Tag: PEMANDU

Categories
Politics & government

[2458] PEMANDU needs an expiry date

A friend asked me once what I thought of PEMANDU. He expected me to praise it since he knew where my economic bias lies. Here was PEMANDU advocating liberalization in a number of ways. There I was, a person who has been accused of being a neo-liberal at one time or another… there was a match in preferred policy. Despite that, I gave the friend a non-committal answer because I was unsure how things would turn out in the end.

Things have become clear since and I have rationalized my thoughts, I think, quite comprehensively. This is what I think of the unit under the Prime Minister’s Department.

Many of these initiatives can be done without PEMANDU at the helm. A number of initiatives are Proton-like, with Proton being more or less a rebadged Mitsubishi. Many projects merely received a nod from PEMANDU and that alone allows those projects to be listed as PEMANDU-related projects.

To be fair, there are actual initiatives like the Government Transformation Program with all of its indicators. Many initiatives offer real measurements of progress in some areas. In the past, progression and regression were purely a matter of opinion. These measurements provide an anchor for a more objective discussion. That is laudable. The work on the mass rapid transit is two, save some problems like how contracts are being awarded. One can have a list of the good stuff done and planned. Its push for a more responsible approach in public finance is another praiseworthy effort, although contradictions raise skepticism.

How does one react to PEMANDU’s call for subsidy and deficit reduction when the unit itself praises fiscal populism?

How does one react to a call for private-led economy when it is the public sector that is leading the charge?

How does one react to market-friendly affirmative action?

Beyond the superficiality and the contradiction lies one consistency. PEMANDU signifies the concentration of power. Roles once spread among various ministries — which can be a system of check and balance — have now been transferred to the Prime Minister’s Department. The fact that the prime minister and finance minister are the same person serves only to strengthen the point.

Pemandu is now the economic central planner, the construction contractor, judge and all. It is even your emailman, judging by its enthusiastic support for the 1Malaysia email project.

Power concentration can be useful when the government itself is debilitated, filled with deadwood, stuck with legacy issues and trapped in time. For example, PEMANDU’s public communication is slick. One can imagine how badly such communication would have been handled by the Ministry of Information. The ministry is still fighting the communists after all of these years.

Just as the concentration has its benefits, there is a cost. The cost is a weakened check and balance system.

There is such a thing as too much power and Pemandu is accumulating powers within the government. Given its wide-ranging influence, it is becoming a ministry by itself, headed by an unelected minister who reports to yet another unelected minister.

Meanwhile, other parts of government are becoming weaker as their roles diminish. Where is the Ministry of Works in the MRT equation? Where is the Ministry of Finance in the subsidy debate? PEMANDU appears to play the larger roles, implying its influence. This will adversely affect the democratic nature of governance in Malaysia, whatever much left there is. The continuous existence of PEMANDU will continue the trend of power accumulation.

For this reason, PEMANDU should not exist for eternity. There has to be an expiry date so that these concentrated powers will not accumulate to a point that it becomes a struggle between an authoritarian and the rest of Malaysia. There must be a point when those powers will be redistributed back across the government.

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 November 7 2011.

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

erratum — In the original article at The Malaysian Insider, I misidentified Menara Warisan Merdeka as Menara Wawasan. Furthermore, I mistakenly associated it with PEMANDU. I have removed the reference here. Apologies for the mistakes. Here are the deleted sentences: “Take the Menara Wawasan proposal by PNB. PNB could easily go ahead with it without Pemandu stamping a GNI value to it.”

Categories
Economics

[2441] No target, no central planning

Milton Friedman once visited Hong Kong in 1963. He met John Cowperthwaite, the financial secretary of Hong Kong, whom was credited for enabling Hong Kong to become Asia’s foremost financial center through his free market policy. Friedman asked him “about the paucity of statistics” in Hong Kong. Cowperthwaite replied, “If I let them compute those statistics, they’ll want to use them for planning.[1]

Statistics has its uses and it does help us understand our society better. It describes phenomena objectively instead of forcing us to rely on conflicting anecdotes that are dependent on point of views. First and foremost, statistics has descriptive power.

But not all individuals believe in only the descriptive power of statistics. Some believe too much in the prescriptive aspect. Statists tend to belong in the latter group. PEMANDU is afflicted with it too, arrogantly trying to manage the economy when the economy itself is organic.

