Failure of the Third Malaysia Plan to stop downdrift of the share market an ominous start to the TMP

The Federal Development Expenditure Estimates for 1976 amounting to $3,137 million is 50 % bigger than the estimated expenditure of $2,020 million in 1975.

It marks the first-year implementation of the Third Malaysia Plan which the Dewan Rakyat has just debated and passed.

One would normally expect that such an important occasion like the announcement and adoption of the Third Malaysia Plan, the most ambitious economic blueprint for the next five years which envisages a total investment target of $26.8 billion and public sector expenditure of $18.6 billion would be a great boost to public confidence and to the share market in particular.

However, the TMP failed to stop the downdrift of the share market, and this is an ominous start to the TMP, for it highlights the general atmosphere of unease, uncertainty, insecurity and instability about the future, not only of Malaysia, but of ASEAN countries as a whole.

This is also reflected by the increasingly bigger and bigger slices of development funds which are channeled off to security expenditures at the expense of socio-economic development of the country and people. Thus, for 1976, for every dollar of development spent in Peninsular Malaysia, 18.1 cents will be on security.

Danger of expansion of police and armed forces

The tragedy of course is that greater and greater expenditure on defence and security is no sure formula for guaranteeing security – as the Americans have found to their great cost in Vietnam where their wealth and military might could not prop up a corrupt, decadent and undemocratic Saigon government.

The great expansion of the police and armed forces is in fact an admission of the failure of the government so far to win the battle for the hearts and minds of Malaysians in the fight with the communist guerrillas, whose strength lies in the increasingly inegalitarian, inequitable and undemocratic social system in Malaysia.

By expanding the police and armed forces and stepping up expenditures on defence and security, without at the same time adopting new nation-building policies over the whole range of political, economic, social and educational fields which will halt the dangerous degree of polarization of races and classes that have been reached in Malaysia, is merely to create new and even more dangerous problems.

This is because in these circumstances of deteriorating political and economic ground, we can envisage greatly increased number of incidents with mounting casualties on both sides, more on the part of security forces than on the part of communist guerrillas because of the very nature of guerrilla warfare.

A protracted warfare, with a growing list of casualties and the physically maimed and incapacitated, would lead to the questioning in military circles as to the political nature of the struggle, some to question whether the political leadership is not in some respects wanting in being unable to provide the political prop to the army to defeat the communist guerrillas because of the rampant corruption and class exploitation; others to question whether the political leadership was not too soft in not assuming full totalitarian powers to suppress dissent and subordinate everything to the military objective, even if it means suspending the Constitution, banning Opposition political parties, and putting everyone who dissent under arrest.

Every year, the number of Malaysian military officers who are trained in Indonesia and who therefore come under the influence of the teaching that the military as an important political role and function just like the Indonesian Army in Indonesia, increases.

If we are not careful, the expansion of armed forces to day may be a prelude to future coup-de-tat and military takeovers in Malaysia. I do not think we need perceptive and intelligent political leaders to tell how disastrous a military dictatorship will be for Malaysia.

This is a danger inherent in every country which keeps a large standing army. The other disadvantage of course is the high public expenditures involved in order to maintain and upkeep it, seriously retarding socio-economic development.

Both these political and economic disadvantages of a large standing army can be overcome by introducing national service for all Malaysian youths – which will enable the keeping of a small standing army without reduction in the number of military personnel at any one time.

The Government, however, for its own reasons, which are not difficult to surmise, has decided against the introduction of national service, although at one time, the country was told that there was a Cabinet Committee considering this question.

Have we got a communist as a Deputy Prime Minister?

I know that what I have said are very unpalatable facts for the government, and will open myself to all sorts of wild accusations by government leaders.

Yesterday, I was accused by the Deputy Prime Minister, Dr. Mahathir bin Mohamed, when he wound up the debate on the Third Malaysia Plan, as “toeing the communist line” when I had corrected him by stating that the communist challenge was not merely an ideological war, but also a class war.

I had said that for Dr. Mahathir to go round and say that if the communist win, the rich and the poor would equally suffer, would dismay the rich but would not make the poor lose any sleep.

My purpose was to try to awaken the government to the urgent need to concentrate on the task of fighting poverty, class exploitation and popular grievances so as to deny the political ground to the communists, who thrive on such popular discontents and frustractions.

For my pains, I was accused of ‘toeing the communist line’, I would advise Dr. Mahathir to examine his own statements and thoughts processes. For if what I have said id ‘toeing the communist line’, then the overwhelming majority of Malaysians, whom I believe in varying degrees share my view that one reason the communist guerrillas have been able to make the significant headways they have made, is because of the existence of poverty, exploitation and injustices which the government had neglected and ignored for teo long, are all ‘toeing the communist line’.

