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The 10th Khazanah Megatrend Forum and Budget 2015 – A Disconnect? by Dzulkefly Ahmad.

October 31, 2014

Dr Dzulkefly Ahmad, PAS Research Centre | 31 Oktober 2014. (Harakahdaily.com)

Granted, as someone who helms an Opposition party think-tank, I was indeed privileged to be invited to attend the 10th Khazanah Megatrend Forum (KMF) last month. I have no qualms to admit that the two-day engagement was indeed intellectually enriching.

Permit me to quickly revisit pertinent observations from the many very distinguished speakers. Admittedly, I can only be selective. Speeches, forum and events traversed the usual realms of economics and finance, evidently depicting Khazanah’s leadership grasp of what it takes to propel the nation further.

That novel characteristic alone has entitled this year’s KMF to be relatively unique i.e., away from obsession with economic growth numbers to defining the challenges of the nation going forward.

Simply put though, it was a gathering of thought leaders and experts to address the critical malaise of the nation i.e. of why Malaysia is stuck in the middle-income trap and what does it take to transition her to a high-income economy and by logical extension,  a ’truly developed nation’.

For the record again, our history of socio-economic development is arguably one of relative underperformance. While we edged our regional peers like Thailand and Indonesia, we have been out-performed by South Korea, Taiwan, Singapore and Hong Kong.

Going back to basic economics, it has long been observed that the productive capacity of an economy is capped by the availability of inputs i.e. labour and capital, given a set of technological conditions.

The maximum potential level of production or the productive efficiency frontier of an economy is graphically represented by the ‘Production Possibility Frontier’ (PPF) or the Production Proficiency Capacity (PPC).

It was with this backdrop that its theme of “Scaling the Efficiency Frontier: Institutions, Innovation and Inclusion” was indisputably most apt.

In their respective ways all the keynote speakers namely HRH Sultan Nazrin Shah, Professor Ha-Joon Chang and Tan Sri Andrew Sheng and others provided compelling arguments for the need for Malaysia to affect a productivity challenge, moving beyond the “miracle” of input growth.

To develop a different trajectory of growth, Ha-Joon singly provided new insights of what it takes to do things differently. To paraphrase Ha Joon, we are not to rely only on our comparative advantage as it will impede our productivity growth and stifle our further innovative endeavours.

Significantly too, Ha-Joon stressed on the need to embrace the downside of innovation. This is done by instituting legal provisions to provide for a second chance for entrepreneurs in the face of liquidation and other risks of doing new things and getting into unchartered markets.

Other speakers also alluded to the critical need for government to incentivise these risk-taking efforts in an eco-system that would allow for innovation by ‘serial entrepreneurs’, who invariably exhibit ‘dysfunctional personalities’.

Companies are reminded to be more robust enough to diversify in the face of the eventuality and trade-offs of Schumpeter’s creative destruction in the innovative economy. That must surely be worth pursuing, though arguably always easier said than done.

Be that as it may, let us now turn our attention to the recently tabled Budget 2015. It doesn’t take any more reminders that the budget proposals haven’t allowed much fiscal space for the Finance Minister to manoeuvre his way.

This piece however, is not about to comment any further about his arduous task of balancing fiscal prudence with the rakyat’s needs. There have been ample critical comments both from detractors and supporters alike.

But being the last building block in the five-year development blueprint, it is expected to provide an allocation for the creation of the desired structural changes as envisaged by the 10MP. It is from this perspective that this writing is keen to query further.

Simply put, has Budget 2015 laid down the strategic initiatives for the transition to the next Eleventh Malaysia Plan (11MP)? Has the Budget sufficiently addressed the structural issues of getting the nation out of the ‘Middle-Income Trap’?

The premier must take heed that no amount of huge spending of capital in infrastructural projects would take us out of this middle-income rut. A slew of big-ticket infrastructural projects have been lined up as relentlessly as before in this budget.

To cite, seven highways and rail projects are to be built in 2015 at a cost of RM48.2 billion, including the 56 km MRT2 Line from Selayang to Putrajaya at RM23 billion.

