Cos some writer's column pricked my socialist memories. Remember I have prided myself as a Socialist on weak days? But Desi's been labelled a "commie" by some less than kind souls -- from you no w'ear! Hence, my "ABU" campaign for next general elections GE13. If you don't know what ABU means, I repeat I'm gonna be "mean" and holler like a koboi: "Blar lah dari sini bukan neraka", is that close enough to "Get the Here out of Hell!"?
EGALITARIA
The paradox of plenty
THE paradox of plenty refers to resource-rich countries with slower economic growth and worse development outcomes than those without. At first glance, it does not look like we have been hit with this “resource curse”. But a deeper analysis might show otherwise.
The Malaysian story of growth and development has been romanticised over the years, having successfully reduced poverty to low levels. Malaysia’s economic growth surpassed many Southeast Asian neighbours in the 1980s and 1990s (except our island neighbour down south, of course). Malaysia scores fairly decently on international indices measuring the ease of doing business, human development and competitiveness, moving up or down several notches each year.
But an alternative take is: Given our geographic advantage, abundance of resources, language and cultural diversity, we could have achieved a great deal more – a problem acknowledged over the past few years, and coined into catchy phrases such as stuck in the “middle-income trap” and the need to “move up the value chain”. A culture of mediocrity has led to this rather dull mode of stagnation.
But it is not just by chance that we are sluggish. One of the most important factors to consider is Malaysia’s unhealthy dependence on oil and gas resources. Almost 40% of national revenue comes from oil and gas.
The World Bank’s recently released Malaysia Economic Monitor states that although higher oil prices have driven revenues, this also means dependence on oil has increased. Over the past five years, petroleum-related revenues “averaged 38% of all revenues”.
There are several implications for this. First, our fiscal position is exposed to volatile global oil prices. Government developmental expenditure would be highly dependent on this.
Second, Malaysia is falsely lulled into believing that our balance sheet looks fairly healthy. It is crucial to look into non-oil growth, where “the non-oil primary deficit has roughly doubled over the past five years to almost 20% of GDP in 2009” (World Bank, 2011). Is our non-oil sector growing at a much slower pace, having gone unnoticed because of the oil sector’s growth?
Third, there is a risk these plentiful funds are made use of with less stringent oversight. It is impossible to tell what our oil money is used for specifically, because all revenues are pooled into a consolidated fund, which contributes to all government spending. For example, would government embark on mega-projects if we did not have oil money to fund them?
Petronas controls 84% of Putrajaya Holdings Sdn Bhd. Petronas also financed and built private healthcare facility Prince Court Medical Centre in Kuala Lumpur, with costs estimated at RM544 million. Although one argument is that resources ought to be used for national development, these commitments must be prioritised. Such investments must add value to the core petroleum business and not burden Petronas (and the country) with additional costs.
Talking about oversight, the Petroleum Development Act 1974 actually gives the prime minister sole discretionary power over the management of Petronas, Section 3 (2) reading, “The corporation shall be subject to the control and direction of the prime minister who may from time to time issue such direction as he may deem fit”.
Many countries plan for the unpredictability of oil prices by having sovereign wealth funds (SWF), or oil stabilisation funds, which compensate for revenue shortfalls, save for future generations, and invest in physical or human capital for future economic growth. Norway’s is probably the best example of a successful SWF, whose operations are strictly monitored by parliament, to which it reports three times a year. On the flipside, Nigeria is an example of a country whose Excess Crude Account “will soon be empty of sizeable windfall profits collected during the recent period of high oil prices” (Gillies, 2010), mainly because the fund was not protected from short-term political pressures to spend.
The closest Malaysia has to this is the “Kumpulan Wang Amanah Negara”, or National Trust Fund, which had RM5.43 billion as at June. But for it to fulfil its purpose, Malaysia must resist using the windfall profits by politicians for short-term gains. Depleting resources should be used for both current and future generations.
Transparency is crucial. A Revenue Watch Index placed Malaysia in the “Partial Revenue Transparency” category, scoring only 48.4 out of 100 points. This index measures public accountability by government and oil companies, in the extraction of oil and gas resources. The score was reportedly due to an absence of legislation providing for disclosure of information. Relatively little is publicly disclosed such as contracts and agreements. Also, parliament does not have the authority to ratify contracts.
There must be better monitoring of natural resource accounts and the National Trust Fund by government together with civil society. With steadily depleting oil and gas reserves, non-oil sectors must play the more important role in contributing to national income. Responsible resource management is the only way to ensure a sustainable future for Malaysians in the long run.
Tricia Yeoh is director at a market research consultancy, having worked in the think-tank and public sectors previously. She writes on national and socio-economic issues. Feedback: letters@thesundaily.com
DESIDERATA: became acquainted with a fine lady named Tricia only a few tears ago -- though I have read many of her writes for some time before that! -- wqhen working at CPI and promoting my BUMmer activities. If U2 have to aRsEk what BUM is, get the hear2 out of hell!
Anyway, back from digression, which is always a BUMmer's privilege to abuse -- that's WHY you must start a blog immediately after this! -- as I was saying, I enjoyed several of Tricia's articles, penned in her quite with-the-masses and down-to-earth style enhanced with GOoD research, for a while I BELIEVE she became a comrade of sorts when she joined PKR, more specifically, the Selangor MB';s office, as a researcher -- (? correct Desi if I am wlong!:( -- and I see now through her column in theSun she's into the private sector.
I said "acquainted" earlier because I can't claim friendship, nyet, as we had had only a few brief encounters, as I did refer to, at CPI's favourite venue -- the KLSCAH.
So Egalitarianist attire, hear I cometh! -- with heads held up high to the sky. We drink skyjuice and eat roti canai by the roadside, OK, Tricia, when we next meet. Okay, tehtarik if tou prefer over plain H2O.
From the online dictionary cometh this definining moment:
[ih-gal-i-tair-ee-uh
e·gal·i·tar·i·an
[ih-gal-i-tair-ee-uhn] Show IPA Now you understand WHY I now prefer to describe meself as "egalitarian"? GOoD handle, and hopefully, those goons won't label egalitarian = socialist = communist and come after us using the ISA, or its more repressive "Terror" acts. YL, Desi
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