With Sudhdave’s analysis indicating the parameters on declining growth rate since the beginning of the 21st century, and Post-1997 identifying probable causes, what should be the political economy of Malaysia post-2020?
The politico-economic challenges facing us are confronting the dimensions of economic inequality, employment precarity, geographical disparity in development, technological changes and the new informality. We shall attempt to go forward with the four crises endured, learnt and to reflect upon – hopefully with better resource endowments intersecting with pellucidity in political will and wisdom – because COVID-19 has accentuated as never before the interlinked ecological, epidemiological, and economic vulnerabilities imposed by capitalism.
We have to blaze to a brave new domain.
1. Concerns about rising inequality
Underemployed rural labour – titleless cultivators, stateless farmers, unsettled folks in Sabah and Sarawak, and the indebtedness of ANAK FELDA and the unemployed urban workers in the hospitality and tourism, logistics and delivery, retail, sanitary and basic care – all had got an unfair and roughened deal which exacerbated in the present pandemic.
The agricultural sector, too dependent on migrant labour, requires a comprehensive yet wholesomely LAND REFORM to embrace a community spirit that national resources belong to all, whether they are padi fields in Tanjong Karang, the heirloom and bario rice of Sarawak, the sugar plantations in Perlis and Kedah, the pineapple cultivations in Johore and Kampung Padang Pan in Sarawak.
Not to be neglected is the urban labour because they require physical proximity and close-interactions; their jobs are most exposed to either business shutdowns, a mandatory control lockdown or contagion infections spreads and spikes, and they are dependent on the rural produce to maintain livelihood sustainability. There is an urgent need in transforming the agricultural sector to support Malaysia’s transition to a higher income status by sharing prosperity between rural and urban communities.
Indeed, women and the young are particularly hit hard because they are over-represented in many of those sectors in employment indirectly, as documented in the IMF’s latest World Economic Outlook. We might have lifted hundreds of thousand of our rakyat2 out of poverty, but under regimes of an ethnocratic governance enveloped with a political Islam religiousity, this has created rising inequalities and political tensions, intensifying existing societal fault lines economically, and environmentally affecting across geographical space.
2. The economy landscape had changed under, and during, a Covid19 envirnoment confronting challenges to digital workers in a digital economy from gig work and other irregular labor.
Though political initiatives were relatively quick to establish income-support programs, but these financial outlays had failed to reach its target because present ruling regime had not identified the workers most in need, and like previous 3 financial-related crises had boosted corporate capital and save oligarchs and kleptocrates from enterprise collapses than focus on the
“precariat” of service worker: those with unstable employment, working under zero-contract, working with insecure situations or imprecise working conditions, underemployment to tasks or skills unfulfilled – often dragged down by an inadequate income and limited (if any) social benefits.
The polarisations in a workforce between ‘fixed’ digital workers who are physically isolated in their work@homes working virtually, but closely monitored via computers and routers, and the precariously employed mobile (the ‘footloose’ ) gig-workers – disproportionately made up of secondary-educated young, non-civil service non-GLC employees – equally closely monitored and digitally managed, who deliver the physical goods and services to the home-bound upper and middle-class beneficiaries.
This Gig-Economy – the e-platform economy – has to be addressed, regarding inadequate employment protections, unfair work and working conditions – all riding on unfair competition with reduced labour bargaining power whilst power imbalance manifests in an arbitrary way on digi-work platforms profiting on data generated by workers for free. All these existing, and emerging issues (like the concentration of capital and expansion of market share by global corporations, the digital management of supply chains and a wide-spread growth in algorithmic control and surveillance of workers) need to be discussed with players, social activists, ruling elites and corporate capital – and to be RESOLVED.
3. The geographical disparity in the development of underdevelopment between states in terms of unequal and imbalance fund allocation, infrastructure implementation, healthcare facilities provision, educations in highland interiors for Orang Asli communities, non-connectivity to fixed lines and Internet access – are major problems to be addressed as we track towards a United Nation of Malaysians.
