Malaysia faces its own credibility crisis

Recent tax hikes including new taxes like the GST are but a desperate attempt to plug the leaks in the national coffers. It will become exceedingly difficult for any country to sustain economic growth and finance its economic plans unless it manages to create the conditions that attract investments and create employment from new jobs and industries.

By STEVE OH/MySinchew

I write in response to your Opinion article The Third Way.

Thatcherism was the natural response to decades of socialist policies that threatened to make her country economically sluggish. It worked to a degree.

The British social welfare state had become costly to run and the solution was to make governance more cost-efficient by privatization of nationally owned enterprises. It was the golden era of privatization and what writers described as “classical liberalism” but such terms are meaningless to most people except the economic purists who like to pigeon-hole people and policies into neat ideological boxes.

But I can appreciate the need to make governments more efficient.

As a young auditor then in charge of the audit of the British Railways Southern Region in London, I saw the folly of a system that created inefficiency and the sight of several idle workers standing beside one or two that were actually doing the work because of the quirky ways of trade unionism that prevented workers from doing something not prescribed in the agreements that unwittingly made them unproductive.

In essence Thatcherism, according to her Chancellor of the Exchequer Nigel Lawson, was “free markets, financial discipline, and firm control over public expenditure, tax cuts, nationalism, Victorian values”, privatization and a dash of populism.” Thatcher was foremost in dismantling the tight control of trade unions. It was her courage in introducing unpopular measures that gained her the reputation of “Iron Lady.”

Malaysia desperately needs an “Iron Leader” to install policies that will help the country instead of the flawed policies of the past that has seen the country’s development unfairly skewed and resulting in social disunity and political backwardness.

Her ideas were compared then to similar policies adopted in other English-speaking nations in the late eighties and nineties, for example, America’s Reagonomics, New Zealand’s Rogernomics and Australia’s Economic Rationalism, though Australia was then governed by a supposedly socialist Labour government. Many of their policies were unpopular but they did bring about the economic benefits of tax and other reforms.

In the UK the Labour governments of John Major and Tony Blair pursued with Thatcher’s policies and there is little to distinguish between Australian Paul Keating’s Labour policies in the and Liberal John Howard’s when they were in power respectively and today it is folly to subscribe to any particular model for its sake except the one that works for the county.

In Malaysia we know that its economic policies are fraught with shortcomings, constraints and contradictions and the drop in foreign direct investments and capital outflows from the country should sound the alarm bells.

Recent tax hikes including new taxes like the GST are but a desperate attempt to plug the leaks in the national coffers. It will become exceedingly difficult for any country to sustain economic growth and finance its economic plans unless it manages to create the conditions that attract investments and create employment from new jobs and industries.

While Malaysia is not hampered by trade unionism some government programs exacerbated by corruption evident by cost blowouts have resulted in wastage of public funds and questionable expenditure. There is much that can be done to improve accountability.

Liberalising the media, enactment of protection for whistleblowers, changes to the Official Secrets Act etc are helpful measures but may not be politically acceptable to the incumbent administration. Ultimately it is the political will to face the music that makes for good governance but that is unlikely to happen in Malaysia with the present government. KPIs and all that technical stuff are useless without the political will to make the hard decisions.

It is difficult for any system to change when one political party has been in power for so long.

China in the eighties under the visionary Deng Xiaopeng pursued a radical policy of private enterprise which unshackled his country’s precipitous dependence on failed state-owned and state-run businesses. When the deadwood in the system was removed it ushered in a new era of positive economic outcomes that continues till now and recently the Chinese government has had to use monetary policy to curtail its accelerated growth to curb inflation and prevent the economic bubbles.

His famous “don”t care what cat it is as long as it catches mice” saying has encapsulated China’s economic miracle.

It provides a lesson for Malaysia’s administrators who insist that the cat must be of a certain colour and pedigree even though it fails to do the job. Until there is a management by results system in place and meritocracy is restored in the public and private sectors Malaysia risks becoming a mediocre nation like the Philippines that was the brightest economic star in the region in the 50’s and 60’s before it suffered decades of corruption under the Marcos regime and became a basket case.

Malaysia too will suffer the same fate, as its population grows, the economically productive emigrate, and the country’s public institutions succumb to further corruption, unless it gets serious about the country’s interests before political interests, and brings about serious reforms.

Instead of OneMalaysia perhaps the focus should be on FirstMalaysia.

