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Sakmongkol ak 47

Sunday 26 September 2010

Najib and the ETP

We are not going to take away any credit from those people doing the ETP show. A lot of thinking and skunk work have gone into preparing such an elaborate showcase of , what is really , a business plan for Malaysia. it's a thick document- reflecting, says the chief presenter, the government's political will.
But I can also argue that the ETP is also a product by the do-gooders and a product also of special interest groups. The do gooders are of course our politicians and leaders who think, the public should be taken care of by meticulous planners ensconced somewhere in Putrajaya. The special interest groups are of course the well connected business groups who are pushing for their projects to be adopted as either EPPs or BOs.
The conspiracy of these two groups, as I said in an earlier essay constitutes to me, disguised collectivism hiding behind the overt declaration, that we are pushing for free market system. Not a few people are easily taken in by the argument, that this ETP is a celebration of free market economics. It is private sector driven of course when the private sector involved consists of mainly the same old market players. It does not offer an opening up of the economic game.
I will still maintain my argument, that the ETP is a signal for the further strengthening of the idea that the government knows best. I have no quarrel if the government that knows best is a good government consisting of equally good people.
I have a simple test of this view. Last year, the government unveiled the biggest deficit budget as a fraction of the GDP in our history. Surely that is a sign of an enlarged government, not a ' work in progress' towards smaller government. The ETP is still going to be 40% financed by the government, directly through government agencies, indirectly through GLCs. The private sector will also be provided with cheap financing to jumpstart the economy. All in all, government participation is still going to be a dominant one. Therefore, in actuality, many of those who profess the most individualistic objectives support collectivist/command centre means without recognizing the contradiction.
The ETP is premised on unleashing the energies of individual economic actors or it should have been so. There are already two forces that will work against the achievement of the targets of the ETP. One, as we have said, the ETP can only be achieved within the context of a liberal order in which government activity is limited primarily to establishing the framework within which individuals can pursue their own business objectives. That is not going to happen under the ETP regime- the bulk of the businesses are going to be cornered by a few people. We haven't yet established a culture and tradition of operating with libertarian and democratic values.
The second force that will gnaw into the success of the ETP will be the government itself. Our civil service's excellent quality is only a politically correct assessment. In reality it is far from efficient and corruption is pervasive. The government is simply inefficient. The government has proven inept at managing enterprises, organizing and applying of resources to economic pursuits. It is often mired in bureaucratic confusion and inefficiency.
So to me we haven't addressed two underlying issues. One, the establishment of a regime cultivating the right values that open up market and invite participative capitalism. Two, we haven't re-structure the government and administrative machinery to support the ETP.
Here is our main contention. Our economy is not plan driven. This is my point. Our economy grows as a result of the many responses by business units. It's easy to mislead the public by giving a picture of an economic model, in which the inputs are fed by selected business units. Then, the business plan which is presented, is actually an amalgam of individual business plans by those who have been called in to submit. It's impossible for the government to capture the myriads of business decisions and responses. We don't plan our economy on huge input-output tables ala Mahalanobis where we perform the various mathematical operations.
The business of government like that said by the prominent banker, is to step aside and let the business community do its job. But it is even truer if he had said, that the business community shouldn't be confined to a selected few.
How do we know, the private sector and other players cannot come out with a better deal for the public? How do we know for certain for example, the 43 billion MRT project proposed an sponsored by Gamuda-MMC, couldn't be had at a far cheaper cost? We don't know because, to the government, private sector means, certain pre qualified private companies. The business of government, is to create the right framework within which we operate at the maximum. We invest in the apparatuses of governance- rule of law, administrative competencies, education, technology and business opportunities.


Anonymous,  26 September 2010 at 18:40  

the really unanswered question>>whats the base case?where will we be in 2020 without the ETP?

Anonymous,  26 September 2010 at 21:38  

"At them moment I can't help but being cynical. This is to enrich certain companies. How can the ETP be just centered around the Greater KL / Klang Valley? The main aim is to improve the income per capita. But this plan will only increase the gap between the have and have nots. It seems like the govt have not consulted each state govt for opinions and ideas."

Najib Basher

dianna 26 September 2010 at 22:12  

What we are not told is the business case for each project, for instance, the ticket price for the MRT, or the returns from cleaning up the river. We are not even told how we can compete on global healthcare generics against the likes of India and Brazil which already have mature generics sectors.

What one should be concerned about at this juncture is whether the government had moved all those 131 EPPs totaling USD216 Billion for vendor-independent evaluations on their respective feasibility before putting them on powerpoint.

They probably thought that since it will be private-sector driven, the government will be doing just low-risk promotions and so needn't be so concerned whether the projects have a chance of success in the present global economic climate that they can go on by just what the vendors had submitted which went into the programme.

But what happens when the business case requires sovereign guarantees otherwise the loans will not be released to the private players?

Will the government then have to step in and comply and if it does, which of its funds will it have as reference? More importantly, who will be making each decision under pressure, conscience-wise or hedonism-wise? Wrong decisions will not only waste resources and time, and bill real costs but also raise high opportunity costs at a time when other countries have caught up.

And as the blogger has succinctly noted, how do we know the price gives the best bang for the buck? As example, the citizens know they are already paying 20 percent more for tolls which should also have ended years ago.

