UMNO-Barisan irrational faith in capitalism Malaysia needs a politically legitimate government,

For a long time British politicians have treated the world of business with something like religious veneration. The last Labour government was always trying to make the public sector more entrepreneurial and consumer-focused. They loved it when management consultants and financiers told them that they had to modernise the state through the ever-greater use of market mechanisms.

Their child-like faith in market forces would have been touching if the consequences hadn't been so disastrous.

The “Mother of All Issues in Malaysia” is the economy which is bedeviled by the Fat Cat Syndrome – read the politics of patronage – fostered by gross distortions of the marketplace initiated by the ruling elite in Umno.

Again, the favoured parasitical few of their Political Masters from Umno are leeching off the rest of the nation and sucking our blood dry through the Licence Raj – inspired by the long discredited Socialist India model – of permits, concessions, quotas, Applied Permits and the like so that a few can “makan atas angin” in perpetuity.

This is a revisiting of the ancient caste system of India where the temples became centres of great wealth and the Brahmins, the priestly class, lorded over the great unwashed masses for several thousand years. In Malaysia, it’s a case of a small group of Muslims, forming the ruling elite, distorting the message of Islam to foist a latter day caste system of sorts on the country.

The Fat Cats and their political masters are the new Brahmins in Malaysia.

'Constitutionalized' plundering

The formula that is driving the Licence Raj basically calls for plundering the public treasury through government procurements and contracts which finally cost the tax-payer anything between double, triple to ten times what it should actually cost them.

To pull the wool over the eyes of the people, while the plundering is going on, Umno indulges in the politics of distraction and disruption by twisting and turning every issue into a racial issue. The hidden agenda is to scare the Malays into circling the wagons and gather under one political platform – Umno – so that the Fat Cats and their political masters can continue to live it up at the expense of all.

In short, the Federal Government is running amok in the marketplace through deviations and distortions in the implementation of Article 153 in the Federal Constitution, and by extension, the New Economic Policy (1970-1990). (scroll below for the full definition as laid out in the Constitution)

The NEP, if seen correctly, reads well on paper. In reality, it’s not worth even the paper it’s written on.

The 3rd prong of the NEP, observed more often than not in the breach, calls for the eradication of poverty irrespective of class, race or creed.

The 2nd prong of the NEP, again observed more often than not in the breach, calls for the elimination of the identification of race with economic function and place of residence.

The NEP and where it has taken the races

The vast majority of Indians, when not in the squatter areas, continue to endure slave-like existence in the estates and have since been joined by the Dusuns and Dayaks. The Malays who are not in the shanty towns are still in their kampung shacks, while the Chinese remain in their dilapidated houses in the new villages which haven’t seen many improvements since the British left.

The 1st prong of the NEP is an extension of one of the four pillars of Article 153 of the Federal Constitution i.e. that the Orang Asli, natives of Sabah and Sarawak and the Malays – not described as Natives by law – should be provided with a reasonable proportion of business opportunities created by Government.

The 1st prong itself of the NEP speaks of the Orang Asli, natives of Sabah and Sarawak and the Malays “owning, controlling and managing 30 per cent of the nation’s corporate economy – publicly listed companies – by 1990. Soon after the NEP was announced in 1970, the Orang Asli and the Natives were given the short end of the stick by the ruling elite and the percentage was re-read as 30 per cent of the entire economy.

The other business opportunities created by Government under Article 153 should go to the non-Malay communities. The second part of Article 153, the power over which is vested solely in the King, speaks of the legitimate aspirations of the non-Malay communities.

Sapu bersih

In reality, the ruling elite usurped the power of the King over Article 153 and made it and the NEP into a sapu bersih (clean out) policy for themselves and their favoured few, the Fat Cats.

The other three pillars of Article 153, like the fourth, speak of a special position for the Orang Asli, the Natives of Sabah and Sarawak and the Malays. The special position translates into reserving for them a reasonable proportion of jobs in the civil service; intake into institutions of higher learning owned by the Government and training privileges; and Government scholarships.

The emphasis is on a “reasonable proportion”. This is the special position which Umno has distorted to read as special privileges. Today, ninety percent of jobs in the civil service, an example, are monopolized by members drawn from one community. Likewise, intake into institutions of higher learning owned by the Government and training privileges is monopolized by the same community.

It’s the same story with Government scholarships. This brings us to Hindraf Makkal Sakthi’s beef with Umno on Article 153 and the NEP as implemented in its distorted version. If nothing else, this ad hoc movement has had the courage to point out that Article 153 had a shelf-life of 15 years from independence in 1957.

Likewise, the NEP was to have ended in 1990. Obviously, the Fat Cats and their political masters in Umno are not going to end the deviations and gross distortions of Article 153 and the NEP. Obviously, the Fat Cats and their political masters in Umno are not going to do away with Article 153 and the NEP.

Therein lays the dilemma for all Malaysians as they go to the polls for the forthcoming 13th General Elections.

Alarm bells should be sounding by now, yet the nation’s leaders seem to be adamant on keeping things sounding rosy and well. The Auditor-General's Report for 2010 has shown how far down the barrel, Malaysia has gone.

