This article first appeared in Forum, The Edge Malaysia Weekly on December 26, 2022 - January 1, 2023

The government led by Datuk Seri Anwar Ibrahim is not quite a unity government, but it was formed by uniting parties that contested against each other during the 15th general election. It is a governing coalition of rivals and, in that sense, it is a unity government. The Perikatan Nasional coalition voluntarily opted out of what would have been a true unity government and chose to instead be the opposition, and an unproductive one at that even at this early stage.

A ruling coalition headed by the leader of Pakatan Harapan (PH) does not make it a PH government; there would have been compromises and parties would have agreed to some common red lines to remain together. But its leader, having been appointed by the Yang di-Pertuan Agong and having obtained a vote of confidence in parliament, will lead to realise the reform agenda he started and paid a high price for more than two decades ago. It is time to govern and the task is an onerous one.

The first task is healing the wounds after a highly divisive general election that saw parties exploiting insecurities and appealing to base instincts instead of advocating policies to address the root causes of such fears. It was not a contest of ideas and the promise of hope and a better future. It was about pandering to fear and it was vile and self-righteous. While we have the Malaysian constitution, which forms the compact that binds us in all our differences, the divisiveness we saw was extra-constitutional; it totally ignored the constitution in letter and in spirit. If the country were a person, it would be akin to him having an existential crisis.

The prime minister will have to focus on healing these wounds as he is uniquely qualified to do so. It is not about uniting the various groups as that is not possible and futile. What is needed instead is to unify the meaning of being Malaysians. As it is, we have very different conceptions of what being Malaysian is about. The utter failure of our education system is that we have not educated the tens of millions who have gone through the national school system on what it means to be a Malaysian and what this compact is that we call the constitution; and the rights as well as the responsibilities that come with those rights. It is also important to address the cynicism many have towards politicians and the political process. It is important that politics be seen as a force for good to encourage the widest possible participation in its process, for any loss of confidence in the system will only see the rise of the tyranny of the minority.

Governing is the next task, and that should focus on government finances and the effectiveness of government delivery mechanisms. The whole agenda of addressing inequality and ensuring the bottom segment of society and the economy do not fall off the mainstream depends very much on the availability of resources and the effectiveness of public policy and their efficient use and implementation. Both issues will need to be solved as indeed, some of the sense of alienation that we saw are the results of under-development and failed policies.

Addressing the fiscal state of affairs will be hugely challenging as tough and possibly unpopular decisions will have to be made, but this government is well placed to address it. There is no longer any low hanging fruit to speak of. New revenue sources will have to be explored as the current ones are barely enough to cover the operating expenses of the government, and any which way that is done will affect some interested party. That is why this exercise requires a systemic view that obtains a comprehensive picture in order to have a clear understanding of the trade-offs between competing alternatives.

After more than a decade of a low interest rate regime, the norm will be a return to pre-2008 levels and liability management will be a major issue, which then brings the expenditure side into focus. It is not just about programmes and their effectiveness in achieving policy objectives, but the whole organisational design of government machinery needs to be looked into. In the early part of his government, former prime minister Datuk Seri Najib Razak had a programme called the Government Transformation Programme, modelled along the lines of the UK’s re-inventing and modernisation of government. It quickly fizzled out when the project-driven Economic Transformation Programme became the focus. Indeed, the government transformation programme need not be re-invented, it is all there. It just needs to be updated, implemented, monitored and calibrated for results.

Government machinery — its capabilities and competencies, how technology is utilised, and how their performances are measured — will have to change. It should do more and be more effective with the same budget. Of course, the bigots everywhere will skew every decision into a racial or religious thing, but in the end, it is results that count. A more effective government will touch more people in the right ways.

Finally, there is governance and oversight. This is perhaps the easiest to do as they do not involve more financial resources, but instead require a lot of political capital and political will that is hard to obtain, but this agenda is not starting from zero. Parliamentary reform was included in the memorandum of understanding between the Ismail Sabri government and PH but it did not fully materialise. The agenda is all there, from parliament having its own service commission instead of having to report to a member of cabinet to amending the Standing Orders to empower the various standing and select committees. The draft legislation should be further deliberated on and passed as soon as possible.

Parliamentary reform is the foundation for the broader institutional reform, which at the core, involves legislation, and empowering parliament in its oversight role will only serve to improve its legislative role, and vice-versa. All other institutional reforms, be it electoral reforms, law enforcement reforms or judicial reforms start with parliamentary reform. This will also change in fundamental ways how parliamentarians work and the expectations placed on them and, hopefully, the profile of those who stand for elections. Members of parliament will have to do a lot of reading and listening. Hopefully, we will see less of the vacuous and indecorous shouting matches we see nowadays.

The “economic” agenda of the government is therefore about getting government finances in order and ensuring that government spending and its delivery mechanisms are effective. It is about having credible rules of the game — regulatory institutions and law enforcement bodies. It is not about the government getting involved in the production end of the economy. The main economic lever of the government is therefore legislation and parliamentary oversight to ensure that governance is proper and effective. It is legislation and subsidiary legislation and regulations that define how the government shapes the economic incentives and landscape. Again, it is primarily about a functioning legislative body: if the economy is a forest and the government is the appointed custodian, the main responsibility is to ensure the borders are secured, the air and the water are good, and there are clear rules and fair enforcement of the rules. The government does not have to decide what trees to plant, what more, do the actual planting.

Malaysia’s private sector has the capital and the means to identify opportunities and take risks and they should be given the space to do so within the regulations and laws. It is these laws and regulations that will define the incentive structures for firms and investors to decide. The “animal spirits” of the private sector need to be released for the economy to develop new capabilities and for Malaysian firms to be competitive, especially in the export markets. Reversing the domestication of the economy is necessary for the economy to get onto a better growth trajectory in order to escape this low-cost, low-wage regime that has resulted in this declining and inequitable growth path we have been on in the last two decades.

The government's actual involvement should simply focus on providing safety nets in a meritocratic manner as financial resources are scarce. The various governments in the past had thought through the same issues and had designed plans to overcome them. We can disagree on emphases and the means to achieve the stated objectives, but the problem has always been about implementation, whatever the plan is — getting the sequence right and getting things done right. Weak governance has always gotten in the way either by increasing the costs or in messing up priorities. We thus suffered from both allocation and production inefficiencies from public expenditures. The focus should not primarily be about the coherence of “the plan”, although that is crucial. The primary focus should be on the discipline of execution while ensuring that governance is strong enough to avoid pilferage or the hijacking of priorities.

Dr Nungsari A Radhi is an economist

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