GE13 Malaysia – from New Mandala

Posted on April 5, 2013 by Tricia

GE13 Malaysia – Tricia Yeoh

(I was asked a common series of questions on the upcoming 13th General Elections. Here are my answers, as posted on the New Mandala website! Thanks goes to Greg Lopez of the Australian National University for this)

– 4 APRIL 2013POSTED IN: GE13 MALAYSIA, MALAYSIA

Tricia Yeoh
1.    What do you think will be the most important issue that the new government must address?

The new government must address economic growth and distribution: ensuring there is a strong economic base, new industries and creating an open, innovative environment to attract the right workforce; as well as making sure national wealth reaches the lowest income groups, especially in rural areas that still have no access to proper water and sanitation.

2.    What do you think is Barisan Nasional’s greatest strength?

Barisan Nasional’s greatest strength would be its numbers of years as a coalition government, its ability to govern together with all parties. However, this is not saying the governance itself has been of stellar performance.

3.    What do you think is Barisan Nasional’s greatest weakness?

Barisan Nasional’s greatest weakness is the fact that its major parties are race-based. This is the biggest constraint it has, if it wants to move beyond ethnic politics, as each party (UMNO, MCA and MIC) will continue having to retreat to their ethnic support bases when campaigning for votes.

4.    What do you think is Pakatan Rakyat’s greatest strength?

Pakatan Rakyat’s greatest strength lies in its philosophy of new politics, that politics has to move beyond race. Acknowledging the cultural differences between races, none of the three parties advocates a Malay, Chinese or Indian-based approach to solving national problems. They focus on the community’s particular needs, on raising incomes irrespective of race or creed.

5.    What do you think is Pakatan Rakyat’s greatest weakness?

Pakatan Rakyat’s greatest weakness lies in its lack of professional experience as administrators in government, which the civil servants have taken advantage of in the early years of Pakatan Rakyat running the state governments of Selangor, Perak and Penang. This is where Pakatan Rakyat will have to rely on the expertise and experience of trustworthy civil servants, retired civil servants, and other practitioners and academics when it comes into government.

6.    What is your hope for Malaysia?  

My hope for Malaysia is that its young will grow up in a country they feel they are proud of, that they fully belong to, and a place they will want to live, work, play and retire in, even for their future generations to come.

Tricia Yeoh is the Research Director at Institut Rakyat.

Posted in Elections, General Politics, The Cause | Leave a comment

Pakatan rule of Selangor – how has it fared?

Posted on April 1, 2013 by Tricia

Pakatan rule of Selangor – how has it fared?

Thanks goes to the newly formed Radio Free Malaysia (RFM) for interviewing me recently on the  record of the Selangor state government over the past five years. The interview was conducted in Malay. Click here to listen to this episode of RFM.

Sure, the Selangor government under Pakatan Rakyat governance has performed well in democratic progress and economic performance as can be seen in the revival of local government elections in new villages at least, a historic first in a Freedom of Information Enactment, and the highest ever revenue in 28 years; but how have ordinary Selangorians benefited from their five-year governance? We ask former insider, Tricia Yeoh, who was research officer to the Selangor Menteri Besar’s office and is now research director with Institut Rakyat, a PKR-affiliated think tank.

Posted in Economics, Public Administration, Selangor | Leave a comment

Ensuring growth to ensure sustainability

Posted on March 31, 2013 by Tricia

Ensuring growth to ensure sustainability

 (First published in the Penang Monthly’s March 2013 issue)

Photograph: My Train Pix / Flickr

Photograph: My Train Pix / Flickr

While Singapore’s government tries to convince its citizens of the wisdom of its population plans, Malaysia suffers instead from the lack of a long-term and comprehensive vision that is supported by concrete measures to ensure sustainable growth.

By Tricia Yeoh

The Singapore government recently faced public outcry following the release of a white paper on its country’s projected population growth rate. The paper forecasts a population size of 6.9 million people by 2030, which has alarmed local Singaporeans; foreign migrants currently already account for almost 1.5 million out of the 5.3 million residents, who take up jobs previously occupied by locals. (The latter is an arguable point though.)

Among the major concerns expressed online is that there are insufficient resources and infrastructure to cater to this rapid growth – already there are complaints of overcrowded public transport systems and hospitals. Although their government responded by saying it is merely a guide, this episode is certainly what other rapidly developing cities should take note of.

Drawing from our neighbour down south, the question for both Selangor and Penang (being two of the most industrial and commercial states in Malaysia) is: how should thriving, cosmopolitan cities and states plan for future population growth? One lesson to be learned from the Singapore example is that governments must engage in forward planning and targeted communication with their residents. This is to ensure sustainability of resources over a long-term period and to make sure the people are aware that such efforts are being made after serious consideration.

While it is important for hospitals, schools and public transportation systems to expand according to the needs of a growing populace, these are areas that unfortunately do not fall under the purview of state governments – and are therefore left to the federal ministries to plan, hopefully with input from and collaboration with their state counterparts.

