Malaysia's Economy: The great decline

Malaysia's Economy: The Great Decline Kenny Gan, Malaysia Chronicle ANALYSIS What has happened to the Malaysian economy? We were once one of the most promising emerging economies in South East Asia and blessed with bountiful natural resources including oil and timber. In the 1970s Malaysia was on par with other developing countries such as Singapore, South Korea, Taiwan and Hong Kong but these countries have progressed far ahead of us. Their per capita incomes and currency values are a few multiples of ours. For example Singapore and S. Korea’s per capita incomes are US$35,400 and US$16,700 respectively while Malaysia is lagging badly at a mere US$8000. S. Korea has also exceeded us in technological products and has many global brands while all we have is Proton which cannot compete outside its domestic protected market We appear to be stuck in the middle income trap. On one hand we are unable to compete with low cost countries such as China, India and Vietnam but on the other hand we are unable to move up the value chain to a high income knowledge based economy due to lack of skilled workers. We are unable to attract skilled foreigners to our shores while skilled Malaysians are leaving in droves. Meanwhile we are importing masses of low skilled foreigners which depress our wages. As a result our wages have remained stagnant for the past 15 years while the cost of living has escalated. The net result is that the standard of living of ordinary Malaysians is regressing due to depreciation of real income while our income gap is the widest in Asia. The economy of a country cannot be treated in isolation to its social, human and political factors. It is closely interrelated to education, meritocracy, corruption, natural resources, productivity, creativity, democracy and rule of law among others. A strong and robust economy is the net result of good governance, good policies and proper use of resources and is reflected in the happiness and wellbeing of its citizens. In this article I shall try to explain how Malaysia has stumbled and sowed the seeds of its economic decline. Racial policies If any single factor can be blamed for the poor health of the Malaysian economy it is racial policies. Meritocracy is the natural selection of the economy; it ensures that the best and brightest people and companies rise to the top just as natural selection in the ecosystem ensures that the strongest and fittest organisms survive and propagate for the wellbeing of the species. If race has replaced meritocracy as the qualifying factor it means that we are not making full use of our human and natural resources with detrimental effect on our competitiveness. Even worse, racial policies as embodied in the NEP has encouraged rent seeking and created a culture of bumiputraism where rewards are expected by a privileged group without the requisite effort. It has also led to patronage in the form of negotiated and bloated contracts such as those given to IPPs and toll concessionaires which distort economic efficiency with consequent higher cost to consumers. Exclusion of other races from government tender and procurement means that the government does not get the best price or the best vendors. The preferential treatment and government assistance given to bumiputra contractors, suppliers and entrepreneurs shield them from real market forces which would have made them stronger and more competitive. The special economic privileges espoused by bumiputraism require the productivity of other races to sustain. The government cannot give something for free to anybody without taking it from someone else who must give it up for free. Essentially this means a lower overall productivity and an injured entrepreneur spirit among the minority races. Unfortunately Malaysia’s racial policies cover more than just economic privileges, it also intrude into education, employment, sports, licensing, government linked investment funds, buying houses, petrol station dealerships and new share applications and indeed into every facet of human endeavour. It is sad to say that racial policies are woven into the very fabric of Malaysian society. The Chinese have fared better under Malaysia’s racial policies due to various factors such as their emphasis on education, their clans, the large domestic Chinese economy and their entrepreneur spirit but the Indians have become an underclass. However if any community is held back from achieving its full potential the whole country suffers. The difference in economic opportunities and the lack of meritocracy lead naturally to a brain drain as the best and brightest Malaysians disadvantaged by race take their talents overseas. In a globalized world the educated and the skilled are extremely portable as there is a huge competition for skilled labour. Although there are pull factors enticing them away the push factors originating domestically is no less compelling. Education Education is the future of the county but unfortunately education in Malaysia has not been spared the deleterious effect of racial policies. As racial policies essentially mean that meritocracy takes a backseat to ethnic origin this is extremely injurious to education. Students face race based policies after Form 5 when Malays are streamed to matriculation with a token 10% for other races while non-Malays either opt for Form 6 which is longer and harder route to university or private colleges which require considerable financial outlay. Those who go to matriculation save one academic year compared to those who go to Form 6. Even more unfair is that the grades acquired in matriculation are taken as equivalent to the grades acquired in STPM (Form 6) for the purpose of university entry although they are in no way comparable. Matriculation students sit for segmented internal exams and a large portion of the final marks may come from projects done throughout the year while STPM students sit for a difficult final public exam which are marked externally. After Form 6 non-Malay good achievers are confronted with unfriendly racial quotas at the gates of tertiary institutions. If they are accepted into public universities they are likely to be shunted into less popular courses with little commercial value such as fisheries, forestry and philosophy. This is despite many universities, colleges and technical schools reserved for one race only which is found in no other country in the world. Pre-tertiary students in private colleges will continue their studies in local private institutions or overseas which again entail heavy financial commitment. Scholarships for non-bumiputras are hard to come by and every year we hear of heart-breaking stories of top students who fail to secure scholarships. The upshot is that non-bumiputra parents have to spend a lot of money to educate their children to tertiary level. Those students who do not have well-off parents and not lucky enough to gain a place in public universities or win a scholarship are forced into the job market. It is clear that standards in public universities have fallen drastically due to the lack of meritocracy in intake of students. This is compounded by race based preference in the employment and promotion of academic staff. Standards have also been marked down to make it easier for bumiputra students to graduate. Our universities have long dropped out of the ranking of the 200 best universities in the world. They are churning out low quality unemployable graduates who do not know how to speak proper English to join the bloated civil service or the ranks of the unemployed. The result of our two tiered education policy is to contribute to the brain drain of young non-Malays incensed by the racial inequality in education opportunities. They head for the exit as soon as they have acquired their tertiary education while those who remain behind are a fertile breeding ground for opposition supporters. Parents have also been known to migrate in order to obtain affordable tertiary education for their children. Corruption Corruption is a drain on the efficiency of the economy as it upsets the principle of getting the most optimal prices for the best goods and services. As