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NB: This press statement was released on 18 October 2013 in Kuala Lumpur.

The recent 2012 Auditor-General’s Report has once again raised a storm over the Federal Government’s track record in financial management and expenditure. According to Serdang MP Dr Ong Kian Ming, up to RM6.5 billion may have been wasted over 64 cases identified by the report.

However, there is one major Government-Linked Company that does not get reviewed by the Auditor-General, and that is our national oil company, Petronas. Formed by an Act of Parliament in 1974, Petronas is the custodian of our nation’s entire oil and gas resources, and remains until today Malaysia’s one and only Fortune 500 company.

Petronas is also the Federal Government’s financial backer, providing 40 per cent of the Federal Budget through dividends, oil royalty and taxes, but excluding gas subsidies, which are additional contributions.

By law, specifically Section 3(2) of the Petroleum Development Act, Petronas is answerable solely to the Prime Minister. Even Members of Parliament have no access to its financial records besides a simple annual report that is published for public consumption.

More than a billion in losses

Besides oil and gas, Petronas has in recent times ventured out of its core business in an attempt to diversify its portfolio. As a result, Petronas is now heavily invested into properties as well as the healthcare sector through Prince Court Medical Centre, a luxury private hospital situated in the heart of KL city.

However, at a cost of RM544 million to build, the investment in Prince Court Medical Centre has not been able to reap any profit. In fact, according to its annual report, the private hospital has been suffering huge losses every year for 10 years in a row, particularly in the last five years since its operations started.

In 2008, Prince Court lost a total of RM111 million. This figure nearly doubled to RM192 million in 2009 before haemorrhaging a further RM450 million in 2010. By year ending 31 December 2011, the accumulated losses stood at an incredible RM1.08 billion, as shown in the table below.

Income Statement for Prince Court Medical Centre (2002-2011)

Year (31 March)

2002-2007

2008

2009

2010

2011

2011

(31 Dec)

Revenue

 3,236,375

32,780,002

49,290,328

74,731,365

67,190,166

Gross Profit

56,029

21,955,887

40,077,219

36,766,570

Net Profit

Loss for the Year

55,158,456

111,221,071

192,794,384

450,578,215

166,455,753

138,106,830

Total losses

1,114,314,709

Total losses after reconciling effects of (1) reversal of fair value upon equity conversion in 2009 and (2) adopting FRS139 for year ended 31 March 2009

1,082,949,412

Prince Court’s financial performance is in stark contrast to other private hospitals. For example, according to IHH Healthcare’s 2012 financial report, Parkway Pantai, which owns a chain of hospitals in Malaysia and Singapore, recorded RM4.75 billion in revenue for 2012, out of which RM818 million was declared as profit.

Should the public subsidise a loss-making luxury private hospital?

According to a Parliamentary reply I received from Minister in the Prime Minister’s Department Senator Dato’ Sri Abdul Wahid Omar, the Government considers Prince Court’s business model to be sound, and that heavy investments are needed due to the superior state-of-the-art technology used.

Wahid further added that the hospital has been able to achieve 23 per cent growth in the first quarter of 2013 and was recently named the “World’s Best Hospital” in a medical tourism ranking by Medical Travel Quality Alliance.

Even if it is indeed the “world’s best hospital,” it still remains a question whether Prince Court is able to eventually turn a profit, and if not, then why is the public effectively subsidising a loss-making luxury private hospital.

The bigger question is: should Petronas even be engaged in non-core activities such as healthcare and property, being as its mandate and expertise is in the field of oil and gas? Other oil companies typically only invest in oil and gas-related industries and do not stray away from their core competency.

The huge losses amounting to RM1.1 billion suffered by Prince Court clearly proves that Petronas should not be involved in non-core businesses. Meanwhile, this episode also signals an urgent need for greater oversight in Petronas’s financial matters, especially considering the importance of the national oil company to our country’s coffers.

Zairil Khir Johari
Member of Parliament for Bukit Bendera
DAP Assistant National Publicity Secretary

NB: This article was originally published in Roketkini.com.

Ketika Dato’ Sri Najib Razak awal-awal menjadi Perdana Menteri, beliau menjanjikan perpaduan nasional melalui kempen 1Malaysia dan Model Ekonomi Baru (MEB). Dasar ekonomi yang diuar-uarkan ini dikatakan akan mengambil pendekatan tindakan afirmatif berasaskan keperluan, yakni kepada golongan berpendapatan 40 peratus terendah tanpa mengira kaum.

Usaha ini menandakan pemisahan daripada Dasar Ekonomi Baru (DEB) sebelum ini yang berasaskan kaum. Dengan anjakan paradigma ini, Najib mengisyaratkan bahawa pembangunan ekonomi negara pada masa depan akan bertunjangkan prinsip keterangkuman sosial, di mana setiap rakyat Malaysia akan dihitungkan, khususnya mereka yang paling memerlukan bantuan.

Malangnya, janji-janji Najib semua sudah terbatal. Konsep 1Malaysia kini menjadi tidak lebih daripada jenama bagi kedai runcit subsidi, klinik bergerak, skim perumahan mampu milik, menu makanan bajet, serta peruncit tekstil dan lain-lain lagi.

Pada masa yang sama, MEB pula jelas dipinggirkan oleh NEB versi baru yang dinamakan agenda Pemerkasaan Ekonomi Bumiputera (PEB).

Dasar PEB yang baru dilancarkan ini melibatkan pelbagai inisiatif berasaskan kaum, termasuk pembentukan Majlis Pemerkasaan Ekonomi Bumiputera, penubuhan Unit Pembangunan Bumiputera di setiap kementerian, jaminan bahawa Syarikat Berkaitan Kerajaan (GLC) utama akan meningkatkan penyertaan vendor Bumiputera, serta pelancaran 10 bilion unit saham baru Skim Amanah Saham Bumiputera 2 (ASB2) oleh Permodalan Nasional Berhad (PNB).

Sementara MEB menawarkan liberalisasi pasaran dan tindakan afirmatif berasaskan keperluan yang akan memberi tumpuan kepada usaha merapatkan jurang antara yang kaya dan miskin, PEB pula seolah-olah usaha untuk mengembalikan DEB yang telah terbukti gagal membela golongan Melayu miskin, tetapi sebaliknya lebih memanfaatkan golongan kapitalis Melayu yang mempunyai hubungan akrab dengan parti pemerintah.