Surely this will provide good macroeconomic (input) boost to growth and with it, the attendant debt build-up. We are not against it per se but the issue is always about the ‘opportunity cost’. What should be our priority and what needs doing first, as imperatives to propel the nation into a higher income economy?

What is it that we couldn’t do else, when Najib has committed RM711 million for Permata? For R&D&C, the Finance Minister could only cough up a meagre RM 1.3 billion for the Ministry of Science and Technology and Innovation.

To highlight further, another RM10 million will be allocated for the Business Accelerator Programme under SME. To enhance use of new technology, automation and innovation in the development of SMEs, RM80 million is allocated for a Soft Loan Scheme for Automation and Modernisation of SMEs under Malaysian Industrial Development Finance Bhd.

To further promote industry, a Digital Content Industry Fund will be set up under industry regulator the Malaysian Communications and Multimedia Commission, with an allocation of RM100 million. All this amounting to a mere RM 190 million (let us be generous, RM200 million!), to encourage national innovativeness, against RM75billion (for the combined MRT2 and Pan-Borneo Highway) for infrastructure, which will only lead to more lining of the pockets of crony companies!  The “innovativeness budget” is not even one-seventh of the Permata genius-production initiative.

On a serious note, if the above is not serious enough, we should ask whether upgrading roads, schools, hospitals and providing critical utilities and infrastructure, particularly in Sabah and Sarawak costing even as much as RM27 billion be an imperative, as opposed to the Pan-Borneo Highway which will also cost RM27 billion?

For the record, of the big ideas of the 10MP, when first launched, wasn’t unleashing productivity-led growth and innovation among the central themes? For all that we now come to know at the end of the 10MP, productivity levels have remained flat. Besides, the economy continues to be anaemic on talent and skilled labour availability amply depicted by the total factor productivity (TFP), which evidently suggests a weakening dynamism in key sectors of the economy.

A recent report from The Asia Foundation (TAF) conceded that while Malaysia has effected some positive policy innovation in recent years, the stated reform measures have only been on addressing the symptoms of the ‘middle-class trap’, rather than the underlying causes of the country’s economic ‘incompetitiveness’.

Worse, according to TAF, one of the sore points is that Malaysia’s economic progress had not been accompanied by reforms of the country’s political institutions. The insufficient checks and balances continue to dog the country’s economy, thus leading to increasing concentration of power within the executive branch and persistence in rent-seeking behaviour, patronage politics, opaque governance practices and pervasive corruption.  Is it any wonder then that Malaysia is perceived as among the world’s worst countries on integrity?

Yes, Malaysia’s economy has no option but to transition from an input-led growth model towards one driven by innovation and productivity.

But to be on the trajectory of a high-income and inclusive economy and a truly ‘developed nation’ where growth benefits all, Malaysia must embrace a sea-change in its social, institutional and economic systems and a ‘revolution in the mind-sets’ of all stakeholder, firstly the ‘leadership’ and collectively ‘the rakyat’!

From that perspective, the Budget 2015 is a far cry from realizing the imperative of ‘Scaling the Efficiency Frontier’ where a commitment for Change and Reform must be effected through the ‘3Is’of Institutions, Innovation and Inclusion as mooted by Khazanah.

In this sense, there is a clear disconnect between the 10th KMF and Budget 2015.- ES

This article first appeared in The Edge dated 24th October 2014.

Why Ennahda Lost Tunisian Elections? – A Lesson for All Islamists…

October 30, 2014

By Adel al-Thabti, Anadolu Agency

Tuesday, 28 October 2014 00:00
Editor’s Note: Initial projections place the secular Nidaa Tounes party ahead in Tunisia’s upcoming parliament with about 80 out of 217 seats, while the Islamic Ennahda party came in second place with approximately 70 seats. This is a short analysis attempting to explain the reasons behind such results.
Why Ennahda Lost Tunisian Elections?

Some Ennahda members helped in the image distortion through their unstudied appearances in satellite and radio programs.(Reuters)

It was clear since its inception in June 2012 that the Nidaa Tounes party is an undeclared coalition between the members of the dissolved Democratic Constitutional Rally (DRC), the party of the former President Zine el-Abidine Ben Ali, and trade unionists and leftists from various walks of the left and some independents.