a result of corruption the buyer is likely to end up paying inflated prices for shoddy products. Even worse the result of public corruption is to pass on the cost to the man in the street who ultimately pays higher taxes, higher utility bills, higher tolls and more expensive goods and services. Corruption is essentially a re-distribution of wealth from the poor and the middle class to the rich elite who becomes super-rich. The result is a widening income gap and a weakening middle class until only rich and poor remains as what happened in Suharto’s Indonesia. Although corruption happens in all countries in Malaysia it has become endemic and massive due to the synergistic boosting effect of corruption and racial policies. The distribution of resources and economic opportunities by race as implemented in the NEP provides an ideal vehicle for these resources and privileges to be grabbed by the powerful and the well connected. The NEP which was originally an affirmative action plan to uplift the poor of all races has degenerated into an umbrella to shelter all kinds of corruption, cronyism and nepotism to enrich the political elite under the guise of helping the poor Malay masses who have largely remained poor. Bloated negotiated contracts, rent seeking deals and privatization of public assets which bring windfalls to favoured cronies while increasing costs and a lower standard of service to consumers are just another form of corruption. Accelerated spending on defence when no threat is present and economically senseless white elephant projects continue to bleed the country Can a small developing country like Malaysia afford to spend RM6.75 billion for locally made naval vessels which were never delivered, RM12.5 billion for the PKFZ white elephant, RM3.7 billion for two bare Scorpene submarines, RM8 billion for 257 locally made armoured personnel carriers, RM2.2 billion for 3 navy supply ships, RM12.5 billion for economically senseless double tracking railway from Ipoh to the Thai border and RM811 million for a new palace? These are just but a sampling of countless huge financial scandals. Corruption has become so massive that it is now measured in hundreds of millions and even billions for each corrupt deal. No developing country of Malaysia’s size can withstand such massive leakage and wastage without depreciation of its currency, yawning fiscal deficit, damage to its economy and hardship to its citizens who face rising cost of living and depreciation of real income. Democracy Although it may not seem obvious the economy is also directly affected by democracy, rule of law and treatment of human rights. The economy is nothing if not driven by human emotion and sentiments such as industriousness, entrepreneurship, motivation, creativity, confidence and most of all, hope. Authoritarian regimes inevitably have poor or broken economies because of their abuse of human rights which crushes the human spirit. Foreign direct investment which is vital for a small developing economy is affected by concerns over political stability, adherence to rule of law, fairness of the judiciary, protection of human rights and crime rate as well as government policies, cost of labour and education level of the workforce. Unfortunately Malaysia’s record of upholding democratic principles and human rights has been poor. We live in a pseudo-democracy where institutions such as the police, the MACC, the Attorney-General chambers, the judiciary and the press are subverted to serve the ruling party to maintain its power. They are abused to harass the opposition while turning a blind eye to the corruption of the political elite. Death in custody is common in the police force who seems more interested in going after opposition politicians for minor and dubious transgressions than in fighting crime. This has contributed to a high crime rate which has seen gated communities springing up willy-nilly as citizens take measures to protect themselves, sometimes illegally. Nowhere can the breakdown in rule of law be seen as clearly as in the infamous Perak power grab where BN toppled the Pakatan Rakyat government by enticing its elected representatives to defect by immoral means and hung on to power by brute police force and controversial judicial judgements while ignoring the calls of the citizen for new elections. Nowhere can we see a greater abuse of our democratic institutions as in the odious sodomy case against Anwar Ibrahim where the whole apparatus of government, enforcement and judiciary were employed to drag an opposition leader to court on the most flimsy and dubious of charges while employing disreputable and unlawful court processes to deny justice to the accused. These negative factors in conjunction with racial quotas make the country less attractive to investors who are spoilt for choice over where to put their money. Foreign direct investment (FDI) to Malaysia has been falling steadily for the past decade and we now lag behind countries like Vietnam and Indonesia in attracting investments. In fact Malaysia recorded a negative FDI inflow in 2009 which is a rare phenomenon in developing countries and points to signs of capital flight. Private investments which include both foreign and domestic investments have been declining since the 1997 financial crisis and now stand at a mere 10% of GDP from its peak of 37% pre-crisis. This ranks among the lowest in Asia so it appears that not only foreigners but Malaysians are also losing confidence in their own economy. Towards a precipice Hence we can understand why the Malaysian economy has fallen way behind other countries which it was once on par with despite our rich natural resources. The economy has been clobbered by racial policies, falling education standard, brain drain, massive corruption and a damaged democracy. If any one reason is the root of all reasons it is racial policies which has resulted in economic inefficiency and distortion, affected meritocracy in education, caused a brain drain, become a vehicle for wastage and leakages and resulted in the abuse of democratic institutions to protect the lifestyles of the ruling elite. They are also responsible for dampening the human spirit required to drive the economy. Things would have deteriorated much faster if not for the revenue generated from oil which is now supporting 40% of the national budget. What would happen when oil runs out? Efforts to resuscitate the economy must tackle the myriad of racial policies in education, business, commerce, financing, investments, employment, licensing and countless other sectors. This requires great political will and a prime minister with considerable political skills to wean the Malays from their racial privileges. However BN being a Malay nationalist party is unable to muster the political will despite lofty rhetoric that the New Economic Model will remove rent seeking and inefficiencies while striving towards a market driven economy. After pressure from right wing groups the 10th Malaysian plan rolled out can only offer more of the same old affirmative action for bumiputras and setting a superfluous bumiputra equity target of 30% which is all but unachievable due to constantly moving goalposts. In the near future Malaysians will be hit with rising prices due to planned removal of subsidies and a spike in inflation when GST is implemented while salaries remain stagnant. This will put pressure on the poor and middle class who are already struggling to make ends meet. Despite this the BN regime does not appear to be curbing its profligacy in spending nor in curbing leakages. Should BN continue to govern after the 13th general election there is every chance that Malaysia will become a maid exporting country five years later. Economic decline is not linear but exponential because negative factors compound and feed each other. It declines slowly at first then it gathers speed before falling off a cliff. We are probably at the edge of the precipice. A political solution is required to fix the economy and pull Malaysia back from the precipice. Only an inclusive ruling coalition based on social justice and fair treatment for all races has any chance of uplifting the economy.

