Let’s do our part to help build Malaysia

Happy Malaysia Day

In the cacophony assailing many parts of the world today, and where ills, tensions, warring and strife dictate much of daily life, we are living a life of plenty.
Our political climate is stable. We are at full employment, and our poor have enough to eat. Our children go to school and our graduates have opportunities.
We are attracting investments to our shores and multinationals are setting up shop. We are recognised for our talents and reforms, and are progressing headlong into a high-income, knowledge-based economy by the end of the decade.
If we are to be dictated by commentaries on social media alone, we will be sucked into a vortex of doom and gloom where everything has gone south and we should be defeated.
Social media, being free and rife, opens up also spaces for people to air their grievances whether valid or otherwise. But I believe we are maturing as a society and can learn to differentiate hate speech from the truth of good people trying to do good work to make a real difference for our future.
There is a lot going for us. Our GDP this year beat forecast to grow at 6.3%, while investments continue to impress even the cynical with its 12.1% spike this second quarter at RM53.1 billion compared with the same period last year.
As a minister in the Economic Council, I was happy with the World Economic Forum’s resounding recognition of Malaysia as one of the world’s top 20 most competitive nations in the Global Competitiveness Report 2014. They described Malaysia as the highest ranked among the developing Asian economies and highlighted strengths in financial market development, efficiency in goods and services market, and a government that was able to tackle corruption and red tape.
This wasn’t the case just six years ago. In fact it was a whole different scenario, crippling even the best.
The U.S. subprime meltdown sucker-punched Asia squarely in the gut and Malaysia was not spared. We had barely recovered from the economic hit of the 1998 Asian Financial Crisis, weighed down in debt and struggling with a ballooning deficit.
Our Prime Minister stepped into leadership at a particularly chaotic and trying time. America and Europe had plunged into severe economic recession. Asia, skittishly reacting to plummeting demand for its products and services, suffered also a jittery, highly volatile and unpredictable capital market.
The world was mired with insecurities and some first world countries embarked on austerity measures that further slowed any hope for growth and momentum. It was a dark period, especially for a relatively small and open market like Malaysia, straining to see the light at the end of the tunnel.
Our Prime Minister recognised we cannot continue with business as usual. We cannot keep doing the same things and expect different results.
We had to act fast, and to take bold, radical steps to arrest slowdown, strengthen economic fundamentals and escalate efforts to grow our sectors to successfully compete with global players.
There was no room for complacency and half-measures.

The New Economic Model
Enter the New Economic Model. In 2009, a panel was convened to diagnose the nation’s economic health and to come up with a plan to transform government and the economy.
What really impressed me about the NEM was its mandate to pursue the high-income agenda, while keeping equally focused on inclusivity and sustainability.
I have often said that achieving high-income as a result of increasing GNI is easy enough. Do a few things right and we will get there.
But it is not enough. As a responsible government, we must make sure everyone benefits from prosperity. This wealth and wellbeing must be sustained so that our children and their children will live in a safe, progressive and prosperous nation.
Even developed countries struggle with the challenge of inclusivity. It is always missing in many international economic models resulting in unequal development – a combustible cocktail that has led to uprising and social dysfunctions as evident in the London riots, the Occupy movement and the Arab Spring.
Which brings me to this critical point that keeps governments awake at night – creating jobs for its people. There is no shortcut to this. It is the basis to secure stability and progress for any country, and allows people to feel confident and hopeful of their future.
The most sustainable way to create high value and quality jobs is through private investments. It is as simple and as complicated as that.

Investments
The domino effect of investment is obvious. Investments create jobs. The more people are gainfully employed, the more revenue a government will receive through tax and consumption. The more revenue we secure, the more government can spend on its people especially the poor and marginalised.
This is the ‘circle of life’, and private investment is the cog that will turn the wheel.
Under the ETP, private investment grew five times to 15.3% (CAGR 2010-2013) compared to 3.1% (CAGR 2007-2010). These are realised numbers and not merely committed so you can understand why I am very confident our economy is on track.

Pvt investment accelerates post ETP

 

Private investment accelerates post ETP
(Source: Department of Statistics, Private Investment in Constant 2005 Prices in RM)

MIDA’s pipeline of approved investments in the last three years breezed-past the goalpost of the 10th Malaysia Plan’s RM148 billion annual target. In 2011, we recorded RM154.6 billion, 2012 RM167.8 billion and just last year, we chalked a whopping RM216.5 billion.

