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The 12th Malaysia Plan offers few solutions while making the same mistakes; a not so hidden agenda The 12th Malaysia Plan offers few solutions while making the same mistakes; a not so hidden agenda
by Murray Hunter
2021-10-18 07:34:26
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Malaysia’s prime minister Ismail Sabri Yaakob recently launched the 532 page 12th Malaysia Plan (MP12) in parliament. What is clear in the document is that Ismail Sabri didn’t have much time to influence the direction of the plan. Ismail Sabri’s Keluarga Malaysia (Malaysian family) slogan looks to have been hastily placed within the preface, introduction, and conclusion of the document.

Once taking time to read through the document, complete with its slogans, trendy management terms, and incongruencies, the realties of the document are evident.

malplan0000001_400Throughout the preface and introduction, the MP12 document exposes a Rakyat (or people) first paradigm, with catalytic policy enablers. The report promises 14 game changing approaches to transform Malaysia. The implementation will be overseen by transformational leadership, promising the whole nation will be mobilized to achieve the mission of RM12, a prosperous high income, sustainable low carbon economy, that is globally competitive.

The reality of the document couldn’t be more different from what is espoused. Very little focus is given to the devastation of the Malaysian economy from the Covid-19 pandemic. Economic management is perpetuated along the lines of former Malaysia plans, promising much more government intervention. The government has also selected potential industry winners, which in the past have led to so many dismal failures, and taken the same approach to poverty eradication as past five-year plans.

The reality of the document is probably best seen through the statements about Bumiputera equity made by Ismail Sabri during the introduction of the plan to parliament. The government has Keluarga Melayu (Malay family) more in mind, than keluarga Malaysia. The document highlights the economic and social division the country has been steered towards over decades.

The major flaw of MP12 is that it is just not relevant to the current situation facing Malaysia today, due to the Covid-19 pandemic. By the government’s own admission, the data doesn’t exist to quantify the current dire economic situation facing Malaysian citizens today. Calling the current situation, a humanitarian crisis with those in need of food and basic staples growing on a daily basis, is not an under-statement. Statistical data time-lag is hiding the real problems.

The semantics within RM12 just don’t reflect the reality of Malaysian political institutions today. Instead of transformational leadership, the country has witnessed years of political bickering among the Malay elite, where the Yang Di-pertuan Agong, or king has intervened two times over the last two years, installing two different government administrations. This bickering hasn’t ended there, seen by the collapse of the Melaka state government, due to changing political loyalites, where an election is required in the middle of a pandemic.

The MP12 document appears to have been guided by a small group within the Economic Planning Unit (EPU) under senior minister in the prime minister’s department Mustapa Mohamed, and consultants with working groups selected from within the civil service. Through guided seminar discussions the themes, policy enablers and so-called game changers were formulated using an old Ansoff strategic management framework from the 1960s. RM12 is basically a product of guided focus groups working in serviced five-star hotel seminar rooms with white boards up the front.

This five-year plan is in stark contrast to the early five-year plans which analysed the economy and arising problems with candour, coming up with solutions. Observers of five-year plans say the standard of these documents declined sharply from RM9 back in 2011, when consultants began being utilised heavily.

Rather than being Rakyat or people first, the policy document scribed a specific agenda.

This specific agenda is about increasing the size and influence of government within the economy, providing justification for a large number of IT and database contracts for a select few consulting firms, amid continuing positive discrimination towards Bumiputeras. RM12 is about big government, big projects, and enhancing the power of the already wealthy elite.

Rather than narrowing income disparity, RM12 will end up increasing income disparity. The focus on racial income disparities is hiding the massive disparity between the Malay elite and other Bumiputeras.

The real issue is that B20, or bottom 20% income earners share only 5.9% of national income, while T10, or top 10% income earners share 30.7% of national income. RM12 policies will do nothing to reverse this unjust situation.

There are a number of other unfeasible policy concepts within RM12 that should be scrutinized. These include the promotion of Industry 4.0 to the micro, small and medium enterprise sector, when most of Malaysia’s 1.15 million MSMEs are ‘hand-to-mouth’ enterprises doing low value manufacturing and trading. Most of these enterprises are unable to digitize due to very tight working capital liquidity. Digitization in most cases would provide marginal benefits. Those 984,643, or 85.5% of Malaysian SME in retail sales would be able to purchase ‘off-the-rak’ retail data-processing solutions anyway.