Interestingly, contrary to popular belief, population growth rates in both Penang and Selangor have actually fallen in the last few years. In Penang, the average annual population growth rate has fallen from 1.6% in 2008 to 1.5% in 2009, 1.3% in 2010 and 1.1% in 2011. Similarly so for Selangor, the growth rate fell from 2.6% in 2008 to 2.5% in 2009, 2.2% in 2010 and 1.4% in 20111.

Be that as it may, the population size is growing. In the decade of 1991-2000, Selangor’s population increased by 75% from 2.4 million to 4.2 million. Between 2008 and 2011, the population increased from 1.5 million to 1.6 million in Penang, and from 5.2 million to 5.6 million in Selangor. It is also important to explore immigration into the states to understand the population makeup further.

 

Net migration by states, 2006-2009.

Figure 1: Net migration by states, 2006-2009.
Source: Department of Statistics Malaysia.

In the period between 1995 and 2000, Selangor received a total of 371,000 net migrants, of whom 14% were foreigners. That state continued to receive the highest percentage of immigration from 2003 to 2007, mainly from the states of Kedah, Perak, KL and Kelantan. From 2008 to 2009, however, Penang was the main destination of migrants, which Figure 1 shows. The highest concentration of foreign migrants into Peninsular Malaysia was, however, in Selangor (15.7%), the highest percentages coming from Indonesia, India/ Pakistan/Bangladesh and the Philippines, with the majority working in the manufacturing and construction industries.

The labour force has also increased from 688,000 to 781,000 in Penang and from 2.2 million to 2.7 million in Selangor over the same four-year period, due to increasing labour force participation rates in both states. Added to this is the rising GDP growth rate in both states, going from 5.8% to 10% in Penang, and from 8.4% to 10.8% in Selangor between the years 2008 and 2010. Clearly resources, social amenities and infrastructures will need to match the increase in population size and the increasing industrialisation.

Sustainable water resources 
Singapore has done well in assuring its citizens of a self-sustaining water supply. Although this is a politically sore point in Malaysia (there is much history involved in the water and price negotiations, which this article will not explore), Singapore targets to eventually wean itself off Johor’s water supply by 2061, the year in which the final water agreement between the two countries expires.

This brings us to the primary issue at hand, namely ensuring sufficient water supplies for both Penang and Selangor respectively. In my previous column on the subject, I stated that the water industries of both states differ significantly. In short, Selangor’s water industry is fragmented into four separate private water concession companies (three in charge of water treatment and one for water distribution), whereas Penang’s is managed by a state corporatised body, the Perbadanan Bekalan Air Pulau Pinang, or PBAPP. While Penang has successfully negotiated its water restructuring deal with the federal government’s Perbadanan Aset Air Berhad, or PAAB, Selangor continues to struggle to achieve this.

Early last month, Penang’s Chief Minister called on PAAB to speed up the Perak-Penang water transfer project in order to provide for future water demands, as 80% of Penang’s water source is derived solely from the state’s Sungai Muda, which will meet water demand only up to 2020. This is a responsible statement, seeing as Penang itself has limited water resources, an issue exacerbated by the reported logging activities within Kedah water catchment areas which are likely to reduce these resources even further.

Readers may be quick to point out that Selangor on the other hand is reacting in an entirely opposite manner: namely through its inability to agree with PAAB on a final restructuring deal, and also refusing to approve the Langat 2 water treatment plant as part of the Pahang-Selangor water transfer project.

While it is necessary to cater to an increasing population growth in the future, the issue is not as simple as it seems in Selangor. Because of the fragmented nature of the water industry, the two main companies, Syabas (water distributor) and treatment company Puncak Niaga (which is the majority shareholder of Syabas), have refused to accept the buy-back offers of the Selangor government, causing a stalemate. Ideally, as part of the Water Services Industry Act 2006, this should have been resolved by now, by consolidating all companies into one, owned by the state government.

The federal government has not cooperated in the matter either, by recently providing yet another RM120mil in what seems like bailout funds to Syabas. This is on top of the RM320mil 20-year back-loaded, unsecured and interest-free loan to Syabas in 2009. One must recall that Syabas is a private entity, having signed a concession agreement to undertake its services and responsibilities, which it failed to do in a recent breakdown in the Wangsa Maju pump station, which resulted in water shortages affecting more than 27,000 households in the Klang Valley.

It is more urgent than ever that both governments work together to solve the water problem, on the principle that water companies such as Syabas should be dealt with strictly. Water regulator National Water Services Commission (Span) is the most well-suited to handle the matter. Of course it seems highly unlikely any chastisement will take place before the 13th general election that is soon to come – all parties are waiting to see how the power structures remain or change before major policy decisions are made.

Finally, while Penang requires water resources to be channelled from Perak owing to its limited resources, Selangor has not fully exhausted its existing water resources – its lakes and rivers and heavy rainfall exist in abundance. The mega-project to transfer water from Pahang to Selangor will cost in total some RM9bil (consisting of the dam, tunnel and treatment plant), compared to the Perak-Penang project of RM2bil. I have stated in other articles that this massive project should be reconsidered in preference to other solutions like upgrading existing plants, rainwater harvesting, water recycling and treatment of Selangor’s raw water resources. These would also ensure sufficient water for future generations in the Klang Valley.

