Good grace under pressure


BY Prime Minister Tun Dr Mahathir Mohamad’s admission, the Pakatan Harapan didn’t expect to win the general election. So, the new federal government is finding itself biting more than it can chew having made “too many promises”, and is now struggling to fulfil its election pledges.

“Actually, we did not expect to win, and we made a thick manifesto with all kinds of promises.

“We need to make sacrifices to fulfil our promises. If we can’t fulfil them, we will need a good reason that is acceptable to the people,” Dr Mahathir was quoted by a daily which cited several sources who attended a PH meeting last week.

Firstly, there’s no way to fulfil all promises made in 100 days because it’s just physically impossible – that’s just too short a duration.

It augurs well during campaigning but realistically, it can never be pulled off, even if the economy is strong and we have billions to spend.

The 100-day period is popularly used to evaluate the first three months of an American president’s term, but many democracies have their own yardstick to measure the success of a government or a leader.

The practice has long been adopted in Malaysian politics to observe the start of a new political administration. It’s sometimes regarded as the honeymoon period, where some tolerance is accorded to a new leadership, especially if it is inexperienced.

Secondly, the PH and Malaysians, presumably, failed to realise the financial mess we’re in. The empty coffers will make the government’s task of realising its promises that much more difficult. However, given the depth of our debt, most voters will probably find it in themselves to give the new government more time to settle into the job.

Without doubt, the new government has plenty of goodwill and support, and even after the 100-day period is over, it will retain the patience of the rakyat, but nothing should be taken for granted.

After all, PH leaders can only blame the failures and corrupt ways of the Barisan Nasional government for a time.

They were elected to fix the problems left behind by the Najib Administration, so the blame game can’t continue forever.

We can expect a rough ride ahead because the figures released by Bank Negara don’t bode well for the future.

Economic growth for Malaysia in the second quarter of this year came in at 4.5%, which was below consensus estimates of more than 5%.

According to Bank Negara Malaysia, supply disruptions in the second quarter resulted in the slower economic growth.

In comparison, GDP growth was 5.8% in the corresponding quarter of 2017 and 5.4% in 1Q2018.

In the breakdown of GDP by economic activity, the services, manufacturing and construction sectors showed growth in the second quarter while the agriculture and mining sectors slipped into a decline.

Last week, Malaysian equities took a hit while the ringgit slid to its lowest level since November as fears escalated over the currency crisis gripping Turkey. These are factors beyond our control, but the timing couldn’t have been worse.

The PH government has made good its election promise to abolish the unpopular Goods and Services Tax. Unfortunately, this populist move will have far-reaching consequences for Malaysians in the long run as it simply means the government earns less from taxes. This diminished revenue stream is bound to hamper development.

Basically, the losses will extend to the forgone projects that would have been financed by the higher earnings the GST would have generated. This affects essential projects such as schools, hospitals, roads, public services and subsidy programmes for the poor.

According to Singapore’s Straits Times associate editor, Vikram Khanna described the move to discard the 6% GST as driven more by “populist politics than by sound economics”.

Malaysia became the first country to introduce GST and then abolished it, although it has long been accepted by economists as the most comprehensive, transparent, fair and efficient form of consumption tax.

Vikram said that while today’s oil prices of about US$80 (RM278.60) per barrel can provide some fiscal cushion in the short term, oil-based revenues are fickle and volatile. Malaysia can’t depend on them for the long term.

“After the GST is abolished, the government will eventually need to come up with new taxes – either on income or capital gains, or higher user charges. The negative impact on the economy of these taxes should also be f actored into the cost of abolishing the GST,” he cautioned.

He said one reason for the perception that GST raises living costs is it being an “optical illusion” – the GST is transparent and is clearly stated in invoices, but the SST is hidden to consumers.

“While they actually pay it (SST), many of them don’t realise they are doing so. Another reason is that some unscrupulous businesses raised prices when the GST was introduced by more than their additional tax liability, blaming the GST for the increase,” Vikram said.

He said the GST also became a scapegoat for other issues such as the financial scandals relating to, for example, Felda Global Ventures and 1Malaysia Development Bhd (1MDB).

“In some voters’ minds, the issues came to be linked: the GST was viewed as a means to recoup revenues that were lost to Malaysia because of mismanagement and corruption. What was essentially an economically sound tax became tainted and politicised.

“Abolishing it is relatively easy. But now comes the hard part: The new government has the unenviable task of managing Malaysia’s finances without the GST – and without an alternative revenue measure that can match it,” Vikram said.

The bottom line is that the government will now be short of at least RM21 billion with the abolishment of GST, and it doesn’t help that despite the rise in global oil prices to an average of US$70 per barrel, the expected increase in oil-related revenue is estimated at only RM5.4 billion.

The easiest thing to do, in the immediate term, was to identify cuts worth RM10 billion, which meant downsizing, delaying and abolishing overlapping and non-urgent programmes and projects.

It will be painful post GE14, but fortunately, there are also bright sparks in the New Malaysia.

Malaysians knew corruption had a vice-like grip on the country, but they didn’t realise its grave impact until examples of it were exposed, one after another, by the new government.

Barisan leaders and supporters must have been just as shocked and horrified to witness this unbridled greed.

The immediate institutional reforms will win the PH government top marks, and truth be told, the new culture that has surfaced is a breath of fresh air. The shackles feel like they have come off – Malaysians now feel free with the old regime having been toppled, and the media has also benefited. The PH government will be closely watched, though.

Call it what you will but ending the tenure of Barisan political appointees and replacing them with their leaders as envoys smacks of hypocrisy.

At least the effort to pursue those who stole our money through 1MDB deserves an “A”.

All’s not rosy though – the disorganisation of some ministers also needs the attention of Dr Mahathir. Some are already fast earning reputations for ignoring the advice of their more experienced ministry officials, while others are even resorting to snubbing the media.

It’s a shame that some PH politicians continue to wear “racial glasses”. Surely the long-drawn issue of many senior Malaysians not getting citizenships because of document issues is not restricted to a single ethnic group.

And some PH leaders still view race and religious issues as if they are still in Umno, quickly forgetting where their votes came from and how they got elected into government.

We must surely commend Dr Mahathir for looking beyond race in the appointment of key posts, including Tommy Thomas as AG and Lim Guan Eng as Finance Minister.

Hopefully this will set a precedent for appointments from now on to be based on ability and merit.

The PH government clearly has its work cut out, but coming from a patient and accepting culture, we could do with giving the new administration more time to iron out the creases. But good grace is always under pressure from the weight of expectation, particularly for a nation fraught by disappointment and thirsting for change. Everything has its limit, and time will soon tell if the powers that be have met their KPI.

Politics , PH100 , Wong Chun Wai , On the beat

Wong Chun Wai

Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 35 years in various capacities and roles. He is now editorial and corporate affairs adviser to the group, after having served as group managing director/chief executive officer.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.