Whether it is the Keynesian economics of huge government spending and unbridled money supply or Thatcherism which tried to reverse the ills of big government, the fact is only two years ago the world saw the Great Financial Meltdown. All our economic wisdom could not protect us from human greed.

All the emphasis on religion is worthless until faith is seen in works that produce tangible benefits for the nation. Politicians have much to answer for playing with fire in manipulating religion and race and using hype to deceive the public. The fruit of failed government policies is seen in a society that still sees mobs taking to the streets to intimidate others and who resort to firebombing and other acts of terror.

The Global Financial Crisis was really the American Financial Crisis–the result of unbridled greed of those who bled the system and the gullible and vulnerable public. Looking at the root of the problem perhaps it”d be more accurate to describe it as the American Moral Crisis. But the masters of hype can be duplicitous about the truth.

Malaysia faces its own Credibility Crisis.

No one doubts that when America sneezes the rest of the world catches a cold but in the interest of truth one needs to point the finger at the American system and way of life itself which allow Americans to live beyond their means and affect the rest of the world when things go awry.

Surely American national interest must also consider the global interest, if America is willing to go to war in some foreign country to protect it but not worry if its actions at home will affect the countries that depend on it.

The conviction of Bernard Madoff for fraud, the former Chairman of the NASDAQ Stock Exchange, who could not account for the missing $65 billion from client accounts was the pinnacle of Amercian greed, and it could only happen in America, in terms of the magnitude of the sum involved.

But in fairness the American way is still the best way because it is democratic and has the uncanny ability to right itself when the American ship wobbles in rough seas. In grappling with its problems in a democratic way and upholding the rule of law, proves that the country is mature, fair, and willing to admit its mistakes.

When President Barrack Obama recently admitted losing touch with the American people after the Republicans won a key senate seat that was held by the late Democrat Ted Kennedy it proved the American way is admirable when leaders admit mistakes instead of blaming others.

However differently you frame or name a principle or idea, you can”t avoid doing the right things if you want the desired result that is fair and good for the country as a whole. It is the missing ingredient in the Malaysian recipe. It is in not taking heed of the critics that enlarges the Archilles heel of the politicians.

For many years the book The Malay Dilemma provided the politicians with the ammunition to shoot at critics and opponents of its discriminatory policies and its untested claims were accepted as the truth. It took twenty two years for its author to publicly lament he failed to change his people despite doing his best to help them. But to his detractors, those of his race, it was the author who failed not the people.

The Malaysian Maverick, a recently released book on Malaysia but unofficially banned touches on the lost billions but more than that were the lost opportunities to turn the nation into a first-world country if only greed had not hijacked public policies that engendered a system of political patronage, cronyism and corruption that festers until today.

Malaysia is a unique country with peculiar problems but they are not unsolvable or are they all that difficult to resolve. What is missing is integrity. There are many capable Malaysians who can do the job but they are shut out because of the system of cronyism that breeds corruption which is incompatible with a “clean, efficient and trustworthy” system. We saw how honest judges were victimized in 1988 when the judiciary was hijacked by the executive.

The truth is the problems are nothing compared to what some other countries face and sadly many of the problems are the result of gratuitous and often unfair politicization and appear self-generated by an administration that tries to control everything when it should focus on doing the right thing.

Take the Allah saga as an example. After all the trouble the latest decision is to allow Christians in Sabah and Sarawak to use the term Allah. It is back to square one–almost. But why even bother to rock the boat in the first place? What good has the banning done for the country or anyone?

Malaysia does not need another slogan or new economic fad.

It only needs to do what is right and good for the people. There are many capable Malaysians who can help the nation. It is not short of ideas but those in power lack the moral will to resist the temptations and do what is good. Corruption is like the strangling fig tree that has taken root in the country and threatens to strangulate it.

Corrupt politicians are like strangling figs and the challenge is to not let them take root in the host tree which is the country’s administration. Malaysia desperately needs leaders who are decent men and women of integrity and intelligence, who know and understand the times and hear the cries of the people, and will act fairly and expeditiously to restore the integrity and efficacy of governance.

Malaysia simply has to follow the Right Way–which requires its leaders to do what is right and for the right people to take charge. It is time for the clean and competent to take over if they can get into power and for the country to stop running a one-legged race, which seems to me is what OneMalaysia seems to convey. 

(STEVE OH is the author of Tiger King of the Golden