Pakatan Rakyat Budget 2012 (Part 6 of 10)

5 Thrust 1: Empowerment, Opportunities and Dignity for All Malaysians

5.1 All Malaysians and government must collaborate to restore dignity

The holistic economic and structural policies of Pakatan Rakyat will:

Restore dignity to all working Malaysians and their families.Dignity through improved skills, increased productivity, higher incomes, better job conditions and better quality of life;

Re-establish incentives for businesses and investors to upgrade and launch innovative high-value added product and services activities, and

Enhance the motivation of government employees to facilitate this bold transformation process.

But the Pakatan Rakyat government cannot carry out these essential policies by itself and in isolation. The rakyat, as employees and employers; as housewives, caregivers and students, and most importantly as contributing citizens must play their individual and collective roles and take their place in advancing this brave agenda to move Malaysia forward to greater heights to stand tall globally.

To increase productivity, the rakyat must improve their skills:

Pakatan Rakyat will work on policies to improve and strengthen education to increase skills, including through programs to up skill and retrain workers. But workers must be prepared to undergo additional training and continued education to secure the better paying jobs, higher incomes and ultimately a better quality of life;

Pakatan Rakyat will augment and broaden the technical skills of the workforce through a complete overhaul of technical education in collaboration with the private sector particularly in apprenticeship schemes and industrial attachments;

As Pakatan Rakyat structural policies for business and new sources of growth take hold, there will inevitably be disruptions in some sectors as industries adjust and shed jobs in declining sectors. Workers must be prepared to relocate to areas where the new and higher paying jobs may be clustered;

Pakatan Rakyat will have policies to strengthen the worker safety net that will be centered on retraining and up skilling, job search and relocation assistance, as well as unemployment insurance. The social safety net will also be enhanced to support those who are made redundant and require longer to rejoin the labour force.

Pakatan Rakyat will help employers and investors by providing incentives, reducing the cost of doing business and making the recently enacted Competition Act work effectively as described in Section 5.7 below.

Industry must be prepared to retool, move up the value chain and reduce reliance on low-wage foreign labour. Pakatan will facilitate entrepreneurs from SMEs and support R&D for innovative products and processes;

With inputs from industry and worker representatives, Pakatan Rakyat will align education and training policies to deliver the right mixed of skilled employees for industry. It will also facilitate the entry for skilled foreign labour that cannot be sourced locally in support of high value-added industry;

Pakatan Rakyat will expect that employers must reward high skill workers accordingly and be prepared to more equitably share the productivity gains of industry with workers.

In short, success of this initiative is dependent on all citizens of Malaysia and the government collaborating effectively:

Employees must be willing to adapt, learn, reskill and retool;

Employers, businesses and entrepreneurs must value productivity and innovation and reward accordingly; and

Government must put in place appropriate policies and give support where necessary.

5.2 Raising incomes through skills, productivity and a minimum wage

There are many reasons why Malaysian productivity is low. One is that employers have had little incentive to invest in productivity improvements because Barisan Nasional federal government policies have allowed reliance on excessive numbers of unskilled, low-cost foreign labour.

It has been estimated that there are about 1.9m legal
17
 and up to 2m illegal
18
 foreign workers in Malaysia, who are mostly unskilled. On this basis, there are 4 mostly unskilled foreigners for every 10 Malaysian workers.

Chart 2: For every 10 Malaysian workers, there are 4 foreigners

Chart shows total number of workers.

Source:Derived from Principal Statistics of Labour Force, Malaysia, June 2011 from the Ministry of Labour; and the estimates on foreign labour cited above.

Pakatan Rakyat notes that cheap foreign labour is a subsidy to businessmen taken from unskilled Malaysians. Lower income Malaysians have sacrificed decent jobs, housing and lifestyles so that businesses could enjoy high profits the easy way without having to invest in productivity improvements.

Pakatan Rakyat believes that a well thought out, effectively implemented mix of holistic policy measures will help spur productivity improvements and sustainable increases in domestic demand:

Cheap labour spares businesses the effort and cost of investing in productivity improvements and making jobs better. For example, delivery personnel and taxi drivers are generally not equipped with GPS systems, despite the relatively low cost of such systems and clear productivity gains to be reaped;

Cheap labour also results in brain drain as our best and brightest move on to economies which reward their efforts;

Upskilling, increasing productivity and higher wages will lead to higher purchasing power and greater demand for goods and services, driving a virtuous cycle of domestic demand growth.

Pakatan Rakyat concurs that incomes can only grow sustainably in line with productivity gains. To sustain productivity, workers must be prepared to upskill themselves, retrain and be relocated to new regions where the higher paying jobs may reside. But Pakatan Rakyat recognises that in the immediate short term, the wage setting mechanism in many key sectors of the Malaysia’s labour market has become dysfunctional. This phenomena is clearly reflected in the chart below.

Chart 3: Value Added per Worker and Wages are not significantly correlated

Source: Reproduced from Minimum Wage in Malaysia – Potential Impacts, Design and Next Steps. The World Bank, 19 Jul 2011.

This shortcoming is particularly acute in the lower wage segment of the labour market. For this reason, Pakatan Rakyat is in favor of a national minimum wage policy, to correct for the deficiency in the wage setting mechanism in the labour market.

Pakatan Rakyat is of the view that a minimum wage policy is only one among a package of instruments to raise household income which has stagnated for a large segment of the Malaysian population. Indicators and notions of meeting “a living wage” or “the poverty income line” are best addressed by an enhanced social safety net program which will more comprehensively and broadly address the needs of the poor and disadvantaged segment of the population.

Pakatan Rakyat will support a single national minimum wage. States such as Sabah and Sarawak will be allowed more time to converge:

Pakatan Rakyat will propose amendments to the National Minimum Wage legislation to strengthen the governance of the wage decision by the National Wage Consultative Council (NWCC) and reduce the current unlimited discretion granted to the Minister of Human Resources;

The minimum wage (defined to be total compensation) will be determined by a NWCC, based on a set of objective indicators and appropriately explained discretions;

Any allowed deviation from the established national minimum wage must be set on the basis of the ability to pay of employers and the likely impact on employment in the affected states;

In addition, Pakatan Rakyat will also allow for a fixed deviation for young workers and disabled members of the community.

Chart 4:Wages in the Klang Valley and Penang are far higher than elsewhere

Chart shows % of labour force in each state below the wage levels cited.

Source: Reproduced from Minimum Wage in Malaysia – Potential Impacts, Design and Next Steps. The World Bank, 19 Jul 2011.

Pakatan Rakyat will recommend to the NWCC a national minimum wage of RM1,100 per month. This level of minimum wage would have the largest impact on workers in the wood products (excluding furniture) and agriculture, fishing and forestry industries where about 80% of workers would be affected, as shown in the chart below. Without other government incentives and policies, it is estimated that about 10% of foreign direct investment (FDI) could be lost. Some of this FDI would be in low-end labour-intensive areas which are no longer desirable or appropriate for Malaysia. Pakatan Rakyat anticipates that in the medium-term, together with other good governance initiatives and policies outlined in this document, FDI will rise.

Chart 5: Distribution of wages by sector

Chart shows % of labour force in each sector below the wage levels cited.

Source: Reproduced from Minimum Wage in Malaysia – Potential Impacts, Design and Next Steps. The World Bank, 19 Jul 2011.

Pakatan Rakyat views this policy on the national wage policy as one of the measures among the holistic policies to improve labour productivity and income. This policy on minimum wages will only be effective in correcting the deficiencies in the labour market in tandem with the broader labour market policies described in this document.

In addition, Pakatan Rakyat will introduce specific policies to reduce reliance on the use of low wage foreign workers which has also contributed to suppressing wages at the low end of the labour market. However, Pakatan Rakyat recognises that many important sectors will continue to have a need for low-skilled foreign workers because of the small size of Malaysia’s labour market relative to the volume of the country’s economic activity.

