Economic policies that do not add up


P36: Kubang Ikan, Kuala Terengganu. Anwar Ibra...

Analysis By Baradan Kuppusamy

The lack of economic expertise in Pakatan Rakyat underlines the many difficulties the Opposition would encounter if it captures Putrajaya.

WHILE Pakatan Rakyat has been quick to capitalise on Barisan Nasional’s political setbacks like the current controversy over the National Feedlot Corpora-tion, it is weak in its economic policy formulation, and one reason is the lack of qualified economists.

This shortcoming would weigh heavily on the coalition if it were ever to capture Putrajaya.

Its weakness in formulating economic policies like the Alternative Budget 2012 that Datuk Seri Anwar Ibrahim read out to reporters a day before Prime Minister Datuk Seri Najib Tun Razak presented his Budget in Parliament, is a sign of its incompetency in ruling the country.

The Pakatan Rakyat budget was a wishy-washy affair. More thought should have gone into it beyond a cursory glance at where revenue is coming from and the expenditure incurred.

Instead Anwar just “handed out cash to the poor, teachers and farmers”.

The failure to formulate a serious, alternative Budget is yet another example of the weakness of the coalition that would affect their ability to rule the country.

Its inability to go beyond making unrealistic and populist demands and criticising the policies formulated by the experts i.e. Bank Negara economists, is a setback to Pakatan growing into a valid and competent coalition.

Populist policies are easily made but their implementation is hard, if not totally unrealistic.

For instance, Anwar campaigned in 2008 that if you voted for him and he takes Putrajaya, the price of oil would be lowered the very next day..

He can do it by further subsidising the price of “subsidised oil” – and that is economic madness and unsustainable.

Furthermore, Anwar is economic adviser to the Selangor government, earning a fee of just RM1 – another populist measure that gels well with the rakyat in the state. But how much FDI (foreign direct investment) has he brought into Selangor?

Beyond sloganeering like merakyatkan ekonomi, what are the realistic economic steps that he has taken thus far?

The lack of qualified economic formulators is glaring and shows how the Barisan federal government is far superior in that respect to the proposed Pakatan government when it comes to administering the economy, warts and all.

This lack of economic know-how was apparent in a leaked US State Department cable by Wikileaks on Nov 8, which stated that Pakatan lacked economic policy formulators within its ranks and how this shortcoming weighs on them as a coalition.

It also speculated why this was so and suggested that it could be due to Pakatan’s failure to give them high wages and that “politics” could have frightened them away.

The lack of economic expertise among them underlines some of the many difficulties they would encounter if they capture Putrajaya.

While the Opposition-run states are struggling without competent experts, their politicians also show little aptitude for heavy economics.

Except for Tony Pua, the DAP MP for Petaling Jaya Utara, there are no competent economic advisers working with Opposition controlled states that are struggling to line up economic advisors, the cable noted.

Pua is a one-man-band and he has his hands full. Besides, “one swallow does not make a summer”.

And, if Pakatan captures Putrajaya, PAS will pull the country one way and PKR in another and the DAP, a third way – demanding that affirmative action policies are abolished immediately.

Each is committed to its own constituents in different ways. There is little cooperation among them on economic matters beyond agreeing on political matters like seat sharing and working to capture Putrajaya.

There’s is no deal on how Pakatan would rule the country, no documents stating the basis of their rule and no power-sharing formula.

They have no shadow Cabinet.

Their power-sharing formula, in the event they capture Putrajaya, is simply that Anwar would be prime minister and his deputies would be DAP’s Lim Kit Siang and PAS president Datuk Seri Abdul Hadi Awang.

There is also not much difference between Barisan and Pakatan in the broad policy framework for the country. They are both for an open economy and for FDI to grow the economy.

But there the similarities end and the differences emerge.

There are differences over affirmative action policies that is favoured by Barisan, PKR and PAS but not by the DAP. This is a cause for dissension.

While all three Pakatan parties are against corruption along with Barisan there is a realisation that much of the corruption is linked to the affirmative action policies and that corruption can only be defeated if that policy is abolished.

This is the DAP’s stand and it is markedly different from the rest.

Pakatan’s weakness in economic matters would show immediately and in a serious manner if they ever were to capture power. There would be chaos as they find their bearings, if at all.

