Mr.Najib, Is My Money Well Spent?

The Budget 2015 announced by Dato' Seri Najib recently, has received mixed reactions from the Malaysians. In fact, the recent budget also received criticism from the Malaysian economic experts such as Tan Sri Ramon Navaratnam. The most important question is, whether the budget is really people-friendly?

The 2015 Budget amounts to RM273.94 billion, an increase of RM9.74 billion compared to the previous year. And as in previous years, emolument or the civil servants' salaries, is the largest component of the budget in 2015 in which next year, the emolument is estimated at RM65.6 billion. This is a big increment, especially when compared to the year 2013 which only reached RM61 billion.

Does the increase in emoluments relevant, when in reality, the government is actively trying to control the government deficit?

Eliminate the post of the Special Envoy

If anyone asks me about a field that promises money for life, I will definitely recommend the person to join politics (related to the ruling party). Within last few years, Dato' Seri Najib has introduced the positions of "special envoy". Datuk Seri Samy Velu (former MIC president and “famed” for his eloquence in Malay language) has been made Special Envoy to South India for infrastructure. Datuk Seri Ong Ka Ting (former MCA president) as the Special Envoy to China and Datuk Seri Dr Jamaluddin Jarjis is the Special Envoy to the United States. Not forgetting, Dato' Seri Tiong King Sin has been appointed as Special Envoy to the East Asia. The Special Envoy post is an addition to the existing ambassador posts.

It is worth to be noted here that countries like India, China, United States and Japan have long had ambassadors and other diplomats from Malaysia's representing our country there.

Thus, the establishment of the office of the Special Envoy is seen as unimportant and just a waste of public money. However, Dato' Seri Najib is likely to deny this statement by saying the Special Envoys are appointed to bring in investment opportunities and other benefits. For example, Samy Velu has good relations with India since he brought many Malaysian companies to invest in India’s infrastructure-building during his tenure as the Minister of Public Works. In that sense, Samy Vellu is the perfect candidate to bring Malaysian capitalists to invest in the emerging India or that’s what Mr. Najib thinks.

For me, this idea is unreasonable. Yes, the success of Samy Velu helping Malaysian companies to venture in India must be taken into concern, but what is the current Minister of Works, Dato Fadhillah Yusuf doing? Could he not continue to bring Malaysian businesses to invest in infrastructure developments in foreign soil? If not, why should he be retained?

Likewise are with all the other Special Envoys. If the existing Ministers and the current ambassadors are doing what their tasked for properly, the office of the Special Envoy should by any sense, be irrelevant.

Many may be wondering why I am pushing for this position to be abolished. Before you call me an opposition “cyber trooper”, I should duly explain. This is due to the fact that a Special Envoy is paid up to RM27,000 as monthly salary. This is greater than the net salary of the Prime Minister! And perhaps, there may also be other benefits. Assuming the position of Special Envoy eliminated, the amount of civil service’s emoluments can definitely be reduced.

Eliminate the posts of Special Advisor to the Prime Minister's

Currently, there are four positions of Special Advisors; Datuk Seri Dr Abdullah Md Zin (Religious Advisor to the PM), Datuk Wira Mohd Johari Baharum (Special Advisor on Northern Corridor Economic Region), Tan Sri Dr Rais Yatim (Advisor on Social Affairs and Culture) and Datuk Seri Shahrizat Abdul Jalil (Advisor on Women’s Development and Entrepreneurship). They are also expected to be paid with a hefty sum monthly, which eventually will result in soaring final figure of emolument.

It is never my intention to question the credibility of these four individuals and spread fallacies, but is Datuk Seri Dr Abdullah Md Zin’s post really necessary since Dato 'Seri Jamil Khir is the minister responsible for Islamic affairs? Should Rais Yatim be appointed when Datuk Seri Nazri Aziz is in charge of the Ministry of Tourism and Culture? And most important of all, should Shahrizat Abdul Jalil be appointed as Advisor on the women’s development when the Dato Rohani Abdul Karim is responsible for the Ministry of Women, Family and Community Development? Was she appointed to the post just because  Dato Shahrizat is Wanita Umno chief, despite the fact that she has lost the election and was linked with the “Cow-gate” scandal?

