By Arveent Kathirtchelvan

Over the past few weeks, the Pakatan Harapan government has shown an increased reliance on neoliberal rhetoric to keep their regime afloat. Unfortunately, this behaviour will only result in more economic contraction, rather than increased prosperity. At this time, there must be a shift in the way we see the economy for better job creation, shedding depressed salaries and truly accelerating the road to a more prosperous Malaysia.

Eliminating Skills Mismatch

When Youth Minister Syed Saddiq championed Go-Jek’s inclusion into Malaysia, his argument was to get motorcycle enthusiasts who currently are unemployed jobs. His cry of ‘let’s help mat motors’ was intriguing, yet the departure from his pre-election promise of 1 million jobs creation is stark. Go-Jek and other ride-sharing services, as others in the gig economy, are bereft of basic necessities needed by workers. Putting aside pension plans or medical coverage, even the pay for individual workers is miniscule. How then can they properly result in satisfactory jobs?

Alternatively, one may state that, in this time, at least 2 jobs are needed to sustain a comfortable standard of living and these services offer flexible working options for that reason. Strangely, in the name of pragmatism, we seemingly have accepted the perverted notion that the current state of the economy is the norm. Full-time work was designed through negotiations between workers and employers for decades to properly compensate workers such that a single day may be split into three 8-hour blocks: the first dedicated for work, the next for leisure and the third for rest. Now, we seem to be allowing some of our leisure time and even rest time to be sacrificed, not by choice but by necessity, simply to sustain our livelihoods. How perverse!

Even more disconcerting is the mismatch of skill between graduates and the jobs they end up doing. On Twitter, a thread recounted how an engineering graduate ended up working as a food distributor for Food Panda, followed by many such examples of a skills mismatch. What we end up with is an educated mass that is under-employed in the sector they are passionate about. Although some have made the claim that this is due to an overproduction of graduates, it must be noted that the present system is what causes this surplus in the first place. There might be a misalignment of education with the realities of the job market, sure, but when engineers are unemployed in a growing economy, this must be attributed more to a lack of jobs.

Neoliberal Policies Need To End

Unfortunately, the government is less focused on this and relies on the neoliberal concept of reducing dependencies and expenditure instead. Whilst no one is in support of overpaying for certain amenities or services, reducing government expenditure as a blanket move will not result in a more prosperous nation. The recent discussions to do away with government pensions is an example of a reduction in expenditure that will backfire on the government apparatus. Possibly the main reason for individuals to go into the government sector, the removal or substantial reduction of the pension scheme will result in fewer capable individuals aspiring to work in the government. One wonders if, with the removal of the pension, will Pakatan Harapan move to increase the salaries of government servants as a compromise? It seems highly unlikely.

It is increasingly obvious that we are heading towards high levels of unemployment. With it will come the usual spiral to the bottom with respect to wages and further curtailment of public welfare schemes. In an attempt to spur the economy, the government will rely on cutting tax rates and increasing incentives for the super-rich to encourage the vague and inaccurate notion that capital will trickle down to the masses. Alongside that, the government would also increase incentives for the circulation of capital from the masses through certain schemes including reducing bank interest rates and increasing the ease of borrowing for purchase of certain assets such as houses.

The latter can seem to be a positive endeavour, and can be seen in Malaysia through the government pushing for easier access to housing loans and waiver of stamp duty fees. Whilst it is understood that this enables more people to buy houses, it still does not solve the core issue of housing prices simply being too high to be affordable in the first place. Private developers seek greater margins by building disproportionately luxurious houses, leaving most Malaysians without proper access to adequate shelter. Easier access to capital will only extricate whatever little savings in the hands of the common Malaysian to service loans much higher than they have any right to be. Those who don’t spend then suffer from lower interest rates on their savings in their bank accounts.

Economic Control Needs To Be Strengthened

All of this in service of what? Smaller purses for the common man, smaller revenue for the government due to reduced taxes and greater capital flow to top 1% where it will either remain to multiply through further exploitative policies or is extricated overseas to tax havens for safe-keeping.

