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

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

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.

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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

Don’t Muddy the Water Issue

Posted on January 25, 2013 by Tricia

Don’t Muddy the Water Issue

(From theSun, 25th January 2013)

The water saga between the Selangor government and water operator Syabas took another turn in the latest episode of the Wangsa Maju pump station fiasco that affected more than 27,000 households in the Klang Valley. It is easy to confuse the many issues, thereby muddying them together. But first, some facts.

The Wangsa Maju pump house – which is made up of 4 pumps and 1 for standby purposes – broke down on 29th December last year and 1st January, and since then the blame game has ensued between both parties accusing the other of being at fault. The pump house has a design capacity of 180mld (million litres per day) in total.

Syabas claims that the failure was due to “operating above its design capacity for a long period of time in recent years” (Syabas, 15 January 2013). Selangor state checks, however, revealed that throughout 2012, the pumps operated beyond its capacity of 200mld for only 18 days out of the whole year.

The central issue here is whether or not the pumps have actually been well-maintained to operate consistently without breaking down. The responsibility to maintain these pumps falls under Syabas and not the Selangor government. According to standard operating procedure, ‘preventive periodic maintenance’ is a basic requirement that should have been conducted by specific capable contractors. This was apparently conducted up to 2008, after which it was only done whenever a pump was damaged.

Prevention is surely better than cure, something any water operator should have known at the outset. No regular checks by the appropriate technical experts were carried out, and this was the primary reason for the breakdown. Even if Syabas employees did routine inspection, why did they not realise the pumps were already faulty, and thereafter immediately alert their superiors? In fact, it was revealed that one of the five pumps was already reported as faulty since last year and this was not addressed.

This brings us to the next issue of good governance. The water industry is regulated by SPAN (National Water Services Commission). Syabas has unfortunately demonstrated its inability to manage its equipment efficiently, when it should have investigated the root problem even before it became a problem by following SOPs and best practices.

SPAN together with its Ministry of Energy, Green Technology and Water should use this perfect opportunity to correct any inefficiencies in the water delivery system. Failure to reprimand only means it is silently supporting incompetency. It is not clear whether SPAN had in fact instructed Syabas (or rather, Puncak Niaga Sdn Bhd, the actual pump operator) to make urgent corrective measures.

Added to this is a revelation in the Auditor-General’s Audit Report for the operating period of 2009-2011, which showed amongst other things that the funds Syabas received for capital expenditure (capex) from the Selangor government were actually used for operating expenditure (opex). If such funds were necessary for the upgrading of water pumps, then they should not have been misallocated.

Syabas would have us believe that this has everything to do with the supposed water shortage in Selangor and the need for the monstrosity of the Langat 2 plant and Pahang-Selangor water transfer project. This doesn’t make sense, since the Langat 2 plant was slated for completion in 2014 anyway. The Wangsa Maju plant failure has nothing to do with Langat 2.

In earlier columns, I stated that this RM9 billion mega-project should be reconsidered in preference of other solutions like upgrading existing plants, rainwater harvesting, water recycling and treatment of Selangor’s raw water resources.

Some have also raised the question of why the Selangor government lays the blame squarely on Syabas when it holds 30% of its shares. Although this means attending board meetings and access to documents, Selangor is still the minority shareholder, and has no role in dealing with day to day operations. In fact, the federal government through its Finance Ministry Incorporated holds the golden share of Syabas, which allows them to flex some muscles. Nowhere in the concession agreement (which, by the way, is also signed by the federal government) does it say that maintenance of pump stations falls under the jurisdiction of the state government.

Finally, enter political drama. In a blatant fish-for-votes speech, Prime Minister Najib Razak promised to resolve Selangor’s water woes if Barisan Nasional is given the mandate to govern the state in the upcoming general election. This is most distasteful indeed, which basically says that until and unless Barisan retakes the Selangor government, the federal government will do nothing and sit idly by as the people suffer the misfortunes of an inefficient company.

Under Section 191(5) of the Water Services Commission Act 2006, the Minister has the right to determine what amounts to national interest issues, and this determination would be “final and binding”. This means the Minister – and through its regulator SPAN – would be empowered to make the best decision to resolve the water problems of Selangor, whether it means termination, restructuring, or migration to a new regime. Such action must be taken regardless of political support, and the people of Kuala Lumpur, Selangor and Putrajaya deserve better.

