Malaysia's 2011 budget......could have been so much better

Simple and to the point - here are the good points :
1) MRT - though this is long overdue and should have been done eons ago (but then, who would protect proton? Actually proton could protect itself by improving quality and competitiveness but that has always been a problem for Malaysia - protect, protect and weaken from within)
2) Development plans for greater KL
3) Slightly better allocation for Health and Education

There are however more cons :

It seems to me that the gubment is really not trying to attract foreign investment but trying instead to stimulate local private players to drive the economy (many of these, I may add are glcs...but that's not surprising, right?)

1) Nothing to excite foreign investors - no tax cuts/ tax breaks or review of 50 year old policies that may really improve the quality of human capital in Malaysia or at least reduce the brain drain in Malaysia.
2) This was supposed to be a budget that will build human capital - not sure which aspect of the budget covers this - don't quite see it
3) The 100 storey tower??? What the hey do we need this for? The twin towers are beautiful and iconic and they are sufficient as it is. Do you see Singapore, Thailand or Indonesia trying to build the tallest towers etc? They are far more pragmatic and they are attracting more FDI than we are. I'm not sure whose hair brained idea it was to have the tower....  The general consensus is that the government is trying once again to enrich their cronies and persecute the middle class (which funds a large proportion of the government's revenue)
4) Higher service taxes (1% which will largely affect the urban middle class who have been funding the governments coffers and civil servant salaries all this while) Oh but the government would so much rather protect it's cronies who actually also help fund the governments coffers.....
5) Reduced import taxes for imported branded goods which are largely purchased by the upper classes and the Arab tourists who visit. Retailers, importers and the rich and famous are likely to benefit from this. Perhaps there will be some spillover effect for local players (hoteliers etc...) but I am thinking that this will not help improve tourism much in Malaysia - Thailand appears on the tourist radar far more often.....due to the fun nightlife and entertainment activities. So in the end, who will benefit? Perhaps people like Farah Khan of the Melia group and other rich magnates and  politicians who will pay less for their wives handbags and shoes....


Sigh - we expected so much more and were excited about the ETP etc.... somehow it has all fallen flat.

Disclaimer : By the way, to those who wonder if I am influenced by opposition blogs - I have not read any of the comments yet/ or articles on those blogs - these thoughts are my own.

The Economic Transformation Programme - Malaysia

I attended two of the syndication meetings for the NKEA ETP labs as well as the open day for the ETP last week. It was heartening indeed to see that the government has taken some concrete steps to stimulate the economy and ensure that Malaysia achieves a higher GNI by 2020. There are naturally queries that have to be answered - the level of details as most of the laboratory sessions that I attended in the open day did not seem to address HOW they planned to achieve those targets but really the sense was more that the ideas were there. The key thing to note is that the ideas came largely from the private sector players. It was disheartening to note the CEO of Pemandu state that this is private sector project and that if it failed, the blame would not lie with the government as it was a private sector driven project (I hope he meant it more as a joke.....)  Some items that I feel must be in place before this will actually work :

1) The government has to be a key stakeholder in the ETP - in the formulation of policies and in most of all ensuring full transparency with tenders as well as project allocation (see below).
2) There seems to be a lack of effort with the ETP to involve foreign investment because the govt.  is still hell bent on protecting local industry players. Let me highlight the fact that there seems to be mostly involvement from domestic private sector players and not foreign private sector players and yet one of the EPP for Greater KL is to attract the top 100 MNC to have their operations in Malaysia. How they plan to do that has not been outlined

The problem with this is that efforts such as the MRT which everyone agrees to be a good idea is long overdue (and why - because of protectionist policies to protect the local automative industry) whereas other countries in our region already have such infrastructure in place and better yet have attracted investment from foreign players to start up factories manufacturing automobiles eg. Thailand and Indonesia.

What can we as Malaysia do to compete with the other countries in the region who already have the infrastructure and policies in place? Really more thought has to go into that. It is easy to say that we want to attract 100 MNCs - but how will you convince us that it will be worthwhile to do so? That should be the main focus. I will definitely be purchasing the thick version of the ETP book on the 26th of October because I am presuming that there will be more details therein.

