2011 Budget – Eulogy for NEM and relaunch of Mahathir economic model (Part 4 of 4)


Human Capital Issues

The allocations announced in the Budget for human capital development are indeed impressive. However, the question arises if the nation will get value for its money. There can be no denial of the fact that the Malaysian educational system is in disarray.

Standards have fallen dramatically. Our universities turn out graduates who lack rudimentary skills demanded by employers thus contributing to low productivity and loss of competitiveness. Our secondary school system is in disastrous shape.

Those who are charged with educating the next generation of Malaysians to be responsible citizens are more interested in promoting race hate as recent episodes of misbehavior by teachers highlight.

The lack of an adequate reaction from the top echelons of the Government has sent a strong signal to others in the educational system to project the message of hate that BTN promotes with impunity. These despicable acts and patterns of behavior give credence to the notion that the 1Malaysia slogan is nothing more than a catchy slogan devoid of meaning or sincerity.

Creating a skilled, innovative and knowledgeable work force demands a major revamping of the existing system. The Prime Minister gave no indication that a rethinking is contemplated.

The fact that the country is entrapped in the middle income trap can in large measure be attributed to the fact that the current educational system and labor market policies have been inappropriate. It is clear that without a fundamental change in these areas the country faces the prospect of remaining a middle income country.

The Prime Minister made much of the fact that efforts are being made to attract Malaysians working abroad to return to the land of their birth. The establishment of a Talent Corporation has been announced with great fanfare. It is far from clear how and what it will do.

There is hardly any recognition of the fact that Malaysians migrate partly in search of a better quality of life and higher incomes. What is becoming increasingly evident is that race polarization and increasing intolerance are emerging as negative factors that encourage migration and discourage a return to Malaysia. It is most sobering to note that the Government has yet to acknowledge the need for addressing the root causes.

The Prime Minister made reference to the fact that 375 native English speaking teachers will be hired to enhance the teaching of English. This proposal is somewhat laughable as the number involved is minute in relation to the demand.

If the Prime Minister and his Deputy, the Minister for Education are sincere and acknowledge the role English plays in commerce and industry and the modernization process, there is a need to mount a crash program.

The Government should promptly hire 1000 lecturers to train existing secondary school teachers in the teaching of English as a second language. Other steps worthy of consideration would be to making a pass in English in the MCE a requirement; all undergraduates be required to pass a course in English.

Again large allocations have been made for programs for Intensifying Training and Skills. A new program (1Malaysia Training Program) has been added. There is no indication that these multiplicities of programs have had a favorable impact. There is a clear need to review and evaluate these programs and to ensure that they are effective in meeting new goals and objectives of national policies.

The proposed establishment of a National Wage Consultation Council as the main platform for wage determination represents a modest and belated attempt to bring greater equity in the determination of wages.

For far too long the Government has indulged in policies that favor employers. Its labor market policies favoring the inflow of low wage migrant labor have contributed to a suppression of wage levels and pushing many working Malaysians to below poverty income levels. These distortions have become serious and require rectification. Time will tell if the new Council will contribute to correcting these anomalies.

The ad hoc setting of wage levels for different occupations such as security guards, postmen etc that the Prime Minister cited raise an issue of equity. It is hard to rationalize why there should be different minima for different occupations and these minima are either close to or even below the poverty line. In setting a minimum wage, it is imperative that wage levels be not near or below the poverty line.

Budget expenditures

The Budget for the year ahead calls for an expenditure of RM 212 billion and is 2.8 percent higher than in 2010. There is however little doubt that the final outturn will exceed by a sizable margin the budgeted amount when customary Supplementary Allocations are taken into account. The projected reduction in the deficit to 5.4% from 5.6% is not likely to be met. It is also important to note that expenditure increases of the order of 2.8% are unrealistic when account is taken of likely inflation in the range of 2 to 2.5%. That expenditure in real terms will increase by only 1% stretches credibility to the limit.

It is to be noted that the expenditure proposals generously allocate funds to Federal Government controlled projects. The Prime Minister’s speech was eloquently silent on the amounts that are to be transferred to the various State Administrations. Federal revenue sharing in the face of major structural changes appears to be wholly ignored.

