Wednesday, December 31, 2008
I must begin by disqualifying myself. I am no economist. Nor am I to be regarded as having any significant measure of expertise in economic theory or applied economics. But, I lay claim to have an insatiable curiosity about how the modern world has evolved and the values that drive our current ethos.
This little post is actually inspired by the intrepid blogger Mat Cendana who has 2 excellent blogs, Cendana and Cendana Blues, and, who made a very interesting comment to my recent post on EF Schumacher. Mat Cendana's comment was, if we accept and adopt Schumacher's proposition that each community must be self-sufficient, what happens to exports and trade?
That led me to a line of inquiry that offered a vista of key swatches of the parts of economic history that dealt with economic growth. The paradigm of economic growth is, in many ways, the basis for our preoccupation with international trade and globalisation.
The genuine economics bloggers such as Sakmongkol and etheorist are also focusing on these issues. While they get into the chemistry and alchemy of economics, I am confined to a role that is best described by a scene in the movie, As Good As It Gets, where the psychologically-challenged character, Martin Udall, played by Jack Nicholson tells the gay character, Simon Bishop, played by Greg Kinnear, I'm drowning here and you're describing the water.
But, undeterred and, shamelessly so, I shall attempt to describe the water...
Ibni Khaldun and the original concept of economic growth
Ibni Khaldun wrote on economic and political theory in the introduction, or Muqaddimah (Prolegomena), of his History of the World (Kitab al-Ibar).
In the book, he discussed what he called asabiyyah (social cohesion), which he sourced as the cause of some civilizations becoming great and others not. Ibni Khaldun felt that many social forces are cyclical despite the possibility of sudden sharp turns that break the cycles.
His idea about the benefits of the division of labor also relate to asabiyya, the greater the social cohesion, the more complex the successful division may be, the greater the economic growth.
He also noted macroeconomic forces of population growth, human capital development, and technological developments effects on development. Ibni Khaldun thought that population growth was directly a function of wealth.
Although he understood that money served as a standard of value, a medium of exchange, and a preserver of value, he did not realize that the value of gold and silver fluctuated based on the forces of supply and demand.
Ibni Khaldun also introduced the labor theory of value. He described labor as the source of value, necessary for all earnings and capital accumulation, obvious in the case of craft. He argued that even if earning results from something other than a craft, the value of the resulting profit and acquired capital must also include the value of the labor by which it was obtained. Without labor, it would not have been acquired.
His theory of asabiyyah has often been compared to Keynesian economics. Ibni Khaldun's theory clearly contained the concept of the economic multiplier. A crucial difference, however, is that whereas for Keynes it is the middle class's greater propensity to save that is to blame for economic depression, for Ibni Khaldun it is the governmental propensity to save at times when investment opportunities do not take up the slack which leads to aggregate demand.
Another modern economic theory anticipated by Ibn Khaldun is supply-side economics. He is said to have argued that high taxes were often a factor in causing empires to collapse, with the result that lower revenue was collected from high rates. He wrote that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.
As a minor aside, it is interesting to note that Ibni Khaldun also introduced the concept popularly known as the Laffer Curve that increases in tax rates initially increase tax revenues, but eventually increases in tax rates cause a decrease in tax revenues because too high a tax rate discourages producers in the economy.
Ibni Khaldun used a dialectical approach to describe the sociological implications of tax strategies in the following way:
"In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue...As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow...owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects...and sharply raise the rate of old taxes to increase their yield...But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes...Consequently production falls off, and with it the yield of taxation."
This analysis is said to bear the same principles as the modern economic concept known as the Laffer Curve. Laffer does not claim to have invented the concept himself, instead attributing it to Ibn Khaldun, and more recently, to Keynes.Concept of economic growth
Classical growth theory
The modern conception of economic growth began with the critique of Mercantilism by thinkers such as David Hume and Adam Smith. The theory was that productive capacity, itself, allowed for growth. And the growth of capital to facilitate that capacity was the wealth of nations. While early thinkers stressed the importance of agriculture and saw urban industry as sterile, Adam Smith extended the notion that manufacturing was central to the entire economy.
David Ricardo later argued that trade was a benefit to a country, because if one could buy a good more cheaply from abroad, it meant that there was more profitable work to be done here. This theory of comparative advantage would be the central basis for arguments in favor of free trade as an essential component of growth.
Economic growth, income and population growth
Income per capita was essentially flat until the Industrial Revolution. This period of time is called the Malthusian period, since it was governed by the principles explained by Thomas Malthus in his "Essay on the Principle of Population." In essence, Malthus said that any growth in the economy would translate into a growth in population.
Thus, although aggregate income could increase, income per capita was bound to stay roughly constant.
The mainstream theory of economic growth states that with the Industrial Revolution and advancements in medicine, life expectation increased, infant mortality decreased, and the payoff to receiving an education was higher.
Thus, parents began to place more value on the quality of their children and not on the quantity. This led to a drop in the fertility rates of most industrialized nations. This is known as the breakdown of the Malthusian regime. With income increasing faster than population growth, industrialised economies substantially increased their incomes per capita in the next centuries.
