#Talkingpolicy EP04: GE15 wishlist

<Moderator> My name is Lee Min Hui, an analyst with ISIS Malaysia. As Malaysians head to the polls on 19 November, we present this podcast on what the incoming government should focus on domestically and internationally. 

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[You are listening to #Talkingpolicy, an ISIS Malaysia podcast] 

First up is Jamil Ghani, our public sector engagement manager, who will focus on what the new government should tackle on the economic front. 

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Subsidy reform is a touchy subject, but untargeted subsidies are just simply unsustainable.  

One of the biggest holes in all three of the GE15 manifestos is the absence of a policy shift towards a system of targeted subsidies. All three coalitions chose to ignore this elephant in the room. 

We have a widening fiscal deficit and a need for sustainable growth. At nearly 80 billion ringgit, the cost of maintaining subsidies for this year equals to 9% of our GDP, which is dangerously high and has worsened the national debt situation.  

We have a small tax base – the country collected only 64 billion ringgit in the first seven months of 2021, barely covering its operating expenditures. The average tax base for nations in the OECD is about 15%, making Malaysia’s tax base of 12.5% of its GDP, one of the lowest in the world. 

The national debt currently stands at 1 trillion ringgit or 61% of the GDP, which makes our economy vulnerable to future shocks and debt default. Malaysians must also learn to distinguish between those needing help and “free riders”. 

There exist strong economic rationales for subsidy removals in favour of targeted ones. Subsidies benefit the wealthy, as they consume and accrue more of the subsidised goods over time. 

Subsidies distort the market, as producers are not penalised for inefficiency. They divert funds that could have been allocated to education, healthcare and welfare. They also promote smuggling to neighbouring countries. 

The subsidy for cooking oil for example, costs 55 million ringgit a month to maintain. It was subsequently removed because commercial and industrial parties were abusing it, and smugglers were selling our bottled oil in southern Philippines and Thailand.  

The best way to help the most vulnerable of Malaysians, without incurring a hefty cost while preventing the misuse of funds, is through cash transfers. But how should the new government go about doing it? 

It must first look to tax reforms and then outline a targeted subsidy plan to address this serious economic issue.  

One way is to leverage technology, using digital apps to identify the deserving and educate the public. The government already has a database on B40 recipients for various types of aid, and the Inland Revenue Board should have information on Malaysians in the lower M40 bracket. 

The next step is to gradually slash certain subsidies over time, while compensating low-income families with direct targeted cash handouts via an electronic subsidy card.  

If implemented properly, such a policy can spur spending, reduce the subsidy bill and promote a more effective system for the eradication of poverty here in Malaysia.  

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<Moderator> Next up is senior analyst Ahmad Afandi, who will focus on climate action and the climate agenda. 

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There are many changes I hope to see from the new government post-GE15. If you look at the manifestos of all three major coalitions, the climate agenda features quite prominently alongside biodiversity and disaster risk management. 

First, the government should set a new overarching agenda on climate adaptation and resilience at the local level. If you recall, Malaysia had a Low Carbon City Framework that kick-started the low carbon agenda in our cities. We now need a similar framework but for resilient city. In tandem, financial allocation should go to building institutional capacity at the local level to ensure we have more effective adaptation planning and localised actions. This way, we have a better chance of reducing the risks of disasters happening in the first place as opposed to reactively keep on spending billions on flood mitigation, disaster relief and aid. 

Second, perhaps less emphasis on piecemeal and feel-good environmental and green programmes and projects but for the government to prioritise climate policy, especially regulatory and economic instruments such as liability systems for environmental and disaster risk management. And that effort should come with undertaking institutional changes to our environmental governance and risk governance. Because those have long been the major structural weakness that exacerbate our vulnerabilities to climate change and disasters. 

At the end of the day, it is up to the government to protect public goods to ensure a clean, safe and healthy environment for everyone. We shouldn’t leave this alone to markets and businesses despite how the sustainability and ESG agenda are on everyone’s radar now. And I really hope our government can assume a greater role because the next five to 10 years are crucial for our nation. 

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<Moderator> Refugees and asylum seekers have been a major topic over the last few months, and will continue to be an issue for Malaysia. Here is senior fellow Thomas Daniel, who will share his thoughts on how the new government should approach the issue. 

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This is a complex and often emotive issue. Malaysia is now not merely a transit country but a destination itself. Refugees and asylum seekers are among the most vulnerable groups of people in Malaysia and have almost no safety nets.  

They further face increased xenophobia and discrimination, as well as legal and illegal pressures from a variety of enforcement agencies. I have two points to make.  

The first is that Malaysia must base its approach to refugees and asylum seekers on humanitarian principles and basic human decency. These do not have to in conflict with sovereignty or national security priorities.  

The government must take a less securitised approach when it comes to genuine refugees and asylum seekers.  

Many of them here are forcibly displaced, who were forced to leave their homes for various reasons. Largely, they do not want to be here nor stay here. The Rohingya is an exception. 

Moving towards a properly codified system for employment and training for these refugees will allow them to provide for their own well-being, plug local labour gaps and prepare them for relocation to third countries.  

Second, the government, whether political leaders, or ministries or agencies, should bear in mind that how we treat these vulnerable groups will affect our reputation internationally.  In Malaysia’s case, our international advocacy on developments in Myanmar – the post-coup violence and the need for a durable political solution for the Rohingya that doesn’t conform to the desires of the fascist elements in Myanmar – have been damaged by how we treat them domestically.  

