Tuesday, June 25, 2013

Idris Jala : Conversation with a M'sian angry with the Govt


RECENTLY, I had a robust conversation with a Malaysian. He was very angry. He had so much to complain about everything in our country. To him, nothing is right in Malaysia.
I reproduce my responses to his complaints, in the hope that it might shed some light and provide some hope to those who feel our country is in a hopeless decline.

To maintain his anonymity and privacy, I simply call him “Angry Malaysian”:

Angry Malaysian (AM): I think Malaysia is the most corrupt country in the world. If the Government is not corrupt, we will solve all the problems in this country. There will be no poverty and everyone in Malaysia will be prosperous and happy.

Idris: That’s not true. Last year, Malaysia improved in Transparency International (TI)’s Corruption Perception Index (CPI). Malaysia’s 2012 score improved compared to 2011 to 49 out of 100 from 4.3 out of 10 (TI’s new scoring methodology changed in 2012 from assigning a score between 1 to 10 in 2011 to 1 to 100 in 2012) . Also Malaysia’s ranking improved from 60 in 2011 to 54 in 2012.
It is equally wrong to say that the only solution to poverty, prosperity and happiness is government corruption.

Almost all the countries that are ahead of Malaysia in the world corruption ranking still have absolute and relative poverty.

For instance, not everyone in the United States, United Kingdom, Germany or Singapore is rich.
Crime still exists in these countries.

Whilst there is hardly any corruption in many rural villages in Malaysia or anywhere else in the world, yet the people are still poor.

When I grew up in Bario, in the Borneo highlands we were almost isolated from the rest of the world and there was no corruption in the village.

Yet, we were poor.

We should stop looking at corruption as something that leads to other peoples’ problem – the poor, the marginalised and expect only the Government to tackle the issue.
It is true that corruption must be eradicated in the interest of creating a level-playing field and enhancing standards of living.

The Government is serious about implementing this through various initiatives.
Whilst we deploy policy measures to arrest corruption, there is also a responsibility upon every Malaysian to ensure they do not engage in or encourage corrupt practices.
As long as there is giving, there will be taking – it is a vicious cycle. Eradicating corruption is not the job of the Government alone, it is a shared responsibility.

AM: Datuk Seri Anwar Ibrahim said at a rally before GE13, that Malaysia’s illicit capital outflow over 10 years of RM873bil, as reported by Global Financial Integrity, is proof that corruption is the scourge of Malaysia.

According to him, if we stop this corruption by the Government and its cronies, there is enough money for Malaysia.

Idris: Bank Negara has refuted this claim.

It has clarified that 80% of illicit capital outflow is trade mispricing or transfer pricing.
This means private companies produce receipts or invoices which differ from the actual amount of money transacted, usually to pay lower taxes to the Government.

This is not government corruption.

Bank Negara established that the remaining 20% of illicit capital outflows is due to “errors and omissions”, which includes small residual amounts due to illegal business and corrupt practices.
Based on the Bank Negara report released in March, it is totally wrong to say that RM873bil of “illicit capital” outflow is due to government corruption.

AM: Twenty years ago, Malaysia was on par with South Korea in many ways for example GNI (gross national income) per capita. Even in soccer, we used to beat them. I believe Malaysia lost its competitiveness because of the New Economic Policy (NEP).
If we remove the NEP, then Malaysia will immediately improve its competitiveness and catch up with South Korea.

Idris: It is true that South Korea has made a lot more progress compared to us.

However, I do not agree that as soon as we abolish NEP, Malaysia will be on the road to catching up with them.

The South Koreans did it because they did not complain incessantly about not getting government contracts. They did not incessantly complain about everything that was not perfect around them.
They simply focused on innovating their products to be the best in the world and trained their sights on marketing and selling them in the world market.

AM: A lot of people, particularly non-bumiputras, are leaving Malaysia in droves because of unfair policies such as the NEP. Many of them migrate to Singapore where there is no NEP and it is a fair society.

Idris: That’s not true. A Mindshare survey of 2,000 Singaporeans carried out last year showed that over half of them (56%) wanted to migrate, although there is no NEP in Singapore.
According to the World Bank, Singapore had 300,000 migrants in 2010, nearly 10% of Singapore citizens. Reasons for migration are complex and varied and cannot be just pinpointed to the NEP.

