Govt revenue from taxes unch over 3-4 yrs

It's always useful to capture vital statistics. Sourced from here-

The government's revenue from taxes has not been increasing for the past three to four years, Deputy Finance Minister Senator Datuk Donald Lim Siang Chai said.

He said on Tuesday, Sept 20 the amount was around RM160 billion a year even though expenditure was on an increasing trend.

He said one third of the government's revenue came from oil and gas, one third from taxes from companies and individuals while the remaining one third from indirect taxes such as stamp duties and Customs duties.

"There is a need to increase the number of skilled labour so that the government would be able to collect more taxes and increase its revenue," he said at the launch of a new Malaysian Financial Planning Council (MFPC) secretariat office and signing of a memorandum of agreement between MFPC with UCSI University and UMSLink Sdn Bhd on registered financial planner (RFP) programmes here.

In Malaysia, Lim said, out of the 12.8 million workers, only 29% were skilled labour as compared to developed countries where 40% of their workers were skilled labour.

"Out of the 12.8 million workers in Malaysia, only 1.65 million pay taxes," he said.

The finance sector, he said, was one sector which has a lot of potential to create skilled professionals with its certification standards.

He said the government was looking at ways how Form 5 school leavers could gain certain skills such as to be a mechanic.

Federalism in Malaysia

Tomorrow, we celebrate the 47th Anniversary of the formation of Malaysia. All Malaysians know that Malaysia is a federation of 13 states and the Federal territories. But, what is a "federation"? What does it mean?

Daniel Elazar has described it as follows-

“The contractual sharing of public responsibilities by all governments in the system appears to be a central characteristic of federalism. Sharing, broadly conceived, includes common involvement in policymaking, financing, and administration of government activities. 

In contemporary federal systems, it is characterized by extensive intergovernmental collaboration. Sharing can be based on highly formal arrangements or informal agreements. 

In federal systems, it is usually contractual in nature. The contract – politically a limited expression of the compact principle – is used in formal arrangements as a legal device to enable governments responsible to separate polities to engage in joint action while remaining independent entities. 

Even where government agencies cooperate without formally contracting to do so, the spirit of federalism that pervades an ongoing federal system tends to infuse the participating parties with a sense of contractual obligation."

This view permeates the Cobbold Report (1962) and the Inter-Governmental Committee Report (1962) which formed the basis for the formalisation of the Federation of Malaysia in the Malaysia Agreement 1963, the Malaysia Act 1963 and the 1963 amendments to our Federal Constitution.

Going back to Elazar's description, we are reminded, from time to time, by various communities and groups in both Sarawak and Sabah that the central government has short-delivered its end of the contractual bargain.

Is this sentiment a fair appraisal of the federal experience of Sarawak and Sabah?

This question is a most difficult one.

In the past decades, there has been substantial vocalisation on federalism by the likes of the late Datuk Amar James Wong of Sarawak (one of the founders of the now defunct Sarawak National Party or SNAP) and  Datuk Jeffrey Kitingan of Sabah.

Fairness in allocation of economic resources

Many of my Sarawak and Sabah friends privately express cynicism about the fairness in allocation of economic resources by the central government to their states.

This sentiment is precisely the matter that dogs the federal centre. This sentiment is also a source of frustration for the federal centre.

There is a perception, rightly or wrongly, on the part of many Sarawakians and Sabahans that their state governments have been under, what Gordon P. Means called, "federal tutelage" from the inception of Malaysia.

Is this a true and fair view? The jury is still out.

What cannot be denied is that such a perception colours the sentiment of Sarawakians and Sabahans.

This is especially true when the topic of petroleum resources comes about.

The perception is that the petroleum largesse is transferred to the federal centre and trickles back to the states of Sarawak and Sabah in the form of capitation grants and road grants.

Is this a true and fair view? The jury is still out. But, the perception is strong.