According to its discourse since its inception, Nidaa presented itself as an alternative to Ennahda Movement and its allies in the power-sharing “troika” government, Democratic Forum for Labor and Liberties, and the Congress for the Republic.

In the light of the party mobilized all its powers in the campaign for the legislative elections in the period between October 4 and 24 in order to rally its supporters, sometimes relying on the tactic of frightening the electorate from Ennahda that it might restrict the personal freedoms of Tunisians.

This paid-off among a sector of Tunisian electorates despite repeated assurances by Ennahda.

Absence of Media Strategy

Nidaa party found more than an ally to support it even from outside its political spectrum, at a time when there was no available influential ally to aid Ennahda.

Seemingly, Ennahda was not able to manage a dialogue with the influential and capable Tunisian media establishment, something that can be attributed to the absence of a clear media policy for the party; hence, it was not able to direct compelling messages to this sector of the Tunisians in the face of the policy of fear used by Nidaa.

Ennahda was able to gather large crowds in its election meetings through good advertising campaigns compared to other forces, which worried its opponents who considered it as a show of power.

Consequently, they were able to forge secret electoral alliances in order to manage a good battle and defeat an adversary that cannot be defeated in a state of dispersion.

Perhaps what proves the existence of that secret alliance is the fact that the DRC — which ran on several party lists — had one of its leaders, according to some sources, voting in a polling station that ended up getting almost no votes for the DRC, implying that his vote and those of the DRC supporters went to the Nidaa party.

Therefore, there is a possibility that Ennahda adversaries of the constitutional leftist bloc had settled one way or another to focus their votes in support of Nidaa in order to avoid a costly defeat in front of Ennahda.

Some other analysts say that some leftists in some constituencies have voted for Nidaa with an aim of changing the balance of power, which made the party get the highest percentage of seats in the people’s assembly elections.

Absence of Alliances

Often, leftist demonstrators chanted slogans against Ennahda’s president Rashid Ghannouchi across many parts of the country accusing him of responsibility for the assassination of leftist opposition leader Chokri Belaid, who was assassinated by affiliates of the Ansar al-Sharia’h Islamic movement in 2013 as indicated by the investigations of the Ministry of Interior.

According to some observers, Ennahda’s failure in managing some economic issues and attending to social demands during the time of the troika government remains a secondary reason for their loss in the elections compared to the party’s failure to manage the battle of image distortion.

Some Ennahda members helped in the image distortion through their unstudied appearances in satellite and radio programs.

Finally, it may suffice to say that the Nidaa party found more than an ally to support it even from outside its political spectrum, at a time when there was no available influential ally to aid Ennahda, which made it face alone several political forces in the elections, with its initial mass support-base rendering useless.

PAS pertahan kerjasama dalam PR, tentang kezaliman

October 28, 2014

SALMIYAH HARUN | 27 Oktober 2014. (Harakahdaily)

KUALA LUMPUR: PAS dan Pakatan Rakyat akan terus mempertahankan kerjasama mereka untuk berjuang menentang kezaliman di dalam negara ini.

Timbalan Presiden PAS Mohamad Sabu berkata, kezaliman yang berlaku termasuklah ketidakadilan undang-undang dan kehakimam begitu juga kezaliman Akta Hasutan 1948.

“Kita Pakatan Rakyat dan NGO akan bersama-sama menentang Akta Hasutan yang disalahgunakan dan rata-rata dikenakan kepada mereka yang tidak sehaluan dengan kerajaan,”katanya dalam sidang media selepas mesyuarat Majlis Pimpinan Tetinggi Pakatan Rakyat.

Malah beliau yang juga Pengerusi Lajnah Demokrasi dan Mobilisasi PAS Pusat juga akan terus memberi tekanan kepada kerajaan agar memansuhkan akta tersebut.