I reject targets placed on something as organic as the economy. While the government does have a role to play, to set a target on the economy mistakes the economy as a business entity or a firm, pretending as if the planner is the CEO, where there is none really.

The dangers of having a set of targets like having specific real GDP growth rate are plenty. One of them is the incentive for the government to spend too much just to meet its target. There is a conflict of interest when the target is set by the very entity that is meant to achieve it (this is also partly the reason why I am skeptical with a lot of KPIs set by the government: incentive to set them low to make themselves good).

This adverse incentive is bad for public finance and ultimately, for taxpayers.

More generally, having those targets encourages central planning.

But this entry is not meant to bash PEMANDU. I think I have criticized PEMANDU so much that I am bored of it already. This entry is meant to criticize Anwar Ibrahim.

Anwar Ibrahim is smart. When he realizes that the Najib administration is targeting possibly an unrealistically high real GDP growth rate given the global economic circumstances, he challenges it and demands accountability from the federal government. He wants a special parliamentary sitting to meet if the federal government fails to meet their target later in the year.[2]

I disagree to the demand for accountability. It is not so much I would like to give the Najib administration a free ride. It is only because I disagree with having a target in the first place. To demand accountability only strengthens the path to the target. That means central planning.

This is a case where accountability is not so hot.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved
[1] — The difference in the economic policies followed by Hong Kong and Britain was a pure accident. The colonial office in Britain happened to send John Cowper-thwaite to Hong Kong to serve as its financial secretary. Cowperthwaite was a Scotsman and very much a disciple of Adam Smith. At the time, while Britain was moving to a socialist and welfare state, Cowperthwaite insisted that Hong Kong practice laissez-faire. He refused to impose any tariffs. He insisted on keeping taxes down.

I first visited Hong Kong in 1955, shortly after the initial inflow of refugees. It was a miserable place for most of its inhabitants. The temporary dwellings that the government had thrown up to house the refugees were one-room cells in a multistory building that was open in the front: one family, one room. The fact that people would accept such miserable living quarters testified to the intensity of their desire to leave Red China.

I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of statistics. He answered, ”If I let them compute those statistics, they’ll want to use them for planning.’’ How wise! [Milton Friedman. The Hong Kong Experiment. Hoover Digest. July 30 1998]

[2] — KUALA LUMPUR, Oct 10 — Datuk Seri Anwar Ibrahim today demanded Parliament reconvene for a ”special sitting” if Putrajaya fails to meet its ”unreasonable” gross domestic product (GDP) growth forecast.

The opposition leader today poured cold water over Datuk Seri Najib Razak’s Budget 2012 tabled on Friday, claiming the prime minister’s predictions and his administration’s alleged penchant for unbridled spending would likely worsen the country’s deficit.

Anwar also predicted the Najib administration would table a supplementary supply bill by mid-2012, seeking for additional funds just as it did in June this year. [Clara Chooi. Anwar wants special Parliament meet if GDP aim unmet. The Malaysian Insider. October 10 2011]

Categories
Economics Politics & government

[2417] Being honest about crime

There are always victims in an economic recession. It can push individuals into desperation and force them potentially to do something that they would not otherwise do. It can turn the man on the streets into a criminal.

There is a relationship between economic recessions and unemployment rates and there is a relationship between unemployment and crime rates. An empty stomach has a way of convincing that the wrongness of stealing is only a secondary worry to the concern of the stomach. Rule of law can be meaningless in times of desperation.

The hungrier one gets because of external circumstances, the greater the erosion on one’s belief in the rule of law. The reward of specific types of crime becomes enticing.

Although there are risks involved in committing the crime, its relative immediate reward has the potential of immediately relieving hunger. A little chance of not going hungry is better than no chance at all.

Before these sentences are misconstrued as a justification or even an encouragement for criminal activities, let it be known the difference between describing and prescribing. One describes without making value judgment. One prescribes with value judgment. This is an effort at the former.

The relationship between economic recession (or perhaps the term economic downturn is a better phrase to escape the banality of technicalities) and unemployment rate is well-established. This requires no further exposition. The relationship between unemployment and crime rates is also well-explored.

What makes exposition important for the latter is that in Malaysia, there is an increasing tendency to ignore it. In its place, there is a belief that an alphabet soup causes the decline in reported crime rate.