Arguments against economic growth
Having taken a superficial tour of economic history, I wish to highlight the four major critical arguments that are generally raised against economic growth:
- Growth has negative effects on the quality of life: Many things that affect the quality of life, such as the environment, are not traded or measured in the market, and they can lose value when growth occurs.
- Growth encourages the creation of artificial needs: Industry cause consumers to develop new tastes, and preferences for growth to occur. Consequently, "wants are created, and consumers have become the servants, instead of the masters, of the economy."
- The human population is now so large that the amount of resources needed to sustain it exceeds what is available. Humanity’s environmental demand is 21.9 hectares per person while the Earth’s biological capacity is, on average, only 15.7 ha/person. This report supports the basic arguments and observations made by Thomas Malthus in the early 1800s, that is, economic growth depletes non-renewable resources rapidly.
- Distribution of income: The gap between the poorest and richest countries in the world has been growing. Although mean and median wealth has increased globally, it adds to the negative aspects of economic growth.
There is also genuine concern that the conventional narrow view of economic growth, combined with globalisation, is creating a scenario where we could see a systemic collapse of our planet's natural resources. If you look at the diagram above, you will see incontrovertibly that economic growth exploded only in the 20th century and, that growth coincided with the population explosion.
Maybe, the underlying principle of humankind destroying the world by over-growth and over-consumption, as dramatically described by the recent Keanu Reeves movie, The Day The Earth Stood Still may not be so far off-base as one would imagine. So, what's it going to be? Klaatu? Or, a new Keynes?
To sum up, my point is basically that surely these are good enough reasons for us to re-visit EF Schumacher's perspective of economics. The Malay idiom that still holds true is, sesat di hujung jalan kembali ke pangkal jalan.
Sunday, December 28, 2008
Now the spectre of GST is getting more ominous. Read the Malaysian Insider report entitled, Rethinking GST option to maintain revenues. This is a trial balloon leaked out to test public reaction to GST. It is also a way to alert the Malaysian public to get used to the idea that GST is going to happen.
Better start preparing for the impact of GST. I suspect that the GST rate will 2% to 3% of the value-added on any goods and services consumed in Malaysia.
Being German-born, for a period during World War II Schumacher was interned on an isolated English farm as an "enemy alien." In those years, Schumacher captured the attention of John Maynard Keynes with a paper entitled "Multilateral Clearing" that he had written between sessions working in the fields of the internment camp. Keynes recognised the young German's understanding and abilities, and was able to have Schumacher released from internment. Schumacher helped the British government mobilise economically and financially during World War II, and Keynes found a position for him at Oxford University.
Thinking outside the box
In 1955 Schumacher travelled to Burma as an economic consultant. While there, he developed the set of principles he called Buddhist economics, based on the belief that individuals needed good work for proper human development. He also proclaimed that "production from local resources for local needs is the most rational way of economic life." He traveled throughout many Third World countries, encouraging local governments to create self-reliant economies. Schumacher's experience led him to become a pioneer of what is now called appropriate technology: user-friendly and ecologically suitable technology applicable to the scale of the community.
Relevance of Schumacher's thinking for us
I've been assiduously following Sakmongkol's series on the Malay race, ethnicity, economic motivation and such and etheorist's series on Keynesian Irrelevance and his current Reboot series. But, rather than to launch into a half-baked set of propositions that either augments or contradicts Sakmongkol or etheorist, my humble contribution is to point the reader to a short essay by E.F. Schumacher entitled, Buddhist economics first published in 1966.
Don't be put off by the title as Schumacher wasn't adopting religious values. Rather, he was advocating a non-Western, non-Protestant work ethic approach to economics and way of life.
As Asians, Malaysians from every ethnic origin, will find Schumacher's view of economics and living values very resonant.
Perhaps, 2009, which by all accounts will be a difficult economic year, will be a good year to revisit the Schumacher view of the world. Read the essay, Buddhist Economics, first. Then start looking for his collection of essays in his book, Small is Beautiful.
Saturday, December 27, 2008
The idea that then prime minister Tunku Abdul Rahman and Sarawak chief ministers Rahman Yakub and his nephew, Taib Mahmud (both from the partisan Rakyat Jati Sarawak, or Berjasa) shared was the creation of a Sarawak alliance dominated by Muslim/Malay/Melanau leaders with subservient Dayak and Chinese partners.
From the very beginning prior to and after Merdeka, there was this heavy tendency for federal intervention into Sarawak politics to ensure the creation of a Malay nationalist polity through Malaysia. Even then, Umno was determined to create Sarawak in its own image. This tendency at the Malayanisation of Sarawak politics was resisted by the first Iban chief minister, Stephen Kalong Ningkan of the Sarawak National Party (Snap).