If this is the case, then the battle that the Government is fighting is a lost cause, and it might as well give up!

Is one ‘toeing the communist line’ just because one believes, just as the communists believe, in fighting the exploitation of the poor by the rich, in wanting to see the end of exploitation of class by class and man by man?

If this is the case, then the majority of Malaysians are ‘communist’ or ‘toeing the communist line’, except for of course, the rich towkays in MCA and the Barisan Nasional.

Does a person who believes that if the present system of free enterprise in Malaysia continues, there will be extremes of the very rich and the very poor, and that the poor will unite to topple the rich leading to a socialist state a ‘communist’ or ‘toeing the communist line’?

If this is so, then we have get a communist as a Deputy Prime Minister, for this was the burden of his article entitled “Malaysia in Year 2,000” written in 1973 for the Malaysian Students Union in Monash University in Australia.

In fact, Dr. Mahathir said that because of the above reasons, in 24 years’ time, “Dalam tahun 2,000 kita boleh memikir bahawa Malaysia akan dijadikan satu socialist state…”

I think the Special Branch should investigate thoroughly whether Dr. Mahathir is a communist or a communist in disguise!

I would remind Dr. Mahathir that he is now Deputy Prime Minister and that he should not be so liberal and careless in fixing labels on others – for this is bound to reflect on his character and qualities of leadership and judgement.

I do not know whether Dr. Mahathir seriously meant what he said about my ‘toeing the communist line’. If he was, then I challenge him to get me arrested under the panopoly of police powers that the Government has in possession, like the Internal Security Act or any of the laws which the Government has arrogated to itself. But before that, the Special Branch should probably arrest him and certify him to be politically fit first!

The Deputy Prime Minister would be gravely mistaken if he thinks that he could frighten me from speaking out honestly and truthfully just because he is ready to clamp the label of ‘communist’ or ‘toeing the communist line’ like other witch-hunters in the UMNO at present on anyone who says thinks unpleasant to the ears of the government, but which are true.

Polarization of classes and races

The success or failure of the development expenditure which we are voting, and for that matter, the Third Malaysia Plan and the New Economic Policy, will depend on whether they can lessen the heightened polarisation along both class and race lines in the country.

The second-prong objective of the New Economic Policy has sharply increased class conflicts in the country, including the class conflicts among the Malays, because of the widening gap in the incomes and wealth between the rich and the poor Malays.

From the Government’s 1957 Census and 1970 Post-Enumeration Survey, it has been computed that there has been a growing disparity in the distribution of incomes among the Malays in Peninsular Malaysia, as shown by the following table:

Class 1957 (Percentage of income) 1970 (Percentage of income)
Upper Class (20% of the total number of bumiputra households) 42.4% 52.5%
Middle Class (40% of the total number of bumiputra households) 38.1% 34.8%
Lower Class (40% of the total number of bumiputra households) 19.5% 12.7%

This means that from 1957 to 1970, the top 20 per cent of the bumiputra households have increased their dominance of the incomes from 42.4% to 52.9% while the 40 per cent of the poorest Malay households have shrunk from 19.5% to 12.7%.

The Government has produced no comparative figures for 1975, but a study of the use of funds and the result of the restructuring of society prong of the Second Malaysia Plan show that the Malay rich and well-to-do have become richer while the genuinely Malay poor become poorer.

Converting a half-a-millionaire into a millionaire

For the 1976 Development Estimates, the Central Government is giving out $80 million as loans to State Development Corporations, $61 million for MARA and $32 million for UDA.

How much of these vast sums of money go into the hands of the genuinely needy, and how much of it are waylaid by the well-to-do, who do not have any credit problems, but who use the opportunity opened up by the second-prong objective of restructuring of society to convert themselves from half-a-millionaire into a millionaire.

Probably, the government should tell the country that under the second prong objective of restructuring society, how many Malay millionaires it intend to create, in the Third Malaysia Plan and for the 20 year period of the New Economic Policy.

I have received many complaints from fishermen and farmers that they could not get loans from either Bank Bumiputra or Bank Rakyat, as they are regarded as uncredit worthy, the former because they lack a collateral, the latter because they do not have viable holdings of sufficient economic size.

These are the poor who genuinely need credit, either to purchase fishing equipments or to but agricultural inputs like fertilizers, who need help by government or quasi-government agencies like Bank Bumiputra. The contrary however is the case. Bank Bumiputra and Bank Rakyat turn them away, and instead, give loans running into millions of dollars to top UMNO leaders and even Ministers to buy stocks and shares!

