- Good riddance to EO
- An uphill battle
- How Welfare is Inclusive, Just, and Catalytic to the Malaysian Economy
Posted: 14 Jul 2013 03:27 PM PDT
The Emergency Ordinance is gone and should remain that way.
Syahredzan Johan, The Star
THE authorities have finally acknowledged that for many Malaysians, crime is not merely a perception but a reality.
Now that they agree that we have a problem, the authorities claim that this is because they can no longer rely on the Emergency Ordinance to help them fight crime. Specifically, the law is known as the Emergency (Public Order and Prevention of Crime) Ordinance 1969), as there are actually several Ordinances promulgated under three declarations of Emergency. But for ease of reference, we shall refer to this particular Emergency Ordinance as the "EO".
Flashback – on the eve of Malaysia Day, 2011, the Prime Minister announced several democratic reforms, one of which was to table a motion in Parliament to end three declarations of Emergency. True to his word, the motion was tabled in the Dewan Rakyat and passed on Nov 24, 2011. On Dec 20, 2011, the Dewan Negara similarly passed the motion.
With that the Emergency ended and set in motion the constitutional provision to also end, within a period of six months, all laws passed under the powers given to the Government to enact emergency-related legislation. The six months period expired on June 19, 2012, ending the operation of the EO once and for all.
Purportedly, this is the reason why the crime rate has increased. The authorities, it is claimed, no longer have this powerful arsenal to combat crime. They are "handicapped"; that is why the criminals have the upper hand. The solution? Bring back "EO-type legislation".
First of all, it is simply not possible to bring back such laws. The EO was promulgated under a declaration of Emergency, which allowed the Government extraordinary powers to deal with threats to public order. You cannot bring back the EO because there is no longer a standing declaration of Emergency.
The EO was promulgated in 1969. Its preamble stated the existence of a grave emergency threatening the security of the country, in reference to the race riots of that year. It also made reference to the fact that when it was promulgated, Parliament was dissolved and that immediate action was required to secure public order, suppress violence and to prevent crime. Most tellingly, it was promulgated on May 16, 1969, three days after the race riots of May 13.
Clearly, the EO was intended to deal with the aftermath of the race riots. But the authorities have used the EO to arrest individuals and detain them without trial and without charging them in Court. The EO has been abused and to suggest that it be resurrected is to allow for it to be abused again.
For the EO is a powerful tool in the hands of the Government. Under the EO, the Inspector-General of Police may detain a person up to 60 days. Thereafter, the Home Minister may issue a Detention Order to detain the person without trial for two years, renewable for a further two years indefinitely. Or if he may issue a Restriction Order to restrict the person to a particular area for two years. These powers cannot be challenged in Court, except if there is a procedural non-compliance.
Detention without trial takes away a person's liberty without allowing him to meet his or her charge in Court. Some have argued that preventive detention is necessary, but even those arguments are limited to terrorism.
Detention without trial in order to combat crime is disproportionate and unreasonable. In fact, there is already an option to detain a person for purposes of investigations before a charge is laid. Under the Criminal Procedure Code, the police habitually ask for a remand order to detain a person. Depending on the crime, the court may order a person to be detained for up to 14 days.
Why do you need to detain him up to 60 days to two years?
Crime has been on the rise for the past few years. In fact, it was just over a year ago on June 10, 2012 that the then Home Minister insisted that the crime rate was down and that high crime was just a "perception". Three years before, the Government promised to tackle street crime and focus on hotspots throughout the country. All this was before the EO became inoperative on June 19, 2012.
The crime rate has been a problem for years, not just in the past one year. It is ridiculous to suggest a causal link between the EO and the crime rate. Especially when we look at who the EO detainees were. The detention centre in Simpang Renggam was not filled hardcore criminals and kingpins. I have represented youths detained under the EO. What were their alleged wrongdoings? Stealing motorbikes.
I have also represented a minor who was detained under the EO and restricted far from
his parents. Forget not also the EO Six – six activists from Parti Sosialis Malaysia, including the re-elected Dr Jeyakumar Devaraj, Member of Parliament for Sungai Siput. They were released after a month and not charged with any crime.
So what was it about using the EO to combat crime, again?
Posted: 14 Jul 2013 03:24 PM PDT
That is how PAS view their chances in the coming Kuala Besut by-election. The seat fell vacant following the death of Barisan's Dr A. Rahman Mokhtar.
Philip Golingai, The Star
IF you were a tourist heading to Pulau Perhentian, you would not sense that there was a by-election that could "hang" the Tereng-ganu legislative assembly.
