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Sakmongkol ak 47

Thursday 30 September 2010

Political will, the NEM and ETP.


The people who wrote the NEM say, the heart of the model is the political will of the government. In simpler language, it means the government must be ready to not spare the rod.
So far, it has shown a lot of slacks in this department. The PM as the principal driver, has shown himself to be in a state of perpetual diffidence; he can't control the UMNO enforcers, he is easily spooked by Perkasa and is seen to be over eager to please non Malay demands. He believes the success of the NEM and ETP depends on the involvement and support of the non bumis.
The sad part is, that's true. Which group is more economically adaptive and will respond to the 'incentivize' plans of the government? Which group has better stock of knowledge workers? Which group is more competitive? The non bumis.
So what do you do to the to-be-marginalized group? Najib has not addressed this issue sufficiently. It is causing him minus marks. Even UMNO people are questioning his Malay credentials. He is more absorbed into showy PR exercises. He is eager to champion his new philosophy of 1 Malaysia where our ethnic and cultural diversity will be strategically leveraged.
But you have to solve the basic economic issues. You can't write in special positions and such things into economics. You have to devise programs, policies to help them. Policies, and actions help them earn income, not having some provisions written in. so you come up with the nebulous concept of market friendly affirmative action. What is this? If you are already market friendly and driven, you don't need a special category of market friendly affirmative action.
In other words you are saying, you don't have any solid policies to help out the 40% base. But you have policies for the top 20%. For the bottom 40% you have market friendly affirmative action. For the top 20%, you actually have projects for them dropping as it were, like manna from heaven.
In this sense, when the NEAC recommends that the government must have solid political will, it is right. It must have the heart of steel to break the logjam of vested interests. It is also right to point out that the opposition will come mainly from people who are beneficiaries of rent seeking activities.
While it is right in this aspect, it is wrong in identifying those people with the vested interests. Perkasa? Miss by a mile.
The main beneficiaries are ganging up in support of the NEM to ensure that remain beneficiaries and stakeholders to the new plan. bankers, big contractors, direct negotiation bidders, the government's business partners are all there to celebrate the hallelujah-ing the ETP show.
Here is one big contradiction. The NEM and ETP are crafted by technocrats. They say, we must have political will. They also say we must have a process of engagement. Here is the contradiction.
The political will or its lacking are explained by non politicians. Asking 3000 people to come for an exceedingly expensive sandwich party can hardly qualify as a process of engagement and dissemination of the ideas of the NEM. Because it isn't done by politicians or through political channels, it will not have the power backing. The survival of the NEM, the ETP and whatever catchphrases therein, depend on political backing.
The sponsors and promoters of the NEM and ETP have displayed ignorance in not having these two 'projects' communicated by the political machinery..
The majority of the UMNO members, who provide the steel to the heart are not even aware what is the NEM or the ETP. Yet, these will impact on them the most- since they are direct beneficiaries of government big push of strategic policies.
Come on baby, light my fire.
The wheels of the NEM are of course the SRIs- strategic reform initiatives. Phew!
Fire up the private sector so that they will invest in high value added products and services. But of course- the 43-50 billion MRT is a valued added product and service. It is a valuable plan for the sponsors of the plan. The large property development projects involving government land- that is also a high tech value added investment. That would certainly fire the voracious and nefarious appetites of gatekeepers and vested interest groups.
We want to develop quality workforce. Start with raising entry level qualification of those going into government jobs. We must find people who are paid well and won't complain as overworked and underpaid. You get paid commensurate with the qualifications you have.
The NEAC extols the creating of competitive domestic economy. Of course again by employing cutting edge methods such as the Swiss challenge method. Hence MMC-Gamuda for example is invited to propose the building of MRT. Others are invited to counter offer and the first proposer has the first right of refusal. Who are the 'others'?
But here is the clearest indication of lack of political will.


The Council will now seek and incorporate feedback and collaborate with all stakeholders over the next few months to further analyse and detail the policy measures and implementation frameworks.
In other words baby, it is still the age of government knows best. Unfortunately, it's a government that is not sure of its top down policies.


Anonymous,  30 September 2010 at 08:04  

good piece of arguements,

Anonymous,  30 September 2010 at 09:23  

If you, being a staunch UMNO member, can foresee all the difficulties, problems, obstacles, oppositions to the NEM/ETP, what can we expect from local and foreign investors?
Are they going to rush in and invest billions in the country?

OneMalaysian,  30 September 2010 at 09:47  

Dear Sakmongkol

“He (Najib) believes the success of the NEM and ETP depends on the involvement and support of the non-Bumis. The sad part is, that's true”.

When I first read the NEM in April it struck me that the benefits flowing from the NEM will benefit the different communities in different time frames. What do I mean by that?