This includes deporting those who are vulnerable to persecution in Myanmar, a clear breach of non-refoulement, and in breach of local court orders. Now this might not matter to some in government, but it should. The repercussions and ramifications to Malaysia and the arguments it makes abroad are real. 

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<Moderator> The next government must tackle the post-Covid economic issues impacting Malaysia and embark on reforms to ensure fiscal prudence and resilience. Analyst Qarrem Kassim discusses the pain points that must be addressed to continue our recovery.   

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First, the focus must remain on economic recovery and enhancing the resilience of small and medium-sized enterprises.  

Policy measures, such as a mandated allocation of open tender public sector procurement contracts exclusively for MSMEs and robust digitalisation grants would promote the resilience and productivity of small businesses, especially as we enter an economically uncertain 2023.  

Further, a commitment to enhancing the adherence of ESG and SDG principles through government-backed sustainability loans and grants for SMEs will help reset the business landscape and encourage more sustainable economic development.  

Second, the passing of the Fiscal Responsibility Act must be a top priority.  

This legislation must pave the way for a broader, more efficient and transparent tax collection system and incorporate the expenditure, subsidy and pension reforms necessary to ensure budget responsibility, thus promoting long-term fiscal policy stability. 

Lastly, the new government must provide clear economic direction to attract investments in key economic sectors and high-valued industries.  

The government must embark on the necessary supply-side reforms to reduce compliance costs and offer regionally competitive tax and non-tax incentives to secure long-term international interest, making Malaysia a global player in value-added supply chains.  

These reforms should prioritise qualitative improvements in reskilling and upskilling local workers to narrow the mismatch of skills in the labour market.  

Long-term improvements in young adult education should focus on the skills needed by the jobs of tomorrow with a focus on dematerialised industries such as software programming and coding that fuel the experience economy.    

This should be accompanied with a focus on marketable skills for young graduates and developing an entrepreneurial mindset- an important step in optimising the vast potential of the nation’s youth in charting Malaysia’s future economic growth path.  

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<Moderator> Senior analyst Harris Zainul chimes in to discuss on what he likes to see the new government focus on when it comes to the information environment.  

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Hey Min, thanks for having me. I think what the new government, whoever it may be, will need to focus on will be to protect the information environment. This will be paramount to ensure that the shared facts necessary for productive debate in democracies, such as ours, can be maintained. There are three things that I’d like to see being done by the new government.  

The first is for the revival of the planned Media Council. Here, the current system whereby the government regulates the media needs to be reformed. This is because the media should be completely independent, which would then allow it to perform its role as a watchdog for any potential government transgression. Having the government regulating the media industry works counter towards that objective. Instead, through the Media Council, the industry would be able to regulate itself… which is a much better option for press freedom. So that’s the first thing that I want to see: having the Media Council introduced.  

The second thing that I want to see would be a paradigm shift of the current model of addressing false information. Currently, there is an emphasis on punitive punishments for those creating disinformation.  

The logic here is that with the introduction of punishment, people would be deterred from creating false information. This makes common sense, but can be incredibly problematic when coupled with the low levels of digital and media literacy skills in the country. This essentially places the onus on the people, who may or may not know any better, to determine for themselves whether something is true or not… and if they get it wrong, they will be open to prosecution.  

What I want to see being done instead is for more resources to be diverted towards promoting digital and media literacy skills among the people, so that they would be able to determine for themselves whether a piece of information is right or wrong. Once this is in place, then maybe we can have another look at introducing punishments.  

The last thing relates to the rampant usage of social media influencers to promote political agenda. To me, this is not a problem in and of itself, but we need to ensure that these people who are promoting an agenda, and are being paid to do so, are doing so transparently. And I say this because it is only then that, we, as the audience, will be able to determine for ourselves whether the message is credible or not.   

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<Moderator> For myself, I wish to touch on one of the major issues highlighted by #GE15, the lack of women candidates and how it is an indicator of how women in general are seen as an afterthought in policymaking and nationbuilding. 

I’m hoping that things will change after GE15. One of the key things that need prioritising is greater women’s representation in politics. That can be achieved by extending the government’s 30% target of women in leadership to at least 30% of women heading ministries. We also need a commitment to gender mainstreaming through a nuanced, intersectional national blueprint and strategy. This will go a long way towards creating more gender-sensitive policies that will benefit Malaysia as a whole.  

Next, the government will need to consider the issue of childcare more critically. When it comes to Malaysia’s public childcare system, fragmentation and duplication are a key challenge impeding improvement. At least four different ministries oversee and provide early childhood care and education for children from 0-6 years old. There should be a single overarching body to monitor the provision of these services. Beyond that, we need to start thinking about extending access to public childcare services to benefit more people beyond the B40 group or making childcare cheaper through targeted cash assistance. 

Finally, while there has been a lot of focus on assisting women in the workforce, little has been said about women in informal work who miss out on employment-related benefits. The incoming government should take the first step towards extending some of these benefits to women in informal work. For example, cash maternity benefits to ensure women don’t fall into poverty during maternity or childbirth and improve health outcomes for both mother and child. 

We also need to be cognisant of the youth who make up Malaysia’s largest electoral bloc. Beyond job-related policies, improving their bargaining power vis-à-vis employers and the government is key to ensuring their voices are heard in policymaking. 

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<Moderator> We hope this non-exhaustive list serves as a starting point for conversation. To all Malaysians, “Selamat mengundi”.  

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[ISIS Malaysia is an autonomous research organisation, focusing on foreign policy, economics and nation-building, innovation and environmental studies. For more information, visit us at www.isis.org.my]