Let’s do our part to help build Malaysia

Good times, good policies

In my travels, I meet with some of the world’s top economists, investment analysts, influential academicians, and movers and shakers in the business community. For example, last week, I spent a day with back-to-back meetings at the World Bank Headquarters in Washington to share Malaysia’s transformation story.

I shared the stage as a panellist with Professor Christian Ketels of Harvard University, and Professor Charles Sabel of Columbia University, who wrote a case study commissioned by the World Bank on Malaysia’s transformation programme. I stopped for a day to make similar presentations at Harvard University in Boston and also to the Fitch Rating agency in New York.

Some of these guys tell you things as they see them, and have very little patience for niceties. I listen intently to their assessments – both good and bad, and walk away learning from their experiences dealing with emerging markets battling similar trends as ours.

In a nutshell, they give Malaysia the thumbs-up for our rigour in tackling economic fundamentals and working out the structural kinks in implementing policies and initiatives.

But here’s the kicker. No matter how painful the going gets, they tell me in no uncertain terms, the Malaysian government must doggedly and responsibly continue its tough measures to ensure our economy grows faster than the rate of government expenditure. This simply means that over time, your income should grow at least as fast as or faster than your expenditure.

There’s a saying among economists that ‘good times make for bad policies and bad times make for good policies’. After 1997 several countries made the conscious decision to make ‘good policies in good times’. Malaysia was one of them. We started managing our budget carefully so that it was counter-cyclical, meaning we spent less and worked to reduce our deficit during the good years.

We have seen enough countries – at one time brimming with potential – cave in to political pressures, conflicting interests and factional bickering. Inevitably, they fail to enable, empower and then effectively regulate a vibrant market-based economy. Without a competitive edge, these countries sputter to a standstill with spiralling expenditure, contracting reserves and loss of revenue.

When you fail to strengthen your economic foundation, you are susceptible to domestic and global risks and shocks. When this happens, everyone suffers, especially the poor.

We see this repeatedly. A senior economist made the observation that Argentina, prior to the Second World War, was one of the richest countries in the world. He argued that blessed with rich resources, the country nevertheless failed, over time, to respond to changing times to transform its economy.

Another critic mentioned that Venezuela had one of the most successful petroleum companies in the world. Due to a shift in politics, it went down a populist path and squandered the capability and strength of its petroleum industry.

He went on to add that after the Second World War, Burma was seen to be the most promising South East Asian economy due to its teak, agriculture and high literacy rate. After the military took over the country, its economy quickly regressed to least developed status. Myanmar remains underdeveloped to this day.

When I sat in at Parliament to listen to the Budget 2015 speech by our Prime Minister, I was encouraged that we stuck to our mandate. There are four aspects that I like about the 2015 budget.

First, it continues to propel economic growth in line with our economic transformation programme.

Second, it is an inclusive budget, providing a lot of goodies for all different segments of the rakyat.

Third, it is a fiscally responsible budget, promising further cut in our fiscal deficit.

Fourth, it provides the right balance between what the Prime Minister calls the “capital economy” and the “people economy”.

Indeed, the government will continue its efforts to rationalise subsidies and will implement GST by April next year, even as these measures are not popular.

There is potential upside of RM22 billion from gradually reducing fuel subsidies to market price. Imagine just what good works we can do to improve the country’s public transportation, healthcare, education and welfare!

Rural Development NKRA under the GTP received RM3.7 billion development expenditure as we requested. These are not monies that go to Pemandu, but will be channelled to the various Ministries to roll out infrastructure projects in rural regions. I am aware that a few of our critics deliberately spin a false picture that these money are allocated to Pemandu. This is an absolute lie.

As a Sarawakian, I am of course especially cognisant that development in Sabah and Sarawak remains a challenge. The RM3.7 billion for the rural development NKRA under the Federal Ministry of Rural Development is allocated for infrastructure projects – mostly in Sabah and Sarawak – for rural roads, electricity, water and low cost housing.

The people of Borneo can expect to enjoy benefits arising from the construction of 635km of rural roads, implementation of electricity connection for 15,000 houses, rural clean water supply to 15,000 houses and building and rehabilitating 9500 units of dilapidated houses.

Total development for the whole country in terms of rural areas will include economic development for orang asli communities, improving infrastructure and housing facilities and building more roads to increase accessibility to key economic centres.

There has been hue and cry over the issuance of BR1M with opponents denouncing it as mere hand-outs that do not solve the problem of poverty.

BRIM is not a mechanism to solve or resolve the problems of the poor. BR1M is meant to cushion the effects of a transforming economy that will challenge every nerve in its structure. BR1M recognises that a fast growing economy also means a fast changing economy. Fast changing economies can be stressful for some of those who have to adapt. BR1M is a means of easing the adaptation. Nothing more and nothing less.

