To rescue the economy, put national interests before self-interest

Rash Behari Battacharjee
The Malaysian Insider
17 January 2015

It is as plain as daylight that Budget 2015 must be revised in the wake of plunging world oil prices, given that some 30% of government revenue comes from petroleum. In addition, it has been noted, the unprecedented ferocity of the year-end floods which will require a multi-billion ringgit reconstruction effort means that development expenditure must be reallocated to rehabilitate damaged infrastructure and restore normalcy to the victims’ lives and the economies of the affected regions.

Last week, Prime Minister and Finance Minister Datuk Seri Najib Razak indicated, not a day too soon, that an announcement about a possible restructuring of the budget to address these challenges would be made this week.

Analysts have noted that a confluence of external and internal factors in recent months – including the oil price shock, capital outflow, flood devastation and 1MDB’s performance, besides corrosive political developments – have heightened concerns about the prospects for the Malaysian economy, both in the immediate future and the longer term.

Nevertheless, the current adversities present an invaluable opportunity to set right the ship of state, which is showing alarming signs that it is heading for the rocks.

Although it is evident that the budget revision exercise would encompass the rationalisation of government expenditure through a raft of measures including cost-cutting and the de-prioritisation of non-urgent projects and programmes, it is essential to acknowledge that these steps do not address fundamental issues of governance that are at the heart of Malaysia’s development dilemma.

Chief among these is the current paradigm of political financing that nullifies the entire infrastructure of checks and balances that are central to democratic rule, from the principle of separation of powers to parliamentary oversight of national affairs to the practice of transparency and accountability.

In fact, attempting to instil fiscal discipline in the public administration without addressing the underlying decay in governance is essentially an exercise in futility. In a word, we must be serious about cleaning out the Augean stables of public office built on rent-seeking and patronage if we truly care to ensure a bright future for the country.

To put the government budget back on a sustainable track, wind back its ballooning operating expenditure and address the structural problems that are weighing down the economy, it is necessary first of all to commit ourselves to a functioning system of public accountability that enables the key democratic institutions to scrutinise public policies and performance and prevent the whole range of aberrations that are giving rise to grave concerns even about the viability of the country.

A common step taken by debt counsellors to help an individual debtor overcome the addiction to easy credit is to literally cut up the debtor’s credit cards before him or her. An equivalent action is necessary to cut the attachment of the political parties and their leaders to friendly business interests to finance their war chests and oil their political machinery.

This will require a radical shift in the political culture in order for political parties to introduce a transparent system of political financing, where private funding is open to scrutiny, public funding of political activity is given a bigger role and spending limits for political campaigns effectively enforced. There is no shortage of time-tested models of political financing in mature democracies that can be adapted to the local situation, if the political will for it can be summoned.

However, the tools of transparency must be fairly applied and not used by incumbents in office as a means of ferreting out the financial backers of political opponents in order to penalise them. It will not work if it is used to produce a zero sum game.

Is such a level playing field even conceivable in the current political climate? Although the issue is fraught with difficulties, there is perhaps no other choice for Malaysia but to start on a fresh slate, given that the template for political financing that is currently being used threatens to drain the lifeblood from the nation.

Admittedly, this matter can only be given serious attention if the key stakeholders in the situation recognise that the political equation that was set in place at the time of the nation’s independence is in an extremely fragile state after close to six decades and therefore, that a powerful new inclusive formula must be introduced to give the diverse Malaysian people a fighting chance to pull together to build a vibrant future.

Enough unease has been generated by the polarising influences of racial and religious politics to show that for Malaysia to become a successful nation, it must quash the idea of organising society along communal lines and start afresh. In its place, a multi-cultural approach is essential, albeit in tune with constitutional safeguards for Malay rights, to attune the people and economy towards an era of globalisation.

To turn the country away from the insular, antagonistic thinking that is being given disproportionate attention today, national institutions and leaders must project an open, forward-looking outlook that encourages Malaysians to see themselves in the global context, both as consumers and producers in a progressive and productive future.

That will require the political establishment to discard the race-tinted glasses through which the nation’s affairs, including its economy, people and culture are viewed, although that ensures them a permanent spot in the news. To make the change happen, they will only need to abandon self-interest in favour of the national interest. – January 17, 2015.