SEEING IT MY WAY
M. Bakri Musa
Malaysiakini.com May 13, 2005

(Co-written with Din Merican*)

Editorial lead: Prime Minister Abdullah Badawi recently conceded that there are shortcomings in his leadership. But humility is not going to win over those critics who want to see action.

Prime Minister’s Abdullah Badawi’s recent “admission” speech to the local Harvard Club bore all the hallmarks of his spinmeisters, right down to the tone, style and language. In the speech Abdullah acknowledged his poor performance. Admitting is one thing, action is another.

The Prime Minister may dismiss his critics as cynics unable to appreciate the subtleties and complexities of Malaysia’s problems, but that would not in any way improve his performance. He can win them over only by executing and producing. Otherwise Abdullah has more than his critics to worry about; his own party will throw him out.

The Prime Minister chose as his theme, “The Challenges of a Nation Growing Up.” It would have been more appropriate had he reflected on his own lack of “growing up” as a leader.
Abdullah attributed the lack of results to malaise and inertia. We might add, on whose part? He has all the power of his office to make things happen. To achieve that he must lead and provide national direction. Instead, what we have for the last 18 months are knee-jerk responses and scatter gun approaches to policy making, peppered with his endless sermonizing. When he should be focusing on the economy, he becomes addicted to and distracted by Islam Hadhari.

Ending Deficits and Subsides Not Enough

Abdullah’s economic polices are nothing more than a rehash of the standard IMF prescription of slashing deficits and cutting subsidies. During the recent Asian economic crisis, this IMF remedy proved a disaster for Indonesia. In contrast Malaysia, in pursuing a diametrically opposite policy, fared much better.

In principle we agree with eliminating deficits and subsidies, we argue over the manner and timing. More importantly, we have to address what brought those deficits and subsidies in the first place, for unless those issues are resolved they will continue to burden the nation.
Abdullah must confront the core problems of the economy: structural distortions and supply and distribution bottlenecks (as exemplified by the diesel fiasco). Compounding them are corruptions and preferential policies. Additionally, the currency peg, once a savior, is now fast becoming a liability unless it is reviewed, and soon.

While we do not subscribe to the Reaganomics assumption of “deficits don’t matter,” more important than the size of the deficit is what it is being used for. If it were for operating expenses (increased salaries for politicians and bonuses for civil servants) or overhead (renovating the prime minister’s residence or carving out a new Brasilia in the Malaysian jungle) then any deficit no matter how small would be a drag on the economy.

On the other hand if the deficits were used to build much needed infrastructures (ports, airports and railroads) or to enhance productive capacities (improving schools and universities), incurring large deficits would be prudent economic management.

It is for this reason that we disagree with the cancellation of the double railroad project. It is a much needed infrastructure; it would enhance the capability of the Johor Port. Our argument is with the bloated costs. There was no open competitive bidding; it was done through the usual “negotiated” process with pre-selected vendors. To get the best price we must open it to all bidders, including foreigners.

Abdullah characterized his reducing the deficit as the most difficult task he had to do. He would have learned the wrong lesson if he were to focus solely on this.
Malaysia is fortunate in that its high domestic savings could finance the deficits. The challenge is not to squander them on showpiece projects. Prudently done such public spending also help boosts the economy. Pump priming is not a substitute for or an alternative to private sector led growth; it is a counter-cyclical measure to restore confidence.

Pump priming does not mean simply pouring money on a problem. The debacle over the schools’ computer lab projects failed miserably because policy makers confused their primary objective, that of providing amenities for our students and not jobs for inept and politically-connected Bumiputra contractors.

Ending Deficits and Public Debt

We did some simple arithmetic. We added all the costs of unneeded and ostentatious mega projects (Putrajaya, Twin Towers) with the various bailouts (Bank Bumiputra, MAS, Perwaja). The total easily exceeded the cumulative deficits for the last few years. Meaning, had Malaysia not wasted those precious funds it would have a surplus.

So much for the “difficulty” of deficit reduction!

Were Abdullah to go further and sell off the government’s stake in the various GLCs, he would be able to wipe off the entire public debt and have plenty left over to improve our declining schools and universities as well as build new ones. The government has no business being in business.

Transparency and Openness: Only Talk

So far Abdullah’s talk of openness and transparency remains just that – talk. Some projects may be “open” but only to Bumiputras, and only selected ones at that!
As for transparency, consider the definite lack of enthusiasm for releasing the Royal Commission on the Police Report.