Pipeline investments 2006-2013
Chart 2: Pipeline investments 2006 – 2013
(Source: MIDA)
The ETP
Under the ETP, we deliberately chose the top 12 sectors which are strong revenue drivers and where we have the confidence to compete. These sectors alone will create 3.3 million high value, high income jobs by 2020.
In fact in 2010-2013, we logged 1.3 million employment in the NKEA universe, putting us on a sure footing.
In an advanced economy, workers will be paid higher wages, and this will lead to higher costs of production. In turn, we will experience a rise in the cost of living.
This is the flipside to being a high-income economy. You cannot have your cake and eat it too.
As long as the rise in income is higher than cost of living people will enjoy higher disposable income.
Today we are already seeing and feeling its effects. With the enforcement of the Minimum Wage Gazette 2013, it is unacceptable for Malaysians to earn less than the Poverty Index Line at RM900 per month (For Sabah and Sarawak, it is at RM800 per month).
Many employers were worried their production costs will escalate and their businesses will shut down. But as evident in many countries applying the same principles, what we will see in due time is efficient use of labour and resources, adoption of technology and overall greater productivity.

Managing finances
The common gripe I hear from some quarters is that they don’t feel the nation’s growing prosperity affecting them in any tangible or meaningful way.
I don’t know whether to laugh or cry. We are one of the most heavily subsidised nations in the world where our annual subsidy ticket in recent times rose to a massive RM40 billion a year, of which half is used for fuel.
So it is fair to say, each time you fill up the tank in your vehicle, you are feeling the country’s prosperity.
I could draw up a list. Toll roads that crisscross the nation; public hospitals for consultancy and medication capped at RM1.00 since 1982; billions spent to keep electricity tariffs artificially low; and subsidised food items across the smorgasbord of gas, cooking oil and rice.
There are four ways to fix our problems:

1. Reduce expenses
We are carrying a debt burden of RM568.9billion since the 1998 crisis. The government has over the years, borrowed money for development as a result of channelling revenue to subsidies.
This is untenable and unsustainable with the ballooning subsidy bill.
It is easy to keep dolling out the feel-good factors of more and more subsidies. But living this fantasy will only plunge our next generation into a quagmire of liabilities and the slow debilitation of a society in regress.
We have to gradually reduce our subsidies. This is the bullet we have to bite.
To give you a sense of possibilities, if we were to reduce fuel subsidies by 30% or 50% – and it is a reasonable expectation – that will release about RM15-20 billion that can make tremendous headways in the lives of the country’s bottom 40%.

2. Increase revenue
GST will come into effect next year and will broaden our tax base. Currently only 1 million people pay tax for a nation of 29 million.
As a consumption tax, anybody buying will be contributing to the national revenue. Of course basic products and services will be exempted from GST to safeguard the interests of the vulnerable.
Even at 6%, it is estimated that we will be able to capture RM22 billion in revenue annually whereas with the current sales and services tax we have been able to earn about RM15-RM16 billion annually.
Once we are able to reach the international benchmark for GST, the upside potential in terms of revenue is tremendous. We can do a lot for infrastructure and people development, and improve our social safety nets.

3. Reduce deficit
In 2013, Malaysia for the first time moved into the fiscal Safe Zone matrix developed by the Boston Consulting Group.
The “safe zone” is for countries whose public debt is below 75% of GDP and deficit is at 4% of GDP or below. Public debt equals or above the GDP and deficit of 8% and above places a country in the ‘Danger Zone’.
With much resolve, we reduced fiscal deficit in the last three years from 6.6% in 2009 to 3.9% last year. We remain on track for this year’s 3.5% reduction, and by 2020, are confident of hitting budget neutral, as targeted. We are also steadfast in maintaining our debt below the 55% legislated ceiling.