Scholars without a ship to sail

Scholarships are now granted to deservingly straight A's students. Automatic if you scored 9 A's. The government decision to approve or agreed to such conditions are not out of any analysis or foresights planning, but was done out of public pressures. Students, non-bumi's especially, have been getting the raw deal from the many stories one heard from friends and relatives.

Question:- Do our government have to bow to pressures before deciding on the most logical and feasible thing to do?

Another question:- Didn't our government or leaders appoint qualified ministers to cast in the most workable solutions to our nation's education system and criteria for scholarship's award?

I tend to think, wait, or am I really allowed to anyway, that a minister is there just to look good and make ceremonious appearances, giving grand speeches, presenting datas or solving issues on ad-hoc basis. Any projects or implementation must derive some publicity to make their tenure look good instead of setting in place long term solutions.

I simply have to make it on my own and continue paying my taxes for what it's worth. Maybe that same minister is wearing a gold watch that I indirectly and unwittingly paid for.

Kissing footprints

Does A Tun-ship, etc., have legal immunity?

By Bluesyworms Jazzyworms

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As rumours about Samy Vellu's and now Musa Aman's Tun-ship circulated over the Net, another old issue regarding the title itself started to circulate as well. The 'myth' that a Tun-ship carries with it a legal immunity have been debated over the Net for years. No one really knows whether it is true or false.