There was no flag war in the Kuala Besut by-election. The only Barisan Nasional and PAS flags I saw the day after nomination on Friday were on the bridge leading to the Kuala Besut town, the gateway to Pulau Perhentian.
It was a subdued affair on nomination day. The Umno and PAS supporters were about 200m apart.
I was with the PAS supporters, mostly decked in green. The only excitement for me was to see a fashionably late PAS Mursyidul Am (spiritual leader) Datuk Nik Abdul Aziz Nik Mat arriving at the nomination centre in a Mercedes Benz.
Later in Kuala Besut town, I stumbled into an opposition leader.
"How's PAS' chance in this by-election?" I asked.
"It is an uphill battle," he said. "PAS needs a miracle to win."
The odds are for 37-year-old engineer Tengku Zaihan Che Ku Abd Rahman of Umno to defeat 48-year-old businessman Azlan Yusof of PAS. In the May 5 general election, Barisan won the seat with a majority of 2,342 votes against PAS.
Few weeks after GE13, it was unlikely that the majority of voters would have a change of heart and vote for the Opposition.
The seat became vacant following the death of Umno's Dr A. Rahman Mokhtar on June 26. His death has kept alive PAS' dream of recapturing Terengganu that it won in 1999.
That night to gauge the support for PAS, I attended a ceramah in Kampung Pusu Tinggi, about 10km from Kuala Besut town. About 150 people, mostly men wearing white skullcaps, gathered to listen to PAS' top guns – Kuala Krai MP Dr Hatta Ramli and vice-president Datuk Husam Musa – speak.
"It has been two months and seven days since GE13," a PAS Besut leader in Terengganu lingo told the crowd.
"In Besut (MP seat), it was Barisan 4 and PAS 0. It was Barisan 17 and Pakatan 15. Now it is Barisan 16 and Pakatan 15. You can make it 16 16."
I was seated at a warung, sharing the same table with three die-hard PAS members who drove 45 minutes from Machang in Kelantan to listen to the ceramah.
"Perhaps PAS can win. But it won't be easy," one of the Kelantanese told me.
"Why was it four zero in Besut?" I asked.
He called a PAS leader from Kuala Besut to explain.
"From the eight voting streams in Kuala Besut, PAS only won two. We lost the votes from people living along the coastline and on the island (Perhentian). Those who live along the coastline are fishermen who rely on government subsidies," said the Kuala Besut local.
"Those living inland voted for PAS. They are mostly farmers (who receive occasional subsidies)."
In unison, the three Kelantanese nodded their heads.
It was Dr Hatta's turn to speak.
"Kuala Besut should not be a hollow creek – which means a quiet place," he said. "Kuala Besut should be known all over the country as the one seat that changed the Terengganu government. But if Barisan wins, nobody will talk about Kuala Besut. You can create history."
Next was Husam who spoke in local lingo. If you were from Kuala Lumpur, you would need to be a bit clever to understand what he said.
He mentioned "Deris" several times. I wondered what "Deris" was.
Later I put two and two together. "Deris" + "MB" = Datuk Seri Idris Jusoh (the former Terengganu Mentri Besar).
"Barisan relies on peteh. Peteh this and peteh that. But when the people don't rely on peteh like in Subang Jaya, the opposition wins," said Husam, in a dialect that I assumed was Kelantanese.
I thought he was talking about "peti undi" (ballot box). But it was not logical that the Opposition didn't rely on the ballot box and therefore won the Subang Jaya state seat.
Finally, I figured that "peteh" meant money. Later I was told that it was a word used by the people of Terengganu.
Husam played the batu api (instigator).
"Besut used to have a local as MB. But since Datuk Seri Ahmad Said became MB, the people of Besut are treated like stepchildren," he said.
In a twisted logic, Husam said a vote for PAS was a vote for Deris.
After the ceramah, journalists chatted with Dr Hatta.
"Terengganu is a petroleum state. It is the Kuwait of Malaysia but if you look around it is a third world state," he said.
"But can PAS win this by-election?" I asked.
"We have a 45% chance of winning. We're hoping it will increase on polling day," he said.
Posted: 14 Jul 2013 12:25 PM PDT
In the case of Malaysia, bigger welfare programs in education and health for example, will help raise the purchasing power for the average lower middle class Malaysians who are very much left behind in the curve of development.Anas Alam Faizli
One of the most wicked economic satirist of the 18th century, Bernard Mandeville cynically proclaimed, "It was generally admitted that unless the poor were poor, they will not do an honest day's toil without asking for exorbitant wages. To make the society happy it is requisite that great numbers should be ignorant as well as poor."
