Mission and omission

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sarawak nativesNational unity must be based on social justice. Graham Brown highlights the disturbing trend of widening regional disparities between Peninsular Malaysia and Sabah and Sarawak, a gap made evident in the Ninth Malaysia Plan due to the new approach used in the Plan to calculate poverty rates.

The Ninth Malaysia Plan (9MP) represents a considerable divergence from previous plans that had focussed almost exclusively on economic development. This plan is much broader in its social ambit, covering areas such as the inculcation of ‘noble values’. Prime Minister Abdullah Badawi has stated that he didn’t want it to ‘become an ordinary plan’, but rather one that embodied the new ‘National Mission’.

'Mission', not 'Vision'

What exactly is this ‘National Mission’?  Apparently, it constitutes five ‘thrusts’:

  • To move the economy up the value chain;
  • To raise the capacity for knowledge and innovation and nurture ‘first class mentality’;
  • To address persistent socio-economic inequalities constructively and productively;
  • To improve the standard and sustainability of quality of life; and,
  • To strengthen the institutional and implementation capacity.

These are all, of course, worthy goals. But the question remains, what does the ‘National Mission’ really add to our sense of where Malaysia is going and how? Is it anything more than a vague but worthy statement of intent? The 9MP is geared, of course, towards the achievement of Vision 2020, another vague and worthy statement of intent. Presumably, therefore, it constitutes a part of the National Vision Policy, although this is barely mentioned in the document. Indeed, the Vision 2020 discourse of Abdullah’s predecessor Mahathir is remarkably absent from the plan. Instead, it is explicitly stated in the 9MP that this new National Mission will be implemented according to the precepts of Islam Hadhari. While some broad statement of the kind of society we would like to create is probably worthwhile, this proliferation of visions and missions is really rather confusing.

Throughout the plan, we are barraged with such terms. But do these terms add up to something meaningful? Or, is the ‘National Mission’ simply Abdullah’s way of stamping his own imprimatur on the government’s development strategy, replacing Mahathir’s Vision with Abdullah’s Mission, but without any really comprehensive changes to the way development is pursued?

Targeting development

This aside, one of the most positive aspects of the 9MP as a whole is its return to a much more practical and broad-based development strategy than we have seen over the past few plans. Gone is the previous emphasis on ‘prestige projects’ and selected high-profile industries. One of the few prestige projects to survive the 9MP formulation was, of course, the ‘scenic half bridge’ to replace the Johor-Singapore causeway at huge cost and dubious benefit. Already, this has also disappeared.  

More attention is also given to the previously unfashionable industries and sectors such as agriculture, which was largely ignored in the last two Plans. Agriculture may not provide us with any Twin Towers or catchy slogans like ‘k-economy’ or ‘smart partnership’, but it still constitutes around a quarter of employment in the country and a renewed focus on this sector is particularly welcome.  

Against this positive return to practicality, however, is a return to NEP-style ‘targets’ for just about any and every development indicator, including new targets for Bumi-Chinese income ratios and a renewed commitment to ‘old’ targets including, presumably, that 30 per cent equity ownership. But there are problems with an overly target-driven approach.

Both the Seventh and Eighth Malaysia Plans declared very ambitious economic growth targets which, when unmet, were quietly revised downwards, allowing the targets to be ‘met’ after all. The 9MP, for instance, reports that the 8MP ‘target’ of 4.2 per cent average annual growth in GDP (constant 1987 prices) was exceeded with an achieved rate of 4.5 per cent.  So, it seems, the economy has done better than expected – thanks, of course, to the government’s masterful economic management. But the original target of the 8MP was for growth of 7.5 per cent, against which the actual growth rate falls far short. Similarly, the satisfactory ‘achievement’ of 4.7 per cent average annual growth during the 7MP (‘target’ 3.0 per cent) is slightly less satisfactory when compared with the original target of 8.0 per cent. With this in mind, we must be at least a little bit sceptical about the 9MP target of 6.0 per cent growth over the coming five years.

Who gets what?

Before moving on to look at specific policy areas, I want to draw attention to the broad shift in the allocation of development funds between ministries in the 9MP. 

