Tag: The Malaysian Insider

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ASEAN

[2093] Of a chance to demonstrate Malaysian goodwill

The very silly spat between Malaysia and Indonesia is a huge disappointment for regionalists who dream to repeat the European experiment of closer integration in Southeast Asia. It may be silly but it has dire ramifications to regionalism in the region. Even if one is not a regionalist but simply a citizen of either country who wishes for his or her own country to take its rightful place in the world, it is in his or her interest to see relationships between both countries blooms. It must flourish for both countries are dependent on each other.

The point on dependency is by no means a mere rhetoric. In 2008, Indonesia was the seventh most important trading partner of Malaysia in terms of total trade. In the same year, Malaysia was among the top five most important trading partners to Indonesia. If hostility hurts trade, clearly both have something to lose from hostility. In times when the world economy is struggling to find its way towards sustained recovery, Malaysia and Indonesia do not have the luxury to let trade between them flounder.

The importance of trade impresses upon the urgency on both sides to find for ways to douse the fire that threatens to burn the ties that bind the two together. Multiple issues ranging from culture, territorial demarcation in eastern Borneo, treatment of Indonesian workers as well as open burning in both countries must be addressed to improve relationship between the two Southeast Asian countries, and more importantly, eventually, people-to-people relations.

Alas, these issues are complex enough that individuals on the street may not be able to appreciate the difficulties faced by both sides. Those complexities demand for both sides to take time in finding solutions that will satisfy all. It cannot be rushed lest it becomes seeds for future discord. Therefore, the same issues cannot be relied upon to immediately improve relationship between the two neighbors.

In the short run, both have to rely on something else.

In this sense, the earthquake that devastated Padang and its surrounding in western Sumatra offers Malaysia an opportunity to improve its relationship with Indonesia. To use a jargon, which is regretfully so popular in the circle of management consultancy in Malaysia, this is a quick win.

Malaysia must quickly mobilize its resources to dispense humanitarian aid to victims of the earthquake in Indonesia. In fact, it is imperative for the Jalur Gemilang to be the first national flag to fly alongside the Sang Saka Merah Putih in Padang if Malaysia is to capitalize on the whole episode. The short distance between the two countries further add weight to the importance of Malaysian presence.

Failure to be the first country to reach Padang could only be seen as incompetence of the Malaysian government. Failure to be the first is a failure of Malaysia as a neighbor and a key member of ASEAN. It is most unacceptable, if Malaysia wishes to have better ties with Indonesia.

Not only that, Malaysia must donate generously. The state government of Selangor for one has allocated half a million ringgit towards relief effort in Padang. This action deserves the highest commendation.

One cannot be deluded in thinking that money can buy good relations however, especially at people-to-people level. One also cannot be deluded in thinking that a one-time event like this — if the Malaysian government as well as other Malaysian organizations played an effective role in the relief effort in Padang — can permanently improve relations with Indonesia.

Good long-term relations depend on how issues between the two countries are resolved.

Nevertheless, the disaster is a stepping-stone towards better long-term relations. It is a chance for Malaysia to demonstrate its goodwill to Indonesians and effectively undermine Indonesian jingoists who seek to disrupt Malaysia-Indonesia ties that in effect jeopardizes regionalist agenda for Southeast Asia, though it may not be those nationalists’ intention.

Malaysia has a chance to set everything on the right track here. It is a chance to show that Malaysians care for Indonesians. One would pray for Malaysia to not blow this golden opportunity in diplomacy.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on October 2 2009.

Categories
Politics & government Society

[2084] Of not humored by the accusation of Malayan imperialism

Those who value liberty place responsibility on a pedestal. Without responsibility, an entity is undeserving of liberty and deserves admonishment for its oversight. While it is heartening to witness the culture of liberty flourishing in Malaysia, it is unclear if the necessary responsibility associated with freedom is experiencing parallel development required of a mature free society. Many Malaysians are delighted at the prospect of greater freedom but remain unwilling to take up the required responsibility.

Sentiments prevalent in several issues can demonstrate this clearly. The issue of fuel subsidy is one: advocates of subsidy want to consume fuel but are unashamedly unwilling to pay for its fair, free market cost.

Another example, which I would like to go into greater depth, is the discussion regarding the relationship between eastern and Peninsular Malaysia.