Hakikat ini adalah jelas apabila kita pertimbangkan perangkaan yang menunjukkan bahawa setelah empat dekad bantuan yang kononnya disasarkan kepada Bumiputera, masih terdapat 40 peratus isi rumah Bumiputera yang hidup dengan pendapatan bulanan RM1,686 secara purata. Pada masa yang sama, si kaya yang mempunyai hubungan politik mampu untuk membeli rumah banglo RM7 juta dengan begitu sahaja.

Justeru, cadangan pelancaran 10 bilion unit ASB2 adalah sangat meragukan. Siapakah yang sebenarnya mendapat manfaat daripada saham ASB tambahan yang bakal disediakan? Adakah kumpulan 40 peratus isi rumah Bumiputera terendah dapat melabur dalam saham-saham yang berhasil tinggi ini sedangkan pendapatan mereka hanya cukup makan dan pakai?

Menurut laporan tahunan PNB, pelaburan purata pelabur Bumiputera adalah RM14,097 seorang pada akhir tahun 2012. Sekali pandang, angka ini tampak menunjukkan bahawa ramai orang Melayu sudah mencapai kadar simpanan yang agak selesa.

Walau bagaimanapun, apabila laporan ini diperhalusi, angka ini benar-benar mengelirukan. Setelah dicerakinkan, didapati bahawa 74 peratus atau hampir tiga perempat pelabur Amanah Saham Bumiputera sebenarnya mempunyai pelaburan purata hanya RM611 setiap seorang. Angka ini jauh berbeza dengan purata keseluruhan pelabur dan lebih mencerminkan realiti rakyat.

Dalam erti kata lain, hanya golongan pelabur elit Bumiputera yang mampu melabur dengan jumlah yang ketara, sementara majoriti pelabur Bumiputera yang lain ternyata tidak mampu menikmati tawaran saham ini. Oleh itu, bagaimanakah mungkin langkah Kerajaan untuk menyediakan lebih banyak unit ASB dapat memberi manfaat kepada Bumiputera kebanyakan?

Malah, satu kajian oleh pakar ekonomi Dr Muhammed Abdul Khalid mendapati bahawa perbezaan kekayaan antara pelabur ASB adalah sangat mencolok, di mana 0.1 peratus teratas pelabur Bumiputera mempunyai portfolio terkumpul yang bernilai 1,526 kali lebih banyak berbanding gabungan 80 peratus pemegang saham terbawah. Oleh itu, tidak syak lagi bahawa kumpulan elit Bumiputera ini juga yang akhirnya akan mendapat manfaat daripada tambahan 10 bilion unit ASB2, dan bukannya Melayu biasa yang sekadar mampu untuk melabur sebanyak RM611.

Maka, persoalannya – untuk siapakah ASB2 ini sebenarnya? Pastinya bukan untuk Bumiputera kebanyakan.

NB: This press statement was released on 9 October 2013 in Kuala Lumpur.

When Dato’ Sri Najib Razak first became prime minister, he promised national unity in the form of 1Malaysia and a New Economic Model (NEM) that preached needs-based economic intervention in favour of the bottom 40 per cent of household income earners regardless of race. This signalled a departure from the race-based policies from the past, and a clear indication that the way forward must include every Malaysian, especially those who most need help.

Unfortunately, Najib’s promises have all been undone with the recent launch of his new Bumiputera agenda. Dubbed the Bumiputera Economic Empowerment Agenda (BEEA), it entails a variety of race-based initiatives including the setting up of a powerful Bumiputera Economic Empowerment Council, the creation of Bumiputera Development Units in every ministry, an assurance that major Government-Linked Companies (GLCs) will increase Bumiputera vendor participation, as well as the launch of 10 billion units of new Skim Amanah Saham Bumiputera 2 (ASB2) shares by Permodalan Nasional Berhad (PNB).

While the NEM offered market liberalisation and needs-based affirmative action that would focus on narrowing the gap between the rich and poor, the BEEA appears to be a reversion to the old New Economic Policy (NEP) that has been proven to benefit mostly a select class of Umno-linked Malay capitalists at the expense of the poorer, unconnected masses.

This is made obvious by the fact that, despite four decades of supposed Bumiputera-targeted assistance, the bottom 40 per cent of Bumiputera households today earn a measly average income of RM1,686 per month. At the same time, the politically-connected rich are able to purchase RM7 million bungalows at a whim.

As such, the proposed launch of 10 billion ASB2 units is highly questionable. Who is set to benefit from more ASB shares made available? Would the bottom 40 per cent of Bumiputera households be able to invest in these high-yielding shares considering that they hardly earn enough to get by?

According to the PNB’s annual reports, the average investment of Bumiputera investors stands at RM14,097 per person as at end 2012. At a glance, this appears to be a decent amount suggesting that many Malays have attained significant savings.

However, upon closer inspection, this figure is actually misleading. When the numbers are broken down, it turns out that three-quarters of Bumiputera unit-holders actually have an average investment of a mere RM611 per person. It is only the top quartile of Bumiputera unit-holders who are able to invest heavily in the shares.

How then, would the availability of more units benefit the average Bumiputera, when they are unable to take advantage of even the current available ASB shares?

In fact, a study by economist Dr Muhammed Abdul Khalid found that the disparity of wealth is massive, whereby the top 0.1 per cent of Bumiputera investors have an accumulated portfolio that is 1,526 times more than the bottom 80 per cent combined. Hence, the likelihood is that this elite group of Bumiputeras will eventually reap the benefits of the additional 10 billion ASB2 units, rather than the common Malay who is able to invest only RM611 on average.

Thus, the question is – who is the ASB2 really for? Certainly not the average Bumiputera.

Zairil Khir Johari, Member of Parliament for Bukit Bendera

NB: This article was originally published in my column on The Malaysian Insider.

The most basic form of democratic decision-making is the exercise of majority rule, a binary concept whereby the option that gains more than half the votes is chosen. However, this simplistic model, in use in most legislatures throughout the world including ours, can easily lead to majoritarianism, or simply put, the “tyranny of the majority”.

In such a situation, particularly in the absence of legal safeguards, political minorities risk the danger of being oppressed, be they minorities of race, gender or class. This is especially relevant to a multi-ethnic, multi-religious society such as ours, comprising of various ethnic groups co-existing alongside the majority Bumiputeras (most of whom are Malay-Muslims), which make up over 50 per cent of the population.

Such a delicate ethno-religious situation thus requires a kind of democracy that is more intuitive and just, which not only serves the wants and needs of the majority, but which also protects the rights and needs of the minorities. This balance is critical and must be maintained in order to provide the necessary space and opportunities for every citizen to achieve their optimal potential and ambitions.

