Same rules of the game

In October 2011, the Occupy Wall Street movement was rife, infecting many other cities in the US and England. We had a similar movement, although ours started even before theirs began, interestingly enough. A version of this was published in theSun on 7th October 2011.

Occupy – The Same Rules of the Game

“We are the 99%” is the slogan used by the thousands of protestors who have stormed New York City in the “Occupy Wall Street” campaign, which culminated in the march and mass arrests on Brooklyn Bridge last weekend. Their message is simple: a protest against the well-oiled financial and economic system that is led by the 1% of the population, made up of the wealthiest and most well-connected Americans; the same system that despite having wreaked havoc on the country’s (and therefore, the world’s) economy, still continues running unabashedly on the same rules of the game as it did previously.

Watch the scenes on Al-Jazeera (or Youtube, depending on your generation) and you’d think the protestors are starving, with nothing to lose, like in the Arab Spring revolution. We often think Americans have it all, abundant manna from heaven, but a Washington Post columnist decries this fallacy, saying that three years after the crash, “youth employment is at its lowest level since the end of World War II” (Downie, J., 26th September 2011).

The Malaysian Prime Minister will be tabling the 2012 Budget in Parliament on this very day. At the time of writing, he has hinted that its contents will address the rising cost of living of low-income earners, like “extending financial aid, subsidies, incentives, skills training, healthcare services and housing”. (Funny, were we not told by Pemandu just last year that subsidies would have to be withdrawn, failing which Malaysia would be bankrupt by 2019?)

My humble prediction of the Budget’s contents is that it will be precisely that: a combination of motherhood statements like “increasing foreign investment”, “stimulating economic growth”, and welfare aid policies like “1Housing Scheme”, “1Skills Programme” and “1Subsidy”, and so on. A number of quotes from the ETP, GTP, EPP and the 10th Malaysia Plan, to be sure.

All well and good, except that nowhere in the Prime Minister’s speech or the accompanying budget documents will there be an incisive analysis of the failures of an economic system that will break (and has been breaking) Malaysia.

And what exactly is this? 

It is the culture that embraces, breeds, and practically worships the means of getting rich quick, and finding deceptively roundabout ways of doing so. It is considered the intelligent thing to do, in climbing the ladder of crony capitalism. Forget the free market; this is pulling every string you’ve got to get ahead of the crowd.

In fact, this is a culture deeply embedded within the privatisation scheme introduced by then Prime Minister, Dr. Mahathir in the 1980s, many of which turned awry. Recall the multiple bailouts and losses the Malaysian government (and hence, taxpayers) had to consequently bear throughout the 1990s: Bank Bumiputera Finance, Star LRT, Putra LRT, EPF are some examples. The principle of privatisation is to maximise competitiveness and productive efficiency, but the Malaysian version seems to have emerged with the opposite results.

The Najib administration has declared its wishes to minimise government’s role in the economy, transferring this to the private sector. One wonders if real competition and private-led initiatives will be permitted to flourish.

Especially since recent privatisation schemes with similar modus operandi have continued. The water services industry in Selangor is an example of failed privatised public utilities, one particular concession company of which being continually in the red, sustained only by Federal government loans.

Another example is the current and ongoing Federal government move to centralise the privatisation of solid waste management in Peninsular Malaysia. Under this scheme, three private companies will be given 22-year concessions to undertake solid waste management (Alam Flora in the central zone, E-Idaman in the north and Southern Waste Management in the south). The Selangor, Penang and Perak state governments have opted out, having their local councils take over instead.

There are several issues here that Malaysians should be concerned about. First, although the Federal government will pay the additional fees to the concession companies, this is only for the first five to seven years. The Minister of Housing and Local Government stated that “after the KPI is fulfilled and people feel satisfied with the services, we will start charging”. These funds dispensed by government are effectively taxpayers’ money anyway. Second, the companies will receive RM500m to RM600m annual payment from the government on top of the assessment fees. Finally and most importantly, how were these companies selected?

In Malaysia, 60 percent of households still earn less than RM3,500 a month in 2009 (10th Malaysia Plan), whilst six percent earns more than RM10,000 a month (there is frustratingly no data available for higher income categories).

The privatisation model seems to be a repetition of schemes that in the past have failed to deliver public benefits effectively. Further, it enriches a rentier, crony class disproportionately to corporate performance. Unending “corporate welfare” provided by government could instead be channelled more effectively for public good.

Given the trend, one hopes the Budget 2012 will tackle structural reform. Failing which, Malaysians may begin to ask themselves whether they belong to the 1% of society – or the 99%.

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