Poor Quality Of Malaysia’s Education System Is Equally As Big A National Economic Threat As Rising Levels Of Private Household Debt Which Can Derail Vision 2020 Of Transforming Malaysia Into A Developed Country.
DAP disagrees with the World Bank that the poor quality of Malaysia’s education system is more worrying than the level of debt in its households. Dr Frederico Gil Sander, who is World Bank senior economist for Malaysia, explained that the country’s substandard education system would affect the pool of skilled talent it needs to grow its economy to become a high-income nation, while high household debt is not necessarily a problem if the economy continues to grow and citizens are gainfully employed. Malaysia records the second highest household debt in Asia from 81.1% of Gross Domestic Product (GDP) in 2012 to 86.8% of GDP in 2013.
DAP believes that both are equally as big a national economic threat to Malaysia and likely to derail Vision 2020 of transforming Malaysia into a developed economy. High household debt diminishes the quality of life with social records invariably showing that children’s education would be amongst the first to suffer when economic distress strikes. Further our income is not growing quickly enough to provide a discernible improvement in the quality of life and our citizens are not gainfully employed with rising-income jobs.
Labour unions claim that generally during the last decade, productivity rose by 6.7% annually but real wages inched up by just 2.6% each year. The situation in the manufacturing industry is more distressing with real wages of export-oriented industries increasing by 1.9% whilst that of domestic-oriented industries rose by 1.4% after 1997.
The price hikes by the BN Federal government last year in sugar, petrol, power tariffs and motor insurance premiums have highlighted the sad fact that wages can not keep up with inflation. DAP proposes a minimum monthly wage of RM 1,100 combined with a grace period for Small and Medium Entreprises(SMEs) for 5 years that would serve to increase income for Malaysians and help economic growth by protecting Malaysian SMEs.
PR’s minimum wage policy is RM 1,100 monthly is acceptable to SMEs provided that it does not cover foreign workers. After the 5 years grace period, SMEs have to pay the minimum monthly wage to all foreign and local workers. Further Malaysia loses out when foreign workers send most of their money home. Remittances by legal foreign workers doubled from RM 10 billion in 2009 to almost RM20 billion last year. This RM20 billion foreign workers’ remittances last year are expected to double when the minimum wage is fully applied to foreign workers.
For this reason, Malaysian employers and employees should be looked after first by ensuring that employees enjoy a higher minimum monthly wage of RM 1,100 and giving SMEs, a grace period of at least 5 years for SMEs to adjust before extending this minimum wage to foreign workers. Unlike BN, the PR state government in Penang is proud that we did not increase business license fees, water rates, quit rent and assessment charges. To distract attention from the price hikes by the BN Federal government in sugar, petrol, power tariffs and motor insurance premiums, BN stokes the fires of racial and religious hatred.
Bank Negara Should Reinstate Developer Interest Bearing Scheme(DIBS) And Introduce A Shared Ownership Scheme(SOS) For First-Time Buyers Of Public Housing And Affordable Homes.
The latest Bank Negara Annual Report 2013 has revealed that Bank Negara is being short-sighted and uncaring at best or irresponsible and unprofessional at worst towards the problem of Malaysia having the second highest level of household debt in Asia. Bank Negara dismissed the rise in the level of household debt in Malaysia from 81.1% of Gross Domestic Product(GDP) in 2012 to 86.8% of GDP in 2013 as not posing any risk to financial stability.
Bank Negara should realise that the reason for is that our income levels are stuck in a “glacial trap” with inflation outpacing wage rises. This has forced many households to rely on credit loans to make ends meet and even resort to loan sharks when they are unable to get loans from financial institutions.
With total household borrowings at RM854.3 billion in 2013, the proportion of households having loans with those having monthly earnings of up to RM3,000, accounted for 27% of total household borrowings at RM230.l7 billion. Bank Negara also said that the aggregate leverage for households earning up to RM3,000 a month was seven times(measured as the ratio of outstanding borrowings to annual income) is high and should be reduced.
This only proves that for lower income groups, their incomes are unable to keep up with inflation, forcing many to borrow to survive to maintain their living standard. With such high rates of outstanding borrowings that is 7 times their annual incomes, it is difficult if not impossible for lower-income groups to get approvals of housing loans from banks or financial institutions.
How can first-time buyers from lower-income groups afford to buy their own homes when Bank Negara has reduced the maximum tenure for loans of property purchases from 45 years to 35 years? Such reduction in tenure will only increase the housing instalments payments and make it more difficult for lower-income groups to qualify for loans.