With a Budget that looks out for the poor, and if we continue on this footing, I am hopeful that in one generation, we may be able to solve problems, encourage growth and enable our young to face the future with confidence.

If I have to pick any one ‘investment’ that is my favourite, it will be for rural development and the government’s gumption to stay the course on being fiscally responsible no matter how tough the going gets.

Taking The ‘Jam’ Out Of Kl

Every morning my wife drops me off at the train station. I grab a hot drink, find a seat and settle down for a good read.

This was pretty much was my daily routine for four years in the mid-90s when I worked at the Shell office located near Waterloo station. I chose to live in Cobham, a suburb about 40 kilometres from central London. Being far from the city meant I could afford a large house with sprawling gardens, and yet easily access the city for work and play. It allowed my family to have a productive and yes, wonderful life.

By 2020, 10 million people will call Greater KL home, translating to one out of every three Malaysians living in KL and surrounding suburbs.

As it is today, traffic in some areas can only be described as gruelling. Tempers flare and drivers feel trapped, stewing in their cars. By the time we get to the office, we are already tired – not a good start for productivity.

There is no point being a high-income nation when the quality of our lives are disrupted by arduous and long daily commutes.

When the GTP was launched in 2009, one of the main concerns involved tackling the daunting issue of urban public transportation (UPT). The city needed an integrated and efficient system that allowed commuters to move about as fast and as easily as possible.

Let me paint a scenario. How do you get from your home in Sungai Buloh to your office in Jalan Sultan Ismail without having to drive? You get on the KTM Komuter at the Sungai Buloh station, hop-off at KL Sentral, purchase a ticket at the LRT terminal, get off at KLCC, then either take the covered pedestrian walkway or the free GoKL bus to your office at Menara Standard Chartered. Seamless, fuss-free and already possible today.

But for someone who lives in densely populated Kota Damansara, the first mile connection is a challenge. Driving to Kelana Jaya to take the LRT definitely makes no sense but once the Kota Damansara MRT station is up, KLCC is accessible in under one hour by rail and bus.

We want to improve connectivity so that commuters do not have to walk any further than 400 metres to get to the first mile connection point or get out of stations to get to another transport line. The real value of UPT can only be felt when it is integrated and easy to use.

A two-fold approach is required for public transportation to become the preferred choice:

1. Pull factor
Public transportation must be attractive enough so people are drawn to use it. There are four important aspects:

• First and last mile connectivity must feed commuters into the terminals conveniently and deliver them to their destinations on time. An efficient network of feeder buses that ply neighbourhoods and business districts, with proper park-and-ride facilities and pedestrian walkways are mandatory.
• Facilities must be safe, clean and well-maintained without burdening commuters with unjustifiable costs.
• As the network is integrated, the payment system must evolve so the commuter does not exit the commute trail to pay for a line shift. The experience must be seamless and fast.
• A mobile app that features real time data for commuters to plan their journeys. They can time when they will leave their houses and how long it will take to get to their destinations.

A Bus Rapid Transit (BRT) that allows for a bus-only-lane on the Federal Highway from Klang to Pasar Seni is in the pipeline. Buses will be available every two minutes with plans for this to be shortened to every 30 seconds. This will be greatly reduced travel time uncertainty, with end-to-end journey taking one hour at peak traffic compared to 2 hours by car currently.

2. Push factor
Governments all over the world managing populous cities usually put in place policies to discourage people from driving their cars into the cities.

For example, London and Singapore introduce congestion charge or aerial pricing for people driving in the cities, in addition to high fuel price at normal market rate, without subsidies.

As we gradually rationalise fuel subsidies, and with the pull factor as described above, we will naturally gravitate to trains and buses as the more affordable option.

By spending less on subsidies, we can use the additional funds to upgrade terminals and pedestrian walkways, add coaches and expand the network to improve connectivity as population grows.

Also, with lesser cars entering the central business district, city spaces can be utilised more productively instead of being allocated as car parks.

As an example, we spend hundreds of millions in subsiding the KTM Berhad operations. Low fares collected from passengers do not meet operational expenses.

We must gradually increase fares so that the company can improve their services. Government cannot continue to heavily subsidise a country’s public transportation.

I live in Kota Damansara and like every commuter driving along the MRT construction site, I have my fair share of feeling frustrated at the choking traffic.

I take comfort that this encumbrance is temporary because in the next couple of years, greater KL will have a dependable public transportation system that is fast, convenient and environmentally friendly. If only we can get more people on board, peak hour nightmares and rising travel costs owing to high petrol prices will be a thing of the past.

Happy Malaysia Day

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