FITCH Ratings’ decision to upgrade Malaysia is a piece of good news well received by the market, with much relief among the public weary of politicking.
The upgrade in our sovereign rating is a recognition of the strong fundamentals in our economy and an endorsement of the government’s management of the country’s fiscal and financial policies, giving confidence to investors that, despite 1Malaysia Development Bhd issues, Malaysia can contain the fiscal deficit and achieve sustainable growth, as projected in the revised budget and the 11th Malaysia Plan.
While there is much to celebrate , we must be aware of external challenges that give rise to uncertainties.
The geo-politics in hotspots involving the big powers, the financial crisis in Greece and its possible effects on the eurozone and the North Atlantic Treaty Organisation, and the timing of an increase in United States interest rates, add to the volatility of the external environment in the coming months.
Malaysia, with its open economy, is bound to be affected.
Malaysia must brace itself for these uncertainties by continuing on the path of reforms to strengthen the government’s fiscal and financial position and, at the same time, deal with the more difficult structural issues affecting the long-term growth of the economy.
These issues include education, brain drain, New Economic Policy (National Development Policy), institutions of law and order, human rights, religious tolerance and the openness of the political system to allow for the changes to be debated so that the country can arrive at the right solutions for the future.
There will, of course, be resistance to changes. This is to be expected, given the multicultural make-up of our country.
But while the opponents of change have the democratic right to express themselves, as long as they stay within the boundaries of the law, the rights of others who are in favour of reforms must also be respected so that the nation can emerge stronger.
The progress on reforms in fiscal and financial policies has been encouraging, as noted in the World Bank and International Monetary Fund studies on Malaysia and reaffirmed in the statement by Fitch Ratings.
Having strengthened the revenue base with the introduction of the Goods and Services Tax, and removal of petrol subsidies, the government should cut down on wastage in government expenditure, especially operating expenses on travel, entertainment, official celebrations and ceremonies at federal and state levels.
Recently, the government issued a freeze on intake of staff in the civil service.
There is no doubt that with technology, a high percentage of the support staff in government departments is becoming redundant.
The government should explore opportunities for saving on salaries and emoluments as this item consumes about 70 per cent of the operating budget.
Considering that there are only 1. 2 million taxpayers in the country, a civil service with 1.4 million employees makes the ratio high in comparison with other countries.
By saving on this big expenditure item, more funds can be released for repair, maintenance and upgrading, which are necessary to keep ageing government assets, especially roads, schools and hospitals in good condition.
Spending the money on repair and maintenance is a lot more productive as it can generate contract jobs for small entrepreneurs and create more economic activities.
Money saved on salaries can be used for training civil servants and selecting the bright ones to be trained in top business and management schools in the world to prepare them for leadership positions in government service.
Continuous learning among civil servants should be made compulsory to open their mind to understanding how the country can be efficient and competitive like successful countries in East Asia. which broke through the middle-income trap several years ago.
In these successful countries, they select the best graduates for their civil service and use meritocracy as the basis for promotions.
Government procurement has always been considered one of the sacred cows under the New Economic Policy.
Yet, it is one reform that must be addressed to make it transparent and efficient, thereby saving the rakyat from the huge amount of wastage arising from overpriced contracts, delays in completion, and poor quality of work.
Government departments should be forced to adopt competitive bidding, including e-bidding, to make the process transparent for the public.
The Treasury should report annually to the public how many per cent of government contracts are procured through competitive bidding.
In the case of education, one issue frequently raised by employers is the low quality of graduates from local public universities.
According to sources, the problem can be mitigated by raising university entrance qualifications, but this is also a sacred cow involving racial balance in university enrolment.
A solution must be found to ensure that those who wish to enter university are qualified for high- level academic education, because each student is highly subsidised by taxpayers and must, therefore, be worthy of the subsidy.
At the school level, teacher training must be given priority so that children can receive quality education from an early age.
Proficiency in English, Science and Mathematics, coupled with an ability in critical thinking and the social skills that come with a proper mix of learning in and outside the classroom, are essential for employment in major companies and financial institutions, where most of the high-paying jobs are.
It is important for social justice that rural school leavers and local graduates be well-educated so that they can be competitive with foreign-trained graduates in the job market.
We cannot allow a dichotomy in the employment market where the children of the rich and powerful get better jobs because they lived in big cities, went to private schools and received a foreign education.
With a good education system that inspires parents to educate their children here, fewer families will want to migrate.
It will also reduce brain drain and attract Malaysians talent to return to the country to enrich our human resources with their skills and experience.
There must be compromises on the education policy to bring about the desired results, instead of treating it as another sacred cow.
Turning to the rule of law, it is important that the judiciary and enforcement agencies, in particular, police and the Malaysian Anti-Corruption Commission, earn the respect of the public by being professional.
At the same time, the media and civil society should be given the space to become the voice of the people, in line with the democratic practice in other countries and, more importantly, in line with the guarantees on freedom of expression and right of assembly under our constitution.
The law must protect the rights of citizens to express themselves freely and in a peaceful manner, and should be enforced when any group endangers the peace of the country, especially by using race and religion to threaten other citizens.
Malaysia is getting more attention in world news for the wrong reasons. Foreign journalists and investors are puzzled at the growing intolerance and the creeping intrusion of religion into schools, universities and government offices, as well as in everyday life, for they have always taken for granted that Malaysia is a progressive Muslim country.
Instead, they are seeing Malaysia being in the Western and United Nations’ watchlist of countries not fulfilling their international obligations on human rights, freedom of religion and treatment of refugees.
This trend is worrying Ma-laysians, too, as the growth of the economy and the happiness of the people depend on the country taking the moderate path in line with the principles enshrined in the constitution and our obligations as a member of the international community.
As trade with the world is the cornerstone of our economy, we must not take the risk of being punished with sanctions on our exports, foreign investments and tourism on account of bad behaviour. In other countries, their extremist policies have driven out their best talents and investors and plunged their people into poverty.
The tragedy that befell several Muslim countries is that when the leaders realise it is necessary to change, it is too late.
Having ridden the religious tiger, it is impossible to dismount. Often, the tiger will turn on the rider and devour him.
We hope our leaders will take steps to uphold the supremacy of the constitution and the rule of law as these are as important as managing the macro-economic policies for financial stability and sustainable growth. We hope the moderate path taken by the prime minister will be supported by his cabinet, as well as by law enforcement and religious officials, as this will reinforce the good feeling that the recent upgrading of our sovereign rating is an indicator of better times ahead, for the economy and for our society.