There needs to be a fundamental shift in the ideology behind the decisions this government takes. When it comes to the economy, the constant downward spiral the government pushes, with greater cuts in tax rates for the wealthy and corporations, will only result in corporate dictatorship of the masses where the super-wealthy exert unbridled control over the life of the common man who is dependent on them for employment and material needs. This comes to him only fulfilling the minimal requirement of sustaining markets to keep the capitalist system of disproportionate surplus value extraction in place.

As a nation and a people, we will lose out. What the government should be doing is spearheading local and common control of the economy. This is where the role of the state comes in. Unlike the common view that the state should divest as much as possible from the economy, it is imperative for the government to invest more in the economy and control a larger portion of it to properly distribute the wealth that is generated.

For example, the private sector has shown ineptitude in raising wages. Bank Negara Malaysia stated that Malaysian wages should be commensurate with a living wage, defined as the income level needed to achieve a minimum acceptable standard of living. For Kuala Lumpur in 2016, this was RM 2700 for single adult, RM 4500 for a couple and RM 6500 for a couple with 2 children. However, according to the Malaysian Department of Statistics, in 2016, almost 50% of workers were paid less than RM 2700 and 27% of households received incomes less than the living wage.

The Malaysian Employer’s Federation stated that it is impractical to implement a living wage in Malaysia due to high costs. However, in 2016, the share of workers’ income compared to the GDP of Malaysia was 35.3%, with 59.5% being corporate income and 5% taxes. This is much lower than Australia (47.8%), South Korea (43.2%) and South Africa (45.9%).

With state control, wages can be increased as a policy directive, where profits for the corporation can be reduced to provide for this. This is because the mechanism of the state, at the end of the day, is to benefit the masses, not purely generate revenue for investors. This mechanism can also be taken advantage of to sustain important entities that allow for benefits elsewhere. For example, a research and development entity can be set up and run to produce products used in another industry, preferably under government control. The research and development entity can be running in losses so long as its products result in a greater reduction in expenditure or even large enough surpluses in the latter industry. GMO seeds production and subsequent utilisation to increase crop yield and decrease import food bills can follow this approach.

The government can also provide jobs as a method to increase overall productivity of the country, which is not what private enterprises are necessarily interested in. With profits being emphasized, control of operating expenditures for single corporations is paramount. Hence, a reserve of unemployed or under-employed masses become somewhat necessary to drive down salaries. Moreover, it is less probable that private organisations will actively stimulate economic growth in an area in desperate need for it, at least without government support. For example, access to transportation is imperative for businesses to start up in an area, as can be seen from cases such as the ECRL. In times of economic downturn, it is not in the best interest of a private enterprise to drive growth, rather it is the best time to restructure fiscally and push for better terms such as lower tax rates, which will never grow when the economy recovers.

Conclusion

Hence, to properly break from the hegemony of corporate control, it is important for the Malaysian government to not view the economy as something to be spearheaded by private enterprise alone. Rather, the government should mobilise our GLCs, GLICs and substantial funding to invest and establish more entities controlled by the government in strategic areas. This will increase economic activity, is more likely to ensure proper distribution of wealth generated and pave the way for labour reform repressed currently to satiate private investors. With this in mind, an integrated approach to assessing the performance of these entities is needed, where all the benefits they bring is calculated against the costs such that none is made to become private and profit-oriented. This is the way the government must innovate policies, not push the blame onto workers.

Featured Image From Financial Literacy For Youths

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One thought on “What Is To Be Done With The Malaysian Economy?