Economic growth and development puts pressure on governments to manage the resulting consequences. As Singapore grapples with its exponential population growth, so too must the dynamic states of Selangor and Penang, by carefully studying similar projections over the mid to long-term future, given high immigration rates.

We must not reach a stage where residents feel the strain on infrastructure, amenities and resources. To that end, it is hoped that the Pakatan-led states maintain their governments in the upcoming state elections, and that government bodies like Pemandu, the Economic Planning Unit and Department of Statistics will work closely with the states.

Posted in Economics, Selangor, Water | 1 Comment

Peaceful Transitions

Posted on March 30, 2013 by Tricia

Peaceful Transitions (theSun, 29th March 2013)

PRIME MINISTER Datuk Seri Najib Razak said this week that a weak government owed to a reduced parliamentary majority would mean instability and uncertainty, in a bid for greater support for his Barisan Nasional coalition.

Surely he ought to realise that it is the indecision over when the election itself will be held that has contributed to this situation of uncertainty.

Such political risk could have been avoided by a straightforward announcement ahead of time of the election date instead of allowing this continued speculation for well over two years.

There is a wide range of opinion as to how the electoral outcome will affect national stability, in terms of both social and economic effects. For instance, Credit Suisse reported that foreign investors in Malaysia may do a good deal of selling ahead of the general election in light of such political risk.

According to the Wall Street Journal, foreigners hold around 25% of overall share capital in Malaysian banks, “the highest level since the global financial crisis”. Analysts such as MARC also predict that the ringgit will weaken over political developments relating to the election.

However, one must be careful not to equate the high political risk involved in an uncertain election outcome with that of instability due to a possible government change.

The adverse economic impact would come about mainly because this has never taken place before, and without any precedence, it is difficult for people to imagine being governed by any other political coalition.

A recent public forum organised by Institut Rakyat, Penang Institute and the Islamic Renaissance Front discussed this matter.

Datuk Seri Anwar Ibrahim, leader of the opposition coalition Pakatan Rakyat, reminded the audience that a peaceful transition from one government to another would really reflect upon a mature democracy.

This is true, since if the system itself has in-built robust mechanisms to allow for a transfer of power, then there really is no need for fear – the kind of fear that incumbent governments are wont to drum into voters to have them cower under, all for the sake of prolonging their positions.

Titled “Economic Management during Political Transition”, it was a valuable opportunity to discuss what kind of economic policy would prevail should there be a change in government.

Malaysia’s institutions seem to be strong enough to withstand any major shocks. Indeed, the World Bank did say that Malaysia has a large capital market, strong institutions, sophisticated participants and high quality accounting practices. In short, the economy will not collapse should there be a change in government.

Panellists also spoke of experiences from other countries which had also gone through political transition.

One particularly interesting insight was from Professor Woo Wing Thye from Penang Institute, who showed how leaders in autocratic regimes would fail in their attempts at reforming their countries, as long as they were nominees of the previous government.

For example, this was one of the factors that allowed reform in China: Mao Zedong’s appointed successor Hua Guofeng failed, but Deng Xiaoping who deposed him succeeded.

Likewise, politicians in Malaysia should note that any reform must be led by a leader who is not tarnished in any way by the acts or wrongs of its predecessor. Whichever coalition wins, the appointed prime minister would do well to remember this.

On a final note, it is no longer an excuse that because Malaysia follows the British parliamentary system, therefore the executive body can arbitrarily set the election date, which is the current custom.

The United Kingdom’s Parliament passed the Fixed-Term Parliaments Act 2011 that introduced fixed-term elections. According to this law, barring certain exceptions, polling day would occur on the first Thursday in May of the fifth year after the previous general election.

Parliament would automatically dissolve 17 working days before polling day.

For the sake of certainty and stability, which the prime minister prides himself on assuring, this may be a welcome step in the right direction.

In memory of the late Zainon Ahmad, or Pak ‘Non, who helped me believe in Malaysia.

First published in theSun on Friday, 29th March 2013

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Economic Management under Political Transition: Radio interview

Posted on March 27, 2013 by Tricia

I was invited to speak on inspire.fm (an online radio) on what transpired during Institut Rakyat’s inaugural event on “Economic Management under Political Transition”. This is what I said, which can be listened to here on their website.

The synopsis of the programme:

If the opposition were to wrest power, a key question that remains in the air is the fate of Malaysia’s economy in the wave of transition. How can we ensure that economic policies remain inclusive? What are the values and objectives that will guide the transition? Will the free market be Malaysia’s destiny? Dominic speak to Tricia Yeoh Su-Wan, Research Director Of Institute Rakyat, to get her feedback on the forum.