That narrative needs to be assessed and then made blunt in the interest of sincerity. Partisan political discussions sometimes can push honesty aside for political convenience. It is all about brownie points. The utility of free speech is essential in putting less-than-honest assertion in perspective.

There are many documentations proving how unemployment contributes to crime rate. Karin Edmark in 2005 showed how ”unemployment had a positive and significant effect on some property crimes in Sweden.”

Property crimes can be associated with theft, which can be associated to what can be called as crime of the stomach. In 2002, Eric Gould, Bruce Weinberg and David Mustard found a similar result for general crime rate for young, unskilled labor in the United States, between 1979 and 1997.

Steven Raphael and Rudolf Winter-Ebmer in 2001 found the same relationship in the United States in the 1990s. They wrote ””¦a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate.”

There is little reason why it should be different for other parts of the world, including Malaysia.

It is highly instructive to learn that if indeed actual crime rate had decreased in Malaysia, it happened only while the economy was recovering, thus creating the jobs needed to reduce unemployment.

It is equally instructive that crime rate was on the rise around the same time the Great Recession was at its peak, adversely affecting external demand for Malaysian goods and through that, jobs in Malaysia.

In February 2009, the unemployment rate was 4.1 per cent. In the same month in 2010, the rate was 3.6 per cent. Out of the 12 months, the 11 months of 2009 had higher unemployment rate than the same month a year later. If anybody requires any reminder, it was 2010 when the domestic economy was recovering at a worthwhile rate. The year 2009 was just horrible.

The severity of that number can be put in better context. The annual rate for 2006, 2007 and 2008 was around 3.3 per cent. In 2009, it is estimated to be 3.7 per cent. The estimate for 2010 is already lower than the year before, at 3.5 per cent.

As for the 2010 crime rate, the crime index fell by about 15 per cent compared to the previous year, according to a Bernama report. It also stated that the ”achievement was a result of the Royal Malaysia Police’s (PDRM) 12 initiatives to battle crime nationwide,” those initiatives being the Government Transformation Program. The arrogance and the dishonesty are truly remarkable.

The narrative of the results from the government’s effort at combating crime must compete with the mainstream uncontroversial economic one. This is not to say government effort is worthless, but for it and its supporters to claim too much credit, or in this case all the credit for the alleged drop in crime rate without even blinking amid the well-established and stronger case between unemployment and crime rate is too much to take. That is undue credit.

It must compete, just like how the government and its supporters claimed the undue credit for the Malaysian economic recovery when in fact, it was mostly the then rising tide of global economy that lifted the Malaysian boat.

Little things do matter. Actual effort at combating crime by the government and the wider public do matter and they are most appreciated. Nevertheless, do not be dishonest about it. Such dishonesty will discredit all the good real things done.

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 21 2011.

Categories
Politics & government

[2352] What if I spam with my 1Malaysia email?

I am still on the 1Malaysia email controversy. I must admit, this is starting to get ridiculous because its investment cost is only RM50 million. That is nothing compared to other big projects announced which on the surface and without being too ideological at least, are a-okay. For such a small project, maybe I am criticizing PEMANDU too harshly.

Nevertheless, I find the way the whole issue has been handled infuriating. Each piece of information makes me angrier: as it turns out, the email will cost the government RM0.50 per unit. It is not free, as it was promoted earlier.

A PEMANDU director justified the cost by stating it would save the government money. He compared the RM0.50 per unit cost to the cost of sending out actual mails, which is RM1.00 per unit.[1]

Saving or not, I am unconvinced that there is a need for that email, as with a lot of other Malaysians out there. Do we even need to pay for the RM0.50 in the first place, hence saving even more, if saving is a concern?

Another other concern — out of many unstated here — and the driver of this post is the director’s comparison of the RM0.50 per unit cost to the RM1.00 per unit of sending out actual mail. The director’s logic is completely sound, if each comparable actual mail is replaced by exactly one email and that there is no additional email sent out.

The 1Malaysia email at the moment however appears like any normal free email out there, except that it is authenticated. Supposedly, that is the main point. The question is, what if a person uses the 1Malaysia email for everyday use?

I typically send out between 5 to 10 emails per day. I receive even more daily. If I use the 1Malaysia email exclusively (I hate having multiple email accounts), these everyday emails will add to the cost of running the program.

Who will pay the cost of sending out email?

