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Anwar Ibrahim

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Anwar Ibrahim


[ARTICLE] The Truth Serum Behind Najib’s Economic Transformation Programme (ETP)

Posted: 20 Mar 2013 12:57 AM PDT

By KPRU

When Prime Minister Najib Tun Razak launched the Economic Transformation Programme (ETP) on 21st September 2010, it was done with the intention of keeping Malaysia on the right track to a high-income status nation by the year 2020. In 2012, ETP boasts 72 out of 131 EPPs launched, surpassing its GNI target of RM830 billion and also surpassing its private investment target worth RM94 billion.[1] The ETP also boasts itself of the pool of acronyms; EPP, NKEA, SRI, SEDIA, IRDA, NCIA, RAPID, BOs, BLESS, and much more. And yet, your average Joe and Jane on the street not only does not fully understand the ETP, they seem to be left out from the fruits of labour of the ETP.

Failures of ETP

Prior to Najib's ETP and GTP address on RTM last night, the failures of the ETP listed include; falling surplus in which the share of external trade to GDP (gross domestic products) shrunk to 145% caused by weak external environment; the silent death of the Equal Opportunities Commission (EOC) which was supposed to be a part of the ETP; Malaysian investment abroad worth RM19.5 billion in the first half of 2012 surpassed the RM13.6 billion worth of inward investment; the GNI per capita of 49% as boasted by Najib in from USD$6,670 in 2009 to USD$9,970 in 2011 was misleading. The real figure was a minor 16.2% according to World Bank data. Recycling old failed projects such as the Karambunai Integrated Resort City and the Tanjung Agas poject. The failure to attract foreign investment to Educity, Iskandar. Of the ten institutions approached by the government, only two have been fully functioning.

Think tank Political Studies for Change (KPRU) believes Najib should also show the other set of glaring failures of the ETP which includes the falling of Malaysia's rankings in the World Economic Forum's Global Competitiveness Report (WEFs GCR; Table 2). Amongst the fall in ranking are the fall in wastefulness of government spending ranking; a fall in labour market efficiency, a fall in the government's budget balance position ; a fall in the labour market efficiency; a fall in the women in labour force, ratio to men, a fall in the technological readiness under NKEA and more.

 

Dazzling but Substance Lackluster ETP Speech

During the ETP and GTP speech, Najib claimed 149 EPP projects have been announced but in actual fact, according to the 2012 Annual Report, the real number is 152 EPPs planned with 408,443 employment created and it's expected GNI contribution is RM135.64 billion. Najib used ringgit Malaysia as the currency for GNI, however in an earlier 2012 report, American dollars was used instead. Why the discrepancy and non-compliance of currency? Najib also claimed an increase of 22 percent in private investment from 2011 to 2012. However, what can be seen is that still the major contributor of investment are from the government. Najib boast the 'success' of the RAPID Pengerang project and in the 2012 report state drawing the likes of Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Institute of Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC), Reading University Iskandar, Raffles American School and Marlborough College Malaysia (MCM). Yet, he seems to have left out the representatives of those institutions facing immense struggles of bureaucracy causing a mismatch of departments put in place and a lack of students with staff interested to work in Educity.[2]

Najib in his speech also quoted several international rankings such a the World Bank Ease of Doing Business Report  2013, World Competitiveness Yearbook 2012/2013, AT Kearneys FDI Confidence Index, Globe Shopper Index by the Economist Intelligence Unit, and also the International Living Magazine to display Malaysia's positive international outlook. Yet, KPRU sees that while Najib likes to bask in the so-called glory of the ETP, Najib have failed to state the rankings stated by the World Economic Forum's GCR Report, in which Malaysia pretty much fell in the expectations of accountable and transparency or that 50% of business lost business in Malaysia over corruption as stated in Transparency International. Malaysia be a leader in global shopping but Malaysia also suffers a heritage loss such as the crumble of iconic places in Jalan Sultan, Tun Perak, Lebuh Pasar and even the infamous yet iconic Pudu Jail and the non-discriminatory loss of our million years old forests particularly in East Malaysia.