Should civil servants' salaries be raised?

Yes, the government officials also need a pay raise, but any increment must be followed by improved quality and workmanship. But, is it happening in Malaysia’s public administration?

Public employees whom are not productive and are of poor quality are maintained in the government for fear of "losing votes". Several years ago, the Civil Service New Scheme (SBPA) was introduced and contained "Exit Policy", in which public employees will be evaluated every year and to those who scored less than 70% mark, will be sacked from the public service. However, the objection from CEUPACS (which later agreed with lower scores) and various other parties, SBPA has been replaced with the Transformative Remuneration Scheme which comes with no “exit policy”.

Malaysia currently has 1.4 million civil servants. For me, this is not so bloated compared to other countries because in Malaysia, army and police officials are also counted as public employees, unlike in other countries. However, we cannot and should not compromise with lacklustre performance of some civil servants and they need to be removed. Official statement shows that only 1.1% of civil servants scored less than 70% appraisal marks each year. If so, the "Exit Policy" should be re-introduced in a new form after discussion and explanation of all the parties involved. For this time, it is appropriate if a higher threshold mark of 75% -80% is set.

Conclusion

I personally agree with the rationalization of subsidies, but such attempt alone will not help the government to achieve or a balanced budget. My recommendation is Malaysia needs to reduce expenses in the payment of emoluments by putting the welfare of the people as the main intent, rather than to meet the "passions" of politics.

America versus China; The Impact on Malaysia & Asia-Pacific

When United States of America faced its worst market crash in 2008 since the catastrophic 1929 Great Depression, little did its people know that the worst was yet to come. It took quite some time for the economic powerhouse to stabilise after continuous sluggish economic growth, severe unemployment and high national debt plagued the nation. Since day one after inheriting the “most sought after seat” from his predecessor, Barack Hussein Obama was seen discreetly struggling to put the Uncle Sam’s nation back on track. Nevertheless, he was not to be blamed as most of the problems were inherited from the previous Republican president, George Bush Jr.

            The market crash in early 2008 dubbed as the Great Recession, took place no thanks to unscrupulous bankers and corporate honchos in America’s financial district; the famed Wall Street. The subprime mortgage crisis shook everything apart, leaving many defaulting in their loan repayments and others retrenched without ample compensation. Worse, it was complemented with the much anticipated housing bubble burst. To the uninitiated, to put it simple, housing bubble burst occurs when supply of housing units overrides demand, thus in the process, dragging the market price to a remarkable low level. Whilst this left many new units unoccupied, the speculators who jumped on the bandwagon earlier to profit on the escalating real estate industry received the biggest blow.

            In a bigger scope, even the flamboyant MNCs in US were hit hard by the economic meltdown. Conglomerates like American International Group (AIG) were pushed to the periphery of bankruptcy but was fortunate enough to be bailed out by using America’s taxpayers’ money. To the unlucky ones like the once high-flying Lehman Brothers, it was the end of the road for its stakeholders.

            This maelstrom in Wall Street initiated a brutal domino effect that wrecked economies throughout the globe, most notably the poor and developing economies. Worst off, for export-reliant nations like Malaysia, the economic contagion spelt a heftier damage. Malaysian economy plunged and experienced reduction in private spending. This eventually triggered the Premier, Datuk Seri Najib Razak to announce the roll-out of two fiscal stimulus packages amounting to RM 67 billion in 2009. But, while many parts of the world were facing dampened economic growth, Malaysia’s economy continued to perform miraculously in a very stable and steady manner, spearheaded by the Government’s various plans and initiatives under the National Transformation Policy. The Economic Transformation Programme launched soon after, propelled the economy to a greater prospect despite the world being shrouded in economic uncertainty.

Now, in 2013, Malaysia boasts with sound economic growth and significant level of foreign direct investment (FDI) in its diverse fields, “turbo-boosted” by the five notable economic corridors. Those corridors are the North Corridor Economic Region (NCER), East Coast Economic Region (ECER), Iskandar Malaysia, Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE). Scores of foreign investors have flooded Malaysian shores to invest in many projects and industrial developments. Not only that, Entry Point Projects (EPP) announced by the Prime Minister from time to time have managed to grab attention of not only domestic, but also international cornerstone investors.

