M. Bakri Musa

Prime Minister Abdullah and his civil servant accountants delude themselves into believing that the government could actually “save” RM2 billion merely by reducing ministerial allowances. The only way to effectively and substantially reduce the cost of government is to first rationalize its function.

As for any savings, Abdullah would achieve considerably more by getting rid of his luxurious Airbus corporate jet. If he were to do so, the jet would become a revenue producer instead of at present, a costly expense item. He would effectively move it from the liability to the asset column.

The British Prime Minister does not have a private jet, despite leading an economy and nation considerably larger. To think that this Imam of Islam Hadhari, only a generation away from the poverty of the kampong, having such an obscenely extravagant taste, at public expense!

In the wisdom of the kampong, Abdullah, his ministers and senior officials are tak sedar ekor (lit: not aware of their tails; fig: oblivious of their greed).

Proper Role of Government

The government should focus on doing only those things that are properly within its purview, and do away with extraneous activities. This would streamline its machinery, reduce its size, and trim its costs. We would also have a more efficient government that could serve the citizens more effectively.

In this Age of the Internet, the government has no business owning a television station or news agency. Dispense with the Ministry of Information. Likewise we do not need a ministry trying to produce athletes or encourage sports. About the only champions that ministry could produce were profligate spenders of public funds, as evidenced by the ministry’s recent debacle over its training facility in London. That now-abandoned project cost the government hundreds of million of ringgit.

Then there is the Ministry of Entrepreneur Development. The pretensions of these civil servants to think that they have the competence to select or train future entrepreneurs! Get rid of that ministry and we would see a blossoming of entrepreneurial activities.

In the same vein, do Tourism Ministry officials really think that they are responsible for tourists visiting our country? The operators of Club Med and Hilton hotels do a far more credible job. They have to as the success of their businesses depends on these tourists. As for those civil servants in the Tourism Ministry, all they can think of is their next posting abroad, or when they would undertake a “promotional” trip overseas.

I have taken many vacations in Malaysia and have never found the Tourism Ministry or its many agencies useful. Canvass foreign visitors, or better yet, stay at one of Tourism Malaysia’s facilities, and you would reach the same conclusion. Abolishing the ministry would have no negative impact on the industry. On the contrary, freed from bureaucratic hassles, the industry would grow even faster.

Those impressive statistics the ministry puts out are uninformative. Millions of the “tourists” coming through Johore Baru or Padang Besar are nothing more than aunts and uncles visiting their relatives across the border.Eliminating these ministries and combining others would reduce by half the number of ministers, together with their accompanying Secretaries-General, Directors-General, and hordes of Deputies and Assistants. These savings would be instantaneous as well as cumulative. Think of the future savings in salaries, medical costs, and pension liabilities.

Bloated Public Sector

By any measure – relative to the economy, population, or labor force – the public sector in Malaysia is bloated. Being primarily a Malay institution, the impact of the civil service on the psyche, labor dynamics, and cultural values of Malays is disproportionately huge.

Young Malays are conditioned not to look beyond the civil service for employment. Our universities and colleges too are unresponsive to the demands of the private sector as most of its graduates are Malays whose career horizons rarely extend beyond government service. Perversely, the obsession with Ketuanan Melayu makes the civil service’s hold on Malays even more tenacious.

Civil servants enjoy considerable subsidies, from subsidized car loans and home mortgages to below-market rents on government quarters and paid pre-retirement vacation packages. Children of civil servants are also over represented among those admitted into our residential schools (again highly subsidized) and recipients of government scholarships. This makes ridding of the subsidy mentality among Malays that much more difficult.

To these civil servants, gyrations in interest or foreign exchange rates will not impact them. Insulated from the realities of the marketplace, it is no surprise that the policies they design and implement are similarly far detached from reality.

If we reduce the public sector, Malays would be forced to look into the marketplace. They would then have to prepare themselves adequately. That could just be the needed incentives for them to pursue relevant subject matters in schools and universities. Instead of looking forward to being a kerani (clerk) at the land office, they could instead take up auto mechanics for example, and in the process contribute more to the economy.

The public sector is nothing more than overhead, and a very expensive one at that. It does not add to the economy; on the contrary it is a burden. It is people, individually or through their enterprises, that produce the goods and services. Reducing the size of government would also discourage corruption and influence peddling. Plot the size of government (adjusted for population and economy) and incidence of corruption, and the correlation would be startling.

A large public sector inhibits the development of a vibrant private sector. The many government-linked companies (GLCs), far from stimulating new independent contractors and entrepreneurs, actively compete with and stunt their development. These GLCs have not nurtured their share of entrepreneurs. How many employees of GLCs leave to start their own enterprises?