For this and many other reasons, Stephen Kalong Ningkan was forcibly removed from office by a federally initiated declaration of emergency and a constitutional amendment in Parliament. A stop-gap Iban chief minister Tawi Sli was elected, and after the general election of 1970, Rahman Yakub – a Muslim Melanau – stepped in to take over the helm of Sarawak government. Muslim Melanau dominance has continued to this day.
Friday, December 26, 2008
The San Jose, California-based company plans to use the funds to build a factory in Malaysia to produce more than 1,000 megawatts a year of the panel components, the company said in a statement. The unit, the company’s third in Malaysia, may start output in 2010, the company said in a statement in May.
“The loans within the agreement are divided into two tranches, and the weighted average interest rate applicable to the two tranches is competitive with the cost of borrowing under SunPower’s existing line of credit,” the statement said.
The loans can be drawn upon through 2010 and the principal is to be repaid in six quarterly payments starting in June 2015, it said.
Some questions that need answers
Perhaps the Malaysian government can clarify why an FDI from the U.S. is entitled to RM1 billion of funding?
Typically, FDIs are given a slew of incentives such as pioneer status, tax and duty exemptions and waivers, cheaper land, cheaper electricity and water and the like.
It is unusual, to say the least, that a publicly-listed U.S. technology company is entitled to loans from the Malaysian government.
- RM1 billion is a lot of money to set aside. Where is the source of these funds?
- Was this part of the 2009 Budget?
- What are the terms of repayment?
- What is the interest charge?
- What is the collateral for the loan?
- Can the loan agreement be made public?
- How many Malaysians will be employed?
- Will there be any transfer of technology?
So many questions.
It would be good if the Malaysian government can issue a public clarification on this deal in light of the RM7 billion package, part of which comprises the RM5 billion Valuecap package which is to be borrowed from EPF.
Again, where is the source of funds for the ONE BILLION RINGGIT loan to SunPower?
Wednesday, December 24, 2008
Tuesday, December 23, 2008
This is a passage that I quite liked since it advocates the need for a single command post to deal with the plethora of developmental issues; something this blog has advocated all along:
I would like to suggest setting up a comprehensive national strategic plan and an institution with the mechanism to implement the national mission. This mission, which was first announced at the launch of the Ninth Malaysia Plan in March 2006, outlined the country’s core development plan for the next 15 years.
To achieve this, we need to have a strategic national mission masterplan with a clear target and implementation schedule that also includes definitions and detailed measurements for all core missions.
This plan need to be understand, agreed upon, and implemented by all parties involved in the public and private sectors and the general population. The roles of ministries and agencies towards achieving the national mission need to be spelled out clearly in a plan.
The accountability and the responsibility of overseeing the whole project/plan must be optimised to move in a single direction. Existing sectorial strategic plans such as the Third Industrial Masterplan (International Trade and Industry Ministry), Education Development Masterplan (Education Ministry), the National Science and Technology 2 Plan (Science, Technology and Innovation Ministry), National Strategic Higher Education Plan (Higher Education Ministry) and the Third National Agricultural Plan (Agriculture Ministry) need to be incorporated into this strategic plan.
Each plan need to realise the goals of the National Mission Masterplan.Anyway, I didn't know there were so many bloody Plans and Masterplans in this country!!! Sounds like we're really organised doesn't it?
The part of the speech that I didn't like was this:
A long- term plan such as Vision 2020 needs high level of commitment to realise. I would like to suggest the setting up of a National Development Council (the Malay acronym is MPN) to be chaired be the Prime Minister, as the platform to oversee the implementation of the national mission. This is to ensure every resource be optimised and coordinated to the best level.
Under MPN, I would like to suggest the setting up of a full-time “task force” (Direktorat Pembangunan Negara or DPN) to be manned by experts and professionals that can be formally institutionalised.
The directorate can be set up almost immediately by putting under it an existing institution, Malaysia Development Institute (MDI). Currently MDI is being tasked to plan the country’s strategic macro direction and do research on the national mission.
With a clear mandate and transparent accountability, this task force is answerable to the Prime Minsiter and MPN to come out with a strategic plan, coordinating programmes, and its implementation and day-to-day running of all intiatives that is being planned. The task force is the strategic planner and execution coordinator that will work with all ministries and agencies involved throughout the whole project.I'll tell you why I don't like it.
Effendi is the former Minister in charge of the EPU and NEAC. He's telling us that it is necessary to create another NEAC-like body to do the work that EPU and ICU were set up to do since the time of Tun Razak.
Someone in the BN government, anyone, should tell the taxpaying rakyat why we still have the EPU and ICU when obviously Dr M thought they weren't good enough which was why he created the NEAC.
Now the ex-Minister for EPU (and ICU) and NEAC says lets create another acronymic agency with superpowers to do the job that EPU was created to do and, what NEAC failed to do. What does that say about his tenure as the Minister for those agencies?
Is it any wonder that Malaysians feel puzzled and perplexed all the time (and, people wonder why my brows are furrowed almost all the time)?