The above forum was held to address these questions at a leading hotel in the city on 12 March 2013. The panelist were Prof. Anwar Nasution, Professor Of Economics, Universitas Indonesia, Azrul Azwa, Chief Economist, Islamic bank, Prof. Woo Wing Thye, Executive Director, Penang Institute and the moderator Dr. Wong Chin-Huat, Fellow, Penang Institute. This forum was jointly organized by Penang Institute, Islamic Renaissance Front and Institute Rakyat.

Posted in Economics, Elections | Leave a comment

Towards a New Malaysia

Posted on March 17, 2013 by Tricia
First published in Selangor Times on Friday, 15th March 2013

THE term “think tank” may evoke images of stuffy bespectacled researchers sitting behind desks towering with stacks of paper.

And whilst it is true that the centrepiece of a think tank rests on its intellectual capabilities of research and policy, what is equally important is that it proposes practical solutions.

The limitation of ivory-tower research is precisely that it does not apply to the lives of people on a daily basis.
Herein lies the advantage of the new think tank that was launched last week.

Institut Rakyat, a new think tank that is affiliated with Parti Keadilan Rakyat (Keadilan), seeks to provide independent policy advice on a range of socioeconomic issues primarily, amongst others.

Due to this affiliation, many people have questioned just how independent such an institute can be.

This is a model that is not entirely new.

In fact, many political parties around the world have foundations, organisations, and think tanks that are affiliated with them, but are also able to operate independently.

Germany’s political parties, for example, practise this: The Friedrich Ebert Foundation is a foundation associated with their Social Democratic Party and aims to promote democracy, political education, and promote students of outstanding intellectual abilities and personality.

Many other examples follow in like manner, such as the Friedrich Naumann Foundation for the Liberal Party and so on.

Another common question raised is, in the event of a conflict of position, which one prevails?

The answer to this is rather simple.

A think tank’s role is to propose, debate, ensure deep and thorough dialogue takes place on a certain policy or subject. The think tank engages with people from a broad spectrum of society, including academia, the media, civil society, the private sector, religious groups, labour groups, government and so on, in order to collate thoughts, perspectives, ideas and produce evidence-based solutions.

In this particular circumstance, Institut Rakyat would exercise editorial independence in its research and writings.

When proposed and presented to the party it is linked with, the ultimate decision on what exactly to implement is out of the institute’s hands.

Although this may seem confusing to some, this is in fact the best way to encourage policy debate and discussion – what better way than to disagree and iron out the issues amongst our researchers and experts.

And there is so much to smoothen over, given the numerous issues Malaysia faces today – economic, social, environmental, cultural and otherwise.

As such, Institut Rakyat aims to conduct research and formulate policies that are directed towards social justice and a sustainable future at national and state levels.

Its focus areas under the Policy Hub are Economy and Finance; Law, Governance and Social Justice; Human Development and Sustainability; Foreign Policy and Security; and Media, Arts and Culture.

But in order to ensure these do not remain as policy papers on shelves, libraries and desks, it is imperative that they are discussed widely through workshops, forums, conferences and publications – which is part of the plan.

In fact, two separate public forums are being planned for the month of March, which will be announced shortly.

Finally, through its Youth Hub, it will provide a platform for nurturing and training young leaders, policy-makers and thinkers.

The objectives here are to provide political education and leadership training for youth, provide avenues for students and youth to engage with activism and party politics, and create platforms and networks for youth to generate ideas and engage with the public through similar dialogues.

The last election produced many young parliamentarians and state assemblypersons who would have much to offer their younger counterparts in their experiences and accumulated knowledge.

Some may also have wondered about the timing of the launch, taking place when preparations are already underway heading toward the 13th General Election.

What role precisely would a think tank have in the political process? True, it would have no direct responsibilities in the campaigning itself.

However, as an institute that is more than interested in the policies being proposed by either political coalition, there is certainly a gap to be filled.

Pakatan Rakyat, the national opposition coalition, of which Keadilan is a part, unveiled its election manifesto earlier this week, titled “Manifesto Rakyat: Pakatan Harapan Rakyat”.

This 35-page document is loaded with policy proposals ranging from the raising of the national minimum wage to RM1,100, reducing water and electricity rates, and abolishing tolls, to returning 141,000 hectares of land to Orang Asli communities and so on.

These are policies which need unpacking, understanding, and evaluation as to their feasibility.

This is where Institut Rakyat comes in, allowing this space for open and frank discussion, so that ultimately the rakyat is able to digest the proposals or clarify questions they may have upon reading the document.

It is, after all, perfectly logical and necessary for the public to know the sort of future government they would get should there be a leadership change.

The institute will tap on the expertise of a wide range of people in the Board of Directors and Advisory Panel, with renowned individuals like Jomo K Sundram, Dr Syed Husin Ali, Datuk Dr Toh Kin Woon – as well as reaching out to individual experts in their respective areas of, for example, constitutional law, media reforms, local elections, and others, in drafting policy proposals.

The establishment of Institut Rakyat is a reminder that policy debate is here to stay, and hopefully encourages public discussion even further than what already exists (with the help of social media, no less).

We look forward to what lies ahead, towards a new Malaysia.

