Competence, Not Humility Needed

SEEING IT MY WAY

M. Bakri Musa

Malaysiakini.com May 13, 2005

Competence, Not Humility Needed

(Co-written with Din Merican)

Editorial lead: Prime Minister Abdullah Badawi recently conceded that there are shortcomings in his leadership. But humility is not going to win over those critics who want to see action.

Prime Minister’s Abdullah Badawi’s recent “admission” speech to the local Harvard Club bore all the hallmarks of his spinmeisters, right down to the tone, style and language. In the speech Abdullah acknowledged his poor performance. Admitting is one thing, action is another.

The Prime Minister may dismiss his critics as cynics unable to appreciate the subtleties and complexities of Malaysia’s problems, but that would not in any way improve his performance. He can win them over only by executing and producing. Otherwise Abdullah has more than his critics to worry about; his own party will throw him out.

The Prime Minister chose as his theme, “The Challenges of a Nation Growing Up.” It would have been more appropriate had he reflected on his own lack of “growing up” as a leader.

Abdullah attributed the lack of results to malaise and inertia. We might add, on whose part? He has all the power of his office to make things happen. To achieve that he must lead and provide national direction. Instead, what we have for the last 18 months are knee-jerk responses and scatter gun approaches to policy making, peppered with his endless sermonizing. When he should be focusing on the economy, he becomes addicted to and distracted by Islam Hadhari.

Ending Deficits and Subsides Not Enough

Abdullah’s economic polices are nothing more than a rehash of the standard IMF prescription of slashing deficits and cutting subsidies. During the recent Asian economic crisis, this IMF remedy proved a disaster for Indonesia. In contrast Malaysia, in pursuing a diametrically opposite policy, fared much better.

In principle we agree with eliminating deficits and subsidies, we argue over the manner and timing. More importantly, we have to address what brought those deficits and subsidies in the first place, for unless those issues are resolved they will continue to burden the nation.

Abdullah must confront the core problems of the economy: structural distortions and supply and distribution bottlenecks (as exemplified by the diesel fiasco). Compounding them are corruptions and preferential policies. Additionally, the currency peg, once a savior, is now fast becoming a liability unless it is reviewed, and soon.

While we do not subscribe to the Reaganomics assumption of “deficits don’t matter,” more important than the size of the deficit is what it is being used for. If it were for operating expenses (increased salaries for politicians and bonuses for civil servants) or overhead (renovating the prime minister’s residence or carving out a new Brasilia in the Malaysian jungle) then any deficit no matter how small would be a drag on the economy.

On the other hand if the deficits were used to build much needed infrastructures (ports, airports and railroads) or to enhance productive capacities (improving schools and universities), incurring large deficits would be prudent economic management.

It is for this reason that we disagree with the cancellation of the double railroad project. It is a much needed infrastructure; it would enhance the capability of the Johor Port. Our argument is with the bloated costs. There was no open competitive bidding; it was done through the usual “negotiated” process with pre-selected vendors. To get the best price we must open it to all bidders, including foreigners.

Abdullah characterized his reducing the deficit as the most difficult task he had to do. He would have learned the wrong lesson if he were to focus solely on this.

Malaysia is fortunate in that its high domestic savings could finance the deficits. The challenge is not to squander them on showpiece projects. Prudently done such public spending also help boosts the economy. Pump priming is not a substitute for or an alternative to private sector led growth; it is a counter-cyclical measure to restore confidence.

Pump priming does not mean simply pouring money on a problem. The debacle over the schools’ computer lab projects failed miserably because policy makers confused their primary objective, that of providing amenities for our students and not jobs for inept and politically-connected Bumiputra contractors.

Ending Deficits and Public Debt

We did some simple arithmetic. We added all the costs of unneeded and ostentatious mega projects (Putrajaya, Twin Towers) with the various bailouts (Bank Bumiputra, MAS, Perwaja). The total easily exceeded the cumulative deficits for the last few years. Meaning, had Malaysia not wasted those precious funds it would have a surplus.

So much for the “difficulty” of deficit reduction!

Were Abdullah to go further and sell off the government’s stake in the various GLCs, he would be able to wipe off the entire public debt and have plenty left over to improve our declining schools and universities as well as build new ones. The government has no business being in business.

Transparency and Openness: Only Talk

So far Abdullah’s talk of openness and transparency remains just that – talk. Some projects may be “open” but only to Bumiputras, and only selected ones at that!

As for transparency, consider the definite lack of enthusiasm for releasing the Royal Commission on the Police Report.

As for inculcating First World mentality into Malaysians, this is the same leader who recently banned books by, among others, Karen Armstrong. Looks like Abdullah needs to drag himself first into the First World. His smart young advisors obviously learned nothing from having spent time at such august institutions as Oxford. We doubt very much that the distinguished audience of the Harvard Club posed any of these questions.

If we were not enamored with Abdullah’s deficit reduction, his strategies for ending subsides are no better. Malaysia is already burdened with imported inflation from the ringgit’s peg to the weakening dollar. Eliminating subsidies at this juncture especially if done suddenly and without much thought will aggravate inflationary pressures. It will also be socially and economically disruptive. Resorting to price controls is not the answer either, especially in a period of rising inflationary expectations. America learned this in the 1970s.

Consider the diesel subsidy. It does not make sense to end the subsidy and yet control what the poor taxi drivers could charge. The social and economic injustice just reeks. With the current corrupt system, the subsidized diesel meant for taxi drivers and fishermen are diverted to the factories.

In his speech the Prime Minister blasted local corporate chieftains for their “addiction” to subsidies, cheap foreign labor, and rent seeking behaviors. Meanwhile his minister is bringing in 100,000 unskilled Pakistanis. As for rent seeking behaviors, he is obviously ignorant of where the money in UMNO’s “money politics” comes from.

If those corporate leaders were addicted, then Abdullah is their dealer, or to use the polite social terminology, the enabler.

As expected, Prime Minster Abdullah’s “admission” is widely praised in the mainstream media, with some trumpeting it as a reflection of his general humility. To them, our Prime Minister can do no wrong, that is, until he is out of office. To us, humility is an overrated trait especially in a leader. We prefer competence.

Abdullah’s supporters, undoubtedly well meaning, are doing themselves, the Prime Minister, and the nation a great disservice in blindly praising him. Sooner or later, when you see that the emperor has no clothes, it spares everyone the general embarrassment if someone were simply to expose the naked truth. If you do not have the courage to do that, then at the very least give him your best attire.