Posted in Ekonomi

Apa ideologi yang dipegang negara kita? (kemaskini)

Saya menerima sepucuk e-mel dari seorang penulis bergelar Pak Sako yang merujuk kepada posting saya dua hari lepas di mana saya telah menerbit semula ulasan Dr Mahahtir Mohamad bertajuk ‘Change‘.

Pak Sako meminta saya menyiarkan huraiannya yang ditulis sebagai respons kepada Dr M kerana beliau berpendapat ia mungkin memanfaatkan para pembaca blog ini jika kita mempertimbangkan suatu pandangan yang lebih menyeluruh.

Mutakhir: Respons Pak Sako kepada pembaca, sila rujuk kaki mukasurat — Ogos 26

Oleh Pak Sako

In his blog post ‘Change’ (22 Aug 2012), former Prime Minister Tun Dr Mahathir Mohamad criticised the socialist ideology.

He then claimed that “Malaysia has no ideology”.

This is not accurate.

It can be strongly argued that the Malaysian government after 1980 followed the “neoliberalism” ideology, a pro-business ideology.

This economic ideology was aggressively promoted around the world at the start of the 1980s by two pro-business world leaders: British Prime Minister Margaret Thatcher (elected 1979) and American President Ronald Reagan (elected 1981).

Both leaders had strong business connections and economic advisers who were pro-business, Alan Walters and Milton Friedman respectively.

Mahathir became prime minister around the same time, in 1981. Not long after, he officially announced a privatisation policy in 1983 (Jomo K.S. and Wong Sau Ngan (eds.), “Law, Institutions and Malaysian Economic Development”, page 42).

Mahathir too had close business associates, and his economic adviser was a businessman called Daim Zainuddin.

The neoliberal ideology says privatise publicly-held assets, sell them off to private business interests, entrepreneurs, corporate “captains”.

This is what the Malaysian government did.

The “massive privatisation strategy” carried out during Mahathir’s tenure is said to be linked to “increased competition for resources within the ruling Malay party”; it redistributed resources “in favour of emerging factions centred on key political leaders” (Jeff Tan, “Privatization in Malaysia: Regulation, Rent-Seeking and Policy Failure”, 2008, page 5).

Privatisation seems to be a favoured economic policy of the Malaysian government till today.

The neoliberalism ideology calls for weaker worker unions so big businesses can have more “economic freedom”.

The Malaysian government’s development agenda subordinated labour in favour of private business interests, especially in the 1980s (Jomo Sundram and Patricia Todd, “Trade Unions and the state in Peninsular Malaysia”, 1994). Labour organisations are weak relative to business power in Malaysia.

The neoliberalism ideology wants free labour markets, let wages be competed down if necessary, minimum wage rules are bad.

Mahathir also lately argued against minimum wages in Malaysia, claiming it might bankrupt Malaysia (“Dr M: Minimum wage may bankrupt Malaysia”, The Malaysian Insider, March 2, 2012). He did not consider the positive aspects of minimum wage rules.

The neoliberalism ideology supports a strong state, but not a strong state that directly provides for the public welfare, but a strong state that enables businesses and capitalists to flourish freely — corporate freedom and welfare.

Mahathir too does not like the welfare state.

The welfare state approach claims that basic social needs and securities must be fulfilled as a precondition to economic prosperity.

The opposite way is the neoliberal one: to support the corporate class in the hope that wealth will “trickle down” sufficiently to fulfil the fundamental needs of society.

In short: Mahathir complains about the injustices of the neoliberal international order, but he himself followed the neoliberal style (Johan Saravanamuttu, “Malaysia’s Foreign Policy, The First Fifty Years: Alignment, Neutralism, Islamism”, 2010, pages 202-203). Malaysia sharply switched to economic policies advocated by the neoliberal ideology under his rule. Mahathir’s personal positions on a number of issues are characteristic positions of the neoliberal ideology.

On debt, Mahathir says Greece borrowed a lot of money and is bankrupt.

But Europe fears Italy has also borrowed too much and is going bankrupt.

Malaysia has now been given a financial warning: a top debt ratings agency says our public finances are weak — they are at the same level as debt-struck Italy (“Fitch warns Malaysia of possible downgrade due to ‘deteriorating’ public debt ratios’, The Edge, August 1, 2012).

Malaysia’s debt is now more than half of the income Malaysia as a whole earns in a year. This debt is RM456 billion. This debt nearly doubled since 2007 — a matter of four years.

This is equal to saying that every Malaysian now owes about RM16,000. If you earn RM4,000 a month, that is four months’ pay.

Mahathir says: “Look at [Barisan’s] record… compare it even with the developed West. They are in deep financial trouble…”

Mahathir says: “Five years to give a trial as government is dangerous. Many things can be destroyed in five years.”

Question: Which government doubled Malaysia’s debt in less than five years?

***   ***   ***

Thank you for furnishing your readers with my response to the economic claims made in Mahathir Mohamad’s blog post ‘Change’ (22 Aug 2012).