Malaysia moves into the Safe Zone
Chart 3: Malaysia moves in to the Safe Zone in 2013
(Source: EPU, MOF, BCG analysis, Economist Intelligence Unit, CIA fact book)

4. Proliferation of entrepreneurship and innovation
I am passionate about efforts to create conditions for people to become self-employed and run thriving businesses.
There is much room for growth amongst Malaysian SMEs. Local businesses are fighting for slivers of a domestic pie when in reality the world has opened up to us. We must let go of our comfort zones and learn to ride the waves.
Although Malaysia entered the industrial sector aggressively at about the same time as Taiwan and South Korea, we lag behind them in terms of innovation. Samsung is a great example of brand that has captured the imagination of a global audience and today takes on the likes of Apple.
Agencies such as MIDA, SME Corp and Agensi Inovasi Malaysia (AIM) are here to support local companies so they are able to step up but companies themselves must develop a strong appetite for competition and become global champions.

It is inaccurate to say the government is doing very little to make things better for the rakyat today. To put it into perspective, you will feel the transformation if you are the segments we are reaching out to:

• 5.16 million students benefit from highly subsidised public education
• School students have not been left out. 1.2 million Tertiary education students received RM250 book vouchers via the Baucar Buku 1Malaysia, whilst 5.2 million students received RM100 via the Back to School Assistance initiative
• The government also opened 6,843 pre-school classes and trained 20,138 pre-school teachers. Total enrolment of pre-schooling children increased to 81.7% or 793,269 with more children having better access to quality early childhood education and getting a head start before primary school
• More than 10 million people use public hospitals and clinics, benefitting from affordable health and care in 2012 alone
• 4.6 million out of 6.5 million households benefit from free and low electricity tariff
• 22 million registered cars and motorcycles in Msia with 13 million licensed drivers directly enjoying cheap fuel everyday
• 4 million people are using toll roads in Malaysia
• Commuters on public transportation benefit from the additional 38 new six car train sets on the KTM Komuter service. We also introduced 35 sets of new four car trains for the LRT Kelana Jaya line, created a new integrated transport terminal at Bandar Tasik Selatan and revamped Puduraya. They are now more spacious and convenient. Every single one of the 400,000 daily commuters feel the transformation.
• Tackling the bottom 40% enabled us to reach and improve the lives of 188,000 individuals who are now lifted out of poverty, of which 89% recorded increased income levels
• We worked on 54,000 hard core poor families and gave them cash every day in order to ensure they had enough to feed their children and put a roof over their heads
• In ‘teaching them how to fish’, these individuals were required to choose one of the 1AZAM programmes under the GTP so they could start their own small business and become self-sustainable
• Over 5,300 women entrepreneurs profited from training and reskilling to improve their economic value via micro credit assistance
• We have built over 4000 km of rural roads that is comparable to driving from Johor Bahru to Dhaka, Bangladesh. About 2.1 million people have gained, allowing rural communities to trade and access goods and services
• 61,062 houses have been built and restored for the rural poor, benefiting 305,300 people
• Overall, a total of 5.1 million people have benefited from basic infrastructure such as new roads, and access to clean water and electricity
• Over 6.8 million low income Malaysians received assistance via BR1M
• Malaysia is only one of few countries that regulate and control many food items and this means all Malaysians can enjoy low food prices every day. Our CPI has been kept under check and has been easing slowly in recent months as prices begin to moderate

Government Innovation
In July this year, PEMANDU was rated one of the top 20 Leading Government Innovation Teams Worldwide by Bloomberg Philanthropies and Nesta. The accolade testifies to the commitment and work from our Prime Minister, Ministries, agencies and civil servants.
It is also a recognition of PEMANDU’s 8-step transformation process. A systematic and structured approach incorporating diagnosis, planning, execution and feedback – securing transparency and accountability.
Besides tracking Ministerial KPIs and holding regular Steering Committee Meetings, the Problem Solving Methodology (also known as the Putrajaya Inquisition) is held twice a year with the Prime Minister and top government officials to identify problems, make decisions and move milestone projects forward.