In other words, the state must ensure the provision of social mobility. This goes beyond merely providing the required space and infrastructure, and then allowing nature to take its course. Such a liberal concept is problematic because it is unfair insofar as the world is unfair.

I refer here to the issue of income inequality. It has been traditionally accepted that inequality is a natural by-product of economic growth because healthy competition and meritocracy would result in unequal outcomes. After all, it makes sense that those who work harder and smarter than the rest would reap more benefits compared to those who aren’t as competitive. In short, income inequality reflects a well-functioning market economy.

However, recent empirical evidence produced by mainstream research has pointed out that income inequality may not be sustainable as far as long-term economic stability and growth is concerned. This is because income inequality will invariably result in the gross concentration of wealth at the top, and consequently weakening effective demand at the bottom. As we have seen in recent times, this may translate into loose monetary policy and unsustainable debt as the masses at the bottom struggle to keep up.

At the same time, income inequality also creates a vicious cycle of disenfranchisement as quality education, healthcare, economic opportunities and ultimately social mobility begins to edge further and further away from the reach of the masses. In other words, not only do the rich get richer, the poor will get poorer, both materially and socially.

Hence, the role of the state is extremely important in rebalancing inequality through income redistribution, not only to ensure the welfare of the people, but also to facilitate growth. The macro concept is simple enough – the healthier the population, the more educated they are and the more they earn, the stronger consumer demand becomes and the more sustainable the economy will be. For proof of concept, one only has to look at the Scandinavian model which has produced strong, resilient economic growth through equitable income redistribution.

Now, coming back to the Malaysian situation. We currently suffer from one of the highest levels of income inequality in the region. With a GINI coefficient of 0.4621, our income gap is the widest Southeast Asia. The bottom 40 per cent of Malaysian income earners earn a total of 14.3 per cent of total income while the top 20 per cent commands nearly half or 50 per cent.

Thus, while it is not difficult to argue for the need for some kind of redistributive policy, it is not as simple as one would think given the complicated nature of Malaysia’s polity, ethnic diversity and colonial history.

Post-1969, the Malaysian government recognised the need to address vast socio-economic inequalities that were apparent along racial lines, whereby the Bumiputeras, despite being the majority, only owned an equity share of 2.4 per cent of the economy, compared to the dominant Chinese, which made up the bulk of the capitalist class. Faced with a situation that would unlikely correct itself owing to the general lack of qualifications and social capital amongst the Malay populace, the New Economic Policy (NEP) was devised to address this gap.

The NEP entailed a two-pronged approach, namely: (1) the eradication of poverty regardless of race; and (2) the restructuring of society to eliminate the identification of race with economic function. The former took the form of rural development and poverty eradication programmes while the latter manifested as positive discrimination in favour of the Bumiputeras via education and employment quotas, government procurement policies, as well as corporate equity requirements on publicly-listed firms.

After two decades of the NEP, poverty was successfully reduced from 49.3 per cent in 1970 to single digits today. Local ownership of corporate equity also increased at the expense of foreigners while the Bumiputera share grew tenfold to about 20 per cent according to official data.

However, critics point out that while the NEP managed to lift a significant portion of our population out of the poverty trap and create a sizable and urbane Malay middle class, it has over the years also been used and abused not only to enrich a small elite class of Malay capitalists, but also as a tool of patronage.

Under the guise of the NEP, privatisation, property ownership, corporate listing requirements, senior public positions, and even education opportunities were captured and monopolised by those in power – all made kosher by the standard line of “helping the Malays”.

As a result, a handful of Malay millionaires and billionaires were created while the average Bumiputera remains trapped with little prospect of social mobility. According to the Federal Government’s New Economic Model, the bottom 40 per cent of Malaysian households earn an average household income of RM1,500 a month, with the Bumiputeras making up close to three-quarters of this number.

While inter-ethnic inequality has indeed been reduced, the intra-ethnic gap has widened by leaps and bounds. State monopoly capitalism now pervades, while the private sector is increasingly crowded out. In short, the NEP’s intended purpose of addressing poverty and increasing Malay participation in the economy has given way to corruption, cronyism and abuse of power for the benefit of the ruling capitalist class. This has occurred principally because of the racialised nature of the affirmative action policy, which allows special entitlements based solely on one requirement: race.

Hence, what is needed is not the dismantling of affirmative action, but a reorientation of the policy from race-based to needs-based. This will ensure positive discrimination not in favour of a certain race, which has been easily abused, but instead in favour of those who truly require support and assistance.

In particular, attention must be focused on the marginalised, such as the Orang Asli, the Bumiputeras of Sabah and Sarawak, other ethnic and religious minorities, and those in the lower income groups, in order to help them compete and in turn contribute towards the development of our nation.

We also need an economic agenda that recognises the problem of income inequality, and seeks to alleviate it by empowering those at the bottom, providing them with health, education and economic opportunities, regardless of race.

Most importantly, any kind of affirmative action must be implemented in a transparent and accountable manner, so as to reduce the scope for corruption and cronyism.

In this pivotal moment of our country’s development, it is critical that we embark on a new, inclusive national policy that is able to target and support the most vulnerable in our society. The failure to address this successfully will render any economic development meaningless, as its benefits will be invariably reaped by a select few.

After all, as Nelson Mandela once wrote, “a nation should not be judged by how it treats its highest citizens, but it’s lowest ones”.

NB: This article was originally published in my column on The Malaysian Insider.

Selama 56 tahun, rakyat Malaysia tanpa gagal menyambut satu perayaan yang cukup besar maknanya. Perayaan yang mengingatkan kita betapa berharganya nikmat hidup dalam keadaan bebas daripada cengkaman penjajah.

Dalam pada itu, umum juga menyedari bahawa penghayatan sambutan kemerdekaan bukan sekadar menggantungkan bendera kecil di kenderaan masing-masing, berdiri tegak di dalam pawagam semasa lagu Negaraku dimainkan atau berhimpun menunggu percikan bunga api pada detik 12 tengah malam.

Sebaliknya, kemerdekaan adalah sesuatu usaha pembinaan negara bangsa yang berterusan. Kemerdekaan bererti bahawa setiap anggota masyarakat memiliki hak dan tanggungjawab bersama untuk menentukan corak dan masa depan negara ini. Kemerdekaan bererti bahawa pilihan rakyat menjadi pilihan keramat. Kemerdekaan bererti bahawa setiap insan yang bergelar rakyat dimartabatkan dengan kehidupan yang bermaruah dan peluang untuk menikmati berkongsi kekayaan negara ini.

