Tag: Barisan Nasional

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Politics & government

[2218] Of wanted: political capital and will

There is mutual frustration between those in government and those who identify themselves as ordinary citizens in Malaysia. The frustration originates from the incapability of both to understand the other side’s challenges. This makes the gears of a huge machine — the government — stuck. It needs to work again.

The period immediately after the March 8, 2008 was supposed to be an opportunity for major reforms. The machine was supposed to work again after years of abuse that exhausted its credibility. The filters were supposed to have been washed, even if partly. Rusted wheels replaced. The joints, oiled.

That was not enough, apparently. Skepticism against the government — or perhaps more generally, against the state — not only persists but also grows. It has grown so much that it is disconnecting the government from the people, and the people from the government. It is threatening the idea that the government is the people, and the people are the government.

Given the record of the Barisan Nasional federal government, however, that skepticism is justified. In fact, skepticism against the state is a good thing to have. It is the first line of defense against tyranny.

Yet, skepticism is healthy only up to a certain dose. If there is too much skepticism, the central functions of the state cannot be carried out. Too much skepticism erodes the reason for a state. And there are signs that skepticism has become a monster in Malaysia, devouring too many regardless of agenda.

In the current political and economic climate, that skepticism has grown to a point that no reform can take place. The size of government is big so that it needs to be cut down so that there is less opportunity to repeat abuses of the past. Unfortunately, efforts to reduce it and put public finance in order are widely seen by many as a deliberate attempt to short-change citizens.

The problem of a big government is very real. Its effects on individuals and society are observable. Its growth over the years in Malaysia is something that cannot be missed. The Abdullah administration committed gross gluttony while the supposed benefits of big government were unseen. Something has to be done now, but nothing moves. Loud popular opposition stands in the way.

Part of the reason is that the challenges associated with big government are far removed from the ground. Public finance, for instance, means little to men and women on the streets. Individuals do not directly face it and hence, they do not see it as problems to solve, at least not soon.

Incapability to see it does not mean all is fine and dandy. The tragedy is this: Efforts to solve it inflicts relatively immediate pain while its benefits will only come relatively later. Furthermore, benefactors of big government will obviously defend it. Coupled with those is the fact that most of us enjoy the idea of instant gratification, so the loud popular opposition is not a surprise.

In justifying their opposition to initiatives to cut the size of government, they do raise very pertinent questions. What about corruption, what about leakage and what about inefficiency in the public sector? These are among the questions many have asked. Why should we pay for their excesses?

Recent allegation by the civil servants’ union, Cuepacs, that nearly half of civil servants in the country were suspected to be involved in graft does not instill confidence. The size of the civil service suggests that the government is uninterested in cutting down its expenditure seriously. Purchases of overpriced defense equipments suggest unwise spending. The investigation of the Port Klang Free Zone (PKFZ) is going unsatisfactorily, if there is any progress at all. Recent large losses of enterprises linked to the government exacerbate the image of the government of the day as incompetent.

Slammed with the idea of a goods and services tax along with the withdrawal of subsidies, rightly or wrongly, taxpayers get the perception that they are picking up the tab for somebody else’s mistake. As far as critics are concerned, the government is swimming in excesses, disconnected from the concerns of the masses.

The boilerplate answer to this two-way disconnect is commitment to democracy: Voters should till the land. Get a completely new captain and crew to staff the bridge.

It is an attractive solution as it removes one disconnect. As with any boilerplate argument however, it is insufficient. A libertarian fear revolves around this: Such a democratic solution solves only one part of the equation. It may build the trust that is required to run the machine smoothly again. What it may fail to do is to address the problem of big government.

The alternative in the form of Pakatan Rakyat has not demonstrated their grasp of the issue. They are happy with mere populism so far, such as promises of free water and bigger subsidies.

They really cannot be blamed for that. It is only expected. The truth is that Pakatan Rakyat needs to run a populist campaign to enter Putrajaya.

That does not negate the fact that economic populist policy tends to run a country down. That does not negate the fact that unpopular moves are required to solve the problems. Clearly, political capital is required to run unpopular policy.

But who has the political will? Who has the political capital?

Putrajaya, so far, lacks at least one of them.

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 June 14 2010.

Categories
Politics & government

[2197] Of Zaid Ibrahim for Hulu Selangor

There will be a big parliamentary by-election today in Hulu Selangor. By-elections have always been big in Malaysia but the fact that Pakatan Rakyat is fielding a giant makes this edition important by its own right. Zaid Ibrahim is not an obscure name.