My Opinion

As far as I know, a Tun-ship does not confer on to the holder any sort of immunity from any criminal nor any civil charges. They do not have any automatic diplomatic immunity. The police can still take action towards them if they park their car in the middle of the highway for no justifiable reason. They can't just barge and trespass into other people's property. They have no authority over any civil servants. And the recipients still have to pay taxes.

In short, their rights are just like any other Malaysians. The same goes to other titles like Tan Sri, Datuk Seri, Datuk, Dato, Pehin etc etc etc ...

It is just a title, you get a fancy medal and the only privilege accorded is a free entry to use the VIP room at KLIA etc. If you still don't believe me, then please go to this official government website regarding the Agong and the titles confered by His Majesty. Read and be enlightened;

http://www.malaysianmonarchy.org.my/portal_bm/rk6/rk6b.php?id=rk6_c1_13&title=Keistimewaan%20bagi%20Penyandang%20Darjah%20Kebesaran%20Persekutuan

Regarding Other Titles

If the recipient is a 'Tun', you call him/her 'Yang Amat Berbahagia'. If it is a Tan Sri or a Datuk, you call him/her 'Yang Berbahagia'. Generally the wife for a Tun will be called 'Toh Puan'. I said 'generally' because if the recipient is a hereditary Dato' or you receive a Datukship from Terengganu, normally the wife will be addressed as 'Toh Puan' too. Yes folks, there are titles that are hereditary in Malaysia, just like some of those English Lords with their 'Baron' and 'Duke' titles. The current Prime Minister, Dato' Seri Najib Razak is one of them. He is the 'Orang Kaya Indera Shahbandar' of Pahang that carries the hereditary title Dato'. His eldest son will automatically get the title after his death. Yeah I know I know, once I didn't know about these hereditary 'Datukship' too. You can close your open mouth now ....

A Tan Sri's wife is called 'Puan Sri'. A Datuk Seri's wife is called 'Datin Seri'. And a Datuk's wife will be called 'Datin'. Please be aware that only IF the recipient is a woman, then her husband has no title altogether, though you can call him a 'Toh Puan', 'Puan Sri' or 'Datin' if you are bold enough. Just make sure there is a 1Malaysia Clinic nearby. On second thought ... never mind.

So is it a Dato' or a Datuk? Again, generally, a Dato' normally is a title given from a state. A Datuk on the other hand is a title you get from the Agong and Federal Government. Hence the difference in spelling.

Tun and Tan Sri however, are given exclusively by the Agong and Federal Government.

Anyhow, back to the topic. Now is there any legal immunity given to these titles? Nope!! There is none.

Highest Civilian Title in Malaysia

Some may argue that because 'Tun' is the highest title of the land, therefore there must be such immunity. There are two contradictions with this argument. First, as I have mentioned above, I found no such privilege nor any written law that supports this argument.

Second, is the fact that 'Tun' is not the highest title of the land. The highest title in Malaysia is the Seri Pahlawan Gagah Perkasa [SP] which ironically does not carry any namesake whatsoever. Here is the list of all Federal Titiles awarded according to priority.

http://www.malaysianmonarchy.org.my/portal_bm/rk6/rk6b.php?id=rk6_c1_2&title=Senarai%20Anugerah%20Mengikut%20Susunan%20Keutamaan

You can see that both the titles that carry the title Tun, ie Seri Maharaja Mangku Negara [SMN] and Seri Setia Mahkota [SSM] are ranked 4th and 5th respectively. Not even a third placing ....

Tunship above the Sultans and Agong?

We must remember that even the Sultans can be sued via special provisions according to the Federal Constitution. It is therefore impossible that a person carrying the title 'Tun' can be immune from the law. Are these people above the Sultans and Agong?

Case Law?

To further prove that a Tun has no legal immunity is the legal case of Dato' Seri Anwar Ibrahim v Tun Dr Mahathir Mohamad [High Court number S4-23-15-2006; Appeal Court number W-02-609-2007]. Though Anwar Ibrahim failed in this case so far, none of the judges be it in the High Court nor Appeal Court cited legal immunity confered on a Tunship as the reason for dismissing the case. In fact this case proved that a person having the title Tun can be sued.

How Did The 'Myth' Start?

1. Limited number of recipients.

- A Tunship is confered via two titles, the Seri Maharaja Mangku Negara [SMN] and the Seri Setia Mahkota [SSM]. At any one particular time, only 25 people are allowed to receive the SMN title and another 25 people receiving the SSM title. Hence there are only a maximum of 50 'Tuns' around at any particular time. If the maximum number has been reached, the only way to award another Tunship is to wait for any one of the 50 recepients to, well ... die.

Hence, because of these limited numbers of recepients, the chances of any of them being charged legally is 0.000002 percent out of 26 million Malaysians.