For employers, Pakatan Rakyat will set up a special Facilitation Fund, to help entrepreneurs, SMEs and small firms which meet qualifying conditions to retool, mechanise and adjust their operations to meet the minimum wage requirement. In consultation with SMEs and cooperatives, Pakatan will formulate the implementation framework and amount for this Fund, but an initial size of RM2 billion could be allocated for such a purpose;

Similarly employees who had previously been apathetic due to the lack of rewards for up skilling may need a helping hand. To support employees during this transition period, the Pakatan Rakyat government will consult with employers and worker representatives on the kinds and levels of skills needed. At the same time, all existing government funding, government-funded programs at tertiary and higher learning institutions and GLCs training schemes would be reviewed and consolidated into a strategic framework aimed at a sustained upgrading of skills for all economic sectors. In addition, the operations and contributions of the Human Resources Development Fund (HRDF) will be folded into this more purposeful training scheme. Pakatan will place special emphasis in three essential areas:

Assistance and support for employees and job seekers undergoing training and upgrading of skills, whether this be on-the-job, on leave of absence or outside working hours;

A total review and revamp of the system for certification of skills in coordination with industry and training professionals and consistent with international standards and practices:

Pakatan Rakyat will aim at creating an environment where a system of better paying jobs that align the pay scales to the different categories of certified skills will be established;

Simultaneously, professional bodies for the most important categories of mid-level skills would be established to supervise and guarantee that accredited workers are appropriately deployed and reasonably compensated for their skills. For example, only an appropriately certified auto mechanic or plumber should be deployed, which would help to ensure that quality work is performed in accordance with safety, health and other standards and thereby justifying higher wages for skilled workers; and

Deliberate policies and support programs to increase the participation of women in the labour force, which at 46% currently is among the lowest in the region. In addition to conscious efforts to address gender discrimination and harassment at the workplace, Pakatan will increase incentives for women to join or rejoin the labour force through training, greater flexibility in working hours as well as work locations and expanded provision of affordable, safe, child-enriching and more convenient child-care facilities. A childcare allowance of RM1,000 a year for children below 12 years old from households earning less than RM1,000 a month and establishment of certified childcare centres through special loans and tax incentives will be facilitated.

5.3 Unlocking private sector potential

Wages, like all prices, are a function of supply and demand. Increasing the supply of skilled workers and imposing a minimum wage will not result in higher overall wages and employment if there is insufficient demand by employers.

Khazanah Nasional in a report
19
 concluded that:

Only government investments in infrastructure – such as roads and ports – complements and stimulates private investment;

Government involvement in directly productive economic activities crowds out private investment.

In plain language, government involvement in business has replacedrather than created jobs. Entrepreneurs and private businesses choose to leave the market rather than compete with the government, resulting in fewer job opportunities.

This lack of employers is another reason for the wage suppression in Malaysia as the bargaining power of employers becomes strong compared to that of workers. Existing firms have little to fear from new competition and can maintain wage growth below productivity growth without worrying that their employees can move on to other better paying jobs.

Besides the crowding out by government, the lack of private activity can also be attributed to excessive bureaucratic red tape and regulatory burdens dissuading new investments and new firm creation and operation:

14% of manufacturing firms actually had to hire special consultants to deal with pemits, licenses and approvals
20
;

According to the Doing Business Indicators produced by the International Finance Corporation, Malaysian ranked 113th out of 183 countries in the world in terms of ease of creating a business in 2011.

Khazanah pointed out, and the World Bank concurs, that our physical infrastructure – ie roads, airports, ports, utilities – is generally sufficient. It suggests that the government must now invest in soft infrastructure, instead of more physical infrastructure.

Three elements are key to unlocking private sector potential:

Promoting competition;

Allowing price determination to be more market-driven; and

Further improving the investment climate.

The Pakatan Rakyat government will reduce its involvement in direct economic activities that crowd-out the private sector; and expand its involvement in areas that complement private sector initiative – crowd-in investments instead.

5.4 Rewarding innovation and productivity via procurement policy

The current policy of negotiated/closed contracts rewards know-who rather than knowhow. It deters innovation, creativity and productivity and also impedes price discovery. Pakatan Rakyat will implement an open tender policy for government procurement. Information on the contract details and winning bidder will be clearly published on-line.

It is anticipated that as companies compete openly and fairly for government contracts:

Some of the fees and “commissions” now paid to various “agents” will be spent on higher wages for talented employers and better products/services instead;

The costs charged to the government will also be reduced as these companies strive to offer better terms in an open tender environment;

More firms will be attracted into the arena, creating more jobs.

Pakatan Rakyat recognizes that, to achieve inclusiveness, calculated policy interventions are still needed to narrow income disparities between ethnic groups and regions in Malaysia. Accordingly, Pakatan Rakyat will continue to provide affirmative support and opportunities for disadvantaged groups based on need.

With full transparency, Pakatan Rakyat will work with Bumiputra and disadvantaged groups to refine the objectives and execution of affirmative support initiatives including a vendor development scheme for entrepreneurs;

In particular, Pakatan Rakyat will focus on strengthening the capability of the disadvantaged groups through targeted education, training and financial support;

Pakatan Rakyat affirmative measures will be subject to mandatory biennial reviews as to their impact and effectiveness.The ultimate purpose of affirmative action will be uplifting income while shrinking the size of this group and thereby drastically contracting disparity sufficient for it to become a non-issue.

As much as possible, Pakatan Rakyat is in favor of upholding fair and equal opportunity to allow the economy to be competitive by arousing market confidence. Pakatan will face resistance from cronies that desire to perpetuate patronage and rent-seeking. With the enlightened rakyat as our buttress, Pakatan Rakyat will meet the challenges for managing these disruptive groups that lack foresight and propagate divisiveness.

5.5 Increasing incomes and employment opportunities for Malaysians in rural areas

Pakatan Rakyat will increase incomes and employment opportunities for Malaysians in rural areas. In the medium-term, regional and rural development will be boosted through administrative decentralisation as covered in this Budget.

In the immediate term:

BERNAS’ monopoly for the import of rice will be abolished. Import licences will be awarded through a competitive and transparent process.

Subsidies will be delivered directly to farmers via farmers’ institutions such as Pertubuhan Peladang Kawasan, Pertubuhan Peladang Negeri and Persatuan Peladang Kebangsaan instead of through BERNAS.

The database of targeted individuals and groups will be improved. Line agencies including religious offices at the area and district levels will share information more effectively.

RM200 million will be allocated to agricultural research institutions such as MARDI.

More competitive wholesale markets and mechanisms will be developed and established to ensure fair prices are paid for farm produce.

Agricultural marketing mechanisms across agencies especially FAMA, FOA, Department of Agriculture and the Veterinary Department will be better coordinated.

Institutions such as MADA, KEMUBU, LKIM, LPP and LPNM will be entrusted to facilitate better market access for farmers.

5.6 Civil Service Excellence and cutting red tape to serve the rakyat better

5.6.1 Restoring the glory of the Civil Service

The support of the civil service is crucial. Government policies will remain merely theoretical ideas and documents if the civil service is unable or unwilling to implement these policies effectively.

The Malaysian civil service is admittedly large. It also suffers from the perception that it is inefficient, sloppy and sometimes suffers from impropriety. Restoring the lustre of the civil service is a joint responsibility of the political leaders of the day and the civil service:

Pakatan Rakyat recognises that political interference has been a factor behind the decline of the civil service. Good, professional civil servants have been overlooked nd ignored by the Barisan Nasional government as it pursued political patronage strategies;

Pakatan Rakyat is committed to an independent, professional civil service. Pakatan Rakyat leaders will accord civil service personnel with professional respect and will reinstate the eminence of the civil service in policy development;

On the other side of the coin, civil servants must restore the culture of excellence, rewarding high performers and addressing underperformers.

Pakatan Rakyat proposes a Civil Service Excellence Initiative (CSEI) to restore the glory of the civil service. The CSEI will include:

Improving job satisfaction and thereby productivity and efficiency. Responsibilities and jurisdictions will be clarified, reducing unnecessary overlaps, duplication and bureaucracy;

Putting in place remuneration, reward and promotion schemes that reward highperformers as well as ‘work-out’ schemes by which under-performers can be counseled and retrained, or ultimately released.

5.6.2 Less red-tape eases life for the rakyat and promotes economic activities

A dynamic and forward-looking civil service is crucial in streamlining the regulatory environment for businesses including licensing requirements and barriers to new investment. This will encourage new businesses to be formed and existing businesses to expand.

It is envisaged that such expansion will increase demand for labour. This will in turn create a virtuous cycle where increased demand for labour makes firms more efficient, more likely to participate in the formal economy, and more amenable to better compensation and employment conditions which in turn spurs more demand and more business activity.

The current regulatory framework in Malaysia is awkward and burdensome at all levels of government. Pakatan Rakyat will put in place a wide-ranging regulatory reform scheme to stimulate productivity and competitiveness resulting from greater innovative investments.

The new regulatory environment will highlight certainty, reduce distortions and ensure policy consistency in line with international best practices and standards. The new framework will have regulations and licensing requirements that are proportionate and thereby contribute to keeping business costs low and free of excessive procedural complexities. Departments and offices at all level of government must adopt a new tradition that strives at reducing the regulatory burden and red tape. Specifically:

Pakatan Rakyat will adopt the Principles of Good Regulation. These include transparency, due process in administration of regulations, predictability, proportionality, accountability, and non-discrimination;

All new regulations must be subject to a Regulatory Impact Analysis (RIA). This makes clear the impact and expected outcome of the regulation and calls for mandatory consultations with affected stakeholders;

All regulations must have sunset clauses or mandatory review following fix periods of their existence to assess their effectiveness and continued need;

A proper registry or database of regulations (existing and new) at all levels of government must be established and managed centrally. This will allow businesses and the rakyat to have a proper view of applicable requirements and allow government to track and reduce overlaps and inconsistencies.

