The Solution to Malaysia’s Problems

I love my country, Malaysia. Besides the hot weather and flash floods, everything seems perfect (at least on the surface). Malaysia’s problem isn’t racial. When I was in primary school, I was the only Chinese in a class full of Malays.

Was I bullied?

Absolutely not.

Did I have friends?

Absolutely, yes!

When my Muslim friend’s were fasting (not eating),  I joined in along with them (that may explain my lack of fat :-)  ). When an inter-racial group goes out on an outing on Friday, the non-Muslims would wait patiently till after the Friday prayers. When we fought, it was over something trivial and not racial (he took my eraser!). By Jove, I even took Islamic studies for two years though I was a Christian (my dad insisted I would learn something..and I did).

The real current Malaysian problem in 2009 is economic. For the past 10 years, since the Asian financial crisis, we have believed ourselves invulnerable. We have thought that the capital controls we imposed were wise. We have thought that being less exposed to the international financial markets was the solution. We thought that we had petroleum reserves that would last forever. If the system ain’t broke, why fix it?

We, Malaysians, were wrong!

Mr Anas Zubedy got it right when he called for the Government and the Opposition to put the economic problems ahead of political ones. But in reality, this is not so simple. Politics and economics are as intimately linked like two sides of a coin. Furthermore, if the people do not put enough pressure to push for policy changes, it is likely that this ‘changes’ will never happen.

Malaysia is more exposed to external pressures than we might have thought. In 2007, aound 20.5% of our local exports goes to the United States while a further 18.4% goes to Singapore. Both countries are now economically handicapped as they scramble to restore confidence in their own financial markets.

While Malaysia can boast of its current account (export) surplus and high foreign exchange reserves, most of our exports are related to petroleum and palm oil products which requires no expertise or value-added elements. Furthermore, the persistent budget deficit of the past 10 years have hinted that we have been using government revenues (40%) from petroleum to pump to create economic growth.

Trickle down economics don’t work. According to Joseph Stiglitz, growth is not a matter of increasing the gross domestic product of a country in a year. Growth must be sustainable and inclusive. By depending on export demand, an undervalued currency, and petrodollars for growth, we made sure that this growth is unsustainable. To add to that, protectionist policies from the NEP to Proton has marginalized a huge portion of not just Chinese and Indians, but also Malays!

A report from the Asian Development Bank gave evidence that the inequality of income in South-East Asia is still high and rising even higher. But isn’t Malaysia one of the most successful countries in fighting poverty? Yes, we are relatively successful. However, we did that not by making people richer but by maintaining the poverty line since time in memorial while the cost of living has continued to rise.

Way to go! We fight poverty by making sure that the poverty line is so low that everyone is not poor. Brilliant!

Foreign direct investments on the other hand, have increased but at a decreasing rate. Finally in 2007, the outflows of foreign direct investments is significantly higher than its inflows. This shows that Malaysian businessmen were more keen on buying assets outside the country than locally. Why? Because our local investments opportunities are no longer attractive!

The solution? It does not matter who the government of Malaysia is as long as they solve the problem! To ensure this, voters of Malaysia must be prepared to punish the Government and the Opposition when they are not doing their job.

I agree that a stimulus plan is needed. However, if money from the stimulus goes into the wrong hands, we are back to square one (an increase in income inequality). The real solution therefore lies in opening up the economy and scrapping most of the protectionist policies we have.

Why should we give Telekom all the telecommunication deals when some other company claims they can do the same job for half the cost?

Why should we protect Proton and make all other imported cars expensive when Proton give us second grade cars that gradually break apart before they are 5 years old?

Why should the toll prices increase when Mr Shahrir have not solved the problem of our local petrol prices being higher than international prices (we are being taxed everytime we fill the tanks of our cars)?!!!

As citizens of Malaysia, we should send a clear signal to both the Government and the Opposition that when we vote, it is nothing personal or racial. Solve the problem and we will vote for you!

Further reading:

The Fourth Meditation, Politicus – The Limitations Political Power

The Sixth Meditation, Juno Moneta – The Limitations of Wealth and Money

Why We Want a Free Press!

Why We Should Kill Off Proton?

Why Petrol Prices Go Up But Not Down in Malaysia?!

Is Laws and Regulations Part of the Problem or Part of the Solution?

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