Tuesday, May 31, 2011

Malaysia Inc.'s Leaning Towards Corporatocracy

If we remember back then, the bulk of funds to run Najib's ETP program which costs more than a trillion ringgit will be largely, approximately between 70 to 80 percent are from private corporations, with the rest formed by GLCs and the small amount by government. If you notice the composition of parties involved, this of course forms collectively as part of the Corporatocracy. There is a notoriety of the saying from that concept "Too Big To Fail."

The term above is on, social economically speaking and focusing, refers to conflicting, opposing interests of the society. Big institutions and even government entities with private components dictate the direction and governance of the country. If you take the term, it simply goes against the 1Malaysia slogan of  "People First, Performance Priority". 

The anti-Lynas earth plant protest is the best case of illustrating the concept. The government is in a conflict of whether to lean on to people who requested the plant to be scrapped for health. On the other hand, government could see a potential annual revenue of RM 8 billion if they decide to follow what the lobby group and pro-Lynas supporters would want. If the IAEA panel finds no reason to have it scrapped, it means of violating the slogan above and succumbing to the dictates of the corporation.

In this case, corporations have the large say on what the government has to do or risk losing investment and pulling funds out of it. With the announcement of slew of projects and programs under the ETP, the government has to have an average annual GDP of no more than 6% in the next few years or risk failing the target and the Vision 2020 project, Dr. Mahathir's pet project. This realization alludes to another reason why Najib recently visited New York for an investment call and visit for American investors to inject more investment funds into Malaysia - to achieve the average while corruption and cronyism still runs rampant.

The subsidy bill that keeps ballooning to the point where the Najib administration simply has no other option but to cut the bill and increasing tariffs and fuel prices to market levels. This has many implications: first, being of doing what the economic hitmen would ask them to do. Secondly, this was one part of the solution to solve the debt reduction problem, aside from restructuring the debt. Restructuring the debt by renegotiating existing contracts with other parties involved was the best for national interest, a win-win, but refusing to disclose to public (as what Peter Chin's excuse today) is tantamount to withholding information that people are entitled to know of and reveals of not answering to the people but instead to corporations. 

In this time of the world, the Keynesian model, which Dr. Mahathir and a few world leaders are in favor might not be working anymore. Still mired in the economic crisis that we have yet to move out of it, using that model is equivalent to what David Karsbol said  to having a train keep accelerating disregarding that there train is about to reach the chasm and end of the line resulting in multiple train wrecks. This is very dangerous as this method of stimulus and so on will great much deficit to the GDP and could push Malaysia to the same fate as P.I.G.S. As the government in line, like in the western countries, if they are to balance the books, they need to adopt something like the Hicks model (a.k.a IS/LM) model where interest rates will have to be more than the inflation rate and incremental if the average income gets lower and lower. Other measures that had to be considered in would be to cut public sector wages (allowances), increment of retirement age (now at 58)

There have been criticism from those opposing saying that hikes without other things done is wrong and of course mentioned earlier, violating Najib's own 1Malaysia slogan. But in the end, the lower class people is going to suffer more than the middle and upper class. If there are professionals paying income taxes, everyone is paying for 6% government tax that Customs department is imposing on, with another 10% service charge on certain places as well. 

I have also taken a look into the PR's Buku Jingga thing and I have seen this book being criticized by many anti-PR people which points out that if PR runs the federal government, the national income will go bust for the first two years of its 5-year term. Spending almost RM 300 billion or almost all the national GDP for that is a very risky thing to be done. But what Anwar wants to do is the complete opposite of corporatocracy - dirigisme. As I have mentioned previously, Anwar and the Buku Jingga ideas mentioned implies of heavy state government monitoring, participation and intervention. If that is the case, it also involves rules to be imposed on private sector, measures here and forth.

Someone from Pakatan gave me the argument in rebutting the potential problem on going bankrupt in the first two years - which is that some points have been missed out already. What they said before was that in the process, they wanted to make a mandatory of "minimum wage" to be paid for those working in the sector since the amount of profits reap by corporations are high. To the tune of how much remains the question in my head.

Hong Kong has recently imposed a monthly minimum wage of between RM1700 and RM 2000, which is higher than the planned minimum amount to be introduced. Now what about Malaysia? If we look at the chart below - I picked that profession as example because of my field of work I am in, you would notice that if we are to add the minimum wage value into the present gross income of pay, you can either be part of the bracket range of supposed pay or it is an addition and one step closer towards what Najib called as High Income of $15000 GDP. 

Unfortunately, the problem lies in the employers objection towards this, demanding a market-determined wage. At this point of time, and while we have yet to fully go back to the period pre-Asian financial crisis, dirigisme can be taken but very very risky. One wrong move, and it can collapse. The only thing is whether if Pakatan Rakyat has those things ready as they claimed to be - i.e investors ready in hand, clear set of rules and scope of intervention, participation, etc?

It sounds a little long winded but the point to emphasize is this that while  there have been increases on prices, and inflation, yet people's income have not increased to compensate that, so this implies of non compliance and not heeding to the 1Malaysia mantra that Najib's men have been talking about. Secondly, if this problem drags on, it means that they can't do the macroeconomic job well, and the governance has been determined by corporations. Third, the no will to reform the economy was partly due to the opposition by certain parties, because reforming could well affect their desired profit range at the expense of the people. In that case, it implies BN can't do the job and they might as well give the baton to the other parties to handle. Let the people judge to see who's doing better instead of behaving like school children who refuse to give even though they are found to do things badly.

1 comment:

  1. first eliminate the monetary system and start RBE (resource based system)
    check out http://thezeitgeistmovement.com for more info


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