“Seperti kita tekan kerajaan untuk mansuhkan ISA akhirnya diganti dengan Sosma begitu juga Akta Polis ditukar jadi Akta Himpunan Aman. Kita akan lawan sampai Akta Hasutan dimansuhkan,”katanya.

Malam ini satu langkah awal PAS di bawah Lajnah Mobilisasi menyatakan solidariti buat mangsa Akta Hasutan, menganjurkan makan malam yang akan dihadiri beberapa pimpinan utama Pakatan Rakyat iaitu Datuk Seri Anwar Ibrahim, Lim Kit Siang, Azmin Ali dan beberapa pimpinan PAS termasuk Naib Presiden Datuk Tuan Ibrahim Tuan Man.

Masih relevan

Sementara itu, Anwar menegaskan mesyuarat Majlis Pimpinan Pakatan Rakyat hari ini menunjukkam gabungan pembangkang masih relevan.

“Perselisihan kecil diketepikan dan sekarang kita mara sebagai satu pasukan padu menentang Umno dengan trend perkauman makin sempit dan jelik.

“Mesyuarat hari ini menguatkan komitmen kami untuk kuatkan hubungan dan teruskan program tak kira apa yang berlaku Rabu ini,” kata beliau.

Turut bersama dalam mesyuarat itu Setiausaha Agung PAS Datuk Mustafa Ali, Ketua Penerangan PAS Datuk Mahfuz Omar, Dr Hatta Ramli, Suhaizan Kaiat dan Siti Zailah Mohd Yusof. – HARAKAHDAILY 27/10/2014

Define ‘high income’ before launching petrol plan – FOMCA

October 25, 2014

Fomca urges government to define ‘high income’ before implementing MyKad-for-petrol plan.

petrol-upThe government should provide a clear definition on those referred to as “high income earners” before implementing new regulations on the subsidised RON95 petrol.

Federation of Malaysian Consumers Associations (Fomca) deputy president, Mohd Yusof Abdul Rahman said this was because the definition of this group differed according to the situation and where they were located.

While describing the announcement as something much awaited, Yusof said the rich were those who were not the least affected by the rise in costs.

“Those earning RM5,000 to RM10,000 are still pressured by the rising cost of living in the city,” he said when contacted by Bernama.

“Firstly, the government has to narrow down on those eligible to receive the subsidy, secondly, remove from the list the industries not qualified for the subsidy, and thirdly, the government needs to fix the leakages and then only, turn to the domestic consumers,” he said.

Yesterday, Deputy Finance Minister Ahmad Maslan said the selling price of RON95 petrol for the high-income group would be in accordance with the market price starting in June next year.

Ahmad said the mechanism and method of implementation were being finalised by the Ministry of Finance and the Ministry of Domestic Trade, Cooperatives and Consumerism using MyKad or other cards.

Low and middle-income earners will continue to enjoy RON95 at the subsidised price.

Economic analyst, Mohd Yusof Kassim said the move by the government would bring significant benefits to low and middle-income earners and make a positive impact on national development.

The savings from the measures taken could be channelled to projects beneficial to the people and national income distributed to the middle-income group, he said. – Bernama

Causeway toll ‘tit-for-tat’ will hurt Malaysia more than Singapore, The Economist says….But we say: What say you PM @NajibRazak?

October 24, 2014

Despite protests by transport companies and frequent commuters of the Causeway, Malaysia raised the toll fees for cars leaving the country at its southern gateway in August with taxis paying RM8.20 for a round-trip while heavy good vehicles are charged RM33.30. — File pic

Despite protests by transport companies and frequent commuters of the Causeway, Malaysia raised the toll fees for cars leaving the country at its southern gateway in August with taxis paying RM8.20 for a round-trip while heavy good vehicles are charged RM33.30. — File pic

KUALA LUMPUR, Oct 24  MMO― Malaysia has more to lose in the “tit-for-tat” Causeway toll fee hike than Singapore, The Economist said in its latest print edition, pointing out that the bridge road between the two Southeast nations accounts for roughly half of this country’s foreign visitors.

The London-based international current affairs news weekly also pointed out that the higher rates hurts the pockets of Malaysians travelling across the Causeway for work.