By omitting any mention of the EPU and NEAC, Effendi has indicted both agencies and his own tenure as Minister. In any case, why is the NEAC still around? By the way, isn't there supposed to be an Economic Council somewhere in the mix? Is the Economic Council the new NEAC (since they share the same Secretariat)? Where does that leave the EPU?
Effendi is the typical BN pol. He likes to build new things. He thinks maintaining is not cool. Shiny and new, that's the way. Old is boring, no way. This is classic Third World mentality isn't it? Build and build new things. Forget about maintaining. Forget about the foundations, just concentrate on the facade.
Maybe they should create another central coordinating agency answerable to the PM on why people are feeling angsty, lacking in confidence, ennui, aimless, moribund and, yes, a sense of malaise.
I am still a junkie for strong brands. When Tiger Woods first endorsed Nike I was 100% into Nike for several years; shoes, T-shirts, shorts and so on. I am a brand loyalist. I am the type of consumer marketing companies dream about. Terrible, but true. I subscribe to the belief that if my sporting hero endorses it, then, if I wear the T-shirt or don the shoes, I, too, can be like the sporting hero, in skill and deportment and carry the same aura. Yes, I am another wannabe sucker and shamelessly so.
That part of the advertising and promotions industry I absolutely have no problems with.
What peeves me, however, is the part of the advertising and promotions industry that feels the need to come up with so much packaging material to sell their products.
Most of the trash and rubbish that we throw away is actually packaging material. Most of them are temporal dressage to attract the impulse of the prospective customer. Once the product is consumed, we are left with trash and rubbish.
It is a taboo subject to connect trash to packaging.
I've watched hours of Discovery and National Geographic programmes on how to treat trash and rubbish. Compact them, incinerate them, recycle them. But none of the programmes ever track back to the source of the scourge...the packaging.
How do we package the cry for less packaging? I don't have the answer yet. But it's got something to do with brands, though.
Monday, December 22, 2008
Lessons for Bank Negara
First, MIER has produced an excellent piece that was carried in The Star. It is an instructive piece that educates us about the hollowness of excessive foreign exchange reserves as a cushion against economic turmoil. I hope the oracular Bank Negara governor is taking notes.
Further interest rate cuts
Second, The Edge Daily reports inter alia that Nor Zahidi of Malaysia Rating Corporation Bhd (MARC) expected the OPR to be trimmed by another 50 basis points before end-2009, and said a more aggressive monetary policy response would be helpful for the economy, considering that the government’s fiscal position is constrained by a relatively high level of budget deficit.
This is what I've been advocating. But, I guess it's more real when MARC says it and The Edge Daily reports it.
FDI plant closures
Third, our so-called Industrial Production Index is very much slanted to the FDIs by virtue of their sheer magnitude. And, FDIs are almost 100% export-driven. Therein lies the fate of Malaysia's export economy - in the hands of the FDIs. I'm too lazy and I don't have the resources to check, but, someone with the government research grants should examine the extent to which Malaysia's export volumes, export values, production indices and so on are based on FDIs and, how much is actually really Malaysian.
We may very well be kidding ourselves if we don't have a transparent measure of the contribution of FDIs to Malaysia's economy. It is no wonder that our human resources are still low-cost and low- to medium-skills based. It is no wonder that the Malaysian government takes such a lackadaisical attitude towards the quality of primary, secondary and tertiary education.
The modus operandi is to get FDIs and more FDIs and everything will sort itself out. Will the FDIs be the panacea or the bane of the Malaysian economy? Let's see about it in 2009. In the mean time, I just want to draw your kind attention to the portents as reported here.
Things to do in 2009
Frankly, I am not impressed with all the talk by the Malaysian government and mainstream economists about stimulus packages and its timing.
The economic contraction in Malaysia is actually an opportunity for the economic managers to seriously revamp the way developmental policies are formulated.
But, I don't have much expectation that our economic managers will take such an attitude. They will keep treating symptoms and completely ignore the opportunity to institute positive change.
They will keep throwing money to prop up the stock market. They will throw money at the property development and construction sector.
What they should do is to:
- Improve the quality of education at all levels; primary, secondary and, tertiary. Provide greater training of the educators and institute a merit-based promotion for academics.
- Put more resources into the vocational institutions and technical institutes that train Malaysian workers with higher and higher level skills.
- Examine the quality of the SMEs and their processes and put resources into assisting the SMEs to improve the way they do business. SMEs are the backbone of the Malaysian economy. We should stop paying so much attention to GLCs, PLCs and FDIs. We need to pay more attention to SMEs. They are the biggest group of employers in the country.
They can talk all they want about releasing EPF monies, lending EPF monies, lowering interest rates, deficit spending, stimulus packages and so on.
With the greatest respect, all those are treating symptoms NOT causes. Not that we can do anything about the real cause, a U.S. economy in turmoil...
I leave you to ruminate over this remark made by Greg Mankiw in his blog post, How not to stimulate the economy:
If the government spends a fiscal stimulus package on goods and services without much public value, it could well stimulate the economy as measured by macroeconomic aggregates but leave the participants in the economy worse off. Avoiding this trap requires that the government spend taxpayers dollars only those items that pass a strict cost-benefit test. That is hard to do quickly. Willy-nilly spending is a good way to stimulate the economy only if the outcome is judged by the wrong metric.
