Generating income is vital for redressing social inequity
WHAT gives me a major attack of the blues is the oft-repeated charge that transformation occurs only in the already developed areas, citing for instance the urban transport plan for Kuala Lumpur.
That is a clear misconception of what transformation is about and what we have to do to get the necessary income – both for the people and the government – to take us to developed country status, and all that entails, including a great quality of life for all.
Why is St Regis undertaking an RM1.2 billion property project in Kuala Lumpur and not in Bario, my village in the Kelabit Highlands of Sarawak? The simple answer is that there is no demand for such property in Bario.
But how will that help rural development in Bario, you may ask. The project will involve expenditure while providing employment for many, helping to raise incomes for a broad cross section of companies and people. That raises the government’s revenue through taxes and duties and enables it to provide basic infrastructure in Bario.
Similarly, the urban transport plan for Kuala Lumpur will make transport within the city easier for all and especially for the poor who need cheap and quick means of transport. It makes Kuala Lumpur a more attractive destination for doing business for locals and foreigners alike. And it increases revenue for the government.
Since 2009, our economy has been growing steadily. Last year, as our GDP (gross domestic product – goods and services produced in the economy) reached a record high, we achieved the highest government revenue ever — RM185 billion. This healthy trend has helped us in our drive to maintain the current account surplus (surplus of exports over imports) and also reduce our fiscal deficit from 6.6 per cent of GDP in 2009 to 5.6 per cent in 2010, 4.8 per cent in 2011 and further planned reductions in subsequent years.
All economic activity tends also to raise the revenue for the government and that enables it to get the income to develop rural and disadvantaged areas by providing appropriate infrastructure and necessary help for the poor. Without economic growth, the government cannot get the revenues necessary to discharge its social obligations.
Allow me to put a simple logical narrative to describe the relationship between the New Economic Model (NEM) and the Economic Transformation Programme (ETP) and the Government Transformation Programme (GTP) in five points:
1. The NEM describes the outcome that we want for Malaysia that is high income, inclusiveness and sustainability.
2. The ETP is the roadmap to achieving the NEM’s aims. We get there by focussing on the 12 national key economic areas, starting with many entry point projects as catalysts. In addition, we are also implementing 51 strategic reform initiatives to ensure competitiveness will flourish.
This will enable our companies to make products and provide services which will be competitive locally and in the global markets.
3. When we successfully implement the ETP, the economy (GDP and gross national income or GNI – the income accruing to the country in current prices), will grow and this leads to higher government revenue. This revenue helps us to cut our fiscal deficit, invest for further growth and spend the money where the rakyat want us to.
4. Under the GTP, we have identified seven priority areas termed national key results areas which the rakyat want the government to emphasise. We have made special provisions in our annual budget for them. The areas are urban public transport, rural infrastructure, education, low-income households, cost of living, crime and corruption. Over time, we will make changes in our priorities based on the rakyat’s feedback.
5. Taken together as a whole, the points in 1,2,3 and 4 above constitute a holistic and balanced development for Malaysia. Perhaps, this is one of the reasons why Harvard and Princeton University have case studies on the Malaysian transformation programme. We are also gaining some global recognition for the work done and the results achieved so far.
It is clear that all these cut across demographics and ethnicity. They will help all citizens and most of all those who are disadvantaged so that we can reduce the gap between the haves and the have-nots.
No government can claim to have achieved success unless it systematically provides for the improved well-being of its most disadvantaged citizens by programmes which specifically target them and give them a real opportunity for lifting them out of their predicament.
It’s because government finances are good that we are able to implement programmes such as 1Azam, initiated by the government to provide economic opportunities for low-income households by giving appropriate aid and continuing access to know-how to get them started on various ventures.
It’s because of that too that the government can implement the RM3 billion BR1M, a programme to provide cash hand-outs of RM500 each to those earning under RM3,000 a month to alleviate their burdens.
These schemes are better than subsidies which mostly reach everyone, including those who don’t need them.
Instead, they specifically target those who are known to have low incomes and help alleviate their suffering by giving them the means to lift themselves out of the situation and providing relief in the meantime.
Giving everyone a real opportunity and providing them with the wherewithal of lifting themselves out of poverty is an integral part of our on-going transformation programme. The success of that gets even more income eventually.
But the realisation must be there that it needs resources to achieve that and more resources can only be committed to these areas if the government income continues to increase. And as the resources take effect, the improvements in the seven areas will facilitate more productive economic activity.
Transformation is holistic. The economic and government transformations therefore go hand in hand and feed on and complement each other – there can’t be one without the other. This is the virtuous cycle that we are trying to achieve.
This is the 19th and final column for this year. But we will return in the New Year with a new name and new focus to keep up with the needs of changing times and the progress we make in the transformation journey.
In these columns I have covered diverse topics ranging from achieving high income, crime, corruption, education, competition, urban transport, oil and gas, the government’s role in business, going international to rankings amongst others.
I have tried to explain and articulate the transformation programme and dispel common misconceptions about what it entails in language that is jargon free and understandable to anyone who is interested. Any suggestions that you have for improving the column and its focus in the New Year will be most welcome.
Meantime, Season’s Greetings and have a wonderful and prosperous New Year. And let’s all join hands together to make this country of ours a prosperous one too – for ALL of us.
Datuk Seri Idris Jala is the CEO of the Performance Management and Delivery Unit (Pemandu) and Minister in the Prime Minister’s Department. All fair and reasonable comments are most welcome at [email protected].