I REFER to the latest posting in (Tun) Dr Mahathir Mohamad‘s blog, in which he criticised non-Malay [Malaysians] for asking for more concessions from state policies. In response to these demands, the current prime minister (Datuk Seri Najib Razak) has liberalised rules pertaining to equity ownership in some service sub-sectors and promised to set up a scholarship based purely on merit, beginning from next year.
Dr Mahathir has found all these to be unacceptable, as they are tantamount to the government helping the relatively better off non-Malay [Malaysians], taking even more from the relatively poorer Malay [Malaysians]. To substantiate his point, he went on to assert that non-Malay [Malaysians] now own around 50% of the share capital while Malay [Malaysians] own only 20%, far from the target set in the New Economic Policy of 30%.
I find Dr Mahathir’s arguments to be objectionable on three grounds. Firstly, quite apart from the accuracy of his statistics on share ownership according to ethnic group, his focus on this particular issue is a case of wrong priority. We all know, and I am sure Dr Mahathir does too, that shares and even high-value urban properties are owned only by a small proportion of the total population. This is true of all communities, not just in Malaysia, but in countries all over the world, including the US and Japan.
For the bulk of the population, share ownership is far removed and irrelevant to their lives. Their concern is with obtaining a just return to their efforts and labour, i.e. with egalitarianism. Instead of focusing his concern on how wealth and income can be redistributed from the upper strata of all communities to the lower strata of all ethnic groups, Dr Mahathir chose instead to concentrate on redistributing wealth from one socioeconomic elite group to another.
Precisely because of this misplaced priority, the pattern of wealth and income distribution for the country as a whole, and for Malay [Malaysians] in particular, has gotten worse over the years. The wholesale adoption of neo-liberal policies, such as the privatisation of massive infrastructural projects to cronies has led in part to this rising inequality. Other factors include the increasing reliance on indirect taxes, which are regressive, as a source of governmental revenue, and shrinking the state’s role as a provider of public goods.
What is worse, and this is my second objection, Dr Mahathir’s resort to using very strong ethnic underpinnings in his argument may well lead to further ethnic division and contradictions. I would have thought that as a former prime minister of 22 years, he would have made it his utmost priority to promote the core values of socio-economic egalitarianism, inter-ethnic cooperation and communitarian togetherness. It would seem that this is not the case, which is indeed most disappointing.
Finally, Dr Mahathir, like many others who take the racial approach, has taken the simplistic and unscientific assumption that all communities are monolithic and homogenous in socio-economic terms, when in fact they are far from so. All the ethnic communities in Malaysia are class stratified. The Malay, as much as the Chinese and the Indian [Malaysian], are all stratified into different income groups, with the rich making up only a small percentage of the total.
The bulk of the Chinese, like the bulk of the Malay and the Indian [Malaysian], are relatively poor. Over the years, these labouring Malaysians have found monetary returns to their labour unable to catch up with the rising cost of living. In real terms, all of them have suffered.
Dr Mahathir’s thoughts and efforts should be on how governmental policies can be better designed to alleviate their economic sufferings and not resort to pursuing racist arguments in support of one group of the rich elite. Reorienting his priorities will go a long way towards helping the nation attain equality, social justice and inter-ethnic harmony.
Dr Toh Kin Woon
Research Fellow at the Center for Southeast Asian Studies,
University of Kyoto
Former Penang state executive councilor
Nicholas Aw says
Dr.M was a respected statesman acknowledged by many Malaysians. But of late he is losing respect as he loves to indulge in fanning the fire of hate amongst Malaysians.
I could write pages both good and bad about Dr M but the rakyat would already have known this hypocritical man who would say one good thing and the next minute turn around to say that it is bad.
You have retired Dr M so act like a retiree and don’t offend the rakyat with your big mouth. Then the people would still acknowledge you as a statesman and perhaps the best Prime Minister Malaysia ever had.
Yes, 22 years at the helm has not changed Dr Mahathir’s ways. He has always taken the select few approach to the detriment of the whole. Pick a few trusted men and hope the benefits will trickle down to the masses. He has never been open to other approaches.