  1. It’s great to see Food Panda riders striking against unfair remuneration in Kota Kinabalu.
    “Foodpanda riders on strike in KK against new scheme”
    “Durie Rainer Fong – September 29, 2019 9:40 PM”
    https://www.freemalaysiatoday.com/category/nation/2019/09/29/foodpanda-riders-on-strike-in-kk-against-new-scheme/
    The gig economy and its super-exploitative nature, with a veneer of chic “be your own boss, independent contractor” image has been pushed by neoliberals especially since the time of Thatcher in Britain and Reagan in the US, along with the seeming allure of privatisation and de-regulation of capitalist industries which neoliberals promote as enabling competition and lowering of prices, which neoliberals tout as “beneficial to consumers”.
    So OK! One can now fly on a choice of budget airlines for fares much more affordable than on traditional, full-service state-owned or tightly regulated private airlines which treat passengers better than budget airlines, whilst the media glorify certain personalities heading budget airlines as some kind of demigods.
    Many people, including self-proclaimed socialists and urban middle class people prefer to use e-haling taxis rather than traditional licensed taxis.
    The problem with state-owned of GLC enterprises in Malaysia is their supposed inefficiency and high cost of service due to corruption or perverted agendas, which drive people towards privatised alternatives.
    A fine example of this is Malaysia’s National Car initiative, especially Proton which has seen all car prices skyrocket compared to in our neighbouring countries, since the mid 1980s, and which has placed a financial burden upon the car-buying public, especially when there is a lack of more affordable, efficient, extensive and reliable public transit options, not only in the Klang Valley but also in the smaller cities and towns across Malaysia.
    When I started working in 1980s, I earned RM1,000 per month and a new 1,300 cc car cost around RM13,000 to RM15,000, which could be paid off with a three-year loan.
    Today, the price of a 1,300 cc Proton Saga Standard manual transmission is RM32,800, whilst the Premium model with automatic transmission is RM39,800, and we are now looking at between 7 to 9 year loans.
    https://www.proton.com/en/find-a-car/saga
    At the same time, it’s hard to find foreign brand cars in Malaysia below 1,500 cc capacity and a foreign car such as the 1,200 cc Kia Picanto (2018 model) costs RM47,079.
    https://www.motomalaysia.com/category/best-hatchback-cars-malaysia/
    As for taxis, Malaysians have faced too many bad experiences of arrogant licensed taxi drivers who refuse to use the meter, demand overly high fares and refuse to take passengers to certain places, especially during peak hours when the roads are congested, with all of this being possible due to weak enforcement of regulations.
    Moreover, the many licensed taxi companies are believed to be owned by some or another politically-connected person or crony of a Barisan Nasional party, who in some case charges taxi drivers a high rental.
    Also, whilst about 10 or 20 years ago, it used to be easy to book a licensed taxi by calling the booking number, however I personally have found it increasingly difficult to get through or the phone rings unanswered, and licensed taxi drivers have told me that they had been giving up their subscriptions to taxi-radio services due to high costs.
    So under such real-world circumstances, the suffering Malaysian public will be glad for alternatives such as e-hailing private-car taxis, despite the lack of the required insurance coverage and so forth, which are convenient to book through the app on their phone, where they are informed of the fare beforehand and where the fare usually is cheaper than that of a licensed taxi between the same points. For instance the Grab fare from the LRT station to home is RM5, whilst the fare on the meter of a licensed taxi for the same journey had cost between RM5.60 and RM5.70.
    So Grab, which began as MyTeksi in Petaling Jaya and later re-located to Singapore earns foreign exchange from Malaysia, whilst licensed Malaysian taxi operators and drivers lose out.
    Likewise, Malaysians welcome neo-liberal measures to liberalise the automotive market, so that prices especially of foreign branded cars will come down.
    Also, as far back as the mid-1990s when the World Trade Organisation was pushing hard the neoliberal ideology of globalisation, open borders and free trade through the media, management consultants, public policy bodies, through the Internet, many especially urban, middle-class, non-Malay Malaysians welcomed globalisation as a means to undermine the Bumiputra policy and the dominance of GLCs in Malaysia’s economy.
    All throughout, I generally opposed and still oppose neoliberal globalisation, open borders and free trade as a foreign imperialist drive to gain control of key industry sectors in different countries, especially in developing countries but I was a minority amongst the milieu I had to move within, since it was for practical reasons that those I had to associate with in my work and where I live welcomed globalisation, liberalisation, de-regulation, open borders and free trade, thanks to the policies of the then Barisan Nasional government, though the Pakatan government has not done much or has done nothing at all to correct the root cause of their preference for globalisation and neoliberal policies.