I am not at all humored by complaints raised by critical Malaysians in Sabah and Sarawak on how they have been short-changed in the 46-year-old partnership between the two states in Borneo and the 11 states in the Malay Peninsula. Some public discourse in eastern Malaysia exhibit varying levels of hostility to Peninsular Malaysia that sometimes in jest includes the mention of Malayan imperialism. Along with it are matters such as underdevelopment, allocation of resources, immigration and even the date of National Day, among other things.

This hostility is unfair because the peninsular states should not be their punching bag. Only the federal government has the power to effectively address those issues both Sabah and Sarawak face individually or collectively. It is utterly crucial to differentiate between the peninsular states and the federal government. Failure to do so will not solve the problem and is likely to make the problem worse by introducing new ones. Hence, the resentment should be directed at the federal government.

Furthermore, while admittedly the other 11 states theoretically dominate the national legislature, federalism is only rarely a priority item among these 11 states due to years of the centralization policy of the federal government that flagrantly disrespected individual states’ rights. In fact, perhaps that is true for all states in Malaysia, including Sabah and Sarawak. Simply observe the Dewan Negara. What is supposed to be a symbol of states’ rights has been reduced to a rubber stamp of the executive, contrary to the spirit of democracy, even in the crudest definition of democracy.

Actually, even the federal government is unworthy of the resentment. If it has been forgotten, Sabah and Sarawak are part of the federal government. Two factors need stress.

One, Sabah and Sarawak are over-represented in the Lower House of Parliament in terms of population. Both states combined have approximately only six million people but are associated with 56 seats. The other 11 states have close to 20 million Malaysians but have only 153 seats in the Dewan Rakyat.

Two, moreover, as a direct result of the March 8, 2008 general election, both states have unprecedented influence in the federal government.

If the interests of Sabah and Sarawak have not been secured, it is clear that those who are frustrated at national discourse regarding both states should not blame the peninsular states or even the federal government. Rather, their representatives have failed.

Their federal representatives failed because despite over-representation in Parliament and commanding influence in the federal government, these eastern Malaysian representatives failed to effect national discourse. Meanwhile, their state representatives failed because they did not stand up to federal pressure when called upon to do so.

Yet, the majority in Sabah and Sarawak continuously voted for these representatives who sometimes seemingly colluded with the federal government to erode state rights of not only that of Sabah and Sarawak, but all 13 states of the 46-year-old federation.

Ultimately, this is a failure of assuming rightful responsibility. It is a failure of Sabahans and Sarawakians, especially those who are unhappy with the status quo. They demand their rights but they do not stand up and be counted. Thus, they brought this upon themselves and therefore, they have only themselves to blame.

What other conclusion can one draw?

Worst of all, they are shifting the cause of their failure to those on the peninsula. Not only those who cry Malayan imperialism each time the federal government comes in sight failed to act by changing their representatives, they refused to shoulder the consequences for their failure to act by making a scapegoat out of Peninsular Malaysia.

As I said, I am not at all humored.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on September 17 2009.

Categories
Economics

[2076] Of anti-trust laws can defeat protectionism

Opponents of economic liberalization fear, among many other things, the possibility of giant foreign companies dominating the local market at the expense of local businesses. For those who are simply interested in better quality goods and services, market liberalization introduces competition in the market to improve quality, much to the benefits of consumers. While the war between the two camps is much relished, there is a middle ground for both to tread on and it involves anti-trust laws.

Increasingly in Malaysia, protectionist argument is becoming less and less relevant each time the sun rises and sets to rise again. Intellectually, it is bankrupt. Empirically, it has resulted in missed opportunities and needless sufferings. Examples of protectionist failures and its subsequent ejection are aplenty for all to observe.

Proton, for instance, is still unable to compete fairly despite years of protection granted by the government to the national enterprise. It has also cost Malaysia an opportunity to become a regional center of vehicle manufacturing that Thailand has become. Thankfully, such government protection that once resulted in effective Proton’s monopoly of the local car market will end by 2010, in line with the ASEAN Free Trade Area Agreement.

Another example relates to the imposition of cabotage between Peninsular Malaysia and East Malaysia. With intention of nurturing local shipping companies, it has caused unnecessary increase in cost of living of Malaysians in Sabah and Sarawak by hiking up transportation cost. Tradable goods became more expensive than it would have been under free trade environment. Again, thankfully, despite protest from local ship owners, the removal of the protectionist policy has been successful. Malaysians in Sabah and Sarawak can expect their real wages, ceteris paribus, to go up, thanks to liberalization.