The New Economic Policy is breeding a parasitic Malay rich exploiting the Malay poor. MARA build shop-houses throughout the country to help Malays to stand on their own feet in business in urban centres. But most of these shop-houses are given to UMNO leaders in the State and Divisions, who do not themselves do business, but rent them to others out at a big profit. This is the prevailing parasitism of the New Economic Policy. If the Minister of Public Corporations is not aware, then he can come to Malacca, and find out how many MARA shop-houses are used as business buy the renters, and hoe many are further sub-let, illegally, to others to do business!

The SEDCs spend huge sums of money on housing projects which are too expensive for the low-income brackets. The SEDCS enter into joint ventures with private housing developers to make 100% profit margins, and when, as in Malacca, their lower-quality houses could not compete with private developers, the State Government froze sub-division of land to build houses by private developers.

SEDCs enter into joint ventures with industrial concerns to establish factories and swiftly gain, in Malacca at least, the reputation as a bad employer. In at least two factories where the SEDC have participation, the factories have closed them without paying workmen their rightful wages and entitlements.

The Hypak Scandal

The Hypak Scandal in Malacca, involving a plastics-bag industry, is a typical example of the misuse of power and public funds by State and Government agencies, who seem to operate without the need to public accountability.

The Hypak Sdn. Bhd. was formed by three concerns, namely Folex Industries of Taiping, Hypax of Singapore and the Malacca SEDC.

Hypak secured a $10 million loan from the MIDF, but within two years the Hypak Sdn. Bhd has not only dissipated the $10 million loan provided out of public funds, but accumulated debts up to over $2 million, where it had to close down causing not only the unemployment of over 400 workers, but denying them even their statutory minimum notice of termination or pay in lieu.

The SEDC has acted solely from the profit motive, and has lost sight of the social objective of the New Economic Policy.

What is shocking, however, is how the MIDF could so easily lend $10 million, which could so easily be squandered away. Is it all because one of the directors of Folex, which had 51% interest in Hypak Sdn. Bhd, is a brother of a MCA Minister?

DAP wants every cent of Federal Government grants for housing to be used for low-cost housing

One of the sorriest records of the government is in the field of housing, to ensure that every Malaysian has adequate housing, which apart from food, is the next largest household expenditure item, taking 15% – 20% of household expenses for the majority of the people.

Under the Second Malaysia Plan, low-cost housing schemes undertaken by State Government with Federal funds showed a shortfall of 50%, as only about 13,000 units were completed as against a target of 26,000.

The Government has all along failed to fulfil the needs of Malaysians of low-income groups for low-cost housing. There is now a massive backlog of housing shortage which is as high as 250,000.

The Government must use every cent for low-cost housing to break the back of the housing problem, and there can be no justification for use of Federal funds either by State Government, SEDCs or other Government agencies for expensive homes either for the high incomes or middle incomes.

I notice that under the TMP, a sum of $26.3 million has been allocated to the SEDCs for the construction of commercial housing which will not benefit the low income brackets. Such allocations must be stopped and made use of for genuinely low-cost homes.

Poverty Income Line

Yesterday, Dr. Mahathir rejected what he said was my proposal that there should be a common poverty income line. He gave as reasons that this is not possible in view of the differences in the cost of living and facilities for social amenities for different areas and households.

I advise Dr. Mahathir to study my speech carefully, because he was making the very arguments I had presented when I had criticised the government’s use of a single poverty income line. Probably, Dr. Mahathir has not fully understood the Third Malaysia Plan himself.

Export Duty Exemption for rubber-smallholders with less than 15 acres

For the Third Malaysia Plan and the development estimate expenditures to succeed, there must not only be proper implementation capacity, there must be greater co-ordination between government departments and Ministries. We often find that the right hand of the government does not know what he left hand is doing, and even doing conflicting things, cancelling each other out, wasting public funds, resources and time.

A good example was furnished on Monday, when Ministers started replying during the Third Malaysia Plan debate. I had called for a total exemption of export duty and rubber cess for small-holders with less than 15 acres as an anti-poverty programme to help the smallholders. The Finance Minister, Tengku Razaleigh, rejected it out of hand as not practical while the Assistant Minister for Primary Industries, speaking on behalf of the Minister, said that this proposal is being actively taken up by his Ministry and is being studied in depth between his Ministry and the Finance Ministry, How unco-ordinated can the Government get?

Speech by Ketua Pembangkang and DAP Member of Parliament for Kota Melaka, Lim Kit Siang, in the Dewan Rakyat on the 1976 Development Estimates on Thursday, 28.7.1976.