Important or not, I do not feel the excitement of by-elections anymore. Part of the reason is that I am away in Australia. Another part is caused by election fatigue. Yet another part is because I have grown skeptical of Pakatan Rakyat due to policy issues.

The biggest of all issue is likely related to the goods and services tax debate. Effort to nationalize highways is another issue I deeply disagree with Pakatan Rakyat. Never mind issue of subsidy of various kinds. Some individuals who I thought would defend liberal economic policies within Pakatan Rakyat turn out to be cafeteria liberals. In short, I am no longer impressed with Pakatan Rakyat’s politics.

That in no way means that I am all set to lend my support to Barisan Nasional. I simply do not trust Barisan Nasional although I am willing to give thumbs up for several initiatives that fit my economic worldview. Their racial policy is a huge turn off for me, even if the current Prime Minister is pushing for liberalization of the economy.

Liberalization, of course, does not necessarily mean economic liberal. It could mean superlatively liberal. What else do I make when the federal government is pushing for liberalization of the economy while appearing to support minimum wage or creation of more government enterprises?

I was ready to largely ignore the election until Barisan Nasional raised the issue of alcohol and how Zaid Ibrahim drinks. I frown at the personal attack because I always expect people to debate on issues. Barisan Nasional failed on that front.

Moreover, the issue of alcohol comes close to the idea of choice, or anti-choice to be more accurate.

While I do appreciate that the norm in Malaysia is for Muslims to refrain from drinking as well as the fact that Muslims do have strong opinion on the matter and thus, Muslims voters who make up the majority in Hulu Selangor may vote based on personal lifestyle, for Barisan Nasional to raise the issue and use it as its election campaign material simply assaults my principle. The fake photographs of Zaid Ibrahim drinking distributed by those close to Barisan Nasional just adds up to the mounting anger I feel with respect to the way Barisan Nasional is campaigning.

That is not the only assault on freedom that is happening as far as the by-election is concerned. A former producer at NTV7 resigned because the Prime Minister’s Department, really, to make it all the more outrageous, the Prime Minister’s wife, demanded that the channel practice censorship to the benefit of Barisan Nasional.

Barisan Nasional has made freedom as an issue for me.

For that, I am stating that, for whatever it is worth and I know that it is not much, I am endorsing Zaid Ibrahim.

Categories
Economics Politics & government

[2183] Of opposition to reforms

Malaysia requires multiple reforms. Development in recent years proves that moving away from the status quo is incredibly hard, however. This is due to opposition mounted by beneficiaries of the current system, as well as beneficiaries of circumstances.

As the Najib administration puts in effort to address criticism directed against the flawed affirmative action, it faces fierce opposition from its own base in UMNO. There are at least two proofs to back this assertion.

First, while Perkasa is officially independent, the majority of Perkasa members ”are ordinary UMNO members”, as reported by The Nut Graph. Secondly, the editorial of Utusan Malaysia, which traditionally has been a very eager promoter of UMNO, supports Perkasa openly. Perkasa is an unrelenting critic of liberalization with respect to the affirmative action.

Perkasa and its allies fear the dumping of the current affirmative action. They are inside and they are loud. The internal opposition has already forced the Najib administration to postpone the announcement of the so-called New Economic Model several times now. How much eventual reform will occur on this particular front is suspect after deputy minister and a prominent UMNO member Mukhriz Mahathir said the new policy would have the spirit of the old New Economic Policy.

The preceding federal government also faced opposition from the inside, with respect to its effort to ensure judicious use of police power. The Independent Police Complaints and Misconduct Commission (IPCMC) proposal did not go through.

While the Abdullah administration then was already treading the path of the tattered, it still enjoyed huge majority in the House. Yet, there was no political will to deal with the police force decisively. The Enforcement Agency Integrity Commission was instead born, but critics say it is an ersatz to the IPCMC.
The Abdullah administration is now gone partly due to resurgent democratic culture in Malaysia, among other things. It is crucial to capitalize on the resurgence to seal the future of a more democratic Malaysia.

The reinstatement of local election is one way to institutionalize democratic culture. Unfortunately, standing in the path of further democratization is the Najib administration. Given the prime minister’s exhortation of the need for Malaysia to change, it is utterly disappointing to have him to prefer the undemocratic status quo.

Regardless of the outcome of all three cases, outside forces, which more often than not come in form of Pakatan Rakyat, have been crucial in pushing the case for both. Unfortunately, a warning is in order. While it can be helpful, outside force, i.e. Pakatan Rakyat, is no less influential in affecting reforms adversely.

