SINGAPORE (Sept 2): Who would have thought that as Malaysia celebrates its second Merdeka Day since voting in a new government, the question on everyone’s lips would be whether the Pakatan Harapan (PH) coalition will survive the next general election?
Behind that question lies a raft of issues that have preoccupied the people, the leaders, the business community and an array of pundits and public interest groups since the heady days of the formation of the Mahathir administration.
From the outset, there was no doubt that the new government would face enormous hurdles in resetting the course of the nation towards good governance after decades of entrenched rule by a monolithic power structure that fostered a culture of dissolute greed.
Yet, the refreshing wind of optimism that swept through the country after the import of its first democratic change in government sank in encouraged the people to hope that their new representatives in the corridors of power would pull together to undertake the greatest national rejuvenation project of their lifetime.
Sadly, a large measure of that optimism has subsided some 15 months since that historic moment, battered by a succession of shocks that the people’s confidence received as the new government tripped over itself by mismanaging its responses to a series of challenges.
That is not to say that the PH government has performed dismally. On the contrary, it has destroyed nests of corruption, swept out a long list of powerful enablers from the Najib administration, pulled the plug on costly commitments that were set to bleed the nation’s finances and introduced a bunch of progressive changes to its democratic institutions.
Of that, the PH government can be rightly proud.
Nevertheless, these positive developments do not absolve it of being accountable for major missteps that have undermined the momentum of change that must be sustained for a long time to pull the country away from the slippery slope of misrule, which threatens to lead to a descent towards communal conflict, misallocation of resources, political turmoil and economic decline.
Perhaps the most imminent of these dangers is the threat of political instability that has escalated in recent months. The people are befuddled by the cracks that have appeared in the new ruling coalition — among its partners and within its parties — as the support of its leaders becomes the subject of speculation.
The price of losing the momentum for reform is high, in the view of opinion leaders contacted by The Edge.
Ahmad Fauzi Abdul Hamid, professor of political science at Universiti Sains Malaysia, candidly captures the dark mood created by the political uncertainty: “The political manoeuvrings behind closed doors where the direction of the country, especially the transition of power, is being decided by a few do not augur well for the spirit of Pakatan Harapan.
“Neither do chauvinistic sentiments that are unable to empathise even a bit with the institutional advantages that befall communities of the ‘Other’, whether by historical accident or post-colonial political manoeuvring in the name of nationalism.
“If these dark forces are successful in forging their alliances in secret pacts, whether in PH or Barisan Nasional — the only alternative we have to PH at the moment, no matter how incompetent they are and how pathetic they have been since losing on May 9, 2018 — then Malaysia will tumble into chaos.”
In the economic sector, the pain that is being felt by a significant portion of the population, squeezed by a stagnant wage regime and unaffordable housing, education and healthcare, is palpable.
No doubt, Malaysians are better off today than they were decades ago — on paper, at least. One indicator is the Gini co-efficient, which measures inequality. Between 1970 and 2016, the figure had fallen from a high of 0.513 to 0.399 in 2016 — the higher the number, the wider the inequality.
But such indicators do not tell the whole story. A study by the Khazanah Research Institute that was released last year shows that on the ground, the actual income gap between the B40, M40 and T20 households had nearly doubled in a 20-year period.
In a nutshell, the issue is that economic growth over the years had not filtered down to all levels of society equally. There is a longstanding consensus that income growth has failed to keep pace with the rising cost of living and property prices, particularly for those in the lower tiers who bear the brunt of the increases.
“The immediate biggest concern would be sustained income and employment growth so that the lower and middle-income groups feel good and confident in having a secure livelihood, keeping ahead of cost of living increases and seeing improvements in living standard and quality,” says Sunway University Business School economics professor Dr Yeah Kim Leng.
“The new government’s push to rein in corruption and reduce wastage and leakage has not received commensurate appreciation from the citizens, perhaps due to their intangible benefits arising from losses avoided and the not-so-evident but important efficiency gains in the longer term.”
This challenge aside, the PH government also needs to take bold steps in setting the nation’s economic direction on a new pathway or risk being left behind.
Critically, resetting the economy and promoting more inclusive growth means identifying new concrete areas of growth that can drive the economy.
There is an urgent need to find these new engines of growth, according to Lee Heng Guie, executive director of the Socio-Economic Research Centre.
“In an increasing global complexity influenced and shaped by a rising protectionism mindset, newer technologies and digitalisation revolution and the accompanying disruptions, Malaysia must also evolve fast to rival its competitors in driving the next phase of our country’s economic development journey towards a sustainable future,” he says.
To be fair, Malaysia’s 62 years of economic development and diversification strategies represent strong economic and financial foundations, Lee clarifies. The current platform is supportive of a renewed search for a structural transformation to reach a higher and sustainable growth plane, he adds.
But challenges remain despite these foundations, including “low productivity growth and capital efficiency, continued non-optimal investment in capital-intensive and value-added industries and automation, skills gap for the future workforce as well as SME capability and readiness in the Fourth Industrial Revolution,” says Lee.
Resetting the economy and promoting more inclusive growth means confronting Malaysia’s human capital development issues, including its cheap foreign labour addiction, head-on.
For years, cheap foreign labour has undercut wage growth, stymied investments to move up the value chain and undermined upskilling of local talents.
Looking beyond foreign labour, there are also issues revolving around the mismatch in the education system and the talent it produces with employment opportunities in the current economic make-up.
“For an inclusive and sustainable path to economic progress, human capital is the most important link. The quality of human capital is a function of nature and the quality of education, skills and reskilling to keep up to speed with the changes is the nature of jobs,” says Ali Salman, CEO of the Institute for Democracy and Economic Affairs (IDEAS).
Certainly, the matter is high on the government’s agenda. In July, Prime Minister Dr Mahathir Mohamad outlined his vision of “shared prosperity”, which espouses the equitable sharing of economic benefits and prosperity amongst the rakyat.
A cornerstone of that vision is an emphasis on human capital development, Ali points out. “The question is, to what extent can our policies, both of the public and private sectors, be aligned with this vision, and when.”
Along with these economic imperatives, the need to balance growth with environmental protection is becoming more pressing by the hour.
“Humans have failed to be good stewards of nature and its resources. With increasing technological advances, we have succumbed to our greedy instincts to intensify the exploitation of nature,” says eco-activist Gurmit Singh.
“The fundamental question surely is, can harmony be restored in nature? It might take decades but humans could help accelerate the process by curbing many of our self-serving actions like hunting, burning, removing genetic resources and dumping pollutants into living ecosystems. Our ecological footprints must shrink drastically.”
Economic challenges and ecological risks aside, Malaysians need to work much harder to achieve national unity and improve the state of race relations.
“The PH government must strive to work as a united coalition and craft policies, strategies and economic programmes that benefit the poor, irrespective of their ethnic or religious backgrounds. Social justice needs to be the cornerstone of all socio economic programmes,” says Aliran president Prema Devaraj.
“PH must move away from identity politics and ethno-centrism and instead lead the way forward in practising inclusivity and embracing diversity. Educational and media institutions can play an important role in helping raise awareness of and promoting an inclusive narrative.”
Aliran is a social reform movement that has been promoting the idea of a common national consciousness since the 1970s. “Malaysians at all levels of society need to look beyond ethnic and religious identities to the values of a common humanity that we all share. We are one as humans. It is as simple as that,” says Prema.
“This spirit of inclusivity must be practised in government as well as among ordinary people — in our daily lives and in all that we say and do. Only then will our children and grandchildren have a future in a truly multicultural, multi-religious, united Malaysia.” — The Edge Malaysia
