Subsidy removal: Malaysia needs ‘reality check’ – Activist

Shah Alam - A community activist has emphasised the need for Malaysia and its people to undergo a 'reality check' in light of the controversial possibility of subsidy elimination.

In the complex landscape of Malaysia's economic challenges, the government is poised to implement controversial subsidy eliminations amid concerns of a deteriorating economy.

This move comes against a backdrop of rising dissatisfaction among Malaysians, who questioned why they should bear the brunt of government mismanagement during these difficult times. As the cost of living escalates and economic stability remains elusive for many, tensions are running high, highlighting the urgent need for nuanced solutions that address both economic realities and public concerns.

In an interview with the Sinar Daily, Liyana Marzuki, a community activist shed light on her recent podcast session with the "Jangan Pajak Otak" to provide accurate information to the public on issues related to public interest. Recently, there was news from Bloomberg about the potential elimination of subsidies in Malaysia, possibly in June 2024. Recognising the importance of obtaining authoritative insights, Nurhisyam Hussein, the economic advisor to PMX was invited to shed light on this matter. Nurhisyam revealed that:

• The potential increase in fuel prices; from the current RM 2.05 per litre to RM 3.50, representing a substantial RM 1.45 increase. The jump raises concerns, particularly considering the impact of subsidy removal in neighbouring countries like Indonesia where riots occurred in 2016;
• To address these concerns, the government plans to implement subsidy rationalisation progressively over time, possibly with incremental increases every six months to mitigate the immediate impact on the public; and
• The approach aims to reassure the public and prevent any adverse reactions by ensuring a clear understanding of the government's strategy.

According to Liyana, she had been discussing the removal of subsidies since last 2023 and her perspective on this matter was influenced by the country's staggering debt, which was now nearly 65 per cent of Gross Domestic Product (GDP), amounting to approximately RM 1.7 trillion, the highest in Malaysia's history. When considering on this matter, she always reflects the future generation and reflects the experience of Sri Lanka and Venezuela. Venezuela was once a wealthy nation with abundant oil reserves, faced economic collapse due to prolonged subsidy maintenance and a 'cash is king' mentality since the 90s. Learning from such examples, she believes that addressing the subsidy issue is timely and critical.

Lyana further stated that:

• The previous attempts by the Barisan Nasional (BN) government were clouded by corruption issues like 1Malaysia Development Berhad (1MDB), which undermined public trust in subsidy removal efforts. The current government as far as she is concerned has not shown any signs of integrity issues and the timing is right for subsidy rationalisation;
• She did not anticipate receiving the subsidy if it was removed, given that she and many others fall within the M40 middle-class category. It is likely that cash transfers, if implemented, would target the B40 and below, covering 60 per cent of the population. However, it is crucial to grasp the economic reality facing Malaysia after 65 years of independence as we are no longer economically prosperous; and
• She stressed that Malaysia was burdened with significant debts and subsidy liablities with an uncertain economy. Comparing Malaysia to neighbouring countries currently has one of the lowest fuel prices after Brunei. In Indonesia where salaries are lower than ours, fuel prices are higher. 

Liyana emphasised that we must acknowledge that times have changed, and we cannot expect the past to mirror the present. To convey this reality to the public, especially those who may not benefit from subsidies, we need a 'reality check'.

It is essential to recognise this reality and not selfishly cling to subsidies, as failing to address our economic challenges could jeopardise the future for our children and grandchildren, as seen in countries like Venezuela and Sri Lanka.       

The article titled Subsidy removal: Malaysia needs 'reality check' - Activist was written by Wan Ahmad Atarmizi and published in the Sinar Harian Daily on 14 May 2024. The podcast in Malay may be accessed in Youtube, "Penarikan Subsidi Minyak: Rasional dan Impak", Jangan Pajak Otak.    

International laws leave Malaysians vulnerable to unfair dismissal

According to Edmund Bon, a human rights lawyer said two international laws which Putrajaya is bound by leave Malaysian employees at foreign embassies vulnerable to unfair dismissal:

• the Diplomatic Privileges (Vienna Convention) Act 1966; and
• the International Organisations (Privileges and Immunities) Act 1992

They provide total immunity to embassies in all respects of their presence in Malaysia. They not only allow for the dismissal of Malaysian employees, referred to as "locally engaged staff" (LES) but makes it difficult for them to seek legal recourse if they have been unfairly terminated.

According to Bon:

• No legal recourse is available if an embassy is granted general immunity.
• The two laws give rise to three possible interpretations, which means the outcome of any case brought against an embassy would hinge on which interpretation the presiding judge relies on. So, say if a local employee were to challenge a dismissal in a Malaysian court, does the court follow the common law, which is premised on precedent cases or statute law?

In a recent case in which a Malaysian security guard sued the US embassy for unlawful termination was a progressive case based on common law but should also be applied across the board to all statute laws. Read further here. Thank you. 

Malaysian Education quagmire: Destruction of current and future human capital

THE intersection of the education system, the burgeoning gig economy and the brain drain may seriously challenge Malaysia’s future.

With a massive brain drain already in place, as more and more students choose to join the gig economy instead of pursuing tertiary education, understanding the factors driving this disinterest in tertiary education is paramount to ensuring that the educational system remains relevant and effective in preparing individuals for the rapidly evolving landscape of the modern job market.

In an era of rapid technological advancements and shifting professional landscapes, the traditional pathways to success are undergoing a profound transformation.

The allure of flexible work arrangements, lucrative opportunities, autonomy, and on-demand work gaining momentum challenges the conventional notions of the value of higher education.

Armed with a tech-savvy mindset and an innate entrepreneurial spirit, the younger generation questions the age-old narrative that equates tertiary education with assured prosperity.

This shift in attitude raises critical questions about the potential consequences for the future workforce, economy, and societal development.

As per the Organisation for Economic Cooperation and Development (OECD), the enrolment figures in tertiary education serve as a measure of a nation’s prospective capacity for a skilled workforce in the future (refer to "Equipping future talents with education, skills to thrive").

Global data also shows that higher tertiary education enrolment correlates with better national outcomes over time (Figure 1).

Very well, there could be a reciprocal relationship, thus creating a vicious cycle!

However, Figure 2 illustrates Unesco's data concerning the trajectory of tertiary education enrolment proportions in Malaysia.

Read full article here.

Education is fundamental in shaping society and determining the country’s future.

It can be the root of many socio-economic issues, so innovations must be made to the system to keep education in line with the changing practices.

To do so, leadership with vision is needed. 

Dr Rais Hussin and Chan Myae San are part of the research team at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

Source: The Stars Online, 3 September 2023