A time-based reduction of the regulatory burden will be developed. With the database available, several approaches to undertake this deregulation will be adopted, e.g. by subjecting all existing regulations to RIA; by targeting a removal of a set number or percentage of regulations every year; and by targeting the simplification or streamlining of a set number or percentage of regulations annually.

Civil servants will spend more time interacting with the public in field audits rather than sitting in offices reviewing paperwork and issuing permits:

Usage of on-line and electronic processes will be broadened and widened;

Except for critical security or health related activities, self-declaratory, lapse-oftime, and disclosure based regulatory regimes will be implemented.

This will speed up response and efficiency but must be backed-up by strict but transparent compliance audits and excruciating penalties for violations. Pakatan Rakyat will strengthen enforcement to generate better compliance effectiveness for regulations and licensing requirements.

5.7 Lowering costs – curtailing lop-sided concessions, monopolies and oligopolies

5.7.1 Remove lop-sided concessions

The Malaysian economic landscape is littered with many one-sided contracts and concessions under which private entrepreneurs reap supernormal profits while government or government-linked companies continue to bear considerable business risks and consumers and businesses bear unnecessarily high costs.

These private entrepreneurs sometimes also enjoy subsidies while running inefficient operations. For example, take the case of independent power producers (IPPs). Gas used in power generation is heavily subsidised in Malaysia. Over in Singapore, there are no such subsidies. It has been estimated that without subsidies, electricity from Malaysian IPPs would cost 57% more than from Singaporean power generators
21
.

There is no easy solution to this issue.

On one hand, Pakatan Rakyat fully supports the principle of sanctity of contract;

On the other, allowing such unfair contracts to perpetuate would continue to inflict unfairly high costs on millions of Malaysians, raising the cost of living and adversely affecting our national competitiveness.

To resolve this conundrum, an Unfair Public Contracts Act will be enacted and an independent Public Contracts Commission will be formed to review such lopsided concessions and agreements that are deemed to be against the public interest.

Such an act will be similar in nature to the Land Acquisition Act 1960, which allows the government to acquire private land for public purpose, provided adequate compensation is paid.

The Public Contracts Commission will also fully explore remedies available within the contracts and concessions. For example, the concession agreement for Lebuhraya Damansara-Puchong (LDP) contains an expropriation clause under which the government can buy back the LDP for an estimated RM1.4 billion. This compares to an estimated RM1.54 billion in compensation which the government is currently expected to pay in addition to the billions of toll collectible from motorists
22
.

In addition, monopolies and oligopolies will be curtailed and regulated. The Competition Act 2010 is intended to be enforced effective January 2012. This act aims to prohibit anti-competitive agreements and abuses by dominant players such as pricefixing, bid-rigging and predatory pricing. However, the Competition Act 2010 does not cover businesses regulated under the Communications and Multimedia Commission Act 1998 and Energy Commission Act 2001. This means very key and large business sectors including the telecommunications companies, satellite-tv provider Astro and the independent power producers (IPPs) are exempted.

Pakatan Rakyat will extend the Competition Act to all sectors of the economy. In particular, where the jurisdiction of the Competition Commission overlaps or is limited by the activities of other statutory regulatory agencies, for example the Securities Commission (SC) or the Malaysian Communications and Multimedia Commission (MCMC), Pakatan Rakyat will take the position that the objectives of free competition should prevail and therefore policy inconsistencies must be reconciled. Pakatan will give prominence to addressing any gaps between regulatory agencies that may give rise to uncompetitive practices and will clearly designate the lead agency responsible for resolving competition issues so that businesses are not subject to a bureaucratic merry-go-round.

5.7.2 Monopolies and Oligopolies: The Great Reducer of Average Malaysian’s Income

Pakatan Rakyat recognizes the debilitating effects of monopolies and oligopolies on the long-term economic health of the country and ordinary Malaysians in general. Hence, being in line with the enforcement of the Competition Act 2010 on 1st January 2012, Pakatan Rakyat is cognizant that reforms and corrections need to be swiftly implemented. Therefore Pakatan Rakyat is committed to:

Abolishing Padiberas Nasional Berhad (BERNAS)’s monopoly for the import of rice. Instead, import licences will be awarded via a competitive, open and transparent process;

Telekom Malaysia (TM) will be instructed to release its stranglehold on the “last mile” market of broadband internet service and focus on its backbone business – data and telephony – thereby creating a robust and competitive “last mile” market. This will subsequently lower costs and enable enhanced broadband penetration;

Telecommunication companies’ cartels will be dismantled;

Press and media cartels will be dismantled;

Airline services cartel will be dismantled;

Astro’s monopoly of direct broadcast satellite pay television service will be broken up;

Taxi licences will be given directly to individual taxi drivers.

5.8 Enabling GLCs to soar free

Implementation of the GLC Transformation Program has failed to match the required sense of purpose. Management and staff at GLCs seeking excellence are still impeded by stifling political interference.

Pakatan Rakyat is supportive of the aims of creating GLCs that are not only competitive within the domestic framework, but also regional champions that will carry Malaysia’s flag.

Pakatan Rakyat believes that the GLCs have the professional abilities to achieve excellence. Therefore, under Pakatan Rakyat, GLCs will be set free to pursue initiatives that they consider best. By the same token, the Pakatan Rakyat government will also not automatically guarantee the liabilities of GLCs nor afford special preferences to GLCs in federal procurement transactions.

Government representatives on the GLC boards of directors should primarily focus on normal fiduciary responsibilities, corporate governance, evaluation of business strategies and scrutiny of management controls;

Pakatan Rakyat will refrain from making GLCs champion growth in emerging sectors and activities; but if needed, GLCs should as far as possible partner with the private sector to undertake such high-value activities with clear a strategy for exit when the situation permits;

Pakatan Rakyat will want GLCs to have greater but transparent collaborations, and certainly not adversarial relationships, with private businesses to better leverage economies of scale, expanded dynamic integration/networking into national and regional supply chains, and to create opportunities to become regional and international champions.

The conditions will be created for GLCs to soar. It is intended by 2020 that we have:

World class champions that can compete internationally and become multinationals with multiple listings; and

Locally-based GLCs which are synonymous with excellence – in the products and services they deliver, in their role as employers and trading partners and in the quality of their managements.

Corollary to the enhanced, transformed GLCs will be their increasing attractiveness as investments. It is envisaged that investors will be increasingly interested in GLCs as their prospects improve. This will be the ultimate success of GLCs – when they are held by the private sector and completely free.

Government will retain control of certain GLCs in strategic sectors, to be determined following a study. Outside of these sectors, and in the right conditions, orderly and transparent disposals of government holdings will be conducted. Besides freeing GLCs completely from direct management by politicians, there will also be positive ancillary effects such as for financial services, market capitalisation listed on Bursa Malaysia and trading velocity.

The freeing of GLCs will address two major issues:

The crowding out of private enterprises, as explained earlier, as these GLCs will now become full-fledged excellent private enterprises themselves; and

The significant conflicts of interest posed when the government is involved in business:

Firstly, as provider of public goods vs business sense.

For example, healthcare and public transport are generally accepted as public goods that should be provided by any government. However, the BN government also operates private hospitals and automobile manufacturers via GLCs. In this regard, any improvement in public goods would be bad for the GLCs. How then does the government address this conflict of interest?

Secondly, as regulator vs businessman.

In areas such as telecommunications, a good regulator ensures consumers enjoy good services at reasonable rates. However, good services come at a cost, which profit-maximising businesses will always try to reduce. So, on one hand, the government through the Malaysian Communications and Multimedia Commission attempts to oversee the telcos, but on the other hand, the government is a major shareholder in a major telco. How is this conflict resolved?

_______

17
Foreign Worker Levy Hike in 2011. The Malaysian Insider, 20 May 2011.

18
Human Resources Minister Datuk Dr S. Subramaniam quoted in Move to minimise confusion in registration of legal and illegal workers. The Star, 4 Aug 2011.

19
Cited in Repositioning for Growth. World Bank, Nov 2009.

20
Inclusive Growth.World Bank report, 2009.

21
Is the gas subsidy protecting inefficient IPPs? REFSA (Research for Social Advancement), 13 Jul 2011.

22
Democratising Malaysia’s Economy: DAP Alternative Budget 2010. Democratic Action Party, 2009.

[
Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 6 of 10
]

[<< Part 5]

[Part 7 >>]

                This entry was posted on Wednesday, 5 October 2011, 10:44 am and is filed under
Budget Debate
,
Economics
,
Pakatan Rakyat
. You can follow any responses to this entry through
RSS 2.0
.


Pakatan Rakyat Budget 2012 (Part 7 of 10)

6 Thrust 2: Sustainability

6.1 Inclusive growth

One of the most important ways for Malaysians to contribute to our country’s progress is by being productive, working citizens.

