COMMENT | Reforming our political economy: What M'sia needs now

COMMENT | The country is hit with multiple crises right now, but here are five things that the current administration can immediately do in transforming our political economy that is in dire need of reform.

First, the government can reform our procurement practices through clear and transparent legislation, where procurement (including that of mega-public infrastructure projects) is a regular source of corruption and wastage of government money. 

In fact, the National Anti-Corruption Plan (NACP), which you have committed to, says so, promising to legislate a Government Procurement Act. An opaque and non-rules-based procurement system acts as a deterrent to economic competitiveness, and worsens our international governance score.

Part of the reforms should include establishing a review system that will allow interested stakeholders to seek complaints and remedies if rules of procurement are not being followed. This will ensure all parties involved in procurement comply with applicable rules. 

We should also adopt international transparency standards in regular procurement and procurement by public and private partnership (PPP) models and provide open procurement data to the public. 

Finally, we should allow outside observers to take part in the procurement process that will have a significant impact on both service delivery and taxpayers’ money.

Second, the government can provide robust regulation, monitoring and oversight of our government-linked companies (GLCs), some of which no longer serve their original social objectives in helping communities thrive. A quick analysis into which sectors GLCs should continue to exist in, and not, can be done. 

If the GLCs are helping the economy, they can carry on. If they are harming the economy, for instance, by competing against the very small and medium enterprise (SME) market that contributes to the country’s GDP, they are obsolete and should be gradually phased out.

Third, the government can provide leadership in settling the issue of bumiputera preferential policy once and for all. Specifically, the current administration can be fully transparent regarding what sort of affirmative action continues to be needed in which sectors, for how long more and what are the clear targets that must be reached. 

Investors both domestic and international require stable and predictable environments. With a transparent and accountable bumiputera agenda alongside clear goals, this would provide the certainty they require to restore trust in our economy.

Fourth, ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a low-hanging fruit that can address some of our trade woes by opening up our economy further, but this must be done in conjunction with parallel economic plans for labour and other adjustments. 

SMEs would benefit as this would create a more level playing field and more transparency and predictability all round. Up to one quarter of Malaysia’s SMEs are at risk of closure over the next few months, according to the SME Association of Malaysia, following the lockdowns and semi-lockdowns they continue to face. SMEs represent 98.5 percent of companies in Malaysia and account for 38.3 percent of our GDP. 

The Institute for Democracy and Economic Affairs (Ideas) estimates that ratifying the CPTPP will increase our GDP by 1 percent, which would translate into 140,000 additional jobs and employment opportunities.

Fifth, work to immediately get the Political Funding Bill tabled and passed in Parliament. Without legislation that regulates how political funds are raised and spent, the system invariably self-corrupts even the most idealistic politician. 

This is added to by constituents who expect that their elected representatives contribute financially to their needs; so civil society and think tanks can play a role in educating the public that lawmakers should do precisely that, over and above playing the role of welfare officer. 

As Malaysia faces further fiscal squeeze without a GST regime in place, greater pressures to roll out larger aid packages and slowing contributions from oil and gas, it is important that government funds are channelled to the right targets instead of to political parties that may siphon off a significant margin, leaving only a remnant to the poorest communities.

If some of the above are addressed, there is a remote chance for Malaysia to regain its competitive position. Already the data shows us that the US-China trade war has not necessarily resulted in Malaysia benefiting from manufacturer relocations. 

Industry suffers from the lack of bold economic policy, the lack of prioritisation, and poor government coordination. The Shared Prosperity Vision 2030 document and 12th Malaysia Plan are expected to spell some of these out, but the rollout of these documents are already delayed. Unless they present reforms to some of the issues outlined above, there is a risk of sounding repetitious and worse, showing no true vision.

Our country is facing crises on multiple fronts - social, economic, political and public health. Malaysia needs its political leaders now more than ever, but many, if not most, do not seem present. The uncertainty over national leadership in the country is causing the markets to stall, while investors both domestic and foreign adopt a “wait and see” approach, unsure over whether the current administration will remain, given its razor-thin majority.

The lack of transparency over what ought to be a basic administrative procedure premised on the country’s constitutional foundations in determining the country’s prime minister has added to a sense of frustration. 

The public feels at a complete loss, disenfranchised and cut off from the decision-making process that is behind closed doors. Any sense of empowerment gained from voting in the previous election has drained out of the electorate, leaving behind a cold and disillusioned public.

New Zealand’s prime minister has shown us that it is possible to demonstrate stellar leadership during a time of crisis, and be rewarded for it. Jacinda Ahern (above) recently won re-election with a landslide victory, on the back of managing the pandemic well. I implore that you as the country’s leaders come forth and demonstrate the same leadership, focusing on public policy priorities that are needed to steer the nation toward positive outcomes.

Address the core, fundamental, structural problems that riddle our institutions. Be courageous in laying out the foundational solutions within our political economy, even if they may be deemed as sensitive. Settle the question of parliamentary majority over the constitutionally and legally recognised administration – whichever administration, it matters little if you take a bigger picture approach – sooner rather than later, to restore investor confidence. 

Reform the way political parties are funded, so money can flow to the right places in helping vulnerable communities instead of being funnelled to the wrong hands. Decisively select high-value sectors for the economy to flourish, and jobs will be restored. Now is the time to act.

TRICIA YEOH is CEO of Institute for Democracy and Economic Affairs (Ideas).

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.