By Stephanie Jacob
In the final part of this series, Idris Jala discusses the other hot button issues in Malaysia. Including combating corruption, undergoing subsidy rationalisation and the introduction of the goods and services tax (GST).
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During the interview with Kinibiz, Minister in the Prime Minister’s Department and chief executive officer of the Performance Management and Delivery Unit (Pemandu) Idris Jala also discussed some other major issues being hotly debated among Malaysians.
This included the negative perception and mistrust many Malaysians have for the government and the latter’s responsibility to make tough, unpopular decisions. This includes subsidy rationalisation and the implementation of a goods and services tax.
Jala also underlines his tough stance on corruption, while pushing for Malaysians and corporations to adopt a similar hardline approach.
Below are some excerpts from the interview, with Kinibiz’s questions in bold.
In response to people suggesting that the ETP is losing steam you said “I don’t understand people who are so bent on looking for any signs to indicate negative trends that their parsimony misleads the public at large.” Why do you think there is this abiding pessimism or mistrust over the ETP project?
Idris Jala: I suppose in a way you have to look at the last election, and that 52% of the popular vote went against the government. So you might say 52% wanted a change in the government or every other Malaysian out there wanted a change – and I think that explains a lot of the storyline.
But I went to church the other day, and the pastor said ‘I know all off you are praying for a change, but you know we prayed for a change in the United Kingdom and it did not work. We changed the government and it is still the same.’ And he said what you really want is for god to change you, the individual.
So don’t go change the government, if you change the government it is the same stuff – it is not a panacea for all ills. And so essentially, I think that captures the whole story lah.
So is it perception, then? What does the government do to try and counter that?
Idris Jala: I think the issue for us is that we should try to be the best we can be to govern the country and make an impact. That is the reality as the government I think, it is to run the country and to focus on the governing. So you have to do what you think is responsible and right. You got to do that and hopefully it will be viewed positively by the public.
I think the problem is always when you do tough things, that is very difficult. Subsidy rationalisation, very tough. Nobody wants surgery, it is painful as you can get. But some part of the transformation must require pain, in order to reach the gain. And GST is also in the same category, as there is a lot of people resisting it.
Many, many people say ‘oh, you go and sort out corruption and if you sort out corruption then you don’t have to rationalise subsidies, you don’t need to introduce GST – I don’t agree with that. You need to do all.
You have to fight corruption, and you have to battle it. You also have to rationalise subsidy and introduce GST. So all must be done, and you cannot pick and choose.
Nor do I agree with people to say to do it in sequence. There are people who say, ‘yes, we got to do them but in a particular order. First priority is fight corruption, and after you finish that then only you do GST, then only you do subsidy – no, I don’t agree. You have to do it all together.
But you can understand where people are coming from. People are worried that if the issue of corruption is not sorted, more money will be coming in and then more money will be disappearing?
Idris Jala: Ya, but it doesn’t solve all our problems.
As I said the problem, as a country we have a fiscal deficit. And this is very significant, subsidies alone, we save around RM40 billion a year.
So if you look at government expenditure, a lot of it goes to salaries and you can’t change that. And then there are interest payments for loans, and fixed grants. The amount of money that is really subject to procurement is a small amount. Plus minus it is about RM86 billion a year.
So if even if it is 10% (corruption related to procurement) it is RM8 billion, if it 20% it is RM16 billion. Doesn’t solve the problem (like the deficit), the problem is huge.
So therefore, that it why most countries that when they have gone down the path of implementing GST, some of them are putting GST in the region of 10% and UK and many others are at 18%, 20%. We are not going anywhere near that.
To me the reality today is that, Malaysia must learn to live in the real world. And that the real world is that you have to pay market price for many things. And I accept and understand that we have to do it gradually la, and that it fine. But you have to start doing it now, you can’t say you are not going to do it. You have got to do it.
So these are difficult things to do la. So in government it is very easy for people to say lets do only the popular things. But when you are in government you have to do it (make difficult decisions).
So Malaysians are maybe living in a sort of dream world, with an unrealistic view… ?
Idris Jala: Ya, I would say so. Take hospitals for example. The last time we pegged the hospital charge, to go to a government hospital was 1982, it was a long time ago. That is RM1, you go government hospital and you pay RM1 – you can even get three months of medicine. Where in the world do you have a situation like that?
I mean if Malaysians were to agree, to raise it even by 10 sen or even 5 sen is good enough la – RM1.05. But you cannot have the same charge since 1982 right up to now. And so we got to really accept those things. So I would say that is the dream world lah, but that dream world cannot go on, and on, and on.
So perhaps there are a lot of people who can afford to pay a little bit extra, but don’t want to. But there is also a portion of Malaysians that really are struggling.
Idris Jala: Our view is that the bottom 40% of the populace is who we need to help. Even more so, is the bottom 10% that we really need to help. I would think that social safety nets are necessary for any country. I believe that social safety nets must be put there.
Went we introduced BR1M (Bantuan Rakyat 1Malaysia), what people forgot about BR1M was this – BR1M is purely a cash transfer that is financed through withdrawal of subsidies. That is where BR1M comes from.
