Tag: The Malaysian Insider

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 Society

[2446] Homeownership isn’t the only way

It is not a crime to dream of a place to call one’s own. It is hard to beat having a roof none can take away in the worst of times. If anything happens, at least there is a home to run to. It is a comforting feeling to have a haven. That is the sort of sentiment fuelling the dream of homeownership. So pervasive is the thought that the inability to own one is seen as a problem by many.

Across the Pacific Ocean, the American Dream is invariably linked to having a good home. With a government subscribed to the Dream, measures were taken to encourage homeownership. As the housing market crashed partly due to the pro-homeownership policy, the Dream grew distant to create a pessimistic American worldview.

Across the straits, the Singapore government built high-rise flats all over the island, partly to encourage homeownership. The product of that encouragement is a contemporary culture. These flats are ubiquitous enough to form part of the Singaporean consciousness. The Complaints Choir of Singapore sings: ”I’m stuck with my parents till I’m 35, ”˜cause I can’t apply for HDB.” Failure to own a home is a source of shame.

It is no different in Malaysia. Homeownership occupies the collective mind. The high prices of ordinary homes stand as a barrier. That barrier is stirring up discontent among the middle class and down.

The Malaysian government knows this and it has introduced various incentives to make homeownership a cheaper endeavor for Malaysians.

For the longest time, the government has relied on low-cost housing projects to encourage homeownership. Despite the name, the term low-cost can be a misnomer. What is cheap for the financially well-off Malaysians may not be cheap for the impoverished. The whole enterprise can add too much financial burden to would-be owners, pulling them down into a deep unsustainable debt hole.

That concern does not stop the Najib administration from expanding its pro-homeownership policy by introducing the 1 Malaysia Housing Program. Proponents of the program tout the initiative as an affordable home program. Just as the term low-cost can be misleading, so too can the term affordable.

In the eagerness to translate private dream into reality through very public means, not many have asked, is there a better option to homeownership?

Popular opinion immediately accepts homeownership as the only respectable option.

The debates on homeownership ignore other housing options altogether.

For one, renting can be a superior option to ownership. That can be so when rental cost can be much cheaper than mortgage payment, when mortgage payment eats too much of current income and when the financial market is sophisticated enough to handle the substantial saving arising from the difference between the mortgage and the rental rate. The saving can present a whole lot of possibilities that homeownership cannot. There is virtue in flexibility and whatever virtue homeownership has, flexibility is not one of them.

Perhaps more substantially, one has to realize the importance of having decent home. If a decent home means homeownership, so be it. The relationship can be true but it is not necessarily true. Neither does homeownership absolutely mean decent home.

Pro-homeownership sentiment ignores this complexity and instead falsely assumes homeownership stands above having a decent home or that homeownership is about having a decent home.

Despite an alternative that focuses on having a decent home instead of homeownership, many individuals and the government continue to believe in the virtue of homeownership without question. The former complains about the affordability of homeownership and the latter, indulging the former, refuses to believe and to adapt to a new reality.

Ownership must have made sense in the past but just as time changes, so too can the justification for homeownership. It could very well be that individual and societal preferences, formed after years when the financial logic actually made sense, lag behind the market. When expectation lags behind market and with the government supporting the indulgence, something bad is bound to happen.

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 24 2011.

Categories
Economics Politics & government

[2442] Hypocrisy hampers deficit reduction agenda

If one throws a dart randomly at those pieces of paper pinned on the wall, there is a good chance the dart will land on a handout provision. Those papers are the 2012 Budget.

The Budget, as tabled by the Najib administration, is an election budget. Civil servants, teachers, the police force, the armed forces, pensioners and others will get their share regardless of justifiability.

Meanwhile, the subsidy liberalization program that the Najib administration was so gung-ho about earlier has taken a back seat, half-baked and emitting a stench called hypocrisy. Idris Jala, a man who unproductively exaggerated that Malaysia would go bankrupt if the government expenditure continued to rise, now praises the Budget of goodies.

Such is the loyalty of some men to ideas and principles. The wind blows and the mind changes. There is no principle to stick to because only political convenience matters. Never mind the contradiction and hypocrisy. Voters have a short memory span. Give them money and they will go gaga. It is all about winning elections, not honesty and consistency.

The financial position of the federal government could be in a better shape if the administration had the necessary honesty and consistency instead of bending backwards to accommodate the populism monster.

Without the monster, the fiscal deficit for year 2012 — the Najib administration projects to be 4.7% of nominal gross domestic product (or RM33.8 billion in absolute terms) — could be lowered considerably. It could possibly go down as far as 3.7% of nominal GDP if all the subsidies, one-time cash transfers and other election-related handouts are flushed down the drain.