Posted in Corruption, Economics, Selangor, Water | Leave a comment

A Neutral Public Service

Posted on January 11, 2013 by Tricia

A Neutral Public Service 

(From theSun, 11th January 2013)

As a public policy researcher, filmmaking was the last thing I thought I would venture into. But having received a grant and opportunity from a local NGO, Pusat KOMAS, last year to write and direct a documentary, this exciting experience has convinced me that the visual medium is sometimes more powerful than what any amount of writing can achieve. The short film, “The Rights of The Dead”, analyses the case of the late Teoh Beng Hock, who died at the Malaysian Anti-Corruption Commission premises in July 2009 whilst being interrogated for an alleged corruption case involving a member of the Selangor Exco.

Although the documentary encapsulates the case and shockingly cut-short life of Teoh, it was meant to provoke thinking and discussion of the bigger picture. First, that this was not the first death in custody to occur, where in fact 156 people have died in custody between 2000 and 2011. Is this perhaps symptomatic of a more pressing problem, that of the structure and system that govern us as Malaysians?

Most recently, yet another body was found where Nagarajan, arrested for a drug-related offence reportedly died from a fall, although “wounds on his body raised suspicions” (theSun, 2nd January 2013). In response to this incident, the Malaysian Bar called for the establishment of a coroner’s court so that there is structural reform of inquests. Presently, although the Criminal Procedure Code deems it mandatory to conduct inquests for deaths in custody, this is not always done. A coroner’s court would bring some system into what seems to be a rather haphazard way of deciding whether or not an inquest should be formed.

At the various screenings both public and private that have taken place over the last few months, one of the points most often stressed was that it is only when the various institutions of government are independent and strong that we can have faith that the system would look out for us in time of need. Thus, for example, the Judiciary, Police, the forensic doctors in public service, government agencies (in this instance, the MACC), and so on, must behave with the utmost integrity and independence without being subservient to the demands of political interference.

The corruption investigation for which Teoh was questioned took place at a time of heightened political tension between the Barisan federal government and Pakatan state government of Selangor. This then begs the question of how neutral the civil service is. Over the past five years, states led by the Pakatan Rakyat have been regularly affected when federally-appointed servants working in their states have conflicted allegiances. A recent example would be the 24-hour notice of the Petaling Jaya Mayor’s transfer, which came as a surprise to the Selangor government.

In 1845, the Northcote-Trevelyan Report, which prescribed public service ethos, emphasised that a politically neutral civil service “means complete loyalty to the government of the day regardless of its political complexion” (taken from the Chief Secretary’s website). It also stipulated that the public service should provide continuous services which are impartial and appropriate for public interest.

Increasingly, people no longer have patience for what they perceive to be an overdose of politics eating into their daily lives. When politics interferes into the ability of public service delivery agencies and mechanisms, this results in an overall net negative: poor quality of amenities, bad traffic, less time, and a lower disposable income (due to the lack of competitiveness in an over-monopolised market). But worse, politics entered the very doorstep of the Teoh family on the day they received the news of Beng Hock’s demise.

This year heralds what is certain to be an election year, with many pondering the results ahead of time. Whichever way the wind blows at both state and federal government levels, it must be stressed that the political coalition(s) in power should promote a neutral public service. There ought to be assurance given that the federal government would not discriminate against any state government that happens to be of a different political affiliation. It is also essential that in whichever post-election outcome, civil servants in all agencies behave professionally in ensuring a smooth transition or continuation of power.

Interestingly, several discussants at the screenings to date have themselves been public servants. Without mentioning any departments, it is worth noting that given the appropriate leadership, and confidence to assume the right stand in practising principles of integrity, the Malaysian public service can certainly be honed and restored to its “first-class civil service” goal.

However, finally and most importantly, providing for these institutions’ independence would be the priority of government. In the long run, it is hoped that these important steps would improve things systemically, and more crucially, in order that yet another tragic incident would not have to take place again.