However it is evident that the vast majority of Malaysians have not reaped the benefits of their work. Under the Barisan Nasional Federal Government, overall income levels remain low, inequality has leveled out at comparatively high levels and deep pockets of poverty continue to exist, as discussed earlier.

The current policies of centralising powers and funding with the federal government will, if continued, foster even more geographical concentration and further amplify rural-urban differences. Pakatan Rakyat will focus on developing income-earning opportunities across the economy and the nation.

Also, inclusive growth rests on a vibrant economy that generates plenty of opportunities for all. Thrust 1 of Pakatan Rakyat’s Budget 2012 focuses on investment climate improvements such as labour market and economic reforms to reduce costs and barriers to new investments. Thrust 2 focuses on ensuring the growth is enjoyed by the rakyat spread across the nation, and sustained with investments in education, public transport, housing and crime-free secure neighbourhood while safeguarding the environment.

The focus of Pakatan Rakyat’s immediate and longer-term policies encompassing sustainability will revolve around the twin objectives of promoting public finance sustainability in combination with more urgent stewardship of Malaysia’s natural resources and environmental well being:

Public finance soundness and sustainability requires a return to fiscal discipline and transparency in reporting on the formulation, implementation as well as outcome of expenditures. Macroeconomic balance with steady growth is better attained when government finances are healthy which in turn promotes stability in the financial sector. Reforms in government operations and expenditure programs (e.g. eliminating wastage, cost overruns, value management) will be the main building blocks of financial sustainability.

Protecting the interests of our children and future generations calls for more urgent actions to preserve Malaysia’s natural resources and environment. Pakatan Rakyat will give greater clarity to an overall national strategic policy to better manage our natural resources, which will include strengthened regulatory rules and their enforcement as well as appropriate pricing of such resources to reflect their preciousness. Pakatan will strive to truly embrace green technology policies and leverage Malaysia’s potential as a centre for developing environmentally sustainable products and services, particularly in agriculture, for example, downstream palm oil products and derivatives and other edibles plus medicinal agricultural produce.

6.2 The Environment – Keystone to Quality of Life

The Pakatan Rakyat government will give prominence to crafting policies to actualize a green economy to underpin an environment for the rakyat to live with unpolluted air, clean potable water, affordable housing, efficient transportation and life-prolonging healthy outdoor recreational facilities. An ecosystem will be created that values nonsquandering of energy use; waste disposal encompassing recycling and conservation of depleteable resources.

The array of environment friendly policies would encompass:

Greater efforts on implementing a comprehensive energy policy;

Establish efficient energy standards for household and office products;

Foster alternative renewable energy sources, e.g. solar, wind and biomass;

Striving for appropriate pricing for non-renewable and scarce resources including petroleum products, gas, electricity, water, timber harvesting and mining;

Subscribe adequately if not wholesomely to national and global commitments to limitations on emissions and mitigation policies to meet the challenges of climate change; and

Encourage industry to adopt green technology and conventions in production and services processes:

Offer incentives for innovative green processes and products; and

Raise costs or make polluters pay an appropriate premium.

6.3 Security – let’s have more active policemen, not more policemen

Half of Malaysians fear becoming victims of crime
23
. Our serious crime rate is generally higher than our neighbours Thailand, Singapore and Hong Kong. We are outstripped in murder cases only by Thailand, and we have more reported rape incidents than Thailand, Singapore and Hong Kong.

Chart 6: We are outstripped in murder cases only by Thailand

Sources: Laporan Tahunan PDRM 2009; Singapore Police Force’s Annual Statistical Report on Crime 2009; Thailand’s The Nation, “Crime rate up 10%, incidence of rape rises,” July 5th, 2009; Australian Crime: Facts and Figures 2010; UK Home Office, Homicides, Firearm Offences and Intimate Violence 2009/10; Hong Kong, Police in Figures 2010. These charts are reproduced with permission from independent, not-for-profit research institute REFSA (Research for Social Advancement)

Chart 7: More reported rapes than Hong Kong, Singapore and Thailand

Note: Australia is excluded as its 67:100,000 ratio includes sexual threats, unwanted touching and indecent exposure

Sources: LaporanTahunan PDRM 2009; Singapore Police Force’s Annual Statistical Report on Crime 2009; Thailand’s The Nation, “Crime rate up 10%, incidence of rape rises,” July 5th, 2009; Australian Crime: Facts and Figures 2010; UK Home Office, Crime in England and Wales 2009/10; Hong Kong, Police in Figures 2010.

These unenviable crime statistics are all the more exasperating when considering that we have more than enough policemen and a horde of auxiliary security personnel such as RELA as well as a thriving private security guards business.

The 106,079 policemen we had in 2010 is equivalent to one policeman for every 270 Malaysians. This 1:270 ratio is close to the 1:250 recommended for Malaysia
24
, and better than our neighbours Thailand (1:321) and Singapore (1:396) and developed Commonwealth countries Australia (1:342) and the UK (1:380).

Chart 8: Malaysia has more policemen per citizen than many other countries

(chart below shows number of citizens per policeman)

Sources: UNODC/HEUNI, International Statistics on Crime and Justice, 2010; Oral reply by Deputy Home Minister Datuk Wira Abu Seman to YB Wee Choo Keong (Independent – Wangsa Maju) in Parliament on 16 Mar 2011; Hong Kong Police Force, Police in Figures 2010; UK Home Office, Police Service Strength England and Wales, 30 September 2010; Australian Productivity Commission, Report on Government Services 2011. Reproduced with permission from REFSA.

While we have enough policemen, deployment is an issue:

41% of our policemen are in management or administrative roles. This works out to each manager/administrator serving fewer than two active policemen on average.

The 59% of active policemen are also poorly deployed. For example, the General Operations Force, which was originally formed to fight communist insurgents, has nearly 15,000 personnel. This is far higher than the 9,000 at the CID (Criminal Investigation Department). The communists have long laid down their arms and Malaysia has become more developed and urban. The reverse would be more appropriate – CID should be the larger unit
25
.

There are plans to add another 50,000 officers by 2015
26
, a huge 47% increase from last year’s total. This would take our police to population ratio to 1:209, far higher than the 1:250 recommended for Malaysia and that of many countries perceived as “safe” as shown in Chart 8 above.

Rather than unnecessarily increasing the numbers, Pakatan Rakyat will retrain, redeploy and upgrade existing police officers:

Trained, sworn-in police officers currently bogged down in non-core administrative and other support functions will be reassigned to active crime prevention and detection, maintenance of law and order and preservation of peace and security duties. The non-core functions can be performed by civilian professionals and civil service staff;

Resources and manpower will be redeployed to reflect the changes in Malaysia. For example, the CID and Commercial Crimes units will be accorded higher priorities than the General Operations Force.

It is envisaged that such changes will result in enhanced security as well as greater public confidence in the Royal Malaysian Police. Pakatan Rakyat will strive to help the force to reverse the rakyat’s negative perception of the police. This change will restore community support and contribute to lowering crime rates. Stronger public confidence can then justify remuneration increases and help develop an even more professional police force.

6.4 Boosting regional and rural development through administrative decentralisation

Economic activity and growth has been increasingly concentrated in the Klang Valley. In order that economic activity and growth opportunities are enjoyed throughoutthe nation, it is proposed that the states be given greater control and accountability over their finances.

The Pakatan Rakyat will strengthen the principle and practice of federalism enshrined in the Federal Constitution in which states will be accorded with a more equitable formula of power sharing and resource distribution.

For a start, Pakatan Rakyat will review the Capitation Grant. The present practice of giving RM72 per capita for the first 100,000 population, RM10.20 for the next 100,000 then RM10.80 and RM11.40 for the next 100,000 and remainder of the population respectively is archaic and does not taken into account changes in the level of development and economic needs of each state in our federation of Malaysia. Pakatan Rakyat will introduce a more dynamic formula encompassing various factors such as the amount of each state’s economic contribution to the federation, income disparity andlevel of development and economic needs. More generally, disbursement of federal funds to States will be standardised and consistent based on agreed standard rules.

Over the medium-term, Pakatan Rakyat will reinforce State and Local Government capabilities in expenditure management:

The initial focus will be to strengthen State economic planning, implementation, monitoring and evaluation. State and local governments will be given more effective opportunities to provide inputs into allocation of federal funds. This will ultimately contribute to improvements in the efficiency and effectiveness of State expenditure programmes;

Pakatan Rakyat will also emphasise that information on the State expenditure programs; their results and impact, should be transparently disseminated as practised at the Federal level;

The ultimate objective when there is sufficient capacity will be greater devolution and decentralisation of federal government services and support to the State and Local authorities.