Success in sight
In the long-term, our economic transformation will bear fruits so all Malaysians – including the middle-class – will meaningfully gain. Better incomes, quality education, efficient public infrastructure, cleaner and greener cities, higher-paying jobs for graduates, and transparency and governance. These are fair expectations to ask of a government.
It is every government’s mandate to prioritize its citizen’s needs and to put in place policies that will safeguard the public’s wellbeing for this and future generations. We are no different. Even as we battle to steer the country into the economic ‘safe zone’, we must continue to be in service of the rakyat so that no one is left behind.
As evident, all of us are already ‘feeling’ the benefits of government initiatives in small and big ways and our lives are better for it.
It is about time we give credit where credit is due i.e. to our Prime Minister, Deputy Prime Minister, Ministers, Chief Secretary and the civil servants.
Our Prime Minister has provided the right leadership to steer us in transforming towards achieving vision 2020. There is no doubting the results delivered so far since he became PM, although more needs to be done.
Having worked in his Cabinet for the last five years, I can say categorically that he works extremely hard and is totally committed to doing what is best for the country.
Given the various polarities of views and divergence of opinions amongst our multi religious and multi-ethnic society, he is taking us through a path of moderation.
I know a lot of people would prefer him to take their extreme position but as the leader of our country, it takes wisdom on his part to avoid knee jerk reactions. Even if he is often provoked, he is patient enough to stay the course of moderation for the sake of our beloved country, Malaysia.
I am a believer that Malaysia will stride on regardless of the bumps on the path to 2020. We must be patient even as we relentlessly pursue our goals.
As a Malaysian and Sarawakian, I wish each and everyone Happy Malaysia Day.

Aging with Dignity

Like death and taxes, getting old, ill and dependant is inevitable. It’s an easily dismissed subject when you are a strapping lad but with the passing years, the realities of illness and aging cripple some of us who are not prepared.

In trying to understand how we as a nation can better deal with managing care for the aging, we should appreciate how developed nations cope.

Japan’s population will fall by a third in 2060, with nearly 40% being above 65 years of age. Lifespans tend to be longer for developed societies with access to medical technology and high standards of medical care – in Japan’s case, their life expectancy is about 83 years.

As we approach high income, developed nation status, we are heading in a similar direction. The average life expectancy for a Malaysian in 1957 was just 56 years. Now it is at 75 years. By 2020, the number of Malaysians aged 60 and above is expected to hit 4.46 million up from the current 2.32 million.

For this article, let us look at life in three phases – phases that we are all likely to go through, in some form or another.

For the young and mobile, this is the on the go phase. We will eventually slow down – perhaps as we touch our late 50s – I call this slow go. Some will reach the point where they become fully dependent on others for care – the no go stage. People who are debilitated or those caring for them, suffer the most.

My father was diagnosed with Alzheimer’s a few years ago. At that time, my siblings and I faced the harrowing, heart-wrenching process of accepting that there will come a day when he will no longer be the strong, capable leader and father he once was. We also had to seriously consider how best to take care of him.

From my observation, care and support in our country for the slow go stage is acceptable. There are public and private hospitals that cater to a range of medical needs with the assumption we can still care for ourselves. But when bedridden or fully dependent, this is where the real struggle begins.

Reflecting on our experience in caring for my father, there are three aspects to getting aged care on the right track:

1. Ensuring proper standards

The elderly require various levels of care, and services must be catered to fit these purposes. For those who need minimal support ‘low care’ will be the right choice and cost for such level of attention will be minimal. The ones who are in the dependent stage will require ‘high and intensive care’, and we will see costs escalate.

The new Aged Healthcare Act, to be completed at the end of this year, addresses these needs. The Act regulates the provision of services and facilities for aged care – aimed at transforming aged care facilities and services and upgrading skill requirements for caregivers.

The Government also encourages the development of senior communities such as retirement villages, and is pushing for a robust mobile healthcare industry that caters for those who wants to age at the comfort of their homes that can be covered by insurance.

2. Prepare for the future

I cannot stress enough of the importance of savings and insurance. While still working, people should deliberately save enough money and get sufficient insurance for old age. Insurance premiums tend to be low for the young. Locking the rate in early means you are able to secure medical care at a much lower cost.

Just one large calamity can leave you in dire straits if all you have is your EPF or SOCSO. Being prepared for the eventuality of old age is crucial.

Right now, in Malaysia, public health is highly subsidised. That is why it is one of the most affordable in the World. For example, a GP treatment at a Government hospital in Malaysia is charged at an incredibly low RM1, a rate established way back in 1982! Going forward, the level of subsidy in the current public health system is unsustainable.

