This article first appeared in Forum, The Edge Malaysia Weekly on October 21, 2019 - October 27, 2019
Budget 2020 — Pakatan Harapan’s second — has been tabled and in many ways, the stakes are higher this time.
As we enter greater global economic and geopolitical turmoil, there is an urgent need for Malaysia to ensure future growth that is both sustainable and equitable. The best way to do this is to deliver on our manifesto promises and invest in the people.
The latest budget tabled by Finance Minister Lim Guan Eng is a step in this direction. It is something we can build on for a better and fairer future for all Malaysians.
Jobs and wages
It is good that Budget 2020 focuses on my mantra, as PH Youth Leader, when we campaigned for the 14th general election: jobs, jobs, jobs.
The provisions in the budget to increase high-quality employment opportunities for locals (particularly graduates, women and apprentices) as well as to reduce our dependency on foreign labour are most welcome.
I also welcome plans to review the Employment Act 1955, including to increase maternity leave and extend overtime eligibility. The government must also take heed of gender discrimination as well as the research of scholars like Lee Hwok Aun and Muhammed Abdul Khalid, who found evidence of racial discrimination in private sector hiring.
Reform of labour laws should not be done piecemeal but holistically through an employment laws reform commission involving the government, the Malaysian Employers Federation and the Malaysian Trades Union Congress.
Separately, the proposed increase in the monthly minimum wage to RM1,200 in urban areas is positive. This proves that PH is on track to deliver its pledge to increase the minimum wage to RM1,500 by 2023.
Still, it is very far from the “living wage” concept proposed by Bank Negara Malaysia in 2016, including RM2,700 for individuals living in Kuala Lumpur.
Everyone should get behind this. IDEAS Malaysia (a pro-market think tank) has called for a tax credit scheme to encourage companies to increase the salaries of their lowest-earning employees — there is definitely merit in this. Government procurement can also be designed to favour companies that are committed to achieving a living wage.
A fairer gig economy
Lately, there has been great controversy over the so-called gig economy, including how to protect its workers.
California recently passed landmark legislation requiring ride-hailing companies to hire drivers as employees rather than independent contractors.
This will mean that such workers will receive labour protection and benefits like unemployment insurance, overtime, minimum wage and the right to unionise. It is perhaps time Malaysia considered passing a similar law.
It is worth noting that the salary of Malaysian workers lags behind that of their peers in benchmark economies. The low-wage growth model is archaic and no longer works. It does nobody any good in the long run. The quality and productivity of our workers will increase if they are paid better.
It is true that businesses should not be strangled by red tape. But workers should not be left to fend for themselves. Dealing with IR4.0 does not require a return to the exploitative practices of the First Industrial Revolution.
PH’s challenge is to create opportunities and safeguard the interests of job seekers, job holders and job creators in Malaysia — it can be done.
Sustainable public transport
The move towards targeted fuel subsidies also means that efforts to ramp up public transport must go into overdrive.
The revival of major infrastructure projects like MRT3 in a transparent and more cost-efficient manner will help close the MRT system’s loop in the Klang Valley.
I welcome the provision of 500 electric buses. Indeed, we ought to prioritise “green” public transport solutions to address pollution and climate change, the impact of which we in Malaysia know only too well.
A reasonable housing policy
The government has decided to lower the foreign ownership threshold for residential properties to RM600,000. In my constituency of Setiawangsa, a house of that value is not luxurious but the mainstay of the M40 group, including young professionals.
Indeed, as Chang Kim Loong of the National House Buyers Association has argued, this proposal will likely not encourage developers to build affordable housing.
The government should refocus on encouraging the building of affordable housing in the RM300,000 ceiling bracket in the urban areas.
Innovative ideas that can lower building costs, especially those that are environmentally sustainable, should also be incentivised.
Intra-ethnic inequality
There is also a need for the government to address not only inter-ethnic but also intra-ethnic inequality in Malaysia, especially in the Malay and bumiputera community.
The anomalies in Amanah Saham Bumiputera (ASB) and Tabung Haji are proof that there is a growing gap between the rich and poor bumiputeras.
Based on ASB’s 2018 annual report, a total of 7.4 million (or 76.92%) hold unit sizes of below RM5,000. Only 0.24% hold unit sizes of RM500,001 and above.
However, 9.15% of the unit holders have subscribed for 81.83% of total units or more than RM127.5 billion.
If we were to apply the Gini coefficient — a gauge of economic inequality where the lower the score the better — to ASB, the score would be 0.84, in sharp contrast to Malaysia’s, whose score fell from 0.513 in 1970 to 0.399 in 2016.
Similarly, 50% of the funds in Tabung Haji’s savings accounts come from only 1.3% of its contributors. According to media reports, a single individual contributed a staggering RM190 million!
The government could thus consider measures like prioritising the reinvestment of ASB dividends for accounts that are below the investment limit of RM200,000 because these make up the majority. Currently, accounts are still permitted to collect dividends that can be reinvested on top of the RM200,000 cap.
Tabung Haji should also return to its roots as a savings fund for the haj at a reasonable rate. This year, the cost of a basic haj package was around RM22,900 while the subsidy given by Tabung Haji was RM12,920. So, those who wish to perform the haj would only need to save RM9,980. Priority should be given to those saving to perform the haj, not to the elite for cosy investment.
Our conception of the New Economic Policy and, indeed, the bumiputera agenda, should shift towards a needs-based paradigm.
Nobody denies the good both have done. But indiscriminately handing out benefits based on race will not move the community forward. Indeed, it will simply exacerbate the socioeconomic divide within our ranks, to the detriment of the entire country.
T20 Malays must be trained and prepared to compete with the other races and globally. In the meantime, support must be provided to Malaysia’s urban poor, farmers and workers, most of whom are Malays and bumiputeras.
Doing this will be crucial to the government realising its vision of creating “shared prosperity”. The latter will not happen without the former.
Nik Nazmi Nik Ahmad is Keadilan member of parliament for Setiawangsa and was a member of the parliamentary special select committee for the budget. He has written several books in Malay and in English.
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