Take the liberalization of the fuel subsidy regime under the Abdullah administration, for instance. The subsidy regime has proven to be disastrous to government finance. Massive expenditure dedicated to it sapped and is sapping resources that can be better used for other more productive purposes.

Yet, Pakatan Rakyat opposed such liberalization. In riding populist sentiment, Anwar Ibrahim even announced that he would cut fuel prices and, in effect, increase subsidy if he was in power at a time when global crude oil prices were going through the roof.

Fortunately, the restructuring of the fuel subsidy went through. Fortunately, partly because the populist path would have brought great damage to the economy in the long run. The reform is not complete yet but at least, it is moving along. What is of note is that the Abdullah administration only managed to push through the liberalization after suffering huge political cost.

Another example involves the proposed goods and services tax (GST) pushed by the Najib administration. The GST modernizes the tax system by addressing tax evasion committed by free riders who want every benefit but refuse to pay for it, or rather have others to pay for them.

There is considerable apprehension against the GST, especially when it is pushed by a government that does not have a stellar reputation in fiscal discipline and is perceived as corrupt. Yet, that in no way negates the need to reform the way government collects revenue because the solutions to all these concerns on government size and corruption are not mutually exclusive issues. They can be solved together.

Yet, Pakatan Rakyat is developing into a party of ”no”. It states that while GST is a good concept, it still opposes it due to a number of reasons. Lim Guan Eng, in an anti-GST forum, said that GST would tax everybody and painted the idea that not everybody is paying consumption tax at the moment. He backed his statement by erroneously comparing the fact of a narrow tax base relevant to income tax to the tax base of a consumption tax, which is a completely different animal.

Furthermore, quite conveniently, he was pretty much silent on two points that do not fit his narrative. First, the existence of a consumption tax in form of sales and services tax; all of us face prices after that tax at the moment, and that in effect says that everybody pays consumption tax.

Second is that the GST is to replace that consumption tax at a lower standardized rate with possible replication of existing tax exemptions, making the GST potentially not inflationary. The Institute for Democracy and Economic Affairs has made a stronger claim that the GST at the proposed rate is disinflationary.

Another argument against the GST from Pakatan Rakyat revolves around wealth inequality of Malaysia. But if the GST is not inflationary, then it should not affect inequality; if it is disinflationary, then it should have an equalizing effect on wealth inequality.

Whatever the effect of GST on price levels, the truth is that the GST system can be tweaked to satisfy a lot of concerns. Income tax rates can be lowered if there is concern about excessive burden. Rebates can be designed for some purpose. Exemptions can be made. Really, discussions on how to make GST better or more palatable than its current form need to take place. That it is not happening, though. Instead, Pakatan Rakyat is giving a solid no and prefers to ride on anti-tax sentiments. That is, in effect, a preference for the status quo.

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 March 25 2010.

Categories
Politics & government Society

[2151] Of barking up the wrong tree

How many times have we heard the statement that if so and so did not exist, certain problems would go away? Specifically, one side would blame UMNO and Barisan Nasional for racial and religious problems in Malaysia, while the other would blame PKR and its allies for the instability in the country.

The truth is that politicians and political parties get too much credit for the various issues the country faces. As controversial issues erupt, the blame game begins in earnest. The usual suspects get apportioned with the blame at the slightest chance by the other side, as if there were quota to fill. The controversy revolving around the use of the term “Allah” is a case in point.

At this juncture, where venom is thrown so easily as to make the atmosphere too toxic for fruitful exchange, the air needs clearing. This can be achieved by recognizing the sources of issues and identifying proxies for what they are.

Granted, politicians and political parties — especially those in government — have disproportionate power to influence politics. There is no doubt that there are cases where the blame clearly belongs to one side.

Yet, the relationship of politicians and political parties with society is not characterized by one-way traffic. It is a two-way street. In many cases involving grander issues like race, religion, democracy or liberty, for instance, the causal flow to the other side is greater than the direction that blame-gamers typical take.

However imperfect our democracy is — condemn it as crass majoritarianism all you want — it is a democracy nonetheless. This means the views of real individuals, with real wants and real needs, along with real hope and real fear — like you and I — get represented in the system. Elected individuals in Barisan Nasional, Pakatan Rakyat and others as well, largely represent diverse opinions that exist within Malaysian society.

Even if they are not elected, individuals still have voices of their own. There is no reason to discount these voices as irrelevant when it resonates so well with other individuals.

From this perspective, these individuals are effectively proxies within the issues. To put it another way, they are mere reflections of what the society at large thinks. Without issues — the concerns lingering in our society — these proxies will not exist.