A. Asohan says
“In response to these demands, the current prime minister (Datuk Seri Najib Razak) has liberalised rules pertaining to equity ownership in some service sub-sectors and promised to set up a scholarship based purely on merit, beginning from next year.”
I have to disagree with this statement on a few grounds — first, it plays into the fascist rantings of the worst of the Umnoputras (“the non-Malay Malaysians are *demanding* more rights”); second, I believe Najib was merely responding to the demands of reality; and third (and perhaps most important), weren’t these liberalisation moves actually part of the Afta concessions committed to by the Abdullah administration? I could be mistaken in the last, however.
The only point(s) of disagreement I have with an otherwise excellent analysis 😉
Just to comment on a narrow but important aspect.
We must be careful not to blame privatization for our economic problems. As world economy worsens in the next decade, honestly-brokered GLC divestments and privatization can save Malaysia from plunging into chaos.
Dr M’s mistake was that he did not conduct true privatization. He instead chose to “privatize profit and nationalize losses.” He feudalized (allocating resources to cronies by loyalty) rather than privatized, hence giving Malaysians a terrible aftertaste of privatization.
In honest privatization, the divested enterprises can freely hire the best talents, buy from the cheapest suppliers, and sell to the highest bidders. Not Dr M’s “privatized” enterprises.
Honest privatization will enrich everyone in Malaysia – Malay, Chinese, Indian, Dayak, or others. How? Through shares in their EPF, private retirement mutual funds, more employment opportunities, higher-income jobs, cheaper food and services, better quality transport and telephone service, more customers for hawkers and more diverse and useful education.
Don’t blame privatization blindly. Capitalism can end up providing – ironically – social economic benefits that even the most idealistic socialists cannot hope to achieve – but in a less oppressive way.
How? An example is when mutual fund ownership in a liberalized and privatized economy becomes the dominant ownership mode, where every worker ends up with a piece of ownership of every enterprise. To borrow from AirAsia’s motto, “Now everyone can be a boss (politically and economically).”
(The US was moving toward this goal, but in the past decades went astray because government intervention through Fed to lower interest rates distorted the economy, pushing people towards debt and overpriced houses.)
Wouldn’t that worker-own economy be a socialist’s wildest dream? This is not a contradiction in terms. But it cannot be achieved through socialism. It can only be achieved through capitalism, liberalization, and starting with privatization of GLC assets.
Bravo Dr Toh!
Dear Dr M hope you’re reading this?!
CONCERNED PERAKIAN says
Well said Dr Toh. Dr M’s focus on wealth is not supported by statistics but merely an assumption. The Chinese Malaysians were not spoon fed but they achieved success through untiring hardwork. There is no reason why other communities in Malaysia could not catch up with the Chinese if they also work hard as the unscrupulous Chinese.
Wonder why the author wastes his time criticizing TDM in this article. Just ignore him, he’s already old.
Dr Mahathir continues to live in the 1930s. Today, any race-based argument to support inequality is at best antiquated, but worse, is misleading. Dr M should look back at his 22 years and ask where has he really taken the country. After all he was a PM whose coalition was elected into power by the majority of Malaysians. After 22 years, the dominant political question should not be one of race or communal politics but should have been replaced with nation.
Paul Warren says
I am afraid the former premier has outlived his usefulness and if he had any sense left he should just quietly lock himself in a room overlooking the lake behind his home and count the number of birds that dip into the water in each hour. Such a statistic might just be useful for some of us who might be interested in trivia. Otherwise the Tun is no more than a mischief maker venting his frustration over the fact that the world might have moved on to something beyond his understanding. Increasingly he might even be a liability and an embarrassment to his own children.
His 22 years have succeeded in creating an elite bumiputera class through unconventional means: he now needs to set the ‘required’ mindset where there would be no subsequent ‘witch-hunts’, especially in light of the possibility of a change of government at the federal level post-308, over the means by which such wealth were created. Dr M is being very logical and single-minded in this, after all did he not clearly state at the outset that he would be happy to see the creation of more bumiputera millionaires?