Tricia Yeoh is a research director of Institut Rakyat. Please visit www.institutrakyat.org for more details. 

Posted in Economics, Public Administration | 1 Comment

The Elusive Election

Posted on March 8, 2013 by Tricia

The Elusive Election (from theSun, 8th March 2013)

RESOLVING the water saga in Selangor epitomises the frustration of the nation in waiting for an election that is ever elusive – just round the corner, but yet never quite visible.

The Selangor government’s fourth and latest offer to take over the four private water companies is most likely to end in an impasse again.

This time, two companies Splash and Abbas have indicated they are likely to accept, while the remaining two, Puncak Niaga Sdn Bhd and Syabas are still mulling over the matter.

Despite the latest offer totalling a whopping RM9.65 billion, higher than its previous offers, both Puncak and Syabas would probably hold off on any decision until the election takes place – presumably, till the winner in Selangor is determined, as this would change the political landscape and everything else that follows.

Although their reason to wait is likely to demand an even higher price, it is fair to say that we are this close to the 13th general election and knowing its outcome would make decision-making all that easier.

They are not the only ones. Even the optimism level of the property market is low due to election uncertainty, according to the Real Estate and Housing Developers Association Institute, as people are more cautious, preferring to wait and see what transpires.

ELECTION FEVER

Five years ago today, Malaysians voted for a change in the Selangor government and for the opposition coalition to run four other states in the country.

On the one hand, it is a good thing that these governments (save one) have had the opportunity of the full five-year term to see their public policies and programmes come to fruition.

This allows voters enough time to observe, experience and evaluate for themselves the difference between their previous and current state governments.

On the other hand, however, it is rare for a prime minister not to have sought a fresh mandate from the people.

Datuk Seri Najib Razak was appointed to take over the leadership of the country in 2009 following the poor performance of his predecessor who lost Barisan Nasional’s two-third majority in Parliament, therefore not technically being the people’s choice of a leader for the past four years.

The election game, if one recalls, began early. Among the 16 by-elections that took place since 2008, Hulu Selangor in April 2010 was one parliamentary seat that the Barisan Nasional won in great relief, which spurred talk of an early general election that year itself, which did not take place.

The three by-election victories by Umno at the beginning of 2011 in Tenang, Merlimau and Kerdau must have also contributed to the ruling coalition’s confidence after their previous defeats in Bukit Gantang, Permatang Pasir and Sibu.

Following Barisan’s return to power in the April 2011 Sarawak state elections, speculation was already rife that the election would take place in mid-2011.

It is likely the Bersih 2.0 rally in July 2011 and the growing support for its movement caused the Barisan to hold off, and this trend would continue the following year.

With Bersih 3.0 held in April 2012 – following dissatisfaction with the report submitted by the Parliamentary Select Committee on Electoral Reform – as well as the appalling police violence towards members of the media, it was again difficult for Najib to call for the election.

FURTHER DELAY?

As we entered the year 2013, Malaysians would have thought to themselves – this is it, no delays any longer. Parliament automatically dissolves on 28th April, but both the Johor and Negri Sembilan state assemblies dissolve at the end of March. Elections must be held within 60 days of dissolution.

Hence, for all state and federal elections to take place simultaneously, polling day would have to be held at the end of May at the very latest.

However, there have been further complications added to the matter. The Suluk intrusion into Sabah over the last few weeks has left many confounded. With little official information forthcoming, some of us having to resort to reading Filipino newspapers online, it is difficult to gauge what the impact will be nationwide.

The Election Commission (EC) says the intrusion has not affected preparations for the 13th general election as it has full confidence in the security forces’ ability to resolve the conflict.

But with villagers in fear in Lahad Datu and Semporna, eight Malaysian policemen killed as reported at the time of writing, and rumours of yet more intruders arriving, this raises more questions than answers.

The commission also said the election will be held as planned regardless of the scenario. That is good news, but it would certainly help if these plans were made known to more people than just the prime minister and the EC commissioner.

The air of uncertainty has hung about for far too many months. If there is one thing that perhaps the majority of Malaysians can agree on, if not necessarily the outcome thereof, it is this.

For the benefit of the business community, policymakers, civil society, and the general public, this elusive election must be held within the time it is due: no later than 60 days after the set deadline for the dissolution of Parliament.

Posted in Elections, General Politics, Water | Leave a comment

Fresh Water Offers

Posted on February 22, 2013 by Tricia

Fresh Water Offers (from theSun, 22nd February 2013)

Over the recent weeks, the water wars between the Selangor government and water distribution company Syabas have intensified. Following the Wangsa Maju water pump breakdown, eight-page A4-sized booklets titled Selangor Water Crisis! – Don’t Get Misled – Get The Facts were distributed in the Klang Valley.

Although Syabas denied any involvement in the publishing of the booklets, the point-by-point list of arguments which criticises the state government was suspiciously similar to the press statement released by Syabas last month.

In my previous column on the water issue, I spelt out the reasons why as the concession holder to water distribution rights in Selangor, Syabas is the rightful party responsible for ensuring the maintenance of the water pumps – which it failed to do.