Bank Negara should reinstate the Developer Interest Bearing Scheme(DIBS) for first-time buyers to enable them to realise their dream of owning their own homes. Up to 70% of the housing loan applications have been rejected, mainly from lower-income groups because of their low repayment ability, for low-cost and low-medium cost houses(LC/LMC). Legal fees should be part of the DIBS package and the Finance Ministry should waive stamp duty to lower the initial entry cost for first time home buyers.
Further the Syarikat Jaminan Kredit Perumahan(SJKP) guaranteeing LC/LMC loans by private banks for LC/LMCs is ineffective because there are very few applications by buyers approved in Penang. With only RM180 million of loan guarantees offered nation-wide, many applications by banks to Bank Negara for SJKP has failed. Can the Ministry increase the quantum of loans available and make it more accessible to a larger number of people, especially Penang?
Interest rates for LC/LMC and first time buyers of affordable housing should be fixed at Base Lending Rate or BLR if the Bank Negara is sincere in helping them. It is sad that high-end loans get lower interest rates than LC/LMC and affordable housing loans.
To assist the lower income groups to get bank loans, the Penang state government has introduced the Shared Ownership Scheme(SOS) for low-cost houses to help lower-income groups. Under the SOS,the property is jointly owned by the government in giving out as government loans of up to 30% of the property price to lower-income groups interest-free. Many lower-income groups are able to qualify if they need to borrow only 70% of the property price.
For the sake of housing democracy, DAP urges Bank Negara to introduce a SOS for affordable homes and public housing to help first-time buyers qualify for loans to buy their own homes.
Making teaching a high-status profession again
DAP agrees with Dr Sander that Malaysians should be “alarmed” that their children were doing worse in school than children in Thailand and Vietnam, which are poorer than Malaysia. The Programme for International Students Assessment or PISA 2012 ranked Malaysian students at 52 out 65 as compared to Vietnamese students ranking of 17 out of 65.
Malaysia’s poor PISA results contradicted BN’s claim that Malaysia has a world class educaton system on par with United Kingdom highlighting instead the weakness of our school system despite education receiving the largest share of national budget annually. Global management consulting firm McKinsey has come up with an answer that most of us already know instinctively that is the quality of teaching as reported in The Edge.
It studied 25 of the world’s school systems, including the top performers in PISA tables. Schools it says need to do three things:get the best teachers, get the best out of teachers and step in when pupils start to lag behind. Malaysia has huge room for improvement to meet its objective of being in the top third in the PISA ranking.
Chart 1 shows countries participating in PISA 2012 by performance ranking and their cumulative spending per student (eduex), in comparison to their per capita gross domestic product (pcGDP). Eduex is the total amount spent on education per student in the six to 15 years age range, over a 10 year period. Per capita GDP is often considered an indicator of a country’s standard of living.
Almost all of the performers in the top third spend more than 100% in eduex above their pcGDP. The OECD average is 147%. Malaysia on the other hand is at the bottom of the PISA spectrum and spends the least amount compared with all the countries listed in the chart – a mere 12% on eduex above pcGDP. Even Thailand with a lower pcGDP than us, spends 43%. The highest spender is Slovenia, with 244% on eduex above pcGDP. It is ironic that Malaysia’s education budget allocates a huge amount for education, but lags behind on this chart.
Chart 2 shows the per capita GDP trends from 2004 to 2012 of seven countries that participated in PISA 2012. Our pcGDP is within the range of that of Turkey, Poland and Estonia. Estonia and Poland are in the top third tier in their PISA ranking and spend 176% and 188% on eduex over pcGDP, respectively.
If we aim to be in the top third in the PISA ranking, it is apparent that we need to bump up our education expenditure by leaps and bounds. If we need to choose a country we should benchmark ourselves against, it would be Poland. Not only are we within the range of its pcGDP, but Poland’s population of 38 million compares with Malaysia’s 30 million .
DAP agrees with Dr Sander’s solution of decentralisation to give more power to schools to make their own decisions based on their local circumstances. Further, schools can be more efficient by grading them on performance and merit which will compel them to seek better trained teachers. Ultimately it is the school teachers that makes the difference and can inspire students towards excellence.
The question is whether the BN government is bold enough to adopt these changes suggested by the World Bank. Or the egos and false pride of those in charge of our education system will continue to prevent Malaysia from breaking out from our stagnation at the bottom quarter of quality education system in the world, eventually losing out not only to Thailand and Vietnam but even to Indonesia.