As a blast from the past, just the case of MAS brought a ripple. Someone was given carte blanche to buy in, then the corporation nosedived, and he was bailed out using the EPF as if nothing had happened.

The government must keep its hands off the EPF. At present burn rates, it will only last each salaried citizen for a few years.

Apart from independent valuations, does the government have strong legal capabilities to finecomb each agreement before inking them?

We remember what was revealed on how the toll concession agreements were inked. We also remember other losses like InventqJaya and the Tuna farm. We might as well rope in the MSC and Cyberjaya.

dianna 26 September 2010 at 22:13  


In other words, is the present government assured of the capabilities of its legal counsel beyond courtroom antics, or have they all been lingamized beyond recognition?

We are talking about many high-priced contracts here to be inked by a government with a deadline for political recovery, failing which the last scoop.

Which comes to the matter of the GTP, or government transformation programme.

As an example, if the DPM now says it should be the Chief Secretary of the government, why has the latter been silent all the while?

Is proactivity by a civil servant only a function of last resort?

Would that trait explain why businesses are taken on too many wild goose chases when seeking approvals just because the approving penurut perintah cannot proact to get a firm decision but by elbow-jerks throw out applications because they don't meet the exact specifications of situations which have nevertheless already changed since the last time they were couched?

Does Putrajaya suffer from a paucity of brains in this time and age of agile pro-response needed because people finally realize how bad the national situation has become?

Or is it still warlordism galore? Just think about it. Many years ago, the going rate for a simple approval to a simple house extension was rm600 and there were thousands of such applications. That itself was already not just wrong secular-wise but religion-wise. Now we are going to have mega-sized real estate developments where approvals will no doubt still be required even if the submitting parties are already oiled and vested to the approving departments. Would Pemandu then give an assurance no such leakages will be taking place, even as the MOHousing will make sure no house-buyer will have to suffer developers defaulting on delivery of their purchases?

And that is the theme - the interconnectedness of government services seen only as one nebular and cancerous lump by the overly long suffering citizens of this country. Where is the transparency and acountability? Who will be meting real control and maintaining integrity? Where are the 18 raisian cases? What will be done about Taib of Sarawak?

So who will take charge to change all this once and for all because enough has long gone past enough? The DPM? That other minister in the PM's department? The deputy MOF? Ibrahim Ali? Awang Selamat? Or The Loaf?

OneMalaysian,  26 September 2010 at 22:25  

Dear Sakmongkol

“The business of government is to create the right framework within which we operate at the maximum.”

This is what I believe. But this ETP is a thinly disguised attempt at deeper collectivism as you put it. And I agree. It says that only 8% of the investments will come from government. In reality this is not true because the government can direct or influence GLCs to invest. Further, many of the big projects will get government guarantees of one kind or another (like PLUS highway got guarantees of road users), so that they can get cheap financing through the bond market. That is an indirect form of government financing. Let’s call a spade a spade.

What puzzles me is your believe - or is my perception wrong? – in this concept of “the right framework within which we operate at the maximum”? This is presumably what Najib means by market-friendly affirmation action? This is a dangerous idea for an UMNO man like you to believe in, especially when the Perkasa vigilantes are roaming about town condemning such heretics.

Anonymous,  27 September 2010 at 08:57  

A business plan for Malaysia? You must be kidding to call this a business plan.

Try showing this to a Venture capitlist (with money), and let them do a SWAT analysis...

The first question they would ask you would be, from where is the income to sustain these buildings and infrastructures? What is the USP(Unique Selling Point) you have that can beat your competitors?

I can guarantee you, this plan would not pass the first stage of evaluation and we are so hooola hooola about it and cheering.


Really Malaysians are ...... (fill in the blanks yourself. Too many adjectives to use.)

Anonymous,  27 September 2010 at 10:33  

Dato Sak,

This ETP will fall by the wayside just like Vision 2020, Islam Hadhari and 1Malaysia but who cares as long as the well connected elites make their bundle from the RM1.4 trillion projected funding.

The government is more interested to fast-track this country to be a high income nation without giving major emphasis on developing and building a solid foundation on human capital and resources. People are a nation's greatest assets and the government has failed miserably in this area. What is there to shout about being a high income nation by 2020 when the rest of the world will have achieved super or hyper high income status by the same time.

This country never fails to live up to it's Jaguh Kampung mindset with it's claimed first world infrastructure (which is questionable) but third world mentality (without any doubt).

Anonymous,  27 September 2010 at 13:55  

The fact of the matter is the power of govt is limited. There are times the govt can be highly effective but when it comes to getting for us what we want, all the govt can do is harness forces of others, private enterprise in particular.

There is no way for govt to 'make' or will directly what we want i.e., it cannot truly deliver completely what we want. All it can do is put the condition in place with the a chance that what we want happens.

That is why is futile for the govt to try and make such centralized the effect of its programs - it just don't work that way.

Asam Pedas,  27 September 2010 at 21:16  


How much I want to believe that the Government will hear people reservation through blogs and Pemandu workshops about the Government Programs particularly ETP, in reality it is about Government backed by major corporations will have final inputs and say.

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