Posted in General Politics, Human Rights, Public Administration | Leave a comment

The Personal and the Professional

Posted on January 8, 2013 by Tricia

This article first appeared in Selangor Times in January 2013.

Yet another Malaysian incident has made it into international news. The Wall Street Journal, amongst other newspapers since, has reported on Bank Islam’s suspension of Azrul Azwar Ahmad Tajudin after his analysis of a possible Opposition win at Federal Parliament was presented at a Regional Outlook Forum in Singapore last week.

Azrul’s presentation on Malaysia’s economic and political outlook of 2013 included a section on the domestic political landscape, which outlined three possible scenarios as a result of the upcoming 13th General Election. The first, a scenario with moderate probability or best-case scenario was a narrow win for Barisan Nasional; the second a scenario with high probability or base-case scenario with a narrow win for Pakatan Rakyat; and finally a third scenario with very low probability or worst-case scenario with a big loss for Barisan Nasional.

Since then, a group of civil society organisations and individuals have issued a statement in support of Azrul, and in protest of what is seen to be Bank Islam’s unprofessional and unjust act of suspension. In its statement (for full disclosure, I was also a signatory to this statement), it was argued that financial markets would require free access to information, and that elections analyses are of “paramount importance for the markets and the country”. Finally, that in so doing, Bank Islam showed its reporting policy of being favourable only to Barisan-friendly news.

This issue is something that all of us in professional jobs and relationships have to deal with on a regular basis. It brings up several points in question, namely whether there ought to be a distinction between one’s personal versus professional opinions on a certain – in this case, political – matter. For instance, one blogger wrote stating that Azrul should have known that working in such a corporation meant requiring him to behave in a manner expected of him. Bank Islam, a bank close to the Barisan government, would naturally have received pressure after what was perceived to be a Pakatan-friendly prediction. Other bloggers have also insinuated that because he is a member of Parti Keadilan Rakyat, and had exchanged e-mails with members of the political party, this meant he compromised on his professionalism.

A second point is whether or not it is within the job function and ability of an economist to make elections predictions, the way a political scientist would have more likely been able to. For what it’s worth, Azrul did precede his analyses with the acknowledgement that he was no political analyst, and that the prediction was based on a set of factors including: analysis of voter profile, past voting trends in the 2008 election and consequent 16 by-elections, Sarawak state elections, ground visits, voting patterns with identified election issues, as well as assumed conditions under which these would take place.

Just how much of a gap should exist between our personal and professional lives? One imagines the number of Malaysians in either the private or public sector who may, perhaps, have attended last Saturday’s successful Himpunan Kebangkitan Rakyat (People’s Uprising Rally) in Stadium Merdeka in support of the opposition Pakatan Rakyat – but yet keep it quiet when entering their office premises on the following Monday morning, for fear that their personal sentiments would have an adverse effect on their job positions, contracting relationships with government, and so on.

Should they have to? Ought an employee to adhere strictly to the corporate code of conduct and set of beliefs of his or her employer at all times, or should independent thought be protected as the right to freedom of expression?

These answers will vary according to the specific employer in question. However, a general principle would be for the employee to behave in a professional manner as far as the boundaries of the work required of him go. In this particular situation, the question we may ask is whether as the Chief Economist of Bank Islam, it was considered fair and acceptable for him to have conducted political analyses for the purposes of determining Malaysia’s economic outlook for the year.

We know, for example, that political outcomes have a direct impact on the economy. A change in government would certainly affect markets, investor sentiment and institutional structures. It is therefore safe to state that presenting his election outcome analyses was part and parcel of behaving in a professional manner. There is a difference between expressing a theoretical analysis and a personal preference; in this case, it was the former and not the latter.

Bank Islam does emerge from this looking the loser, and may have to conduct some public relations messaging to defend its actions. By suspending Azrul, the message it sent was “we do not tolerate opinions that are favourable to any party other than the ruling government”. Going forward, employers at all levels of companies would be forced to consider how to balance their employees’ needs with their personal sentiment; is there a ‘line’ to maintain, and if so, what justifies this position? Ultimately, what must be remembered is that individuals when undertaking their jobs based on their professional duties as required should not be persecuted for political reasons alone.

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