Together with growing state government capabilities, Pakatan Rakyat will review the allocation of federal funds to States and widen the allocation criteria and indicators to be utilised for this purpose. In principle Pakatan Rakyat will put the following policy measures in place over the medium-term:

Corporate and income taxes will be shared with the states

An equitable portion of income and corporate taxes, as determined by the residence of thetaxpayer and location of the establishment, will be returned to the states. This ensures that there is a link between the state’s performance and its revenue.

Incometaxes will be collected by the federal government using the existing infrastructure.

The share of revenue will be distributed to the states within six months of theend of each reference period.

Equalisation and development grants to ensure balance

Poorer states with smaller tax bases will be given equalisation and development grants to ensure adequate public services are delivered.

The equalisation grants will be based on the tax base in the statecompared to the average tax base in the country.

Development grants will be offered to less developed states. These willbe formula-based, depending on poverty rates and average incomes,among other criteria.

State and local leaders will take responsibility for more spending

States will take responsibility for expenditure on public transport, amenities, utilities and social welfare. These are areas where local leaders on the ground arefar better positioned to tailor responses to local needs;

There will also be newresponsibilities created, such as the setting up of community police services. Made up of full-time, part-time and volunteer staff as well as retired police personnel, this police service will be an integral part of the community working to identify, prevent, reduce and eliminate issues that affect community safety and order

To avoid duplication of civil service work, states will have access to theresources at the Economic Planning Unit and relevant federal ministries to assist them in utilising their new allocations effectively.

6.5 Meeting our most fundamental need – affordable food

Malaysia suffers a shortage of food production in Malaysia. In 2010:

Food imports jumped by 13% RM30.2 billion;

The food trade deficit widened by 9% to RM12.1 billion.

The Barisan Nasional approach has been to become more involved in the food value chain by setting up more grocery shops, wet markets and eateries “for the rakyat” such as “Kedai/Pasar Rakyat” or “Restoran Rakyat”.

While providing much-needed relief to the lower income group, these ventures which offer products at below-market prices will eventually ‘crowd-out’ private enterprises. A negative cycle is then created as the remaining successful private businesses are forced out of business by government competition, putting Malaysians out of employment and further increasing the demand for even more “for the rakyat” ventures.

While maintaining these ventures in the near-term, Pakatan Rakyat will put in place longer-term, sustainable solutions. All aspects of the food supply chain from planting, breeding, wholesaling, distribution, transportation to marketing and retailing will be streamlined. Greater competition and efficiency will help ensure adequate supply of food at affordable prices:

State governments will be encouraged to adjust land policies to ensure availability of suitable land for agricultural activities;

Greater use of technology will raise productivity, sustain prices, and give impetus to food agriculture as a sustainable new growth area for employment and income;

Monopolies or cartels for the supply of food items, such as Bernas, will be dismantled or regulated to reduce anti-competitive behaviour;

Transparency and streamlining will reduce the multiple layers in the supply chain of food and other necessity items; and

Direct sales by farmers, breeders and other producers to consumers will be facilitated.

6.6 Homes – The foundation of communities and nationhood

Housing is one the three basic needs, besides food and clothing. Pakatan Rakyat considers adequate housing as a fundamental building block of communities which form the bedrock of the nation.

However, the development of communities is hampered by two major issues:

Soaring house prices. Good quality, affordable housing is increasingly beyond the reach of ordinary Malaysians; and

Poor quality and delivery. The housing market is littered with abandoned projects and low quality developments. Malaysians who had paid for housing do not get their money’s worth.

6.6.1 Build, then Sell

Abandonment is a serious problem. As of 2009, 79,000 Malaysians have fallen victim to stalled or abandoned housing projects
27
. The worst part is that this affliction is particularly rife in the low-medium cost markets. It is not enough that the victims are already poor, they are now being robbed at the same time.

This problem is a direct result of the current ‘sell, then build’ model that exposes Malaysian house buyers to great risk. In simple language, developers are allowed to sell as-yet non-existent units to finance their developments. The units will be built with the down-payments and progress payments from the buyers. Should the developer abandon the project, house-buyers are still burdened with the repayment of bank loans.

Pakatan Rakyat will implement a modified ‘build, then sell’ policy for all low-medium cost housing developments costing RM300,000 and below:

A 10/90 model will be implemented which allows house buyers to pay a 10% deposit with the rest payable only after the unit is ready for delivery with all appropriate papers and certifications;

Put into practice, house buyers need only start making a loan application shortly prior to the date of completion, and then only if they are satisfied with the progress of the development;

Smaller developers will be assisted to compete.

This ‘build, then sell’ model will also help reduce common problems such as poor workmanship and Certificate of Fitness (CF)and strata title issues. Developers will focus on building quality homes as promised in their marketing brochures as buyers will have the opportunity to inspect the homes before committing the final 90%.

This will not result in substantially higher house prices, as claimed by some developers. Already, the property market has seen the innovative 10/90 or 5/95 schemes where only a downpayment of 10% or 5% is required, with the rest to be ‘paid’ after construction is completed:

The modified ‘build-and-sell’ approach has the same financial impact on developers – the developer takes 10% up-front and the balance only upon completion;

The major difference is that bankers will be required to monitor developers more closely as they will not be able to pursue buyers in the event that the developer abandons the project. Under the current 10/90 or 5/95 schemes, the buyer is still responsible in the case of abandonment as he/she has already entered into a loan agreement with the bank.

6.6.2 Affordable housing will be built

House prices are rising beyond the reach of ordinary Malaysians.

Recognising this, the Barisan Nasional federal government introduced the “My First Home Scheme’ in February. Young adults earning less than RM3,000 per month will be granted 100% financing for houses costing between RM100,000 and RM220,000, with the repayment period spread over 30 years.

The drawbacks:

Reality is that landed properties and condominiums in major cities like Kuala Lumpur, Petaling Jaya, Georgetown and Johor Bharu already cost more than RM220,000;

Cheaper properties may be available, but these would be run-down and/or located in outlying areas – resulting in high transport costs and/or undesirable living conditions;

Even if a home costing RM220,000 can be found, the young buyer will be saddled with a heavy financial burden. Assuming the buyer earns RM3,000 per month, she will have just RM806 left per month after the deductions for EPF, SOCSO, income tax and loan repayments. Using a more realistic estimate of RM300,000 per house, the balance will be just RM406 – clearly insufficient to live
28
.

“My First Home’ addresses the symptoms rather than the cause. Income growth has not kept pace with house prices. Earlier in this Budget, Pakatan Rakyat outlines policies and measures to grow incomes. Concurrent with this, Pakatan Rakyat will also put in place policies designed to rein in house price inflation.

6.6.3 Affordable housing is a joint-responsibility of federal and state governments

Affordable housing in the low and medium cost rangeis greatly needed but this market segment is of diminishing appeal to developers. It is clear that a government-led approach must be considered.

Hence, the federal government recently announced that the 1Malaysia Housing Programme Corporation will be set up to spearhead Projek Perumahan Rakyat 1Malaysia (PR1MA) affordable housing scheme. While the concept and intentions may be noble, this organisation suffers from some serious shortcomings, such as the fact that most land belong to the States and should necessarily be state-managed.

We believe that the solutions to housing problems faced by Malaysians must necessarily be solved via a State-led approach that combines legislation and financing at the federal level with development and enforcement at the State level.

Housing needs vary from state-to-state, and so do land and construction costs, income levels and relative cost of living;

State involvement in the low-medium cost and affordable housing market will help stabilise prices while not unduly competing with developers who are now mainly interested in high-end niche markets that yield better gains.

The responsibilities of the federal government will be to:

Provide an annual housing grant to each state according to its needs. The amount of this grant will be set after consultations and discussions with stakeholders;

Determine building specifications for various ranges of low-medium and affordable housing, in order to set a quality benchmark that must be followed;

Determine the ceiling price for low-medium and affordable housing with appropriate regional variations.

Each state government will:

Prepare a detailed Housing Plan to estimate and project housing requirements;

Form a Housing Board which will:

Determine housing needs based on the Housing Plan;

Acquire or alienate land to be used for development of low-medium and affordable housing;

Undertake the actual development either by appointing a state agency or subcontracting to private developers and ensuring construction is done according to the specifications determined by the Federal Government.

While federal grants will help to subsidise the developments, the balance of the cost will be funded through sale of units as well as through rezoning fees and development charges levied on developers.

6.6.4 Existing legislation will be fully-utilised to protect home-buyers

There is legislation in placeproviding for protection of house-buyers and action against errant housing developers.

For example, if a project is abandoned or in danger of abandonment, Section 7 of the Housing Development (Control and Licensing) Act, 1966 (Act 118) allows the freezing of the errant developer’s bank accounts while Section 11 of the same Act accords the Minister powers to direct another company to assume control and carry on the business of the housing developer in question. Furthermore, Section 10A allows powers of entry, search and seizure on the premises of the errant developer.