The economic-geography of globalization interconnecting countries and between states has, and can, contributed contagion that spreads with intra-border travels, like the recent Covid19 spikes in Sabah and the Klang Valley.
Further, conducting businesses with a global monopoly-capital manufacturing hub model means that production from lockdowns to shutdowns shall alter permanently the geographic distribution of prosperity more felt than widely foresighteen.
With the concentration of knowledge services in the urbanized city-centres and suburban industrial estates’ production sites, any disruption of either singularly or both sectors concurrently will have dire economic and social ramifications onto labour in the suburban-rural precincts where majority of labour resides.
4. Technological changes and the new informality (the new norms in conducting business and its relationship with labour and environment) would likely shift to the remote working-practice that amounts to a steep change in business use of digital technology.
This approach is bound to affect production patterns, the arbitrage of labour and the exploitation of labour surplus value that could result in the distribution of economic surplus even more unequalled.
Even any unprecedented government step to protect incomes would be insufficient to offset the disproportionate damage to those already worse off. As a result, post-2020 is likely not only to have reinforced chronic economic polarization, but to have intensified public awareness of it as a problem challenging old orthodoxies about public spending, central banking, and government ownership (including debts) and control (covering misused and mismanagement) of public assets, and intrusiveness of governmental intervention in the economy.
5. WHAT TO DO:
Whether we aim to back for business as usual approach or best better building (bagus baik bina) model may well decide the direction of Malaysia post-2020 political economy.
A] If to undertake the usual back for business approach, the country will only aim a minimal posture in painless re-adjustment where economic agents – whether state’s apparatus GLCs or corporate capital ( or both entities collaboratively colluding) – are once again to shape the economy over time. The capitalist mode is good at production processes, but weak in the equality on distribution of wealth. The best better building model – resting on a socialistic platform where the fair distribution of wealth, regardless of race, creed or state location – is paramount to propelling country forward with a new Malaysian politico-economic identity, and destiny.
B] The best better building model will demand confluence of capital and labour harmonously striving together, for example, by agreeing work standards, work conditions, work processes and work pays; on agreeing to equality on wealth distribution, and healthcare welfare for all, embracing of climate change goals affecting environmental wellbeings (from clean water to haze-free air to flood mitigation programs) moving to a different politico-economic dimension onboard a progressive path.
C] The best better building presupposes a strategic policy goal of rakyat-first, fairer sectoral reallocation, regional development symmetry, with class-based confidence in the ability of rakyat2 and the state to coordinate and steer private sector (corporate capital) and public behavior (from civil service to GLCs restructured or dismantling) collectively with a national-focused willingness to establish the desired polical economy destination.
i) Produces a high-intensity yet inclusive economy with rakyat-participated so that a strong demand in productivity and growth and wealth-sharing shall ensure progressive firms have good reasons to expand and ensure new jobs to emerge. A high intensity pressure is necessary to benefit those who are on the margins of the labor market – the young, ill-educated, and minorities – who tend to be fired first in a recession and hired last in an economic upturn.
ii) Applied, this means firmly running macroeconomic policy “hot” while calibrating monetary and fiscal policies to keep demand always slightly ahead of the economy’s capacity, to encourage companies to pull more people into the labor force and seek productivity-enhancing improvements.
The focused mission objective is that it must be big in scope and large in scale – something of an ardent ambition and a vibrant vision to generate pulsating power to push the country forward.
iii) That the attributes and quality of work are central, and this reform program must concentre on creating higher-quality jobs for more rakyat2 in more places.
Also required is to lower the cost of leaving a bad job and finding a better one . This definitely set a panoply of policies, including greater spending on skills, well-resourced active labor market policies, and social security reform to untie benefits from jobs.