 

Epilogue

Najib may have claimed much successes over the implementation of the ETP but what remains is the amount of gold felt by the common people of Malaysia. He may have boasted on the 'surge' felt in the Kuala Lumpur Bursa and the sukuk investment revealing in dazzling numbers, percentage and tables but KPRU sees that none of all that matters when those who feel the returns are the corporate and political figures rather than the common people of Malaysia. In a nutshell, Najib's ETP is a series of projects benefiting UMNO rent seekers rather than the ordinary Rakyat that he used to claim in hisJanji Ditepati rhetoric.

 

Table 1: List of ETP Activities and its Failures

No. Failure ETP 2012 Report
1. Falling surplus – the share of external trade to GDP has shrunk to 145% caused by weak external environment.[3] As of 31st December 2012, 149 EPP projects were launched worth RM211.34 billion.
2. Oil palm replanting programme – the target plant areas was 126,500ha but only 103,000ha was achieved.[4] 113,000 hectre  of oil palm planted
3. Growth of real GNI is only 4.7%, much lower than 6% target in ETP. Its claim of RM797 billion "target" for 2011 GNI was lower than the MoF forecast of RM811 billion. This "target" was only publicised after the GNI data was released by the MoF. Furthermore, it is very low, calling for just 7.8 per cent growth, well below the average 8.8 per cent targeted in the ETP Roadmap Report. The ETP focuses on GNI, but CEO Datuk Seri Idris Jala misdirected Malaysians by citing the stronger GDP numbers.[5] GNI per capita increased 49 percent in 3 years.2010- RM8100

2011-RM9700

2012-RM9970

GNI in 1957 was merely USD257

Purchasing power parity is 2x of the Malaysian GNI.

4. 1 on October 25, 2010, PEMANDU said LFoundry Sdn Bhd, a subsidiary of German-based Landshut Silicon Foundry GmbH, would undertake a 200 mm water fab worth  RM1.9 billion project. Yet nothing was mentioned in the "Achievements" section of the ETP Annual Report. Instead, a much smaller RM100 million equipment refurbishment and training centre project was highlighted.Lfoundry in Germany is declaring itself insolvent and going into bankruptcy proceedings. -
5. Damansara City 2 project by GuocoLand (Malaysia) Berhad was unveiled in the 3rd ETP Progress update on January 11, 2011. There was no status report, it was not even mentioned in the "Moving Forward" section. Instead three additional heritage routes and the upgrading of Masjid Jamek were highlighted instead.  Marina Island Pangkor's International Resort & Entertainment Extension Project was showcased in the 4th ETP Progress Update on March 8, 2011. Strangely though, no progress update was given in the Annual Report on this huge project.[6] -
6. According to Asia-Pacific Sovereigns Andrew Colquhoun, ETP has failed to boost Malaysia's average income fast enough to avert a middle income trap.[7] -
7. According to Refsa, only 21% of income will eventually go to the workers as opposed to the current 28%. Only 21% of the income created by Pemandu's ETP will go to workers. Compare this to Singapore which allocates 40% and South Korea and the US which set aside 50%.[8] -
8. Karambunai project was initially announced in October 2010 during Datuk Seri Najib Razak's budget speech as a RM3 tourism project which more than tripled in value to RM9.6 billion when it was included in the fifth ETP update on April 19, 2011.[9] Between in 2011 and 2012, Malaysia attracted 50 million visitors with RM100 billion GNI.
9. Abdul Jalil Abdul Rasheed, who helps manage US$3 billion as CEO of Aberdeen Islamic Asset Management in Kuala Lumpur, is worried the lion's share of the billions in private investments needed for the ETP will come from government-linked companies who then raise funds by issuing bonds. These bonds then get government guarantees, making the government's debt position even more worrying should a default happen.[10] TERAJU manages the Skim Jejak Jaya Bumiputera (SJJB), a Government initiative introduced in 2007 providing "lastmile" support to eligible Bumiputera companies for listing on Bursa Malaysia. The initiative will consequently allow forgreater Bumiputera corporate equity.