Admittedly, the drastic reduction will be a shock to the system that none might want to experience amid the present global economic uncertainty.

Yet, in times of uncertainty, it is only prudent to save for rainy days even within political needs. This is doubly true given that regardless what has been said and done about the importance of domestic demand, external demand is still wildly important to the domestic economy.

A number of analysts have already voiced out that the government’s revenue figures are too optimistic for a pessimistic world. That is all the more reason for observers to be conservative with the federal government’s finance.

The fiscal deficit can be brought down still lower even with political considerations in mind. Removing the RM3,000 one-off gift to 4,300 individuals, another RM500 one-off transfer to an expected 3.4 million persons and the KAR1SMA program that will cost RM1.2 billion off the Budget while keeping the bloated subsidy regime intact, the deficit for the year 2012 could stand at 4.4% out of nominal GDP instead of the higher projected 4.7%.

One could argue that these programs are welfare enhancing, hence they deserve to be written into the 2012 Budget. In order to forward that argument however, one has to believe in it first. Honesty is required.

Unfortunately, many of those within the government whom now say these are caring measures are exactly those whom accused these same measures of being irresponsibly populist. This suggests one thing. Their only moral compass involves one question: where did the idea come from?

If it is from across the aisle, it is destructively populist. If it comes from their side, the same measures are caring.

That is not a sincere moral system, for the currency is political convenience. The slogan is ”win the election and forget anything else.”

If honesty were of any value, these programs — regardless of whether they are labeled populist or caring — should have given way to a deficit reduction agenda. With honesty and consistency, the federal government would have a smaller deficit, so that there would be less taxation for all of us in the future.

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 10 2011.

Categories
Liberty Society

[2439] When it comes, they will run

The return of Hong Kong to the People’s Republic of China was imminent. After years of a hands-free approach taken by the colonial government, the citizens of Hong Kong were used to a liberal atmosphere. The prospect of a continuous liberal environment after the 1997 handover was unclear however. The uncertainty convinced many to fear the worst. Rather than suffer the uncertainty, they took action and sought refuge elsewhere. They applied for permanent residency and citizenship in other countries to escape the possibility of living in an oppressive society. The PRC, regardless of what it is now with all of its contradictions, was perceived as a repressive and decidedly communist country. The 1989 Tiananmen Square incident was still fresh in everybody’s minds.

Money is not always the only consideration in any decision regarding migration. There are other factors that are not necessarily less important than money. Security is one. Love is two. Freedom has often been cited as a factor. A way of life is another.

The implementation of hudud or the adoption of more comprehensive Islamic laws will affect the way of life in Malaysia.

Proponents of hudud argue that the implementation of such laws will be applicable to Muslims only. They guarantee it.

Neither their argument nor their guarantee are good.

The argument of exclusive application is unlikely to be true. Previous conflicts from child custody to death and burial have proven that even the milder version of Islamic laws as practised in Malaysia impacts non-Muslims. These proponents might have forgotten these episodes. They must be reminded of it because these conflicts do create a fear of creeping Islamization in the hearts of non-Muslims as well as others who care for religious freedom.

These past conflicts can tell us what to expect in the future.

The likelier outcome of the wider implementation of Islamic laws is this: whatever affecting the majority will likely affect the minority. A more comprehensive version will not leave non-Muslims alone, even if the legal rights are discriminated among citizens so strongly.

It is naïve to believe such an incredible guarantee.

The minority will float along with the majority, whether they like it or not, for better or for worse. The wider implementation of Islamic laws will be a change in lifestyle for everybody. It will first affect the lifestyle of Muslims, regardless of their piety. The group will become more conservative, voluntarily or otherwise.

Then through the interaction between Muslims and non-Muslims, the lifestyle of the latter will be affected. The rest will have to respect the new conservativeness.

In the end, whatever is the way of life that prevails will change. Whatever openness and liberalness within the society that exists will gradually vanish to satisfy rising conservativeness. Whatever lifestyle that was will have to give way to the Islamic one, however those in power define the Islamic laws. The outlook of Malaysian society itself will change. None will escape such a wholesome change unless they leave.

There is a point where the religious and non-religious minorities along with Muslims who hold more relaxed religious positions will choose migration over further tolerance of growing Islamization within their society. The potential lifestyle change can be too drastic to stomach. There is a point where enough is enough.

If it comes, there will be those who will walk off to a more open society permanently. They have the means to do so, just like many former citizens of Hong Kong.

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 6 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.