Some lessons for Malaysia from our northern neighbour

I have always enjoyed visiting our neighbouring country, Thailand. The people are friendly, the food is great, and the countryside is refreshingly clear of the miles and miles of oil palm plantations evident in Malaysia.

It has also improved tremendously over the past few years. A lot more people speak English now, unlike in Malaysia where the command of English has dropped. Unlike us, they must be doing something right with their education system.

Thailand is modelled after South Korea, another successful Asian economy. The inclusion of the agriculture sector in their economic blueprint means their rural communities are not left behind. This means that the income gap between the urban rich and the rural poor can be bridged.

In terms of infrastructure, their airports have been expanded and modernised and roads and expressways have improved with higher safety features and standards. The towns are much cleaner, many new amenities have been added, and rural areas have been upgraded with modern facilities. In Malaysia, on the other hand, time seems to have stood still in many places for the past 30 years or more.

The Thai economy (GDP: US$487 billion in 2018) is built around three main pillars: agriculture, manufacturing and tourism. This economic structure has always been resilient and solid despite the fragility of Thai politics at times. The tourism sector only moves in one direction: up. There are tourists even in the most remote parts of the country.

In contrast, the Malaysian economy (GDP: US$345 billion in 2018) has revolved mainly around three wobbly pillars: oil production (Petronas), oil palm cultivation (Felda) and general trade and services. By and large, the revenue from these sectors goes to paying the government’s yearly operating expenditure (60%). The balance goes to government development projects and GLC initiatives, the latter of which have failed the country.

With low FDIs, our economic driver is left with nothing but consumer spending. Driven by salaries earned by a large group of people – government employees, about 1.6 million of them; unhappy local contractors with no new jobs; and declining private sector employees whose jobs have been taken over mainly by foreigners. The upside is limited, and the future looks bleak.

The benefits from this simplistic approach to economic management are far from promising. Its success or failure is very much dependent on the fluctuations of commodity prices within those three sectors.

But in Thailand, as analysis over the years has shown, the economy remains afloat despite political downturns. The stock market continues to perform, manufacturing sectors continue to grow, tourists and FDIs keep coming in, and new companies tap new capital from the ever-expanding Bangkok stock market.

On the other hand, the Malaysian stock market has been passive for more than 10 years, as shown by its lethargic index of around 1,600 points over the period in question. No company in its right frame of mind would want to tap new capital from KLSE as the premium would likely be lost from the first day of trading.

Future Forward Party

Despite its many political turmoils or upheavals, Thailand has not suffered as much compared to Malaysia. There have been no financial scandals, labour shortages or economic mismanagement to rock the country.

South of the border, Malaysia has had a series of serious financial problems with profound effects to the economy and political system. In the last decade or so, Malaysia has also lost out in terms of attracting FDIs. We are no longer in contention; Thailand and Vietnam have become the new preferred countries.

If our economic fundamentals are as strong as Thailand’s, where job opportunities are plentiful, employment is almost zero and the B40 group have enough food on their tables and can climb the social and income ladder, then news about greedy politicians fighting for power would attract less attention.

It is unfortunate that the leader of the Future Forward Party (FFP), Thanathorn Juangroongruangkit, who is well liked and respected by many Thais, might be disqualified from becoming the next prime minister. Malaysia too may run into the same situation when the baton is passed from the current prime minister to the next one, except that the background scenarios are different.

Despite FFP receiving tremendous support from the young voters and leading with 81 seats, Thanathorn’s hopes of a possible coalition with the Pheu Thai Party (136 seats) and the Democrats (over 50 seats), making a total of 267 seats in the 500-seat Parliament, have dissipated.

At one point after the general election in March, the FFP coalition was ahead of the pro-Prayuth, Palang Pracharath Party (PPP). General Prayuth Chan-o-cha is the incumbent prime minister and very much linked to PPP, which like FFP is also a new party formed before the last general election.

Thanathorn’s chances have now been completely ruled out with the emergence of the newly appointed Senate members, 250 of them in addition to the 500 MPs. It is now likely that PPP will form the next government, which would be unfair to the group led by Thanathorn. But this is politics and fairness is not a guarantee.

The Thais are known for their strong political convictions and their willingness to take to the streets. This time around, though, they seem pretty relaxed about the possibility of continuing with Prayuth as the prime minister. Could this be due to their current stable economic condition, or have they gotten tired of politicking?

This is comparable to the situation in Malaysia. People have a limited capacity or political energy to fight the powers that be. The idea that started with the Reformasi movement which gave birth to PKR is a case in point. Will the ground swell again if the PKR leader doesn’t end up becoming the next prime minister?