To make things worse, The Economist noted that Johor lawmakers are now also threatening an additional levy on Singaporean drivers in Malaysia.

“Malaysia has most to lose from the tit-for-tat,” the weekly said in an article in its latest print edition.

Despite protests by transport companies and frequent commuters of the Causeway, Malaysia raised the toll fees for cars leaving the country at its southern gateway in August with taxis paying RM8.20 for a round-trip while heavy good vehicles are charged RM33.30.

The Singapore Land Transport Authority then announced in September that it would match Malaysia’s prices on the oldest bridge linking the two countries that were once part of the same federation, adding that it would revise the rates if and when Malaysia does.

Johor’s lawmakers have sounded warning bells over the hike, noting that the 470 per cent increase will pose a strain on small traders, besides hitting Malaysia’s tourism and the Iskandar development region, which is heavily reliant on its closeness to Singapore for investments.

“The Iskandar Development Region… is as good as gone. There will definitely be an impact on the national economy,” Kluang MP Liew Chin Tong said recently.

The Economist agreed the toll hikes would affect Johor’s burgeoning Iskandar region, noting that early optimism in the returns from the economic zone is already fading amid the looming housing glut.

“Malaysia has poured money and effort into Iskandar,” the weekly said.

By developing the economic zone, which spans an area about three times the size of Singapore, The Economist said Putrajaya had hoped to “snag a little more of the magic dust” from its rich neighbour.

The plan worked for a time, the weekly said, noting that rich Singaporeans were happy at having a cheaper option to park their investments.

“Until recently, Iskandar’s cheap condominiums seemed like good bets when Singapore’s own property prices were shooting up.

“Singapore hopes factories can move to Johor, freeing up space and resources for higher-value businesses,” The Economist said.

Malaysians in the meantime, it said, continued to commute daily from Johor, reporting to jobs across the Causeway where they could earn in Singaporean currency.

But housebuilding in Iskandar has now outpaced job creation, The Economist said, a phenomenon that observers have agreed will soon result in a property glut.

Citing Malaysian data, Singapore’s main newspaper Straits Times reported recently that there are 118,191 homes under construction in Johor, and another 168,371 planned as at the fourth quarter of last year.

Adding to fears of the looming oversupply of homes, The Economist pointed out that the suspension of corporate-ownership rules that favour the Malays, Malaysia’s ethnic majority, in Iskandar has also angered the locals.

Their grievances, the weekly said, cannot be ignored, particularly as the ruling Barisan Nasional (BN) government had lost significant numbers to the opposition during the last general election.

“At present the costs are manageable,” The Economist wrote in reference to the Causeway toll prices, quoting a taxi driver on the Causeway.

“But what will happen next year?” it asked.

- See more at: http://www.themalaymailonline.com/malaysia/article/causeway-toll-tit-for-tat-will-hurt-malaysia-more-than-singapore-the-econom#sthash.V4RNDalH.dpuf

Major Zaidi’s guilty of having courage, court told…..You Will Never Walk Alone…We’re All With You!

October 20, 2014

Oct 20, 2014

By Radzi Razak (MKini)

Royal Malaysian Air Force Major Zaidi Ahmad’s only crime is his courage when he publicly spoke out on problems with the electoral process, said defence lawyer Hanipa Maidin.

“His only crime is being courageous. He should not be taken action against, he should be given a medal instead,” Hanipa told a military court today in his final submission.

Zaidi in the last general election revealed that the Election Commission’s (EC) indelible ink used on his finger during the polls process could be washed off.

He was subsequently court marshalled on seven charges for disobedience under Section 51 of the Armed Forces Act 1972.

Among the charges include making statement to the media without the Defence Ministry’s authorisation and use of military channels

Hanipa (right) argued that the prosecution failed to produce clear evidence to support the charges.

He said Zaidi had only made the media statement in his capacity as a registered voter and therefore did not violate military law.

‘Military has no power to investigate’

“The indelible ink is not supplied by the military and it does not have power to investigate because the election and the ink are under the Election Commission,” Hanipa told the court hearing at the Sungai Besi Royal Malaysian Air Force base today.

