Monday, February 18, 2013

Who makes public policy in Malaysia?

Nobody seems to know or care

When Malaysia faced the Asian economic crisis back in 1997, the then Prime Minister Mahathir Mohamed called on his old friend Daim Zainuddin to head the National Economic Action Council (NEAC) set up under the Economic Planning Unit (EPU) to find a solution through the National Economic Recovery Plan (NERP).

On the advice of the NEAC, the Malaysian Government pegged the ringgit at 3.8 to the US dollar, put in place a number of capital controls and undertook a number of bailouts of large firms.

Putting the individuals and controversies aside, the actions taken at that time were counter-intuitive to what every other country was doing, following IMF prescriptions.

The NEAC is an example of public policy making in Malaysia at a time of crisis. It was a top down process, formulated without any consultation, ending up favoring select groups, and it triggered vigorous debate about the merits of the action taken.

Just as the Genting Casino complex can be seen overlooking over much of Kuala Lumpur symbolizing gambling, public policy in Malaysia is also top down and often a gamble.

The Economy and Policy
The Malaysian economy is uniquely organized. The government is business friendly, but not necessarily market friendly, utilizing many quotas, subsidies, concessions, and licensing mechanisms to regulate business, and the economy. The policy process very closely resembles a centrally controlled economy, where detailed five-year plans spell out the current economic situation and outline in some detail the agenda for the next fve5 to 10 years. Government-linked companies control many sectors like palm oil, and state economic development corporations actively pursue new business opportunities, sometimes competing with the private sector.

Federal ministries tightly control their jurisdictions. For example the Ministry of Agriculture selects potential new industries to support as national priorities, independent of market forces. The relatively new Ministry of Higher Education exercises a lot of discretion over higher institutes of learning in areas of vice chancellor selection, course approval, the setting of KPIs, and many other matters related to day to day operations. Consequently very little university autonomy actually exists.

At state level, government is more concerned with how to implement national policy, rather than formulating any regional policies of their own. Federalism in Malaysia is skewed towards tight central control where the federal government controls taxation and budget allocations, giving the prime minister great personal control, at least in the states that his government controls.

In addition each prime minister brings his own agenda into public policy; Wawasan or Vision 2020 under Mahathir, the corridor development approach under former Premier Abdullah Ahmad Badawi, and Economic Transformation Program (ETP) under the current Premier Najib Razak.

There are in fact huge policy gaps in Malaysia today. For example, an electric motorcycle or car for that matter could not be registered to as a motor vehicle because there is currently no policy or regulations existing on the issue. Green bio-fuels are very difficult to develop as hydrocarbon fuels are heavily subsidized, acting as a disincentive to new bio-fuel development. Islamic banking cannot be diversified into communities through Muslim Savings Cooperatives because policies don't yet exist. Very little policy exists in the public forum concerning Malaysia's entry into the ASEAN Economic Community scheduled for 2015.

With an impending election due within the next couple of months, one would expect this to be a time where visions are extolled and explained by political party leaders. But if one scans the media, news and comment are almost totally focused upon scandal, who has or doesn't have the right to use the word "Allah," Islamic laws laws, and who should have citizenship, etc. Emotional issues emerge without much informed discussion. Both sides are campaigning hard, but without much, if any debate on public policy issues. At public meetings locally known as ceramahs, certain politicians are famous for what they say about their political adversaries and attract large crowds.

In parliament, the opposition tends to oppose government initiatives just because they are government initiatives rather than putting them under parliamentary scrutiny, like recent opposition to the Automated Enforcement System (AES) speed trap cameras.

Policy doesn't seem to be a major variable and if you go and ask supporters of both sides what their party stands for, very few people will actually be able to tell you the specific policies. Political parties as such are not known for being policy generating organizations.

Rather, the parties have developed sets of values, where the meaning in government is rather vague. Most often, pragmatic considerations influence the implementation of policy, rather than principles and doctrines.

Most street-side discussion focuses on personalities, scandals, corruption, and tactics. Most are interested in who will win the next election. The formation of public policy seems separated from the political process. Ministers are extremely busy dividing their time between party, constituency, parliamentary and ceremonial duties. A large percentage of a minister's time is dedicated to meeting with people, something embedded into Malaysian culture. So the time for a minister to be actually engaged in doing ministerial work would be very limited.

Most ministers with a few exceptions like Mustapa Mohamed, an experienced micro-managing technocrat, leave the running of their ministries to department heads.