It must be noted that when Malaysia was formed in 1963, the British left her with a solid administrative template. Yet, after more than 50 years of rule by Barisan Nasional, the template has not been improved on. In fact, it has gone to the dogs; replaced instead by a form of government that encourages leakages and corruption of all forms.

Malaysia has a population of 28 million and a civil service of around 1.3 million. Out of the 28 million, only one percent are paying income tax. This clearly shows that 99% are either below that income tax bracket or merely earning too little to need to pay taxes. With inflation and the prices of goods continuing to rise, expect even fewer people to pay income tax in the near future.

Incredulous optimism

Yet, the Najib administration's goal for 2012 is to grant perks to the civil service and give hand-outs to non-serving members of the society in the incredulous optimism that this will improve productivity and raise efficiency and so forth. There is a lot of hope, but as always, no real mechanism to bring about results. The AG's report clearly shows that though there were improvements from last year, the large number of detected faults still means the government has a long way to go in order to be a world-class administration.

For comparison, Taiwan has a population of 24 million and a civil service of just 400,000. Yet, Taiwan has continued to emerge as a major player on the global economic scene. Not bad for a small island that has so few natural resources and at one time was chided for producing rip-offs of Japanese electronic goods. Obviously, a clean and efficient government allows for a growing nation and a growing nation shows up, regardless of its size.

But not only is it confirmed that the Malaysian economy and system is riddled with rampant corruption, widespread inefficiency and general incompetence, the country has reached near to the end of the line. Bankruptcy is visible and to the extent that a time frame can be drawn. Minister in the Prime Minister's Department Idris Jala, who shocked the nation last year by warning of bankruptcy by 2019 if the government continues with its current spending pattern, reiterated his view on Tuesday.

In announcing the latest investment updates for the government’s economic transformation programme (ETP), Idris had this to say, “If our economy grows less than four per cent... and we don’t cut our operating expenditure, if we borrow at 12.5 per cent, if our annual debt rises to 12.5 per cent and our revenue does not grow, then it will happen.”

Bankruptcy happens when one overspends or makes a poor investment

Let us examine Idris' statement. Exactly, what will happen and how will it happen? The answers are, Malaysia will go bankrupt and it may come sooner than 2019 unless the leaders get their act together. The awful signs of such a situation are when the country starts to be late in its repayment of debt or servicing of interest.

This happens because there is insufficient cash-flow. Revenue from income and corporate tax plus returns from investment in all productive sectors are insufficient to cover the outflows. How come? Because the past BN government frittered away the borrowings on overpriced, unproductive or loss-making projects and ventures!

According to the AG's Report, Malaysia’s national debt rose by 12.3 per cent to over RM407 billion last year, and although the economy grew by 7.2 per cent in 2010, last year’s fiscal deficit maintained public debt at over 50 per cent of GDP for the second year running. The government owed 53.1 per cent of GDP, slightly down from 53.7 per cent last year.

This does not augur well for Malaysians who may now have to contend with additional taxes like the GST, just to raise government revenue in order to cover its operating expenditures such as subsidies. Yet even as the government grapples with the idea of reducing subsidies and implementing the GST, it must also clean up its own act.

Decisions based on political motives, not sound judgment

The latest news of Prime Minister Najib Razak’s daughter and wife going off on yet another spending spree in Australia surely does not help the cause in asking Malaysians to tighten their belts and to live frugally.

Then there is the scam of the RM3 meals. Najib may have paid RM3 for his meal when he came calling at the 1Malaysia restaurant, but other patrons had to pay in the region of RM4-6 for a meal equivalent to the one the prime minister had.

And while meals and shopping sprees are the order of the day, the AG's report also points out the mob-like nature the government it runs. The latest round of never-ending corruption allegations against the BN involve the National Feedlot Corporation, a multi-million ringgit project aimed to get local production of beef to meet 40% of the national consumption.

Not only was there alleged hanky-panky in the project's management, there were also allegations of abuse of power in the federal government’s RM250 million soft loan to the company awarded the beef project. And guess what? The company is owned by Cabinet minister Shahrizat Jalil’s husband!

'Winnable' entrepreneurs, not cronies

But Najib, who is also Finance minister, chose to defend such questionable practises. The PM said in a written reply to a parliamentary question that the company — Agroscience Sdn Bhd — had been selected to operate the NFC project to create Malaysia’s “Beef Valley” after a tender process involving five other companies.

However, as PKR strategy director Rafizi Ramli pointed out, 6 firms making private representations to the government on a project that had not been announced to the people hardly constituted an open or public tender. To rub in the salt, the AG's Report also criticised the project, and pointed out that it was now “in a mess”.

Perhaps the Beef Valley project says it all. A project of national importance because the supply of reasonably priced food is actually of topmost priority, a national security in fact. But the money allocated and the 'talents' to whom the project is given, are not based merit, capability or track record.

Any lay person can see the conflict of interest of this messy affair, yet Najib seems to be blind to it. Perhaps, the PM should view it in the context of the 'winnable candidates' that he is always harping on for the BN's of candidates to contest in the coming general election!

It really is as simple as that. Choose a wrong candidate, and BN will lose. Choose the wrong entrepreneur, and Malaysia will lose. This is the state of the nation as it stands now, and truth be told, all final warning signs are clear to see - Malaysia may well and truly be bankrupt sooner than 2019.