Mandeville made clear his displeasure with an economic hierarchy that accepted poverty as necessary to safeguard "social order", dismissing charity as hypocrisy of priests and noblemen wanting to maintain status quo. His great paradox that "private vices bring about public benefits" was echoed by his junior of half a century, Adam Smith. Similarly, Smith posited that true virtuous self-interest results in an unintended invincible cooperation, which produces greater economic good.
Is the answer to humankind's economic queries truly within the power of collective selfish incentives? A revisit to the origins of economic superpowers of today can invalidate this claim.
How did West Europe, America and Japan emerge as significantly superior economies to the rest of the world? In 1820, the average income in Western Europe was roughly 90% of that of Africa today. Huge poverty and wealth gaps between nations today virtually did not exist prior to the 19th century. Everyone started on the same footing.
Since the beginning of time, human population only reached 15 million 5,000 years ago. We hit our first billion mark in 1804, and our second more than a century later in 1927. In the 19th and 20th centuries, the world witnessed tremendous economic and human development taking place in Europe and North America. Poverty was reduced in those regions dramatically. Since then, human population skyrocketed to 3 billion in the span of only 40 years to 1960, already reaching 7 billion by 2012.
Healthcare, agriculture, food technology and better mode of production paved way to the industrial revolution. For the first time ever, world food production was at a surplus; one person was able to produce food for thousands of other people. Britain assumed leading position in modern economic growth, given its relative ability to rupture existing structures and undergo necessary gender, familial and social mobility. Growth and technology diffused outwards to other receptive regions like Japan, which was undergoing the Meiji restoration, and North America, from waves of outward migration from Europe.
At the same time, vast regional differences and inequalities surfaced. Modern economic growth was not tasted by many parts the world; thereon emerged dichotomous terminologies we are familiar with today, such as "the east", "the west", "third world" and "first world". Underdevelopment and poverty was no longer something humans could just wait to naturally climb out of. Poverty became relative; it needed combating and attention because great superpowers were accelerating at their self-driven pace, unintentionally or not "trampling" on the poor. Private vices alone will result in grave imbalances. Only then did earlier works in economic philosophy re-emerged with complex theories and models for the solution to man's economic problems, picking up from where Smith and Marx left off.
Jeffrey Sachs in the End of Poverty (2005) saw that eradication of extreme poverty by the year 2025 is possible, as per the Millennium Development Goals (MDGs), given properly planned development aid. Sachs argued that through increasing anti-malarial bed nets in Sub-Saharan Africa, promoting debt cancellation by richer nations to the world's poorest economies, adequate funding for clinical economics, and tripling development aids, the world can be free of extreme poverty. The World Bank defines extreme poverty as living below one dollar and 25 cents per day, at purchasing power parity. But Sachs views the extremely poor as those stuck in a rut and unable to even begin climbing the ladder of development out of poverty without aid.
If we believe in the capability of "private vices" to establish this great invincible cooperative force to achieve economic prosperity; does this mean we see welfare and redistribution as dead? Does it mean we are apathetic towards extreme poverty and economic deprivations of fellow human beings? Where do we draw the line?
A welfare state sees its government play a huge role in the provision of goods and services to ensure social and economic well-being of its citizens. It aims to reduce economic insecurity that is produced by nature or the market. The concept rests upon major normative themes like 'rights', 'needs' 'equality', and 'justice'. In view of organized Islamic living, the Islamic worldview too puts the fulfilment of basic needs of all human beings as one of its primary objectives. Nejatollah Siddiqui in his 'Role of State in the Economy' proposes that the burden of fulfilling needs rest on the Islamic state; it is a fardh kifayah, which is an essential duty that must be performed.
Garfinkel and Smeeding at Columbia in 2010 found that all wealthy nations are in principal welfare states; they are "primarily capitalist economies with large selective doses of socialism". Welfare can take the form of direct transfers or on-behalf payments to service providers, like education and healthcare. Transfers can be cash or coupon handouts, disability and unemployment benefits, which we do not have in Malaysia, family assistance, and poor relief.
Statistically, welfare states can be defined as countries devoting at least 20% to social transfers like Nordic countries, Austria and the Netherlands. On the other hand, countries like the United States and poorer Third World countries spend less in social safety nets and human investments. Malaysia spends only 4.1% on Education (ranking her 101st) and 4.4% on Healthcare (ranking her 156th in the world). Not coincidentally, Malaysia also ranks among the highest in income-disparity gap in Asia between the rich and poor.