As for inculcating First World mentality into Malaysians, this is the same leader who recently banned books by, among others, Karen Armstrong. Looks like Abdullah needs to drag himself first into the First World. His smart young advisors obviously learned nothing from having spent time at such august institutions as Oxford. We doubt very much that the distinguished audience of the Harvard Club posed any of these questions.

If we were not enamored with Abdullah’s deficit reduction, his strategies for ending subsides are no better. Malaysia is already burdened with imported inflation from the ringgit’s peg to the weakening dollar. Eliminating subsidies at this juncture especially if done suddenly and without much thought will aggravate inflationary pressures. It will also be socially and economically disruptive. Resorting to price controls is not the answer either, especially in a period of rising inflationary expectations. America learned this in the 1970s.

Consider the diesel subsidy. It does not make sense to end the subsidy and yet control what the poor taxi drivers could charge. The social and economic injustice just reeks. With the current corrupt system, the subsidized diesel meant for taxi drivers and fishermen are diverted to the factories.

In his speech the Prime Minister blasted local corporate chieftains for their “addiction” to subsidies, cheap foreign labor, and rent seeking behaviors. Meanwhile his minister is bringing in 100,000 unskilled Pakistanis. As for rent seeking behaviors, he is obviously ignorant of where the money in UMNO’s “money politics” comes from.

If those corporate leaders were addicted, then Abdullah is their dealer, or to use the polite social terminology, the enabler.

As expected, Prime Minster Abdullah’s “admission” is widely praised in the mainstream media, with some trumpeting it as a reflection of his general humility. To them, our Prime Minister can do no wrong, that is, until he is out of office. To us, humility is an overrated trait especially in a leader. We prefer competence.

Abdullah’s supporters, undoubtedly well meaning, are doing themselves, the Prime Minister, and the nation a great disservice in blindly praising him. Sooner or later, when you see that the emperor has no clothes, it spares everyone the general embarrassment if someone were simply to expose the naked truth. If you do not have the courage to do that, then at the very least give him your best attire.

(Din Merican (dmerican@yahoo.com) is a Senior Research fellow, Phnom Penh-based Cambodian Institute for Cooperation and Peace. This commentary reflects his personal views.)

SEEING IT MY WAY
M. Bakri Musa
Malaysiakini.com (May 4, 2005)

Get Rid of the 3-D Jobs

Editorial lead: Jobs considered degrading a generation ago have disappeared due to technological advances. Malaysia should be eliminating jobs considered as demeaning instead of bringing in foregners.

The government’s rationale for the massive influx of foreign workers is that Malaysians shun those “dirty, dangerous and demeaning” jobs. A smarter, and in the long run cheaper, solution would be to make those jobs less dirty, less dangerous, and less demeaning. Better yet, get rid of them.
If Malaysia were to admit foreigners, I would prefer that they be the highly skilled, educated and talented. They would then add to the quality of our human capital and economy. Those illiterate maids and unskilled laborers do nothing more than to make Malaysians feel superior. Having Indonesian maids is a way for non-Malays in particular to vicariously compensate for their perceived inferior treatment from the Malay officialdom.
These low-skill foreigners do not enhance our talent capital; they also do not improve the gene pool when they marry locals.
Cheap labor never confers meaningful or long term competitive advantage. Labor is only a small portion of the total cost of any enterprise. Even in a labor intensive industry like healthcare where labor cost is significant, only a very small fraction of that is for low skill jobs, the rest are for highly paid technologists, nurses and physicians. Besides, there will always be someone somewhere who can offer his or her services cheaper. China is using prison labor for free; try competing against that!
Malaysia has to climb up the value chain in labor, that is, make its workers more skillful and productive in order to deserve premium pay. Failure to do that would destine the nation to a permanent third rate status economically.
The ready pool of cheap foreign labor provides little incentive for Malaysian companies to innovate and be more productive. Rubber is tapped and palm nuts harvested in exactly the same labor-intensive way as it was a hundred years ago.

Barisan Government Behaving like the Colonialists

Early in the last century the British colonialists too brought in massive numbers of illiterate immigrants from China and India to man the imperial tin mines and rubber estates. The excuse then was that the natives did not want those jobs, or were just too lazy.
The consequence of that short term economic expedience was to burden the country with an intractable and dangerous race problem. It took over a century and many bloody skirmishes before Malaysians came to terms with the reality of today’s plurality. Some have yet to accept it.
It was the Malays, not surprisingly, who vehemently opposed the earlier British move. Ironically today an essentially Malay government is aggressively bringing in more foreign workers. In this regard the UMNO ministers are no different from those colonial secretaries! Economic imperatives have a way of making people think and behave in the same way regardless of culture and race.
Still the same question remains: What future burden will this new wave of foreigners impose on the nation?

