Come September 2010

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Come September, Prime Minister Najib Razak will mark the second anniversary of his 1Malaysia social engineering campaign. But will that mark the dawning of a reinvented democratic Malaysia of good governance, wonders Tan Kim Hong.

The year was 1959. We sat on wooden chairs entertaining ourselves with a 50-cent Sunday cheap matinee called ‘Come September’. The film was a light-going romance between Doris Day and Rock Hudson, and most of us in the audience were in the teens living in Penang’s own cosmopolitan milieu of ‘Unity in Diversity’.

The country had achieved her independence two years before. We mingled freely with our Malayan compatriots, irrespective of gender, race and religion.  

Some of us did, of course, begin to cultivate an interest in local and national politics, joining the adults in lending our support to the egalitarian multi-racial Socialist Front, the ‘Cow’s Head Party’.

Such was the life of young Penang urbanites in a nascent Malaya on her road to democratic electioneering and nation-building.  

Half a century later in February 2010, after watching TV footages of Chinese New Year fanfare in Pandamaran and elsewhere, I sit back as a hunched retiree in reminiscence of my burning youth and reflect on how and why our country has slid retrogressively from cosmopolitanism to ethnocentrism. I could not help posing an oft-repeated question:  Whither Malaysia?   

Our cherished values like integrity and accountability have been reversed to another opposite end amidst a fairly constant single-digit GDP growth before the economic crisis. Adjectives with negative connotations have now become household vocabulary to describe the irresponsibles who have unabashedly siphoned off our national coffers to feather their own nests.

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Malaysia is visibly sick with social and economic ills. This has in turn eroded our investment confidence index and our international competiveness. We have been confronted with critical questions of constitutional integrity, judiciary independence, social harmony and religious tolerance, and come March 2010, we will be compelled  to cast our watchful eyes on GST.

We will soon witness the second reading of the Goods and Services Tax Bill in Parliament. We will soon be informed of the boons and banes of GST. We will soon know the identity of our bona fide wakil rakyat .

Why attempt to pass the GST Bill at this juncture after it was postponed in 2006? Well, it’s the persistent fiscal deficit and the looming debt trap that Malaysia presently faces.

Advocates of GST argue that the new tax format, long in practice in neighbouring Asia-Pacific countries, will broaden the government’s revenue base to cushion its biggest fiscal burden in 20 years, a figure equivalent to 7.4 per cent of GDP.

With its planned implementation at an initial rate of 4 per cent in mid-2011, it’s hoped that the annual increase of RM1 billion in government revenue will lighten the deficit to less than 4 per cent of her GDP by year 2015.

Government personnel and BN party technocrats have said that the present Sales and Services Tax (SST) structure has shown its defects during times of economic slowdown. An all-encompassing consumption tax will, on the other hand, ensure more money for development and expenditure.

Economic pundits like the executive director of MIER even stated publicly that the introduction of GST might see the reduction in personal and corporate income taxes, thereby creating more disposable income for aggregate consumption and investment, greater employment and higher GDP growth.

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These spill-over multiplier effects are not alien to high school students of Keynesian macroeconomics now. What he did not mention was the adverse effects of possible leakages through rent-seeking and corruption. What he chose not to reveal was the evil hit of the multi-tier consumption tax on existing income disparities.

Even with the guarantee of exemption for essential commodities like rice, flour and sugar, the impact of GST will certainly be more on the low and middle-income groups who, as end consumers, will bear the brunt of a value-added consumption tax.

To date, elitist seminars, conferences and what-not have been held to put forth the positive effects of GST including moral arguments like the sharing of national development burden and the impossibility of tax evasion.

On another plane, there has also been a parallel accelerated propagation of social engineering philosophy and measures in conjunction with the 1Malaysia concept in the mass media – ‘People first, performance now’, KPIs, NKRAs, 1Malaysia Foundation and 1Malaysia clinics – in preparation for Malaysia’s transformation to a truly modern state.

But there is a real dearth of information on the GST issue for the masses. Many of them have no knowledge whatsoever about it.  Nevertheless, putting the two together, I’ve intuitionally come to realise that GST is part of a fiscal transformation program that will affect all Malaysians alike in the near future. “A spiraling price hike shortly before the implementation will be normal, and inflation will be mild if contained,” noted some analysts.

Come March, as reported in newspapers, we’ll also see an imminent increase in petrol and electricity consumption bills, and consequently, another round of price hikes in goods and services.   

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Therefore, to create greater awareness of GST and its far-reaching impact, come March and after, concerned Malaysians should want the issue discussed more openly in public forums. We want our elected law-makers to state their stand in parliament, and to explain the related debates to their electorates in plain language.

We also want to know their roadmap of action vis-à-vis the GST Bill. No sandiwara in indigenous shadow play. No dark or white-faced ala Peking opera. And no populist overtures for this is a serious matter of people’s livelihoods.

And come September, PM Najib Abdul Razak will be in office for two years. September 16 will mark the second anniversary of his 1Malaysia social engineering campaign. He will unveil the Tenth Malaysia Plan before the Sarawak State Election, I believe.

But will that be the dawning of a reinvented democratic Malaysia of good governance? I wonder.

Tan Kim Hong is an Aliran member.

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