Even as the roles of government see expansion all over the world in the aftermath of the global recession through massive fiscal policy and more, the rationale of liberalization in Malaysia continues to take root. While guarded optimism is called for, recent liberalization of multiple service subsectors as announced by the Najib administration is a proof that — to paraphrase slightly the Iron Lady Margaret Thatcher — liberalization is on the move.

The liberals are winning the intellectual jousting. Yet, this is no time for liberals to rest. This excellent opportunity to push for greater freedom — either economic or individual freedom, although the two should be inseparable — does not come as frequently as it should. With a government seemingly friendly to liberalization policy, there is no better time to push for greater liberalization.

Greater liberalization is required because illiberal market structure like price and supply control mechanism on essential goods such as sugar and flour are still imposed by the government. Just weeks ago, shortage occurred to rudely disrupt routine to remind all of inefficient market.

With momentum on the side of the liberals, they can afford to push liberalization forward. Shoving the agenda is especially easy when discredited protectionist ideas are demonstrable as actual and not merely as theoretical failures.

In spite of cache available for liberals to rely on, continuous shoving of liberal economic agenda does not create ally and it only alienates losers of liberalization.

As a sidetrack, liberalization does create losers but the rationale of liberalization, or actually, free trade, is not that it does not create losers, but rather, on average, it lifts all boats up. This should be juxtaposed harshly with the effects of protectionist policy, which may or may not create winners but guarantees everybody, on average, worse off.

Liberalization exercises are definitely colliding with the New Economic Policy, or whatever is left of it. While it is unclear if there is a majority who supports the policy any longer, there is no doubt that there exists a large segment within Malaysian society who do support it and see liberalization exercises as threats.

On top of that, local business owners, Malay or non-Malay alike, are likely to be hugely unexcited with liberalization effort that inevitably invites large multinational corporations with enjoy economies of scale that these locals could only imagine.

Together, these groups have the political power to derail liberalization exercise in the future.
In order to reduce that possibility, it is imperative for liberals to reach out to the potential losers and their sympathizers to partly, wherever reasonable, alleviate their fear. And their fear of monopoly is reasonable.

Perhaps, the act of reaching out should be an afterthought. The fear of monopoly, after all, should not exclusively belong to only protectionists and their cohorts.

Economic liberals celebrate competitive market. Purely competitive market is of course unachievable due to a myriad of factors but that does not prevent liberals for achieving second best solutions that approximate idealized environment.

The practice of anti-competitive behavior especially by colluding companies with excessive market power hurts the prospect of superior competitive outcomes associated with the ideas of free market.

Anti-trust laws may be able to curb anti-competitive practice. It has the ability to reduce the entry cost for newcomers, which can realize the spirit of creative destruction that every incumbent and even more so, monopolies, fear, despite its positive effect on society at large. Through this, protectionists’ fear should be somewhat addressed. And when it is addressed, liberalization can continue with its forward march to actualize the idea of liberty.

For liberals, the law has to be applied in equal weight. All monopolies, either local or foreign, should be subjected to the same law. If it is unclear, this means it must include government-linked companies as well as local cartels formed by private firms.

This cannot be stressed enough. Anti-trust laws directed at only foreign companies is only a protectionist’s tool and not an enabler of competitive market. Worse, without covering government linked-companies, such imperfect anti-trust laws would only open the path towards greater government intervention in the market.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on September 7 2009.

Categories
Economics

[2064] Of it’s the price and supply control, sweetie

Ask a layperson what he or she thinks of the definition of economics. If they do not say it is the art of making money, many of them will mention that it is a study of supply and demand.

In truth, economics is larger than either popular but otherwise misleading definitions. More accurately, it is a study of human behavior. A slightly more restrictive definition would lead to what students of economics typically understand it: economics is a study of the use of scarce resources.

While economics is more than able to explain and rectify the problem of production, distribution and consumption of resources, economic lesson may unfortunately have been lost on the federal government.

The manner in which the government responds to the issue of sugar availability may reveal how poorly they understand economics or, at least, how economics is being ignored by them.

This is not the first time Malaysians are facing a sugar shortage. Almost yearly, the issue keeps returning to the limelight.

The government previously blamed smuggling activities as the cause of sugar shortage. They still do. They have blamed suppliers and other players in the sugar supply chain of profiteering without shame. At other times, they blame Malaysians for consuming too much sugar.

This year, while the official line has yet to be made clear, the government-controlled media is blaming Malaysians yet again. According to them, consumers are panicking and rushing to the stores to get all the sugar they can get. The term that is gaining traction is panic-buying.