Sunday, December 21, 2008
Malaysian Insider reported that the Minister told a press conference that lasted more than an hour that the occupancy rate, employment, investment status and cargo movement have increased since the change of management that took place in May.
He stressed that the review, which he had previously called a chronology of events, was not a financial audit but a statement of facts.
“My job is not to pass judgement but to enumerate what has been happening,” said Ong.
“This is entirely based on documents and official records that we have,” he added.
The Minister is also quoted as saying, “I still can remember when I first set foot in the area, people said this is a ghost town,” said Ong when elaborating on the success in increasing the number of employees in the PKFZ.
Ong however refused to blame his predecessors at the Transport Ministry.
“That is the question that only my predecessors can answer at that point of time,” said Ong.
“You are asking me to comment on my predecessor. This is, of course, his discretion at that point of time, perhaps due to whatever reasons or circumstances that he had at that material time. That is the question only my predecessor could answer at that material time,” Ong said.
“But if you were to ask me then of course I might have my own views ... I may not do it but it doesn’t mean what I say or what I choose is going to be the gospel truth.”
The Malaysian Insider also reminds us that the PKFZ project has been criticised because its development cost of less than RM2.5 billion had ballooned amid concerns about its ability to meet its debt obligations as well as that of the soft loan.
There were also questions about the possible kickbacks after it was disclosed that several individuals acquired the piece of land where the PKFZ now sits at RM3 per sq ft in 1999. The Port Klang Authority (PKA) later acquired the land at RM25 psf.
PKFZ ran into further problems when Jebel Ali Free Zone quit the management of the property.
And, now, going by what the Minister is saying everything is nice and peachy. PKFZ is no longer a ghost town. It is increasingly populated by humans.
Read also the great Ancient Mariner's take on this issue here.
I also hear that most hardware shops in the Klang Valley ran out of stock with white paint for the whitewash needed for the Minister's Press Conference...
Goldsmith highly recommends the 1841 version of this book. Mackay, it seems, was a journalist. His writing was descriptive without being analytical. His reporting on what happened then is almost frightening when read in the context of what is happening now. He described three different "bubbles" from their inceptions to their peaks to their demise: 1) the "Mississippi Scheme," which swept France in 1720; 2) the "South Sea Bubble," which swept England in 1720; and 3) "Tulip Mania," which swept Holland in the 1630s. .
While Mackay didn't go into detail about the common elements that caused these popular delusions, Goldsmith was generous enough to share some reflections on what he learnt from this book that apply to what has happened in the past couple of years.
You may be in a bubble when:
• Everyone starts talking about their investments. In the manias described by Mackay, the popular press and day-to-day dialogue began to revolve around investment opportunities. In a similar manner, during the high-tech bubble, many nonexperts were quoting the price of Cisco or Sun Microsystems, and during the real estate bubble, many home owners were quoting how much houses down the street were selling for.
• Investment decisions are made solely on "how much this has gone up in the past," not "what is this worth?" In historic bubbles, popular dialogue was reinforced by charts that were dramatically moving up. Unfortunately, investors extrapolate from the past to the future. The South Sea charts in early England looked a lot like the stock charts we saw in early 2007.
• Some people do make a fortune. One high-tech "genius" Goldsmith knew made hundreds of millions of dollars selling a faddish concept in the peak of the bubble that (today) is worth next to nothing. While he did make a fortune, the investors that bought his company lost a fortune. In the same way, some tulip investors in Holland were smart enough to get out on top and made a mint. Plenty didn't.
• Greed overcomes fear. When investors focus exclusively on the upside and begin to ignore the downside, prudent risk assessment stops. Bundles of tulips in Holland made millions for dealers, until investors learned of their true risk. Bundles of "safe" home mortgages made millions for banks, until investors learned of their true risk.
• Investors are overleveraged. In the same way that frenzied citizens of Paris borrowed whatever they could to invest in the Mississippi Scheme, frenzied investment bankers in New York borrowed whatever they could to invest in bundles of home mortgages.
• The investment is seen as a once-in-a-lifetime opportunity. When anything is given once-in-a-lifetime status, historical comparisons are discarded, because this is a different time. After reading Mackay, Goldsmith wrote that he was convinced that investors should spend more time reading thoughtful history books and less time listening to frantic stockpickers on TV.
Some of the connections Goldsmith made between these historical manias and today's bubbles are:
• If your neighbors are all talking about how much something is going up, it probably won't go up much longer.
• Never make linear projections from the past to the future. No one in the "hip" late 1960s would have projected that Ronald Reagan would become President in the 1980s.
• Someone will get in on the ground floor and make a fortune. That someone will probably not be you.
• Don't get too greedy. If it looks too good to be true, it probably is too good to be true.
• Before buying anything from a salesperson, understand how their commission is structured.