Khazanah Nasional Bhd and Permodalan Nasional Bhd have identified a total of 10 companies to be divested to Bumiputera companies. Eight of these have officially been tendered for divestment.

10. 1Malaysia email or MyEmail project from last year that was taken by then public-listed Tricubes Bhd. It recently lost its listing status as it was not able to regularize its financials. RM5 million was invested but only 22,000 Malaysians registering for it. Lfoundry scrapped its operations in Kulim Hi-Tech Park.[11] 2012 Report state the failure of the Myemail is due to failed public relations with the public.
11. According to Standard Chartered, a more focused approached than the ETP is needed to transform Malaysia. Instead of the ETP, Malaysia should emulate South Korea and Taiwan in reinventing its economy and moving up the value curve to high-quality products.[12] Between 2011 and 2012, 1087 sundry shops were transformed under the TUKAR scheme with shops experiencing an increase of 30% of sales.
12. The Equal Opportunities Commission (EOC), which was supposed to be part of the Economic Transformation Programme (ETP), has died a silent death due to pressure from certain NGOs.[13] -
13. RM594 billion of the incremental RM594 billion GNI that the ETP creates will go to corporate profits;Just RM166 billion will go to wages for employees; and

RM40 billion will go to the government in net taxes.[14]

GNI will contribute RM135.64 billion and 404,443 employment opportunities.
14. PEMANDU's target is to double nominal income per capita to RM48,000 by 2020. But using its forecasts for income and population growth, and inflation, the target should be RM54,145, not RM48,000.[15] -
15. MSC was renamed MSC Malaysia, the name of the lead agency changed from MDC to MDeC (while still remaining the Multimedia Development Corporation), MDeC is straitjacketed – it has been given the mandate to oversee and implement an initiative that promises to be as transformative as the other TPs were supposed to be, but without the teeth to do so.[16] MdeC will focus on ongoing industry initiatives on two thrusts: Maintaining a competitive environment in Malaysia to attract foreign investment in outsourcing; and increasing the competitiveness of local companies by enhancing their scale, credibility and market reach.
16. According to HwangDBS Vickers Research, GLC/Bumiputera developers tipped to benefit from government land redevelopment, owners of large land bank and investment assets in KL should also stand to benefit from ETP.[17] 48 MRT package contracts contributing to RM19.8 billion and 45 percent of those 48 contracts are awarded to Bumiputeras worth RM8.9 billion
17. Foreigners withdrew $42 million from Malaysian offshore equity funds in the last six months of 2012, while adding a net $129 million and $230 million to Philippine and Thai funds respectively.[18] -
18. Malaysian investment abroad of RM19.5 billion in the first half of this year surpassed the RM13.6 billion worth of investment that the country received.[19] RM547 million worth of creative output and 157 hours of man hours was poured into the making of the Academy awarded of the movie Life of Pi.
19. Cypark Resources Bhd has covered the 26ha former landfill in Nilai, Negeri Sembilan, with up to 32,000 solar panels, turning the area into what is said to be the largest solar photovoltaic (PV) farm in the country and South-East Asia.[20] -
2 In 2009, Najib dismantled a long-time restriction that benefited "sons of the soil." They can now own 100% stakes in businesses in 27 sub-sectors. Najib's 2012 budget extends that reform to 17 more sub-sectors such as medical and education services. But bigger reforms are absent from manufacturing and the labour market that suffers from entrenched affirmative-action policies.[21] 18 subsectors liberalised including quantity surveying that will be liberalised in 2013.Competition Act 2010 gazetted in 2012 and the first case is solved.
21. Only 30% of Malaysians obtained higher education qualifications compared to Singapore's 46%, Thailand's 41% and South Korea's 89% in 2010. 80% of our workforce only receive secondary level education and only 25% of our workers are highly skilled compared to Singapore's 49%, Taiwan's 33% and South Korea's 35%.[22] MSC Malaysia MyUniAlliance Programme is a new initiative by the MDeC with support from PEMANDU. The goal is to develop graduates who are industry-ready and employable.
22. Najib says the GNI per capita rose 49% from US$6,670 in 2009 to US$9,970 in 2011. But World Bank note the figure was only 16.2%.[23] GNI per capita increased 49 percent in 3 years.2010- RM8100