Immediately following the pump-house failure was the surprise announcement by Prime Minister Datuk Seri Najib Razak that RM120 million would be allocated to Syabas for upgrading works, and monitored by the National Water Services Commission (SPAN). The justification was for these funds to be used for maintenance and upgrading works. This is on top of the 20-year RM320.8 million zero-interest soft loan to Syabas in 2009, another 20-year RM110 million loan in October 2011, and thereafter taking over Syabas’s RM2.9 billion outstanding bonds when they were due for repayment.

While it is true that money is required for upgrading and maintenance, is it the federal government’s role to dish out funds to Syabas each time it needs the money? Mind you, these are public funds, millions of which could surely be used for better purposes. This is rather like an unemployed capable grown adult who keeps asking for pocket money from his parents.

Let us not also forget that Syabas is a private company – not a charity – that entered into a contract with the state and federal governments, a contract which legally spelt out its responsibilities. The very reason for which the company was chosen to carry out water distribution services on behalf of the state was supposedly based on its expertise.

Therein lay the flaw of the theoretical assumption that any kind of privatisation would be inherently better than government-run public services. In a seminar earlier this week at Universiti Malaya on “The Pitfalls of Water Privatisation: Failure and Reform in Malaysia”, Dr Jeff Tan from Aga Khan University showed how globally, there is no statistically significant difference of the efficiencies resulting from private and publicly-invested water services.

In fact, because of the monopolistic nature of utilities, there is a limited number of able bidders; therefore there can never be competition in markets, but competition for markets. This means to say that the philosophy behind privatisation may actually fail in the instance of water provision, because the very nature of the industry does not allow for competition. For water to be made available at the most efficient and reasonable rates possible, water treatment and distribution should be managed by a single entity, unlike the multiple parties in Selangor.

Which brings us to the latest development of the week. At the time of writing, the Selangor government announced it would make a fresh offer to the four concession companies to take over water services in the state. This would be the fourth state offer since 2009, all previous ones having been rejected on the grounds that the amounts were considered too low.

Energy, Green Technology and Water Minister Peter Chin expressed his doubts over whether the takeover would take place – this is ironic, given the fact that the federal government itself would need to give the green light as the golden shareholder of Syabas via the Finance Ministry. The obstacle to getting a deal signed, sealed and delivered may not necessarily lie with Syabas alone after all.

Perhaps a reminder is needed here, that the water restructuring was a policy of the federal government. The Water Services Industry Act 2006 was passed in Parliament with the understanding that fragmented water industries like that of Selangor would eventually be integrated to ensure a more holistic approach.

Under the previous Selangor offers, the model would be exactly this: returning water services to a state-run entity practising good governance, run by professional experts experienced in the water industry. This would ensure better water quality for consumers, not trapped by high and increasing tariff rates. It was interesting to note in Tan’s presentation, for example, that Johor has the highest water tariffs in the country, whose water industry is run entirely by the private sector.

Selangor’s water companies’ financial performance was the worst among all states in Malaysia as at 2007 and 2008, which begs the question of what solution is in store. The answer is not to fork out even more public funds to save an already drowning ship, but to resolve the matter once and for all by pushing for a radical change in the industry’s ownership, preferably to a government body with no rent-seeking interests. The federal government’s role is to determine the best policy for public and national interest – this is one time it should deliver on that commitment without hesitation.

Posted in Economics, Selangor, Water | Leave a comment

The Economy of Handouts

Posted on February 9, 2013 by Tricia

The Economy of Handouts 

(theSun, 9th February 2013)

During a recent handout event of BR1M 2.0, or the 1Malaysia People’s Aid, Prime Minister Najib Abdul Razak said this proved the Barisan Nasional government was a champion in administering the country and managing the economy. Under the scheme, some seven million people were estimated to receive the aid, including 4.1 million recipients of BR1M last year. In short, these were direct one-off payments of RM500 to households with a combined income of less than RM3,000 a month, and RM250 to singles earning less than RM2,000 a month.

This close to the polls, (the 13th general elections must be held in June this year at the very latest), one cannot help but draw a connection between the two. An Umno politician stated that it has nothing to do with the elections since the first installation took place last year, quite forgetting that if not for Bersih 2.0 in June 2012, an election may well have been called for that year.

It seems fairly obvious that these goodies are meant to boost Barisan’s popularity ahead of the elections. And although vote-buying itself would not be considered legal, this is where the lines are blurred. Article 10(3) of the Election Offences Act 1954 considers anyone who makes any such gift, offer or promise in order to induce or “procure… the vote of any… person” guilty of bribery. It can, however, be argued that there is no direct inducement taking place in this particular situation. Recipients of the cash aid are in no way obliged to vote for Barisan – of their own free will, anyway.

The Economics of Cash Handouts

The more important question is whether such a cash handout should be considered good policy or not. On the one hand, the cash genuinely does help those struggling to make ends meet, and could be considered fair returns of money rightfully belonging to the rakyat. After all, Pakatan state governments also have cash schemes to help the poor and underprivileged.