• When we become overleveraged, it is only a matter of time before our fantastic returns turn into dramatic declines.
• While the world changes, people don't. The same craziness that occurred more than 100 years ago in France, England, and Holland has occurred this year in America. Don't ever believe that we humans have become too sophisticated to fall into the same old traps.
Saturday, December 20, 2008
There is a rising tide of excitement and euphoria among many politically conscious Dayaks in Sarawak over a series of massive grand dinners held first in Sibu, then in Miri last week, and finally ending in Kuching in the immediate future, to welcome Opposition Leader Anwar Ibrahim.
In this ambitious project, the Dayak voters’ support becomes critical, for they constitute nearly half of the total population of Sarawak.
By virtue of the logic of politics of race, which is entirely based on ethnic head-counting, the Dayaks ought to be the dominant community in Sarawak. The chief minister ought to be a Dayak.
The reality is quite a different thing. The first Sarawak CM Stephen Kalong Ningkan (1920-1997) was indeed an Iban. But he was forcibly removed in 1996 by a federally initiated Declaration of Emergency and a constitutional amendment. Since 1970, the two Sarawak CMs have been Melanau Muslims.
Since then, the Dayak communities have been mired in political marginalisation and socio-economic backwardness that can hardly be imagined by people living in affluent states of Peninsular Malaysia.
Time stood still
Living mostly in the vast rural areas of Sarawak, many still live without basic amenities such as roads, jetties, clinics, treated drinking water, and electricity. Time for them has stood still since independence in 1963.
In most villages that I have visited, young men and women have left their community, to seek work and better prospect in large towns in Sarawak, with increasing number crossing the ocean to West Malaysia and Singapore. Only the very old and the very young are left to eke out a meagre living on their land. The massive exodus of the young has practically emptied the rural communities of the vital force for social and economic renewal in rural Sarawak.
(The think-tank people in PKR should start to think about devising a method to enable these Sarawak diasporas to go back to Sarawak to vote in the next state election.)
Meanwhile, the Dayak people have seen escalating erosion to their land tenure held under Sarawak Native Customary Rights (NCR), from first massive logging, and then giant plantations and dam building have robbed many Dayak communities of their land.Without land, the physical survival and the survival of their cultural traditions and ethnic identity are threatened.
I have visited the coastal area of Samarahan near Kuching. The people there had been represented by Taib Mahmud in Parliament for decades, and despite some huge drainage and irrigation projects, the Malay people there are still poor. For some fishermen there, they wake up to think of how to find their next meal.
Since the political demise of Stephen Kalong Ningkan, the failure of the Dayak nationalist impulse in Sarawak in presenting a more inclusive Sarawakian narrative is one of the reasons for its failure.
26 indigenous communities
Even so, the imagined Dayak nation – as a theoretical construct – is an anomaly within the context of the politics of race in Malaysia.
As an important political category, the terms “Dayak” and “Dayakism” came to prominence only upon the formation of Parti Bansa Dayak Sarawak (PBDS) in 1983 as a splinter group from the Sarawak National Party.
The term “Dayak” is supposed to signify all non-Muslim natives of Sarawak. But by definition in the federal constitution, there are some 26 different indigenous communities in Sarawak that can be regarded as Dayaks. If you include all the sub-groups that fall within any one of these communities, then there are actually well over 40 distinct ethnic groups that could be considered as “Dayak” communities.
(I once asked a Jagoi Bidayu from the Bau area why the Bidayuhs had chosen to live mostly on high grounds up on the hillside, thus earning them the name of “Land Dayak” under the British administration, in contrast to the Ibans who were called “Sea Dayaks”. He said that in the old days, it was easy to shoot down at the enemies during wars with the marauding Ibans.)
The Bidayuh is an interesting case in point. Though lumped together as a single ethnic group, this small community comprising some 8% of the total population of Sarawak has seven major dialects, and countless sub-dialects. Sometimes, when you travel 20 kilometres down the road, you find another group of Bidayuhs speaking another dialect.
Such ethnic diversity may be a gold mine for cultural anthropologists, but it must be a nightmare for politicians to try to forge a Dayak nation, without recourse for appeal to a single language, a single religion, and a single history.
Fortunately for them, all the Dayaks of Sarawak are united in two things.
With the exception of some Penans, they all depend on shifting cultivation as their traditional way of life. Land is more than a piece of property. Their land is the source of their immediate sustenance, the bosom of the gods that protect them, and the burial ground of their ancestors.
Secondly, all Dayak communities have their own set of internal rules called adat, handed down from generation to generation through word of mouth and daily practice. They even have their own tiers of native courts to trial offenders and settle disputes. In the hearts of many natives, these rules and these courts have greater force than the laws of the state and the Borneo judicial system.
Limited political horizon
Unfortunately, in recent decades,the state appointed judges of these native courts, the Pengulus and the Temengongs, have often sided with the state government when it comes to disputes between Dayak villagers and timber companies.
It is this common self-identification of all Dayak communities to their extraordinary tie with their land and their common cultural heritage of living by their adat that allows the nationalist idea of a “Dayak nation” to flourish for a while.
