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No priorities, no solution to the gov’t’s problems

When then-prime minister Dr Mahathir Mohamad started the Malaysia Incorporated and Privatisation policies in earnest in the 1980s, I never envisaged that these concepts would evolve into the monstrous disasters that we see today.

If my memory serves me well, the Malaysia Incorporated policy was to inculcate public-private sector cooperation and partnership through privatisation, facilitation and deregulation. The purpose is to spur economic growth and enhance bumiputra participation in the corporate sector. The approach was essentially to increase the role of the private sector and to reduce the government’s presence in the economy.

Today, after more than three decades and seeing the numerous events unfolding, I can’t help but feel that Malaysia Incorporated is nothing more than the government losing control of regulation and governance, while Privatisation is nothing more than selective cronyism that keeps piling up the contingent liabilities on the government.

Public administration is about right concepts, sound policies and strict implementation with clear guidelines and checks and balances. Good intentions alone, as often claimed by the members of administration, could not translate into real benefits. It is also useless to institute investigations, inquiries and audits after each fiasco. Why trying to lock the stable door after the horse has bolted?

If we look through the problems we are now saddled with like the Port Klang Free Zone (PKFZ), the National Feedlot Corporation (NFC), 1MDB, Mara’s properties purchases in Melbourne, Private Finance Initiative (PFI), the Automated Enforcement System (AES) and numerous ill-conceived privatisation programmes and projects, the common trait is moral hazard and total lack of governance and oversight.

In the name of reducing bureaucracy and promoting economic growth and bumiputra agenda, no questions were ever asked of the numerous projects undertaken.

For example, no question was ever asked why the government of Malaysia ever needs an outfit like 1MDB? What national objectives was it trying to achieve? I thought privatisation was supposed to take the lead while the government would just serve as the facilitator. No question was also ever asked why the government of Malaysia needs an outfit like NFC. Since when has the government become an expert in cattle raising and beef supply?

Now we may have to ask since when has the government become a property investor and manager overseas?

I thought PFI was supposed to carry out government projects that are ‘self-financing’ in the sense that these projects are able to generate income to finance their own upkeep. As it is, PFI has become an indiscriminate conduit for the government to dish out projects (through off-budget operation) to contractors where no financial or commercial viability was ever contemplated.  

It was supposed to be ‘private finance initiative’, but now the government must pay for every sen of these projects. If I am not mistaken, PFI has now become another big source of government contingent liabilities.

Lopsided privatisation agreements

We pursue Privatisation because we think the private sector is more efficient and cost effective in carrying out certain tasks such as telecommunication, electricity, tolled roads, port services, water and other ‘commercial’-oriented services. But these services are mostly ‘natural’ or ‘public’ monopolies where strict oversight, profit cap, and regulations are necessary, post-privatisation.  

Sadly, nothing much was done to correct the lopsided privatisation agreements. ‘Privatised monopolies’ have continued to reap exorbitant profits without sharing the ‘privatisation dividends’ with the people.

Because privatised entities have reaped huge profits over the years, there are now proposals to extend privatisation to ridiculous levels. Essential security and law enforcement functions are also being earmarked for privatisation which leaves me wondering about the roles, functions and capability of our bloated civil service.  

Why can’t the government provide online service directly like what MyEG is doing? Why can’t the Road Transport Department and the police directly handle the AES?  At one time there was even a proposal to privatise the issuance of Malaysian passports. Can you imagine the compromise in security and the consolidation of power in the hand of the privatised entities if more essential services are put under their charge?  

It also calls into question the continued need to increase the size of the civil service and pay them higher salaries. To what extent can we sustain an economy based on fake jobs doing fake activities?   

It is perfectly all right for the government to facilitate businesses. But it is a separate matter if the government goes into businesses in the big way. That is where moral hazard comes in - what could be more disastrous than doing business using other people’s money.

It is perfectly all right to privatise economic and commercial services to leverage on the efficiency and capability of the private sector so long as there are proper rationale, oversight and regulation after the privatisation. But if privatisation was carried out haphazardly to benefit crony capitalists, the consequence could be fatal as it could lead to profiteering, the piling up of contingent liabilities, and endemic corruption.

Right now, it is my considered opinion that the government is doing lots of things it is not supposed to do and not doing lots of things it is supposed to do. Unless the government gets its priorities right, the problems will continue to happen. It is just a matter of time.  

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