Malaysia’s Drop In The World Competitiveness Ranking From 16th In 2004 To 28th In 2005 Behind Thailand Underlines The Need For Malaysia To Carry Out Structural Democratic And Economic Reforms

Speech At Penang DAP “Restore The 3rd Vote” Dinner
Lim Guan Eng

(Penang, Friday): Malaysia’s drop in the World Competitiveness ranking from 16th in 2004 to No. 28th in 2005 behind Thailand(27) underlines the need for Malaysia to carry out structural democratic and economic reforms. The competitiveness report undertaken by the International Institute For Management Development supported by the World Economic Forum shows that of 60 countries Malaysia suffered the most drastic drop in competitiveness.

This perhaps explains Malaysian International Development Agency(MIDA) own figures where Foreign Direct Investment(FDI) in 2004 went down by RM 2.5 billion or 16% from RM 15.6 billion in 2003 to RM 13.1 billion in 2004. Total foreign and domestic investment went down by 1.6% from RM 29.1 billion in 2004 to RM 28.7 billion in 2003.

The World Bank academic report released on 9 May 2005 on local governance is as shocking as it showed that the quality of governance in Malaysia from 1996 to 2004 has deteriorated alarmingly(see appendix). Based on six indicators from democratic rights, political stability, government effectiveness, government’s regulatory quality, rule of law and control of corruption showed marked deterioration that highlights the importance of restoring local government elections and making both the police and Anti-Corruption Agency independent and answerable to Parliament.

As such reports are relied upon by foreign investors to decide which country to invest, it is clear that lack of democracy is also a negative factor against us. The worst decline in governance standards were in terms of democratic freedoms and human rights which went down from 51.8% in 1996 to 37.4% in 2004, a dismal failure mark. Malaysia would receive a pass mark if local government elections are immediately restored nationally. Thus Malaysians would enjoy not only greater democratic space but also a better investment climate that would help the country’s development.

Unless There Is An Open Tender System, Fights Corruption And Adoption Of Merit, Based On Equal Opportunity, Malaysians Will Not Enjoy The Good Economic Growth In the Country.

The hot issue issue in Penang is that there will be no rotation system in the Penang Chief Minister’s post. This should not be surprising as BN won the 2004 general elections on the platform that there is no such rotation system. What is surprising is why Penang Chief Minister Dr Koh Tsu Koon dare not come out openly to criticize UMNO Penang for suggesting such a rotation as a breach of the people’s trust and support given in the 2004 general elections.

However the most important issue now is the state of our economy. Even though our economy recorded a growth of 5.7% in the first quarter of 2005, there is no sense of well-being. Clearly only those who own plantations, companies and cater to export markets or foreign tourists are doing well. For those who are not, times are difficult especially the construction sector that suffers a negative growth rate of 2.4%.

Unless there is an open tender system where every Malaysian can apply, fights corruption and the adoption of merit, based on equal opportunity, Malaysian will not be able to enjoy the good economic growth in the country. Is the government serious about fighting corruption until the former Prime Minister Dr Mahathir Mohamed says corruption is more serious than before when during his time it was at least “under the table” whereas now it is “above the table”.

DAP opposes the increase in fuel prices which will result in inflation that affects both the economy and the livelihood of the poor.  As fuel is a basic commodity, the 10 cents or 7% increase in petrol and 20 cents or 23% increase in diesel has resulted in transportation costs going up at least 30% and a chain reaction of price increases of other goods.

The Malaysian government claims that fuel price increase will reduce fuel subsidies by RM 2.2 billion from RM 9 billion to RM6.8 billion. However, this RM 2.2 billion in subsidies is not large compared to Petronas exports from both LNG and crude oil of RM 38,397 million in 2004? Or Petronas huge profits during the 2004 financial year of RM 23.6 billion? So long as Petronas remains unaccountable and not transparent about its financial accounts and expenditures, the people prefers Petronas to subsidise 25 million Malaysians than to subsidise the few BN cronies.

We can expect further fuel price increases over the course of this year following the government’s intention to end the present subsidies of 66 cents per liter for diesel and 30 cents per liter for petrol.  DAP’s stand is that subsidies can be reduced gradually but never abolished because it is the government’s socio-economic responsibility to reduce the financial burden on the poor and disadvantaged.

If subsidies meant for the poor are misused by certain irresponsible parties to enrich themselves, then it becomes a matter of failure of enforcement not a failure of the subsidies. To consider these two issues as one and the same is to confuse policy and enforcement.

It is the enforcement agencies’ failure that allowed smuggling of diesel to be sold for industrial use which is sold at the unsubsidized price of RM 1.75 per liter as compared to the subsidized price of RM 1.08 per liter. BN is missing the woods from the trees by punishing the people in the form of higher fuel prices for the failure and mistakes of these enforcement agencies.

It is for this reason that BN played up the sandiwara of the rotation system of Penang Chief Minister to hide its economic failure to bring prosperity, wealth creation and fair wealth distribution to the people. The time for talk is over, the people must press for BN to deliver its promises.


*  Lim Guan Eng, DAP Secretary-General