us in the 1970s but today their per capita income is US$19,200 (S$26,000) and US$15,270 respectively. Our per capita income is only US$6,240.

And we haven't begun to talk about Singapore, a city state of four million inhabitants. At US$30,810, its per capita income is five times that of Malaysia's. The enormous difference becomes all the more glaring if we consider that just 30 years ago, Malaysia was neck-and-neck with Singapore.

But per capita income paints only a partial picture. What we don't see is the gross inequality in income distribution. In 2005, Malaysia registered the most glaring Gini coefficient (a measure of income disparity) in South-east Asia. At 0.47, Malaysia was No.2 in Asia, losing only to Papua New Guinea .

This is a devastating indictment of the BN's New Economic Policy, crafted almost four decades ago. In the area of the urban-rural gap, this policy has been a complete fiasco. In 1999, income in rural homes was 55 per cent that of urban homes, with the highest poverty (concentrated) in bumiputera-majority states such as Kedah, Kelantan, Perlis, Sabah, Sarawak and Terengganu.

By far the most damning case against the NEP is that it has been hijacked by the ruling elite to satisfy their lust for wealth and power. No doubt this was a multiracial rip-off of the most systematic kind: the leaders of the component parties of the ruling coalition worked hand in glove with Umno to deprive deserving Malays, Chinese, Indians, Ibans and Kadazans of the benefits that were to be derived from the NEP. Tender procedures, transparency and independent evaluations, all these were swept aside in the name of the NEP.

Just compare the money spent on scholarships with say the tens of billions expropriated by the select few in equity awards, Approved Permits (for car imports), contracts to companies controlled by a few families and cronies, and the billions in profit reaped on account of privatisation projects and schemes.

The decline in Malaysia's FDI as well as private domestic investment is serious.

India in the last five years saw its investment/GDP ratio rise from 22 per cent to 34 per cent and Brazil's ratio shot up from 15 per cent to 27 per cent. Malaysia's ratio plunged to 9 per cent last year from 30 per cent in 1996. In terms of FDI alone over GDP, the ratio plummeted from 8 per cent to 4 per cent over the same period. This is one of the steepest declines in the world.

There is no reason to imagine things will improve for the better barring a drastic change in circumstances. Yet the authorities are touting Malaysia's so-called impressive current account surplus, which rose from 8 per cent of GDP in 2002 to 14 per cent in 2007. But what this means really is that investments have fallen and hence the import of capital goods has declined.

Growth over the last five years was driven mainly by private consumption. Malaysia's economic growth is fuelled by borrowings to such an extent that individual indebtedness is now the highest in the region.

Malaysia lags behind other emerging economies in spite of a diversified economy, with commodities and manufacturing and a relatively good physical infrastructure. Our competitiveness suffers because of the failure to develop and keep innovative human capital. Our brain drain problem is legendary. This reflects foundational weaknesses in our educational infrastructure and mismanagement of our human resources.

The report of the Royal Commission of Inquiry into the V.K. Lingam scandal has fully vindicated our earnest efforts to expose the corruption that has beset the highest institutions of power. The Malaysian judiciary, once touted as among the best in the world, has been severely compromised. We cannot overemphasise the importance of an independent judiciary to realise the objectives of the New Agenda. When justice can be bought and sold, the economic implications are extremely far-reaching.

Foreign investors want impartial and fair hearings in trade and commercial disputes. The fact that most international contracts executed in the region choose Hong Kong or Singapore rather than Kuala Lumpur as the forum for arbitration speaks volumes about the level of confidence of the world business community in Malaysia's judiciary.

The fear that (the opposition's) agenda will erode the rights of the bumiputera is but the consequence of the racist chanting of some Umno leaders who will stand to be the biggest losers. Fearing the prospect of their corrupt sources of income being reduced if not altogether eliminated they resort to stoking the fires of racist sentiments.

Our policy is simple and straightforward. We do not intend to do away with the affirmative action principles outlined in the NEP, but we will apply them across the board, making them available to all races on a needs basis.

The question is: Should we condone the abuses of a policy which make the rich richer and the poor poorer or should we not support a policy that provides equitable assistance to all needy Malaysians?

If I may conclude with an apology to Shakespeare: Now is the winter of our discontent made glorious summer by the sun of Pakatan Rakyat's New Economic Agenda. Victory lies in courage to replace the old with the new, the obsolete with the functional.

Without this paradigm change, Malaysia will be adrift in an ocean of uncertainty, at the risk of being marooned on the island of oblivion. We must take the current when it serves or forever lose our venture.


A REGRETTABLE WASTE

Malaysia lags behind other emerging economies in spite of a diversified economy, with commodities and manufacturing and a relatively good physical infrastructure. Our competitiveness suffers because of the failure to develop and keep innovative human capital. Our brain drain problem is legendary. This reflects foundational weaknesses in our educational infrastructure and mismanagement of human resources.

 

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