2011-RM9700

2012-RM9970

GNI in 1957 was merely USD257

23. Foreign education institutions are struggling to launch in Educity. Of ten institusion approached to open campuses, only two institutions have officialy fully operated. Globally recognised institutions including Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Instituteof Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC) and Reading University Iskandar have set up campuses.
24. Recycled old projects such as the Tanjung Agas that was originally launched in 2009 with an investment shot of RM8 billion[24]that is relaunched under ETP as a transforming project. -
25. IHH Healthcare IPO falls flat, expects not dividends as it is no longer attractive to investors nor is it supportive of its rich valuation.[25] -
26. The renaming of the Kuala Lumpur International Financial District (KLIFD) or now known as Tun Razah Exchange (TRX)  worth RM25.07 billion with the possibility of creating a propertyglut.[26] RAPID Pengerang will provide 4000 employment opportunities with 20,000 contruction workers.

 

 

Table 2: Fall in Malaysian Ranking in the WEF GCR from 2011 to 2012[27]

Indicator

Ranking in WEF GCR 2011 and 2012

NKEA/SRI

Wastefulness of government spending

12 to 19

Public finance reform SRI
Government's budget balance position

96 to 110

Public  finance reform SRI
Intensity of local competition

26 to36

Competition, standardisation and liberalisation SRI
Extenct of market dominance

14 to 19

Competition, standardisation and liberalisation SRI
Labour market efficiency

20 to 24

Human capital devfelopment SRI
Women in labour force, ratio to men

114 to 119

Human capital devfelopment SRI
ICT use

57 to 68

Communications, content and infrastructure (CCI) NKEA
Technological readiness

44 to 51

Communications, content and infrastructure (CCI) NKEA
Broadband internet subscriptions

62 to 68

Communications, content and infrastructure (CCI) NKEA
International internet bandwith

60 to 83

Communications, content and infrastructure (CCI) NKEA

*WEF GCR is an abbreviation for World Economic Forum Global Competitiveness Report

 


[1] MI, Dissecting the ETP Annual Report (Part 1) — Grade A+ for obfuscation! — Ong Kian Ming and Teh Chi-Chang, 31 Mei 2012,

http://www.themalaysianinsider.com/sideviews/article/dissecting-the-etp-annual-report-part-1-grade-a-for-obfuscation-ong-kian-ming-and-teh-chi-chang

[2] MI, Foreign Schools Find Iskandar's Education Hub Less Than Stellar, 24 Disember 2012,

http://www.themalaysianinsider.com/malaysia/article/foreign-schools-find-iskandars-education-hub-less-than-stellar

[3] The Star. Falling Surplus Nothing To Worry About, 9 Mac 2013,

http://biz.thestar.com.my/news/story.asp?file=/2013/3/9/business/12815156&sec=business

[4] The Star, Challenges for the Economic Transformation Programme, 28 November 2012,

http://biz.thestar.com.my/news/story.asp?file=/2012/11/28/business/12380117&sec=business

[5] MI, Dissecting the ETP Annual Report (Part 1) — Grade A+ for obfuscation! — Ong Kian Ming and Teh Chi-Chang, 31 Mei 2012, http://www.themalaysianinsider.com/sideviews/article/dissecting-the-etp-annual-report-part-1-grade-a-for-obfuscation-ong-kian-ming-and-teh-chi-chang/