    Also,this favourable attitude towards globalisation and neoliberal policies,especially amongst non-Malays, is driven by resentment over social democratic, welfare state policies benifitting mostly the Malays and other Bumiputras.
    Generally, I have found urban, educated, middle class Pakatan Harapan supporters to be more favourable towards globalisation and neoliberalism and these include more liberal Malays, and it does not help when prominent neoliberals such as Wan Saiful Wan Jan are influencing public policy especially through Mahathir’s party Pribumi. Also, think tanks such as IDEAS advocates neoliberal policies.
    Back in 2012, I attended an anti-FTA (Free Trade Agreement) protest organised by the PSM outside the Ritz Carlton Hotel in Kuala Lumpur where a meeting on the FTA was taking place, and I asked Dr. Jeyakumar why there were no prominent representatives from the then Pakatan Rakyat parties present at the protest and he said that most of them are neoliberal, and that albeit “for the wrong reasons”, more Barisan Nasional politicians were more opposed to neoliberal policies and are opposed to the FTA.
    I attended the anti-Trans Pacific Partnership Agreement (TPPA) in Padang Merbok in January 2016 where there was a large PAS presence, whilst a couple of hundred at most of PSM and other protestors held a separate protest at the junction of Jalan Tun Perak and Jalan Tuanku Abdul Rahman beside Dataran Merdeka which DBKL had not allowed the protestors to use for their rally.
    http://bureaupolitique.blogspot.com/2016/01/more-like-50000-were-there-to-protest.html
    Earlier, I had learned that the Najib government had decided that Malaysia would sign the TPPA, long before any opposition rose to it and long before the decision that Malaysia would sign the TPPA was passed by parliament, despite public opposition to it.
    Thus in a seemingly rather perverse way, even to myself, I welcomed President Trump killing off US participation in the TPPA, which left it dead in the water. Hooray!
    Also, as it has turned out in reality, it’s been the populist right wing in North America and Europe which have been saying and doing more against neo-liberal globalisation than the liberals, liberal-left and social-democratic left, as can be seen in how the Liberal democrats, Labour and others in the U,K. are trying hard to delay or even prevent BREXIT against the democratic will of the British people, whilst a Conservative prime minister, Boris Johnson is trying hard to get BREXIT over and done with by 31 October 2019.
    Whether Johnson is doing so to fulfil the will of the British people in the referendum in 2016 or whether it is to serve the interests of a pro-BREXIT, anti-EU section of the British Capitalist class is subject for further investigation and analysis but whatever the end is the same – the UK leaves the EU on 31 October 2019.
    Back to Malaysia, quite frankly, I don’t see the Pakatan Harapan government carrying out what you ask of it in your article above.
    For instance, the toll consessionaires are mostly GLCs but the Pakatan Government says that it will cost the government too much in compensation to the GLCs if it abolished tolls. So the government which is a major shareholder in these GLCs (Government Linked Companies) cannot tell them to surrender the highways back to the government.
    A fire at the EPF building on Jalan Gasing on 13 February 2018 left Petaling Jaya without a public-facing EPF service centre,with the nearest service centres on Jalan Raja Alut in Kuala Lumpur and at the IDCC in Shah Alam and there was not a peep from the Pakatan Harapan MP for Petaling Jaya or the Pakatan Harapan state assemblyman over this and the need to set up an EPF service centre somewhere else in Petaling Jaya.
    EPF staff told me that there were plans to set up an EPF service centre in the building beside Amccorp Mall by July 2019, which was then postponed to September 2019 and now November 2019.
    Also, Telekom Malaysia closed its TM Point service centre on Jalan Yong SHook Lin in Petaling Jaya New Town Centre, leaving TM’s PJ customers to go to the TM Point in Damansara Utama or TM headquarters in Kuala Lumpur, or to Telekom Malaysia authorised dealers who can only handle a limited number of TM-related functions, and Pakatan Harapan elected representatives in Petaling Jaya have apparently not brought this up, though to be fair, I have not brought it up with them but if I were in their shoes, I would not wait for my constituents to complain before I bring it up in parliament or the Selangor state assembly, with the Ministry of Communications and Multimedia, the Malaysian Communications and Multimedia Commission or with TM itself.
    This is not to say that the EPF would have set up such a service centre in Petaling Jaya sooner under a Barisan National government but the relevant Pakatan Harapan elected representatives in Petaling Jaya have apparently not thought about this or are not concerned, so I don’t expect much different from them.

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