One of your readers had asked for the source of the information about the doubling of Malaysia’s national debt. I refer the reader to PEMANDU’s website, here.

Some readers appear keen to learn about the neoliberal policies implemented in Malaysia. I would direct them here, to Khoo Boo Teik’s conference paper entitled ‘Social movements and the crisis of neoliberalism in Malaysia and Thailand’ (2010, IDE Discussion Paper No. 238).

For Nobel economist Joseph Stiglitz’s views on the neoliberal ideology’s impact on developing countries, see here.

For a general understanding of neoliberalism, see R. Turner’s book, Neo-liberal Ideology: History, Concepts, and Policies (2008, Edinburgh University Press).

For more information about specific neoliberal policies (e.g., Malaysia’s privatization policies), see Jeff Tan’s book cited in my piece.


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14 thoughts on “Apa ideologi yang dipegang negara kita? (kemaskini)

  1. “Which government doubled Malaysia’s debt in less than five years?”

    apa jaminan kami ada, (apabila pihak satu lagi kurangkan itu dan ini), pihak satu lagi tidak akan berhutang?

  2. This Pak Sako’s so called insights are nonsense. Throwing numbers and unchecked facts to fool the readers. Typical opposition mindset. His comment can be debated further but I’m too tired to even try. But I’m sure any sane and logical reader would do their own research to find the truth.

  3. when it comes to economy, they quote the edge. when the edge comments on anuwar, they said the edge has been bought by UMNO.
    the neoliberal whatever, was active and at its peak with the ex TPM. wonder what kind of policy he has brought to malaysia.

    and lastly
    Malaysia’s debt is now more than half of the income Malaysia as a whole earns in a year. This debt is RM456 billion. This debt nearly doubled since 2007 — a matter of four years.
    can we get the source of this info?

  4. pak sako is right. mahathir’s rule as pm has shown him to be a neoliberal capitalist, despite his constant criticizm of capitalism.

    close relationship with local n foreign business interest, groups, friends

    privatization of public utilities, transport, services.

    weakening of labor unions n organizations striving for workers rights


    Hisham did a great job explaining this, and it also explains why the likes of Pak Sako continues to perpetuate the debt myth for political gains.

    I do concur that privatisation was heartily embraced during Mahathir’s reign. Lets be honest, there is nothing wrong with privatisation when they actually deliver, and even if they don’t do it efficiently (leaks, wastages, etc.), it is still going to be way better (and way faster) than relying on public service.

    Nobody should be asking Malaysians to NOT worry about increasing debt, but that’s why we have to PRIORITIZE. The fact is most of our debt is domestic (about 90% of the half a trillion ringgit), not external. Moreover, Bank Negara has almost the same amount in international reserves of (about RM430.5 billion or equivalent to USD134.7 billion at present). The reserves position is sufficient to finance 9.5 months of retained imports and is 3.9 times the short-term external debt.

    So should we rein in these debts, especially the growing housing bubble and household debts? Sure, but at what price and to what end? I’ve long argued that subsidies have skewed our consumption patterns, and since a lot of people doubt the Government’s ability to manage public finances, what’s Pak Sako’s proposed alternative? The reality is that Malaysia is growing at a pace built on the back of cheap labour (and foreign). Our labour force in 2010 is about 11 million, how many did you think are foreign? On one hand we want less of these foreign workers, so we try to move our economy up the value chain, but on the other hand, we are not willing to pay for the actual cost of living and we try to keep manpower costs low. When brain drain happens, we bitch. We will be breaching RM1 trillion in GDP, but the REAL issue is never debt but widening income gaps!

    And you average joes think NONE of these matters are being discussed and debated in the government? It is coming up with “acceptable” solutions that gets difficult. It is not just pure economics, but also connected socio-demographic, education and unfortunately, political realities. Politicians may think they run the country, and voters will believe they decide who gets to run the country. The truth is that both, on average, have very little knowledge about development. Wealth creation is about a balance of interests – whether it is the people with the capital, the people with the purchasing power, or the people who makes things happen (from laying bricks to building systems).

    When you all curse and rant about the civil service, these are the same people PR will have to work with. Oh sure, parachute brilliant politicians who come up with RM100 cash handouts here and there, lets see where that will get you. Of course, fight corruption, plug leakages (no brainer), but please DO find the engines of growth that can generate more wealth all around. Everyone is hollering away about petroleum running out, heck, you think you’re the only genius here with that inside information? The real challenge is what to do with the Petronas business and looking beyond our borders and finding alternative streams or avenues of income. The masses can’t even accept GST (a consumption-based tax), let alone any increase to the income tax rates (which politician will be that stupid?). At the same time, there is a hell lot more money needed to deliver public services, not less. Contrary to popular belief, while our birth rates ARE declining, it doesn’t mean the population is reducing. We have about 29 million people with 12 million working and about 2.5 million are paying taxes. Corporate taxes make up about one-quarter. Oh, sure, slash the civil service, they are bloated anyway, with about one-third being educators. Since education is so critical (and yet we are still paying peanuts), lets half the remaining two-third or the 1.4 million civil servants and let them compete in the “real” world. I mean, we have almost full employment right? So, sure no problem there. Heck, those people might thank us in the long run since the pay is so much better in the private sector in the long run. The influx of willing workers will keep the labour costs low too, so perhaps the starting salary of fresh graduates can be lowered to RM1000 per month.