Namun, walaupun sudah lebih setengah abad kemerdekaan, rakyat makin hidup dalam ketakutan dengan kadar jenayah yang kian meningkat. Hak demokratik pula tercabul apabila pilihan rakyat yang lantang dalam pilihan raya umum tidak berjaya diterjemahkan kepada realiti.

Kesenjangan pendapatan pula makin melebar sehingga negara kita mencatat Pekali Gini (Gini Coefficient) yang tertinggi di Asia Tenggara dan antara yang tertinggi di Asia. Begitu gentingnya jurang antara yang kaya dan miskin, akibat kerangka ekonomi kapitalis kroni yang menguntungkan segelintir elit serta kerabat mereka, sementara 40 peratus rakyat terbawah terpaksa hidup dengan pendapatan purata RM1,500 sebulan seisi rumah.

Yang paling teruk, keharmonian dan kesepaduan antara kaum dan agama makin terancam. Saban hari media arus perdana menyajikan rakyat dengan sentimen-sentimen ekstremis perkauman dan agama, seolah-olah kebencian itu merupakan sifat fitrah masyarakat kita. Apakah yang sudah terjadi dengan matlamat Bangsa Malaysia? Harapan mulia yang pernah diimpikan kini lemas diselubungi dendam kesumat gara-gara politik sempit dan pemimpin dangkal.

Justeru, kita memerlukan pembaharuan yang ketara dalam kancah politik negara kita. Politik lama – politik perkauman dan agama, politik kebencian dan ketakutan – sudah jelas gagal dan perlu dibelakangi. Yang diperlukan adalah keazaman politik baru, iaitu politik bertunjangkan dasar, yang menggalakkan perdebatan serta berjiwa besar. Sekiranya pemimpin politik kita sanggup melakukan perubahan ini, nescaya matlamat Bangsa Malaysia boleh dicapai.

Kita juga memerlukan kerangka ekonomi baru yang mampu mengagihkan kekayaan dengan lebih saksama. Bantuan sosial, pendidikan dan juga ekonomi harus diberikan – tetapi kepada mereka yang perlu dan bukan kepada mereka yang bergelar kroni. Ini tidak akan tercapai selagi sistem ekonomi berdasarkan perkauman tidak dapat diganti dengan sistem yang menyasarkan golongan yang paling memerlukan bantuan tanpa mengira kaum dan agama.

Akhir sekali, kunci kepada pembinaan Bangsa Malaysia terletak dalam sistem pendidikan. Pada masa kini, sistem pendidikan yang seharusnya menyatukan rakyat tampaknya semakin jauh daripada sasarannya. Menurut laporan awal Pelan Pembangunan Pendidikan Malaysia 2013 – 2025,  enrolmen murid bukan Melayu di Sekolah Kebangsaan (SK) hanya 6 peratus manakala enrolmen murid bukan Cina di Sekolah Jenis Kebangsaan Cina (SJKC) mencapai 12%. Statistik ini seolah-olah menyatakan SJKC lebih bersifat “kebangsaan” berbanding SK dari segi komposisi kaum. Sudah tentu, ia juga menonjolkan kegagalan kerajaan untuk menjadikan jurusan Sekolah Kebangsaan sebagai pilihan utama masyarakat.

Oleh itu, sudah tiba masanya kita memikirkan kembali bagaimana untuk mengembalikan fungsi pendidikan sebagai pemudahcara perpaduan nasional tanpa mengabaikan kepentingan mana-mana pihak.

Bagi saya, satu-satunya cara adalah melalui proses disentralisasi dalam sistem pendidikan. Saya percaya, kita harus mengagihkan tanggungjawab dan peranan utama dalam pendidikan kepada pihak-pihak berkepentingan (stakeholders), yakni ibu bapa, guru-guru, murid-murid serta masyarakat tempatan.

Sejauh mana yang mungkin, campurtangan politik harus dielakkan. Ini kerana secara lazimnya politik itu menjadi punca segala masalah, sepertimana yang sudah berulang kali kita alami sepanjang sejarah kita (memori yang paling segar kes PPSMI yang dilaksanakan semata-mata untuk memenuhi kehendak seorang pemimpin).

Sesudah 56 tahun bergelar Merdeka, besar harapan saya agar 56 tahun yang akan datang tidak akan menampakkan kegagalan impian dan harapan nenek moyang kita yang telah banyak berkorban demi mewariskan negara yang megah, maju dan saksama.

Maka, janganlah kita sia-siakan usaha mereka. Sebaliknya, marilah kita meneruskan agenda kemerdekaan dengan mengukuhkan lagi batu asas kenegaraan kita dan mendirikan rangka ekonomi, siasah dan pendidikan yang teguh bagi penjalinan Bangsa Malaysia pada suatu hari kelak.

NB: This speech was delivered at the launch of the Penang Paradigm at the Town Hall, George Town, on 23 February 2013.

Firstly, I would like to welcome everyone to the launch of the Penang Paradigm, which is the Penang Institute’s proposed 10-year development plan for the Penang Government. The ultimate vision is to create an international and intelligent state that embodies the principles of holistic development in order to forge a “balanced society” by the year 2023.

The Penang Paradigm was of course not produced overnight. Lots of research, discussions and thinking have gone into this document. Many rounds of consultations were held with civil society, government agencies, academics, and of course today we are here to present it to the people of Penang for public consultation and feedback.

Subsequent to this launch, a public exhibition will be held for two weeks in both George Town as well as Seberang Perai. We encourage as many people as possible to come, view and to revert with feedback.

Now, the Penang Paradigm is by no means a revolutionary proposal. In producing this document, we were greatly aware that there was no need to attempt to reinvent the wheel. After all, there are many success models out there in the world, and the best thing we can do is to learn from them, which is exactly what we have done.

We have studied why economic strategies work, and more importantly, why they don’t. We have then applied our analysis to the interesting case of Penang, which is an economy that has seen many ups and downs over the years from its heydays as a regional entrepôt to its late-20th-century glory-days as a leader of industrialisation in the country.

This analytical process is important, because any comprehensive and long-term solution must necessarily be cognisant of not only what has been proven to work, but also what has been proven to fail.

Ladies and gentlemen,

We find ourselves today at a crossroads. We are essentially caught in a transitional phase of the global economy, in which the world is struggling to come to terms with, on the one hand, the decline in Western consumerism, and on the other, the voracious appetite of the emerging markets in East Asia and the Indian Subcontinent. As an export-oriented economy built upon the demands of Western consumerism, Penang now needs to rethink its strategy.