Race and community relations

All my Sarawakian and Sabahan friends are aghast at how separate the communities are in Peninsular Malaysia. They are fearful that such a way of life will infect the happy inter-ethnic and inter-communal ambience that still exists in Sarawak and Sabah (though signs of invisible walls being built are growing).

This is not the federal influence they want.

The challenge for the federal centre

Apart from the acculturation issue (which all Sarawakians and Sabahans should rightly reject), the core issue must surely be whether Sarawak and Sabah can lay claim to a fair share of the economic resources generated from within their states.

I recall being told by a Sabahan friend some time ago that when they watch the tv and see the images of sparkling skyscrapers of glass and steel and well-lit multi-tiered highways in KL, they cannot feel any sense of excitement or share the pride that such images were intended to inspire. Such images actually engender an opposite emotion.

So, beyond the temporal politics of today, the federal centre must renew and redouble its efforts to win the hearts and minds of the people of Sarawak and Sabah that their forebears did the right thing when they signed on to the Malaysian adventure; not a nightmare.

The importance of consultation

I have written extensively (in an academic context) about the importance of consultation as a feature of federalism. Consultation is, in fact, the MAIN feature of federalism.

Our Federal Constitution has many references to the need for consultation. Some of it are formal on issues such as-

• Appointment of judges
• Land
• Local Government

Others are informal but, still, constitutionally necessary. These include the issue of natural resources such as water and minerals.

The importance of federalism for Malaysia's democracy

Malaysians have a narrow view of the democratic process as something that we eat kuaci and sip teh tarik over when any political elections loom.

We also should be aware and be constantly reminded that each of the thirteen states, particularly the states of Sarawak and Sabah, are sovereign in their own right and, they chose to form the Federation of Malaysia. In any way that we may wish to look at it, the undeniable fact is that we have a set of contractual relationships between the federal centre and its 13 partners.

This is as it should be.

For the states of Sarawak and Sabah, they signed onto the federation with stronger conditions than the other 11 states. It gives Sarawak and Sabah greater say over many aspects of the affairs of their states.

But all 13 states have residual sovereign rights. These sovereign rights may be limited by the Federal Constitution; but they still exist.

This is what Malaysia is. 

British Malaya: Balik ke pangkal jalan

Better hit the iron on the anvil while the metal is still hot. In this instance, the hot topic is our history involving the role of the British. As with all things historical, one must approach the matter with full objectivity and free oneself as far as reasonably possible from the taint of bias.

We are fortunate to have reprints of the source documents from which the British sought and obtained a legitimate legal presence in Peninsular Malaysia. 

Among the more significant treaties entered into between the British and the Malay Rulers was the Treaty of Pangkor that was signed in 1874. The preamble to the Treaty is an interesting read-

Whereas, a state of anarchy exists in the Kingdom of Perak owing to the want of settled government in the Country, and no efficient power exists for the protection of the people and for securing to them the fruits of their industry, and,

Whereas, large numbers of Chinese are employed and large sums of money invested in Tin mining in Perak by British subjects and others residing in Her Majesty's Possessions, and the said mines and property are not adequately protected, and piracy, murder and arson are rife in the said country, whereby British trade and interests greatly suffer, and the peace and good order of the neighbouring British Settlements are sometimes menaced, and,

Whereas, certain Chiefs for the time being of the said Kingdom of Perak have stated their inability to cope with the present difficulties, and together with those interested in the industry of the country have requested assistance, and,

Whereas, Her Majesty's Government is bound by Treaty Stipulations to protect the said Kingdom and to assist its rulers, now,

His Excellency Sir Andrew Clarke, Governor of the Colony of the Straits Settlements, in compliance with the said request, and with a view of assisting the said rulers and of affecting a permanent settlement of affairs in Perak, has proposed the following Articles of arrangements as mutually beneficial to the Independent Rulers of Perak, their subjects, the subjects of Her Majesty, and others residing in or trading with Perak, that is to say:-

(I have just selected the pertinent Article for you)

VI. Sixth. - That the Sultan receive and provided a suitable residence for a British Officer to be called Resident, who shall be accredited to the Court, and whose advice must be asked and acted upon on all questions (emphasis mine) other than those touching Malay Religion and Custom.

