THE World Bank’s recent report, Aiming High: navigating the next stage of Malaysia’s development, is a timely reminder that Malaysians have only two choices after the mandate for change was stolen – fight or flight.
The report’s key message? For Malaysia to make the transition to a high-income and developed status – projected to be between 2024 and 2028 – enhanced social contracts and tough reforms are needed.
The report mentioned six broad and interlinked reforms:
- Revitalising long-term growth;
- Boosting competitiveness;
- Creating jobs;
- Modernising institutions;
- Promoting inclusion;
- and, financing share prosperity.
The Covid-19 crisis provides an opportunity to undertake these much-needed reforms.
The World Bank reports that Malaysia must adopt a new course for greater knowledge-intensive and productivity-driven growth to boost productivity, while ensuring equitable access to good jobs. The country needs to remove barriers to fair competition, make better use of underutilised sources of labour, and adapt and improve the education system so that workers are prepared for the jobs of the future.
To produce economic growth through efficient allocation of resources, innovation and productivity, it said the Malaysian government needs to encourage competition in the domestic economy. Firms that face vigorous competition have strong incentives to reduce their costs, innovate, and become more efficient and productive than their rivals.
The existing social contract gives preference to firms connected to the state and individuals based on their ethnicity. Without fair competition, resources are inefficiently allocated, output is lower and domestic firms do not offer high-quality jobs that attract the most qualified of workers.
Meanwhile, a pool of underutilised labour – women, youth and the diaspora – are excluded, and either stay at home or leave the country for better opportunities.
Despite best intentions, a significant portion of the population is not receiving the quality of education necessary to succeed in the modern economy. In short, good jobs are hard to get, and many lack the incentives or qualifications to pursue them.
The World Bank said an enhanced social contract needs to be established with buy-in from all segments of the population. This contract must ensure equality of opportunities for all Malaysians, and provide for upward mobility and incentives for the people to remain and invest in Malaysia.
The report warns that if a large portion of the population believes that growth benefits a minority, the political support necessary to achieve structural transformation for the reforms will be insufficient in enabling the government to implement them effectively.
It notes that a significant share of the country’s most educated and skilled citizens left the country for lack of opportunities at home.
According to the United Nations, more than 1.83 million people born in Malaysia had lived outside the country in 2015, mostly in Singapore. One-third of the emigrants were high-skilled, accounting for 20% of Malaysians with a tertiary degree.
While emigrants generally left for better career opportunities and compensation, many cited discontentment with the country’s inclusiveness policies (or, more precisely, policies that lack inclusiveness).
Women constitute another significant underutilised source of labour.
While women outperform men in terms of education outcomes, the female labour force participation rate of 55% is considerably lower than their male counterpart’s participation rate of 80%, as well as the female participation rate in most of Malaysia’s peer countries.
Increasing it requires reducing or eliminating barriers to economic opportunities for women through legal reforms, introducing more economic and societal support for parents, and addressing gender norms and attitudes that perpetuate disparities.
Finally, the existing social contract is failing those most in need, leaving many lower-income students ill-prepared to enter the workforce.
Malaysia has done well in terms of school enrollment. However, learning outcomes remain significantly lower than most high-income countries and standout regional peers despite a relatively high government spending on education.
A deeper analysis of the relative learning shortfalls in Malaysia suggests that a disadvantaged economic, social or cultural background, remains the biggest contributor to learning deficits among low-performing students. These disparities are magnified over time, and, eventually, leave many such students ill-prepared to enter the workforce.
Reforms stung by a “scorpion”
The World Bank’s recommendations are neither new nor surprising. They serve to confirm what Malaysians know all too well.
Critical structural reforms are not only required, but long overdue. After all, Malaysians are the ones facing these problems daily. They are the ones paying the price for the corruption, wastage, and poor and incompetent services, while the rent-seekers, political patrons and economic elites are laughing all the way to the bank.
Malaysians watch in pain and grief at their children’s falling standards of education, while their businesses and the nation’s competitiveness goes down the drain.
The majority of the people had aimed high for reforms in the last elections, but were brought down by those who shot low.
Unfortunately, the person who rode on the bandwagon for reform did not believe in them.
For 22 months, he stalled the reforms to push his divisive racial policies. Like the scorpion that stung the frog in midstream, his true incorrigible recalcitrant nature was unmasked in the Sheraton Move.
He chose to drop the baton for Tan Sri Muhyiddin Yasin to pick up rather than handing it over to Datuk Seri Anwar Ibrahim.
The frustrations and anger of those whose trust have been betrayed are justified.
We are disheartened by the few who fell into the temptations of power and wealth, but should be encouraged that through this crucible of fire, compared to the few who fell, many more are forged by their steely resolve in staying true to their principles.
We now have a group, tried and tested, for the coming battle. Covid-19 reveals that with the incidences of ongoing Asian bashing, racial prejudice and discrimination are everywhere. There is no place to flee.
The World Bank’s report cautions us: unless we revive our spirit for reform, we are back on the road to serfdom. – The Vibes, April 7, 2021
William Leong is Selayang MP