3. Strong cooperation from all parties

We need the strong backing of all groups that contribute to a dynamic healthcare system for the aged. Social welfare agencies, healthcare providers and the medical profession must find avenues to collaborate. Presently they work in separate areas but if the industry can set up one-stop centres for aged care, this will be a practical collaboration.

Geriatric-friendly housing is the next natural step. In Singapore, such buildings have features like bathrooms with grad bars and emergency buttons in each room, with a doctor on standby in each building.

My father is a brave man. Upon diagnosis, he organised a party and invited all his friends and family. As the celebration was underway, he stood up to speak.

“With my disease, I will die twice – once mentally and the other, physically. Say to me tonight everything you want to say because the next time I meet you, I may not know who you are,” he said.

We all sang “Amazing Grace” that night with so much choked emotion. Tears flowed freely. For us as his children, it was a brutal realization of the daunting days ahead. My parents then made the decision to leave their beloved Bario to move to Kuching to live with my big hearted sister in order to access medical facilities.

Whenever I get the chance, I return to Kuching. The roles have reversed. Sometimes, I would lie in his bed and hold him as how he held me when I was a child. I remind him stories of our past to trigger his memory, and we spend many an afternoon laughing and praying together.

As much as I talked about the practicalities of managing the elders, caring isn’t just about money. The old and incapacitated are most vulnerable. What they need is our time, our attention and our unbridled love. My brother, who lives in Australia generously took up almost a year to stay with my father in Kuching. Indeed, we should all give grace to the people we love so they can age and eventually, depart with dignity.

Business Transformation Plan 2 (BTP2)

In one of my recent public engagements, I replied to a question on the future of MAS. I made a comment that the answer is stated in the Business Transformation Plan 2 (BTP2) document that was published back in January 2008 by the MAS team then. Scenarios that were projected and shown on page 26 […]

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Bringing Life Back to our River

At the Puah Pond information centre

At an era of our history, the muddy confluence of the Klang and Gombak rivers served mainly as a means of transport for the tin-mining industry. Its waters were so pristine people would throng to the river at Masjid Jamek to perform ablution before prayers. Over the years, with the steady erosion of the quality […]

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We Must Not Forget The Villages

At the commissioning of the irrigation system of NKEA Bario Paddy Project

A case of a village named Bario Villages all over the world, including in Malaysia undergo similar development cycles. Urbanisation and access to better education has led to many young people leaving the villages for life in towns. EPU’s latest data shows that more than 70% of Malaysians live in urban and semi urban areas […]

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Open For Business

Gone are the days where we lived in the comforts of our bordered geographies, choosing to buy and sell only when it serves our purpose. In today’s highly globalised world, we have no choice but to be more interconnected and interdependent if we want growth and economic resilience. Malaysia has an exceptional history in trade […]

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Corruption – taking the beast by its horns

Inadvertently when I attend social events, someone will highlight a personal encounter where they paid a bribe to solve a problem. “There you go, Idris, corruption is rampant in this country and the reason why we will fail to progress,” they tell me. When you have been victimised, it is easy to discount the government’s […]

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Malaysia’s economy is doing quite well, thank you

Bloomberg columnist William Pesek is curious as to whether Malaysia’s economy will crumble because Oxford Economics ranked us the riskiest country in Asia in a survey. I want to assure Mr Pesek that we have our eyes on the ball. In fact, we are so determined to get the economy right, that in 2010, we […]

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Malaysia improving economic resilience; on track to meet 2020 income, investment & job targets

Recently, I was interviewed by the Prospect Group and we talked about the Economic Transformation Programme’s (ETP) goals for 2014, which includes Gross National Income (GNI), investment, and job creation, and ensuring Malaysia’s economy is resilient in the face of global uncertainty. You can view the video and read the transcript of the interview here: http://www.theprospectgroup.com/malaysia-improving-economic-resilience-track-meet-2020-income-investment-job-targets-82142/

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Tackling income inequality

Chandrasekaran Ramaiah fell into hardship when he suffered a stroke some years ago. Now partially recovered, he runs a food kiosk in Melaka after having secured help under the Azam Tani programme. When we met last month, he told me his income has doubled to RM100 per day. Chandra is one of 145,630 households that […]

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