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The 9MP – Lessons unlearnt?
Speech (5) on the Ninth Malaysia Plan
It is fiscally irresponsible and marks an abandonment of prudent fiscal policies and the adoption of deficit financing as a central tool to pursue more mega projects. Social engineering, a theme of Malaysian Five Year Development Plans since 1971, is to be pursued via greater regulation and state interventions which will hobble the ability of the private sector to play its role as the engine of growth. The Plan, which set unrealistic targets, with draconian tools and controls at its command, aided and abetted by a compliant media and a silenced citizenry, may be heading for disaster.
The Plan's only visible purpose is to lay out a program of spending some RM 220 billion over the next five years. The only actual "strategy" that can be deduced from it is that the administration wishes to continue doing what it has but with a greater vengeance – purportedly to enable Malaysia to achieve developed nation status by 2020.
Vision 2020 of a fully developed nation is not achievable by mere proclamations and the many assertions lavishly contained in the Plan. They only raise serious questions whether the government is prepared to address the real issues and concerns confronting the country and the economy. If answers are not forthcoming, serious observers and thinking Malaysians will come to the conclusion that past ruinous policies will continue and the main beneficiaries will be the well-connected, the cronies, and the chosen few who will receive lucrative contracts, licenses to collect rents while corruption will be fed with new grease to move along unabated. The poor, the vulnerable and disadvantaged segments of the Malaysian population will continue to bear burdens. Good governance and transparency will remain distant rainbows.
The very size of the Plan is staggering. It translates into spending millions upon millions per person over a five year period. The fuzzy maths employed to describe financing of the Plan raises many disturbing questions.
Malaysia is more integrated into the global economy than many other countries of a similar size and at a comparable stage of development. Globalization is a fact of life. It has contributed both positively and negatively to Malaysian development.
On the upside, integration with the global economy permitted the nation to prosper through trade and flows of FDI in the years prior to the East Asian Crisis of 1997. There was rapid economic growth, rising income levels, declining poverty and unemployment and a somewhat more egalitarian distribution of wealth. A contributing factor was the fact that Malaysia was blessed with a rich resource base - its forests, oil and gas.
It had reasonably well-functioning institutions in the form of an established public service, a modestly independent judiciary and institutions that measured well against those in other developing countries. The nation progressed despite creeping corruption, growing polarization, authoritarianism and a general deterioration in the delivery of public services. The early 1990s saw a degree of deregulation and the privatization that gave momentum to modest reforms.
The 1997 crisis represented a rude awakening. Absence of accountability, transparency and the growing cronyism, nepotism and the megalomaniac obsession with mega projects contributed to the creation of conditions that left Malaysia vulnerable to external forces. Capital flows that had sustained Malaysian growth reversed; the currency plummeted; the banking system was near collapse because of the portfolio of bad loans; confidence in the ability of the Government fell. The markets recognized these flaws and punished Malaysia.
Compounding these factors was the adoption of authoritarian measures to silence dissent. The show trials of Anwar Ibrahim resulted in the major loss of confidence, both globally and domestically. The abuse of human rights and the destruction of judicial independence earned Malaysia the odium of the global community, to the extent that the Government had to resort to getting the private sector to bribe unscrupulous lobbyists in Washington DC to “buy” an entry ticket for the Prime Minister to visit the White House in an attempt to gain respectability. To boot, payments were made to third rate columnists to write op-ed pieces to create a synthetic image for Malaysia.
Malaysia survived and partially recovered from the East Asian crisis. Much of this was at a heavy cost. That cost included the adoption of an exchange rate that carried the seeds for the loss of competitiveness and the eventual importation of inflation to Malaysian shores. It included massive bail outs, a resort to unsustainable fiscal deficits, a growing debt burden for future generations to bear, and the diversion of resources away from the provision of public services and the effort to reduce poverty to feather the nests of a band of robber barons.
To the extent that economic growth returned, credit must be given to the favorable trading environment. Yet the favorable circumstances were dissipated: Malaysia lost competitiveness over the past decade; FDI flows were reduced to a trickle; the stock market has under-performed virtually every other stock exchange in the region.
This then was the poisoned chalice that Datuk Seri Abdullah Badawi inherited when he took office in 2003 as the fifth Prime Minister.
Much was expected from the new administration. The electorate gave an unprecedented mandate for change. Promises of far-reaching reforms were made but they remain promises, unfulfilled. Little has been done to address the growing cancer of corruption. Law and order has deteriorated whilst an insurbordinate Inspector-General of Police is threatening revolt against parliamentary democracy and civilian oversight and authority over the police. An unreformed civil service. The space for debate and consensus-building has shrunk further; the mass media have come under greater control than ever before through the threat of closure and the concentration of ownership of newspapers and the broadcast media. The quality of public services has declined. Accountability and transparency remain as elusive as ever. Our institutions of higher education are in total disarray. Scandal upon scandal has unfolded. Policy drift has replaced dynamism. Despair of change has overtaken hope for progress through a shift in policies. Malaysian democracy with 92 per cent parliamentary dominance by Barisan Nasional runs the risk of being exposed as a sham democracy.
We have seen reverse privatization and the creation of GLCs that are not accountable. Their performance in terms of rates of return is dismal. We do not need to look far for examples of the malaise. Witness the dire straits Malaysia Airlines faces characterized by a bloated work force and shady contracts that suck out resources. TENAGA, despite subsidies, reports low returns on capital and seeks a rise in tariffs. PROTON remains uncompetitive and has survived by living on subsidies. PETRONAS uses the fruits of the national patrimony in unaccountable ways. The list is endless.
Malaysia is today a more polarized society than ever before, if the findings of the recent opinion survey are to be believed. To be where we are, after almost fifty years of nation building, is a stark acknowledgement of failure of governance and policies. This failure presents the single greatest threat to the nation's fabric. It goes to the heart of the issue of national unity and its role as the cornerstone and foundation for ensuring stability, prosperity, and progress.
There are other challenges which cannot be swept away. I would like to single out:
· Growing inflation attributable to flawed policies
· Unsustainable fiscal policies linked to a grossly inflated and inefficient public sector
· Over regulation and intrusion of the Government into matters best left to the private sector and individuals
· Persistent poverty and growing income inequality
It has been customary for Five Year Plans to incorporate new policies and directions to guide the country in its long term aspirations. In the Malaysian context those aspirations are embodied in Vision 2020. Previous Plans have followed a predictable pattern. They took stock, elaborated new policies and adjustments to on-going policies, and laid out development expenditure proposals to support policies. There was an intellectual rigor supported by analysis.
The spin-masters and the compliant media have in recent months built up high expectations that the Ninth Malaysia Five Year Plan would take on these compelling challenges boldly. The nation was led to believe that new policies and approaches would be unveiled. The Ninth Five Year Plan unveiled in this House falls far short of the great and high expectations and is a deep disappointment.
Parliamentary Opposition Leader, MP for Ipoh Timur & DAP
Central Policy and Strategic Planning Commission
Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman