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Sunday, May 31, 2020

Pakatan Harapan’s shortcomings from a policy standpoint

Malaysiakini

In 2018, Pakatan Harapan won the 14th general election. The defeat of Barisan Nasional was unexpected.
Many of us that were shocked and surprised at the outcome of the election felt hopeful and optimistic about this so-called dawn of new beginnings or “Malaysia Baru”.
Fast forward some months and a year later, those feelings of hope and excitement have waned and faded away, gradually turning into disappointment and pessimism.
The majority of the electorate voted for Harapan to be in power simply because they thought Harapan can do a better job in running the country than BN.
To be fair, Harapan as a political entity had the ability to be a good government as they have a wider talent pool as well as younger and well-educated politicians that are progressive and forward-thinking.
Bluntly speaking, however, all that talent and capabilities that Harapan has, was of little or no use when they became the government.
The government led by Harapan arguably was worse off than BN when it came to major policy-making that brought direct and immediate impact to the people (bread and butter issues).
There are many policy blunders made by the Harapan government but here I am highlighting only two main blunders that I believe gave the people and the economy an immediate pinch.
One is pertaining to fiscal policy, the other, transportation.
So, my first criticism is in regard to the way the Harapan government handled government finances.
Harapan implemented a fiscal policy that was both economically unfeasible and unsustainable.
The Harapan government abolished the GST, a stable and reliable system of direct taxation that is meant to broaden the tax base and increase revenue which was also crucial in targeting deficit levels.
This populist move had caused revenue from direct tax to be slashed to half.
Also, going back and forth between the implementation of the GST and SST is costly to firms and government agencies as it costs millions to adjust and adapt to a new tax system. This is counterproductive.
Owing to the fact that the Harapan government had to increase dependence on oil and gas revenue by using up Petronas’ special dividends to offset the shortfall in GST collection and for GST refund payments, it has made the country to be more exposed and susceptible to shocks in commodity prices.
The combination of a sharp decline in crude oil prices plus increased reliance on oil and gas revenue and the absence of the GST as a fall-back is a perfect storm.
Of course, there will be voices from certain quarters in Harapan claiming that the idea of abolishing GST was based on the premise that without the GST, spending power can be increased which can then boost overall consumption in the economy and in turn stimulate the economy.
Yes, this notion is logical but doesn’t paint the complete picture.
In reality, even though taxes are a form of leakage in the circular flow of income, they fill up government coffers.
Government revenue from taxes in this case GST collections can be used to finance the building of roads or hospitals, subsidies and transfer payments.
This process altogether puts money back into the economy (injection to the circular flow of income) thus affecting economic growth, in this case, aggregate demand.
At a rate below 10 percent and when most of the countries implement a value-added tax same as the GST, it is silly to say that the GST is a regressive form of tax with the only purpose of taxing everyone regardless of the rich or poor.
What the Harapan government could have done was to fine-tune the implementation of the GST or to lower the rate of the GST, which they did not do.
Beyond that is Harapan’s hasty decision to cancel and delay projects related to public transportation.
Public transportation is a sensitive and important subject matter as it affects everyday life.
Besides the scrapping of the GST, the decision to temporarily shelve, delay and modify infrastructure projects particularly rail transportation will not make lives easier for the people instead of making it more difficult.
There is one project in particular that is affected by the previous government’s cost-cutting measures; the LRT 3.
Victims of the policy of cutting costs and scaling down of mega-projects are the people of densely populated Klang Valley in particular from Shah Alam, Klang and a portion of Petaling Jaya. Ironically these are the areas where Harapan got most of the votes.
The LRT 3 or Bandar Utama-Klang line was planned and supposed to be operational by August 2020.
If it wasn’t for the Harapan government's decision to delay its completion, commuters can already begin using the LRT 3 latest by the end of the year.
Instead, they have to wait until the year 2024 for it to be completed.
This means commuters will have to endure another four years of getting caught in traffic congestions and affected residents will have to face another four years of noise pollution, road disruption and dire road conditions due to ongoing works.
Mind you, four years is not a short period of time. Major sporting competitions like the Fifa World Cup and the Olympics are held once every four years, that’s how long four years is.
Also, the delay has brought construction in some parts of the project site to a complete halt.
Prior to the Covid-19 outbreak, there was little to no activity around the LRT 3 construction site.
Viaducts that are completed halfway due to project delays make the LRT 3 project look abandoned and this certainly is an eyesore.
Apart from the delay in completion, the then government also decided to cut costs at the expense of comfort and convenience.
The original specifications of the LRT 3 system which include numbers and size of stations and the capacity of train-cars were altered.
In 2024, when the LRT 3 would have been fully operational and the population in Klang Valley is expected to have risen, the users will experience a new mode of transport that is actually downgraded.
Commuters will be using LRT 3 that has fewer train cars and fewer stations. Having fewer train cars (from 44 to 22) will reduce the frequency of train arrivals hence making the waiting time longer.
It will also make train rides less comfortable during peak hours as conditions inside the train itself can be quite packed and cramped.
I only pointed out two mistakes in decision-making and policy-making of Harapan namely the cancellation of the GST and delay and scaling down of LRT3 because the examples given are enough to show how careless, irresponsible and short-sighted they were when making policies.
The decision to have the GST abolished was unnecessary and has made the country to lose a stable source of income. The same applies to the move to delay and downgrade rail projects.
As the urban population doubles up in years and decades to come, making trains smaller and reducing the number of stations is nothing short of a silly idea.
It will also not be advantageous for the people and the economy throughout the four years as more time that can be spent productively will be wasted on getting caught in traffic jams and economic profit that comes after project completion cannot be generated.
This brings us to the question of what the cabinet ministers from Harapan were doing when making such policies.
Even if those decisions were made by one individual namely the prime minister or the finance minister, didn’t the cabinet ministers especially leaders of component parties that held important portfolios have a say in cabinet meetings?
Or were they just clueless yes men when it comes to the economy and the needs of the people?
Also worth noting is the mystery of what individuals in the Harapan presidential council actually do because normally, the highest council of a political party or coalition in Malaysia like Umno’s Majlis Tertinggi or Majlis Pimpinan Pusat of PKR is influential and act as the watchdog in policy formulation and implementation in state and nationwide levels.
It seemed like political leaders that sat in the Harapan presidential council suddenly became either powerless or gutless in voicing out disagreements to certain policies that were a detriment.
This gives us the idea that very few or no one in the Harapan presidential council were actually serious and interested in policy matters and were busy wasting time by arguing and conspiring against one another.
In short, the fact remains and it is clear that the Harapan government did not do well as a government and as someone that supports Harapan, their performance as a government was a let-down.
Besides the betrayal of senior politicians from PKR and Bersatu that led to the collapse of Harapan, what is equally disturbing is Harapan politicians’ inaction over issues relating to governance and policy-making when they were in the seats of power.
Moving forward from this, I hope leaders in Harapan reflect and admit to the mistakes they have made while they were in the government.
Since there are no more bad apples in the coalition, it is an opportune time for them to rebuild their strength, fix its reputation and appear stronger altogether as a political force. - Mkini

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