Living in scattered far-flung and sometimes very remote jungle communities, the Dayaks depend heavily on word of mouth, personal contact, and the government controlled radio for their information. Newspaper delivery would be impossible for most long-houses situated a long way from towns. Many are poor by the standards of modern cash economy; it is unlikely that they can afford the newspaper subscription fees. Without a viable market, there is no chance for an Iban or a Bidayuh newspaper to survive.Naturally, the Internet Is a different universe for them.
Therefore, the political imagination of the rural Dayak voters seldom extends beyond their part of the river or mountain. I have all too often heard Dayak political and community leaders talk about “my people”. What they mean is their folks and kin living in the few villages surrounding their own. This limited political horizon is not conducive towards creating a state wide national consciousness, and it creates ample opportunity for opportunism for the Dayak ruling class at the highest level.
Having been exposed to massive money politics for many decades past, voting means very different things for the Dayaks. The vote is often seen as a currency of exchange for tangible immediate benefits like cash and gifts. I have witnessed how Dayak communities that had protested vehemently against logging voting consistently for the BN during subsequent general elections. They have yet to link democracy with changing their own collective fate.
So now the Dayaks are looking to PKR as another political vehicle to regenerate and revive their political fortune. PKR is a multiracial party, and that means the Dayak leaders should aspire towards a more universal inclusive and enlightened discourse, to educate every Dayak voter on the meaning of democracy first.
Meanwhile, the PKR leaders in West Malaysia must also realise that they should take a crash course in Dayak culture, if they are to campaign effectively in Sarawak. Like Sabah, Sarawak is a cultural universe unto itself. Outsiders wishing to help the disenfranchised people of Sarawak will have a thing or two to learn from Sarawakians first.
Friday, December 19, 2008
The whole principle of privatisation needs to be reviewed. It has deteriorated to the point that we are all hard put to determine where privatisation (and, by logical extension, greater economic efficiency) ends and, where rent-seeking behaviour starts.
It is, therefore, heartening to read about the Cabinet's decision. But, like all good thrillers, I cannot fail to note that the proposal is only shelved NOT rejected. This issue may revive itself when Malaysians are not vigilant.
Thursday, December 18, 2008
Wednesday, December 17, 2008
'We started with China at 11 pct growth, then 8, then 7 then China will probably grow at 5 or 6 percent. The possibility of a global recession is real, we realize something must be done,' ' said Strauss-Kahn during a conference in the Spanish capital.
'We are facing an unprecedented decline in output and we have evidence of substantial uncertainty limiting the effectiveness of some fiscal policy measures,' he said.
'We anticipate that the gross effect will last some time. We need large and diversified stimulus support that will last longer than one or two quarters.'
'An adequate level will be around 2 percent of (world) GDP -- $1.2 trillion -- and this may make a sizeable difference and reduce the risk of a damaging global recession,' he said.
'The good news, with some exceptions, maybe a lot of exceptions, we can see the beginning of the recovery end of 2009, beginning of 2010, but there are a lot of downside risks,' he added. Reuters
But with India's economic growth being revised downwards to 6.3% for 2009, at last count, where is the comfort of immunity?
The Malaysian government needs to show a greater sense of urgency on economic management and send clear signals to all Malaysians about how to conduct themselves in 2009. Currently the signals are very mixed. Consider these signals:
RM7 billion stimulus package means "Can spend".
RM7 billion stimulus package to be implemented in 1st quarter 2009 means "Cannot spend until after 1st quarter 2009".
RM5 billion to Valuecap for buying shares in stock market means "Can spend".
RM5 billion to Valuecap to be borrowed from EPF means "Cannot spend because government got no money".
Need to send foreign workers back means "Cannot spend because unemployment is expected to rise. Unemployed Malaysians will need to become labourers".
Very confusing. I'm sure you may have better examples than I do.
To make matters ever more confusing, one of the unkind things that I'm hearing about is that the government plans to introduce the much-postponed Goods and Services Tax (GST) in 2009.
I'm guessing the GST will be 3% of the value of ANY goods or services consumed or used by anyone in Malaysia.
There's, of course, never a good time for introducing any kind of taxes. But GST is a consumption tax. It is indiscriminate. Everyone must pay GST. From the billionaire to the road sweeper. Every KFC you buy will be 3% more for GST.
Unless I'm wrong, the GST imposition surely means less spending, less consumption, less aggregate demand.
GST is a value-added tax. It seems to me that such a tax is good for countries with a large middle-class base.
If we take the taxpaying community as a middle-class. If Malaysia has a working population of 10 million. If only 20% of the working population pays taxes. Then, Malaysia's middle-class is only 2 million people plus family members. The total population of Malaysia is about 26 million. That's not much of a middle-class is it?
But the GST applies to EVERYONE. I think, in this case, timing is EVERYTHING. I hope to the high Heavens that our economic managers know what they're doing.