If you recall, when we started the subsidy rationalisation, we increase the petrol price and the diesel price by five sen, five sen, in a number of increases. We then said, why don’t we take some of the savings and give it directly to people whose salaries are below a certain threshold. We were mainly looking at a category in the bottom 40% and then giving them the help. But in a way that they can decide what to do with it.
And a lot of those people, we wanted to give them the freedom to act on it (to use the BR1M money how they wanted). But overtime that narrative was forgotten, What was BR1M financed from? People forgot it was from the savings from subsidy rationalisation. They just thought it was wasted, the money (from subsidy rationalisation) that we pulled out.
BR1M is targeted subsidies – because we said that anyone whose income is below a certain threshold, they were the recipients of BR1M. Granted perhaps that there are one or two that are misusing it la.
But I think those are small in context, the majority of it is targeted. So BR1M is one, cash transfer. And there are some other people with recommendations of other ways of doing it. Either to give cash or through a card system – but targeted is the right way.
I totally believe we will always continue to have targeted forms of subsidies and assistance – social safety nets for those people. We do need to have that.
And that by the way, you shouldn’t differentiate between colour la. If you are poor, you are poor. Whether you are Chinese, Malay, Indians – everybody will have to receive. That is why when we came with BR1M, there were no distinctions in terms of colour. It was just purely on the social strata, the economic strata. And if you fall into it, you get assistance. Regardless of where you come from.
Is the government trying to move more to that system (needs base)?
Idris Jala: Gradually, and PM has said it many time is Parliament. In the longer term, we will always keep the social safety nets.
The one area of subsidy that the government has not seemed to move on is subsidy for certain industries. Such as the automobile and the steel – essentially there is tariff protection. Why is the government so resistant to removing these?
Idris Jala: I think this is an issue of legacy. Because when you want to pull out from the industry, you can’t ignore these legacies. The investments are made by certain parties. I do agree with you that we have to move towards getting rid of those subsidies.
I would say make a distinction between (subsidies and) those incentives for investors. All over the world there are incentives that are given for investors to come into (the country), Singapore included.
Some people may view that over time, it is a form of subsidy. It may have began as some incentives but over time we (should) wean them off. But then there is always some element of when do we have to start withdrawing this. And when you start withdrawing you run into a lot of legacy issues.
Like steel as an example – the steel industry is a very tough industry…
True, but subsidies to the people are also legacy issues. If the government is going to get tough on that, then it should also get tough on industries.
Idris Jala: Both has to be done. For example when we were looking at how to mitigate electricity — this was the most easiest one for me. Because we are saying it is metered now, so if you are using less the 300 kwh a month, no change.
So that is what we said to everybody , so that means if you don’t run your aircon 24 hours and you don’t have many electric power points – you are bound to have less than 300 kwh la.
And so essentially that it is easier to do. People below that threshold, were 70%, you know? But yet we are struggling to implement it. So essentially it is always a problem to manage it, even for the 30% that in my view can afford it.
Also politically very difficult , they are a very noisy lot also la. So generally speaking, subsidies are highly addictive – it is like opium. And when you want to withdraw it, it is very painful.
You have mentioned that our Auditor General’s (AG) report is one of the most comprehensive around. Yet year after year, we tend to hear very similar bad practices such as overpaying for procurement etc. Seemingly the same issues are cropping up time and again – why?
Idris Jala: I think one of the good things that we did recently was to get the secretary-generals (of the various ministries) to directly face the media. That I think was a very very good thing.
Because the problem here is this, you must remember the way in which we have traditionally been doing it… the whole AG’s report is traditionally kept in secrecy la. It is only released for the first time in Parliament.
It is a very thick document and in Parliament there is no way they can go through it (in its entirety). So before anyone can say that this is what we are doing, judgements are already being made in the stories (media reports).
But actually when we put the secretary-generals in front of the media, they have to answer exactly what it is. Then the answers are available to them (media) on the spot.
This is why we found that for the first time, since we have put our AG report out, that we didn’t get the sort of critical comments because the media understood the details. So the story never came out, because when the media understood it is not as simple as a screwdriver being expensive – it is a package of many things.
So within these many things, maybe the screwdriver is 10 times more expensive. But among all the other packages that particular package is the lowest bidder. So which one would you grant it to? Of course you give them la.
Because you are buying the whole package. You don’t say I don’t want this package because the screwdriver is more expensive, so I don’t want the whole thing. And that is the problem with an open tender la.
But I suppose the details (went the the secretary-generals sat down with the media or the AG), they were able to explain la. So I think that was a very good move la, so they can answer directly and be specific. In Parliament you can’t go through the details, we do not have enough time to go one by one.
The reality is, two things happen in that session with the AG. One is what is the follow up action. So if you (a ministry/agency) agree that there is a discrepancy or there is a weakness in it – what are you going to do about it. That is one.
The second thing is if you don’t agree with it, what is your response. Because not everything by the AG (in the report), is agreed by the relevant ministries. At least they can provide their response.
Generally speaking I think that although there was activities that they have already closed some of the loops and things are already being followed , people think they are not doing it. But actually they are doing, but (people) are not aware. Because in Parliament, there is not enough time to go through all that.