Sakmongkol has already identified the reasons why the non-Bumis will get the first bite, precisely because they are much more ready – they have the capital to start new businesses, or to expand; they have their “contacts” in place so they can propose more high-ticket projects such as the MRT project via the Swiss challenge bidding system (this is NOT an open tender but where a private sector company could propose an UNSOLICITED project, and others have to better the price by some margin to get); and they have the expertise in place. The Bumis, on the other hand, generally trail the non-Bumis in all these respects except in a few cases (Syed Mokhtar is a good example) where they too have good “contacts”, and there are several large GLCs or GLC-related companies too. But one could safely say that because of the readiness of the non-Bumis they are likely to harvest the first fruits of this NEM.

Now, I see some political problems when this becomes evident. The champions of the so-called bottom 40%, that is, the likes of Ibrahim Ali will have a field day shooting down government policies. I don’t blame them. I would blame the government for not properly preparing the people to receive and accept the NEM and what might flow from it, especially the timing issue. There are 2 failures, one political and the other policy. The political failure is the failure to prepare the minds of the people. The NEM is absolutely vital, but its many strategies are too complex for the ordinary people to grasp. For example, what are “market-friendly” initiatives? The Malays will simply say we did not get any tangible benefits whilst the cronies and non-Bumis are getting richer. The common people, especially this bottom 40%, are still grappling with bread and butter issues, trying to earn enough to feed the family. And with the removal of subsidies their position can only get worse if their incomes don’t quickly increase (economic theories of price distortion don’t work at the micro level of kampong folks). Yet for this group to get anything out of the NEM they must change mind-sets (how long?), invest in education (14 years from primary 1 to university), and accumulate capital (how when one had little income?). For these reasons the bottom 40% will feel like losers for quite a while. Unless there are new and vigorous policies to eradicate poverty that are immediately implemented, the disadvantaged groups will agitate and fall victims to the negative politics that will impede or derail the NEM.

You are right to point out that whilst the technocrats do the drafting of the NEM/ETP (that is normal) it is the politicians’ job to sell the plans and ideas. So far they have only sold them to sophisticated fund managers and investors – the people who can supply capital. This is good, but the real challenge is to be able to bring on board the rest of the 80%. Najib has failed here. We wonder if he will ever succeed when he has not even converted the rest of his cabinet to his plans. Or will the NEM be the sword over which he will trip over and end his political career?

Anonymous,  30 September 2010 at 09:48  

winner takes all..
losers are branded whiners who are afraid of competition and want subsidies & affirmative action..

For heaven sake..understand the rakyat >>we don't want private jets and jacuzzis >we only want 3 decent meals a day,a roof over our head and the opportunity to have a better n secured future for ourselves and more so,our children.

And careless spending,jetting in luxury round the world,big consultants,alphabet soups will not get us there.

Its sad but I do think Melaka CM will make a better PM.At the very least he's more in touch with the people.

Anonymous,  30 September 2010 at 12:10  


Apparently the NEM and ETP look more like a two edged sword which the government find it hard to handle.

Without strong political will to push through these strategic programmes, the government will be hurt in the end, either way.

OneMalaysian,  30 September 2010 at 13:54  

Dear Sakmongkol

I have mentioned today earlier about the possible timing difference in income growth for most non-Bumis versus Bumis if indeed the NEM sees the light of day. So whilst the overall gross national income would increase, and so would the per capita GNI, my point is that the Gini Coefficient might actually deteriorate for a while from the current 0.49 (quite high). That is to say, the income disparity in society will actually get worse before (hopefully) it gets better.

Is this a matter of concern? Yes, because we are still very much a race conscious society. China has a Gini Coefficient of 0.47, which already worries their economic planners sick because of its propensity to cause social unrest between the rural and urban folks. They are taking myriad measures to alleviate the problem. Now, immediately after 1949 when the Communist came to power, one could easily imagine the Gini coefficient was probably close to zero, that is, income was vey evenly spread (actually no income at all), but the Chinese then were very poor. Now they are on average much better off, but income disparity has increased to worrying levels. What is better, to be equally poor or to get rich as a country but some are much richer than the others?

This is the dilemma that will face us as the government tries to implement the NEM. It must on the one hand free control of the market to enable more competition and investments, and in the process allow the rich to get richer, but at the same time it must mollify the poor and urge patience whilst it works unceasingly to give the poor a better deal. Can it do this fine, high wire balancing act? So far the PM, the architect of the NEM, has not done the talking, as you had pointed out, to those who would feel disenfranchised. This might prove to be the undoing of the NEM.

bobbyD 30 September 2010 at 17:03  

somebody should explain to the farmers, the fishermen and the common folks where are they in the grand design of NEM and ETP...remember they are the one who voted the government.

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