The next extract that I offer you is the Treaty of Federation that was signed in 1895. This treaty created the Federated Malay States comprising Perak, Selangor, Pahang and Negeri Sembilan.

I reproduce two pertinent paragraphs of the Treaty-

1. In confirmation of various previous Agreements, the Sultan of Perak, the Sultan of Selangor, the Sultan of Pahang, and the Chiefs of the States which form the territory known as the Negri Sembilan, hereby severally place themselves and their States under the protection (emphasis mine) of the British Government.

4. The above-named Rulers agree to accept a British Officer, to be styled Resident-General, as the agent and representative of the British Government under the Governor of the Straits Settlements. They undertake to provide him with suitable accommodation, with such salary as is determined by Her Majesty's Government, and to follow his advice on all matters of administration (emphasis mine) other than those touching the Muhammadan religion.

Everything needs a proper context. The Treaties mentioned above and the background to which each of the Treaties were arrived at has been studied and, is being studied by historians as they should rightly be.

Does the language of the Treaties effectively make the role of the British that of a colonial master?  

What is the difference between a "Protectorate" and a "Colony"?

I have my views. But, some times it is more fun to leave rhetorical questions.

Body and Soul: Tony Bennett and Amy Winehouse

No need for intros...here's Tony and Amy...Amy's last recorded song. Sadly we have to wait for the full version in October:

How the hell did you get here? - Prof Khoo Kay Kim on Malaysian History

The level of dumbing down of Malaysia's education system is beginning to take its toll. Ignorance and indolence are now worn as badges of honour. 

So-called political leaders are confidently screaming out statements that are completely wrong when set against historical records.

In the wee hours that I am writing this blog entry I am unable to wax lyrical nor am I able or inclined to show indignance. 

I prefer to lead you to the video below where there the venerable Malaysian historian, Emeritus Professor Tan Sri Dato' Khoo Kay Kim, continues his noble quest to remind Malaysians about the wealth of our heritage, the meaning of our polyglot society, the danger of ignorance, the despair of indolent minds, the frustration of having lazy historians, and the list goes on...

I have had the immense pleasure in having met Prof Khoo some time ago. And, every time I have the opportunity to read his writings or listen to his lectures, I am reminded of how utterly ignorant I still am about so many aspects of Malaysia's history.

In a sense, this realisation gives me great motivation to dig a little deeper.

But, being an armchair history buff makes me reliant on the efforts of historians. And, if, like me, you browse the bookstores around Malaysia, you will find so few works on Malaysian history that provide any real depth of research or analysis. The sad truth is that there are more republished materials and works on Malaysian history done aeons ago by British scholars and historians than there are recent works that are of any significance or objectivity or depth.

I hope this situation will change. Otherwise, we will still have to depend on British scholars (or, *shock* *horror* *shudder* Singaporean scholars) to conduct research and write about us and how we are suffering from collective societal amnesia and how mockingly amusing it is for non-Malaysians to observe how we Malaysians look at each other and wonder how the hell the other guy got here... because whatever our level of amnesia, we are unanimous on the fact that it is the Orang Asli in Peninsular Malaysia and the numerous suku kaum in Sabah and Sarawak that were here before the rest of us.

So, unless we're happy to call ourselves bastards, we should pause before calling others that and, more importantly, start reading REAL works on Malaysian history.

Credit Growth v Asset Bubble

I am bothered by a report in Star Online containing this statement, "Analysts expect property loans to maintain their position as a key growth driver of credit expansion with some estimating them to grow between 10% and 12% this year due to the low interest rate environment and ample liquidity in the banking system.". 

Where does "credit growth" end and "asset bubble" begin?

This is something that should trouble Bank Negara Malaysia and Malaysia's economic planners. 

I have always believed that property-led credit growth implies asset-bubble formation since there are really no material salutary effect from property booms to the wider economy.

