Budget 2015: what’s the return on investment?

For an economy that sees itself as an aspiring member of the club of developed nations, Budget 2015 gives symptomatic attention to development issues that do not have any place in an advanced country.

The most glaring of these is perhaps the income inequality that blights the story of Malaysia’s development.

Oft-quoted World Bank statistics show that although Malaysia has the highest GDP per capita among the top five Asean countries minus Singapore, it also has the greatest income disparity.

Ironically, despite decades of affirmative action in favour of Bumiputera groups, they remain the poorest among those in the bottom 40% of households. Clearly, despite the noble aims of the New Economic Policy and its successors, the approaches taken so far have produced uneven, and in some areas, pathetic results.

So, how cogent is the Budget 2015 in addressing the gross inefficiency in the endless list of economic upliftment programmes that have been rolled out since Merdeka?

To be sure, sizable allocations have continued to be made for microfinance schemes such as Tekun, which help disadvantaged individuals to embark on income-generating activities. Generous amounts are also allocated for the upskilling of the workforce, including RM1.2 billion for the Vocational and Technical Transformation Programme.

However, this generosity masks deep structural issues that contribute to the economic marginalisation of the very groups that the government seeks to assist.

For a start, consider that more than 90% of these new micro-enterprises are reported to last less than five years.

In effect, therefore, the government has been engaged in doling out billions of ringgit to the target group but achieving little lasting gains in improving their livelihoods.

Among the top reasons given for these enterprises to fold up, one study found, were an inability to withstand intense business rivalry, having too few customers and due to the lack of management, sales and marketing skills.

These are basic business management issues that can clearly be remedied through appropriate and timely interventions. Does the implementation of these micro-financing programmes include such measures that are obviously critical for their success?

Interestingly, the experience with the country’s first micro-financing institution, Amanah Ikhtiar Malaysia (AIM), shows that such schemes can become avenues for political recruitment, as AIM witnessed in the 1990s, when its loans were used as a means to attract political supporters.

The lesson to be drawn from that episode is that such institutions must be insulated from political control and empowered by a holistic management philosophy, and not just dole out cash, to achieve the desired social transformation.

As for the generously endowed vocational and technical training programme mentioned earlier, it will certainly be a boon for many thousands of young people who would otherwise be greatly pressured to fit into an academic system for which they may be ill-suited.

A major element for the successful mainstreaming of vocational and technical education is to change the perceptions of parents and students that these streams are less prestigious than academic-based courses.

Typically, in developing countries, the idea is extremely persistent that an academic or professional degree confers on the holder a higher social status than other pursuits.

This can be a powerful obstacle preventing many parents from encouraging their children to take up skills-based training if they are not able to sustain their interest in bookish knowledge.

News reports have it that a major plan to promote vocational and technical studies is in the works.

For a country that aspires to ride the wave of high technology to become a high-income economy, a ready pool of competent workers is an essential foundation for building that future.

For the people in all their diversity to recognise that Malaysia faces huge, perhaps even insurmountable challenges to lift its economy from a low technological base to the knowledge-driven industrial environment of the new era, we have to be brutally frank about where we stand today.

Malaysia’s dismal performance in PISA (Programme for International Student Assessment), the worldwide test of 15-year-old students in maths, science and reading, is a stark reminder that the economic dream that the country harbours may not be so easily achieved.

It also underscores the folly of assuming that any goal we wish to achieve can be reached if we spend enough money on it.

In Budget 2015, education continues to receive the biggest allocation, drawing RM56 billion for human capital development, it is noted.

However, questions have already been raised about whether that sum will be well spent. Among the allocations said to have doubtful utility is the multi-billion ringgit 1BestariNet project to supply high-speed broadband to all 10,000 schools in the country, for example.

Other money draining schemes are the Virtual Learning Environment e-textbooks for use in all schools and the supply of Google Chromebooks.

Among other advocates for educational reforms, Bukit Bendera MP Zairil Khir Johari, has questioned the prominence given to 1BestariNet, noting that many schools are not using the infrastructure for various reasons, including the fact that we do not have the teaching capacity to make full use of these tools.

It is deplorable that so much money could be poured into projects that are underused when the resources should be channelled to activities that are critical for the enhancement of our education system.

Doubly troubling is the fact that while these funds are being wasted, the public’s confidence in the quality of education continues to erode, with a string of attendant consequences, including a brain drain.

Alongside these issues, Budget 2015 also poses serious questions about the need for safeguards against corruption in public procurement, in view of the long list of big ticket projects that are due to be undertaken in the coming year.

These include RM4.5 billion for infrastructure projects in Sabah and Sarawak and RM3 billion for the Langat 2 water treatment plant in Selangor, to name just two items.

To ensure that we get value for money with these projects, there must be no laxity in the financial oversight of public works, so that we will have something to tide us over on a rainy day. – October 18, 2014.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.