Table 1: Distribution of development funds by ministry 

Development Expenditure

Development

Allocation

Ratio 9MP:8MP

(% of total)

8MP

(% of total)

9MP

Prime Minister’s Dept

4.3

13.2

3.07

Ministry of Works

11.4

9.3

0.82

Ministry of Education

14.2

8.5

0.60

Higher Education

8.0

8.0

1.00

Ministry of Defence

11.0

7.3

0.66

Energy, Water and Comm

3.6

6.1

1.69

Rural & Regional Develop’t

4.4

5.5

1.25

Ministry of Health

5.5

5.1

0.93

Ministry of Finance

8.0

4.5

0.56

Housing and Local Govt

4.4

4.5

1.02

Ministry of Transport

5.7

4.1

0.72

Other Ministries

19.5

23.9

1.23

Table 1 reproduces from the plan document the distribution of development funds by ministry according to expenditure under the 8MP and allocation for the 9MP. What is immediately clear is the massive centralisation of development funds under the Prime Minister’s Department (PMD), increasing from 4.3 per cent of total development expenditure under the 8MP to a 13.2 per cent allocation under the 9MP, an increase of more than 200 per cent.

This is alarming for a number of reasons. Firstly, some people had hopes that the Abdullah administration would reverse the concentration of power in the hands of the prime minister that occurred under Mahathir; this appears on these figures to have been a hope in vain. Secondly, and more crucially, the 9MP gives very little indication of quite how this money is to be spent. The only other reference to the PMD in the entire plan is a comment to the extent that the department, along with three others, will be the ‘lead ministries’ in ‘enhancing wealth ownership and developing BCIC [Bumiputera Commercial and Industrial Class]’.

But ‘restructuring of society’, of which this initiative forms only a part, has a development allocation of RM7 billion, while the total development allocation for the PMD is RM26 billion. There is thus at least RM20 billion allocated to the PMD for which the plan provides no justification or explanation. The biggest loser in absolute terms is the Ministry of Education, which sees its development budget cut by around 40 per cent, or some RM6 billion. This is another matter of deep concern and is reflective of the relative neglect of pre-university education in the plan as a whole.


Pointing fingers: Corruption

For the first time, the 9MP directly addresses the issue of corruption, and for this the government must be commended. What is remarkable about the plan’s treatment of corruption, however, is how it seems that corruption is everyone’s fault except the government’s. Thus, for instance, the government will implement ‘awareness campaigns and educational programmes…to remind individuals of the need to continuously inculcate noble values and norms’. The Anti-Corruption Agency will also ‘diversify its community education activities and increase its campaigns in the media on the perils of corruption’. These are important initiatives – every person who pays ‘kopi-o money’ to avoid a speeding fine or other petty corruption contributes to a culture that tolerates corruption.

Considering the constant barraging of ideas such as ‘Kepimpinan melalui teladan' ('leadership by example') with which our children are faced at school, there is a surprising absence of concrete proposals to combat corruption, especially at the highest levels. These concerns can only be heightened by the release of the 9MP only weeks after the publicisation of the ‘restricted tender’ process through which a company controlled by the Prime Minister’s son was awarded a RM47 million refurbishment project by  government-owned KTM.


Driving regional development

The focus on ethnic inequalities in Malaysia had allowed regional development to deteriorate to a state worse than what ethnic inequalities were in the early 1970s. States such as Sabah, Kelantan and Terengganu lag behind the more developed states enormously.  The Ninth Malaysia Plan recognises this shortfall by noting that over the period of the 8MP, ‘little progress was made in reducing development gaps between regions, states as well as rural and urban areas’. As Box 1 explains, the adoption of a new methodology for calculating poverty has shown that regional disparities are in fact even worse than previous data suggested. With a poverty rate of 23 per cent under the new methodology, Sabah alone accounts for almost half the poverty in the entire country. The 9MP thus gratifyingly refocuses attention on attaining ‘balanced regional development’.