More important is what the government does with its size and power. The Scandinavian countries all have large governments, but they use their power and resources to emancipate their citizens through providing superior education and healthcare. Mothers, for example, enjoy subsidized affordable government-run childcare centers.

In Malaysia, the government uses it size and power to snoop on citizens, making sure that they do not hold hands in public. Significant government personnel and resources are diverted to controlling what citizens read and view, all non-productive activities.

There is however, one good thing about Abdullah’s reducing his ministers’ holiday allowances. They will now know how much those fancy vacations cost. If Abdullah goes further and dispenses with his Airbus jet and uses Malaysia Airlines instead, he would experience firsthand the type of service it provides. Apart from saving the government a considerable sum of money, it would also help disabuse him of the “sultan syndrome.” Anything that would bring him closer to the real world is a good thing.

Farish A. Noor

Civil society, and the actors who occupy that public domain, exists for a number of reasons. One of those reasons is to keep politicians and political parties in check. It would appear that the work of civil society actors in Malaysia today has been cut out, thanks to the murky goings-on within and between the political parties of Malaysia on both sides of the political fence.

Hardly three months have passed since the landmark results of the 8th March Federal elections, and already we see Malaysia transformed as never before. Despite winning 79 Parliamentary seats, the UMNO party that has been in power for more than half a century is showing signs of internal division and fragmenting before our very eyes; bringing with its collapse the very real possibility of change in the mindset of millions of ordinary Malaysians who were told for so long that the sun of the Barisan Nasional would never set. Well, with BN MPs running helter-skelter in all directions at the moment, it would appear as if that claim is about to be tested in no uncertain terms.

What is worrying, however, is the fact that the Pakatan Rakyat coalition is still in its infant stages and does not have the luxury of time on its side. Should the BN government fall, and that prospect seems more likely by the day, the PR should be ready to assume office at a moment’s notice. This can only be done if and when the PR gets its act together and all its component parties agree once and for all that they will abide by the terms they had set for themselves. These include the PR manifesto and the standards of the People’s Declaration which they had all assented to.

Now the problem that faces the PR is that for too long the component parties have grown accustomed to their own version of narrow communitarian-based politics, identifying specific and exclusive racial and religious communities as their target constituencies and primary vote base. What is even more worrying is the tendency for some of the leaders of the PR component parties to continue operating on the basis of the idea that their primary political constituency has remained unchanged; thereby making the fatal assumption that the Malaysian public and the Malaysian electorate hasn’t evolved over the years. Now the last time a right-wing politician worked on such a silly assumption he did something even sillier: namely taking out a keris in public and starting to waffle about racial dominance and the special status of his ethnic-religious constituency. And see what happened: the same politician’s party was thumped at the polls and lost every single Malay-majority urban seat on the West coast, thereby proving that the Malays were no longer susceptible to this sort of juvenile antics and emotional manipulation. Padan Muka! (Fig: Serves them right!)

Looking at the Pakatan Rakyat coalition today, we sadly see rather similar tactics being used by some of its leaders, and in particular, some leaders of PAS. First came the claim that the PR in Selangor should start ‘Islamising’ the public space of Selangor and promoting faith and piety among the Muslims of the state, which begs the question: Since when did the PR become a missionary pietist movement and who said that PAS leaders of the PR in Selangor were voted to become our religious mentors and moral guardians?

Now it would appear that there have been calls by some of the leaders of the Youth Wing of PAS for the PR to start Islamising the five states whose assemblies are under the control of the PR, with Kelantan to serve as the model.

Now let us repeat this for the umpteenth time: The vote for the PR at the recent elections was not a vote for an Islamic state, or an endorsement for any kind of communitarian or sectarian politics, be it on religious or ethnic grounds. The Malaysian public – who remain the real power brokers in Malaysia today – have signalled their utter disgust and frustration with the slow pace of reform that was meant to be the starting point of the Badawi administration but which ended with pointless projects such as an Islamic theme park and crystal mosque instead.

Nor is there any indication that Malaysian Muslims have called for any form of theocratic governance, for their rejection of the state’s Islam Hadhari project may actually suggest that many of them are fed up with the politicisation of religion by this stage.

So when is PAS – or rather some of the more vocal and hot-headed leaders of PAS – going to realize that for it to become a truly national party with national ambitions, it has to adapt to the reality of a plural, multicultural and multi-religious Malaysia where there are not only differences between Muslims and non-Muslims, but also – crucially – differences among Muslims as well? Who and what gave these PAS leaders the licence to assume that all Muslims in Malaysia want an Islamic state, and more importantly their version of an Islamic state? What on earth makes them think that the rest of Malaysia wants to be like Kelantan?

