Malaysia Market Reform – How to Get out of Fiscal Debt Situation

Poland and Slovakia among many other countries currently are dubbed as high income nations, where these countries have made significant economic reforms after being stagnant in the early years. South Korea for instance, has amazing economic growth within a short period of time, where it was once a devastating nation due to the Korean war and had managed to transform to becoming one of the wealthiest nation in the world.  

Challenges for Malaysia, are of short term and long term, where the next general election is in 2018, and until then there are key areas that the current government administration is tasked to do.  In this case few economic matters are of concern, which are reducing the government debt, implementation of GST, strengthening of ringgit and reducing the debt-GDP ratio. Now there are two things that are also of concern in my opinion, in terms of our corruption and competitiveness indexes. We are still far from achieving corruption-free state and our competitiveness index is at the unsatisfactory level (24^th out of 148 countries).

A reform can simply be defined as a major policy change. In economical sense, this could mean a positive improvement to the society, such as in reducing the country’s fiscal deficit. A successful reform could also mean by spreading the burden of the adjustment of government expenditures and revenues across income classes and income sources.

 Some suggested economic reforms:

– Enhancing the role of private sector in the society and limiting government’s involvement in infrastructure projects, which in turns would lessen the contingent liabilities for the government.

-To increase government’s revenue (to achieve >25% of GDP) via more efficient tax collection system and to move away from oil and gas revenues stream.

– Eliminating price controls, deregulating capital markets and lowering trade barriers. As for capital market point of view, to limit foreign holdings in the stock market, to limit GLC participation by way of encouraging the GLCs to sell down their ownership in stocks as well as to ease companies participation in the ACE market and also their movement from ACE market to Main market of Bursa Malaysia.

– Limiting the subsidies and handouts. Though BR1M is a measure of targeted form of subsidy, it is still bearing the characteristics of featherbedding, which discourages and limits self development in the society.

– Allowing media freedom

-Encourage self reliance in food production, which means promoting and supporting the agriculture industry.

All these economic reforms in transforming the country’s political economy should start from the grass roots level, and that includes individual, household and the society at large. Educating the rakyat on the necessities of reforms and difficult government decision such as subsidy rationalisation should be a priority. Any policy reform is indeed painful at the beginning, which largely due to people receptive of changes, thus it is important for the government to disseminate the right information.

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Pak Jokowi

Indonesia, with its massive population of 250 million people, is grippling with issues and struggles; providing enough basic necessities to the people, food, shelter, healthcare and jobs. Jakarta alone is swarmed with 10 million people and due to its large population and lack of public transportation services, the city is often infested with problems such as flood and gridlocks. It is said that 440 cars are bought everyday.. in Jakarta alone.

In Pluit (district within Jakarta) alone there are 7,000 squatters, of whom 2,000 has been relocated to low rent housing under Jokowi leadership. Of all his manifesto, one of his aims is to transform the slum infested Pluit to the better, by having city parks and proper housing development.

Who is this Jokowi, you’d ask? Joko Widodo or Jokowi is the Governor of Jakarta since 2012. Previously he was the Mayor of his hometown of Solo for 8 years, where he has managed to cut crime, revived the local economy and rebranded the city as the centre of Javanese culture and tourism, among many other achievements. This year, Fortune magazine has listed this man as The World’s 50 Great Leaders. Whereas in 2012 alone Jokowi received 3rd place of the 2012 World Mayor Prize for “transforming a crime-ridden city into a regional center for art and culture and an attractive city to tourists”.  In February 2013 he was nominated as the global mayor of the month by the The City Mayors Foundation based in London.

How’s that for a resume?

These are some of Pak Jokowi approach as the Governor:

-Most of the time he’s not at the office, he goes out to the street, market place, hospitals to meet the people. this is a culture / habit which is referred to as blusukan in indonesian.

-He cycles to/from home every Friday since November last year in encouraging the city dwellers to ditch the car and cycles/walks/uses bus to get around.

-He listens to Metallica.

-He ditches his formal uniform and donnes plain khakis and cheap shoes while doing his rounds of meeting people.

-Doesn’t use police escort while commuting. Doesn’t have bodyguards while doing the routine blusukan.

-He was even spotted ditching his formal car and hopped on a motorbike to beat the notorious traffic.

-The people and media adore him. he frequently appears on media, usually with throngs of people swarming him.

-Previous career as a furniture businessman and he made millions doing it. Decided to join politics as to help his ailing, radical hometown (remember Abu Bakara Bashir?) to prosperity.

So there, among the highlights of his achievements and aspirations. And yes, he’d be running for presidential election comes July 9th. This year is surely an interesting year in Jakarta politics. I am of course, intrigued and excited. All the best Pak Jokowi.