The revenue projections call for an increase of 2.3% in current price terms. Several comments are in order. Firstly, it is most odd that revenue growth will be slower than GDP growth. GDP at current prices is likely to be of the order of 7 to 8 percent. It implies that tax revenues will not keep pace and point to large leakages in tax collections. That expenditure growth will outpace revenue growth is most telling. It signifies that prudent budgeting principles are being set aside in the interests of short term expediency. The much touted goal of bringing the deficit under control is thus unlikely to be achieved. The Mahathir model of large deficits continues to drive economic policy.

The fiscal picture presented in the Prime Minister’s speech is far from transparent. No indication is given of the large hidden off budget transactions. Nor is there even a hint of the increase in contingent liabilities that the Government will assume via the granting of loan guarantees. The lessons from the PKFZ fiasco have yet to be learnt.

What the Prime Minister failed to disclose in his speech was that net domestic borrowings by the federal government would rise to RM51.1 billion in 2011, from RM36.5 billion in the current year. A 40% jump in net borrowing and the lack of disclosure of this fact in the Budget Speech is not an oversight or non-disclosure of a fact of insignificance. The concealment is a clear example of lack of transparency and accountability. The nation is being misled and lulled into a false sense of wellbeing.

Conclusion

What is becoming clear is that the Government is embarked upon a dangerous path of massive borrowing and spending. The spending is directed and channeled towards projects and activities that will not contribute to either enhancing the productive or the competitive capacity of the economy. The key beneficiaries are likely to be a small coterie with links to the Barisan.

Short term political objectives are being placed ahead of the long term needs of the nation. A weak and divided Government is being driven to adopt failed and disastrous policies of the past. Reforms are being obstructed by vested interests whose narrow agenda is without vision. The nation’s path to the future and its destiny cannot and must not be set by yesterday’s men. If this path is pursued, Malaysia tragically is headed towards the same situation as faced by Greece in its recent economic crisis. A crisis of that nature will result in deep austerity, a falling of living standards and the destruction of wealth.

Malaysia must move away from that path to the precipice and must instead embrace reforms that will lead the country to a higher plane.

  1. #1 by Mel_a_yu on Monday, 18 October 2010 - 5:11 pm

    “Those who are charged with educating the next generation of Malaysians to be responsible citizens are more interested in promoting race hate as recent episodes of misbehavior by teachers highlight.”

    — the above statement is a gross exaggeration and generalisation. The misbehaviou of a handful of teachers are must misbehaviours. And it so happened that only the misbehaviour of teachers from one particular race was picked and sensationalised. What about teachers in schools where they teach in foreign languages (Yes, I mean languages other than Bahasa Malaysia & English)?

  2. #2 by Mel_a_yu on Monday, 18 October 2010 - 5:13 pm

    correction: The misbehaviour of a handful of teachers are but ‘misbehaviours’.

  3. #3 by gofortruth on Monday, 18 October 2010 - 6:33 pm

    “Our secondary school system is in disastrous shape”.
    ————
    Uncle Lim you’ve said it well. BN gomen is taking away the secondary PMR exam, the way is paved for HALF HALF HALF PAST SIX students to obtain “favorable assessments” to enter the Science stream and that will lower our educational standard even further before the students enter the university door. Disastrous!

    You build the people, the people will build your nation!!!

  4. #4 by DAP man on Monday, 18 October 2010 - 7:49 pm

    kit,
    Will agree with me that the present crop of English teachers in secondary schools will not even understand what you have written here.
    Their English proficency is deplorable and many cannot even write a simple sentence in English and mind you they are teaching English to our children.
    I would like to know who these 375 English teachers are?

  5. #5 by HJ Angus on Monday, 18 October 2010 - 9:44 pm

    WoW! this 1Malaysia budget is what the world has been waiting for!
    Now we should offer our advice to all those problem nations like the USA and Greece.
    Why Obama might even ask to visit us to watch our economic wizardry at work.

    http://malaysiawatch4.blogspot.com/2010/10/malaysia-budget-2011-now-anyone-can.html

    Now I need more Valium, please?