Some of the proposals put forward in the plan for the correction of regional inequalities are to be commended, such as the establishment of universities in Terengganu and Kelantan and the promotion of ASEAN sub-regional growth areas such as the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), which covers Sabah, and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), which takes in the northern peninsular states. Given that the Malaysian parts of both these regions coincide with some of the poorest areas of the country, this is a strategy that could bear fruit. Both the IMT and the BIMP-EAGA growth areas also coincide with areas of political instability – Southern Thailand and Mindanao respectively. If these projects were successful, they might reasonably also be expected to contribute towards reducing the socio-economic grievances at the heart of both problems.

Much of the rest of the regional development strategy, however, is alarmingly preoccupied with infrastructural projects, as if building roads and bridges were all it takes to stimulate economic growth and development. From the days when UMNO awarded itself construction of the North-South highway through PLUS, it has been quite clear who the beneficiaries of such projects really are. Sure enough, among the ‘development’ projects listed in this section is the almost entirely useless and wasteful Penang Outer Ring Road – awarded to a politically linked company without open tender. How many of the other roads proposed here will be awarded in such a way? Once again, despite the ‘open government’ rhetoric of Islam Hadhari, recent signs here are not positive.  

Figure 1: Per capita development allocation in Kelantan, Sabah and Terengganu, 1976-2009 

development funds

As is often noted, the government typically allocates fewer resources to opposition-controlled states, irrespective of developmental status. Figure 1 shows the per capita development allocation under the Fifth Malaysia Plan onwards for Kelantan, Sabah and Terengganu (excluding multi-state projects). The figure is relative to the national average, so, for instance, the score of 1.50 for Kelantan under the Sixth Malaysia Plan means that for every RM1.00 per person the government allocated nationally during the plan, RM1.50 was allocated to Kelantan.  The shaded bars denote allocations made when the state in question was under opposition control.  

Clearly, there was a substantial drop in per capita development allocation in all three states after they fell to the opposition. During all periods of opposition control, the state in question received per capita development allocations below the national average, despite the fact that these are the three least developed states in the country. On this evidence, the Ninth Malaysia Plan is simply continuing the old trend; despite having the lowest average household income in Malaysia, Kelantan received only RM0.83 per capita allocation for every RM1.00 allocated under the 9MP.  In contrast, Perlis – which has a similarly low average income but which is staunchly pro-BN – received RM1.81 per person relative to the national rate. This is of even more concern given the fact that previous experience suggests that the government does not even make good on these lowly allocations for opposition states. As noted, per capita development allocation in Kelantan under the 9MP was only 83 per cent of the national rate, but the development expenditure figures reported in the 8MP are even worse – barely 57 per cent of the national rate, the lowest in the entire country (Table 2).

Table 2: Relatuve per capita development expenditure and allocation, 8MP and 9MP
 

Expenditure, 8MP

Allocation, 9MP

Johor

0.68

0.61

Kedah

0.96

0.80

Kelantan

0.57

0.83

Melaka

1.15

0.97

Negeri Sembilan

1.38

1.16

Pahang

1.21

1.28

Perak

0.67

0.63

Perlis

1.83

1.81

Pulau Pinang

0.76

0.77

Sabah

0.99

0.95

Sarawak

1.28

1.08

Selangor

0.67

0.60

Terengganu

0.73

1.08

Kuala Lumpur

2.99

3.63

So, is the 9MP really the start of a new breed of people-friendly, equitable development process? The evidence suggests not. It’s wrapped up in fancy language which displays a disturbing trend towards political indoctrination but underneath really does little to break from the obsessions of previous plans. Where old problems are publicly confronted – such as corruption – the finger is firmly pointed elsewhere. Lofty promises of openness and transparency are already given the lie by the closed, non-transparent handling of the PORR, KTM tenders and, just recently, the customs toll road in Johor.  Not so much a new National Mission as the same old National Omission.


BOX 1: Measuring Poverty – The New Approach 

In reporting the progress in poverty eradication, the 9MP uses a new way of calculating poverty rates, which marks an important improvement on the previous methodology.  In Malaysia, like most countries, poverty rates are calculated from large income surveys undertaken every few years; the last one in Malaysia was done in 2004.  From these surveys, a ‘poverty line’ income is estimated, below which a household is classified as poor.  This is a standard way of calculating poverty internationally, but the way in which the poverty line is computed varies greatly from country-to-country.

