Iron Bowl No More!

There was a time when government jobs were most sought after as it assured the incumbent security of tenure. As long as there is  no disciplinary case against him, and he has passed all his in-service examinations; the incumbent will wait for his for promotion. There was no discrimation by race or creed. Office politics was almost non-existent.

Then came the office political element into the service. Meritocracy was abused to promote those of the Chief Secretary's men. Inefficiency crept in.

Yesterday,the current Chief Secretary said that public sector jobs were no longer considered “safe” as the Government and society now expect more from them.


 The bulging civil service must be trimmed down and the Public Services Department is forced to re-look at how they can do this as the way civil service business is run must also change with time and the advent of technology.

He spoke about 'merit' in the civil service  and that it had become very important in a globalised and competitive world. I do hope his definition of 'merit'  has the same meaning as used universally to mean a 'level -laying field'. 

“When I first joined 36 years ago, public service was not the best-paying job, but it was almost a ‘guaranteed’ job as long as you didn’t commit a big boo-boo until retirement,” he told reporters yesterday after meeting with delegates from the Muslim Council of Britain.[Let us not forget, my good man, that boo-boo are oftentimes created to put good men down!]

However, there was now higher expectation of the public sector and civil servants had no choice but to improve or be replaced, he said.[ This hardly happened. They are transferred out to the JPA pool.]

“If you don’t perform, we will have to find better ways to make you perform. If we don’t do things as expected, other people will do those things,” he said.[ This is perhaps, laughable! Only Japan does this.]

“Where public sector jobs was once seen as ‘safe’, it is not the case anymore in Malaysia,” he added.

He said the highest ranking officers in the civil service needed to make their contact details public so they were accessible by e-mail and phone. [ Extending contracts of some self-serving officers is killing morale and denying others of promotion!]

“Complainants must receive a response within 48 hours. We engage all media – print and online alike.
“We need to clarify queries raised both through the media and complaints bureaus. In short, nothing is sacrosanct to probe and questioning,” he said. [You may be doing it. The Public Complaints Bureau may be practising it. Are others that hardly have anything to do with the public doing this,my good man?]

Sidek said the public sector needed to drive the private sector by setting higher standards of service delivery.

He warned against complacency although Malaysia now ranked 23 out of 185 countries in the World Bank’s Ease of Doing Business ranking, 24th in the World Economic Forum’s competitiveness ranking and 10th in the Swiss-based IMD competitive ranking.

“Although we are ahead of countries like China, Italy, New Zealand in our competitiveness, it is still not good enough,” he said. You said it truly here, my good man.

As the Bard says, " To thine own self,be true!"

Malaysia: Subsidy Crunch!

KUALA LUMPUR, May 21 — The Cabinet is to meet next week to discuss politically unpopular changes to its subsidy regime for petrol, natural gas, food and road tolls.

Subsidies alone chewed up RM24.5 billion in 2009, 15.3 per cent of the total operating spending, pushing Malaysia’s budget deficit to a more than 20-year high of 7 per cent of gross domestic product.

Plans to cut subsidy spending to RM20.9 billion ringgit this year were dealt a blow by the government’s failure to implement planned petrol price hikes in May.

If you add in other social spending in areas like education grants and health, total transfer spending is around treble the declared figure for subsidies.

Following are the options the government may consider.

Complete withdrawal of subsidies in one go

A big bang approach would impress investors in Malaysian bonds but is unlikely to be popular with voters as it would likely involve petrol prices, for example, rising by 15 sen per litre from their current RM1.80.

Smarting from a by-election loss in Sarawak, Prime Minister Datuk Seri Najib Razak is unlikely to opt for this choice, especially with Sarawak state polls looming this year. Sarawak provides a fifth of the government’s MPs and the state served as a bulwark against record losses to the opposition in Election 2008.

A sudden withdrawal of all subsidies would mean that Malaysia’s economic recovery could be halted. Asia’s third most export-dependent country relative to the size of its economy grew 10.1 per cent in the first quarter of this year.

A “big bang” approach would also cause inflation to spike and could prompt Malaysia’s central bank to hike rates, although in the past Bank Negara has “looked through” food and fuel price spikes. It left rates on hold from April 2006 to November 2008.

If this happened there would likely be a big rally in Malaysian bonds.

A gradual approach

This is far more likely. It would reassure markets fearful of budget indiscipline and limit political damage for Najib who must call a general election by 2013.

A small initial hike in petrol prices by say 15 sen per litre would not immediately hit wallets or derail economic recovery. Prices could then be hiked over a period of years on a regular basis. The timeframe for price hikes would have to be credible.

