The economic contribution from natural resources, especially in oil and gas is expected to decline over the next 20 years as our reserves runs dry. As revenue from oil and gas constitutes more than 40% of the overall Government budget, there is a serious challenge in sourcing alternative sources of revenue to sustain Government expenditure at current levels.

The direct source of replacement contribution towards greater economic productivity in the light of the above will be by substantially raising human capital. With the right quality of human capital, many countries around the world which are not as blessed with natural resources have recorded significant growth above and beyond what we have achieved.

In light of the above, the DAP proposes legislating that at least 50% of our windfall revenues from the oil and gas sector shall be allocated to building human capacity, particularly in Education and Training, above and beyond their normal allocation. This will ensure that our windfall revenues will be productively invested in our most important assets, in particular, the young Malaysians.

We will give every child access to a first-rate education. In every school, the focus will now be on quality. More teachers will be deployed to ensure that there will be more time to plan for quality and innovation in teaching. Our schools must encourage creation of new ideas and creative thinking via different types of classrooms, different styles and different methods, but all with a strong emphasis in quality.

Building World Class Tertiary Institutions

The focus of higher education must be on the quality of the existing tertiary institutions instead of creating new universities for Malaysia. At this point of time, Malaysia has more than double the ratio of university to population compared to countries with better quality education system such as Singapore. As a result, further expansion of tertiary students intake at public universities, expected to reach 294,000 by 2010 will be absorbed into existing universities. To cope with this expansion, an allocation of RM1.2 billion will be provided to upgrade and improve facilities in existing universities.

Universiti Sains Malaysia, Universiti Malaya, Universiti Putra Malaysia and Universiti Kebangsaan Malaysia have been granted “research university” status. These leading Malaysian universities should be allocated RM200 million each to conduct research activities. In addition, to promote the universities’ self-sufficiency and fund-raising capabilities, every additional ringgit up to RM200 million which the universities, including all other local public universities are able to raise from the corporate sector or their alumni for research purposes, the Government will back the fund with an additional ringgit.

On top of the above, the DAP proposes that university academics and lecturers will have their pay de-linked from the civil service pay scale and structure. For a start, university academics shall enjoy an immediate 20% increase in pay. In addition, allowance for academics critical faculties which competes with the private sector will be raised by 300% from the current levels between RM200 to RM300.

A further study will be conducted to revise the remuneration packages for them to ensure that our universities are able to attract the best academics from around the world to teach and research at our universities. Without these global talents, whether Malaysians or foreigners to lead our academia, it will be difficult for our universities to excel in the increasingly globalised and competitive world.

To promote quality and competitiveness between the local public universities, for the 2008 university intake, each university should be able to evaluate their selection of students on the basis of the students’ own preferences. Only if the students are unable to secure a place based on their preferences, will they be allocated a place by a central clearing agency at the Ministry of Higher Education. This change in university placement will result in greater university autonomy in forming the character as well as managing the quality of their own institutions. In the longer run, it will result in much higher quality institutions of higher learning.

To promote access to university education, in particular, those from poorer financial circumstances, student loans should be made available to any and all student who qualifies for tertiary education. However, to ensure efficiency and transparency, as well as to minimise the risk of default, the education loan fund should be managed and administered by all the local commercial banks in Malaysia at preferred interest rates subsidized by the Government. This move will ensure that all deserving students shall have speedy access to funds, preventing unnecessary anxiety caused by delays. At the same time, it will reduce the administrative cost borne by the Government as well as the high percentage of defaults faced currently due to poor and weak enforcement by Government agencies.

Investing in Research and Development

In order to build up a world class economy, the nation needs to invest in the research and development of core technology and products. This will reduce our reliance on foreign expertise as well as increase the competitiveness of our country. Our expenditure on Research & Development has historically been low, but we should boost R & D spending to 2% by 2012, and 3% by 2015 of the country’s GDP annually. For the 2008 Budget, we should have allocated RM3.2 billion which represents approximately 0.5% of Malaysia GDP in contrast to the RM1,370 million allocated by the government for various biotechnology and ICT funds and projects.

The reason for the gradual increase in R&D funding is for the simple reason that it will take time to attract and grow the necessary talents to and in Malaysia to lead Malaysia’s infant R&D industries. The nation’s R&D thrust goes hand-in-hand with our policy in building human capital, for without the necessary levels of skills and intelligence, no amount of money will deliver the necessary results from our R&D ventures.

Malaysia’s primary focus to date has been to construct buildings and infrastructure but we have often failed miserably in the areas of attracting the right quality of expertise and knowledge. Hence, for our R&D thrust to be successful, Malaysia must also invest not only in producing our own R&D scientists but also attract global R&D experts to pursue their research career in Malaysia. Many of these will be Malaysian researchers currently pursuing their careers overseas. It is only with a sufficient critical mass of top global researchers transplanted to the country, that the R&D movement within Malaysia will blossom. However, this means paying the right amount of money for the right quality of talent to set up their operations in the country.

Over the next decade, we should strive to reach this critical mass of top-rate researchers in Malaysia, who will create new intellectual property in our research institutes, universities and hospitals, and will bring in new, technology-driven activities which will spin off benefits to the rest of the economy. This way, Malaysia’s economy can truly move up the value-chain ahead of the fierce competition from our neighbours such as Vietnam, Thailand and even China.

As the areas of research in engineering, biotechnology, ICT as well as other fields is vast and endless, it is also critical that Malaysia’s investment is allocated to a smaller area where the likelihood of success is higher, based on our own competitive advantages. Any lack of focus in the areas of research will result in too little money spent on too many projects leading to negligible results. In addition, it is important that we recognise that we will never be able to spend a similar quantum of funds in R&D as compared to highly developed nations.

However, the sheer complexity as well as depth of knowledge and experience required to decide on sensible and viable policies render our local governmental agencies highly ill-suited to the task. Hence, the DAP proposes the set up of a Research & Development International Action Team (RADIANT), an executive council of internationally renown academics from the scientific community to steer the R&D direction, innovation and entrepreneurship focus for Malaysia.

(Speech 8 on 2008 Budget in Parliament on Monday, September 10, 2007)