Whenever any leader or any party in the PR makes demands like these, it goes against the collective spirit of the PR, narrows the universalist scope of the PR manifesto and betrays the spirit of the People’s Declaration – which, need we remind them, they all signed and agreed to. The negative consequences of such unilateralism are manifold, and can be summed up thus:

Firstly, it reinforces the BN’s claim that the PR is at best an instrumental coalition that will break apart because there will never be any real compromise and co-operation between PAS and the other parties;

Secondly, it sends shivers down the spines of many non-Muslim Malaysians who – for better or worse – have their own misgivings about the idea of any religious state (Islamic or otherwise) in what they hope to see evolve into a secular, democratic, free and equal Malaysia;

Thirdly, it also alienates Malaysian Muslims who – this writer included – also have deep misgivings about the abuse of religion for political ends and who do not want to live in an Islamic state where our personal lives, private space, and right of speech and thought on religious matters are decided by Islamist politicians from a party we are not even members of;

Fourthly, it will provide ample materiel for Malaysia-bashers who would jump at the opportunity to rubbish the PR government (if it comes to power) and to make outlandish claims that Malaysia has fallen under the heels of PAS and is about to be transformed into some Iranian-like theocracy;

Fifthly, – and perhaps this is the most dangerous consequence of all – such unilateral moves on the part of this handful of PAS leaders will pave the way for UMNO to open its doors to PAS, and to invite PAS to abandon the PR and opt for joining the BN instead, ostensibly for the sake of ensuring Malay-Muslim unity, and more importantly Malay-Muslim dominance.

Of all the worst-case scenarios to contemplate, this fifth option is the most worrisome. During the election campaign of March 2008, UMNO’s posters in Trengganu were already paving the way for a PAS crossover to the BN, with slogans like “If you want to really promote Islam, then join the BN/UMNO.” Since March there has been speculation about PAS leaders who have been in negotiations with UMNO, a fact that some of them have admitted; and talk about a PAS hop-over to UMNO/BN should the PR be successful in winning over more MPs from East Malaysia or the non-Malay component parties of the BN.

Now if this were to indeed happen, then we would be left with two political coalitions: The PR that is more pluralist but with a significantly small Malay-Muslim component, and a BN that is less pluralist but with a strong Malay-Muslim component. This may suit the needs and interests of some of the more religiously conservative and racially-minded members of the PR, but it would spell disaster for the country as Malaysia would, for all intents and purposes, be split along both racial and religious lines: the teleological conclusion to five decades of divisive racial and religious politics finally playing itself out in the fragmentation of the nation as a whole. In such a situation, the PR would indeed break apart, but the highest cost (both political and ethical) will be incurred on PAS – that would henceforth be seen and justly condemned for betraying the People’ Declaration and selling themselves to serve their own short-sighted sectarian ends.

Tuan Guru Nik Aziz Nik Mat – who knows better for he was one of those who entered the BN in the 1970s when PAS was brought into the coalition by Asri Muda – is right when he reminds the members and leaders of his own party not to fall into the trap of the BN/UMNO, and to abide by the terms and agenda of the PR. Nik Aziz remembers how PAS was sold short, betrayed and ultimately hung to dry by UMNO; and how it took the party 12 years to put itself back together before they finally regained control of Kelantan in 1990.

The ‘Young Turks’ of PAS today would do well to listen to the wise counsel of the man who is, after all, their spiritual leader and guide, for Nik Aziz knows what he is talking about on this matter. Should PAS’s leaders continue to make such unilateral demands, they will only be helping UMNO/BN weaken the collective resolve and accommodative spirit that brought the Pakatan Rakyat together in the first place, and by doing so be helping further UMNO/BN’s objective of maintaining its hegemonic grip on the country. And so for all our sakes – the Malaysian people’s and for PAS’s sake as well – do rein in these wild horses and keep the PR convoy in line. The road to a plural, democratic, inclusive and equal Malaysia is and can only be a long one, and we do not need hot-headed unilateralists to take us off track. The March 2008 elections was an election for a new Malaysia, and not a theocratic sectarian state, be it in the communitarian mould of UMNO or PAS.

Dr. Farish A. Noor is a senior fellow at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore; and Affiliated Professor at Universitas Muhamadiyah, Surakarta, Indonesia.