  6. #6 by bra888 on Monday, 18 October 2010 - 10:11 pm

  7. #7 by waterfrontcoolie on Tuesday, 19 October 2010 - 1:11 am

    Does the gomen think they can solve the English issue with 375 English teachers? How long would they stay here? Are they going to start at primary level? When supposedly English graduates can’t get it right, without doubt the majority of the undergraduates won’t too. This is all short term move, most probably because of ERECTION! Now we have the Super EGO wanting to follow China style of Gomen, if implemented I just wonder how many of our leaders would be left standing? In the 21st Century, there is no need to split hair on democracy or socialism, we just need sincere and honest leaders. The rest of the experts can be hired.

  8. #8 by BeEndSucks on Tuesday, 19 October 2010 - 4:14 am

    Mel_a_yu, no, the toxic waste spewed by the sick teachers aren’t just misbehaviors. graffiti on a wall or firecracking a cat are misbehaviours, what those teachers said are tell-tale symptoms of what’s going to take the country down. just when the rest of the world are blazing past us, we’re talking about hiring 375 english teachers to arrest the language problem?

  9. #9 by BeEndSucks on Tuesday, 19 October 2010 - 4:51 am

    just perusing the headlines of today’s Star paper (and knee jerk reactions)

    “Wanted men gunned down”
    5 foreigners on malaysia’s most wanted. that’s what you get for blatantly importing your vote numbers!

    “Parents of murder victim had high hopes for her”
    file that under the crime index-numbers-to-cook folder

    “Principals who made racist remarks suspended “immediately”, transferred to district offices”
    immediately? really?? then Nazri Abdul Aziz said “better late than never”. oh yeah, give them cushy desk jobs doing nothing so they can repent

    “Warisan Merdeka: Big projects are the way to go, says Dr M”
    to create economic opportunities, he added. you see, we dig a hole to create a mound that will not be filled by our imaginery friend Returns. then our best buddies Crony and Chum will divvy up the mound and bank them offshore while we amuse ourselves when our other imaginery friend Rakyat trips and fall into the hole

    “Malaysians need quick, reliable access to global information: Muhyiddin”
    ahem disclaimer, as standard practice we define “global” our way. it includes west and east malaysia and everything in between

    “Astronaut programme subject to funding”
    now that the furor of sending our first space tourist seemed to have subsided, let’s send another, this time find someone who does a better job pretending he knows the stuff. while we’re the spirit of faking it, let’s replace mitsubishi badge on the lancer w/ proton’s and fanfare a new model!

  10. #10 by cemerlang on Tuesday, 19 October 2010 - 6:43 am

    Even Tun Mahathir Mohamad is thinking about a dictator. A lot of you here should be English teachers. Reality is if the English teachers are teaching Manglish, the students will learn Manglish and all that we have in Malaysia is Manglish. We should make Manglish official. Afterall what’s wrong with that ? Why should we adopt the official grammars ? As long as we understand each other and the native English speakers understand us and think we speak such good English, that would be fine. Manglish by the way, is the hybrid of Ma for Malaysia and nglish for English. In order to speak American English which a lot of you have picked up because you just so adored your Justin Bieber and your Miley Cyrus, you have to grow up in that environment just like if you grow up in Australia. Right mic ? So when you talk about human capital, it is not just the quantity, there are other factors which I wonder if the politician is thinking about. Money factor don’t forget.

  11. #11 by k1980 on Tuesday, 19 October 2010 - 8:16 am

    #8 by cemerlang

    Make it compulsory for Science and Mathematics teachers teaching PPSMI to take the Cambridge O-Level English Language 1119 test are you will be surprised if 10% of them could manage a pass in it

  12. #12 by DAP man on Tuesday, 19 October 2010 - 9:37 am

    What does Mahathir mean by saying “dictatorship is good”.
    He wants Najib (with Perkasa’s help) to create fear, racial mayhem followed by ISA arrests so that the frightened Chinese will vote for BN.