At this rate, I wager it would not take long before somebody claims that sugar monsters have been raiding warehouses all around the country.

Lest I am unfairly accused of being hopelessly partisan, that it is always the fault of the Barisan Nasional (BN), there are individuals and groups in both BN and Pakatan Rakyat governments that buy the panic-buying storyline.

Regardless of who is buying what, how does the government try to solve the problem?

The efforts to solve the problem are as wanting as the explanations: wider inspections to catch profiteers, greater enforcement at the border to discourage smugglers, and a campaign to encourage Malaysians to live a healthier lifestyle by consuming less sugar.

Yet, the problem recurs without fail, much like how Malaysians can expect the haze to be a yearly affair. In the past weeks, news in the mainstream media suggests that the same efforts, which have clearly failed, will see implementation again.

There is a reason why the problem of shortage keeps recurring and it is because the government refuses to admit one important aspect of the problem — the government is the problem. Specifically, it is the price control mechanism.

All other issues — be it profiteering, smuggling or overconsumption — are direct consequences of the control mechanism. All previous efforts have failed because they are only symptoms of an inefficient market and not the cause. The act of removing the inferior policy will remove the cause of the problem and address all the symptoms in one swift stroke.

Without doing so, apart from flooding the market with sugar through massive subsidization, the shortage will be a repeating phenomenon. This, by the way, happened frequently in the former Soviet Union, a communist state that implemented wide-reaching price and supply control mechanisms.

To understand how price control causes the shortage, one has to realize that prices act as signals to market participants, be it producers or consumers. Given a particular level of starting price, if it increases, it reflects growing scarcity in the market. That then it suggests that producers should or could produce more, or consumers should or could consume less, or both. If price decreases, it reflects growing abundance and that suggests that producers should or could produce less, or consumers should or could consume more, or both.

When the government imposes a friction in the market by placing a rigid price structure like the price control mechanism, it disconnects prices from levels of scarcity and, effectively, eliminates its function. This is a failure of pricing resources correctly. That failure then causes inefficient allocation of resources and in this case, sugar.

It is easy to identify how the term panic-buying is the failure of pricing and ultimately, a failure of government. It is an act of unneeded market intervention by the government, which causes unnecessary hardship to Malaysians.

The euphemism ”panic-buying” unfortunately strips the real cause of the shortage and shifts the blame from government to individuals. Really, panic-buying is simply an increase of demand. Increase in demand happens all the times before a huge occasion like Ramadan. There is nothing special about it.

In a free market, the possibility of shortages is tremendously reduced because prices adjust to reflect reality.

Prices simply go up to discourage consumers from going to the store and hoarding everything; the market punishes the so-called panic-buying by making it progressively more expensive to do so. In a controlled market, that possibility is ever a concern because sugar remains cheap when panic strikes. In a controlled system such as Malaysia’s, there is no feedback mechanism to counter the panic buying.

Oh, I am sorry. There is a feedback mechanism to counter panic buying. The government actually uses the mainstream media to convince consumers that there is ample supply of sugar and Malaysians should calm down. It is raining sugar, baby!

It is insulting to listen to that.

The real solution is to free the sugar market and, indeed, dismantle the control mechanisms imposed on consumer goods by the government. According to a 2008 list obtained by Reuters from the Information Ministry, 11 items have their prices controlled and another 20 items have their supply controlled. It is no accident that these items — among them flour, yet another item that Malaysians have to hunt for from time to time — are susceptible to shortage.

The control mechanism is typically defended as a mechanism to protect consumers. How creating a shortage protects consumers will be an interesting take.

Shortages only reduce Malaysians’ welfare. In fact, shortages should only occur in less developed countries, with communist or socialist markets.

Even if one does not believe in economics, for some reason preferring to believe in the existence of sugar monsters, then at least take note that all past explanations and efforts have failed. It is time to try a new approach.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on August 18 2009.

Categories
Society

[2057] Of a generation of activist idealists

A trauma can make or break a person. It can make or break a generation too.

In an inconspicuous house in Bangsar, a group of individuals belonging to the generation that I identify myself with has been meeting consistently for the past few weeks. There is only one agenda in their list and it revolves around a very global issue of climate change. They endeavor to spread awareness of it among Malaysian youth. More ambitiously, they seek to influence national policy on climate change.