At the same time, a very interesting development is emerging. If there is one thing the recent Global Financial Crisis has taught us, it is that economics is only one part of the equation. The North American housing and financial meltdown, coupled with the European sovereign-debt crisis, has reinforced the need for greater fundamentals. We have now seen how, without responsible regulation, unfettered capitalism can cause an implosion of greed and financial ruin. In other words, good and clean governance is necessary to ensure stability, predictability and efficiency.

In the aftermath of the crisis, the world has also learned another lesson, and that is that economic growth alone is unable to generate lasting prosperity. As the Occupy Wall Street Movement has pointed out, often the benefits of development are reaped by the one per cent, leaving the rest of the 99 out in the cold. More importantly, it has also been proven that greater social justice and a more equitable income distribution will lead to a stronger economy, as access to healthcare, education and economic opportunities will improve in tandem.

At the same time, justice is not only important socially but also environmentally. In this world of finite resources and ever-increasing competition over those resources, a sustainable development agenda is required to conserve energy and minimise our damage to the environment. If we do not take great care of this, there will be no world left for our children.

Hence, the Penang Paradigm is an attempt to understand these global factors, localise it in the context of Penang and indeed Malaysia, and to formulate proposals that will propel us into the next phase of our future: which is an international and intelligent Penang based on a balanced society which encapsulates material prosperity, political empowerment, social progress, intellectual creativity, environmental sustainability and cultural vibrancy.

Finally, I would like to end by thanking everyone involved in this comprehensive project, with particular reference to my colleagues at the Penang Institute who have been working tirelessly for the last few months in putting this together.

Thank you.

NB: This press statement was released on 18.12.2012.

Dalam laporan akhbar Sinar Harian yang bertajuk “Izat: Ekonomi Melayu gugat jika DAP diberi kepercayaan” pada 17 Disember 2012, Presiden Persatuan Pedagang dan Pengusaha Melayu Malaysia (Perdasama), Datuk Moehamad Izat Emir telah dipetik sebagai berkata bahawa “sokongan orang Melayu terhadap DAP akan hanya menyebabkan ekonomi dan masa depan orang Melayu terumbang-ambing.”

Kenyataan Datuk Izat ini jelas dangkal, bermotif politik perkauman dan langsung tidak berasas. DAP adalah sebuah parti politik yang konsisten dalam pelaksanaan dasar tadbir urus yang cekap, bertanggungjawab dan telus, sepertimana yang dibuktikan oleh pentadbiran kerajaan negeri Pulau Pinang selama hampir lima tahun ini. Keberkesanan tatakelola pentadbiran yang dilaksanakan oleh kerajaan Pulau Pinang telah pun mendapat pengiktirafan dan pengesahan daripada Laporan-laporan Ketua Audit Negara setiap tahun.

Bagaimanakah ciri-ciri ketelusan dan kebertanggungjawaban boleh menjadi ancaman kepada orang Melayu? Hipotesis yang kurang waras ini hanya digunakan oleh sesetengah pihak yang tidak mampu berdaya saing akibat kebergantungan mereka kepada sistem kroni dan amalan rasuah.

Sebagai contoh, setelah beberapa tahun perlaksanaan sistem tender terbuka yang diperkenalkan kerajaan Pakatan Rakyat Pulau Pinang, telah didapati bahawa lebih 70 peratus kontrak kerajaan negeri telah dianugerahkan secara telus dan terbuka kepada kontraktor-kontraktor Melayu yang berdaya saing. Ini lantang membuktikan bahawa kontraktor-kontraktor Melayu yang tulen telah diperkasakan dan tidak perlu lagi bergantung kepada “kabel politik”, seperti yang menjadi kelumrahan kerajaan BN terdahulu.

Nyata yang terancam adalah kroni UMNO dan BN dan bukannya pengusaha-pengusaha Melayu yang tulen dan kuat berusaha.

Dalam pada itu, dasar “Agenda Ekonomi Saksama” yang diusahakan kerajaan Pakatan Rakyat Pulau Pinang merupakan kerangka yang serba inklusif. Duit lebihan yang berjaya dikumpul melalui penjimatan dan keuntungan daripada dasar tender terbuka telah disalurkan kepada rakyat melalui program-program bantuan yang menyasarkan golongan-golongan seperti miskin tegar, warga emas, ibu tunggal, pelajar dan sebagainya. Malah, Pulau Pinang telah menjadi negeri pertama untuk membasmi kemiskinan tegar, dan menjelang akhir tahun 2013 bakal menjadi negeri pertama untuk membasmi kemiskinan sama sekali.

Adakah model pembangunan yang membantu golongan bawahan ini, khususnya yang miskin dan daif, boleh dianggap sebagai menggugatkan masyarakat Melayu?

Jauh daripada tergugat, dasar DAP dan Pakatan Rakyat yang dilaksanakan di Pulau Pinang telah memanfaatkan dan memartabatkan masyarakat Melayu, serta menjalinkan pertumbuhan ekonomi yang lebih sihat dan berdaya saing.

Sebenarnya, adalah UMNO dan BN yang telah menggagalkan dan menyeleweng rakyat, khususnya orang Melayu. Di manakah keadilannya apabila rakyat Melayu dan Bumiputera merupakan rakyat termiskin di negara kita sementara pemimpin-pemimpin UMNO dan BN dapat menikmati kekayaan yang luarbiasa, seperti Ketua Menteri Melaka yang baru-baru ini menjamu 130,000 orang tetamu untuk kenduri perkahwinan anaknya dan keluarga Ketua Menteri Sarawak yang didakwa mempunyai kekayaan berbilion-bilion ringgit?

Jelas, sokongan Melayu terhadap DAP dan Pakatan Rakyat akan membawa manfaat dan keuntungan kepada mereka, manakala sokongan berterusan kepada UMNO dan Barisan Nasional hanya akan menguntungkan kroni-kroni dan pemimpin-pemimpin yang rakus serta memastikan rakyat akan terus dibelenggu dalam jerat kemiskinan.

Zairil Khir Johari, Penolong Setiausaha Publisiti Kebangsaan DAP

NB: This article was originally published in issue 8.12 of the Penang Monthly.

The advent of the digital era, characterised by seamless and instantaneous transfer of information and unprecedented levels of global interconnectedness, has seen a paradigm shift in social, political and economic strategies worldwide.

In fact, it is commonly said that the world has entered into “the knowledge revolution or knowledge economy”, which some have argued to be “the latest phase of capitalism”[1]. In this age of knowledge, mobile capital and the easy spread of technology have meant that the production of goods have increasingly shifted to low cost countries.

