Tuesday, July 7

Finding answers towards shared prosperity


AMIDST ongoing travel, people with an interest in world politics have asked me what on earth is going on in Malaysia. After a long-lasting BBC feature about screaming schoolgirls in Kelantan, Malaysia has not received the best news in recent weeks. This includes the high-profile coverage of the tragic case of the disappearance and death of Nora Quoirin, which has unfortunately marred the reputation of a beautiful part of Negeri Sembilan. Recently, the Observer ran a widely-read piece about Malaysia’s last nomadic people, the Batek, describing neglect from the government and the possibility of deliberate poisoning. Then, my Uber driver expressed sympathy over Kuala Lumpur’s obscured skyline as a result of the haze.

And while the Prime Minister’s speech and statements at the United Nations (particularly on palm oil, the Rohingya and reforming the UN’s veto system) were positively reported in Malaysia, international coverage instead focused on his remarks about Israel and previous statements about Jews – and how student groups have opposed their universities hosting him on their campuses.

Explaining the local political context takes time: the people involved; 1MDB and its impact on governance; the coalescence of previously opposing forces; the role of civil society; the pervasive role of race and religion in political rhetoric; and the differing motivations of urban liberals who hoped for reform versus those of rural conservatives who were prepared to break generations of precedent in the hope for positive change.

It has proven tough sustaining both hopes.

As I mentioned to the Kota Kinabalu-born Australian Senator Penny Wong – previously a federal minister but now Shadow Foreign Affairs Minister – last week, the initial appointments to the top of the judiciary, police, Bank Negara, Election Commission and Dewan Rakyat Speaker were promising. Much expectation has been placed upon their shoulders to act in accordance with the law rather than of political pressures – but it is fair to say that some decisions are more scrutinised than others (though the constraints of institutional inertia and law differ across these portfolios). Still, all of them know they will be called out by civil society (including many of their former colleagues) if they don’t perform to expectations.

Certain appointments made to government-linked companies, on the other hand, may well be seen as the replacement of one set of cronies with another, unless greater efficiencies and performance are delivered. Within ministries, old-style practices of patronage and reward are said to have been revived (if better disguised), compounded by intra-cabinet competition for brownie points. Yet, the largest obstacle to clear policymaking is continued speculation about the country’s political leadership.

“It’s the economy, bodoh!” – says the latest edition of The Economist, a rare instance of a non-English word being used in a headline of the 176-year-old British publication – quoting the prescient observation of the Minister of Youth and Sports that “if we fail to deliver on the basic needs of the young populace then you’re bound to create a vacuum which will be filled by demagogues”.

This realisation has perhaps made ‘shared prosperity’ a favourite catchphrase among ministers. In the hope that this represents a genuine attempt at substantial policy formulation, the Institute for Democracy and Economic Affairs (Ideas) has submitted four proposals towards making shared prosperity a reality in Budget 2020.

The first is a Living Wage Tax Credit, in which corporate tax incentives would be introduced to encourage employers to increase pay beyond the minimum wage.  The second is an Employee Equity Scheme so that all employees of companies, not just senior management, are encouraged to hold shares. The third is a Capital Gains Tax exclusively on the profit from the disposal of shares. The fourth is a reform of the government’s domestic investment position, with the goal of gradual disinvestment from Malaysian public-listed companies. (Although the third proposal can possibly have a negative impact on investment, the fourth proposal should more than compensate.)

Fuller descriptions and indicative parameters can be found on the Position Paper on the Ideas website.

Many officeholders in the government get frustrated when their hard work is derailed by insidious scheming among their political superiors, which they want no part of. I hope, then, that contributions from civil society such as this will help those who really want to push towards a positive agenda for the nation – whether through their agreement of disagreement with our proposals.

As I write, the Prime Minister has appeared to open the door for the return of the Goods and Services Tax (GST), whose abolition we identified as a clearly populist move prior to the election. This will rightly stimulate much policy jostling, too!

Tunku Zain Al-Abidin is founding president of Ideas