An efficient and business friendly civil service will help the SME community greatly.
Dear Tun Dr Mahathir Mohamad,
Congratulations on your appointment as the 7th Prime Minister of Malaysia.
It has been 15 years since you have retired and your return has raised the hopes of the nation. I had my doubts with regards to your age and health but you have proven to everyone that your mind is still sharp, your retorts still laced with acidic humour and your eyes still having the mischievous twinkle. Vintage Dr M as I have known since my student days in Universiti Malaya. Welcome back.
Since you are about to appoint members of your coalition government to the Cabinet, I would like to share a few grievances facing the entrepreneur community in Malaysia. Hopefully you will have a better perspective of the state of affairs currently faced by entrepreneurs so that your new team of ministers can formulate new strategies, correct dysfunctional current policies and create a new mentality among the huge civil service that you will inherit.
Malaysia under your management for 22 years grew at a robust pace on the back of innovative and hardworking SMEs’ (small and medium enterprises) involvement in manufacturing, agri business, trading and exports. For your information, SMEs now number around 500,000 entities and despite the presence of huge conglomerates, SMEs still provide the most employment opportunities and keeps the economic engine running. You will be pleased to know that SMEs and its employees are the main supporters of Pakatan Harapan.
I would like to suggest some ideas for your new ministers to consider.
No new slogans please: It just confuses the civil service and the public in general. Bring back “Bersih, cekap dan amanah.” It has worked well before, it will work well again. As Tan Sri Rafidah Aziz has said recently, the civil service exists to serve the community and not to lord over the community. An efficient and business friendly civil service will help the SME community greatly.
Efficiency saves time, time is money: Lower costs increase competitiveness. Competitive companies make profits and increase tax collection for the government. Your ministers should focus on controlling the government agencies that increase business costs unnecessarily. Ultimately, lower costs of doing business will result in lower selling prices thus lowering the cost of living for the people.
Eliminating goods and services tax (GST): As an economist, a consumption tax like GST or value-added tax is a sustainable tax collection model for any nation but it must be accompanied by lower personal and corporate income taxes. Pakatan Harapan’s plan to eliminate GST and reinstating the sales and services tax (SST) might reduce the cost of some products that does not incur sales tax at source. But still the net RM20bil loss in government revenue (GST less SST) means a RM20bil expenditure savings for the people. For that, all the SMEs will support your no-GST programme.
Like all businesses, the government needs to balance its books. I believe you can easily find RM10bil savings from your Prime Minister’s Office expenditure alone. Reducing the number of ministries and cabinet size might save you another few billion. In business when we are not able to increase revenue, we have to cut costs. When revenue decreases, we cut more costs. May I humbly suggest you get a sharp CPA (certified public accountant) assistant to help you review how to achieve savings from the expenditures of the various ministries to make up for the loss of GST revenue.
Another major factor in the increase of costs of living was imported inflation due to the weakening of the ringgit (RM3 to RM4.5 per US dollar). From experience, you have had major battles before with currency devaluations and its effects on our economy. I am confident that you will be able to create a stable exchange rate regime that can sustain a decent cost of living vis-a-vis the prevalent income of your citizens. Businesses will be able to plan better in a stable currency environment.
Rule of law: No businesses can survive without the rule of law being applied in a fair and just manner. It is even more unfair when different rules of law applies to different people. Your plan to restore the independence of the judiciary will create market confidence for new investors and citizens alike.
Similarly, your plan to restore the independence of various national institutions brings hope that a check-and-control system for political excesses can be implemented.
Reducing government involvement in business: The government’s role is to help the private sector, especially the SMEs, in growing the economy so that corporate tax revenues grow in tandem. Instead we have so many federal and state enterprises competing in all sectors of the economy. This creates an uneven playing field as the business opportunities dwindle and monopolies are created. Worst still, politicians and civil servants are involved in running such businesses and being inexperienced managers, state enterprises are inefficient and wasteful. There should be a clear separation of roles – politicians and civil servants administering the government and social projects – and leave the businesses to the private sector.
Anti-fake laws: Your decision to rescind this monstrous law augurs well for freedom of speech and expression. An independent judiciary will be able to solve any defamation suits. What will be of interest to the nation will be how your new administration will manage the publication licences of all the Barisan-owned media companies of newspapers and TV stations. You should not worry too much as they are all traditional media assets. Maybe it is time you allow apolitical independent online and offline media companies to exist and grow.
You will be pleased to know that viewership and readership of traditional media have been sliding at an alarming rate. So has their advertising revenue. Most of the lost advertising revenue has gone to social media companies like Google and Facebook, which incidentally are not taxed on their Malaysian revenue. To make matters worse, local advertisers have to pay additional withholding tax to the Inland Revenue Board since the advertising fees are paid online to overseas account. Perhaps you should direct our Inland Revenue to start collecting tax from such companies instead of harassing our local businesses.
Minimum wage of RM1,500: As most business employers will tell you, salary commensurates with productivity. If you go to a McDonald’s outlet in London, for example, a service staff there gets paid twice our salary on a dollar to dollar basis but their staffing efficiency is one to three. What needs to be done is to inculcate our young on the need to work hard and work fast instead of relying on handouts mentality. That said, it is difficult to find staff who is willing to work on minimum wage in the city thus the reliance on foreign workers.
For SMEs, the staffing problem is more acute. Despite the availability of unemployed local graduates in the hundreds of thousands, it is difficult to find Malay or Chinese graduates who can speak and write passable English. In this increasing Internet-driven economy, basic English proficiency is a prerequisite to employment. Your Education Minister will have a tough job reversing 20 years of misdirected education syllabus which does not meet current needs. Supply not able to meet specific demand. Suggest short-term solutions to bridge the gaps.
Hiring the best people to the cabinet: Please select capable and bright talents to be ministers. When GST was implemented, the ex-deputy minister of domestic trade said that GST will not increase the prices of products. After insulting our intelligence, his officers from the ministry compelled our retail chain stores (customers) not to increase the selling price of products in the store for one year. So the retail stores in return forced the suppliers to absorb the 6% GST. As our imported products were void of sales tax, we had to bear the full GST cost ourselves. At that time, ringgit started its devaluation trend so it was a double-whammy hit on importers. Feeling insulted and bullied was an understatement.
In view of the transition to the new digital economy, I would suggest that Tun bring in as many capable and untainted young talents into your various ministries, if possible. Guide them well and we will have a pool of talented leaders who embodies your “Bersih, cekap dan amanah” mantra to take Malaysia into the next millennium.
Talking of young leaders, I would like to make a personal request that you keep Rafizi Ramli out of jail and bring him into your Cabinet. Nurture him and keep him out of harms. This boy from Terengganu has much to learn and much, much more to give to this country.
My last request is for you to appoint Datuk Ambiga Sreenevasan to be the chairman of the Election Commission. She has been complaining non-stop for the last few years, so it will be good if she is allowed to clean up the electoral rolls, tighten up the laws, revamp the machinery and processes so that the whole nation do not have to stay up so late just to get the election results come GE15.
Last but not least, we wish you good health and good governance. Please listen to your doctor’s advice when she tells you to rest and eat well. You are blessed with a lovely and caring spouse. Not every Prime Minister is as lucky as you are.
Keep well sir.