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PH Government performance after 1 year in power – an independent observation using SWOT Analysis

A fair and well thought out summary of PH Administration so far by Steve Hagger, CEO of Credit Suisse. There are good news and bad news..

It has been one year since Malaysia saw a change of government, the first time in ~60 years. Those that voted for change were euphoric about ‘New Malaysia’. By Christmas, huge disappointment had set in & the government could do no right. Opinion polls & by-election results have subsequently not gone well. In the run-up to the anniversary, it does appear that some degree of optimism has re-appeared, tempered by a hefty dose of realism. It is clear that the people hold this government to a far higher standard than previous governments. Never before have so many eyes been on the government. How is ‘New Malaysia’ doing? I have attempted a SWOT analysis.

STRENGTHS

  • The regime change has been peaceful & the coalition has held together. This is a big deal.
  • Overt corruption has plummeted, but luxury handbag sales are probably down.
  • Reform has meant that parliament is no-longer a rubber-stamping chamber:
    o The speaker is well respected by all sides.
    o Six parliamentary committees have been set up, providing a check & balance.
    o An opposition MP chairs the public accounts committee.
  • The Election Commission, under new management, has conducted several credible, unbiased by-elections.
  • Judicial reform is well on the way.
  • A coalition naturally provides checks & balances. The downside is this results in compromise & slow decision making.
  • The prosecution of Najib is being conducted in a civilised manner. Old Malaysia might have seen him beaten up, jailed & paraded in an orange boiler suit.
  • The minimum monthly wage has been increased from RM1,000 to RM1,100, with the intention to move up to RM1,500.
  • Dr M & his unelected but highly competent side-kick, Tun Daim, are not seeking re-election, which, in theory, allows them to say & do the right things.
  • Relations with China are now on a strong footing. Time will tell what are the costs & benefits of getting to this situation.
  • The Finance Minister has done an excellent, though unpopular job in taking stock of inheriting a very ‘bad hand’.
  • Collections from Sales & Services Tax (SST) have been 20% above budget, due ironically to better information gleaned from the GST data base. It remains a great shame that GST was abolished & not simply reduced.
  • The media is much, much freer, though it subjects itself to feudal self-restraint & is ultimately subject to licence renewal.
  • Social media provides a check & balance, as well as plenty of room for mischief.
  • Senior appointments have generally been well thought out.
  • Corruption charges have been made against many people. The judicial system must be struggling to cope with the workload.
  • Asset declaration by MPs has been conducted, but is hardly robust.
  • The inland revenue has had some success in tackling non-payment of income tax. It has however resulted in a reduction of conspicuous consumption. The crackdown on the sale of smuggled booze & cigs has started.
  • Opposition MPs now get funding of RM100k pa, albeit 10% of what a government MP gets.
  • The shadow finance minister, Khairy, one of the brightest & most experienced politicians in the house, is keeping the government on its toes.

WEAKNESSES

  • Complete failure to reform the education system.
  • Wholesale distrust of all people & all ideas emanating from the Najib regime has wasted both time & resources. I am thinking of GST, education, subsidy reform & public transport.
  • Mistrust between ministers & their civil servants. Ministers need to win the hearts and minds of civil servants.
  • The government generally fails to get its message across in a coherent fashion. Meanwhile, Najib, in an extraordinary twist of fate, has used the media to brand himself as a Malaysian hero.
  • Huge inherited liabilities (~RM1tn made up of RM687bn debt, RM199bn guarantees, RM201bn lease payments). Malaysia needs to grow its way out of this hole.
  • The unexpected ~RM20bn cost of bailing out the pilgrim’s fund & the ~RM6bn cost of bailing out FELDA.
  • Living with the cost of lop-sided deals with China, albeit after negotiation.
  • The timing & method of handover from Dr M to Anwar creates uncertainty. To his credit, Dr M is unambiguous on this point.
  • Variable quality (experience, intellect & integrity) of MPs & ministers. Dr M & DAP ministers are generally seen to be performers in the cabinet. Weak ministers are often complemented by a strong deputy.
  • A coalition government inevitably means compromise & therefore slow or no decision making (also a strength).
  • Integrity of leaders being swept under the carpet eg a minister with a fake degree is incredibly still a minister.
  • Government struggling to pass laws without the support of the opposition.
  • Police appear all powerful. An Independent police complaints & misconduct commission has been mooted, but not implemented. Too many custodial deaths, unexplained abductions & mass graves to simply allow no checks & balances.

OPPORTUNITIES

  • Stick to the reform plan. Four years to go before facing general elections. Plenty of time, if everyone stays focused on the job.
  • Regain the narrative, particularly with respect to the 3 R’s (Race, Religion, Royalty, see below).
  • The mythical economic silver bullet does not exist. There is no quick fix. Institutional reform is a long, hard grind.
  • A coalition government over time will reduce the power & influence of politicians & therefore strengthen the institutions.
  • Term limits for PMs & Chief Ministers should be imposed.
  • Separating the powers of the AG from the public prosecutor will help prevent the abuse of power.
  • Use of big data for targeted subsidies, tax collection, corruption etc. The government has the upper hand.
  • A salary subsidy scheme has been mooted. It has worked well in Singapore.
  • Corporate Malaysia will eventually stop sitting on its hands & get on with business, eg YTL is taking advantage of current uncertainty. Most will wait for political transition before making major decisions.
  • Penang. Just imagine what this state could do with the complete cooperation of the federal government in an environment of US-China trade tension.
  • A cabinet reshuffle. Get rid of the still under-performing ministers. Education reform is mission critical.
  • If palm oil goes up, so will rural incomes. China will help here.
  • A strengthening currency will alleviate some of the cost of living issues. Historically linked to crude oil.

THREATS

  • Dr M is almost 94. He remains the coalition glue. He is probably nearer the end than the beginning of his extraordinary life.
  • Elements of the opposition have resorted to stirring up issues of the 3 R’s (Race, Religion & Royalty). This is a tinder box.
  • Politicians get too distracted with by-election results & pollsters, forgetting the reform plan & fritter away the next four years.
  • Too much power lying in the hands of the unelected Tun Daim (see also strengths). His friends hope he reverts to norm & gives them concessions. Surely too many checks & balances for this to happen?
  • Some royalty are getting a bit uperty. In feudal Malaysia, this is dangerous. The oldest & youngest ministers appear to be the only ones willing to take them on.
  • A re-alignment of coalition partners is always possible.
  • The ‘ruling class’ has been discredited by 1MDB, providing future political uncertainty. Future leaders could be celebrities or clerics. A global trend.
  • Cost of living remains an issue, though some action has been taken such as minimum wage increase (see above, this is surely key), cash handouts, subsidised petrol (dangerous until targeted), lower broadband prices, an insurance scheme for the B40 & travel passes.
  • The environment is not a genuine priority for Malaysia, as is sadly the case for most countries.

In conclusion, Malaysia is significantly better off now than it was one year ago. It needs to build on institutional reforms in order to ‘future proof’ the country. The one political certainty is coalition politics is here to stay. Coalitions generate political muddle, but will ultimately strengthen the institutions & weaken the influence of individual politicians. This is a good thing. However, for the time being, Malaysia’s economic fate is tied to the price of commodities.

Credit to:
S.J.W. Hagger

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