One of the most alarming features of RM12 is the issue of a bloated civil service was not canvassed. Rather than tackle this issue to reduce cost and increase efficiency, RM12 is recommending the creation of a number of new departments and agencies to monitor and regulate the economy. The Malaysian economy needs less government intervention and regulation to assist MSMEs to become globally competitive, an objective of RM12.

The recommendation for a flatter organization structure within the public service will further increase the power of department heads. This will stifle creativity, and increase the incidence of corruption. A flatter organization structure will be a breeding ground for more little Napoleons.

Its difficult to see how the education system can be transformed if ‘connected people’ continue to be appointed to key positions in the ministry and universities. Nepotism will not reform education.

The issue of sustainability is another area that has been whitewashed in RM12. The areas within the report covering sustainability and climate change talk about circular economy, zero carbon output, and green energy production, without giving due consideration to the implications. For example, there are no financial figures on the commercial viability of biodiesel, especially given that current fuel prices are subsidized. Under the current industry structure, the production of biodiesel would be unprofitable. Likewise, the introduction of solar and wind power electricity generation would cost substantially more than present production methods, leading to higher prices for electricity. If consumers are going to pay the extra costs for green energy, wealth will be redistributed from the poor to the equity owners of the energy industry.

Creating sustainable SMEs when most SMES are financially stricken from the pandemic will be almost impossible to achieve at this time. While RM12 is talking about sustainable SMES, it is totally quiet about how to revitalize those SMEs in the tourism industry now in dire financial straits. The issues shouldn’t be about transforming SMEs into sustainable Industry 4.0 model enterprises, but keeping them afloat until the economy recovers.

The crux of RM12’s vison for sustainability is to increase data collection, hand out contracts for consultants to create the software for smart cities, and increase regulation on SMEs to require more compliance. Carbon pricing taxes will increase the costs of running SME and increase administration required by these new bureaucratic measures.

MP12 has been much criticized for the harsh new equity regulations being brought in, that incidentally not within the text of the RM12 document, only the prime minister’s speech introducing the plan. Currently Government Linked Companies (GLCs) control over 40% of public listed company equity on the Kuala Lumpur Stock Exchange (KLSE). This equity could be privatized to distribute equity more equally within the community. Instead, the government has decided for force successful SMEs within the transport sector to divest equity. This is not redistributing equity to needy Bumiputeras, only those already wealthy. The effect of this regulation is to create a new industry of overseas proxy equity holders who are being given tax benefits from the Malaysian Industry Development Authority (MIDA).

Public healthcare recommendations are very disappointing as this sector has been the frontline during the pandemic. The increase of ICU bed capacity in public hospitals should be a top priority. There are only 1.6 hospital beds available per 1,000 people and 3.3 functioning intensive care unit (ICU) hospital beds per 100,000 people. In contrast, Italy, which last year ran out of ICU capacity due to a massive outbreak of severe Covid-19 cases, has 12.5 ICU beds per 100,000.

Malaysia also has a high incidence of diabetes, hypertension, obesity, heart and respiratory diseases and cancers among the population. This makes many Malaysians extremely vulnerable to contracting Covid-19 severely. It also has another vulnerable demographic, with those aged 65 or above comprising 7% of the population, or 2.23 million.

These factors have made Malaysia a disaster waiting to happen. This was not mentioned at all within RM12.

The fact that Malaysia was not able to locally manufacture a vaccine is testimony to the failure of government policy implementation, something that is most likely to happen again with RM12 plans to create an aerospace cluster, just as the industry is ravished by the pandemic.

There is noting in the RM12 document about how RM400 billion will be raised to pay for implementation. Malaysia is currently wrapped in anger over the revelations from the Pandora papers, showing how elite Malays including parliamentarians, businesspeople, civil servants, children of former prime ministers Mahathir Mohamed, Najib Razak and Muhyiddin Yassin, former Sabah chief minister Musa Aman, and members of royal families have hidden their wealth to avoid paying tax. According to a Global Financial Integrity (GFI) report, over RM1.8 trillion in illicit outflows left Malaysia between 2005-2014, fifth among all countries, after China, Russia, Mexico, and India. There are calls for a wealth tax, which RM12 has not mentioned, even though one of MP12 objectives is to redistribute wealth.

The current public perception is that RM12 has been tabled to benefit Bumiputeras, more than the general Malaysian community. Members of the Bumiputra community have publicly acknowledged and welcomed that. There is not much in RM12 for the Rakyat or people, but plenty of money allocated to fund connected consultants and contractors in IT and digitization.

MP12 is very much Keluarga Melayu (Malay family).

Murray Hunter’s blog can be accessed here


     
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