Are we a welfare state, or are we not? I’m not sure even our government knows how to classify us, since there have been conflicting remarks on the matter in the past. This was first published in the Penang Monthly in October 2011.
Malaysia the welfare state?
“Welfare policies” are always controversial issues for various reasons. Who gets what and why is the major question. In Malaysia, answering “who” leads quickly to debates on class and race and what-not, answering “what” leads to fiscal arguments and answering “why” leads to ideological quarrels. Be that as it may, Malaysia has always had interventionist governance, and the new disputes are welcomed for highlighting what nation building is about.
Ever since the Pan-Malaysian Islamic Party (PAS) muktamar in June, which had as its theme the “welfare state” policy concept, there has been a scramble by the ruling coalition to respond, and not so gracefully either. Prime Minister Najib Abdul Razak claimed that PAS had plagiarised the idea, stating that the Barisan Nasional (BN) government had already been implementing the welfare state policy in Malaysia and was doing it better than the PAS government of Kelantan ever could.
This seems to have provided generous room for a policy and idea competition to flourish – the fight for which side is dishing out more aid for the locals. Strangely enough, back in 2009, then Women, Family and Community Development Minister Shahrizat Abdul Jalil retorted to the media that Malaysia was not a welfare state, when asked about the lack of welfare aid in a particular constituency.
That there is any reaction at all by the government this time around is an admission in itself of the growing impact PAS is making on the Malay electorate. The choice of the theme, although not entirely new, is brilliantly timed. It encapsulates all the points of a theologically acceptable “Islamic state” that many PAS members aspire towards, but without actually making use of the term itself. The “welfare state” concept is something all three Pakatan Rakyat (Pakatan) coalition parties have expressed public support for, although their articulation of it so far has been vague enough for centre-right leaning individuals within the Democratic Action Party (DAP) and People’s Justice Party (PKR) to formulate a response. A somewhat more detailed version of what welfare means can perhaps be referenced from the Pakatan’s Common Policy Platform (CPP) and the Orange Book (Buku Jingga).
It has never been easy describing the economic ideology generally practiced in Malaysia. As it stands, however, the economy is driven very much by government-linked companies (GLCs), quotas and other stringent requirements and foreign restrictions. Its government’s so-called “welfare state” policies include a slew of packages that are targeted at the poor through education, health and other poverty-alleviation aid. How different, then, are the proposals by Pakatan from what the BN has already been implementing over the years? And secondly, it is pertinent to examine what welfare measures Pakatan states have been implementing over the last three years.
The discussion is even more important today as Malaysia grapples with a rising budget deficit amidst the growing needs of her citizens. The Statistics Department, for example, reports that the average cost of living for an urban household in Malaysia is about RM2,500 (2010 prices), whilst the average household debt has risen to 76% of gross domestic product through mortgages, car loan repayments and credit card spending (Hariati Azizan, The Star, August 28, 2011). About 36% of Malaysian households (2.1 million) have a total income of RM2,000 a month while almost 55.6% (3.3 million) of households have a monthly income of less than RM3,000. Making ends meet is a common household headache.
“Welfare state”: Pakatan vs BN
Abdul Hadi Awang’s speech at the PAS muktamar included references to economic social justice, where the public should not be coerced into paying high taxes, and where the prices of essential goods should not be hiked. He cited as examples the abolishing of road tolls; the removal of unnecessary taxes that burden people and the improvement of basic public services as had been implemented in Pakatan states. The speech also focused on the fight against corruption, where profits of GLCs have been “distributed…to cronies” and “losses are absorbed by the public through taxes.” Addressing corruption would bring greater economic competitiveness, was the line of argument. The PAS definition of a welfare state is essentially one that is based on the Islamic belief that one ought to administer the state holistically, with great and equal care for the environment, spiritual and moral health, as well as the economic and general wellbeing of the people.
The Pakatan CPP and Orange Book similarly outline the need to address tremendous leakages and corruption. This gives utmost priority to, for example, the removing or renegotiating of subsidies paid to lucrative independent power producers (IPPs) ahead of the removing of the subsidies given for everyday needs. There are also references to assistance items, such as the increase of teacher salaries.
On providing aid to the people, it seems like both coalitions largely subscribe to the same philosophy in theory. However, where they differ is in their definition of what an economic system would look like under a welfare state exercising principles of good governance. Where Pakatan would prefer to get rid of the culture of GLCs and of benefitting crony companies under the guise of “privatisation”, BN still maintains these relationships and in fact continues to set up more quasi-governmental institutes. In theory there may be attempts to encourage transparent and accountable behaviour, but the practice of crony selection of contractors and negotiated tenders is still rampant.
Welfare aid in Pakatan states
It is relevant to examine the sort of welfare aid already being implemented in the Pakatan states, since this is a testament to the sort of national policy envisioned by that coalition. The Penang government increased welfare aid by giving RM100 yearly to 115,000 senior citizens, single mothers and the disabled, and RM1,000 one-off payments to their beneficiaries; allocated 150 acres for public housing in the Batu Kawan township ranging from RM72,500 to RM220,000 per unit and set up an RM2mil dialysis centre with reduced treatment rates, amongst other things.
In Selangor, its “Merakyatkan Ekonomi Selangor” – loosely translated as the People’s Economy of Selangor – epitomises the welfare state policy to its core, with a series of nine packages that help a spectrum of Selangor residents. These include an education fund for plantation workers’ children, RM1,500 given to all babies born in Selangor which can be redeemed at the age of two, a one-off RM2,500 given to those whose elderly family member has passed away, 20m3 of free water for every household, RM1,000 for those who enter university (who come from households earning less than a certain amount), a women’s health scheme including breast cancer screenings, a microcredit scheme, dialysis centre and additional leave for pregnant civil servants, free tuition services and a slew of others.
Kedah also has a similar one-off payment of RM500 for families where an elderly family member has passed away, whereas Kelantan has introduced loans to civil servants at no interest and a whole host of various funds such as the al-Qardhu Hasan, Kifalah scheme, people’s plantation dividends, distribution of grain, extension of maternity leave and youth empowerment programmes.
The federal government recently announced that it would provide assistance to those earning RM3,000 and below. Although the details of this scheme are not yet ironed out, this is seen as a welcome move (and yet another response by BN to Pakatan’s highlighting of a growing problem).
Instead of entertaining the futile debate about which coalition is providing more “welfare”, it is imperative that the discussion moves towards how the needs of the labour market and lower income groups can be better addressed. Even without going into strict definitions of what a “welfare state” entails, it doesn’t take an economic dictionary for us to realise that all sides should be fighting against the system of cronyism, nepotism and patronage, especially in the awards of tenders.
Because the real culprit is this: any efforts made to dish out dole to the masses will have little impact if the nation’s riches are allowed to flow out in many other (surreptitious) ways.