Increasing Power of PM's Department
For years the public service has been the chief policymaker through the Economic Planning Unit (EPU) within the Prime Minister's Department. The PM's department accumulates up to date information on the economy to rival any ministry, dictating policy all around the country. It's a super-ministry centered in Putrajaya with offices in each state. Other ministries manage the details and fill in the gaps where the EPU doesn't outline any policy framework.

The power of other ministries has gradually been curtailed and subordinated. This began under Mahathir and continued under Badawi, where the PM's department became almost infamous, perceived to be controlled by the back room boys led by his son-in-law Khairy Jamaluddin. This led to criticism that policy was being formulated by faceless and unelected people, probably a contributing factor to Badawi's demise as Prime Minister not long after the 2008 election.

Rise of Outside Consultancies
Another trend during the Badawi era was the increasing use of outside consultants to make policy, with corridor policy statements formulated by consultants appointed by GLCs selected to oversee each corridor.

The Najib Administration has made policy almost the complete domain of consultants who undertake studies for the EPU, Corridor authorities, and the ETP. These consulting jobs are lucrative and many firms seek them out.

Although there is something positive about using outside consultants to break out of the public service mold and bring in fresh ideas, in practice many of these reports are undertaken by fresh graduate MBA types who rely on popular terms, cliches, and graphics to deliver ideas that may in some cases not be well thought out or practical. In most cases outcomes are forecast so far into the future - 15 years in the Malaysian Biotechnology Policy - they lose their realism and become wish lists that nobody is really responsible for achieving. This leaves many of these programs open to the criticism of being more public relations exercises and programs for "connected" businesses to get rich on. A number of scandals involving ministers like the National Feedlot Center over the last few years has undermined public confidence.

Very few of these consultants actually have direct experience or expertise in the areas they are developing reports about. For example, the Northern Corridor Economic Region (NCER) Master plan developed a few years ago recommended mini paddy estates run by large companies that would rent farmers' land and employ farmers back as general laborers, something reeking of feudalism to many. Worse still, some reports look like cut and paste jobs, while others are "sub-contracted" out to ghost writers.

Of greatest concern is the growing culture of political correctness today. People are restricted from saying what needs to be said out of fear that someone may be offended. There are many stories around the corridors of Putra Jaya where figures are manipulated to show scenarios in particular ways just to look good. Consequently many reports become feel good papers designed to give a glow about the future.

Most development policy is now in the hands of a corporatized organization called the Performance Management and Delivery Unit (Pemandu), also meaning "driver" in Bahasa Malaysia. The unit's head Idris Jala leads a dynamic group of technocrats who employ lots of consultants in the pursuit of transforming the economy and government.

What is also of concern today is so much public policy cannot be directly reviewed by parliament as it has been sub-contracted to corporations. There is a risk here that policy has thus become a commodity, and to some the policy is the end in itself. These consultants personally lobby ministers, the EPU, and Pemandu officials for lucrative contracts where little expertise matching, transparency or tendering procedures exist.

These reports are very rarely questioned in public and if they are, objections are ridden over roughshod, as the technocrat/consultants don't see the need for public opinion. Most often the terms of reference or TOR as it's known in the industry don't include public input into the report process.

Even the ruling parties have little practical input into these processes as policy comes out of the EPU and/or appointed consultants reports. The top Malaysian public servants and advisors are skilled in handling their ministers, who in most situations don't have the policy background to challenge and question what is put in front of them. Consequently most ministers act upon the advice of their public service advisors and reports presented to them.

In addition some ministries feel the need to make policy to justify their existence and performance. One such example is the Ministry of Higher Education, mentioned earlier in this article, where interference in day-to-day operations may actually be counterproductive to the national objective of developing world class universities.

Governance Stems from Sound Processes
Good public policy is the platform that good governance is built upon and this is an issue that has been almost totally ignored by those involved within the political process. Public policy needs to be built upon a shared vision, with input from all potential stakeholders, equitable, and transparent. An open process would negate the ability of sectional interest groups gaining benefits over others, a very much needed aspect in the process of public policy in Malaysia today.

Political parties too must put more effort into developing comprehensive policies so the people can give a mandate based on policy at election time. Policy substance is urgently needed. Otherwise public policy will be continually subject to political whims and contamination by outside parties.

The future prosperity of Malaysia will not be determined by who governs Malaysia but by how it is governed. Good governance should be based upon a transparent public policy process. It is time that the "top down" notion of public policy making be reviewed and changed to a more consultative process. Until proper evaluations and monitoring are made on proposed and existing public policies, these policies will be nothing more than a gamble, particularly with policies where the effects will not be felt in the community for years to come.

(Murray Hunter is an Australian academic teaching in a Malaysian university)

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