Using the Nordic example, higher social transfers of the welfare state have resulted in less poverty, less inequality, and longer life expectancy with statistically no net cost in terms of GDP, economic growth or even budget deficits. But according to welfare expert Peter H. Lindert, the burden of proof lies on those who claim that welfare states strangle productivity and growth. Antagonists need to prove why, in reality, large welfare states end up with higher growth rates.
Welfare Will Not Bankrupt Malaysia
When approaching the subject of financing welfare programmes, we can never avoid Scandinavia. It is always thought that they run a terrific social democratic welfare state, but at the expense of its people. The myth is that citizens, especially the rich and hardworking, are really bullied to pay heavy income taxes. The reality is not as disheartening.
In the 1980s, corporations and property incomes in Sweden rarely pay top statutory rates because of deductibles and loopholes. In fact in the 1990s, Sweden and some other European countries simplified their tax systems which effectively lower tax rates at the high income brackets. The OECD experience since 1980 exhibits no sign of negative econometric impacts on GDP and national product from higher taxes having to finance larger transfers and welfare payments.
It is actually sin taxes that are highest. Tobacco and alcohol are demerit goods because its total costs to society that arise from its consumption (higher healthcare bills from second hand smokers) outweigh the private costs to smokers who purchase them. Consumption in general is also taxed via the Value Added Tax (VAT); the more financially able one is to consume, the more one ought to be taxed.
The Nordic model also taxes lower income groups. While those earning below RM3,000 (which form the majority) are not taxed in Malaysia, even the average Nordic toilet janitor does. At first glance this seems cruel, but labour supply is less sensitive to tax than say, capital supply; people are less likely and less able to change or run away from jobs because of tax as much as investment monies and consumption could. By making everyone pay labour income tax, even those in favour of receiving government welfare too are made to contribute at least a little to the welfare they enjoy.
Welfare Will Not Hinder Progress, Rather Catalyze It
It is time we cease looking at welfare as populist, a game of pity or even something to be grateful to the government for. It is a perfectly feasible economic programme in its own merit and even growth-accretive. Keynes explained that the welfare state is not just absolute support for the poor. Welfare is actually part of a package of policy instruments to keep the market economy on track and prevent relapses of economic crises. Welfare spending also stimulates demand when private investment and expenditure dry up in times of dampened economic growth.
The Columbia University study showed that large welfare state budgets enrich nations rather than impoverish them. First, all modern rich nations have large welfare states. Second, he found that these states grow faster economically in periods after large welfare programmes compared to periods before them. Third, they found strong evidence that public education and public health have led to enormous gains in productivity and economic well-being. The study drew a 125 years historical timeline for rich nations and found a correlation between social spending and growth rates. It is empirically proven that higher growth rates are registered in states during its large welfare era as opposed to its pre-large welfare era.
How so? For one thing, a welfare state is more inclusive; it generates economic producers wven out of its economically-handicapped citizens, by ensuring the bottom income earners are placed onto the ladder of development.
If welfare programs are tax-financed, it is revealed that social spending can only have a net positive effect on GDP because the leakage out of the economy in the form of tax is re-injected into the economy at targeted productive uses. Denison, Barro, Lucas, Hicks and many others agree that there is overwhelming empirical evidence that public education promotes productivity and growth. In fact, even many other social transfer programs raise GDP per capita. America sees shortened life expectancy, ranking 19th of 20 rich nations, and GDP gone wasted as they refuse to spend for health care. Scientific evidence over a similar 125-year period also suggests public health measures have large social benefits and promote productivity and growth. Unsurprisingly, Finland is the second-happiest country on earth (the US not even in top 10), with lower infant mortality rate, better school scores, and a far lower poverty rate than the US.
Furthermore, various studies also found that the richer a country is, the more its citizens can attribute their incomes to welfare transfers, as exhibited by Europe and Australia, because high-budget welfare states feature a tax mix that is more pro-growth than the tax mixes of low-budget Japan and Switzerland. These high-budget states also have more efficient health care, better support for childcare, women's careers, and other features that more than mitigate any negative incentives effects on transfer recipients.
Transfer payments have a direct impact on economic growth by generating private consumption. But the BR1M that we have witnessed is myopic and too little to make a sustainable impact to income. Public provision of education up to tertiary level too will also produce Malaysians who can acquire better skills and jobs, and thus stronger consuming power. Both productivity and private consumption will contribute directly to domestic components of GDP growth. Unfortunately we still hear Malaysians rejecting public university offers from sheer inability to pay even the already subsidized tuition fees.