The idea for doing so began modestly and very much fueled by conviction to a cause. Friends and strangers met and discovered that they share a passion. With that passion, they banded together to act. They started making calls and sending emails looking for support among larger circles of friends to garner resources required to get the ball rolling.

Climate change was an issue close to my heart. A number of factors prodded me into the realm of economics and climate change, out of several, was one of them. It was back in the late 1990s when I was still a teenager that I found myself attracted to a concept where a person could trade carbon as currency. With no training in economics whatsoever at that time, it was easy for me to be amazed at it.

The concept — pricing carbon to combat negative externality — and many more ideas surrounding the issue are not alien to me any longer. Just as understanding of physical sciences inevitably render what conceived as magic and supernatural events by the unenlightened into dull phenomena, so too does command of economics wash away my awe.

Ironic as it may seem, economics has made me less enthusiastic with the subject. The tools of economics have made me realize how hard it is to solve the issue. Meanwhile, the politics of climate change simply makes it impossible. Just weeks earlier, Australian Prime Minister Kevin Rudd admitted that the odds of success at the much-anticipated climate change meet-up in Copenhagen, Denmark are bleak and rightly so.

Yet, there they are in Bangsar, speaking so passionately about the issue, trying to affect and effect it. A row of ants standing in the path of an elephant, as I first saw it.

I am tempted to be skeptical about they can achieve, especially given the reality of climate change politics.

Each time I want to express my skepticism however, my mind races back in time to the day of my graduation. Amid melancholic mood, uncertain of what the world holds for me, the President of my alma mater, Mrs. Coleman, inspired me. She said, ””¦stand up for what you believe in, and what is right. You just might change course of events for the better.”

This is a hallmark of an idealist.

A friend of mine jokingly called the group in Bangsar as the Planeteers; remember the cartoon?

Jokes asides, these Planeteers are but an example of idealists that make-up this generation of below 30s.

Another group of friends is working hard to share educational opportunities that exist in the United States with students in Malaysia. They are out that to smash the myth that gaining admission into the best schools is either impossible or expensive or both. They are already in those schools and they are inspiring others to be ambitious, just as they had. Together, they hold an ideal that Malaysians should have access to not just basic education but fulfilling education that many in my circles strongly believe that the Malaysian system is simply unable to provide, for various reasons.

Yet another set of brilliant cohorts with sterling education joined politics in drove as interns and assistants to politicians whose ideals they share. And they too, signed up of conviction, not out of power. There is a dangerous of generalization here for surely, in every generation, they are dishonest individuals out mere to acquire power. That seem irrelevant to my circles of friends. In their eyes, I see a cause.

This surprises me greatly. For a generation condemned by others as highly disinterested in politics and societal issues at large, and only out and about listening to unbearable noise on their iPod and out large at night in roaming the city, the manner at which they have come in to shape politics is one big finger to such condescending generalization.

A common criticism directed against idealists is that they are still young and naïve. The real world, sooner or later, will break them. This generation of mine, or at least my circles, in a trend so overwhelming like a 50-meter tall wave to a sampan, is different. They are a different kind of idealists where that criticism is a knife to a hard stone.

These idealists recognize harsh reality. Contrary to typical characterization of an idealist, these idealists found their ideals out of disappointment and out of that disappointment, a call to activism.
They have been all over the world. They witnessed it, made judgment about it, made comparison out of it. And they are disillusioned with Malaysia.

They were angry at everything that is true. All promises were broken and they are posed to inherit a broken country with disrepute institutions, diminished national pride and worsening race relations. While the older generations tend to dismiss this generation as unappreciative of past sacrifices, this new breed of idealist activists see that the older generations have failed them.

What else can so comprehensively explain why the nation’s youth, in an unambiguous manner, voted against the establishment in 2008?

The disillusionment is traumatic, but it has hardened, not broken, them.

Rather than consoling themselves, they decide to not tweak their ideals, but almost outrageously go out to tweak reality. They endeavor to close the gap between ideals and reality, to improve the lamentable state that we Malaysians are in.

Perhaps, these circles of mine sit in the outlier and overly privileged in their upbringing. After all, not too many attended the likes of Harvard, Dartmouth, Colby, Berkeley — and, ahem, Michigan — among others.
But experience tells me that outliers exude contagious confidence. The arithmetic mean is susceptible to outliers.

Such confidence is bound for greatness. It is individual confidence that no longer dependent on the State or the community. They are, by themselves, individually, a whole army.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on August 11 2009.