Old Habits Die Hard With Malaysia’s Five-Year Plans

 

The old Soviet Union may have long ago crumbled, but the underlying mindset – the penchant to control and “plan” everything centrally – still has a tenacious hold, and not just on Russian leaders.

Joseph Stalin initiated the first Five Year Plan, incorporating Lenin’s New Economic Plan (NEP).  However, not many would associate Five-Year Plans with Stalin, as he had acquired other notorieties.

It is ironic that 82 years later, an avowedly anti-communist Malaysia would still embrace Five Year Plans and NEP with gusto.  The last Soviet Plan was its 12th; the collapse of the Empire took care of the 13th.  Even the Communist Chinese have wised up; they now call their “Plan” only a “guideline.”

A century hence Malaysia will still be unveiling its latest Malaysia Plan (MP).  In tone and substance, I predict it will be like the present Tenth MP, and all previous ones.  It will boast of the wonderful attributes of our blessed country, and how fortunate we are to have such farsighted leaders.  Then realizing the incongruity of such lavish praises with the need for yet another plan, the report will lament the squandered opportunities of the past.

Then just like the current Tenth MP, it will bravely call for a “transformation plan to become a high income, developed, resilient and competitive nation,” and exhort us to “think outside the box,” peppering its report with such phrases as “holistic measures,” “development with equity,” and other clichés of the time.

If we aspire for developed status – the stated objective of all these Plans – then at least we should learn from those who are already there.  None of them have Five Year Plans.  That should be a hint for us to abandon this whole notion of five-year plans and the attendant “command and control” mindset.

There is nothing magical about a five-year time span.  At least with a decade for example, a child becomes a teenager, and a pimply teenager a young adult.  Five years?  There is no correlate in nature.

Five years would be an eon with Information Technology.  Today few remember Netscape, much less use it as a browser.  You need a much shorter time span in planning and be incredibly nimble to survive in that sector.

On the other hand, five years is but a fleeting moment with education.  Here planning should span decades.  We are only now seeing the follies of the changes instituted back in the 1970s.

Likewise with trade and investment policies; investors need a stable environment so their investments would not be subjected to the latest political intrigue or capricious regulatory changes.

Canada best demonstrates this wisdom.  It is not surprising that its banks remain robust despite the current global financial crisis.  There, legislations governing financial institutions are reviewed only every five years (previously every ten).  Consequently its banks and bankers are not seduced by the latest financial fashions and “engineering” that had snared their hip colleagues in America, Iceland, and elsewhere.

Instead of an all-encompassing five-year plan, we should opt for a sector approach.  For education, we should have a ten-year plan; likewise with trade and investment policies.  For agriculture, the traditional five-year plan – the time-span for a rubber or palm sapling to reach maturity – is appropriate.

These five-year plans are also disruptive.  The end of the current plan would invariably be consumed with planning for the next, a major distraction from executing the projects at hand.  There is no hiatus between plans, and thus no opportunity to pause and learn.  The learning curve is flat, the same mistakes repeated umpteen times.  Then just as the plan gets going it would be time for the “mid-term review,” an exercise less in reviewing, more excuse-finding.

Then there is the long lapse between planning and execution.  By the time a project is completed, the original assumptions have changed substantially.  Consider the addition to the hospital in Johor Baru where I was attached.  It was mulled during the Second MP, but did not get funded until the Third.  When it was completed in the Fourth MP period, it proved hopelessly inadequate with the vastly increased demands.

Now that the Ninth MP is coming to a close, I predict that many of its projects either remain incomplete or not yet even started.  I once suggested that the sole objective of the next plan should be to complete all those incomplete projects of earlier plans.  I did not get praised for that practical suggestion!

Events and circumstances also have the habit of upending even the best laid plans, as the 1997 Asian economic contagion did to the Seventh MP.  I thought that experience would definitely disabuse our leaders of their obsession with five-year plans.

 

Like its predecessors, this Tenth MP has a glaring disconnect from reality.  Only days earlier a minister in Najib’s own department warned of impending bankruptcy should we stay the present fiscal course, specifically with respect to subsidies.  The Tenth MP only perfunctorily addresses the issue with the promise to rationalize “energy pricing gradually to match market price.”  Only a promise, no concrete action plan!

A few months earlier, the National Economic Action Council (a unit of the Prime Minister’s office) unveiled its brave New Economic Model (NEM), one cognizant of market realities and the need to be competitive instead of hiding behind protective barriers and special set-aside programs.

Alas only the talk was brave, the courage was fleeting.  NEM was an exercise in futility.  The Najib Razak who earlier boldly challenged Malaysia to transform itself was easily gertak (bluffed) by the likes of Ibrahim Ali, the populous critic of NEM.

 If Najib would easily capitulate to a two-bit politician from the ulu of Kelantan, I wonder how he would fare with tough foreign leaders.  No wonder the contested Limbang oilfield ended being given to Brunei, a real tough adversary!  What next?

The major concerns of Malaysians are rampant corruption, escalating crime, and an ill-disciplined police force.  Yet, hardly a word on these!  Not that it would have made any difference.  The Ninth MP’s remedy for corruption was to rename the anti-corruption agency and set up the National Integrity Institute.  Meanwhile corruption remains unabated.

The few good ideas in the Tenth MP, if competently executed (a huge caveat!), would be positive developments.  The explicit commitment away from physical to non-physical infrastructure, specifically human capital development, is one.  I also applaud the expansion of preschools, the lowering to five years the age for entering primary school (only a consideration at this stage), and enhancing the qualifications of primary school teachers.

Old habits die hard; in Malaysia, they never do.  Najib could not wean himself from his dependency on GLCs despite their abysmal performance.  This Plan, like its predecessors, spawns its own set of GLCs.  Nor could Najib unhook himself from the “30 Percent Bumiputra Equity Participation” obsession, despite the irrelevance of that figure and objective.

In his effort to recruit foreign talent, Najib predictably set up the Talent Corporation, another GLC to be run by UMNO operatives, of course.  Another rent-seeking exercise!  He never thought of giving our universities, the real talent corporations, the funds directly so they could do their own recruiting.  Najib cannot find a GLC he does not like.

Najib used the metaphor of a soccer team to illustrate his point on teamwork.  Had he followed through on that metaphor, he would realize that a team is only as good as its members and leaders.  One inept player could cost the team the game.  The pathetic dearth of talent in Najib’s team is matched only by his own deficits.

The only thing worse than a central “command and control” economy is one where the leader is also clueless, lacks conviction, and without courage.  Najib Razak is all three.