And, why do I say that?

If housing property booms are linked to genuine economic growth led by, say, manufacturing or commodities, then, we can safely assume that there is a growth in income to the nation's workforce who can then invest their surplus income to buy their dream home or invest in property. 

If there is loan growth from borrowings by businesses to fund expansion, then, there is some real economic action going on.

But, if loan growth or credit growth is led by property purchases, not led by business expansion, then, alarm bells should be ringing in the head of all rational people.

This phenomenon strongly suggests that Malaysians with savings are fed-up with low yields from fixed deposits. They are desperately looking for alternative things to park their savings with. 

These people seem to have found that buying properties in recent years gives them better financial returns in the form of capital appreciation.

Because of this series of transactions between and amongst these people, there is a perceived demand for properties above and beyond the norm.

People are buying properties, expensive properties, purely for investment in expectation of capital gains. They don't intend to live in these residential properties. They look down at the rental yields, which are paltry. They only want the capital gains. But, how long can this game go on for?

Banks are fueling this mania.

This is just my humble opinion. 

1963: Swatches of history

By now any reasonably regular visitor to this blog would know how much of a history buff I can be. This is especially so at this time of the year, every year. It is the most important fortnight for our nation.

Here's 2 articles on Malaysia written in 1963 for Time magazine. It has an immediacy that I find very appealing. And, it's interesting to bear in mind that in 1963 the Cold War was raging in its full frozen fury. The feeling that there were Commies under every blade of grass was very real.

Nations were being formed, including Malaysia.

There was much concern in the U.S. as to whether the enlarged Malaysian nation could withstand the domino-effect that Communism could catalyse from Beijing to Hanoi to Vientiane to Bangkok to Kuala Lumpur to Jakarta. This was the nightmare scenario. 

As an aside, writing the sentence above reminded me of the late Nordin Sopiee's Ph.D thesis on the formation of Malaysia, which, made pretty cogent arguments along the above lines as one of the primary motivations for U.S. and British support for the formation of Malaysia.

It is in this context that the 2 articles below should be read.

Malaysia: Tunku Yes, Sukarno No

Friday, Sept. 06, 1963

In steamy, palm-shaded Kuching, capital of Sarawak, the day's biggest excitement is the firing of the 8 p.m. cannon on the lawn of government house. "What a dull place," said a United Nations official. "I don't know how we're going to survive three weeks here." At the insistence of Indonesia's President Sukarno, an eight-member U.N. team is present to "ascertain" whether Sarawak and North Borneo really want to join the Federation of Malaysia, which Sukarno bitterly opposes. As the U.N. ascertainers began to sample opinions around Sarawak, they were nearly stoned, not bored, to death.

In the Chinese-dominated town of Sibu, the Red-infiltrated Sarawak United People's Party (SUPP) staged a demonstration that turned into a 90-minute, stone-throwing riot. Only after police fired warning shots to disperse the mob could the U.N. team sit down —amidst broken glass in a Methodist schoolhouse—to interview local councilors. In Miri, Sarawak's oil-refining center, 3,000 Chinese-SUPPorted youths, wielding stones and bottles, screamed anti-Malaysia slogans until the police opened fire, wounding two, and tear gas forced them to scatter.

Date Set. Such outbursts will slightly delay but not derail the formation of Malaysia, originally scheduled for Aug. 31. In last summer's general elections, voters in both Sarawak and North Borneo decisively defeated anti-federation parties. 

Although Indonesia's shadow looms large, the Borneo people know they have nothing to gain from Djakarta but economic chaos and demagoguery. Malayan Prime Minister Tunku Abdul Rahman and British Colonial Secretary Duncan Sandys, who hastily flew to the scene, last week set Sept. 16 as the new birth date for the federation —two days after the U.N. mission's findings will be made public. Both are sure that the U.N. will find a clear majority in favor of Malaysia, but they insist that the federation will come into being regardless of the report. The British last week also turned over internal self-government to Borneo and Sarawak.