Three of the five charges Zaidi is facing are making public statements without authorisation, leaking official information to the media and using military channels without approval.

The other more charges, for which he has yet to be tried, concern text messages sent out by Zaidi, which are said to contain political undertones.

Meanwhile, the prosecution, led by Major Ahmad Azam Soip, only made its winding up arguments on the first three charges.

Ahmad said the prosecution will leave the fourth and fifth charges, which concern unauthorised used of Armed Forces channels, to the courts to decide.

After the winding up arguments, presiding judge Colonel Saadon Hasnan said the court will anounce whether there is a primae facie case against Zaidi at 2pm next Monday.

Pakatan support rebounds, surges to 43%, survey shows – UMCEDEL.

October 20, 2014

BY ZULKIFLI SULONG, FEATURES AND ANALYSIS EDITOR

Published: 20 October 2014

The Pakatan Rakyat’s (PR) support in Selangor has rebounded to 43%, according to a recent survey, after taking a beating five months ago largely due to infighting in the opposition coalition.

Support for Barisan Nasional (BN), meanwhile, dropped by five percentage points from 25% last May, the survey conducted by Universiti Malaya’s Centre for Democracy and Elections (UMcedel) showed.

The survey, which was carried out three days after the new Selangor menteri besar, Mohamed Azmin Ali, was sworn in, also found that 28% were unsure about both coalitions.

The results for PR were an improvement over UMcedel’s survey in May this year, which saw support for the coalition in the state plunge to 35% a year after winning Selangor in the 2013 general election.

But ominously for BN, its support base has not grown since the survey in May, which showed that only 20% to 25% of respondents supported the coalition.

“This shows that despite PR’s crisis, the rakyat is still with them. The voters’ response shows that they are still not confident that BN/Umno can be a better alternative, and that their anger towards BN has still not died down,” said a source in UMcedel.

UMcedel’s latest survey, conducted from September 26 to 28, also revealed that 48% of those polled said they wanted PAS to remain in PR while only 19% wanted the Islamist party to break away and another 22% were unsure.

The survey polled 1,165 respondents in all 22 Parliament constituencies in Selangor, covering all races. The survey was carried out by 36 enumerators and four supervisors from UMcedel within just two days.

The internal turmoil in PR began after PKR initiated its Kajang Move, which saw Kajang assemblyman, Liew Chin Cheh, stepping down to allow PKR de facto leader Datuk Seri Anwar Ibrahim to contest the seat and become Selangor menteri besar.

However, PAS did not agree with the move as it wanted Tan Sri Abdul Khalid Ibrahim to remain the menteri besar, causing the entire episode to drag on for nine months, during which time the ties between the three parties worsened.

Athough the Selangor impasse was finally over with the swearing-in of Azmin as menteri besar on September 23, the tension within PAS did not subside.

Things came to a head in the party when its president, Datuk Seri Abdul Hadi Awang, ordered those who wished to challenge his position to leave the party.

“Whoever wants to become an imam, you are better off looking for another piece of land, build your own mosque, and become an imam,” he had said during the PAS annual general assembly last month.

In the same speech, he had claimed that there were “brokers” and “stooges” in his party, in a reference to the two PAS Selangor assemblymen who had pledged support PKR president Datuk Seri Dr Wan Azizah Wan Ismail as the new menteri besar ahead of the party’s decision on the matter.

Both Saari Sungib (Hulu Klang) and Hasnul Baharuddin (Morib) were suspended from the party for a year by the central committee a week ago.

Since the crisis began, two schools of thought have emerged in PAS: one which wishes for it to remain in PR, and another, led by the clerics, which wants it to leave the coalition.

However, UMcedel’s latest study showed that the people of Selangor still supported PR and wanted PAS to remain in the pact that was formed after the 2008 polls. – October 20, 2014.
– See more at: http://www.themalaysianinsider.com/malaysia/article/pakatan-support-rebounds-surges-to-43-survey-shows#sthash.0tvJHTgP.dpuf

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