2. Lack of courage by the enforcement agencies

- Majority of the recepients are still or was holding a high ranking position in Government. Some are or were Judges, Ministers, Parliament Speakers, IGP, AG etc etc etc.

If these people are still holding such a position, it is very unlikely that they will be legally charged with anything. They may be the top man in these agencies, so no one dares go against the 'boss'.

If they are retirees or not a civil servant, the majority of these people are usually too 'well connected' to those walking the corridors of power in Malaysia. Hence most of the time no agencies nor private individuals dare to persecute or legally sue them for anything for fear of adverse repercussion.

It is really more a question of courage rather than the so called 'immunity'.

3. Custom

- In the old days, before Merdeka, most of the people holding these titles are usually related or connected to the Sultans or Istana themselves. They may be a cousin 5 times removed from the Sultan, or one of those high ranking families that work in the palace for generations. Most of the titles are hereditary and as I said earlier, limited to those related to the Sultans or connected to the Istana via being a palace official. Hence even if you are only a Datuk, it is very unlikely in those days that you will be prosecuted for anything without the Sultan's consent. Having a title means in short, you are legally immune unless the Sultan says otherwise.

But since the formation of Malaya, later Malaysia, the government decided that some form of titles should be created or allowed to be given to palace outsiders, similar to the British Royalty. This is also needed because the title Agong was also just created as the new sovereign of the Federetaion of Malaya, later Malaysia. You can read here;

http://www.malaysianmonarchy.org.my/portal_bm/rk6/rk6b.php?id=rk6_c1_1&title=Sejarah%20Anugerah%20Darjah%20Kebesaran%20Persekutuan

Since then many things have changed, and the palace does not have much of the authority nor immunity it had in the past, save only to an extent the Sultans themselves. Today even a palace official can be legally prosecuted or face a civil suit.

However, the Malaysian mindset somehow are still trapped in those pre-Merdeka days when it comes to these titles. Many still believe that a Tunship, some even thinks a Datukship, confers on the receipient legal immunity.

Malaysians are obsessed with titles

Why the need for the title then? What benefit can you get? Surely there must be a reason why so many Malaysians want it?

Well, lets face it. Most in our society today only respect three things. Money, power and if you are white. Yes folks, that's the truth. If you go to a high class restaurant in KL wearing tattered clothes, unless you can show either of these three things, you'll be thrown out to the streets. Money is easy to show, but how about power? That's where the 'titles' come in. Only those who have 'power' and are 'connected' can have these titles. Only then the restaurant will give you their first class treatment. Doesnt matter if you are a bankrupt Tun or Datuk, many will still view you with awe.

What about being 'white' you asked? Well to sidetrack a bit, to most Malaysians if you are white, ie caucasian, that automatically means you have money and power. Doesn't matter if you are actually a hillbilly redneck with no money whatsoever, Malaysians will still think you are rich, educated etc. Sad but true.

Back to the topic, this obsession with titles among Malaysians are so bad that for example, you can see some Malays even use the title Haji or Hajjah as a form of a title. I don't find Muslim scholars in Arab countries using it as often as us here. Even the renown Islamic scholar Dr. Yusoff Qardhawi does not use it.

Some Malaysians are even willing to buy these titles. If they can't buy it allegedly from the Sultans or government, they buy it from the Sulu Sultan, which confers the similar title of Datu' or Datuk. That title cannot be used in Malaysia, but no one really cares. Just a few days ago the nation was shocked when a Sabahan even superimposed his picture and allegedly claims he was conferred the title 'Sir' by the Queen of England. He has now claimed it was from the government of Papua New Guinea ... sigh ....

Having a title means prestige in Malaysia. It opens doors to many things, like getting your children in that famous school. Police respond to an emergency much quicker. Your dealings with the banks will be much easier. Malaysians put more weight on your opinions. They listen more to you. Even if you talk nonsense!! The higher the title, the better it is.

So far through my experience, that's what I see. Having such titles really do smooth things out. Another sad but true scenario ....

Yes, there are problems associated with having such titles as well. The pressure, the expectation, the constraints .... But that's another story. Generally, Malaysians still are obsessed with these titles.

Conclusion

Unless someone can prove legally that a Tunship does have legal immunity, I stand by what I wrote here. To me, a Tunship does not have any legal immunity whatsoever. They still pay taxes etc. Whatever 'immunity' they have come from other external reasons, not the Tunship itself.

Good public relation

Our ministers here don't ever answer your questions. All they do is justifies what they do and tell you what happened. If you question them more, they will lash back at you for being so persistent.
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