    Operation Lallang worked for him so he wants Najib to try it again. All Najib has to do is detain a few dozen Opposition/NGO/Church leaders and intimidate the Chinese.

  13. #13 by HJ Angus on Tuesday, 19 October 2010 - 9:57 am

    It is interesting to speak of the middle-income trap and the future for Malaysia is truly bleak unless we can really reduce the high number of civil servants that is distorting the nation’s economy.
    The way things are going, we may even slip into a low-income status.
    While an efficient government will spend less than 40% on operating expenses, in Malaysia this has been a growth industry with disastrous consequences for the nation’s progress.

    http://malaysiawatch4.blogspot.com/2010/10/budget-2011-how-to-reduce-civil-service.html

  14. #14 by dagen on Tuesday, 19 October 2010 - 10:09 am

    Mel-ayu above spoke of misbehaviour by the two school principals. Its only misbehaviour he seems to say. But school principals should not misbehave. They must not. Otherwise they do not deserve the position they hold. I will be magnaminous here for I acknowledge that human beings have their moments of weakness. Perhaps those words were uttered by them during such moments. But what about muhideen? If the incidents were mere misbehaviours then muhideen as head of education (the min in charge) could easily and should admonish them, sternly, for misbehaving. Muhideen’s resolute refusal to do so is certainly fanning a great amount uncertainty and confusion into the simple “misbehaviour” issue.

    Dr mamak’s policies are all rotten. Time is already telling us how rotten they are. And the story is still being told. 22yrs of rubbish accumulation cannot be explained in a day. In other words, more sick and sorry mamak stories will emerge. But as it is we are all too tired to bother with more sick and sorry mamak stories. Not that they are unimportant. They will continue to shock the nation no doubt; and to remind voters of the need to cast their vote wisely in GE13. The crucial consideration here is about being pragmatic. The nation, and by that I mean non-umnoputras, just plough on – mending dr mamak’s failure and where opportunities present themselves, move forward.

    Without hearing the concluding bits of that long mamak story we already could identify dr mamak’s economic and political misfirings. And without the need for complex analysis by experts we could very well tell that getting into dr mamak’s footsteps would only lead jib and the nation off a high cliff, sooner than 2020. 5billion for a 100-floor tower is ridiculous. Use the money to complete uncompleted projects like plaza rakyat, to clean up our clogged and smelly drains, to rejunevate klang river, to repair our poor and dangerous road conditions, to educate our children.

  15. #15 by yhsiew on Tuesday, 19 October 2010 - 10:24 am

    ///The key beneficiaries are likely to be a small coterie with links to the Barisan./// – Kit

    That has always been a “feature” of BN’s budget down the years – rob from the rakyat to enrich their cronies and relatives.

    I believe BN is well aware that time is short. In the face of looming political uncertainty GE 13 brings, they think it is better to plunder first before PR takes on the federal government.

  16. #16 by Godfather on Tuesday, 19 October 2010 - 11:17 am

    GE13 can’t be in 2011 – they simply don’t have enough time to specify the projects, and award them with financing done by 2011. It’s likely to be in 2012/2013 now….when the projects are already financed and in full swing, and when money becomes available to buy candidates.

    PKFZ was one such project identified to finance the March 2008 elections, and it was mooted way back in 1999.

    Bottom line is that GE13 will be another huge buy-election.

  17. #17 by dagen on Tuesday, 19 October 2010 - 11:22 am

    Who will benefit? A dozen or so umno cronies and tens of thousands of foreign construction workers. Dats it!

    Jib Jib Boleh!

  18. #18 by sheriff singh on Tuesday, 19 October 2010 - 12:24 pm

    Now Mahathir tells Najib that China’s model is the way to go.

    Or else, he, Najib, will have to go.

  19. #19 by sheriff singh on Tuesday, 19 October 2010 - 12:36 pm

    Another lost talent. Another brain drain to the little red dot.

    http://www.thestar.com.my/news/story.asp?file=/2010/10/19/nation/7253957&sec=nation

  20. #20 by Ridzuan Aziz on Tuesday, 19 October 2010 - 3:15 pm

    What would the DAP change in the budget?
    There is no way on earth a national budget can make everyone happy. It’s unheard of. There are things that must be carefully evaluated before the budget can be tabled in the parliament. The government had gone through many stages prior to presenting the budget. Government officers (not politician) also helped in the process.
    In this budget, everybody got their share. For now, considering how dire the world economic is, we Malaysians should be thankful that Malaysia still has money to spend.

