Is the Civil Service ready for NEM?

Deputy Finance Minister Senator Dato’ Dr. Awang Adek Husin made a statement that part of the strategic plan to increase the Malaysian income per capita as part of the New Economic Model (NEM) is to increase the pay of the civil servants. They comprised of 1.2 million of the 11.3 million Malaysian workforce.

Bernama.com reports:

Civil service pay hike a key factor in NEM success

2010/05/09

KOTA BARU: A pay hike for over one million civil servants is one of the key ingredients in ensuring the success of the New Economic Model (NEM), said Deputy Finance Minister Senator Datuk Dr Awang Adek Hussein.
He said this was to ensure that the NEM’s objective of transforming the country from a middle-income economy to a high-income would improve the public sector’s productivity, thus ensuring successful development strides.

“Singapore shifted to a high-income economy several years ago by setting high pay for civil servants which has succeeded in improving its economic performance.

“So civil servants in this country cannot be ignored,” he said when closing the Kelantan Branch of the Peninsular Malaysia Technical Services Union annual general meeting here.

Awang Adek said the government would take steps to ensure that workers would enjoy better wages in line with the NEM’s objective.

He said 80 per cent of Malaysia’s workforce was earning below RM3,000 a month or a per capita of US$7,000 (RM22,893) while the government strive to increase it to between USD15,000 (RM49,057) and USD20,000 (RM65,410).
Awang Adek said 80 percent of the people earned about RM21,000 a year and the government aspired to increase their income to RM45,000 a year.

On goods and services tax (GST), he said the proposed four per cent GST rate would not burden the people when implemented in terms of price hike of goods and services.

“As we had studied the rate to be imposed, it would be unbecoming of traders to use GST as an excuse to raise prices.

“Even with GST being implemented, traders should drop prices. The GST has been implemented in 146 countries. It will become another source of income for the country as petroleum revenue decreases,” he said.

Awang Adek said, however, the GST would only be implemented after the anti-profiteering law (profit) was enforced to prevent unscrupulous traders from raising prices simply by making the GST as an excuse to do so. – BERNAMA

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The pay hike may improve the aggregate demand that will propel the economy further. It must commensurate with productivity. How the productivity is measured, it is still not clear. Credit should be accorded to the various front line government agencies and statutory bodies which have managed to improved service such as immigration, customs and inland revenue board. However, over all it is still much to be desired.

The civil service should have a quantum leap mentality change. The Federal Government should indoctrinate civil servants to the ’1 Malaysia’ drive; rakyat first, performance paramount.

Once ‘Mahathirism Economics’ where Federal Government work hard-in-hand with private sector in the ‘Malaysian Incorporated’ makes great economic sense. It is the single most important factor in propelling the economy towards industrialisation and on the track to be Asia’s second tier economic powerhouse. The Fourth Prime Minister Tun Dr. Mahathir Mohamad often reminded the rakyat that “The Federal Government has direct stakes in all business activities. 28% of all profits go back to the Federal Government”.

It is pertinent that the civil service be ‘intrapreneurial’ in their mentality and approach, to facilitate the growth of commerce, the most important ingredient in modern age capitalist economy.

Since PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi’s tenure, the civil service has been seen not doing enough to facilitate business development in the country. It is far from actively or pro-active participate indirectly to ensure that businesses flourish. In fact, the bureaucracy had remained the same with archaic procedures and regulations still being enforced to a point is actually a huge obstacle and eventually a reason to ‘advocate’ corruption.

The civil servants have been known to be very slow with the demands and dynamism of the commercial sector. An example are the issues related to human capital.  They do not facilitate to demands of the industry such as archaic Employment and Immigration Acts, which in the final analysis Malaysia lost strategic businesses to neighbouring countries.  This lackluster in human capital regulation and management will actually be counter productive to PM Dato’ Seri Mohd. Najib Tun Razak’s desire to make Malaysia a ‘high income economy’.

Federal Government should really look into the KPIs of the delivery system. Policies could be formulated and decided but if the delivery system fail, then it would be another ‘wet dream’ failed to be realised for the betterment of the rakyat. Worse still, if it cost a lot of money. Case in point: the failed economic corridors (Iskandar Malaysia, NCER, ECER) which were planned and started to be executed half-way through PM ‘Flip-Flop’ Abdullah’s tenure.

The Operating Expenditure of the Federal Government annual budget is already almost as big as the Revenue. A big chunk of this is already going the emoluments. The corridors are good examples huge ‘human capital’ bills are spent but no tacit result is achieved except for abstracts and hopes. IRDA which employs 130 people, foot an emolument and a ‘comprehensive human capital’ bill of RM 48 million last year. Despite a very high salaried workforce, 40 different blueprints are being commissioned by various consulting outfits and yet non implemented to actually produce any result. NCIA which takes care of the NCER recently gave an average 20% increment to its 70 odd workforce for no real tangible results achieved.

Thus employing “people from private sector” and paid market rate still does ensure the work gets done. To make the objective in totality is realistically met, the nation must be able to see the difference for the ‘fee’ the system is ready to part with and what the fee can actually achieve. It is time that the rakyat gets what it worth for this very large expenditure.

In the late 80′s Fourth Prime Minister Tun Dr. Mahathir introduced the ‘corporatisation’ of government services, to reduce public spending and dependence of capital expenditure without impairing the nation building strategic goal and mid term objectives. It not only worked but managed to spur growth. In the corporate world there is a concept of  ‘risk and reward’. For civil servants to have their ‘reward’, they must actually earn it. Taking ‘risk’, is part of the game. ‘Delivery’ is part of that ‘risk’.

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