We Have Learned Nothing!

We Have Learned Nothing!

[Reprinted from the Sun, Weekened edition, Friday October 7, 2005]

This 2005-06 Federal Budget exposes one glaring reality: we have learned nothing from our experiences. We have yet to rationalize public expenditures and appreciate the proper role of government. We still have that civil-service mindset of solving a problem by throwing money at it.

With all the goodies for them, this budget is indeed by, of, and for civil servants. It reflects the increasing bureaucratization, which is a large factor in Malaysia’s declining competitiveness.

Our leaders repeatedly highlight two major issues: the quality of our human capital and inefficiencies of Government-linked companies (GLCs). Recognizing is only half of the problem; the other is correcting. This budget fails miserably at this.

Less than a quarter of the budget is for development, the rest simply operating expenses, with a huge chunk just for salaries. If one were to analyze the development budget separately, the same allocations prevail, that is, most of the funds are for salaries. Those poor kampong folks who risk their lives every day crossing rickety bridges, continue being careful!

The government has substantial allocations for education. By whatever criteria, Malaysia is already spending generously. Yet we have little to show for it.

As huge as the budget for education is, only slightly over a billion ringgit is for development of higher education. For a global perspective, that is about a quarter of UCLA’s annual budget!

After factoring the inevitable inefficiencies, with contracts doled out to favored contractors as with the schools’ computer projects, very little expansion will actually occur on our campuses.

The National Service gets RM 600M, again, all for operating expenses to feed and house the trainees, and pay their trainers. Get rid of it and use the funds to double the salaries of our professors. We then would likely recruit better professors who in turn would produce employable graduates.

We continue with the dichotomy of private and public education. We have yet to appreciate the immense benefits of complementing one with the other.

We permit private universities and colleges, but we have yet to integrate them in the overall policy. Now we have dangerous racial segregation in our universities. Academically too, there is segregation, with private institutions producing English-literate students and concentrating on marketable courses.

There is no private sector participation in the school system, except for preschool. The government encourages expansion of international schools by letting Malaysians enroll. That is less at increasing opportunities for locals, more on attracting foreigners with their cash, again reflecting the muddled thinking.

Allow private schools, local or foreign. That would relieve some of the burden. I would integrate them with the national policy, meaning, their enrolment must reflect the population, and their students, proficient in Malay. I could not care less if these schools use Swahili, but if they attract a broad spectrum of Malaysians, they must be offering something useful.

Malaysia cannot rid itself of its love affair with GLCs despite the many disappointments and exorbitant costs. This budget spawns many new GLCs. One, with the colossal price tag of RM 2B, will dabble in real estate, others in such risky ventures as biotechnology and agro-business. Since when have bureaucrats learned to farm?

These are merely initial costs; expect future expensive bailouts. GLCs have failed to make profits or prepare Bumiputras for the private sector. I would sell to the highest bidder the government’s stake in all GLCs and use the proceeds to reduce poverty and train and educate Bumiputras. That would be good for the market, economy, and Bumiputras.

There is also a provision in the budget for health tourism! Those private hospitals do not need the help or expertise of civil servants. Similarly, the posting of agricultural counselors abroad will not increase exports anymore than current educational attaches increase the number of foreign students. Those appointments are merely cushy foreign sojourns for civil servants.

The bloat in government continues. The budget does not address this, meaning, the government has yet to acknowledge the problem.

If the government were to focus on doing what are truly its basic functions, and leave the rest to the private sector, then it would learn to do them more effectively and efficiently. That is a simple lesson to learn; more difficult is to implement it.