[6] MI,  Dissecting The ETP Annual Report (Part 2): The Mystery Of The Disappearing Entry Point Projects — Ong Kian Ming And Teh Chi-Chang, 7 Jun 2012, http://www.themalaysianinsider.com/sideviews/article/dissecting-the-etp-annual-report-part-2-the-mystery-of-the-disappearing-entry-point-projects-ong-kian-ming-and-teh-chi-chang

[7] The Edge, Fitch Positive On Malaysia's ETP, But Public Finances A Concern, 13 April 2011,

http://www.theedgemalaysia.com/business-news/185024-fitch-positive-on-malaysias-etp-but-public-finances-a-concern.html

[9] MI, Putrajaya Says 'Recycled' Projects Part Of ETP 'Ecosystem', 13 Mac 2012,

http://www.themalaysianinsider.com/malaysia/article/putrajaya-says-recycled-projects-part-of-etp-ecosystem

[10] MI, ETP Faces Battle To Win Big Private Investment, 17 September 2012,

http://www.themalaysianinsider.com/malaysia/article/etp-faces-battle-to-win-big-private-investment

[12] MI, ETP Too Broad To Transform Malaysia, Says Standard Chartered, 16 Januari 2012,

http://www.themalaysianinsider.com/business/article/etp-too-broad-to-transform-malaysia-says-standard-chartered

[14] Ong Kian Ming, ARTICLE: ETP: Part 6 — The ETP Will Make The Rich Even Richer, 6 Mac 2012,

http://ongkianming.com/2012/03/06/article-etp-part-6-the-etp-will-make-the-rich-even-richer/

[15] ibid

[16] DNA, Digital Malaysia: Whither Now, Wither Now?, 23 Julai 2012,

http://www.digitalnewsasia.com/insights/digital-malaysia-whither-now-wither-now

[17] Asia Views, Glcs, Developers The Big Winners In ETP, 21 Disember 2010,  http://www.asiaviews.org/headlines/17-main-story-/27486-storyalias13

[18] Reuters, Run Up To Tense Election Puts Malaysia, Investors On Edge, 17 Januari 2013,

http://uk.reuters.com/article/2013/01/17/uk-malaysia-election-idUKBRE90G19S20130117

[19] MI, Economists: Malaysian Growth Could Be Hit By Investment Outflow, 19 Oktober 2012,

http://www.themalaysianinsider.com/malaysia/article/economists-malaysian-growth-could-be-hit-by-investment-outflow

[20] The Star, Banking On The Right Power, 20 Mac2012,

http://thestar.com.my/metro/story.asp?file=/2012/3/20/north/10949092

[21] WSJ, Malaysia's Old Economic Model, 12 Oktober 2011,

http://online.wsj.com/article/SB10001424052970203633104576624570334832018.html

[22] The Edge, Tough Task Ahead For Malaysia's Talent Corporation, 14 Oktober 2010,

http://www.theedgemalaysia.com/lifestyle/175306-tough-task-ahead-for-malaysias-talent-corporation.html

[23] Malaysia Kini, Kit Siang Calls Najib's GNI Growth Bluff, 13 Mac 2013

http://www.malaysiakini.com/news/223771

[24] The Star, Tanjong Agas Mega Project To Take Off Soon, 23 Februari 2009,

http://thestar.com.my/maritime/story.asp?file=/2009/2/23/maritime/3298307&sec=maritime

[25] The Edge, Hot Stock: IHH Falls On Rich Valuations, HK Venture No Impat, 14 Mac 2013,

http://www.theedgemalaysia.com/highlights/233026-hot-stock-ihh-falls-on-rich-valuations-hk-venture-no-impact.html

[27] MalaysiaKini, Signs That The ETP And GTP Are Failing?, 6 September 2012,

http://www.malaysiakini.com/news/208117

Arkib Buktikan Ketua Penceroboh Sulu Sebenarnya Rakyat Malaysia

Posted: 19 Mar 2013 11:49 PM PDT

KeadilanDaily

KEADILAN mendedahkan bukti secara dokumen yang menunjukkan Raja Muda Sulu, Agbimudin @ Azzimuddie Kiram yang mengetuai pencerobohan di Lahad Datu, Sabah sejak bulan lalu, sebenarnya rakyat Malaysia dan pernah menjadi kakitangan awam.