The old poverty methodology in Malaysia was often criticised for a variety of reasons.  Most importantly, the poverty line was calculated on the basis of the needs of an average household but this line was then applied to every household irrespective of size.  This potentially resulted in the inaccurate classification of many households.  For instance, suppose the poverty line was calculated on the basis of RM500 per month for the average household of five members, which equates to RM100 per household member per month (these are not the actual figures).

Under the old methodology, a family of 10 with a household income of RM550 would have been classed as ‘not poor’, even though their income per family member available is RM55, far below the per capita poverty line for the ‘average’ family. Similarly, a household of only one person with an income of RM400 would have been classed as ‘poor’, even though that single person had income four times the per capita income for the average household at the poverty line.

Other criticisms were that a single poverty line was applied across the country irrespective of regional price differences, with the exception of Sabah and Sarawak for which separate poverty lines were calculated. Even these, however, did not take into account price differences in urban and rural areas.

The new methodology is a vast improvement, taking into account the size, demography (i.e. age structure) and geographical location of each household in calculating the relevant poverty threshold. The table below reproduces the poverty rates reported in the 9MP as calculated using the old and new methodologies. Overall, the new methodology shows a slightly higher poverty rate than does the old methodology – although it is important to note that this difference is not due to a change in poverty per se but rather a more accurate picture of actual poverty levels. If overall poverty rates are roughly the same under both methodologies, the distribution of poverty is noticeably different.

The most marked difference is in Sabah, where the new methodology results in an increase of 50 per cent in the poverty rate on a rate that was already substantially higher than the national rate.  Similarly, the poverty rate in Sarawak is seen to double under the new methodology. These are particularly surprising results as Sabah and Sarawak already had higher poverty lines under the old methodology to account for the higher cost of living there.

Although the 9MP does not report the current poverty rates using the old methodology for the individual states of West Malaysia, we can get some idea of the shifts by comparing the 1999 poverty rate reported in the 9MP using the new methodology with the figures reported in the 8MP using the old methodology.  This suggests that the states which have seen a reduction in the poverty rate due to the adoption of the new methodology are mostly the more highly developed states, especially Kuala Lumpur, which went down from 2.3 per cent to 0.4 per cent, and Penang, which went down from 2.7 per cent to 0.7 per cent.  Once again, it is worth pointing out that these changes are reflective of a change in measurement, not in absolute levels of poverty, but the clear indication is that the picture of regional inequality under the new, more accurate methodology is far worse even than that under the old methodology. – Graham Brown

The old poverty methodology in Malaysia was often criticised for a variety of reasons.  Most importantly, the poverty line was calculated on the basis of the needs of an average household but this line was then applied to every household irrespective of size.  This potentially resulted in the inaccurate classification of many households.  For instance, suppose the poverty line was calculated on the basis of RM500 per month for the average household of five members, which equates to RM100 per household member per month (these are not the actual figures).

Under the old methodology, a family of 10 with a household income of RM550 would have been classed as ‘not poor’, even though their income per family member available is RM55, far below the per capita poverty line for the ‘average’ family. Similarly, a household of only one person with an income of RM400 would have been classed as ‘poor’, even though that single person had income four times the per capita income for the average household at the poverty line.

Other criticisms were that a single poverty line was applied across the country irrespective of regional price differences, with the exception of Sabah and Sarawak for which separate poverty lines were calculated. Even these, however, did not take into account price differences in urban and rural areas.

The new methodology is a vast improvement, taking into account the size, demography (i.e. age structure) and geographical location of each household in calculating the relevant poverty threshold. The table below reproduces the poverty rates reported in the 9MP as calculated using the old and new methodologies. Overall, the new methodology shows a slightly higher poverty rate than does the old methodology – although it is important to note that this difference is not due to a change in poverty per se but rather a more accurate picture of actual poverty levels. If overall poverty rates are roughly the same under both methodologies, the distribution of poverty is noticeably different.