Savings from raising petrol prices alone in mid-year could be as much as RM1.4 billion in 2010, based on a 15 sen hike.

To assist poorer people the government could pay cash benefits to owners of smaller cars or motorcycles.

The risk is that regular price hikes on a semi-annual or annual basis could cause a continual drip of discontent with the government. For markets, the risk would be that the government would lose heart in the face of public opposition.

Electricity price hikes could be mitigated by putting a base consumption level under which people would not pay extra charges.

If electricity was hiked by 2.4 sen per kilowatt-hour, that could save RM800 in 2010.

There would be a spike in annual inflation as a result of the start of the subsidy regime changes, although the base effect would diminish their effect over time. Inflation could spike up to 4.5 per cent at the start of 2011 if petrol, gas, electricity and toll road prices were hiked.

Bullish for bonds if implemented. Could boost electricity company Tenaga’s stock price.

Just make minor changes or do nothing

Tempting for a government that has deferred planned price hikes due to fear of a voter backlash.

The fact that Najib has outsourced all of his economic reforms to independent bodies shows that there is little support within the government for painful decisions. Failure to implement two electricity price hikes have hit credibility.

Looks like Malaysians will have to bite the bullet or face the stoic Grecian pains.

Malaysia: Subsidies Crunch Time

This is an interesting write-up from Reuters. 


21 May 2010-The Cabinet is to meet next week to discuss politically unpopular changes to its subsidy regime for petrol, natural gas, food and road tolls.

Subsidies alone chewed up RM24.5 billion in 2009, 15.3 per cent of the total operating spending, pushing Malaysia’s budget deficit to a more than 20-year high of 7 per cent of gross domestic product.
Plans to cut subsidy spending to RM20.9 billion ringgit this year were dealt a blow by the government’s failure to implement planned petrol price hikes in May.
If you add in other social spending in areas like education grants and health, total transfer spending is around treble the declared figure for subsidies.


Following are the options the government may consider.
Complete withdrawal of subsidies in one goA big bang approach would impress investors in Malaysian bonds but is unlikely to be popular with voters as it would likely involve petrol prices, for example, rising by 15 sen per litre from their current RM1.80.Smarting from a by-election loss in Sarawak, Prime Minister Datuk Seri Najib Razak is unlikely to opt for this choice, especially with Sarawak state polls looming this year. Sarawak provides a fifth of the government’s MPs and the state served as a bulwark against record losses to the opposition in Election 2008.[Sarawak saves us again!]
A sudden withdrawal of all subsidies would mean that Malaysia’s economic recovery could be halted. Asia’s third most export-dependent country relative to the size of its economy grew 10.1 per cent in the first quarter of this year.A “big bang” approach would also cause inflation to spike and could prompt Malaysia’s central bank to hike rates, although in the past Bank Negara has “looked through” food and fuel price spikes. It left rates on hold from April 2006 to November 2008.If this happened there would likely be a big rally in Malaysian bonds.A gradual approachThis is far more likely. It would reassure markets fearful of budget indiscipline and limit political damage for Najib who must call a general election by 2013.A small initial hike in petrol prices by say 15 sen per litre would not immediately hit wallets or derail economic recovery. Prices could then be hiked over a period of years on a regular basis. The timeframe for price hikes would have to be credible.Savings from raising petrol prices alone in mid-year could be as much as RM1.4 billion in 2010, based on a 15 sen hike.To assist poorer people the government could pay cash benefits to owners of smaller cars or motorcycles.The risk is that regular price hikes on a semi-annual or annual basis could cause a continual drip of discontent with the government. For markets, the risk would be that the government would lose heart in the face of public opposition.
Electricity price hikes could be mitigated by putting a base consumption level under which people would not pay extra charges.
If electricity was hiked by 2.4 sen per kilowatt-hour, that could save RM800 in 2010.There would be a spike in annual inflation as a result of the start of the subsidy regime changes, although the base effect would diminish their effect over time. Inflation could spike up to 4.5 per cent at the start of 2011 if petrol, gas, electricity and toll road prices were hiked.Bullish for bonds if implemented. Could boost electricity company Tenaga’s stock price.
Just make minor changes or do nothingTempting for a government that has deferred planned price hikes due to fear of a voter backlash.
The fact that Najib has outsourced all of his economic reforms to independent bodies shows that there is little support within the government for painful decisions. Failure to implement two electricity price hikes have hit credibility.
With Malaysia’s economy rebounding strongly, tax receipts will grow and the need for government stimulus measures will fall so the budget gap will narrow more quickly than the government’s forecast of 5.6 per cent of gross domestic product this year.