Second Sphere: Towards substantive inclusive development

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Saifuddin-Abdullah_SecondSphere-WeeklyTHE 11th Malaysia Plan (2016-2020) is expected to be launched in May this year. It is the earnest hope of many that its goal and thrust will not be a recycled version of “inclusiveness”, but rather, inclusiveness that is substantive. Call it substantive inclusiveness.

Inclusiveness has always been stated in our national development plans thus far. The policies have brought about remarkable results in eradicating poverty and reducing inequalities in the country. But today, as Malaysia moves forward into the 11MP and with only five years remaining to realise Vision 2020, we must understand that we are faced with new challenges. In this context, I find the Malaysia Human Development Report 2013 (MHDR), published by the United Nations Development Programme, Malaysia, very relevant.

MHDR (our first ever) is an independent assessment of Malaysia’s growth and development policy choices and implementation in its quest to achieve developed country status by 2020. It is framed by a paradigm that integrates inclusive growth as a core element of its analysis and policy recommendations. It is produced by an all-Malaysian team of scholars and researchers led by Tan Sri Dr Kamal Salih.

The most important contribution of MHDR is in choosing “inclusive growth” as its theme and in brilliantly defining it:

• Equitable distribution of benefits of economic growth and of social spending across distinct groups and to the poor, irrespective of their group membership;

• Robust generation of broadly accessible opportunities for economic participation and safeguards for the vulnerable; and

• Inclusion of the people in policy formulation and implementation.

MHDR adopts a multidisciplinary and multidimensional approach. Its contents are divided into three parts: analysing growth in Malaysia; dimensions of inclusion and exclusion; and institutional dimensions of inclusive growth and human development.

According to MHDR, we are now faced with new challenges, such as a high degree of income and capability poverty among bumiputera minorities, pockets of marginalisation prevailing in both rural and urban areas, increased income gap in absolute terms, widening gaps of asset inequality and women’s discrimination in the labour market.

Another major finding is that an analysis of Malaysian households’ income shows that the inter-ethnic gap has been decreasing since 1970, and its contribution to overall inequality is now minimal, at only about 5%. This means that today, our more important inequality concern is more intra-ethnic in nature (about 95%).

MHDR also introduces a new conceptual framework, the New Economic Paradigm, which decomposes household capability or purchasing power (wealth effects, disposable income, leverage and transfers) as more important than simply household income.

MHDR calls for an urgent need to introduce new policy reforms while strengthening existing ones. Policies must be based on clear objectives and evidence, resisting populism that ultimately disempowers households and communities.

Accordingly, MHDR proposes concrete recommendations on growth policy, fiscal and tax policy reform, labour market policy reform, small medium enterprise (SME) and informal sector policy, social policy reforms, and legal and institutional reforms.

To me, the strength of MHDR is that it seeks to tell the truth, make an honest evaluation of things and is bold enough to present difficult proposals.

In this regard, its recommendations on legal and institutional reforms are a landmark example. It seeks to establish a rights-based framework in ensuring gender equality, and equal rights to education and healthcare; enact a Social Inclusion Act and Freedom of Information Act; stronger fiscal federalism; reform government procurement; state representation in national policy-making; enhance role of civil society organisations (CSOs) in policy-making; stronger integrity; and independence and credibility of the Malaysian Anti-Corruption Commission and the judicial system.

This is probably the first national report that has a dedicated chapter on law. Here is an opportunity, to paraphrase Tom Bingham, to practise “the rule of law” not as an arid legal doctrine, but as the foundation of an inclusive society, a guarantee of good governance and an important contributor to economic growth.

Another important feature is on the role of CSOs. Stating the role of CSOs in a report is not new. What is new, and very remarkable, is that MHDR advocates that the role of CSOs is fully recognised as part of the meaning and process of inclusiveness itself.

The MHDR’s approach, framework and recommendations are in sync with today’s new realities and resonate with the on-going discourses at other platforms, for example, the preparations of the reports of the National Unity Consultative Council and the Parliamentary Reform Proposal Group.

May the 11MP be a better inclusive policy, and be able to move beyond mere “formal equality” into “substantive equality”, where equality has to be contextualised, drawing upon values such as human dignity, distributive justice and equal participation.
 
Datuk Saifuddin Abdullah is CEO of Global Movement of Moderates and former deputy minister of Higher Education. He is active on twitter: @saifuddinabd

This article first appeared in Forum, The Edge Malaysia Weekly, on March 9 - 15, 2015.