So my question is - is this enough and are we really making any fundamental changes - in the end the proof will be in the pudding ...

2) In the healthcare sector which is of interest to me - I am sad to say that the proposed plans will detract rather than invite foreign company investment in Malaysia. Why? Well suffice to say that protectionist efforts are in place again to protect the GLC generic companies in Malaysia. I was told that the CEO or some foreign pharmaceutical companies actually wrote a comment on the feedback form for one of the labs that attending the lab was a complete waste of time.

What the lab should have striven to do was to ask corporate players what it would take to have the companies invest in Malaysia, eg. manufacturing facilities, human capital requirements, tax breaks etc.

Instead, industry players are left to feel that the government is threatening rather than partnering with the MNC in this area.

I hope that this feedback will be taken seriously because ultimately in the long run, protectionist measures are not going to get the country anywhere.

Fine you can rely on local players but that's not what other smarter countries in the region are doing. Faham tak?

Poor quality of political blogging ...

I was trying to surf the internet to look for comments on the latest PKR debacle. I chanced upon some blogs and was completely taken aback by the level of profanity and lack of objective discussion.  While I will not mention these blogs here, I would like to merely highlight that something has to be done to shape the minds of bloggers productively and develop and nurture sound discussion rather than  profane and racist debate.

This is scary - it really is and I am ashamed that our education system has generated this sort of mentality.

Talk of becoming a high income nation....

What does it take to become a high income nation? I am not an economist - so these are merely random thoughts from a brain that can't seem to stop thinking about how to make this country a better place for all of us (Malaysians first, naturally!)

1) Boost government income and reduce the budget deficit by improving the quality of our human capital.

How can one do this? Boosting the earning power of the rakyat hence deriving a larger proportion of government income through income tax contributions. (Singapore, Hong Kong are richer countries based on the quality of their human capital - yet these countries have lower tax rates than Malaysia currently..... it is not higher taxation that helps - it is the earning capacity of the people and this is not achieved by allowing our best brains to leave the country and leaving the bulk of the population in low earning, low productivity jobs - these low income wage earners do not contribute to the taxes that are needed to fund our economic progress.

2) There is talk of removing subsidies so that employers will be forced to raise salaries of workers. Having said that, what makes Malaysia competitive amongst our counterparts in the emerging world? Lower costs and our middle sized population. However, removing subsidies alone is certainly not going to be the driving force that will make foreign companies invest more in our country - what's the attraction for foreign companies when they know that costs are going to rise? What value is in it for employers especially if the quality of the human capital or productivity does not improve?

It is a question that we all try very hard to answer but did certain policies of the government in the past contribute to the state of the poor quality of the human capital currently? The fact is that the one thing that can improve human capital is open competition. What drives each of us to achieve success and what makes a winner a winner? Without that, we will only be subject to more mediocrity.

3) Government expenditure - so far I have talked about increasing government income. (Let's not talk about Petronas, yet, ok). How transparent is the government with regard to spending of taxpayers money? Failed mega projects? Mismanagement of funds (BTW, why is there no longer any news on PKFZ....?).

The key thing is this : How can the government request the public to tighten their belts with the removal of subsidies when they can't even be open and accountable with how they spend our money? The onus is on the government to prove that they are worthy in the management of taxpayers money.

What are the issues that are close to the taxpayers hearts?

1) Quality Education where the best brains are given the most opportunities - true meritocricy (how else do you improve human capital?), access to libraries and information technology .

2) Good public infrastructure (we pay tolls everywhere and yet we pay higher taxes than in Singapore - go figure) in the form of public roads, public transportation

3) Foreign investments and job opportunities - however this area lacks transparency and regulation (the key thing is that there should be some sort of conflict of interest clauses - politicians too often want a piece of the pie and that is not good governance) - if this is addressed, and policies do not get switched over and flip flopped all the time, perhaps the investors would have a better appetite to invest in Malaysia.

4) Rewards for innovation

5) Affordable Healthcare

We certainly do not need high spending on defense......

What value do I get for every dollar of taxes that I pay?

What will it take to make the government realize that the quality of the human capital in Malaysia desperately needs to be improved?