But there is, in fact, a difference. A big one. Selangor and Penang, both Pakatan-led states that provide financial aid for senior citizens, children and the disabled, have far surpassed their predecessors’ financial performance. Selangor increased its cash reserves to RM1.9 billion in 2011, its highest in 28 years whilst Penang successfully reduced its state debt by 95% from RM600 million to RM35 million in the same year.

This is not the case for the federal government, which has a run a fiscal deficit since 1997. Although it has fallen slightly from its 22-year high of 7 percent in 2009 to 4.5 percent in 2012, our fiscal records aren’t very stellar. Our debt to GDP ratio is at 53 percent, just below the statutory limit of 55 percent.

Both BR1M packages will cost the government an estimated RM2.6 billion and RM3 billion respectively. Najib stated that because the economy continues to expand, this results in increased tax collection and therefore the reason for which BR1M can be dished out.

In reality, a huge RM13.8 billion supplementary budget was tabled in June 2012, forming almost 5 percent of the original budget. Out of this, RM7.5 billion was for cash aid and oil and gas subsidies.

Perhaps we would feel at ease if the budget was more transparent and Malaysians could track where every ringgit and sen of tax-payers’ money is being spent. But here again the country falls short.

In the Open Budget Index 2012 released earlier this week, which measures budget transparency and accountability around the world, Malaysia fell in its rankings from 54th, to 55th and finally to 62nd position in 2008, 2010 and 2012 respectively. Scores also fell from 35 to 39 out of a hundred. Placed shamefully in the category of “minimal information”, our neighbour Indonesia outshines us by scoring 62 and ranking 20th of the 98 countries surveyed, providing “significant information” on its budget.

Popular Populism

The other difference between Pakatan-state financial aid packages and BR1M is that whilst the former is structured, specifically programmed and built into the state’s annual expenditure plans, the latter is a one-off handout.

Whilst people may benefit temporarily with the cash in their pockets, is this really the most optimal use of national funds? Would these billions of ringgit not be better used for investing into education, building skills and talent which would eventually improve productive capacity and increase incomes – all areas that a federal government actually does govern?

Of course, this isn’t really new. It has been common practice for governments around the world to engage in populist policies in order to win over the masses – you do not bite the hand that feeds you – and making people dependent on government for basic survival is a sure way of staying in power. Former Thai Prime Minister Thaksin used the central government’s “Village Fund” as a policy – and not a direct bribe by politicians – to woo rural voters.

A Merdeka Center survey in December 2012 not surprisingly revealed that satisfaction levels with Prime Minister Najib Razak’s performance was highest at 80 percent among households with a monthly income of below RM1,500.

Although BR1M itself may not necessarily fall under the category of vote-buying, it does come dangerously close. Our former Prime Minister also implied as much in a recent speech of his. And if so, the Election Commission could certainly do more to monitor all forms of vote-buying, which is its responsibility anyhow. After all, its role is to regulate and manage “free and fair elections” (Election Commission Website), which can only be accomplished by way of a bribe-free level-playing field.

Posted in Corruption, Economics | 1 Comment

Curing the healthcare system

Posted on February 1, 2013 by Tricia

Curing the healthcare system

(From Penang Monthly, February 2013)

Photograph: epSos.de/Flickr

Photograph: epSos.de/Flickr

Previous articles in this column have elaborated at length on the highly centralised system of government in Malaysia where, despite being a federation, the “federated states” of the country are left with very limited areas of responsibility. Healthcare is one such example. 

As a matter of fact, public health and sanitation are included in the so-called Concurrent List, which theoretically means that that area of administration involves shared powers between the federal and state governments. However, in reality, healthcare policies are determined by the central government under its various departments, namely the Ministry of Health, the Malaysian Medical Council and public healthcare administered by state health departments. State governments of the day have very little say over these policies or their implementation.

Nevertheless, it is worth examining the programmes that have been run by the Penang and Selangor state governments over the last five years, despite their limitations. In the coming year, the Penang CAT Dialysis Centre will be one of the major programmes, where, with the help of a private company, a license application is being made to the Ministry of Health. It is expected that patients receiving dialysis treatment at this centre will only pay RM30 instead of the RM50-RM60 they would pay at other dialysis centres run by NGOs. Another will be Penbar, or Program Pulau Pinang Bebas Asap Rokok, an anti-smoking initiative.

Similarly, Selangor has also initiated several healthcare programmes such as anti-dengue squads, which is an important scheme given the fact that the state has one of the highest percentages of dengue infections in Malaysia. Health awareness programmes amongst civil servants as well as financial contributions are other examples of the once-off activities that are run by the state.

However, these state efforts are rather meagre considering the dismal conditions facing healthcare in the country today. The current situation is not sustainable in ensuring a good majority of the nation’s citizens are kept healthy and productive, which begs the question of what alternative solutions there may be.

A major problem is the increasing disparity between public and private healthcare provision.