Phua Kai Lit says
It’s cynical politics.
Dr M made the statement partly to placate those who are upset with his declaration that science and maths should be taught in English.
Seasoned politicians like Dr M (and also like the senior gentleman “in a neighbouring country”) do not make public statements or do things out of impulse.
Dear Dr Toh,
Let me tell you what Dr M’s priority is:
John Doe says
For all the talk of Dr Toh that Mahathir does not have any proper statistics, Dr Toh himself did not provide a single statistic in his press release to support his claims either.
guru bhaai says
Well said Dr Toh. Dr M may have brought the current Malaysia to be well-known by the world. “Syukur.” A parent has 3 children. First child has 5 children, second child has 3 children and the third child has 2 children. Now the parent wants to share his wealth with his entire family and wants it to be a fair division. Now, will he divide it equally to his children or will he need to consider the number of grandchildren and divide it accordingly?
anthony stiven says
This guy and his Umno buddies have always look at things racially They do not act as Malaysians and do things for the well-being of all Malaysians. Even after GE they still harboured hopes and wanted to continue with the racial line, e.g. unity government with PAS. The people including Malay Malaysians should realise this is not the right way to do things, the cake is big enough for everyone, all you got to do is put your utmost effort on whatever you are doing and you will receive the rewards. We should not be part of this racially-minded group whose interest is more in keeping the power and wealth within their group and family. E.g. Mahathir’s son is deputy minister, is it because he is competent or because Mahathir wants his family, Razak and Hussein’s family to continue with their dynasty and enjoy the wealth and riches among themselves in pretence of looking after the Malay Malaysian community?
pak yeh says
I am very anti-Mahathir for abusing the NEP. I do no disagree with the NEP. Redistribution of wealth is a war cry of most Revolutions, communist or otherwise. Without the NEP, the Chinese would be the Tuan. Without NEP Malaysia would have a KeTuanan Cina instead.
Isn’t it good, climbing the ladder of racial knowledge and not forcing people to realise who they are?
Dr. Toh has again admirably stood up against racist and oppressive ideas. But because Dr Toh, just as Dr.Syed Husin Ali, are such respectable figures whom many young intellectuals will follow, I feel obliged to point out a flaw in his blaming of economic problems on privatization and indirect tax.
In fact, privatization and indirect tax will make a better society than nationalization and high income tax.
I refer to this paragraph “The wholesale adoption of neo-liberal policies, such as the privatisation of massive infrastructural projects to cronies has led in part to this rising inequality. Other factors include the increasing reliance on indirect taxes, which are regressive, as a source of governmental revenue, and shrinking the state’s role as a provider of public goods.”
In an earlier comment, I have pointed out that Dr M did not conduct honest privatization.
Another fundamental problem with Dr M’s privatization is that it did not lead to reduction of taxes. The whole point about privatization is that on the one hand, government gives up the burden of business and services, and on the other hand government reduces the need to tax and finance them.
Not in Malaysia. FM Anwar did reduce tax gradually starting 1993, but still too conservatively. When FM Anwar refused to finance the rescue of major Umno cronies during the 1998 crisis, Dr M overrode him. Not able to raise tax rate due to international competition, Dr M allowed new FM Daim to raise debt instead, substantially, more than tripling government debt now from RM90 billion of 1997. This is the case even though we had a huge petroleum windfall.
With privatization, Malaysia’s tax should have been reduced from 30+% in late 1980s to perhaps a flat and simple 20%. Instead, personal income tax got stuck around 27-28%.
Worse than raising debts, FM Daim and Mahathir had to raise tax through indirect taxes (sales, tariff, excise, service taxes).
Had personal income tax been reduced sharply, raising indirect taxes would not be such a problem.
Indirect taxes is also not “regressive” as Dr Toh assumes, because it is the rich and consuming groups who will be paying the most indirect taxes. They are the restaurant-goers, jewelry and fashion buyers, car and furniture buyers.
An indirect tax regime can always be set up to exempt the unprocessed food, hawker food, school books and essential medicines so that the poor can escape most of it.
