Pakatan’s manifesto: Populist or Reformist?

However the manifesto is silent on how it is going to achieve its promises. It does not explain how this nation is going to be able to afford some new subsidies, grants, freebies and payouts. The coalition left details on revenue streams aside.

FMT LETTER: From Koo Kay Peng, via e-mail

Pakatan Rakyat’s manifesto contains a lot of promises, goodies and freebies. It is not difficult to mistake as the latest budget. For a start, the coalition promises every Malaysian family a monthly take-home household income of at least RM4,000.

It sounds like almost Utopia and the nation’s coffer is bottomless. It promises payment as small as RM50 per month to more significant allocation of RM2 billion to fund minimum wage.

However the manifesto is silent on how it is going to achieve its promises. It does not explain how this nation is going to be able to afford some new subsidies, grants, freebies and payouts. The coalition left details on revenue streams aside.

However, the manifesto is definitely a political document. It is designed to please housewives, undergraduates, civil servants, retired armed forces members and Felda settlers who are considered important constituents in the next GE.

Sabah and Sarawak appear clear winners too with promises of 20% share of oil royalty, pan-Borneo railways and better infrastructures. It offers protection of Orang Asli land rights and assistance.

However, it is going to be a bad news for big conglomerates. The manifesto has proposed an anti-monopoly law to curb and break up monopolies. Another question beckons, how are smaller companies going to be able to compete with larger foreign companies regionally?

The manifesto has failed to identify reforms needed in way the federal government conducts its business. Firstly, the federal government has to manage its on-going deficit. This country cannot continue spending beyond its means and expect money to drop from the sky. A cursory look at the PR manifesto does not suggest that they have a strategy in place to cut budget deficit.

Second, the manifesto touches very little about reforms and restructuring. It takes an antidote that money is the solution to all woes. This approach may not be too different compared to what PM Najib has done over the last 5 years.

As a result, both coalitions may end up trying to prove who is a better Santa Claus.

Let’s look at some of the details:

1 Malaysian Women’s Contribution Fund

PR intends to make legally compulsory for husbands to contribute between RM10-100. Government to provide RM50 per month for wives. It sounds great but RM10-100 is a tad too small a sum to even help pay anything. What about working couples? What about couples who are business partners? How does the government intend to enforce the contribution?

If the coalition wants to please housewives and full time moms, it should stick back to what it has preached – being need based. It should focus on single moms, health care for underprivileged women, capacity building and equal opportunities for all women. Inequality for women in some faiths should also be addressed to ensure that their rights are protected.

2 Senior Citizens’ Bonus Scheme

Again, the coalition is exposing its populist tendency. Each senior citizen aged 60 and above will receive a bonus worth RM1,000 each year to help ease their financial burdens. Private sector retirement age has been raised to 60 years old. Not all of those who are 60 and above are going to need the assistance.

However, there are many who might need more than just RM1,000 a year to survive. The coalition should stick back to its old adage – focus on needs and not blanket welfare. A retired CEO, who has millions in his bank accounts, does not deserve the RM1,000. Meanwhile, those who really need assistance might also need a shelter, food, nursing care, healthcare and others. It would be better for PR to focus on providing a decent and dignified retirement to the deserving senior citizens.

3 Economic Policy

3.1 Monthly household take-home income of RM4,000

It would require the coalition to double our GDP per capita of almost RM22,000 to RM48,000 (assuming that there’s a breadwinner per household). Doubling our GDP per capita is desirable but as easy as it sounds. It takes a systematic overhaul of the economy to ensure that better remuneration commensurates with better productivity and higher value of production. What is PR’s strategy? Doubling of GDP per capita through subsidy or cash handout is not sustainable.

3.2 Add 1 million new jobs

Malaysians are no longer working in industries such as plantations, the construction sector and the service industry. Pakatan Rakyat will introduce a comprehensive package to ensure one million new job opportunities for Malaysians in these sectors by progressive reduction of one million foreign workers within five years of Pakatan Rakyat rule.

It is erroneous to assume that Malaysians are ready to fill up the vacancies vacated by the one million foreign workers. It is false to assume that local employers will be ready to replace these foreign workers with local ones. Granted, new jobs will have to be created but most of our foreign workers are low-to-semi skilled. We need to create higher value jobs for our workers and growing number of unemployed graduates. This can only be achieved with a total overhaul of our education system and our economic structure.

If the coalition reduces intake of foreign workers, a number of our local companies are just going to close shop and move on to less labour intensive industries or adopt automation. It is not going to create 1 million new jobs for Malaysians as claimed in the manifesto.