“This is a natural progression, especially for developed economies,” notes international investment banker Julian Candiah. “As GDP per capita rises and countries gets richer, a lot of the lower-valued components of the economy have migrated to low cost countries. We have seen this hand-off many times, first in the 1970s to the South-East Asian Tigers, and then in the 1990s to China, and now to Bangladesh, Vietnam, Cambodia, etc. Even China is now moving up the value chain.”

As developed economies begin to decouple themselves from industrial production, it is suggested that future success would no longer be predicated upon traditional factors such as land, labour and raw materials, but upon the creation of value extracted from knowledge, skills and creativity.

In other words, future jobs in the so-called knowledge economy would require working with our brains and not with our hands. Soft power, and not hard power, would drive the world forward.

So how exactly has this experiment fared?

e-Britain

In 1997, Tony Blair was elected as Prime Minister of Britain on the wave of Cool Britannia and the promise of ushering in a new golden age. Having successfully rejuvenated and remodelled a now centrist, market-embracing Labour Party, the youngest British Prime Minister in nearly two centuries sought to catapult a then lagging Britain into the “forefront of the knowledge economy”.

According to Blair and other deindustrialisation advocates, this new knowledge-driven economy is the “equivalent of the machine-driven economy of the industrial revolution”[2]. In other words, future British success would lie in the country’s ability to shift from an industrial economy to one based on services. To borrow Blair’s own words, Britain needed to transform the “workshop of the world” into the “e-commerce capital of the world”.

This premise, though an innovation, was not a new one. Margaret Thatcher had been the first, two decades before, to prescribe deindustrialisation as the cure for what she deemed to be an uncompetitive, manufacturing-based British economy. By articulating the “knowledge economy” in the context of a globalising world driven by ICT, Blair gave the strategy renewed direction.

For over a decade, the government pursued this policy, turning the British economy into the world’s second largest services exporter after the US. This was achieved on the back of creative services such as film, music, fashion and advertising, as well as other traditional services such as finance, computing and ICT. The picturesque vision of a knowledge economy looked set to come true.

Today, more than a decade later, Blair’s vision remains just that. Having experienced the largest deindustrialisation exercise in post-war Europe, in which the industrial share of the economy saw a decline from 30% in the 1970s to about 11% today, one would be hard-pressed to opine that the British economy is in a better shape than it was.

The British used to make cars, ships and engines for the world. They gave all that up to sell culture, tourism and financial advice, only to find that selling things simply cannot provide the same volume of employment that making things can. Unemployment is now at its highest level since 1995, while income inequality has reached a 30-year peak.

The British northeast, once the proud home to numerous factories, warehouses and dockyards, has now become the poster child of a post-industrial wasteland, sprawling with hollow buildings and muddy estates. Not only have the cacophonous activities come to an end, so too have the jobs, apprenticeships, local industries and support services that typically characterise an ecosystem built around making things. Meanwhile, the vacuum left behind remains vivid for a generation of displaced Britons.

Services-driven Penang?

Though it took a while, the same debate has now made its way to Penang’s shores. In recent times, certain quarters have spoken out about the need to reinvent Penang’s traditional economic base. Citing a fast-depleting land bank and competition from more cost-effective neighbours, they argue that the manufacturing sector has reached its zenith.

Their solution? To transform the services sector to replace manufacturing as the next engine of growth. According to them, Penang no longer has a comparative advantage in manufacturing, and should instead focus on building resources and talent in service industries such as tourism, healthcare, ICT and finance. After all, Penang is no stranger to economic change, having evolved from a free port into an industrial beacon. The question is, is it time to change?

Today, manufacturing remains the bedrock of the Penang economy, easily contributing more than half of Penang’s economic output. In the last two years, Penang has etched itself as the top destination in the country for manufacturing investment, notching RM12.2bil in 2010 and RM9.1bil in 2011. Of this amount, RM17.7bil came in the form of FDI, which means that the second smallest state in Malaysia had managed to attract nearly a third of total national FDI. At the rate the trend is going, there is nothing to indicate a need for a realignment of strategies.

This is not to say that an over-reliance in manufacturing is without its pitfalls. In fact, Penang’s industrial, export-dependent economy is necessarily more exposed than other states to shifts in global economic trends. This was the case during the 2008 financial crisis, resulting in a GDP dip of over 10% in real terms (based on constant 2000 prices). In contrast, Malaysia’s GDP only fell by 1.6% during the same period. Manufacturing output in Penang also decreased by 20.2%, double the decline suffered nationally.

Global economic forces are of course hard to resist. That said, Penang managed to bounce back with a real GDP growth of 10% in 2010. And despite this rough patch, Penang’s GDP per capita had actually increased slightly over this period of time. This was achieved because, over the years and more so in recent times, Penang has been able to build up an industrial base that is not merely made up of low-skills and low value-added assembly lines but also cutting-edge technology with leading brands such as Intel, Motorola, Sony, Dell, Honeywell, Bose and National Instruments.

As Candiah says, “The trick is not so much to do ‘manufacturing correctly’, but to do ‘correct manufacturing’. The game must be value-added, high-productivity manufacturing. And to the credit of the folks in charge, they have managed to get it right so far.”

Today, Penang is moving towards high-end manufacturing such as solar panels, LEDs, medical devices and the like. Just last year, Singapore Aerospace Manufacturing opened a facility in Penang to produce precision components for the aviation and aerospace industry. Such value-added industries are exactly the kind that will provide the ingredients needed for Penang to move up the manufacturing value chain.

The myth of the services-based economy

But what about the developed countries that have managed to “graduate” into services-based economies? Singapore, for example, is typically used as an example of a successful former industrial power-turned-services provider. Should that not be Penang’s future direction?

Though widely accepted, the above hypothesis is not entirely accurate. Ha-Joon Chang, a leading Cambridge economist, has frequently pointed out that high income knowledge economies that appear to be services-based are in fact highly industrialised economies. For example, Switzerland, believed to be a post-industrial economy reliant on services such as the banking sector and tourism, in fact ranks as the country with the second highest manufacturing value-add (MVA) per capita[3] in the world. Singapore ranks third. And in the Competitive Industrial Performance Index, Singapore is the world number one.

What most fail to understand is that the success of countries like Switzerland and Singapore is based upon their industrial foundations. And it is from such a foundation that they are able to spin off a services supply chain encompassing research, design, engineering, legal, financial and sales. In other words, one first needs to make a product before one can add value to it and finally, consumerise it. The same trend is also evident in other high income Asian economies such as Japan, Korea and Taiwan.