By shifting the burden from income tax (actually an “earning efforts tax”) to indirect tax, a country would be telling its fellow people that “we will not charge you for your efforts to earn more money, or for saving up to build business and create jobs” but “we will delay taxing you until the time you decide to spend it on non-essential items on yourselves”.
Wouldn’t that be fair? Wouldn’t that be the wisest way to encourage work, saving, investments, and differentiate between those who produce and produce jobs (tax them less) and those who eventually decide to consume more luxurious things?
What will happen is that countries will compete to reduce income tax. This means a competition to encourage hard work (“come and work and start business in our country”).
Next, countries will compete to hold down indirect taxes (“come and live, holiday, retire, raise children, shop, get medical care, get education, and spend in our country”). This will mean government revenues will be constrained by competition among countries to be the better place to live. It also means, without an open tap, government size will be constrained.
A constrained government means a less oppressive government.
Indirect tax is not regressive. (To avoid the confusing term of “progressive,”) Indirect tax is in fact an exceptionally enlightened idea.
Mahathir has been described in many ways over the years. I had been a big fan. With maturity and increasing political awareness I realise what a big fool I had been for being a big fan. Perhaps the most appropriate description of Mahathir was coined by Karpal a few years ago – â€œa gutter politicianâ€œ.
Someone once said : a fool is a person who does the same thing repeatedly hoping for a desired result but not getting it.
In medicine, it is said : you make a diagnosis and then treat it; if you do not get the desired result, either the diagnosis is incorrect or the treatment is incorrect. Reassessment is needed or you lose the patient.
If after 30 years of affirmative action we have not got the desired result, you must be a fool to continue with it and risk losing the patient (Malaysia).
Azizi Khan says
After 22 years at the helm Tun Dr M should be ashamed that bumiputra equity ownership is only (allegedly) 20%. Think about it. If Malaysia was a privately owned cooperation, this CEO (Tun Dr M) would have been sacked for such a poor performance. So what is his excuse then ?
Collectively no other prime minister has had his tenure. He had every opportunity to make Malaysia as good as or even better than our neighbour Singapore.
He has absolutely no excuse to blame anyone else for this. In fact there should be a demand for a royal commission by the people to put Tun Dr M on the stand and ask why did he waste 22 years selectively making the rich richer.
KL Lee says
I find it odd that for 22 years, he was in power. [But] he is now [speaking] as though he [did] not do anything for the betterment of Malay [Malaysians], especially the vast majority of them. Twenty two years is a long time and look, we are now [lagging] behind Singapore for all his rhetoric.
NEP is not a subject of communal controversy [for] the present government. And I strongly believe [that] it is [because] FDI has been bypassing us that the government is trying to arrest the slide. NEP not only affects Malaysians as a whole, it affects foreign investments as well.
Despite all the rhetoric of Dr Mahathir all these years, fooling the low rung rakyat with tall tales, it is more than evident that the rich rule the roost and are getting richer all the time.
Every Umno-crat and crony scream […] that Malay [Malaysians] have not achieved the 30% equity status. Which Malays are they talking about? The poor Malay [Malaysians] are still poor whilst the rich live in castle-like homes with BMWs and Mercedes and Lotus at their doorsteps.
Can we Malaysians know how many Malay [Malaysians] […] combined own what proportion of Malay equity in this country against the 90% of Malay [Malaysians] digging the dung and straining on the fishing net for a living?
Can we also know how many elite Malay [Malaysian] children are studying overseas compared with the down-to-earth Malay [Malaysians]? That is why they are not bothered about studying English. Better to have an uneducated, half-literate Malay lot as citizens so that they can be hoodwinked by Malay unity, religion, rulers etc.
In the name of bumiputras and Malay unity, the mass of Malay [Malaysians] are being taken for a ride by the elite who still want to continue to loot the nation and expect to remain in power to do so for eons to come.
Half-castes are unwanted by both sides. So they make a claim as strong as ever for the stronger side of the half-caste. More half-castes and immigrants rule the roost in Malaysia than real natives.