The state will be pulled in different ways – between Anwar’s populist promises, PAS’ Islamic economics and the DAP’s desire to streamline the civil service and abolish affirmative action.

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Malaysia loses the way following the West, politically or economically?

Malaysia loses the way following the West, politically or economically?


Clear vision in uncertain times

Diplomatically Speaking By Dennis Ignatius

In this period of global uncertainty, it is more important than ever for Malaysia to be united behind a common purpose lest we lose our way, be it politically or economically.

THERE is an old saying: “Without vision, the people perish.”

Applied broadly, it means that unless we are united behind a clear vision and are fully committed to doing what it takes to get there, we will invariably lose our way.

Do we have such a vision? Are we united behind a common purpose?

These questions are now more critical than ever before given that we have entered a period of global uncertainty, the likes of which we have not seen in quite a while.

Politically, we are seeing nations rise and fall and power shifting from West to East. Economies that were the drivers of world trade and engines of global growth are suddenly floundering.

The Eurozone, for example, is caught up in the worst crisis in its history. Many are wondering if it can even continue.

The United States, that other great economic powerhouse, is in crisis, rendered impo­­tent by massive foreign debt and deep internal divisiveness. Even China, despite its US$3.2 trillion (RM10.1 trillion) surplus, is not immune.

No wonder economists are worried that the world itself now hovers on the brink of another disastrous global recession.

Suddenly, it’s a whole new ball game out there. No one really knows how it will all play out but one thing is certain: resilient, innovative and competitive nations will do better than those which are not.

In this context, does Malaysia have what it takes to thrive in what management guru Peter Drucker calls a time of “accelerating change, overwhelming complexity and tremendous competition”?

Sadly, as anyone listening in on our national conversation quickly discovers, we are still fighting yesterday’s battles, seemingly unable to make the critical choices that alone can guarantee our prosperity.

While so many other nations have moved on to bigger and better things, we are still mired in issues of race and religion, unwilling to make the compromises necessary to build unity and resilience, unable to de­­cide whether we are a democracy or a theocracy.

Everything is complicated and complex in Malaysia. Even simple issues take forever to be resolved. Indecisiveness can be crippling for a nation.

And for want of a clear vision, the national fabric weakens, our democratic space diminishes and our national institutions decay.

Unsurprisingly, the same dysfunction finds expression in our economy as well.

Malaysia is steadily losing ground, hobbled by the poor choices we make as well as the hard choices we avoid making.

Fifteen years of successive budget deficits have saddled our nation with a staggering RM433bil debt, amounting to 54% of GDP.

Of course, there are those who say that such debt levels are manageable given our growth rates. That is what they were saying in Europe before reality hit them in the face.

Whether we like it or not, international investors are taking stock of our situation and it is their judgement that will decide our fate as much as anything else.

Clearly, we are going to have to make some tough economic decisions sooner than later.

We can no longer remain indifferent, for example, to the waste and abuse that our Auditor-General chronicles year after year.

How long can we continue to spend money on submarines that cannot submerge or satellites that cannot track?

And how long can we afford those expensive subsidies, particularly the ones that go to well-connected corporations and big businesses, that distort the allocation of resources, weaken our competitiveness and foster yet more corruption?

Is it not time to end the reign of the robber barons?

And then there is our bloated and inefficient bureaucracy, now numbering more than 1.3 million, one of the highest civil servants-to-population ratios in the world.

Public service wages and pensions will cost the country more than RM64bil next year.

Significantly trimming the civil service is a must if we are to reduce the deficit.

Prime Minister Datuk Seri Najib Tun Razak has, of course, taken some important steps in the right direction and deserves credit for it.

Some say it is simply to win votes but that is what democracy is all about and must be welcomed.

In order to be effective and meaningful, however, the reform agenda needs to be much wider, much deeper and much bolder.

Undoubtedly, being a reformer in a country like Malaysia is no task for political pygmies.

It takes leadership, vision, courage and conviction, something that Thomas Friedman, the New York Times columnist, lamented recently is sorely lacking in much of the world today.

If there is one encouraging spot in an otherwise gloomy picture, it is that Malaysians are increasingly ready for change.

They are tired of the old template of division, distrust and blame and understand that compromise and accommodation is the only way forward.

Surely the near empty stadium in Shah Alam on Oct 25 was a resounding rebuke to those who want to play the old games of race and religion instead of building for the future.

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