    I am not so sure who wins, but with cheap labour prices of good will surely come down in the mind of our average joes. Pak Sako cited papers but didn’t really understood what was written. Privatisation during Mahathir’s time delivered mixed results. It certainly doesn’t mean that privatisation = bad, it means that the way it was done back in his days aren’t all proper and some people benefited more than others. Life’s a bitch, and that’s why the average voters are all donkeys as they keep voting in politician monkeys who laugh like hyenas on the way to the bank, no thanks to the pack of capitalist wolves at bay. You’re talking about a lot of dough here, and the nexus between the political elites and big businesses won’t be severed just because another sorry bunch of airbags and windbags occupy Putrajaya.

    1. *tip my summer hat to Yacht Ensign!*

      thank you YE for slapping some reality into this kind of barefaced disinformations which try to affect scholarship and legitimacy [konon!] by plucking quotes and parading sources but saying little of the contexts.

      i esp like your retort “what’s Pak Sako’s proposed alternative?”

      this is the sort of crucial question that should be thrown back to all those opposition politicians and their perpetually-hysterical supporters and those duped by their hyperboles and relentless blame-strategy.

      granted they’ll probably do the usual snake-oil gambit aka “the anugerah move” or slam a gag-order/lawsuit, ” leader-kim move”. but whatever, the response will still be telling/

      don’t be fooled if they point to the “buku jingga” btw. it is just similar g.a.r.b.a.g.e, only in print!

      i also like your telling reminder to those arrogant PR politicians that they will be working with the same civil service they are currently abusing, should they ever come to power. tak tahu mana langit dijunjung much? hehehe!

      p.s. thank you helen for this entry. if nothing else, it will at the very least make more people click the link and read that excellent FAQ of hisham h’s and hopefully get a bit more economically educated. i know i was.

      1. I liked the last para Animal Farm where the commenter above said:

        “Life’s a bitch, and that’s why the average voters are all donkeys as they keep voting in politician monkeys who laugh like hyenas on the way to the bank, no thanks to the pack of capitalist wolves at bay. You’re talking about a lot of dough here, and the nexus between the political elites and big businesses won’t be severed just because another sorry bunch of airbags and windbags occupy Putrajaya.”

        So true about the “windbags” … and we know which party’s pollies are the most windy, don’t we?

      2. I would not call them windbags and such. I would instead call them dream paddlers. You see, dream peddlers, they sell what their “customers” choose what to believe. In this case, regarding Malaysia’s debt situation, since the vast majority of opposition supporters believe the country is heading to a “Greece Moment” pretty soon, the dream peddlers just cooked a “dream” that the “customers” already think is real. Dream peddlers, maybe I should call them dream swindlers.

        Agree that the snake oil peddlers sell Dream & Hope. — Helen

  6. Pakatoon philosophy is kiasu, kiasi, kiaboh.

    For most other Malaysians, the ideology is “own pocket first”. Which is why populist policies are such an easy sell.

  7. A real economist had replied to Pak Sako’s idiotic analysis regarding the economy. I hope he can read this

    “Sorry, for the late reply, I’m just back from the Raya break.

    Short answer: yes, it does. The FAQ addresses the more specific concerns.

    Pak Sako did make one error – Fitch did not say that Malaysia’s finances are “at the same level” as Italy’s, they said “deteriorating public debt ratios” (referring specifically to debt/revenue). Italy’s debt “level” (specifically, debt to GDP) is more than double Malaysia’s.

    Incidentally that calls into question the consistency of Fitch’s rating methodology if we are rated the same. Italy’s public debt is in Euros not Lira, and thus effectively foreign currency debt, whereas Malaysia’s external public debt is negligible.

    The markets certainly think Malaysia is a safer credit – current market yield for 5 year MGS is at 3.25%, 5yr Italian govt bonds are yielding 4.75%.

    In addition, that comment about debt doubling is idiotic – most of the increase in debt occurred because of a shortfall in revenue over 2009-2010, not through increased spending. It also ignores the fact that the economy is now fully a third larger than it was in 2007.”

    1. Forrestcat, maybe you being a money market man with MGS denomination. Been there friend, seen it and have done it. You can’t expect regular M’sian to digest this unless they know what they want besides as their battle is not about MGS, just survival.

      Economics is not about what is being preached as most are lost in their own translation but rather what and how the economics enhances the bread and butter issue for the community. The mumbo jumbo means nothing for an ordinary citizen who wants to be a citizen without outsmarting another for what is materially probable but rather what is humane and just.

      The economics and materially driven agenda becomes secondary when we can put aside division for the reality and able to accept it for one another. Do forgive me if I am real for the community, but don’t forgive me if you think I challenge your knowledge and expertise that did nothing for the community.

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