Dr. Farish (Badrol Hisham) Ahmad-Noor, Senior Fellow, Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Research Director for the Research Cluster ‘Transnational Religion in Contemporary Southeast Asia’, Nanyang Tech Uni, Singapore. Tel (off) 6790 6128

Chapter 9: Institutions Matter (Cont’d)

Property and Contract Rights

[Note: This installment was initially posted on June 18, 2008 but it was lost, together with the accompanying readers’ comments, when my website was disrupted. I am reposting it here.]

If we plot the pace of economic development over time, the remarkable finding would be that economic progress within the last hundred years far overshadowed all previous developments over human history. Scrutinizing the graph further, we would note the paucity of economic activities during feudal times.11

If we were to plot the pace of development across societies within the last century, we would have an equally interesting finding. Countries that adopted capitalism or market-oriented policies (Western Europe, the Anglo Saxon world, Northeast Asia) made remarkable economic progress, while others (Africa, Latin America, the Soviet empire, Arab world) remained stagnant. The graphs of this second group of countries resemble those of medieval Europe.

Capitalism involves not only the trading of goods and services between people but also freedom and democracy. People are free to pursue trade. Medieval Europe did not progress because there was very little trading among the citizens, only among the lords. When the lords were not engaged in trading, they were preoccupied with trying to get by force what the other lords had, that is engaging in wars, a destructive and economically non-productive pursuit.

There was little trading among the peasants because they had no rights to their property or labor, hence they could not exchange or barter it. Even their bodies belonged to their lords. If there were some enterprising peasants who could engage in raising crops and animals on the side when they were not serving their lords, those peasants risked losing them all to their greedy lords. A definite disincentive!

For society to progress, its citizens must be free to engage in the exchange of goods and services. The farmer must be able to exchange his excess rice for a hoe from the artisan. In this way the farmer gets to cultivate more land and produce more rice, and the artisan now has the energy to produce even more hoes and other implements. Both benefit from the exchange. Multiply such exchanges a thousand times, and you get progress on a societal scale.

Before such exchanges could take place, another condition must exist. The farmer must have confidence that the hoe rightly belongs to the artisan, and the artisan in turn must be certain that the rice is rightly the farmer’s to sell. There must be clearly delineated property rights.

The Peruvian economist Hernando De Soto in his book, The Mystery of Capital, argues that capitalism fails in the Third World precisely because there is no respect for property rights, especially by those in power.12 In the old days it was the sultans who grabbed the peasants’ prized buffaloes; today it is a ruthless dictator seizing a flourishing enterprise. Even educated leaders are not free from this feudal lord mentality. Armed with their Cambridge law degree they would expropriate land belonging to the people without proper compensation under the precept of “eminent domain” or some other arcane legal doctrine, as happened in Singapore to land belonging to the Malay minority. Regardless of mechanism, the results are the same: the trampling of property rights.

We can appreciate property rights when they apply to tangible assets like land and property. Before you buy a piece of land you must be sure that the owner really owns it, and that after paying, the land would then belong to you. There must be reliable institutions to record these transactions to prevent that land from being simultaneously bought and sold by different parties. There would be unending chaos were that to happen. Resources would be consumed untangling the mess instead of devoting to economic activities.

Malaysia’s land office, the agency responsible for recording titles, is a mess. The process of transferring title that would take a few days in California would consume months if not years in Malaysia. There have been cases where the transfers were never recorded, giving rise to unending conflicts.

Property rights extend beyond tangible assets. If I were to discover a new way to plant rice efficiently, I should reap the gains of my discovery. Others who wish to benefit from it should compensate or at least share with me their added bounty. This is not only fair but would also encourage others to partake in new discoveries. If others simply sponge off on my discovery without compensating me, the damage would be as if they had stolen my property.

In the Third World there is rampant stealing of intellectual property. When Sheila Majid records her beautiful songs, and others freely bootleg them, they too are stealing from her.

Intellectual property rights and patent laws are especially important in the K-economy. On one hand are the concerns of innovators and creative talent that their contributions be adequately rewarded; on the other are the scientists and intellectuals who fear that too rigid enforcements would stifle innovation and research. New knowledge and technical innovations do not arise out of the blue; they are incremental, building upon existing knowledge, products and processes. Too restrictive a protection of intellectual rights would inhibit the diffusion and creation of new knowledge, and thus progress. The challenge is in striking a balance.

Property rights should also extend to the rights we have over the fruits of our own labor. Slavery and indentured labor represent the ultimate loss of these rights, and those practices are rightly condemned in civilized societies.