3.3 Minimum Wage of RM1,100

The Pakatan Rakyat administration will introduce a minimum wage, where every worker will be paid at least RM1,100 per month. The initial financial burden incurred by the employer in the early stages of the minimum wage implementation shall be equally borne by the government.

The Minimum Wage Implementation Facilitation Fund worth RM2 billion aims to provide automation incentives and minimum wage implementation grants to eligible companies, to ensure that the entire job market is not jeopardised by the implementation of minimum wage.

The question is why should taxpayers’ money be used to help offset the financial burden incurred by employers? At present, there are already grants and subsidies available to help companies to automate and new technology adoption. MIDA has allocated RM2 billion to assist local companies. Some of these are matching grants.

It has been proven that more funds/grants do not help local companies especially SMEs to automate. A change of corporate mindset, more demanding consumers and more competitive business environment are needed to instill the survival instinct in them.

4 Education

The proposal to set up 5 technical universities and 25 vocational schools are made in the right direction. The manifesto calls for an establishment of a RCI for education reform. Honestly, we have had enough of RCI. The government needs to revamp both the education and higher education ministries so that people of calibre and quality educators are picked to manage our education system. RCIs seldom meet our expectations.

PR needs to understand that “free education” is not synonymous with “quality education”. It is important to focus on quality education than free education. Its manifesto affirms that fees for higher education in all public institutions will be borne by the government.

Fees for students in private institutions will be subsidised by the government to be on par with the public institution’s rate. This proposal is again problematic. There is no ceiling for fees in private institutions. Why should taxpayers’ money be used to subsidized fees for students in private institutions?

PR manifesto affirms that all students in the public institutions will be provided with living cost allowance for food and lodging, books and transportation, except for those who are financially well-off.

Students in private institutions can borrow from a special fund to cover their living costs for the duration of their studies. How is this different from the PTPTN? It is just another form of PTPTN; which is probably going to end up with the same fate as the current one – not sustainable in the long run.

Most private institutions are not just offering education, they are also promoting lifestyle and consumerism. It is quite common to find designer outlets, eateries and cafes operating in their premises. Surely cost of living is higher in private institutions compared to public ones.

The coalition should focus its resources on upgrading the quality of public institutions to provide excellent education and make them the institutions of choice.

5 Social Well-Being

Pakatan Rakyat is committed to resolve the problem of traffic congestion in the Klang Valley and other major cities within 10 years of coming to power, with the aim of reducing congestion by 50% during its first term. Additional investment of RM2 billion in the first year to double the number of buses and bus routes in the Klang Valley. It is a noble promise but may be too optimistic.

The provision of public transport like buses alone does not help to reduce congestion if the government cannot change our mobility culture. Car is a social status symbol to many Malaysians. How many are willing to ditch their car and walk to the bus stop? It takes education, awareness and policy intervention to promote public transport.

RM2 billion is a lot of money but without a comprehensive policy intervention, it is money into the drain. The increased number of buses may end up contributing to more congestion!

Worse, the coalition is determine to lower the car prices to as low as RM25,000! Singapore imposes a high COE price (certificate of entitlement) for a reason – to discourage private car ownership! How can PR achieve lower congestion by making it cheaper and easier to own a car?

It proposes to abolish tolls. It sounds good for those of us who using the highways often. However, toll is used as an effective way to reduce congestion by making it expensive to drive during peak hours.

In sum, PR needs to get a bit more serious about its policy making capability to ensure that its solution to reduce congestion is well thought out and comprehensive.

It is easy to sound populist but some of these policies may end up contradicting each other and being rendered ineffective.

6 Civil Service

PR has appeared to be quite cautious in suggestion a comprehensive restructuring of the civil service. A number of PR leaders are aware of the problems faced by the civil service. It is bloated and soaking a lot of resources from the country’s annual budget. But the 1.4 million strong civil service is an important vote bank for the coalition. It has to be done but do not count it on PR to announce major reforms of the civil service.

It has worded its manifesto quite diplomatically by promising to restore the prestige and honour of the civil service and to free them from undue political interference. It is left to be seen if any government of the day would willingly not impose any control and command over its civil service. Most of the top civil servants are reporting to the executives. The nexus between the government and the civil service has to be moderated by an independent check-and-balance mechanism e.g. anti-corruption agency and IPCMC.

Ironically, the PR manifesto is silent on the implementation of the IPCMC but promised an allocation of RM200 million per annum to the police force for modernisation. In summary, the PR manifesto may appeal to certain voter groups but it is hardly transformational. It does contain some heart warming promises to halt Lynas and to review the Pengerang projects but it has promises very little drastic reforms that are direly needed.