These laws and numerous others have been provided for to protect the rights of house buyers. Pakatan Rakyat will enforce these laws as they were intended, sending the message to housing developers that Pakatan Rakyat considers housing of crucial importance to the people and the stability of the nation.

6.7 Public transport – moving people, not cars

The share of public transport has dropped from 35% in 1985 to 16% in 2005
29
 and has not significantly changed since then. This is very low compared to other Asian cities. In Bangkok, the corresponding level is 30%. Public transport usage is well over 50% in Manila (54%), Singapore (56%) and Seoul (60%).

Car-ownership is growing very quickly. 1 million vehicles are added to our roads every year. In 2005, there were less than 15 million registered vehicles. 5 years later, in 2010, the number of registered vehicles is over 20 million.At this rate, there will be over 30 million vehicles by 2020.

30 million vehicles will not be a symbol of wealth or progress. They will be embroiled in grid-lock. Urban roads are already extremely congested. Some are choked. Motorists pay tolls and yet are stuck in jams. It is clear that we will never be able to build sufficient roads to accommodate all these vehicles.

This increase in private vehicle use has been driven by the absence of efficient public transport alternatives and ambiguous policies. The Barisan Nasional government has a National Automotive Policy. There is no National Transport Policy. Furthermore, the cost of private driving has been made distortedly cheap by heavily-subsidised fuel.

A paradigm shift is urgently needed in our national transport priorities. Besides lost productivity, traffic congestion and excessive use of motor vehicles leads to unnecessary fuel consumption, noise and atmospheric pollution, accidents and environmental degradation.

With this in mind, Pakatan Rakyat will put in place a National Transport Policy that prioritises public transport. The principle must be “Move people, not cars”.This policy will include the following elements:

A National Land Transportation Blueprint will be created

All three levels of government – federal, state and local authorities – will deemphasise construction of roads in urban centres and channel the resources to expanding public transport services instead;

The approach will be holistic in conjunction with the subsidy revamp as described in this document, disincentives for private motor vehicle use in congested urban areas and incentives to encourage utilisation of public transport;

Pakatan Rakyat proposes a regime of managed competition. Local transport authorities will control the design of the network and define the transport product that is to be delivered. The operators in charge of execution can be determined via competitive tender and strict performance compliance will be required before contract extensions or retenders;

All network designs, infrastructure building and equipment will take into account the needs of disabled and elderly commuters.

Design and administration of public transport networks will involve regional, state and local authorities.

Pakatan Rakyat does not believe the present situation where the Ministry of Finance in Putrajaya runs public bus services in Penang and Kuala Lumpur is effective. Public transport is best supervised by authorities with local knowledge;

In the Klang Valley which encompasses Kuala Lumpur, Selangor and Putrajaya, it is proposed that a Klang Valley Transport Authority (KVTA) be created;

Gross-cost route contracts will be explored. Under these arrangements, the authority pays the operator a specific sum to provide a specific service for a specific period. All revenue collected goes to the authority. Clauses built into these contracts will financially reward good performance and penalise poor performance. The authority will set minimum standards and service levels, following which the routes will be open for tender. These contracts share the risks – the authority takes responsibility for the commercial risks while the operators bear the operational risks.

Public transport improves mobility – not just physically, but also socially:

It gives the rakyat access to more job opportunities – the rakyat can reliably, quickly and at reasonable cost travel to where the jobs are;

It opens up prospects for enriching the quality of life – the rakyat can quickly and cost-effectively access recreational activities or community activities on rest days for physical and spiritual revival in an environmentally-friendly manner;

Both of the above serve to improve productivity. Time not spent driving or stuck in traffic can be usefully spent on mental enlightenment or productive work such as pursuing more business opportunities or reading, preparing or studying for the next meeting or healthy hobbies.

Hence, a National Transport Policy will prioritize public transport following the principle of “Moving people, not cars.” Land Public Transport Commission (SPAD) will be transferred from the Prime Minister’s Department to the Ministry of Transport with increased funding.

In addition, good efficient public transport:

Reduces the cost of doing business;

Expands transport-related business opportunities;

Improves social well-being – less time on the road or improved access means more time for family, community work and self-improvement; and

Results in less environmental decay.

In Penang, the Pakatan Rakyat state government in Mar 2011 initiated the Bridge Express Shuttle Transit (BEST) scheme to reduce congestion on the Penang Bridge. Costing RM1.9 million ringgit per year, commuters are offered free bus services between the Penang Island and the mainland during peak hours from 6am to 9am and 4.30pm to 7pm. Even on this limited schedule, BEST is now carrying an average 500 commuters per day in each direction. This is equivalent to about 5% of the estimated 10,000 vehicles crossing the Bridge during peak periods.

Also, free public transport for all OKU will be given to enhance their mobility. This will be done with an allocation of RM20 million.

6.8 Education – empowering all regardless of background

6.8.1 Strengthening our religious and vernacular schools

Education is crucial in building a progressive nation. And with a multiethnic and multireligious background, it is imperative that no one gets left behind. Pakatan Rakyat has found that in religious, vernacular and missions schools, there are certain shortages and lack of funding in various areas of which this coalition hopes to overcome with numerous initiatives in the budget.

Firstly, a shortage of Chinese, English, Tamil and religious teachers was found to be a substantial issue. Priority will be given to train English teachers as well to meet current needs. To resolve this, an additional 10 000 teachers will be trained and RM 200 million will be allocated for this purpose.

Furthermore, Pakatan Rakyat also recognises that a large number of SRJK (C), Sekolah Agama Rakyat (SAR) and SRJK (T) in particular have inadequate and deteriorating infrastructure and facilities due to insubstantial support. Pakatan Rakyat will allocate RM 200 million immediately to improve existing buildings and facilities of schools. Also, new pre-schools will be set up where needed. New schools will also be built particularly in urban areas where schools are becoming increasingly overcrowded and not conducive for learning.

6.8.2 Skils-based careers will be made desirable

The Malaysian education system is academic-oriented. There has been a focus on paper qualifications, as evidenced by the proliferation of universities and the constant focus on the number of distinctions scored in public examinations.

However, not all youths are academically inclined – 70% of students do not pursue tertiary education. Also, as pointed out earlier, more than a third of household heads are informally employed.

Recognising this, Pakatan Rakyat educational policies will emphasise the importance of skills, and bring dignity to jobs in these areas. Pakatan Rakyat will bring lustre to skillsbased careers. Skilled workers will be recognised for their technical skills and expertise, and not looked down on as drop-outs forced to do menial tasks.

To this end, Pakatan Rakyat will increase resources to vocational and skills training including the incentives for apprenticeships.

The number of public universities has increased from 7 in 1990 to 15 in 2000 and currently number at 20.
30
The number of private higher education institutions with full university status currently stands at over 70.
31
 In addition, there are another 400 or so private higher education institutions with university college or college status. The number of places available at tertiary institutions is clearly not a limiting factor for the 70% of students who do not pursue the path of a tertiary education post SPM and STPM. The availability of PTPTN loans also means that the financing a tertiary education is not a major obstacle.

Instead of increasing the amount of resources towards raising the percentage of the population who enter into tertiary education, a more sustainable and effective policy would be to increase the skill level of non-tertiary education inclined students through the improvement and upgrading of technical and vocational education and training (TVET). The development of human capital in this area is crucial as Pemandu estimates that approximately 40% of the 3.3 million jobs which will be created under the Economic Transformation Program (ETP) will require TVET related skills and expertise at a high level.
32

Currently, TVET suffers from poor public perception and is seen as the path taken for the less academically inclined and school drop outs. Resources are not adequately allocated at the secondary and post-secondary level towards developing TVET as a legitimate career pathway capable of delivering increasing wages as one’s skills in this area are developed. In addition, the multiple entry points towards TVET in various occupational areas increases the perception that it is a fall back option for students who cannot do anything else. The various government initiated training and re-training programs cannot helped but be seen as ‘redemptive’ projects for school drop outs.
33
 These training programs, which are run by the various ministries, also encourage duplication and waste valuable resources.

The launch of Skills Malaysia 2011 in January this year as a strategy to change the public perception of TVET is a positive development as is the ongoing effort to develop, standardise and refine the Malaysian Skills Certificate process in various industries.

But it does not go far enough.

Firstly, TVET has to be developed as a legitimate career pathway. The perception that it is a ‘dumping ground’ for those who are not academically inclined must be removed. TVET must be seen as a desired pathway for those genuinely interested in acquiring and upgrading skills level in industry areas such as construction, building and automotive maintenance and tourism. To achieve this end, any public relations campaign has to be coupled with a clear structuring of the professional TVET career path in the relevant industries.
34
 The inclusion of a wider variety of students into the TVET will be an integral step in changing the public perception of the economic value added of those taking this career path.