PPB Group Bhd chairman Datuk Oh Siew Nam was very frank in an interview session with three media organisations.
While he welcomed the government's spending plans, he highlighted consequences of the slowing economy for those working in certain industries.
He also shared his concern over the problems of illegal immigrants and unemployment, two issues that are likely to spur further debate.
Here are excerpts from the interview.
Answer: I think, generally, we all know that the world is not in the best state of affairs and recession has come to many countries, and things are going to get worse. If you read the papers every day, all you have is bad news. People retrenching, banks closing down, companies shutting down. Things are going to get bad in 2009, there's no question about it. I think this will affect us to a certain extent because Malaysia is heavily dependent on exports.
Obviously, there's a certain aspect that is going to affect us, and my worry is, one of the greatest problems that affect us will be, basically, we have so many legal and illegal immigrants in this country.
Even if you look at the legal immigrants, a lot of them have paid their agents a large sum of money to come here, thinking they will earn a lot and be comfortable when they go home. Now, if they were to be retrenched before they make the money, how are they going to go home? They can't pay off their debts, they are not going to go home. They are going to hide somewhere and try to earn a living here.
Illegals, of course, are not going to go home. The fact that we've got 2-3 million immigrants in this country is frightening; that they have taken over the lower part of our Malaysian economy.
If you go to a pasar malam, the market or Petaling Street, you will see a lot foreigners selling products. I really don't understand why Malaysians do not seem to be interested in these jobs. I think we have to address this before it gets too bad.
The second worry is that when the recession comes, there will be a lot of Malaysians working outside the country who are going to return. I know the government is saying that it will help them look for jobs and all sorts of things, but that's easier said than done.
There's no vacancy at the moment. You cannot build new factories or industries to absorb these people because we are in a recession. Who is going to put money to build a new factory when there's no market for these products?
Obviously, the easiest way to give these people a job is to replace the immigrants or foreigners. Unfortunately, the people working outside Malaysia are not likely to be interested to work in this kind of job due to the low pay. Assuming they are willing to take up the jobs, what is going to happen when the economy recovers? These Malaysians will leave the country and look for jobs overseas again.
Q: Do you think that the RM7 billion stimulus package is a good idea?
A: I think it's good that the government has put up a plan to pump-prime the economy so that we won't go into a recession. If you look at on top, the overall, it's only a figure that is not in a recession. But a lot of people are going to be affected, especially if you are in the wrong industry.
Those export-based industries, like furniture, are affected. Housing in the US has collapsed. Who is going to buy the furniture? So, if you are working in a furniture factory, you are likely to be retrenched. Let's hope that this recession doesn't drag on too long because how many years can you pump-prime the economy?
Q: Do you think the RM7 billion is enough to pull the country out of a recession?
A: According to the government's calculation, there is no recession with the RM7 billion. Obviously, they must have made some calculation. My main worry is, how long the recession is going to drag on? Will people in Malaysia be willing to say, 'Yes, times are bad. I'll tighten my belt; I won't complain.' Then you can pull through. But everybody complains, expecting to get the same or to get the best. Then it will be difficult.
Q: What can be done to maximise the positive impact of the stimulus package?
A: It is widely accepted that construction - in the form of buildings, roads, bridges - is very good for the country. Because the cement, stones, steel, all the materials are made in Malaysia. Therefore, by doing construction, you are giving a lot of business to a lot of factories.
However, I think, if they make a study, the overall population can help in terms of buying products and services that have more domestic input. For example, it's going to benefit us more if we have a holiday in Malaysia than going to America. By flying MAS (Malaysia Airlines) than another airline. Because the money comes back here and it goes to more people.
People may think that this is a nitty-gritty problem, but if you think, if every day Malaysians were to spend RM1 on a local product instead of foreign, we will be spending RM30 million here, which will go round and round. Basically, we need to get people to be more patriotic in their thinking.
Although technically we might not go into a recession, but a lot of people are going to be affected, especially if they are in the wrong industry.
Q: So, are there any plans for the government to boost consumption?
A: I don't know. I presume there is.
Q: The stimulus plan was announced in November, but the money will be spent only in the first quarter of next year. Many businessmen are complaining that the money should be pumped in immediately and the public perception is that the government was not fully prepared when they announced the package. What is your view?
A: Honestly, I can't speak for the government. I'm speaking from a common sense point of view. From what we have calculated at the time when we announced the plan, calculation has shown that we are going to have a good GDP (gross domestic product) growth.
If I'm running the show, what is the purpose pumping money at this time (in November)? Figures are showing that I will do well in 2008. What's the purpose of pumping the money there? The bad year is going to be 2009. You need to pump money then.
I'm not speaking on behalf of the Economic Council. I was not given the details, but I'm saying I will do that (pumping money in 2009 instead of 2008).
Q: Of course, another concern of the public is the fear of leakages in the stimulus package. What can be done to address this?
A: Sorry, I can't give you the answer. But if there're leakages, the government should do something about them. In any case, anywhere will always be leakages. It's only a question of how to minimise or reduce the leakages.