Hence, to accuse these proxies as the sources of our problems is effectively an effort to dismiss real issues that real people care for as merely artificial issues created by special interest groups. Such accusations pretend that the other side does not have real concerns.

That path will essentially result in a misdiagnosis of the problem. Based on that misdiagnosis, any solution provided to address the problem will disproportionately take the proxies into account while disproportionately discounting the issues. In the end, the intended result will likely be unsatisfactory because it will address the proxies and not the issues.

Realize that if these proxies are somehow immediately removed while the issues remain unresolved, different players will take over the proxies’ places to champion those issues. If Barisan Nasional were to be done away with, would racial issues disappear? If Pakatan Rakyat were to removed, would the demand for equality suddenly vanish?

It is naïve to answer in the affirmative.

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 January 14 2010.

Categories
Economics

[2026] Of a step forward with thousands to go

Liberalization is on the move. Yet, the move hardly deserves to be called a liberalization effort.

Notwithstanding how truly free the local economy is, the federal government led by Barisan Nasional is finally addressing the shortcomings of affirmative action as practiced in the country. The past few weeks have seen the kind of market liberalization that one cannot imagine to be even possible before 2008. The much debated equity ownership quota imposed on public companies is now finished.

It is likely that the BN federal government was forced to address the issue. More than anything else, the Najib administration is a pragmatist concerned with its survival. One cannot be deluded into believing that the administration is doing this out of conviction to the idea of liberty.

Affirmative action was one of several major contentious issues in the 2008 general election. Both its basis and implementation suffered from relentless heavy attacks during the election campaign.

The result of the last general election suggests that the attacks were successful. Those attacks eroded popular support for the policy, even among the groups that it was supposed to benefit.

That and coupled with existing market forces that are always ready to rebel against top-down approaches, liberalization seems inevitable in retrospect. The unpopular centrally planned policy based on ethno-nationalism is now indefensible in a concrete sense. The anti-affirmative action movement has done a remarkably good job at demonstrating why it is indefensible.

As a result, no longer are the weaknesses of the affirmative action an abstraction appreciated by the critical-minded and the well-read individuals only. Many among the masses are convinced that the policy is morally and economically unacceptable. So strong is the anti-affirmative action current that BN cannot support the policy, or at least in its present form, any longer if it is concerned with its chances in the next general election, which must  be held before 2013.

Individuals belonging to the tradition of classical liberalism are generally hostile to the policy. Malaysian affirmative action is a case of government intervention. The policy spreads the tentacles of the government across the landscape to limit essential freedom that individuals and firms require to maximize their welfare. It is one more constraint to adhere to, increasing the cost of doing business.

The quota-based policy worked in the past because other factors outside of Malaysia compensated for its cost. Not too many countries had a good transportation and communication system along with a sufficiently educated workforce previously, especially before the 1990s. Some others like China meanwhile were excessively hostile to the concept of private property despite the fact that right to private property is the non-negotiable basis for a prosperous society. Options for investment in an increasingly globalizing world were limited.

That is no longer true today. Factors that made others unattractive for investment purpose are largely gone. This reduces, if not eliminates, many advantages that Malaysia had over others in the past. With a more competitive environment, the policy of affirmative action stands out as one of several major structural barriers that are handicapping Malaysia vis-à-vis other economies.

For Malaysia to move forward, it is exactly the kind of structural reforms like the recent liberalization on equity that is required.

Classical liberals — libertarians — are savoring this moment after years of living through suffocating government intervention. In times when many governments all around the world are enforcing their influence in the market, it is refreshing to see the government in Malaysia retreating.

Still, one has to be mindful that the recent effort at liberalization is largely confined to restrictions traditionally associated with Bumiputra policy. The government has its hands in too many aspects not just in the market but also in the lives of private citizens.

The recent fiscal stimuli based on government spending are proof that the dream for a free market is still far in the distance.

Even as the 30 per cent Bumiputra quota is liberalized, another quota, albeit less restrictive, is set in place.

In the background, the availability of government-linked companies continues to crowd the market. These entities utilize unfair advantages that no true private businesses can have. These GLCs are monopolies. With excessive market power, it kills entrepreneurship, one of the factors that keep the free market as a system superior to any other.

Meanwhile, prices and supply control regimes are still in place to distort signals in the market in the name of welfare, discouraging the development of an adaptive culture in favor of a static one.

There are other examples that affirm the illiberalness of the Malaysian market.

Hence, there is no time to rest. The pressure for greater freedom has to be applied continually. The Najib administration is one point up but it will have to suffer more criticism.

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 July 3 2009.