    • #21 by kahlilgibran09 on Wednesday, 20 October 2010 - 12:18 am

      Recklessly spent, my dear, recklessly spent!

  21. #22 by undertaker888 on Tuesday, 19 October 2010 - 5:43 pm

    Mega heart attack is the way for mamak to go.
    we do not object spendings but corrupted spendings. there will be mega pkfz-type fiasco in the coming future and EPF will have to pay for it.

  22. #23 by cemerlang on Wednesday, 20 October 2010 - 12:06 am

    Human assests form the human capital because human liabilities cannot do so. That means one must be of value. Teachers must be of value to raise up citizens of value. Behaviour is more about how a person physically carries himself about. It is not misbehaviour because the individual can carry himself with no problem. It is his attitude which causes him to say things that are wrong. Therefore it is a wrong attitude, a zero EQ, a negative interaction and a breakdown in communication. Out of the heart, the mouth speaks. For a senior teacher or principal, she must have attended courses after courses after courses which sadly are unable to change her fixed thoughts about others who are not the same as she is. She carries this sort of wrongness into her teaching. Who bothers if she rojakkan English or Manglish ? This is not human capital. This is human liability and what do you do with the liability ?

  23. #24 by Bigjoe on Wednesday, 20 October 2010 - 7:58 am

    Forget NEM or whatever else Najib came out with. Najib’t time is over. He is on his way out for sure. The issue is will he call for early GE or not? It looks like he will. If it does it means his early demise.

    The man is just confused about what to do so the fact that NEM and 1Malaysia is down the toilet is nothing surprising. If you are going to lose your job, why hasten it? Its over for him and yet he is not doing the logical thing, holding stubbornly to pre-conceptions that reeks of entitlement. The fact is he should hold off on GE for as long as he can, focus on either stealing more for himself OR just on his job as his legacy.

    The man is just not that much sharper than Badawi and Badawi had wisdom which he did not.

  24. #25 by zack on Wednesday, 20 October 2010 - 11:29 am

    i have always been a Perikatan/BN supporter but once during every GE. But come next GE I would like to try something different. I would like to see if Pakatan can be a better government than BN.

    what about it? dare we give it a try and take the risks?

  25. #26 by Loh on Wednesday, 20 October 2010 - 2:35 pm

    Muhyiddin said that there is no need to be apologetic for the government to continue with providing crutch to Malays.

    The first issue is who, the persons, who should or should not be apologetic. As the recipients of aids, they do not have to be apologetic if they fall within the group who sincerely need assistance so that they could work hard to be independent of crutch. For those who do not need the crutch but want it to have easy live and to take advantage of others, they should be ashamed to ask for its continuation. Of course they do not have a say on the government decision to do the same old things and hope for different results.

    As the implementers of the so-called affirmative actions, UMNO leaders should not only be apologetic for having to continue with a policy which bend backwards from the provisions of the constitution to implement policies discriminatory to the minority groups, and having that for twice the length of time, for 40 years instead of 20. UMNO should be ashamed that they knew not the methods to help the Malays, if help indeed is needed, after having the absolute freedom to do what UMNO pleased. But the more despicable is the fact that UMNO leaders pretend that the objectives have not been achieved, and are luxuriating in complaining that Malays are next to useless, just like Mamakthir indirectly implied that he was proud to be PM even though any pork sellers would be better than him in intelligence.

    The Chinese consider ‘knowing shame’ as one of the eight virtues of being a ‘JinZhi’. UMNO leaders know no shame. It is dangerous for the state if “Xiaoren’ became the powers-that-be.

    UMNO leaders are simply useless. So, for the sake of the nation, UMNO leaders should be defeated in the next general election. The subordinate-parties are only small time opportunists they will drop out of political arena when the chief sinner is gone.

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