Pengarah Strategi KEADILAN, Rafizi Ramli berkata, ia dibuktikan melalui dokumen 'Senarai Kakitangan 1975, Perkhidmatan Awam Sabah' yang diperolehi dari Jabatan Arkib Negara Sabah.

SenaraiKakitangan2

"Dari maklumat itu, disahkan bahawa Agbimudin tersenarai sebagai Pegawai Tadbir Muda di Pejabat Daerah Kudat bermula 1 Mac 1974 dengan gaji RM610 sebulan," katanya pada sidang media di ibu pejabat parti, hari ini.

Rafizi yang turut melampir salinan dokumen itu yang memiliki cop Arkib Negeri Sabah bertarikh 4 Oktober 1983, berkata, pendedahan itu mengesahkan hubung kait penceroboh  Sulu dengan projek IC yang melibatkan Tun Dr Mahathir Mohamad.

"Wujudnya tokoh dari kumpulan bersenjata ini di kalangan warganegara mengesahkan keresahan rakyat betapa pemberian kerakyatan untuk tujuan politik tanpa proses sah mengancam keselamatan negara," katanya.

Sebelum ini, media sosial terutama facebook kerap memapar pelbagai gambar individu yang dikaitkan dengan Kesultanan Sulu bersama-sama pimpinan Umno BN.

[VIDEO] Kita Nak Calon Yang Berani, Kita Nak Calon Yang Kuat Kerja

Posted: 19 Mar 2013 11:36 PM PDT

[VIDEO] Mana Boleh? Negeri Kaya, Menteri Kaya, Tapi Rakyat Miskin?

Posted: 19 Mar 2013 11:34 PM PDT

The Myth of the Rich and Poor

Posted: 19 Mar 2013 07:08 PM PDT

Malaysian Insider

by Anas Alam Faizli

"They are simply lazy"

"His father is a Tan Sri"

"He knows someone from the inside"

"I made it purely out of effort; I worked hard to get where I am today"

These are some typical expressions that are sure to be heard in coffee chats, every time the topic of rich and poor is brought up. People have grown easily accustomed to brushing off the topic of inequality as welfarist or socialist. This happens even amongst supposedly "middle class" Malaysians, not realizing that they are in actuality, most likely top income earners and wealth owners. Households earning RM10,000 a month above already qualify as Top 4% Malaysians! In fact, while partisan voices continue their discourse in the racial imbalance tone, Malaysia has silently migrated into new battles, concerning intra-racial, income, and class-based imbalances.

It is often argued that the poor and the low income earners are plain lazy and do not work hard; that one earns what one deserves. This is not true. Many are simply unlucky, to be born to parents who lack education or skills to escape from the clutches of poverty. Some were born with disabilities and diseases, while some others live in flood-prone or hazardous places. On the other hand, we have sub-quality undeserving businessmen linked to political patrons, estate and fortune inheritors, and individuals plainly lucky to be placed in lucrative industries with high economic rent. Accusations like laziness then become hardly the issue. The rich can be lazy too!

There are those who do not deserve to be in poverty, just as there are those who do not deserve their wealth. The cases above are simple yet fitting examples to describe that not all poverty is a result of unwillingness for hard work, and not all wealth is a result of it. Thus, the fight against inequality is rather a fight to equalize opportunities so as to reach more equitable outcomes, not to distortively equalize outcomes. This is not a crusade against the rich, but a crusade to help the poor.

What's the Big Deal with Inequality?

Inequality is very real, whether or not we have problems with the GINI coefficient as a measure. In fact, the attention regarded to inequality is very much driven by consequences of inequality, rather than pre-emptive. We can see real consequences to the society; including societal backlashes, power imbalances, effects on wages, effects on growth, crime and quality of living, to name a few. As long as the income and wealth inequality gap remain large and public investment for education, training, childcare and public infrastructure remain inadequate, progressive taxes and affirmative action in its true and productive spirit have a place within public policy. It is imperative that the richer within the society share the responsibility of helping the poor; in the bigger picture, it is actually in their interest to do so, as they too will feel the consequences of inequality.