In a wrangle over details with the British, Indonesia failed to send observers to the U.N. mission, thus giving Sukarno an excuse to question the U.N. findings later. But faced with British determination to defend Malaysia by force, if necessary, Sukarno said: "If the Borneo peoples agree to join Malaysia, we will have to bow our heads and obey." But, added Sukarno, in an unbowed postscript: "Indonesia maintains its opposition to Malaysia."

Book Learning. An Indonesian guerrilla campaign against Borneo and Sarawak may well continue, since Djakarta always needs a foreign diversion to draw attention from domestic difficulties. In Indonesian Borneo, which adjoins Sarawak, Sukarno has set up guerrilla camps along 200 miles of border, and is training 1,000 Red-lining Chinese from Sarawak, following the guidelines of Indonesian Defense Minister General Abdul Haris Nasution, an expert on guerrilla warfare who has written his own book on the subject. Bands of his guerrillas pushed across the border to raid Dyak villages, clashed with patrols of British-led Gurkhas and Sarawak police. In a fire fight ten miles inside Sarawak, the Indonesians killed a British lieutenant and wounded several Gurkhas before being routed with heavy losses. Meanwhile, British officers are studying Nasution's book for clues to stop further Indonesian incursions.

So far, Indonesian terrorist attacks have only served to create a surge of pro-Malaysia feeling in Borneo and Sarawak. Almost nightly, the Indonesian embassy in North Borneo is plastered with slogans reading "Tunku Yes, Sukarno No." Although his people stopped head-hunting years ago, one Dyak chief told the U.N. fact finders that "if any more Indonesian bandits come into our territory, they may lose their heads."

Malaysia: Hurray for Harry

Friday, Sept. 20, 1963

When pretty Catherine Loh was elected Miss Malaysia last April, the pert beauty from the oil-rich British protectorate of Brunei fully expected to preside over the independence ceremonies of the newly formed Federation of Malaysia. But that was before Brunei withdrew from the planned federation in a state of pique, leaving Malaya, Singapore, Sarawak and North Borneo to go it alone. Brunei's defection not only left this week's joyous celebrations without a beauty queen but it also took Malaysia out of the running for the Miss Universe contest.

The beauty queen flap was low on the list of last-minute labor pains attending the long-awaited birth of Malaysia. At the insistence of Indonesia's belligerent President Sukarno, who bitterly opposes the federation, Malaysia's independence had been postponed two weeks beyond the original Aug. 31 starting date, while a United Nations team investigated whether or not North Borneo and Sarawak really wanted to join. Hoping to influence opinion against federation, Sukarno began moving paratroopers into Indonesian Borneo along his 900-mile-long border with the two territories. Some Indonesian guerrillas even sneaked through the jungles into Sarawak to stir up trouble; they were relentlessly hunted down by tough little British army Gurkhas, aided by half-naked Iban tribesmen, who hung up at least one Indonesian head in the rafters of their longhouses.

Fearful that Indonesia might extract further delays out of Malaya's easygoing Prime Minister Tunku Abdul Rahman, the architect of the federation, Singapore's brilliant, shifty Prime Minister Lee Kuan Yew, who regards Sukarno as "an international blackmailer," swung into action. Flying to Sarawak and North Borneo, "Harry" Lee picked up the chief ministers of both territories and brought them back to Kuala Lumpur to stiffen up the Tunku. Britain's Commonwealth Secretary Duncan Sandys was also on hand, working hard to get agreement. Threatening to declare Singapore an independent state, Lee pressured Abdul Rahman into holding firm for the federation's Sept. 16 deadline.

Last week the final obstacle to independence was cleared away when the U.N.'s Malaysia team reported that both North Borneo and Sarawak favored the federation. As the new nation prepared to unfurl its red-and-white-striped flag, Harry Lee was quick to capitalize on the occasion. With his popularity at its zenith for his major role in bringing the federation about, he scheduled immediate elections in Singapore.