According to figures from 2000, 54% of doctors (who are in the public system) have to care for 80% of patients nationwide. The remaining 46% of doctors are in the private sector, but only care for 20% of patients in the country. In addition, 60% of specialists in the country are in the private sector, but they only look after 25% of the most complicated cases. Selangor, for example, has 65 private hospitals but only 11 public hospitals.

Table: Expenditure on health services as percentage of GDP. Source: WHO, 2009. Illustration: Lau Su Lin

Table: Expenditure on health services as percentage of GDP.
Source: WHO, 2009.
Illustration: Lau Su Lin

Herein lies the problem. No doubt, total expenditure on health increased from RM8.21bil to RM24.79bil between 1997 and 2006. But as a percentage of GDP, this amounted only to a small increase, from three per cent to 4.3% (whereas WHO recommends an allocation of at least six per cent of GDP). Second and more importantly, when broken down into public and private spending, government expenditure on health as of 2006 was 1.94% of GDP, compared to private expenditure on health making up 2.36% of GDP, or RM4.2bil to RM13.7bil over the same period. WHO placed Malaysia in 151st position out of 193 countries in healthcare expenditure between 2000 and 2005.

Added to this is the attrition of medical personnel from the public to the private healthcare sector, which the chart below shows. This is hardly surprising given the better pay and working conditions on offer in the private sector. This is in turn an indirect effect of government policy – as the government increasingly viewed healthcare through the lens of investment, it began providing more incentives (such as tax breaks and subsidies) to private hospitals.

Figure: Trends of doctors leaving government service. Source: Ministry of Health, 2009; Ministry of Health Economic Planning Unit and UNDP, 2006. Illustration: Lau Su Lin

Figure: Trends of doctors leaving government service.
Source: Ministry of Health, 2009; Ministry of Health Economic Planning Unit and UNDP, 2006.
Illustration: Lau Su Lin

One solution proposed by the government that received harsh criticism when its working paper was released in 2009 is its 1Care policy, a national healthcare financing scheme which essentially requires all Malaysians to contribute a proportion (the proposal states 10%) of their monthly income, and in return be given certain medical privileges. Opponents of this feel that the priority should be for the government to increase its expenditure on healthcare gradually over time to five or six per cent of GDP before transferring the burden of paying for increasing medical costs to the rakyat. More troubling is that since only about 10% of Malaysians currently contribute income tax, these would be the same people supporting the medical bill of the country, also effectively and simultaneously reducing their disposable income.

One direct result of the insufficient government spending on healthcare is the lack of funds to upgrade and build public hospitals. The bustling city of Petaling Jaya only has one public hospital (Universiti Malaya Medical Centre), whilst Shah Alam, the state capital of Selangor, has none; its hospital construction is severely delayed due to a lack of funds (some allege a crony contractor). Originally slated to be completed in 2011, it is now postponed till the end of 2013. There is a long list of other hospitals still waiting to be built and upgraded.

The government continues to embark on its “health tourism” campaign, which, from an investment perspective, may be thoroughly attractive. There is also the argument that this allows people a greater array of medical options. Health Minister Liow Tiong Lai, in his explanation of the 1Care proposal, states that the insurance would ensure basic access to primary care and patients would then pay the difference for any secondary care thereafter.

However, the lack of transparency and consultation with NGOs, state governments and other stakeholders is of great concern – the details and contents of such a far-reaching policy ought to be discussed publicly before any decision is made. For example, WHO has estimated that between 20% and 40% of healthcare expenditure are regularly wasted due to corruption and inefficiency. For this reason, the Selangor government deeply opposed the initial proposal; its Permanent Committee for Health organised a seminar in 2009 themed “The Future of the Malaysian Healthcare System” to discuss this with representatives of the private and public healthcare sector and other concerned NGOs.

Second, it is crucial for the government to keep in mind that whilst private healthcare entrants may boost investment statistics, this is equally damaging to the public healthcare sector. On the one hand, Putrajaya laments the pallid conditions of public hospitals, but on the other hand it continues to lavishly attract private hospitals in. One may agree with private healthcare in urban regions where people can afford to live, but priority must be given to ensuring an equitable distribution across the country – between cities and rural areas.

Finally, decentralisation must be mentioned as another potential solution. State and local governments could be given greater responsibilities along with fiscal decentralisation, i.e. revenue collection and disbursement powers. Other countries such as Canada, the US, South Africa and Sweden allow state and provincial governments the authority of healthcare management. States could then ensure greater representation, perhaps in both private and public hospital boards and committees, with oversight over selected matters. It could also provide infrastructure and coordinate the placement of local doctors to health clinics (klinik kesihatan), instead of the existing 1Malaysia clinics which have no doctors (the latter has been the focus of Prime Minister Datuk Seri Najib Tun Razak). Of course, all of the above must be carried out through efficient coordination, congruence between federal and state policy, and sufficient tax funds.

What is certain is that reforms must involve all key stakeholders and adopt a holistic approach to national development. A wealthy Malaysia must also be a healthy one.

Posted in Economics, Healthcare, Public Administration | Leave a comment