The most marked difference is in Sabah, where the new methodology results in an increase of 50 per cent in the poverty rate on a rate that was already substantially higher than the national rate.  Similarly, the poverty rate in Sarawak is seen to double under the new methodology. These are particularly surprising results as Sabah and Sarawak already had higher poverty lines under the old methodology to account for the higher cost of living there.

Although the 9MP does not report the current poverty rates using the old methodology for the individual states of West Malaysia, we can get some idea of the shifts by comparing the 1999 poverty rate reported in the 9MP using the new methodology with the figures reported in the 8MP using the old methodology.  This suggests that the states which have seen a reduction in the poverty rate due to the adoption of the new methodology are mostly the more highly developed states, especially Kuala Lumpur, which went down from 2.3 per cent to 0.4 per cent, and Penang, which went down from 2.7 per cent to 0.7 per cent.  Once again, it is worth pointing out that these changes are reflective of a change in measurement, not in absolute levels of poverty, but the clear indication is that the picture of regional inequality under the new, more accurate methodology is far worse even than that under the old methodology. – Graham Brown

The old poverty methodology in Malaysia was often criticised for a variety of reasons.  Most importantly, the poverty line was calculated on the basis of the needs of an average household but this line was then applied to every household irrespective of size.  This potentially resulted in the inaccurate classification of many households.  For instance, suppose the poverty line was calculated on the basis of RM500 per month for the average household of five members, which equates to RM100 per household member per month (these are not the actual figures).

Under the old methodology, a family of 10 with a household income of RM550 would have been classed as ‘not poor’, even though their income per family member available is RM55, far below the per capita poverty line for the ‘average’ family. Similarly, a household of only one person with an income of RM400 would have been classed as ‘poor’, even though that single person had income four times the per capita income for the average household at the poverty line.

Other criticisms were that a single poverty line was applied across the country irrespective of regional price differences, with the exception of Sabah and Sarawak for which separate poverty lines were calculated. Even these, however, did not take into account price differences in urban and rural areas.

The new methodology is a vast improvement, taking into account the size, demography (i.e. age structure) and geographical location of each household in calculating the relevant poverty threshold. The table below reproduces the poverty rates reported in the 9MP as calculated using the old and new methodologies. Overall, the new methodology shows a slightly higher poverty rate than does the old methodology – although it is important to note that this difference is not due to a change in poverty per se but rather a more accurate picture of actual poverty levels. If overall poverty rates are roughly the same under both methodologies, the distribution of poverty is noticeably different.

The most marked difference is in Sabah, where the new methodology results in an increase of 50 per cent in the poverty rate on a rate that was already substantially higher than the national rate.  Similarly, the poverty rate in Sarawak is seen to double under the new methodology. These are particularly surprising results as Sabah and Sarawak already had higher poverty lines under the old methodology to account for the higher cost of living there.

Although the 9MP does not report the current poverty rates using the old methodology for the individual states of West Malaysia, we can get some idea of the shifts by comparing the 1999 poverty rate reported in the 9MP using the new methodology with the figures reported in the 8MP using the old methodology.  This suggests that the states which have seen a reduction in the poverty rate due to the adoption of the new methodology are mostly the more highly developed states, especially Kuala Lumpur, which went down from 2.3 per cent to 0.4 per cent, and Penang, which went down from 2.7 per cent to 0.7 per cent.  Once again, it is worth pointing out that these changes are reflective of a change in measurement, not in absolute levels of poverty, but the clear indication is that the picture of regional inequality under the new, more accurate methodology is far worse even than that under the old methodology. – Graham Brown

                            Overall poverty   Hardcore poverty

Region

Old

New

Old

New

Peninsular Malaysia

0.03

0.04

0.03

0.01

Sabah

0.17

0.23

0.03

0.07

Sarawak

0.04

0.08

0

0.01

Malaysia

0.04

0.06

0.01

0.01

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Dr Graham Brown, a keen observer of Malaysian affairs, is attached to Queen Elizabeth House, University of Oxford.

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