AM: The Government collects lots of taxes from all of us. So many of us work hard only to pay so much in taxes. The Government wastes the tax revenue through corrupt practices and cronyism.

Idris: I don’t agree that Malaysia is taxing everybody and also over-taxing the people. First, Malaysia has a population of 29 million people.

Last year, our working population was 12.5 million people. Out of this, only 1.5 million people were registered taxpayers but only 1.2 million paid taxes.

Second, most of the government tax revenue comes from Petronas and the oil and gas companies, followed by other corporate taxes and then by the 1.2 million taxpayers.

Third, it is not true that Malaysia is over-taxing. Its corporate and personal income tax is competitive when compared with all other countries worldwide.

Fourth, Malaysia is one of the few countries that has not implemented the Goods and Services Tax (GST). More than 140 countries have already implemented GST.

Fifth, since Malaysia wants to keep income taxes at reasonable rates, and since the Government continues to pay huge sums of money on subsidies for the rakyat, our tax revenue is insufficient to pay all our operating and developing expenditure.

So Malaysia has a fiscal deficit. Under the leadership of our prime minister, we have been steadily reducing our fiscal deficit from 6.6% in 2009 to 4.5% last year.

AM: I hear that the Government will be introducing GST. This will hurt the poor people and the middle-income group in this country. GST will bring untold suffering to our people and Malaysia’s economy will collapse.

Idris: No decision has been made by the government to implement GST.

More than 140 countries worldwide have implemented GST and this includes many developed and developing countries eg the United States, United Kingdom, France, Germany, Brazil, Argentina, Singapore, Tanzania, Sri Lanka, Somalia, Ethiopia, Cambodia, Laos, Philippines, Indonesia and many more.

Under GST, many items that are typically consumed by the poor and the middle-income group are exempted from GST. Some items are “zero rated”, which also reduces the impact of GST. This is why the implementation of GST was done in many developing and poor countries. I don’t agree with you that GST will bring “untold suffering to our people”, nor will our economy collapse. Let’s be clear, these problems did not happen in the 140 countries which implemented GST.

AM: Crime is happening everywhere in Malaysia.
Everyday, I read in the newspapers about street crime and violent crimes. The police are not doing anything. The Government doesn’t care about the safety and security of its people.

Idris: The Government considers crime as one of the top national priorities to address. It is indeed one of the National Key Results Areas (NKRA) under the Government Transformation Programme (GTP).

The Deputy Prime Minister, Home Minister, IGP and the police are all working hard to implement initiatives to fight crime. As a result of our collective efforts, crime has dropped from 575 cases per day in 2009 to 407 cases per day in the first five months of 2013, which is an improvement of over 29%.

But that does not mean crime does not occur. It still does, but the rate has reduced. Whilst we take note of this, we continue to address problem areas and ensure we continue to make our streets, villages, towns and cities safe. This is a priority. It is pertinent for us to look into UK’s experience in 1998, when ex-Prime Minister Tony Blair launched an intense nation-wide program to fight crime.
Significant amount of resources were provided to strengthen UK’s police force to fight crime. This program succeeded in turning around crime trend.

However, while the crime rates have started to drop in 1998, the general UK public perception was the exact opposite – believing that crime rate continued to increase.

It was only six years later, in 2004, that the UK public perception of crime finally started to turnaround. This was how long it took for the UK public to catch on with their country’s improving crime situation.

Malaysia is experiencing this same syndrome, called the “Crime Perception Lag”.
We are in the third year of the Crime NKRA program - half-way into the perception lag period experienced by the UK.

I believe we need to redouble our efforts to fight crime – by strengthening police presence in our streets, improving investigation and prosecution outcomes, engaging the larger community to fight crime via to be United Against Crime, and incorporating Safe City elements in the development of our cities and townships.

Well, that was the gist of my conversation with the AM.

Yes, things are not perfect in this country of ours. Where is it perfect? But we have a lot going for us and it is up to us – each and every one of us - to grasp the opportunities available to progress and help our country and ourselves to become developed.

Things are never as bad as they seem.
  • Datuk Seri Idris Jala is CEO of Pemandu and also Minister in the Prime Minister’s Department. All fair and reasonable comments are most welcome at idrisjala@pemandu.gov.my

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