Eliminating the 3-Ds Jobs

Eliminating those “3-Ds” jobs is not impossible. A generation ago the most degrading job was disposing “night soil.” It was a familiar sight then to see those coolies with pails hanging from a pole strung across their shoulders going from house to house emptying the latrines. It was dirty and dangerous work; they were exposed to many lethal diseases. Today those jobs have long disappeared, thanks to indoor plumbing, septic tank, and central sewage plant.
We still have sanitary engineers; they are highly trained and their salaries are anything but demeaning. They are responsible for the efficient running of sewer treatment plants, the hallmark of any modern city. Urban centers in the Third World are public health death traps precisely because they lack such essential facilities. Kota Baru for example, is plagued with endemic outbreaks of typhoid and hepatitis.
Then there are the maids, or “servants” to Malaysians. The Australians and Americans have considerably much higher income, yet they feel no compulsion to have maids. The reason is obvious. Their homes are well equipped with the necessary labor-saving appliances.
As for cooking, I can whip up a mean curry chicken to rival what my mother used to cook in a fraction of the time because all the ingredients are ready made. I do not have to slaughter and clean the bird, nor do I have to pound the curry and chili. Having a maid would simply erode my precious privacy.
In America when our children were young and with both my wife and I working, we too had a housekeeper. But we paid her well, including contributing to the equivalent of her Employees Provident Fund. More significantly, her son entered the same university as our daughter’s. How many Malaysian maids would aspire to have their children go to college?
Many of the American nannies are certified in cardiopulmonary resuscitation and well-baby care. In short, there is nothing demeaning to being a maid in America.
Many of the dangerous jobs in construction can be made less dangerous by enforcing existing safety rules. Visit any construction site in Malaysia and we see workers without safety helmets, goggles or harnesses. With the use of conveyor belts, lifters and earth moving equipment many of these jobs could be made redundant. Mechanization of tin mining eliminated the need for thousands of coolies; likewise in agriculture. Today one American farmer feeds a hundred people compared to only a few a century ago.
I see no need to have immigrants man petrol service stations. In America the petrol stations are automated, and you pay with credit cards as you would at an ATM machine. It is not beneath even the owners of a Rolls Royce to pump their own gas.
Yes, there are many jobs in the service sector like the hospitality industry that cannot be mechanized. The solution there would be to increase the wages to make them attractive to locals. I do not mind paying more for my teh tarik and have it not served by a sweaty Bangladeshi attired in a ragged T-shirt.

High Employment Tax for Low-Skill Foreigners

To discourage the import of low-skill workers, I would impose a heavy surtax to the tune of a few hundred ringgit per month per worker. This would cover the cost of the workers’ healthcare and other related future social expenses.
There is at present a hidden cost to importing these workers in the form of permits. These are restricted in numbers and doled out only to political cronies, providing yet another avenue for corruption. The system encourages the import of workers.
These low-skill workers add only minimally to the economy, yet they impose a substantial burden and in unknown ways on our social system. Whether they are fellow Muslim Indonesians or non-Muslim Vietnamese, there are substantial problems in integrating them. The dislocations are expressed in such indices as increased crime rates. We ignore such early subtle signals at our own peril.
Malaysia must impose stricter rules on employing foreigners, especially those with low skills. Before American companies can legally employ a foreign worker, they must prove that they have been unsuccessful in getting local residents to take the job despite a substantially higher pay.
It is insane for Malaysia to bring in foreigners when there are literally thousands of our youths who are unemployed. Putting a hefty price tag to importing workers would make Malaysian companies invest in the training local youths to be future workers. This would benefit the citizens, the companies, and ultimately, the nation.

SEEING IT MY WAY

M. Bakri Musa

April 19, 2005

PM’s Learning Curve is Flat

(Co-written with Din Merican)

We are truly humbled by your thoughtful responses to our recent essay, Mahathir: A Resource, Not a Burden, which appeared in Malaysiakini on March 30th. Thank you very much for taking your time to comment on it. We decided that the best way for us to respond would be through this composite reply that addresses the pertinent issues you raised. To protect your privacy, we are e-mailing this to you via BCC (Below Carbon Copy).

Despite the title, the focus of our essay was not on Tun Mahathir, rather on the leadership of Prime Minister Abdullah Badawi (AAB). Mahathir was prime minister for over 23 years; he had his day. Nor was it our intent to romanticize Mahathir’s achievements. We are on record as being among his severest critics. Rather, the advice of a man of his wide experience, talent and accomplishments should be actively sought. We do not suggest that AAB follow blindly on that advice; instead it should be critically evaluated. If nothing else, seeking Mahathir’s advice would hopefully ensure that AAB would not repeat his predecessor’s mistakes!