So I think that is good. We will continue, because it is a very good process.
Along with the general perception that corruption is still a widespread problem, there is also a sort of belief among many Malaysians that it is the status quo, or just the way the game is played. How do we change that?
Idris Jala: We must begin by educating and creating awareness. With all civil society, everybody must say no! No to corruption.
Because if the givers are not there, then there are no takers and this is key for us. That is why we are really encouraging people to start doing that – you know you have to be brave to take that stand.
As a corporation you must say that we don’t bribe. When I was in Shell, if you get involved in any corrupt activities the consequence was nothing more than being sacked. You just have to sack people. So there is completely no two ways around it.
That is why when I was in Shell, we have a rule, in Shell group, worldwide. You cannot give money for political funding. I the CEO was to donate money to a political party, the CEO will be sacked. That is a rule.
And the reason that was introduced in the whole Shell group was that we realised that overtime if you go down that path (of political funding), it is very difficult to then differentiate what is corruption and what is not corruption. So they just simply said no.
So it was very easy for me when people asked me when I was in Shell. When they asked me for money – I said very simple, these are our rules. I cannot donate money as the consequence is the CEO will be sacked. Totally cannot, you know.
And it is a very hardline, so essentially overtime the corporation can play a very big part by saying this kind of thing. That is why now we are asking them to adopt the integrity pact.
And in this pact it says no to all this. So we are asking them to sign this, so you don’t do it. You just don’t do it. So if we can make sure the guys say no at source then of course no givers means no takers la. This is the key one.
But we have to get the private sector to begin to say no. The integrity pact that TI put forward is a very good starting point la. We got the government to sign to, we got the private sector to sign. Government is many, so we have the ministries now saying no.
(Writer’s note: Pemandu says that 434 companies have signed the Corporate Integrity Pledge since March 2011)
And the rule should be no mercy if caught?
Idris Jala: Well the problem is this la, enforcement. You can catch a few people, then only people will say ok la (no to corruption)
Make some examples?
Idris Jala: (laughs) Ya, make some examples. When you can do it. That is why we use the whistleblower protection act. We are asking people to blow the whistle, and I am asking everybody to come with evidence you see.
If you have the evidence, bring it forward and we will protect you. Doesn’t matter where the source is, but the evidence must be squarely on the table. And we have to bring people to book la.
But sometimes things seem so bad, that the whistleblower is reluctant to do it because he thinks he might pay for it. Because there is not enough confidence in the enforcement.
Idris Jala: Yes, but actually we already have some whistleblowers.
(Writer’s note: Pemandu says that 173 whistleblowers have been given protection under the Whistleblower Protection Act 2010. Since 2011, a total of 355 whistleblowers have been given protection. It adds that 434 companies have signed the Corporate Integrity Pledge since March 2011)
You have mentioned in the past that you want to see the government and the opposition be non-partisan on education. It is fair to assume they won’t agree on everything – but what are some issues you believe need to be addressed in a non-partisan and non-politicised manner.
Idris Jala: Urban public transport. I would say transport is key, and I would relate it to urbanisation la. Of course when you do urban public transport, you need both push and pull factors.
You may say you don’t want people to be pushed into public transport, until and unless you have good facilities. Yes, you can build the MRT, you can build the KTM, but that is called the pull factors – to attract them to it.
But if you don’t do the push factor, like subsidy rationalisation…there is motivation for them to do it (take public transportation). In other countries they do what is called congestion pricing or ariel pricing. Making it very expensive to even own a car.
What do the Singaporeans do? They give a special license to even buy a car, you have to pay a lot of money to buy the license to buy the car! So there is always the element of push.
Why I say this must be non-partisan, is when we have to do the push – the opposition must accept la. So for urban public transport, you have to take a non-partisan approach to it.
Another area, I really believe we should not be bickering about is the environment. So when we talk about within the city area, I still think within the city centre, we should really dispose our solid waste properly, deal with emissions, all this are key.
We are still putting it in landfills, but nobody really wants to push for an alternative. Such as incinerators or even biomass.
But when you do biomass, actually there is a business to be made in terms of disposal. But we must be prepared to say to ourselves, we must pass an enforced legislation to say that if you don’t segregate your waste in your house – then that lorry must not take it.
So my house for example, you want the truck to come there. The truck guy should come and say if you did not put your trash in the black bag and in the green bag…(then it will not be collected). You see in Holland, they will just leave it there. You must segregate.
If everyone segregates then the local government can say, ok la, this is the segregation in Petaling Jaya. Then you ask the private sector to bid, the highest bidder will get it (the contract to dispose). This could be extra revenue for the local government, for example. And this can maybe reduce their cost.
But you first have to enforce that kind of regulations, and you have resistance from the public to the segregation. Therefore this isn’t just a partisan issue la. I would say that collectively , whether the local governments or the state governments, or public – all need to come around, particularly in the city.
Every year there are more people coming in to the city, so we cannot continue operating like this. Our rivers need cleaning, you know, and we need to do it. But this is not easy to do, nobody wants to do this. Frankly speaking, for the future generations, every country must look at the environment in a non partisan manner.
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