Direct and unconditional payments, including a basic income or negative income tax to avoid low-income traps in the social security system, are ultimately the only way to overcome these obstacles.
iv) Reforms the tax systems to encourage high-quality work.
a) This means shifting taxes away from labor to encourage job-switching and hiring. The tax revenue loss must be made up elsewhere. This requires that a greater tax burden fall on capital, ideally through a net wealth tax which is, after all, productivity-friendly than other capital taxes.
b) In addition, carbon taxes should be significantly increased to reallocate labor and capital in a green direction. The proceeds should be redistributed as a “carbon fee and dividend” or “carbon cheques.”
c) Reforms financial systems and tax rules to be less favorable to debt and more favorable to equity-type funding, which is both more conducive to productivity growth and restores an appropriate balance of risk between workers and capital investors. Presently, financialization capitalism is lowering growth rate, and inducing an unpleasant circuitry of moving money with “rent elements ” that do not enable nor acculumate capital towards formative economic development.
The inequities of financialized healthcare, higways management, water provision and management are distinctive negative aspects of financialization capitalism where privatised hospitals, for instance, have depleted talented expertise and manpower needs in the public sector at time of a pandemic Covid19 calamity.
d) Finally, after 50 years, an international corporate taxation must be fixed to level the competitive playing field between multinational and local companies, and to allow this nation more space for maneuver in taxing corporate capital.
v) Incentivizes a broader geographic spread of the highest-value-added jobs . The goal of policy should be to make more places host a critical mass of high-paying jobs. This might be easier formulated than being executed, but engineering talents and skills, and real estate capital are presence. At a minimum, the process requires greater investment in low-cost housing, transport and IT connectivity, localized infrastructure implementation and social amenities to make workplaces attractive to live in, and policies to make financing available for new ventures in declining and fringe areas.
Overall, the change to remote working provides a promising opportunity to use tax or regulatory incentives to shift good jobs from large central cities to more remote suburban-rural districts or even FELDA and/or land-reformed settlement schemes.
vi) Increasingly, we must build a common front with users of health services to demand that the health and human needs of patients, as well as the working and living conditions of caregivers, be placed at the heart of a reorganized public health system.
It must be firmly reiterated that there is a clamouring cry in reducing social inequities in health and health care to be transformed to a community-based model.
vii) With any dramatic restructuring of the economy, the best better building model assumes the acceptance, adoption and adaptation to the embracement of remote working via IT, including deployment of 5G, and the subsequent 6G, and the employment and utilisation of big data. This approach should improve upon the prospect of attracting more outsourced but high-value-added service jobs, whether city-centric or in outlying marketspaces, too.
viii) The national consumption patterns shall evolve, and shall adapt to a new digital economy. The follow-on to online retail and substitution of online connectivity for physical travel would perpetuate with new innovative apps likely to be home-developed in the Cyberjaya complex. The Bandar Malaysia should become the hub of these diverse digital eco-systems in this digital economy; just like new hubs for bio-medicines, mecho-engineering, agro-food and marine-food.
ix) With high graduate unemployment annually, the teaching approaches need dynamic changes emphasising on science, technology, engineering and mathematics (STEM). Post-2020, the public educational system needs to accept the adoption of partial online academic contents delivery like those practised by private higher education institutions, thus, freeing major cohort of teaching staff to learn other upskilled disciplines and practise creative onskilled presentations.
Presently, it is definitely inequitable for students without internet access or a computer at home, and inequitable for the special-education populace that our telecommunication is not synchronized with new technologies deployment especially into the highland interiors; this needs overwhelming aggressive change agents to broadcast creative information technology solutions to be promulgated extensively.
The challenge to our national economies is extraordinary daunting, but the best better building model in a post-2020 environment is the progressive paradigm pulsar pulsating with dynamic new dimensions whereas the back to business as usual approach is an outdated no-new-thinking, likely with minor incremental policies that are unlikely to achieve much, and definitely entrusted and encrusted to vested capital interests under fossilized governance.
To revisit the Overview by Olin Liu
Malaysia: From Crisis to Recovery, IMF Occasional Paper No. 207, when twenty years past the advice was:
The way forward should have include continued structural reforms to achieve healthy balance sheets of the banking and corporate sectors and further deregulation to promote competition and efficiency
that was not adequately adopted nor appropriately adhered with the dire consequences that this resourceful yet endowed country of ours has depleted its wealth, decimated its economic growth and being pitifully stranded.
We are best better building Together!
Firestorms 