Many of Mahathir’s policies that ABB now criticizes through his surrogates were also AAB’s policies as he was in on them. AAB still retains all of Mahathir’s key personnel. If AAB were truly committed to a brave new path, he should begin by getting new key players.

Many defended AAB, suggesting instead that the blame should go to his ministers, subordinates, and the civil servants. That is simply an excuse, and a very lame one at that. AAB is the man in charge; the Malaysian public gave him an overwhelming mandate in the 2004 General Elections. He has power over the permanent establishment. If he does not exercise that, he is not maximizing his political capital to effect the much needed changes in the Cabinet and Civil Service that he sought.

Improve Civil Service

We agree wholeheartedly on the general incompetence of the civil service. That it is essentially a Malay institution has led many, especially non-Malays, to conclude that the civil service is a reflection on the capability of the Malay community generally. This is what ticks us off. Many Malays too share our outrage at this unfair characterization. The civil service today does not attract the best Malaysians, Malays or non-Malays. Bright young Malays simply do not consider the civil service as their first option. Khairy Jamaluddin, AAB’s son-in-law, is a good example.

The late Tun Razak too, lamented on the inadequacies of the civil service. Unlike AAB however, he did something to rectify it. He recognized that there was no point in simply denigrating the civil service in public or in private, as that would simply lower their morale even more. Instead the Tun did two things. One, he commissioned an American consultant through the Ford Foundation to study our civil service and to recommend ways on improving it.

Two, and more importantly, he bypassed the service. His creating the various crown corporations like Pernas, Petronas and UDA was simply to circumvent the inertia of the bureaucracy, especially those at Treasury. When you consider that the Treasury has the best of the civil service, you can imagine the caliber of the civil servants and the quality of their work at such departments as the land office and immigration.

AAB’s problems are threefold. First, he does not appreciate the enormity of the issues, so he cannot even begin to solve them. You cannot get the right answers if you do not first ask the right questions. Second, he thinks he has solved a problem by simply sermonizing on it. He is the typical Imam who thinks that his responsibility ends with delivering the khutba (sermon). So he is busy spinning his wheels giving lectures to all and sundry groups. Third, even when he tries to solve a problem, he does not execute it well. There is no follow through.

This is glaringly illustrated by his recent inept handling of the problem of illegal immigrants. Does he really think that substituting Pakistanis for Indonesians would solve the problem?

To borrow a golf metaphor, his swing may be great but without the all important follow through, he will miss the hole. Worse, he does not even bother to see where his balls have landed, depriving him of the feedback. His shot may be way off but he would not know it. Meanwhile his underlings keep saying what a great shot that was, a repeat of the pattern of sycophancy rampant during Mahathir’s era.

Stated differently, AAB’s learning curve is flat.

AAB’s reading repertoire is limited; his daily staple, he readily admits, is confined to the local papers, and we might add, to the speeches written by his spinnmeister. His reading habit is that of the average Malaysian. You will never find the Economist or the Wall Street Journal on his desk, or on the desk of his ministers and top civil servants for that matter.

Malaysia’s Ronald Reagan

His son-in-law Khairy Jamaluddin, in his frequent flights of fancy, once intimated that AAB would be a Malaysian Ronald Reagan. Yes, Reagan was no intellect, and he too did not like to read. His reading did not extend beyond what was written on the cue cards, a carry over no doubt from his acting days. But Reagan was innately curious and held passionately to his basic beliefs and ideas. Although he did not like to read, his advisors would bring to his attention the views of prominent scholars and thinkers of the day. Reagan would then invite these luminaries to private dinners at the White House where he could get to hear their views firsthand and in depth.

AAB’s circle of advisors is an insular group of cronies with over inflated sense of their own capability and worth. They think that just because they have degrees from prestigious universities, they know it all. They haven’t run a pisang goreng stall successfully, but they have the pretensions of helming multibillion ringgit corporations!

Many accuse us of rushing to judgment. Our assessment of AAB is also based on his track record as a public servant. Indeed when he was appointed Mahathir’s successor, we expressed our low expectation of him. We see nothing in AAB’s performance in the last eighteen months for us to change our opinion.

Lastly, we wish to reiterate the main point of our essay, that is, there is no need to “disrespect” our past leaders in order to praise our present ones. Many would consider it poetic justice that Mahathir is today reaping what he sowed back in the 1970s with his merciless skewering of the Tunku. We think otherwise. We dishonor ourselves in dishonoring our past leaders.