PM Najib prides himself as the ‘Father of Transformation’ or ‘Bapa Transformasi’ because of the spate of transformation initiatives which he has launched since taking over as Prime Minister in 2009.
He has certainly transformed the Malaysian lexicon by introducing an alphabet soup of acronyms such as the ETP, GTP, NKRA, NKEA, SRI, NEM, BR1M and KR1M, just to name a few.
The expensive consultants who conceived of these terms have certainly benefitted from these transformation initiatives. But the positive impact on the man on the street is far less apparent.
While the Prime Minister still sounds positive about his transformation initiatives, his budget tells us a different story.
The budgetary allocations for ETP and GTP related initiatives have decreased for the past two years, from a high of RM15.5b in 2011 to RM8.3b in 2013, a reduction of 46.5%. The allocation for the 6 NKRAs under the GTP has decreased by 47%, from RM9.5b in 2011 to RM5.0b in 2013. The allocation for the 12 NKEAs under the ETP has decreased by 45%, from RM6b in 2011 to RM3.3b in 2013.
The decrease in the allocation for the GTP raises three important questions. Firstly, have the desired KPIs in the NKRAs been achieved? Secondly, even with the decrease in the budgetary allocations, have the funds been properly allocated?
Thirdly, is the decrease in funding for the GTP a sign that PM Najib is slowly but surely abandoning the GTP in favor of direct cash handouts in order to buy votes in the run up to the next general election?
The answer to the first question is an obvious NO.
According to the GTP Annual Report 2012, the 2012 targets were much more aggressive compared to the 2011 targets. For example, the length of roads to be built was increased from 905km in 2011 to 1350 in 2012, an increase of 49%. The number of houses to be connected with clean water and a regular electricity supply was increased from 58087 and 26822 in 2011 to 201192 and 39442 respectively in 2012, an increase of 246% and 47% respectively.
This is supposed to be achieved with a lower budgetary allocation. Presumably the targets for 2013 would also be higher. And yet, this has to be achieved with a lower budgetary allocation.
The funding under the development expenditure for the Rural Basic Infrastructure (RBI) NKRA was decreased from RM6.4b in 2011 to RM5.1b in 2012 and will be further decreased in this 2013 budget to RM3.2b. In other words, funding for RBI has been cut in half since 2011 even though the KPIs for this NKRA have increased significantly since 2011.
One only hopes that PEMANDU will not be asked to ‘massage’ the KPI data for RBI in future years in the same manner to how the KPIs for crime reduction seem to have been ‘massaged’.
The second question involves the allocation of resources between and within the various NKRAs.
Let’s take a look at budgetary allocation for the Crime NKRA, one of the highest profile NKRAs under the GTP. According to the budget estimates from 2011 to 2013, the allocation for NKRA Crime specific initiatives was reduced from RM351m in 2011 to RM239.8m in 2012 and then increased to RM322.3m in 2013.
What was interesting about the increase in allocation from 2012 to 2013 is that most of this went to the NKRA initiative to ‘Increase Safety Perception index’, which is equivalent to the ‘Reduce Fear of Crime’ NKRA initiative in the 2012 and 2011 budget estimates. The increase in this allocation is a whopping RM103m!
While some of this increased allocation would involve policing initiatives such as the expansion of the ‘Omnipresence’ and the ‘Whiten’ Black Spots programs, it is likely that a significant portion would be channeled towards public relations exercises including organizing a ‘Crime Awareness Day’, conducting independent surveys and beefing up the PDRM Communications Unit.
In other words, instead of allocating more resources to reducing crime such as Street Crime (which only gets Rm26.4m of the NKRA Crime budget), much of this additional resources will be used for PR instead.
Hence, not only has the funding for most of the NKRAs been cut, what is left also seems to be in danger of being misallocated for empty publicity measures.
The reduction in the allocation for the GTP and the ETP is an indication that PM Najib is getting desperate and is abandoning his transformation initiatives in favor of buying votes with direct handouts.
An additional symptom of favoring short term handouts to longer term structural changes is the fact that development expenditure will be decreased from RM49.8b in 2012 to RM49.7b. Our development expenditure has decreased from 24% of the total budget to less than 20% of total expenditure in the latest budget. This is very concerning since having a healthy development expenditure is necessary to lay the foundations of future growth in our country.
PM’s commitment to the ETP also shows signs of flagging. The budgetary allocation for the ETP was a whopping RM6b in 2011. If this figure is to be believed, this would mean that government investment in the ETP was 47% of the total actualized investment of RM12.9b under the ETP in 2011, a much larger figure than the 8% target government investment target set by PEMANDU.
This figure has been reduced by almost half, to RM3.3b in 2013. If this reduction is because the private sector has stepped in to fill the investment targets of the ETP, then this would not be a problem.
But the reduction in the budgetary allocation for the ETP has come at a time when the committed investments for the ETP have also decreased. For 2012, announced investments for the ETP stand at only RM16b or about 16% of the RM167b of committed investments announced in 2011.
As private sector doubts continue to rise with regard to the economic viability of the ETP, the PM seems also to have realized this and has cut the budgetary allocation to the ETP, hoping that this quiet bailing out would escape public attention.
The only allocation which has increased is that allocated to the Strategic Reform Initiatives (SRIs). Sadly, the amount allocated for structural reforms via the SRIs is only a measly RM154m in 2013 from an equally measly RM121.5m in 2012.
The SRIs, which were originally devised in the New Economic Model (NEM) under the National Economic Advisory Council (NEAC), seems to have been left behind and ignored after being appended to the ETP. Of the 51 SRIs which were identified in the NEM, 14 were housed in existing ‘natural homes’ as part of either an NKEA or NKRA. The remaining 37 were clustered into 6 rebranded SRIs.
However, many of the specific SRIs have not been implemented and the small amount of funding allocated to the SRIs in Budget 2013 is a reflection of this. For example, the SRI to ‘Set Up a Central Oversight Authority’ to re-examine the ‘Government’s Role in Business’ has not been implemented. The SRI to ‘Introduce Unemployment Insurance’ to set up a Labor Safety Net as part of the ‘Human Capital Development’ cluster has also been ignored. Similarly, the SRI to ‘revive the national development planning committee (NDPC) as the Premier Body for Policy Development, Coordination and Consultation’ under the ‘Public Service Delivery’ cluster has also been ignored.
The failure of the various transformation schemes can best be seen in Malaysia’s fall in the World Economic Forum’s Global Competitiveness Report from 21 in 2011 to 25 in 2012.
Malaysia’s ranking fell by 4 places as a result of being overtaken by Korea, Luxembourg, New Zealand and the United Arab Emirates. At the same time, Malaysia’s score fell slightly, from 5.08 in 2011 to 5.06 in 2012.
This was reflected in the fact that out of the 148 indicators used by the WEF to compile this ranking, Malaysia experienced in fall in its ranking in 77 indicators compared to a rise in its ranking in only 48 indicators with its ranking in the remaining 23 indicators remaining unchanged.
These indicators cover initiatives under the GTP such as corruption as well as the ETP such as broadband access and the SRIs such as public finance reforms. It is another indicator to show that after the initial excitement over the GTP and the ETP, these efforts have fizzled out.
Public skepticism in Malaysia over these transformation initiatives are reflected in international rankings and surveys.
(Speech 3 on the 2013 Budget on Thursday, October 4, 2012)