The Fallacy of the Free Market

In any discourse of inequality and the rich and poor, the "free market" will almost immediately arise. The basic tenant of a free market is well described by the "Invisible Hand" coined by 18th century economist, Adam Smith. It argues that prices, and thus distribution of goods, services, labour, capital goods, land and human skills are all determined by market forces, or this "hand" that cannot physically be seen. Proponents of this market-based allocation system are naturally against increased forms of government intervention like transfers, donations, taxes, subsidies and benefits. To put simply, they believe that letting the market run its course freely will reach desirable market equilibriums in the fairest manner, thus achieving productivity and wealth for a nation.

The marketplace does have some elements of arguable fairness; hard work will get you higher income, and laziness will be punished. Jobs, goods and wages are "naturally" supplied to and demanded by society, according to their needs and capabilities, instead of government allocation which is dangerously prone to over or under budgeting.

However, one must note critically that the fairness of the marketplace should not be exaggerated. Market forces can be "brutally unsentimental", as put by Jeffrey Sachs. Pockets of failures in the market are impossible to deny because not everyone in the economy starts from the same baseline. Endowments like wealth, opportunities, or physical health vary extremely amongst people within the system. While some manage to climb out of low income brackets and make it, as a result of opportunities and big breaks, others remain pressed in a vicious downward cycle. Indeed, not everyone gets a big break.

The Taxation Antagonist

The most common proponents of the free market are libertarians; whose ethical core is liberty. They hold the best economic outcomes will only prevail when each individual is left free to act economically and live without an authority governing their economic decisions. Individuals are in no way held responsible to the society, other than to be respectful towards the liberty and property of others. The government's sole responsibility is to only maintain law and order such as protection of private property. Extreme libertarians even hold that there is no requirement for government to build infrastructures, road or highways; such should be left to market forces because the need for them itself is incentive enough for someone to build them.

Libertarians are like "taxation antagonists". Amongst other forms of government intervention, libertarians reject governments promoting fairness and efficiency through a system of taxation. Tax is regarded as just another form of government extortion; de-motivating those who work hard while potentially over compensating those who don't.

In summary, libertarians hold that free market is the only way economic allocations are done "democratically"; hence it is the savior of democracy and enough on its own to ensure prosperity. Therefore, talk of government intervention in helping the poor will also become a point of contention in the books of libertarians.

Malaysian Libertarians

Many quarters have easily discarded the New Economic Policy (NEP) in hindsight, but it arguably did its job to almost eliminate poverty; reducing it from 50% in 1970 to the current 3.8%. Previously poor now form middle class and professional Malaysians.

Unfortunately, there is nothing to be proud of with the NEP mid 90s onwards. Rampant corruption, leakages and a breakdown in the integrity system demonstrated by those within the government have further worsened the situation. Perhaps this frustration in the government is behind the mushrooming of libertarian ideologies in Malaysia.

Is Libertarianism for Malaysia? We can first answer this by revisiting typical problems of missing a government sector. There is the question of who will provide public and common goods. We also do not need more than one police force, firemen, or court of law competing against each other. Without the government, who will then take care of the environment, regulate moral hazards, ensure individuals do not hurt each other, and protect the sovereign rights of Malaysians? Reducing government role is perhaps agreeable, but its total elimination has grave repercussions.

We then approach the issue of poverty. In all its admirable intentions of rewarding hard work and reducing influence of corrupt governments, libertarianism leaves too much room for an upward continuity of wealth and a downward spiral of poverty. As argued earlier, people start from different baselines. Holders of wealth are in the position to continue leveraging on existing wealth, to create more wealth- they can hardly be blamed as they are only incentivized and allowed to do so! It is worse when wealth comes from extracting economic rent, rather than the creating of true values that ultimately increases the size of the economic pie.