Such are only some of reasons why Malaysia needs to embark on a serious welfare plan. When designed properly to extract most from less elastic sources to more elastic sources, we can inch closer to ensuring basic comfortable living standards for every Malaysian, and more importantly for them to have the means to ensure that for themselves. A bigger welfare budget is really crucial to enhance the means to achieve a respectable minimum standard of living for many low-income Malaysians.
Welfare Will Not Make Us Lazy
Aside from welfare straining government's coffers or cannibalizing growth, welfare opponents also worry about disincentive effects of tax-financed welfare programs. One other major argument against welfare is how it will make recipients lazy. I argue otherwise. Inheriting a bloated trust fund from your grandfather makes you lazy. Free education and free healthcare do not. That 77% of labor force are only SPM-qualified and below, sluggish wage growth due to lack of skills and qualification, relatively higher graduate unemployment compared to overall employment, and low insurance penetration for access to quality healthcare, only manifest how poor Malaysians are not too far off from those "stuck in a rut" as illustrated by Jeff Sachs. Though not necessarily dying of Malaria, their economic helplessness relative to other Malaysians enjoying a heftier share of Malaysia's growth can be likened to it. Siddiqui proposed that the standard of need fulfilment of an individual should depend on the average of the standard of living of the society that the individual lives in. This needs fulfilment include food, clothing, shelter, medical care and education. In richer states, it should also include transportation, care taking and attendance.
In the case of Malaysia, bigger welfare programs in education and health for example, will help raise the purchasing power for the average lower middle class Malaysians who are very much left behind in the curve of development. They may not be statistically considered poor, but it is increasingly harder for them to be that much better off than their parents. The path of social mobility for the "just above poor" group gets more blurred. Targeted and productive welfare is very necessary to demystify that social mobility path for them and get them started on the path of self-development.
Justifying Welfare for a Country as Rich as Malaysia
The most interesting case yet, for a bigger welfare program in Malaysia, is that the government budget is also significantly financed by non-tax sources. Indirect taxes (excise duties, sales tax) and non-tax revenues (investment income, permits, licensing) combined, contribute about as large as direct taxes to the government's 2012 revenue. Out of indirect tax, individual income tax is the least, at about 11.4 percent. The rest are due to petroleum income and corporate taxes.
What does this mean? First, given government revenue sources are status quo with our wealth of oil and natural resources, welfare programs need not even mean we have to start paying more personal income taxes. Second, there is much room still for welfare programs to positively contribute to employment empowerment, education and socio-economic well being of vulnerable Malaysians without necessarily resulting in laze, complacency or over-dependency.
In fact, over-dependency is only prevalent amongst selected groups who have been enjoying selective treatments by the government, rather than amongst the truly needy groups. While BR1M sings its own praises about how many Rakyat will benefit from it, there's a saying that "We should measure welfare's success by how many people leave welfare, not by how many are added."
Not Just Any Welfare, But Tactical Welfare for Economic Justice
My thesis is that welfare states, when successfully undertaken emulating as much as possible the successes of the social democratic model, is more inclusive to all citizens. Given our current circumstances, it is the best way to promote better productivity in situations of depressed wages, skills and productivity. To allegation that welfare will produce lazy citizens such as in the British case, can be dispelled by the relative success of the Nordic model.
Bearing in mind the need to historically scrutinize data and on-the-ground experiences when studying success stories of other nations, we recognize that arriving at a conclusion is not as simple as it seems. A large welfare programme in no way suggests redistributive intervention where the free market works fine without significant externalities, including fair international trade. Given our relative size, dependencies and advantages on a global scale, it is pivotal for Malaysia to endeavour a larger welfare budget which will ultimately enrich Malaysia, rather than impoverish it.
We dream of a world where grave imbalances cease to exist, where the most vulnerable groups within society are put where they can start making more of themselves. That world would see government intervention as introduced at the start of this address. In that good world, the government corrects externalities and directs resources to where separately functioning private incentives will not, in an ultimate goal of ensuring net positive social outcomes inclusively for Malaysia to yield exponential dividends to reap from.
"Power has only one duty - to secure the social welfare of the People" - Benjamin Disraeli
*Anas Alam Faizli is an oil and gas professional. He is pursuing a post-graduate doctorate, co-Founder of BLINDSPOT, Founding Executive Director of TFTN and tweets at @aafaizli
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