Secondly, private industry groups, companies and education providers should be incentivised to develop their own apprenticeship programs that lead to professional certification at various levels. Currently, too many TVET programs are supplydriven and the push for more industry involvement in curriculum development and standardisation has not been particularly successful. Rather than allowing only institutes of higher education to award Malaysian Skills Certificates, other groups including industry groups such as the Federation of Malaysian Manufacturers (FMM) should also be allowed to develop and award these certificates, subject to approval by the Malaysian Qualifications Agency (MQA). By doing so, the apprenticeship model, which is well known and well developed in Germany, can be developed and enhanced in Malaysia. The National Dual Training System (NDTS), which was started in 2005, based on input from Germany, will stand a better chance of being institutionalised with greater industry participation.

To develop TVET in Malaysia, it is proposed that the number of students in TVET post Form 3 be expanded from 10% of total students to 20% by 2020. Resources expended on the pre-primary ‘gifted’ education program, PERMATA, which benefits only a handful can be better spent on developing TVET, which has wider and longer term benefits.

To incentivise industry groups and other private sector stakeholders to develop and enhance their apprenticeship programs, resources can be channeled from existing training schemes and funding (such as the Skills Development Fund) to develop appropriate apprenticeships models and relevant skills certification by private sector stakeholders.

6.9 Healthcare

Malaysia spends very little on healthcare – only 4.8% of GDP is spent on healthcare in Malaysia. This is similar to levels inLaos (4.1%) and China (4.6%), but lower than South Korea (6.5%) and Chile (8.2%)
35
, 6% for most other industrialised countries and 14% in the United States
36
.

This relatively small amount is ineffectively spent. Flawed privatisations of medical supplies and support services have resulted in massive cost increases.

Expenditures on support services to five hospitals and prices of pharmaceuticals and medical supplies to government health care facilities soared by over 3 times postprivatisation
37
;

Between the Sixth to Seventh Malaysia Plans, there was a six-fold increase in the cost of support services from RM263 million to almost RM2 billion
38
.

These concessions and other agreements will be reviewed under the Unfair Public Contracts Act that Pakatan Rakyat intends to enact.

In terms of delivery, public healthcare personnel are stretched. Although the public sector provides for up to 85% of the population, it is served by only 25-30% of specialists and 45-60% of all registered doctors.This inequitable distribution has severely affected and compromised patient care and training of future younger specialists.

In addition, clear gaps exist:

Poor health among the Orang Asli and the Bumiputera population living in the interior regions of Sabah and Sarawak. The Orang Asli crude death rate is twice that for Peninsular Malaysians. Orang Asli women make up 4.8% of maternal deaths despite comprising less than 0.6% of the total population
39
;

Demographic changes. Increasing numbers of Malaysians are senior citizens. Geriatric care is lacking. Presently, elderly who suffer from chronic diseases are mainly left to depend on their family members or in private nursing homes. These arrangements are not ideal in terms of treating related psycho-geriatric problems such as intellectual impairment, dementia and depression
40
;

Preventive health care and rehabilitation. Malaysian healthcare delivery tends to be focused on in-patient settings which deal with urgent and acute conditions:

Preventive health care, where effective monitoring and measures can prevent illness from turning acute and requiring major medical intervention;

Rehabilitation, where after the onset of an acute episode the patient is medically stable and no longer requires hospitalisation but would still require out-patient follow-up.

Pakatan Rakyat will strengthen the shape of Malaysian healthcare in the future. Improvements will include:

The scope of public healthcare and the means of financing this public good;

Pay and job conditions for medical personnel;

The scope of GLC participation in private hospitals;

Ways to improve health indicators for the Orang Asli and Bumiputras living in Sabah and Sarawak and increased allocations to reflect the costs involved in providing services to these communities in hard to reach rural areas. Amounts allocated per household to Sabah and Sarawak are presently smaller than in Perlis and Terengganu despite their much larger geographic areas
41
;

Better meeting the needs of senior citizens and patients requiring long-term care. Increase the number of health care professionals specially trained to look after the needs of senior citizens and of those requiring long-term out-patient care and monitoring and hospitals with facilities and infrastructure for geriatric services and long term out-patient health care will also be considered
42
; and

Adopting new models of community and home-based care for patients not needing hospitalisation but who have difficulties getting to a clinic or hospital for health care due to age, injury or illness. Such measures would promote injury and illness prevention and reduce unnecessary admissions into hospitals, which would provide significant savings to Malaysian health system.

6.10 Demand Management

One of the many challenges facing government when managing the demand for public goods such as water, health, education, transport, even subsidies; is that the preferences of the rakyat are varied. The needs of different segments of the population, say by income level (poor-middle-rich), by time (today versus in five years), by geographic locations (urban-rural), by ethnicity, by occupation (farmer, civil servant, factory worker, professional); can be universal and have a common thread or could be entirely conflicting or dispersed.

Thus if government tries to satisfy the average citizen’s needs it might well end up not meeting the requirements of anyone, or if lucky, just some portion of the populace. This dilemma can be quite problematical when government has to determine the price to charge and the quantity to deliver of public goods.

A corresponding issue for government, given limited resources, is to establish pricing or distribution that does not lead to wastage or excessive consumption or abuse (for example, smuggling). In this Budget paper, Pakatan Rakyat will focus on water issues, but we fully recognize that there is a broader agenda that will need to be addressed in a holistic manner by a resolute Pakatan Rakyat administration if the rakyat chooses Pakatan Rakyat to govern.

Water demand management (WDM) will be implemented to maximize efficiency of water usage and secure long term sustainability of our water supply. It will serve to reduce the need for costly new water supply infrastructure which often entails significant social and environmental costs in addition to their actual direct costs. Planning for new water supply will therefore assess economic, social and environmental impacts and incorporate ‘least-cost planning’ when comparing supply-side and demand-side options.

Demand management will check and reverse the growth in average domestic consumption and the much higher growth in non-domestic consumption which has been outpacing real GDP growth as shown in the table below. We need to increase the economic productivity of water instead. A vigorous reduction of non-revenue water which remains unacceptably high will have to be a priority. Average domestic consumption stood at 219 LPD (litres per person per day) in 2010 compared 163 LPD less in many countries or regions.

Table 2: Average domestic consumption in selected regions

Country/Region

Average (LPD)

South East Queensland

163

Singapore

154

France

150

Germany

127

Czech Republic

103

Sources: The 2009 Water Report, Queensland Water Commission, 2010; Ministry of the Environment and Water Resources, Singapore; Future water: The Government’s water strategies for England, Department for Environment, Food and Rural Affairs.

Demand management has to begin with a holistic vision of safe, secure and sustainable water for prosperity, social well-being and healthy ecosystems. The vision will embrace the principles of:

Maximizing efficient and cost-effective service delivery;

Considering environmental, social and economic factors and applying ‘least cost planning’ to compare all supply-side and demand-side options, and

Applying water restrictions to achieve long-term WDM objectives as well as to address threats to sustainable and secure water supply.

The potential savings are tremendous. It is conceivable that our nation’s water demand needs up to 2020 could be fulfilled without the need for expensive and environmentallydamaging massive new infrastructure. For example, aiming for targets of 165 LPD for domestic demand, a cap of 120 LCD for non-domestic demand and 20% non-revenue water by 2020 through a comprehensive demand management program, total demand would then be 11,632 MLD, compared to 14,065 MLD in 2010.

The national water authority, Suruhanjaya Perkhidmatan Air Negara (SPAN), in consultation with stakeholders and the community, will develop policy goals for domestic and non-domestic usage and for non-revenue water that specify intermediate and long-range targets and the timeframes to achieve them. The long-range goal would be to realise levels that are comparable to best practice.

Table 3: Water usage & GDP, 2005 vs. 2010

Malaysia

2005

2010

Increase

Population

26,127,700

27,565,800

5.5%

Population served (%)

94.0%

94.2%

–

Domestic demand (MLD, million litres/day)

5007

5682

13.5%

Avg. domestic usage per person
1
(LPD)

204

219

7.3%

Non-domestic demand (MLD)
2

2361

3267

38%

Avg. non-domestic usage per capita (LCD
3
)

90.4

118.5

31%

Avg. non-domestic usage (m3/acc/month)

88.6

115.8

31%

Domestic + Non-domestic usage (MLD)

7367

8949

21%

Non-revenue water (MLD)

4196

5116

22%

Non-revenue water per person (LPD)

171

197

15%

Non-revenue water (%)

37.7

36.4

(-3.5%pts)

Water loss per service connection
4

770

792

2.9%

Total Production (MLD)

11,563

14,065

22%

GDP (constant year 2000 price, RM‘000)

449,250

556,602

24%

1
With respect to population served. Source: Malaysia Water Industry Guide 2008, Malaysian Water Association

2
Excludes groundwater withdrawals used in situ. Source: Water demand management potential in Selangor, Kuala Lumpur and Putrajaya, Conference Proceedings, Asia Pacific Regional Water Conference 2011. James T. Cherian, Mar 2011.

