Prime Minister Anwar Ibrahim's Bold Initiative

 Anwar Ibrahim’s Bold National Initiative

M. Bakri Musa

 

 

Prime Minister Anwar Ibrahim’s over forty-minute Perutusan Negara (National Address) on May 21, 2024 was bold and impressive, in presentation as well as substance.

 

            Anyone who could explain with lucidity macroeconomic policies and indicators with their associated figures, tables, and other complex statistics is impressive. Anwar did that without having to utter spurious economic terms in ‘modern’ Malay, aka pidgin English. Kudos to his graphic arts team for the accompanying slides that were clear and easy to comprehend. They had high data/ink (or data/byte) ratio, as per Edward Tufte’s The Graphic Representation of Data. Meaning, minimal clutter, maximal information.

 

            As for style and crispness, I cannot conjure any of Anwar’s predecessors of even coming close.

 

            Anwar’s speech was timed with the release for the first quarter 2024 economic data. While he went over some of them, especially the favorable ones, the effectiveness of an economic policy cannot be judged from early quarterly figures. Often effective policies would have adverse short-term consequences. Citizens should be prepared for that as per the adage, short-term pain, long term gain. Besides, flashy short-term results may mask underlying structural weaknesses. While those may be useful as campaign gimmicks, in the long term they serve nobody any good, not ruler nor ruled.

 

            Anwar again rightly focused on corruption, diving into it within minutes of his speech. Only later did he emphasize fiscal prudence, what with the ballooning national debt and deficits, in large part the legacy of previous Prime Minister Najib Razak’s corruption. Malaysia is still paying and will continue to do so for the next decade or two the humongous debt incurred by 1Malaysia Berhad (1MDB) alone. Modern Monetary Theory enthusiasts’ “deficits don’t matter” may apply to huge economies like America, but for Malaysia that would be economic suicide. Her unsustainable deficit is already reflected in the weakening ringgit.

 

            Anwar’s Fiscal Responsibility Act aims to reduce debt to 60 percent of GDP and fiscal deficit to three. Commendable! I do not share the economic conservatism of the early Merdeka years that abhorred any deficit. Deficit spending is prudent if used for investing in the nation’s people and productive capacities. Nations are like families. I had more debt relative to my income as well as assets early in my career than now because I needed the money then for investing in my practice, buying a house for my family, and for my children’s education. Those debts were thus not spending per se, rather investments.

 

            Deficit spending is necessary and commendable if used for building schools, hospitals, and infrastructures as with roads and water supplies; a waste if spent on showy skyscrapers and princely palaces.

 

            Anwar’s rationalization of diesel and other energy subsidies is long overdue. However, it is time to move away from the present subsidized pricing for fishermen and freight operators, for example. Instead have them pay the prevailing market price and then claim rebates retrospectively from the government. That would reduce leakages quite apart from giving the government accurate data. Combining this with encouraging cashless transactions would also discourage corruption. China is mandating that now. It is difficult to cheat or bribe when you have paper or digital trails tracing your money flow.

 

            It is also time to have special courts to handle corruption cases involving amounts above a certain threshold. Corruption today is far more sophisticated than the errant driver offering the traffic policeman a few hundred ringgit to settle a traffic violation. We should have experienced prosecutors and judges well attuned to the sophisticated ways of the crooked. Special courts would achieve that.

 

            Doing away with direct negotiations (Mahathir’s favorite method) is long overdue. Likewise with granting exclusive import permits and other economic rent-seeking activities. Auction them to the highest bidder; the government would then reap the benefits. Only the market can determine the true price of an asset, not professional assessors and much less economically insulated civil servants.

 

            Emulate America in having citizens declare and pay taxes on their global income and assets. Presently many, including more than a few of Anwar’s ministers, have significant assets abroad. Off-shore accounts and assets are the favorites with the corrupt and money launderers, as revealed by the Panama Papers.

 

            Having declared his goals with such clarity and courage, Anwar’s next move would be to execute them. That is far more challenging, for him and Malaysia. For that he needs all our help and support.