It is gratifying when one’s country does well in respected international rankings. It provides an opportunity to let out one’s patriotism a little bit, or “my country is better than yours!” This week Malaysia ranked an impressive sixth out of 189 economies in the latest World Bank Doing Business Report.
The overall ranking takes ten topics into consideration, and Malaysia’s rankings for each are as follows: starting a business (16), dealing with construction permits (43), getting electricity (21), registering property (35), getting credit (joint first with the UK), protecting investors (4), paying taxes (36), trading across borders (5), enforcing contracts (30) and resolving insolvency (42). Unsurprisingly the official line is that government policies made this possible, with the Special Task Force to Facilitate Business (PEMUDAH) taking particular praise.
Amongst opposition chatter there was much incredulity: indeed, a grand canyon of perception between the rankings and what they believe to be a state of endemic corruption and cronyism. As with the publication of any international ranking, some of those who are dissatisfied will criticise its methodology. But credit should be given where it is due.
This is all rather good timing for the Prime Minister, amidst ongoing debates on the 2014 Budget tabled last week, because it buttresses the argument that economic liberalisation measures are working. I had written in conditional support of the goods and services tax (GST) before, and while many essential items will be rightfully exempt from the tax, there could have been further lowering and simplification of other taxes at the same time, and more to combat wastage through corruption and inefficiency – measures which would better benefit people on lower incomes than another dose of BR1M.
Much of the wastage stems of course from the sheer size of government to begin with, with Malaysia having more ministries per person than most other parliamentary democracies, and of top of that we have an ever-expanding Prime Minister’s Department, which is this time the fourth largest ministry in terms of spending. I have pointed out how many of its functions duplicate (or contradict) those of other ministries, and it is all to do with politics. The cabinet needs to be sufficiently large so that component parties and geographical areas can be given ministerial positions, and once appointed, each minister expects to hire their own reliable cabals of special officers who complement (or conflict with) the traditional civil service machinery. This is not what cabinet government is supposed to look like.
But perhaps even more essentially, we have to consider that for all the talk about the priority being the reduction of the fiscal deficit, we must look at the government’s track record, which we know is rife with overspending thanks to the good work of the Auditor General. And so we go back to the notion that more budget transparency and stronger anti-corruption measures are needed. Amongst the reforms that could significantly contribute to cutting the overspending, I would suggest giving the Malaysian Anti-Corruption Commission powers of prosecution, which Putrajaya has been resisting for some time now.
Still, at this stage many Malaysians will find the removal of the sugar subsidy to be of greater concern than any of the above, given how much of it we as a nation consume. I certainly approve of this measure – not so much because I am worried about my health and libido (there are superior ways to improve those), and not because I have largely lost my sweet tooth (even ‘kurang manis’ is these days always too sweet for me) – but because it signals a shift towards letting market forces dictate the price of goods, which is fairer to producers, consumers and taxpayers in the long run.
However, the removal of the subsidy is just one part of the equation in ending distortions in the market. As veteran backbencher Tan Sri Shahrir Samad pointed out, sugar monopolies should be ended too, so that competition between sugar producers and importers will drive down prices. There will also be more appreciation for the different types of sugar – I challenge anyone to find a more delectable, subtle sweetness than that of gulo onau from Kuala Pilah.
Oh, how I miss it. In the USA, distortions caused by import tariffs on sugar together with farm subsidies have caused the omnipresence of a disgusting concoction called high fructose corn syrup (HFCS), used to sweeten nearly everything. After a two-hour hike down the Grand Canyon, I reached for what looked like an irresistible bottle of chilled ice tea, only to find HFCS as one of the main ingredients, and I instead submitted to the awesome natural power of water that Arizona’s Natural Wonder of the World so clearly demonstrated.
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Tunku ’Abidin Muhriz is Founding President of IDEAS