Consequently, the levers of power will be in the hands of corporations and the wealthy, which will have a bigger say in public policies, thus countering the libertarians' intended "democracy". Unlike the government of the day, boards of directors are not voted in by the people. Their fear of how a socialist nation will lead to fascism can also happen in free market except under the disguise corporate power. The free market failure then becomes as much political as economic!

Now imagine this "free market" is Malaysia, with one of the highest inequality levels in Asia (measured by GINI). The helpless poor will be left drowning in the currents of this market force, contending against the rich. This is exactly where a true, free, and liberal form of the market may not be able to generate the pristine intended outcomes it initially set out to do.

The Pakatan Rakyat Manifesto: A Manifesto for its Time

Political preference aside, there is cause to applaud the recent Pakatan Rakyat Manifesto. Tackling core economic issues, its four pillars hit home the concerns of the common rakyat; fraternity of the people, the people's economy, people's well-being and people's government. In Malaysia, the published absolute poverty number may be low, but in relative terms, many rakyat including daily creation of urban poor are effectively impoverished by demanding cost of housing and living that are unmatched by salary levels, high indebtedness, and low productivity levels due to limited skills and education.

For the government to maintain relevance in the face of libertarian claims, government interventions need to be tactical. If the government's stance is pro-business, it must be backed-up with robust social safety nets to hoist up and bring along poor households in the sprint towards growth and wealth creation. If the focus is the rakyat, care must be put to ensure business appetite is not suppressed. Such aspirations will be impossible to achieve without policies such as those proposed by the PR Manifesto; such as expanded educational opportunities (by making tertiary education free), reduction in the cost of living (utilities and tolls), targeted instead of blanket subsidies, and an upward pressure towards wages and salaries that are currently depressed by influx of foreign labour.

We have yet to see what Barisan Nasional has to promise with its manifesto but as a start, it should be more defined than its 2008 one; “to grow the economy” and start quantifying them. In fact, growing the economy is really a given.

Uplifting the Poor: Leveling the Playing Field

This is no plan to pull a modern-day Robin Hood, robbing the rich off of their hard work to reassign some wealth to the poor. The rich may be reached out to, to shoulder some responsibility to raise the level of education, health and productivity of the poor. Imagine the difference between a community with a billionaire worth RM40 billion and lots of poor people, versus one with 400 households worth RM10.0 million each. We might not love to pay tax but we accept its legitimacy as long as it is properly enacted into law and is used properly. This by no means entails slacking off on the part of the poor. Opportunities are provided, but they still need to be capitalized upon. The idea is a bigger economic pie and an unleashing of further values that the poorer population could have produced and Malaysia could have enjoyed.

Putting all these into consideration, where does it leave libertarianism, minimal taxes to the rich and businesses, and the free market? Need bigger government roles necessarily mean bigger inefficiencies, and more corruption? Welfare states in Scandinavia have ranked higher than America in terms of the Human Development Index (HDI). At the same time, Scandinavian nations are among the most equal nations, high in governance and control over corruption, despite the bigger size of their government.

Ultimately, a healthy economy is a mixed economy, in which both the government and market forces both play their role. The exact balance remains an ongoing battle; but it's good to start with unraveling the realities of inequality. Inequality is neither a hobby for anti-capitalist activists, nor development economists looking for the next trendy topic for their thesis. It's true that government intervention in the shapes and sizes that they take form, may have distortive capabilities, but the "lazy poor and the hardworking rich" is a myth. For a better Malaysia, we have no choice but to continue our strive for productivity albeit with a new focus; inclusiveness.

Otherwise, Malaysia will be dragging its feet into the future, carrying the baggage of the past policies and its repercussions.

"A statesman is he who thinks in the future generations, and a politician is he who thinks in the upcoming elections." – Abraham Lincoln

* Anas Alam Faizli is an oil and gas professional. He is pursuing a post-graduate doctorate, executive director of TFTN and tweets at @aafaizli

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