            This scenario is not only visible in Malaysia, but also in various other nations in the Asian continent. Prompted by the subprime mortgage crisis in USA coupled with the turbulence in the 17-nations Euro group, investors have lost their “appetite” in the Western nations. After all, the sight of one by one nation in the Eurozone, being bailed out from bankruptcy by using rescue fund from International Monetary Fund did minimised their further interest in investing in those troublesome economies. Soon, in no time, with the limelight shining on Asia, “hot money” flowed into the developing countries which promised better future for their investments.

            And this is where another economic juggernaut rose to prominence. With United States losing its appeal, the Land of Sleeping Giant led by the Communist Party of China aggressively climbed to the top, pulling down Japan, to be “instated” as the world’s latest second biggest economy. The Great China has since become a living nightmare for America. Attracting regional and international investors due to its vast availability of low-cost labours and talent pool, People’s Republic of China became a destination for business-orientated individuals. Ever since Deng Xiaoping’s economic liberation in 1979, China has been growing remarkably outdoing its rivals, particularly after the economic crisis in 2008.

            Whilst some economists feel that China could outdo the US to be world’s biggest economic powerhouse by 2050, this nation is also bolstering itself in all possible aspects. China further advances by reinforcing its influence throughout the globe namely in the Asian Pacific region. This is the hardest blow to the United States and its Congress leaders. After all, most Americans would never have had a better impression on the capability of an Asian nation. Seeing China growing at a remarkable pace together with other better performing economies abbreviated as the BRICs which refers to Brazil, Russia, sub-continent India and China itself, is simply mind-boggling.

            Currently, China, world’s biggest carbon footprint producer, also claims all territories in South China Sea under its jurisdiction. Plus, the country is also struggling with many other issues like the spat over territorial islands rights with South Korea, the Philippines and Japan, the pressure by US to allow appreciation of the Chinese Renmimbi, rebellion in semi-autonomous Tibet and reunification with Taiwan.

            Democratic President Barack Obama saw this sudden growth of China as an imminent threat to America’s status quo in all four corners of the world. Thus, a year back, it was officially announced that the US shall no longer focus in the Middle East, and better US “diplomatic relations” will be fostered in the Asia-Pacific region. America’s involvement in Middle East started even before the Iran-Iraq war until the occupation of Afghanistan and Iraq in the post-9/11 incident period. Although USA categorically denied that its military intervention has failed in the region, by all means, its venture in Iraq and Afghanistan were major flops. With serious deficits hitting its national bottom line, the States is no longer capable to afford more intervention in those nations, in the name of combating terrorism.

            To counter-attack China’s emerging influence in Asian Pacific, the States is foreseeing many possible avenues. Most notably, US has enhanced its power in the region through its proxies, the Philippines, Republic of Korea and Japan. In the meantime, it held military exercise with its proxies as preparation against any untoward attacks. In addition to this, in 2012, America and Australia formally inked an agreement for better future cooperation between the two powerhouses in terms of defence. While the US troops have been gradually petering out of Afghanistan and Iraq as pledged by 2014, their presence in the Asian Pacific region in the past two years has been intensifying.

            Besides that, the Obama administration has pushed for more collaboration with other economies in the region through the currently discussed Trans Pacific Partnership. This agreement seeks to promote free trade and intellectual property protection amongst the participating nations. With the States aiming high in improving its influence in the Asian Pacific region to overcome the new “Chinese fever”, ostensibly there are yet more United States led-initiatives to come.

            Hypothetically, while these two powerhouses are on the chase to outdo each other, may it be in terms of ideology or even economic success, the Malaysian leaders should always be aware. For Malaysia, both nations contribute heavily to its foreign investments and export industries. Thus, good diplomatic liaison with these nations should always be maintained for Malaysia’s own prosperity. Economic developments in Malaysia in recent days have been commended by many international parties such as the World Bank and IMF. With the government rolling-out more action-based policies to spur the economy, Vision 2020 as envisaged by Tun Dr. Mahathir Mohammad can be successfully accomplished!

# My article in soon-to-be released Economics Faculty's magazine of University of Malaya.