As the world progresses, there can be no doubt that consumption of technological products will only increase. Economic downturns may temporarily dampen demand, but in the end, more rather than less manufacturing will be needed to cater to the growing market. Instead of reducing manufacturing, the strategy should be to leverage upon the existing base and focus on value-adds through technology, automation and productivity improvement.

Not what you produce, but how you produce

Years after sounding the clarion call for deindustrialisation, the British government is now talking about a “march of the makers”. In last year’s budget speech, the Chancellor of the Exchequer proudly proclaimed that the words “Made in Britain” will once again drive the nation forward.

Meanwhile, the Obama administration has embarked on a manufacturing drive in a bid to revive the lacklustre American economy. In a recent speech by Gene Sperling, director of the National Economic Council, at a conference aptly titled “The Renaissance of American Manufacturing”, it was pointed out that manufacturing is responsible for 70% of R&D in America, despite being only 12% of the economy. Not only that, manufacturing jobs pay on average 25% higher than non-manufacturing jobs. Sperling then added, as if struck by an epiphany, that manufacturing would be the key to tackling the country’s ballooning trade deficit.

Whether it is too little too late remains to be seen, but the fact is that the US and Britain have finally realised the potential multiplier effect, in terms of jobs and services, that is inherent in manufacturing. What is understood to be a knowledge-based economy is in fact a corollary resulting from a mature industrial base. In other words, manufacturing is a prerequisite for innovation.

Closer to home, it is critical that we learn from the experiences of others before it is too late. To say that manufacturing has peaked is disingenuous. If anything, it holds even more potential today than it did a few decades ago. What is needed is not to replace manufacturing but to create depth and specialisation through innovation and technology. Moving forward, it will be about how we produce rather than what we produce.

“Today, the buzzword is ‘reindustrialisation’,” says the Penang Development Corporation (PDC) deputy general manager Iskandar Basha Abdul Kadir. “After playing an integral role in the industrialisation of Penang for 40 years, it is time for the PDC to facilitate the reinvestment and revitalisation that is currently being undertaken by most pioneer plants and facilities in our industrial zones.

“We cannot afford to lie around idly by while the whole world is moving. Besides attracting new, value-added industries, we also need to revitalise and reenergise the ‘old’ ones so they can become ‘new’ again.”

According to Iskandar, the premise for the future of the Penang economy is simple. “If we can successfully add value to our existing manufacturing capacity, then we will set off a chain of events that will produce higher value services and, ultimately, higher paying jobs.”


[1] Rikowski, R. (2003), “Value – the Life Blood of Capitalism: knowledge is the current key”, Policy Futures in Education, Vol.1 No.1, pp. 160-178.

[2] Speech by Tony Blair at the Knowledge 2000 Conference, http://www.guardian.co.uk/uk/2000/mar/07/tonyblair

[3] A basic indicator of a country’s level of industrialisation. The higher the MVA, the more industrialised the country.

NB: This article was originally published in The Edge Financial Daily.

Penang recently played host to the inaugural conference of the ASEAN Coalition for Clean Governance, a day-long event which brought together a distinguished line-up of prominent leaders and proponents of clean governance from seven different countries around the region.

As a state that has turned the motto of “competency, accountability and transparency” into something of a sacred maxim, it was naturally relevant for Penang to promote and champion the issue of clean governance through an international conference that discussed its mechanisms, enabling factors and correlation to development.

Clean governance is a critical issue in the world today, more so given the extraordinary circumstances that we now find ourselves in. With the crippling debt crises in the West, the Arab Spring in the Middle East and the political transitions taking place in our own region, the global order would appear to be in the midst of a major reconfiguration. Where once the global economy was ruled by the consumer engines of the West, usurpers have emerged in the form of the newly-awakened giants of Asia.

This shifting global order is significant to us in Southeast Asia. Not only are we are geographically sandwiched between China to the East and India to the West, our economies are also opening up and maturing at a pace that has, despite the financial crises affecting our traditional export markets, actually continued to expand both in production as well as consumption. And with Southeast Asia housing 600 million people or a tenth of the world’s population, and about three billion people if we include East Asia and the Indian subcontinent, we have every right to be optimistic about this promised Asian Century.

However, great care must be taken to avoid the pitfalls of development. The post-industrial Western experience has revealed that economic growth, while succeeding in delivering prosperity and an improved quality of life, may also result in widening inequality and social injustice. This is especially the case when institutional mechanisms are unable to rein in the unsustainable machinations of an unfettered capitalistic system.

In other words, without strong, prudent and responsible public institutions, socio-economic systems would be rendered defenceless against corruption, abuse of power and profiteering by self-interested, greedy and irresponsible elements. And as the unravelling economies of the United States and Europe have proven, great wealth will inevitably be amassed by the elites at the expense of everyone else.

The way to circumvent such a situation is to provide the necessary institutional protections. To put it simply, public institutions are the structural parameters within which the government, markets and society interact with one another. These parameters – judicial, executive, legislative, financial, bureaucratic as well as electoral – represent the fine line between a system that will ensure the translation of economic growth into developmental outcomes that are equitable and socially responsible, and one that will engender misguided distribution of resources, arbitrary justice, an exacerbated wealth gap, and uncompetitive and inefficient markets.

This is where clean governance comes in. If we are able to provide public institutions that are clean, efficient, free from corruption, based on the rule of law, legitimately derived from the people, and participatory as well as inclusive, then we will be able to establish a system that is able to ensure safeguards against the pitfalls of unregulated capitalism.

This is all the more relevant in the context of Southeast Asia today, a region that is witnessing a complicated contestation between democratic transition on the one hand, and the entrenched legacies of patronage, corruption and abuse of power on the other. If not handled with care, the future of a resource-rich and geographically-blessed region may end in ruin.

The challenge then is to ensure that public institutions, especially in vulnerable polities such as ours which are undergoing transition, are not hijacked by vested interests. As the Western experience has shown us, structurally unsound and irresponsible fiscal policies and its selective enforcement have resulted in unsustainable development built upon debt and deception. Without proper institutional foundations, it was only a matter of time before the house of cards came crumbling down. Today, Greece is essentially bankrupt while a few other European countries face similar fates.

The need to appreciate the critical and symbiotic relationship between clean governance and socio-economic development cannot be clearer. Clean, efficient and accountable governance will produce positive socio-economic development. On the other hand, corrupt, inefficient and opaque public institutions will impair economic competitiveness, impede private sector investment and distort the distribution of wealth.

However, in order to effect clean governance, political will is required to engage in a long-term commitment to build, rebuild and reinforce public institutions that will be able to minimise corruption and allow the creation of a more inclusive, equitable and sustainable future.