3
LCD, litres per capita per day

4
Litres per connection per day

Similar issues apply to the provision of reliable, efficient electricity supply. The Energy Commission will be tasked with similar goals of developing benchmarks for electricity consumption and supply and specifying the timeframes to achieve them.

________

23
Statement by PEMANDU on 31 July 2011. This was based on a government-commissioned survey from Apr to May 2011. 49% of the respondents feared becoming victims.

24
Oral reply by Deputy Home Minister Datuk Wira Abu Seman to YB Wee Choo Keong (Independent – Wangsa Maju) in Parliament on 16 Mar 2011.

25
Staffing the police – More active policemen please, not more policemen. REFSA (Research for Social Advancement), 26 Aug 2011.

26
PDRM sasar mencapai 150,000 menjelang 2015.Bernama 24 Mar 2011.

27
Source: Ministry of Housing & Local Government (Bahagian Pengawasan & Penguatkuasa)

28
My First Home Scheme: Myth or reality? Malaysiakini, 19 Mar 2011.

29
Automobile emissions and the environment: The Malaysian experience. Fatima Kari and Rajah Rasiah.Available at http://www.idrc.org/CCAA/ev-132167-201-1-DO_TOPIC.html.

30
Most of the new universities post 2000 were public higher education institutions which were upgraded to full university status, for example Kolej Universiti Kejuruteraandan Teknologi Malaysia became University of Malaysia, Pahang.

31
These include universities which are funded by Government-Linked Companies such as Petronas, Tenaga and Telekom.

32
For a summary of the history of skills development in Malaysia which includes TVET, see Pang, CL, Rajamorganan, N, and Sim, Simon (2010). Background Paper for Malaysia: Skills Development in the Workplace in Malaysia presented at the ILO/SKILLS-AP/Japan Regional Technical Workshop and Study Programme on Skills Training in the Workplace Overseas Vocational training Association, Chiba, Japan on 1-5 February, 2010.

33
RM150m was allocated under the 10th Malaysia Plan to train 20,000 school dropouts. Reported in Four Strategies To Broaden Access To Quality Technical, Vocational Training.Bernama 10 June 2010.

34
For example, aspiring medical practitioners are encouraged to take certain science based subjects at the SPM and post STPM levels, before embarking on a medical degree. Post graduation there are different options for these medical practitioners to be specialists and to increase their research expertise in different areas.

35
WHO National Health Account Database by country. WorlBankdata.worldbank.org/indicators

36
Shepard Donald S, William Savadoff and Phua Kai Hong. Health Care Reform Initiatives in Malaysia – A Report of a Consultation with the Planning and Development Division, Ministry of Health, Malaysia. October 16, 2002.

37
Chee, Heng Leng. Current Health Care financing Issues in Malaysia. Asia Research Institute, Working Paper Series, No.18, National University of Singapore, February 2004.

38
Wee Chong Hui and Jomo KS. Equity in Malaysian Health Care – An Analysis of Public Health in Health Care in Malaysia: The Dynamics of Provision, Financing and Access, Chee, Heng Leng and Simon Barraclough (eds), Taylor and Francis, 2007.

39
Nicholas, Colin and Adela Bear. Health Care for the Orang Asli – Consequences of paternalism and non-recognition in health care in Malaysia: The dynamics of provision, financing and access. Chee, Heng Leng and Simon Barraclough (eds), Taylor and Francis, 2007.

40
Poi, Philip JH, Duncan Forsyth and Daniel Chan. Occasional Paper: Services for Older People in Malaysia: Issues and Challenges. Age and Ageing Vol.33, No.5, British Geriatrics Society, 2004.

41
Wee and Jomo (2007) shows in Table 6.10 that the amount allocated per household in 1998 to Sabah and Sarawak was lower than that of Perlis and Terengganu despite the larger area of coverage in the East Malaysia states.

42
Ong also notes that there were only four hospitals, all in the Klang Valley, which were capable of providing geriatric services.

[
Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 7 of 10
]

[< < Part 6]

[Part 8 >>]

                This entry was posted on Wednesday, 5 October 2011, 12:28 pm and is filed under
Budget Debate
,
Economics
,
Pakatan Rakyat
. You can follow any responses to this entry through
RSS 2.0
.


Pakatan Rakyat Budget 2012 (Part 8 of 10)

7 Thrust 3: Empowering Malaysians

7.1 Political Reforms- Democracy Now

Five decades on, democracy as practised in Malaysia today is little more than a shade of its former glory as various key public institutions have been routinely compromised by an unchecked Federal Government. Thus, Pakatan Rakyat is committed to immediately implementing the following reforms:

To revoke all existing emergency proclamations and repeal all laws that provide for detention without trial, as outlined in the draft Emergency Revocation Act (Akta Pemansuhan Darurat) submitted by Pakatan Rakyat in the March 2011 parliamentary session.

To restructure the Public Complaints Bureau (Biro Pengaduan Awam) into an Ombudsman institution.

To place key public institutions including the Auditor-General’s Department, Department of Statistics, Judicial Appointments Commission, the Malaysian Anti-Corruption Commission (SPRM), the Election Commission (SPR), and the Malaysian Human Rights Commission (SUHAKAM), and an Ombudsman institution under the purview of Parliament.

To ensure freedom of the media by removing all discretionary licensing requirements via the repeal of the Printing Presses and Publications Act 1984. In lieu of this, an independent and self-regulating media council will be put in place.

Radio Televisyen Malaysia (RTM) as an institution will be managed by media professionals, based on the example of the BBC, and placed under the purview of Parliament.

To restore academic freedom and autonomy of Malaysian universities by repealing the University and University Colleges Act (AUKU) 1971, thereby freeing students from the stranglehold of the Student Affairs Department (HEP). Leadership of public universities will be based on merit.

To abolish the Official Secrets Act (OSA) and enact a Freedom of Information Act at all levels of government, equipped with the necessary infrastructure. This will ensure access to all information of public interest, with the exception being matters genuinely connected to national security.

A white paper on strategic defence issues and geopolitical challenges will be prepared.

Procurement shall be governed by strict spending procedure to weed out wastage and mark ups.

Reduce defence development expenditure by 20% and increase defence ersonnel and soldiers’ salary by 5% and an improved after service safety net.

While the reforms listed above are far from exhaustive, Pakatan Rakyat believes that these areas present the greatest opportunity to return the country’s democratic practise to health.

7.2 Sabah and Sarawak: Firm Focus on East Malaysia

Despite being equal partners with Malaya during the formation of Malaysia nearly half a century ago, it is evident that Sabah and Sarawak has not enjoyed the level of development and prosperity that rightfully belongs to East Malaysia.

Based on the additional income acquired through the 20 percent oil royalty reserved for Sabah and Sarawak, Pakatan Rakyat envisions the following:

Improving the existing road networks and providing better access to rural communities. For example, until this day, Sarawak’s first trunk road from Kuching to Lawas is still poorly maintained. Pakatan Rakyat is committed to upgrading this crucial infrastructural link for the benefit of all Sarawakians;

Strengthening the electrical grid network infrastructure to reduce the System Average Interruption Duration Index (SAIDI) levels in Sabah, while refocusing priorities from large hydroelectric dams to sustainable and efficient micro hydro power plants and solar farms for all rural communities in Sarawak;

Enhancing education and skills development through increasing broadband access by 2015;

Revamping the existing flying doctors service and emergency medical services in Sarawak via an additional allocation of RM100 million.

Pakatan Rakyat will ensure that the skills and talents of Sabahans and Sarawakians will be used as far as possible to implement these ideas.

7.3 Youths- The Forefront of Change

Pakatan Rakyat recognizes the crucial role that the youth play in realising a better and more democratic Malaysia.

Pending a thorough review and comprehensive investigation on the expenditure and curriculum structure, the National Service programme will be replaced with a schoolbased extracurricular or community programmes. The RM 747 million, as was allocated to the National Service in the previous year, will instead be channelled into this new initiative.

A total amount of RM100 million will be allocated for a Youth Choice programme (Pilihan Anak Muda), involving Malaysians under 30 years old, to implement projects and programmes of their choice through a balloting process.

RM50 million will be allocated to a special fund to promote youth involvement in creativity and in the creation of more recreational spaces for young people.

Pakatan Rakyat will also ensure that all future housing projects under the Prime Minister’s Department (JPM) and the Ministry of Housing and Local Government (KPKT), with the cooperation of local governments, will be allocated sufficient space for sports and recreational activities and better maintenance of existing facilities.

[
Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 8 of 10
]

[<< Part 7]

[Part 9 >>]

                This entry was posted on Wednesday, 5 October 2011, 1:53 pm and is filed under
Budget Debate
,
Economics
,
Pakatan Rakyat
. You can follow any responses to this entry through
RSS 2.0
.