One would think that if we use slaves—free labor—costs would be lowered and profits correspondingly increased. Not so! China seems determined to resurrect the economics of slavery by using forced prison labor. Thus far none of the Chinese enterprises are world leaders either in quality or price. Companies like Microsoft and IBM that pay their workers handsomely produce premium products.

There is another economic aspect to paying workers well. Henry Ford intuitively knew this when he set about to lower the prices of his cars and simultaneously raise the pay of his workers so they could be among his best customers.

One aspect of property rights often overlooked is what ecologist Garrett Hardins termed the “tragedy of the commons.”13 He used the example of the free grazing of cattle on public land, a common practice in western United States. If every rancher were to think only of maximizing his own profit, he or she would simply increase the number of cows. That would not involve much additional cost, as the land is communally owned. However, if every rancher were to do likewise, soon the whole land would be overgrazed to the point of ecological disaster. Everyone would then lose—hence the tragedy of the commons. As the land belonged to everyone (publicly owned), it did not belong to anyone, and no one took responsibility caring for it.

The fallacy of socialism is exactly this. With the state owning everything, no one bothers to take care of anything. If something does not belong to you, you do not have the sense of pride of ownership, and behave accordingly. This is encapsulated in the pithy wisdom that no one ever washes a rented car. The wisdom of capitalism is this recognition of private property.

I recently visited a senior civil servant living in one of the old-style palatial government bungalows in a secluded area of Kuala Lumpur. He had been there for decades, yet in all that time he did not plant a single flower, fruit tree, or in any way tried to enhance the landscaping. The reason? The property was not his, even though he would get to enjoy the fruits of his labor. As for cutting the lawn, he depended on the Public Works Department even if that meant enduring overgrown weeds!

That civil servant’s behavior is no different from the tenant dwellers of the Council flats of Liverpool or public housing projects of Southside Chicago. They have no pride of ownership. Margaret Thatcher tried to eradicate this destructive mentality with her policy of selling those units to their dwellers, that is, encouraging private property ownership.

Related to and an integral part of property rights are contract rights, the freedom of individuals to enter into a contract with one another.14 This does not mean anyone can enter into any contract with anyone to do anything. There are issues of ethics, religious norms, and public good to observe. The freedom to enter into a contractual agreement with my fellow citizen does not extend to allowing my selling my kidney to him. It is for society, and thus the political institutions, to set such limits. In India such contracts are apparently quite legitimate.

Regardless, when people trade goods and services, such exchanges are often transacted over days if not months or years. There is the element of promise and trust. A homeowner may enter into contract with a builder over constructing a new house. The contract may specify terms and conditions that have to be executed by each party. If there is no mechanism to enforce and honor such contracts, there will be chaos. No meaningful trade could take place under such circumstances. Even under the best of conditions, disagreements do arise; hence the importance of having a fair, honest and inexpensive system to resolve them.

The K-economy, with its global and instantaneous connectivity, have changed the dynamics of intellectual property rights and put a new twist to the tragedy of the commons. ICT has transformed markets with the democratization and decentralization of information. In the medieval era, information was the exclusive preserve of the clergy; that was also the way the clergy effectively controlled the flock. The printing press upended all that. With the masses now literate and reading materials readily available, the controls wielded by the clergy soon gave way. That did more to end feudalism and brought in democracy and capitalism.

Capitalism’s success brings its own problems. With news and information now increasingly controlled by big media corporations, we are reverting to medieval times with corporate chieftains replacing the clergy. Their stranglehold seems unassailable, as the economic barriers for new players are prohibitive. While it would take only a few thousand dollars to start a newspaper a hundred years ago, today that figure would be in the hundreds of millions.

The good news is that ICT, specifically the Internet, is again upending the status quo. Today I am reaching more readers through my website and other Internet outlets like Malaysiakini and Malaysia-Today than when I was writing for the mainstream papers.

ICT is challenging traditional economics and business models with its decentralization, diffusion (thus lack of control), open platform, and open-source software. Linux, started by volunteers spontaneously collaborating via the Internet, is fast challenging Microsoft Explorer. Google is offering its most important and most widely used product, its search engine, for free. Wikipedia, again free with its contents contributed voluntarily by millions worldwide, is more widely used than the venerable Encyclopedia Britannica. And the latter is a subscription service! Wikipedia is as reliable as the Britannica at least with respect to its science entries, according to the journal, Nature.15

Whether such successes would herald a new way of doing business to challenge or even complement the traditional capitalist model remains to be seen.16

Next: Judicial System

Dear Readers:

I am pleased to inform readers that my website is now back and running after some unexpected interruptions for the past few days.  I could not retrieve only the last few postings, which I will re-post in the next few days.

M. Bakri Musa