Also, there will be a breakpoint where saving turns into additional expenditure. The breakpoint will not be too big, which makes the chances of incurring additional cost highly likely. This is based on the assumption that the government typically does not send out too many letters to citizens. I personally have not received a letter from the government so far this year. In the previous years, if I am not mistaken, I received only one yearly.

Now, what if a spammer gets his hand on the account?

In short, I doubt this will be a cost-saving exercise. And again, who will pay for it?

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

[1] — Fadhlullah Suhaimi said he expected agencies to pay Tricubes about 50 sen per e-mail, cheaper than the RM1.00 printing, stationery, postage and dispatch cost of sending a regular letter.

He said that, as the per unit cost of regular mail might double to RM2.00 if a misaddressed letter was sent back on the taxpayer’s dime, the government stood to save between 50 sen to RM1.00 per e-mail.

”The poor taxpayer, without realising, is actually allowing wastage of RM2.00 per post that goes out,” Fadhlullah Suhaimi said.

He cautioned, however, that these expected savings were based on Tricubes’ own estimates. He said the actual cost per unit would vary depending on the volume and complexity of the transaction, as well as the number of people who eventually sign up. [Pemandu: Government agencies to pay for 1 Malaysia email database. Yow Hong Chieh. The Malaysian Insider. April 21 2011]

Categories
Economics

[2351] PEMANDU’s GDP folly

The Najib administration intends to make Malaysia a high-income country and that alone with the end goal. Here is the problem: a project is supported not because it is viable, but because it increases the gross domestic product (GDP) — or the gross national income (GNI) depending on context — of the country.

The latest case in point is the 1Malaysia email, which the PM has said that it will increase the GNI by RM39 million… by 2015.[1]

Let me say that this is mindless. It is so because while it does increase the GDP, it will increase it only temporarily. Without viability, it cannot sustain economic growth and make permanent a state of high-income. The focus on the GDP is as good as a project producing a million toilet bowls just because it increases production and hence the GDP, never mind that there is no requirement them.

One commits to a project because there is a need or demand for it. It should not be done just for the sake of increasing the GDP and the GNI. These statistics are not financial statistics. They are macroeconomic statistics for good reasons. Do it for the sake of increasing the GDP frequent enough and soon business failures will be the norms. Given that the government is at the center of it, so too will be the events of bailout.

The GDP and the GNI are descriptive statistics, not prescriptive statistics like the way PEMANDU is using it. These macro statistics are descriptive because only organic growth are sustainable. Once one makes these macro statistics prescriptive, then we will get the nonsense like “a particular project contribute to the GNI by so and so ringgit.” We will get PEMANDU.

Financial statistics can be used prescriptively to ensure viability of a project. Macroeconomic statistics mostly do no such thing. The GDP, for instance, measures what have been spent and says nothing whether a project should be invested in or not. Dig a hole for RM50 million and fill it again for another RM50 million, then the GDP will increase by at least RM100 million. The question whether that action is productive cannot be known through the GDP.

All the more outrageous is that the 1Malaysia email project is projected to contribute RM39 million by 2015 to the GNI. Ladies and gentlemen, the GDP of Malaysia for last year was more than RM600 billion. That is RM600,000 million, just in case the contexts of million and billion need clarification. The GDP numbers are so big that they are usually rounded up to the nearest billion. RM39 million will not typically register in any general statistics.

Yet, the 1Malaysia email project’s celebrated point is its contribution to the GDP.

That is a good joke.

My suggestion is this: take out the reference to individual projects’ contribution to the GDP.

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

[1] — This is followed by the RM250 million investment by Pensonic Holdings Bhd to build its manufacturing hub and international distribution network over 10 years. The project will see a GNI impact of about RM500 million and create 850 new jobs by 2020.

The third project comes under the Malaysia Administrative Modernisation and Management (Mampu), which will invest RM3.26 million to improve the electronic services provided by the government and is expected to create 155 jobs.

The fourth project will come under the communications content and infrastructure national key economic area. It involves Tricubes Bhd, which will invest RM50 million, to develop a web portal for all Malaysian citizens above the age of 18 by 2020.

The 1Malaysia email project is expected to contribute RM39 million in GNI by 2015. [7 new ETP projects with RM901m in investments. Roziana Hamsawi. Zaidi Isham Ismail. Business Times. April 20 2011]