Or will the situation be like that of Thailand where political fatigue appears to have set in? Malaysians as well as Thais have shown that they are tired of the politicking which has continued long after GE14.

Generally, the people would like to move on and get on with their lives. In addition, politics would hold greater interest for the masses when it has a direct impact on their economic well-being. In a stable economic climate, interest in political fights tends to wane.

Economic stability

Once the government manages to set up good foundations in terms of the economy and business climate and regulatory framework, and eliminates or minimises corruption, any form of political approach and ideas tends to lose its value.

This is the case in Thailand, where economic fundamentals have long been established and its economic growth is not dependent on political stability. In Malaysia, meanwhile, the economy relies so much on government stability and its ability to spend.

In contrast to Thailand’s triangular economic structure, Malaysia requires strong and growing revenue streams as well as political stability in order to support the three groups that drive consumer spending.

Falling commodity prices are a bad omen for government tax revenues which have a direct negative chain reaction to government spending and, eventually, on the economy and political stability.

For instance, when Malaysia’s economic spending went through the roof as a result of the 1MDB fiasco, the last government tried to overcome this by injecting more public spending (read: borrowing) through mega projects. The strategy failed almost immediately and backfired politically.

This created political instability, uncertainty and loss of confidence that was capitalised on very effectively by the opposition at that time. It led to the voters rejecting the Barisan Nasional government and voting Pakatan Harapan (PH) into power.

The change in government administration has managed to stem the bleeding process, and much effort has been spent over the past year renegotiating not-so-urgent mega projects. But while the renegotiations have proven useful, the PH government has not improved or injected new fundamentals into the economy. Without any new economic and fiscal policies or new public spending strategies, the economy has been contracting and many in the private sector are suffering as a result, with no jobs and no income.

Local contractors and the services sector seem the worst hit, as almost all mega projects were given to foreigners, resulting in massive outflows of capital funds.

Clearly, the economy that relies heavily on crude oil, palm oil and the general trade and services sector has exhausted itself financially. Continuous public spending based on this income stream to boost the local economy will not be sustainable in the long run. The PH government will have to find other ways to rejuvenate economic fundamentals.

Its current thoughts revolve around new taxes, the SST and exit tax, which are regressive in nature. These simplistic moves are shallow and not well thought out. More analysis and deeper thoughts are needed for new economic strategies to be put in place, and the government needs new management schemes. But there is a lack of new strategic thinking at the moment.

Critics say that the PH government, unlike its Thai counterpart, has failed so far mainly because there is no strategic economic plan or new social agenda on how to take the country forward and fulfil those socio-economic reforms.

3R

There are other side issues, too. Scores of other promises made in the general election campaign such as the pledge to abolish tolled roads and education loans have not been rigorously examined, leading to a bigger trust deficit in the PH government.

For example, financial scandals about phantom students funded by PTPTN via private colleges that were rampant under the previous government have not been addressed. Tolled road agreements should be declassified in order to ensure transparency before it is decided whether to abolish them or not.

Apart from its many economic flaws, Malaysia also continues to suffer from a poor social agenda, too much racial polarisation, and the government’s failure to deal effectively with what has been referred to as the 3R’s: religious, racial and royalty issues.

Unlike Malaysians, the Thais are not bogged down by these issues. For example, they aren’t worried over whether they can use the word “Allah” or not. They have no issues with names like “bin Abdullah” for children born out of wedlock. Everyone is treated equally, irrespective of race or religion. In fact, many Thai couples who live together are actually not officially married. So there are millions of “bin Abdullahs” in Thailand, which is not an issue at all.

The Thais don’t have any hang-ups if a party leader breaks his fast with non-Muslims or at a venue other than a mosque. But in Malaysia, these become media headlines and are carried over into Twitter and Facebook debates.

In Malaysia, Islam is promoted as a way of life and has become part and parcel of many political parties. But in Thailand, Buddhism remains a faith and doesn’t get mixed up in the political arena.

Unless Malaysia does away with political parties based on religion, these issues will continue to be played out in the open, in political campaigns, Cabinet meetings and Parliament, with no solution in sight.

This is not the fresh air that PH leaders were harping about before GE14. The old, divisive and digressive agenda will continue to destroy our politics along with the social fabric and cultural heritage of our multiracial society.

For the sake of future generations, PH leaders, especially the Malays, should be brave enough to put a stop to this political degradation. The narrow-mindedness and lack of maturity in Malaysian politics is simply too glaring to ignore.

The views expressed are those of the author and do not necessarily reflect those of FMT.