If we continue as a nation to fight amongst ourselves, we will eventually lose out to the competition globally. So should you listen to the fundamentalists (IA - PKS) with their protectionist measures and lose out to the rest of the world or should you listen to some common sense and move the nation forward? Because that will eventually improve the lot of everyone in Malaysia (including IA-PKS though they may be too small minded to see this now)

What should National Service be about?

Certainly not about a 3 month stint in the jungle by teenagers who still eventually fall back to their racial castes. National Service is all about bright Malaysians coming back from abroad to serve their country instead of switching their allegiance to a foreign country and contributing to the coffers of the "so called - first world"

However, the real challenge is whether the current policies in Malaysia are enough to bring back this talent to help us develop into a first world nation? Can we do this? Not with fundamentalists and protectionist measures. Malaysia has to grow up - that's just the point.

Oh think not of what the country can do for you but what you can do for the country? But in a nutshell - is this just idealism?

There may be more to the "Name" issue

After reading the analysis of the situation by columnist Jocelyn Tan, I started thinking more about the current situation wondering why the government took a stand to appeal the High Court decision. After all, was it wise to bring an additional parameter (politics) into an already complicated mix? It does not take a genius to know that this is a very sensitive and highly charged area and the potential that it could escalate into something bigger would be a very real threat. Why allow it to escalate further?

Who would stand to gain from this situation, I wondered?

There are several possibilities . However, these are merely my random thoughts.

The next General Election is fast gaining on us . What does the government need to do to retain their control? The major battle that must be fought, I would think is to regain the support of the majority of the Malaysian Malays who contributed significantly to the loss of 5 states in the previous general election in March 2008. What was the main contributing factor to the loss of support by this large and growing group? Was it the charisma of DSAI? Or was it largely due to the growing influence of PAS? Was it a combination of the two?

It is clear that the government realized the growing threat and needed to take action to regain this lost support base.

Here, understanding the enemy's weaknesses becomes an item of major importance.

What would be needed to weaken the enemy? Ever heard of divide and conquer? PAS, one of the largest political parties on the opposition divide is clearly divided on this matter...... the situation now is open to vulnerabilities but the fact that other parties are unknowingly being dragged into the mix is sad to watch.

Why allow the word to be used only in Sabah and Sarawak? Oh yes - wasn't it East Malaysia that saved Barisan Nasional in the last election..... Clearly, retaining the support of Sabah and Sarawak is also paramount. It is noteworthy that leaders from these two states have been distinctly silent on the "Name" matter.

There is also the other side of the coin to look at - would the opposition stand to gain from this?

Please refer to this article :

http://www.atimes.com/atimes/Southeast_Asia/LA16Ae02.html

Is this a ploy to win over Sabah and Sarawak by the opposition?

It seems to me that both sides of the political divide are jumping on the bandwagon and using this issue to gain political mileage.

We will watch as this situation continues to unfold. Let's hope that the affected parties will not allow themselves to be casualties in what many would see as an unnecessary battle. What happened to responsible leadership?

Let us not be pawns in this sinister battle.

Please don't use religion to gain political mileage. It's just not nice!

Where is Malaysia headed? In response to Romerz post

I agree with Masterwordsmith that it is indeed worrying to see where Malaysia is headed.
After the March 2008 GE, we watched and waited to see of there would be any improvement in the likes of our current administration.
We watched as scandals (Lingam-ism, PKFZ, Jet engines, Toyolism, stadium collapses... amongst others) are reported but no tangible outcome of investigations is achieved. We watch in sadness when we see lives lost (TBH being one of them)for no apparent reason. We watch as the government makes flip flop decisions that affect the public and the future of our generations to come like our education system.
We watch as religious extremism is allowed to be fueled in the form of cowheads and now the burning of churches
We watch as the democratic process is tainted with the Perak incident.(We have not forgotten)
We watch as all these issues continue to remain unresolved and politicians continue to bicker and fight for control.
Where is Malaysia headed? I think it is very clear.
It is good to see though that common sense does prevail with calls to remain calm and avoid retaliation or demonstrations that can further stoke dissent in a sensitive situation.