As former UN secretary-general Kofi Annan once remarked, the UN’s own experiences throughout the world have proven that “without good governance – without the rule of law, predictable administration, legitimate power, and responsive regulation – no amount of funding, no amount of charity will set us on the path to prosperity.”

Thus, it is imperative that we welcome the prospect of the coming Asian Century by realising not only the opportunities that it brings, but also the accompanying challenges. However, we are fortunately blessed with the benefit of hindsight, and will hopefully not repeat the mistakes of others. If we are to learn anything from the fiscal crises in the West, it is that we should very well make sure we get our foundations right. And clean.

NB: This article was originally published in my column on The Malaysian Insider.

I have previously written about the housing situation in Penang, in which there is a stark mismatch between supply and demand. This mismatch takes the form of an oversupply of housing stock at both the lowest and highest range of income earners, while there is an undersupply at the middle income range.

For the bottom 40 per cent of income earners, the number of affordable housing stock doubles the number of families at that income range. At the opposite end, there are more luxury residential developments compared to the number of households at the highest income bracket, though this represents a completely different problem altogether.

However, the real problem of housing in Penang is the unavailability of housing stock to supply the middle-income earners. Currently, there is a shortage of 70,052 units for this group of typically newly-wed professionals and young middle class families.

This glaring affordability gap threatens to be a serious problem, especially considering the fact that Penang is a middle-income state with a higher-than-national average mean household income of RM4,407 per month.

Affordability, of course, is a subjective issue. One can easily point out that since there are surplus units at the low-cost range, these families could simply purchase houses that cost under RM150,000. However, the prospect of living in a cramped two-bedroom flat in a building that would unlikely be well-maintained and potentially having crowded neighbouring units housing low-skilled foreign labour, is unlikely to be what a young aspiring family earning a joint-income of RM5,000 would be looking for. At the same time, a three-bedroom apartment in a nice neighbourhood would probably cost more than RM350,000, which would be out of their reach.

This acute mismatch did not, of course, occur overnight. The demographic trends have always been there, but flawed development and planning policies throughout the decades have led to a situation in which the construction of housing stock does not meet the demographic needs.

There are two major reasons for this. Firstly, the role of providing social housing has been outsourced to the private sector without sufficient controls or informed guidelines by the government. In line with the national housing policy, developers are compelled to allocate a portion of their housing project as low-cost units (30 per cent in Penang, ranging from 20 to 40 per cent nationwide depending on the state).

By imposing this obligation – euphemistically described as “corporate social responsibility” – upon developers, the government is in fact shirking its responsibilities in an unsound manner. On what basis is this arbitrary quota derived? The 30 per cent figure was introduced in 1982 – is it still relevant today? Does it reflect demographic demands and future growth projects? What about geographical and socio-economic distribution?

Also, this blanket strategy means that it is the same requirement (with some variations depending on the state) on all developments with only minor regard to other factors such as its gross development value, selling price, housing type and location.

As a result of this uninformed policy, we have often ended up with sub-standard products as developers seek to cut corners to protect their bottom line. Furthermore, it is precisely such policies that have exacerbated the uneven development of housing stock, particularly in Penang. This is because most new housing projects tend to be high-end developments, and since they are forced to abide by the quota they end up building more low-cost housing that may not necessarily be needed.

Secondly, this supply and demand mismatch is also caused by market factors. As I have explained in my previous article, intense competition, costly land prices, and demand for high-end housing encouraged by a speculative property market and irresponsible lending policies virtually make building houses at the affordable range financially unattractive. When faced with the option of building medium-cost houses that will generate narrow margins or “upping” it to a high-end development and prospectively making much more, it is a no-brainer which option a developer would choose.

Therefore, this mismatch dilemma is a result of unintuitive housing policies on the one hand, and market failure on the other. In such a situation, the only conceivable solution is for the state to take ownership of the problem.

Recognising this gross deficiency, the Penang state government has begun to make changes. Instead of simply forcing developers to fulfil the low-cost housing quota, financial contribution is now allowed in lieu. Though the quantum can potentially be increased, this policy change is by far an improvement, as it is now no longer a blanket strategy but one that takes into account the size, price, location and type of development that is going to be built. By collecting money instead of forcing developers to build low-cost units, the state will then have revenue to channel towards more pressing housing needs.

In addition, the state government has announced the introduction of stiffer foreign ownership laws in a bid to curb foreign speculation. Under the new regulation, there will be a minimum value of RM1 million for foreign property purchases (RM2 million for landed property) on the island.

However, there is still much more that can be done. The state should also push the market in the right direction by instituting an intuitive system that taxes the “wrong” type of housing developments and “rewards” the right ones. For example, if the state is in need of a particular type of housing, then higher levies should be imposed on the other types, with a scale that is proportionate to the gross development value of the project.

At the same time, a holistic housing policy is not sufficient if it is only concerned about managing market forces. The state must also play a direct role in the provision of affordable, quality housing, and that means actually building or subsidising them. This is especially so in Penang, where there is a stark undersupply of housing for the middle-income group. That said, the state’s role does not end by simply providing stock to fill the gaps, but it must also be involved in overseeing development guidelines, ownership control, maintenance policy and a resale mechanism to control speculation in social housing. On this note, the Penang state government has taken active steps in the right direction by allocating an unprecedented RM500 million for direct intervention via an affordable housing fund.

In the bigger picture, revisions to quit rent and assessment rates are also necessary, and should be designed in such a way as to tax larger and more expensive properties in order to increase the cost of speculation. Conversely, smaller and cheaper properties should enjoy reduced rates. There should also be no exemption for unoccupied property.

Looking ahead, perhaps it is also timely for new, bold and creative ideas. As the saying goes, there are many ways to skin a cat. As high housing prices will always be an issue for a water-locked island, it may also be useful to think beyond the “ownership” model. There are many options to consider – full rental, rent-to-own, or perhaps even a co-share ownership model with the state.

Finally, housing development must never be approached in a piecemeal fashion. Its policies should necessarily form a logical part of an overall land use plan that must take into account future socio-economic needs and changing demographic trends. Ideally, it should also go hand-in-hand with changes to federal policies, as factors such as fiscal and monetary policies play an influential role.

Though the housing problems in Penang may appear to be peculiar to the state, the truth is that its underlying factors are similar throughout the country. Thus, what is required not only for Penang, but also for the rest of Malaysia, is a total rethink of our outdated and unsustainable housing and planning policies at both state and federal levels.

Zairil Khir Johari

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