Malaysia in More Middling Traps Than Meets the Eye

By OOI KEE BENG
For The Edge, Malaysia, May 25, 2014

What seems to have happened in Malaysian politics since 2008 is that we have a voter population that is divided right down the middle, and given the nature of the game, this situation is expected to remain for quite a while.

We have a siege situation where the opposition, which is not always a united front, tries to wear down the protective walls of the long-term government. The government, in turn, has given up on winning back support. Instead, it has adopted a profoundly defensive strategy and would rather go out of its way to avoid offending remaining supporters than take risks in order to recapture deserters.

The newly formed status quo is being maintained at all costs, even when it is obviously not conducive to the general development of the country. The situation is such that the opposition and the government especially are both easily held hostage. The recent case of Trengganu comes to mind, where dissatisfaction among three UMNO state assemblymen threatened to topple the government until they were cajoled into withdrawing their letters of resignation from the party just a couple of days later. In 2009, the Perak state government changed hands due to three members of its coalition parties switching sides.

Malay right-wing groups pushing the boundaries for what counts as sedition, with no fear of the government using the draconian Sedition Act on them further shows how the deep division in Malaysian politics has emboldened those holding extreme ethnocentric positions.

Just as its politics is now caught in what I shall tongue-in-cheek call the “Middle Outcome Trap”, Malaysia is at the same time also ensnared in the infamous Middle Income Trap.

Since the 1960s, Latin American countries have maintained a standard of living that is around 30% of that in the USA—thus symbolizing the Middle Income Trap most poignantly. And as Woo Wing Thye, the President of the Jeffrey Cheah Institute for Southeast Asia, has shown, countries in Western Europe have developed to reach up to 70-75% of the US standard of living instead. Where East Asian countries are concerned, Japan has been there for quite a while, and in recent years have been joined by South Korea and Taiwan.

And then we have countries like Thailand and Malaysia, which had been growing most impressively until about 20 years ago. Since 1996, they have stabilized at about 30% of the US level. China in turn has leapt from about 12% to 20% of the US level between 1994 and 2006. It remains to be seen if this giant can evade the Middle Income Trap in the coming couple of decades. If it does, and Malaysia and Thailand do not, then the situation gets dire indeed for the latter two.

One has to wonder if the analogy of “traps” is the right one here? Or is the situation worse than that notion suggests? After all, a trap has an upside to it — even if you not going anywhere upward, you are at least not going anywhere downward either, at least not immediately.

Sad to say for Malaysia, even though the political economy seems to have plateaued, what with the dominant party controlling the apparatus of not only the state, but all its government-linked companies as well; what with ethnocentrism having become a stronger passion than patriotism; and what with religious exclusivity now a greater rationale for policy making than developmental efficacy; the future of the country may be bleaker than it looks.

For one thing, oil reserves are running out, and with the continued heavy subsidizing of basic items, it is understandable that the government has decided to take the risk of implementing a comprehensive goods and services tax in the middle of 2015.

To be fair, according to some international rankings, Malaysia has not progressed too badly. At least on paper, it has not been falling. In the Corruption Perception Index put together annually by Transparency International, Malaysia has hovered between 60th and 50th place, actually improved to 50th spot in 2013. Do we spy a Middle Corruption Trap here perhaps?

The Times Higher Education Asia University Ranking for 2013 saw only one Malaysian university among the top 100—Universiti Kebangsaan Malaysia at 89th spot. The QS Worldwide Universities rankings have over the last five years seen Universiti Malaysia climb from 42nd to 32nd position. However, it is the sharp increase in the proportion of international students that seems to be behind the quantitative progression of Malaysian universities on this scale, and not any criteria on educational quality. There seems in fact be a Middling Education Trap involved here.

Related to this is the larger issue about the imbalance between talent inflow and outflow. For decades, Malaysia has been suffering a net loss of educated people and it has had difficulty attracting foreign talents to replace these. Instead, the country has become increasingly dependent on importing cheap foreign labour from poorer countries in the region to satisfy the needs of foreign and local investors. A Middling Talent Trap perhaps?

Compared to other Asian countries which develop by strategically scaling the value chain, i.e. by leaping from one plateau of growth to the next without losing momentum, through human resource development and strategic policy making, Malaysia has enjoyed a rate of progress on all fronts that is simply too slow for it to escape the many traps it falls into.

The status quo is certainly not as unchanging as the analogy of “traps” suggests. Caught in so many traps at the same time, it may be wiser to wonder if we are in reality talking about an invisible slippery slope.