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Are we achieving Vision 2020?

It is sometime disheartening to see the spat between Dato’ Sri Najib Razak and Tun Mahathir Mohamad.  Nevertheless, when a sitting Prime Minister is attacked, regardless by whom, of course he would not react.  What we see today is unavoidable.

There are some instances that require us to put aside our feelings about the spat. Vision 2020 is one of them.  Despite the spat, Vision 2020 remains as our national agenda.

Najib himself has not dismissed Vision 2020.  Just a few months ago Najib was quoted saying “A lot of people asked about Vision 2020. The Government has put in place numerous programmes and the framework for us to achieve what we have aimed for.  This includes the 11th Malaysia Plan and National Transformation Policy, aimed at ensuring that our country attains developed nation status in the year 2020.  There is no issue about this and I want to stress that we are working according to schedule.”

Vision 2020 sets nine challenges.  They are, in summary: establishing a united Bangsa Malaysia, creating a developed society, fostering a democratic society, establishing an ethical society, establishing a liberal society, establishing a scientific society, establishing a caring society, ensuring economic justice, and establishing a competitive economy.

The drafting of the Vision is largely credited to the leadership of the late Tan Sri Noordin Sopiee.  He made crucial contributions when he was Director General of the Institute for Strategic and International Studies (ISIS).

Today, quite a few people are questioning if we are still on track to achieve Vision 2020.  I too have serious concerns.

When our research team looked into the issue, those concerns were confirmed.  We found that the Economic Planning Unit, under the Prime Minister’s Department, have said that the average income per person has fallen by as much as 15 percent from USD 10,345 in 2013 to USD 8,821 in 2016.  To be a high-income nation by 2020, our gross national income per capita (GNI) must be USD 15,000.  This means we must double our GNI in just three years.  This is almost impossible.

IDEAS issued a statement on this, in which our Research Director, Ali Salman, said “When our GNI was USD 10,345 in 2013, the goal was realistic but challenging.  Now it will be extremely difficult and with 2020 being just 3 years away we simply cannot afford to drop further down.”

One of the main reasons behind the drop in GNI is the currency depreciation that we suffered.  The main lesson here is that we must stop giving excuses about the depreciation, and fix the situation so that our Ringgit does not fall further.

Various people have commented on this matter.  There are junior commentators who become childishly emotional, failing to see that critical voices are valuable contributions to push the country forward.  I hesitate to entertain them because there are so many out there who try a bit too hard to seek attention from their paymasters.  Hopefully, given time and opportunity, these beginners will mature into adults, and then we can take them more seriously.

It is the comments by more worthy experts that worry me.  For example, I asked Professor Jomo Sundaram what he thinks.  Jomo hardly needs an introduction.  He has held various posts at the international level, and he is now the holder of the Tun Hussein Onn Chair at no other than ISIS.

I asked Jomo if he thinks we are en route to creating a united Malaysia and a robust economy by 2020.  Let me quote him directly here.

On creating a united Malaysia, Jomo said we are “off track because of the ethno-populist nature of the Barisan Nasional and its peninsular (and Sabahan) component parties.”

On creating a robust economy, he said we are “off track as we grossly understate the denominator.  We pretend we have one or two million migrant workers although the minister says 6.7 million.  And the recent depreciation of the ringgit by one third largely due to the 1MDB scandal has greatly diminished the numerator as well.”

We do have some big challenges that need resolving.  We should conduct open conversations about this.  From my experience, there are many people in government who welcome critical comments positively.  We should all ramp up efforts to stop the country from getting even more off track, and everyone should contribute ideas where we can.

For a starter, I think it would be helpful if the government ensures that we are consistent when introducing or implementing policies affecting businesses.  The government has said they want the private sector to be the engine of growth.  Thus, hurdles preventing them from becoming so should be removed.  Otherwise businesses will never be able to play their role to help us make the economic leap by 2020.

Tourism Tax

Abdul Karim’s colleagues were quick to join in the debate.  While their interventions were fun to watch, the real issue is not yet properly addressed.  The public spat has become a distraction.  From an issue of tax, Nazri turned it into a childish spat.

A more sensible comment came from Minister in the Prime Minister Department, Abdul Rahman Dahlan. He calmly asked Nazri to show a bit more respect to a fellow Barisan Nasional politician, and he also explained that it is necessary to diversify the government’s revenue base.  This is the correct demeanor to explain the situation.

Nevertheless, Nazri does have some good points too.  He was reported to have said “I don’t see why they are so upset about the tax. We made this decision several months ago in Parliament and the Cabinet. There were seven to eight Sarawakian ministers who didn’t say anything.”  Indeed, what exactly did the Sarawakian MPs and Ministers do when this issue was debated in Cabinet and in Parliament?  Why did they not speak up early enough?

Rahman Dahlan also said that the government could have done better at explaining this new tax.  I agree with him on this point.  This particular weakness has resulted in so many people questioning the new tax.

Firstly, it is called tourism tax when in reality it is not.  This name is misleading.  The tax will see every single person staying in a registered hotel being charged between RM2.50 and RM20 per room per night.  This affects everyone who uses a hotel.  Not just tourists.

You might be attending a funeral far away from home, or you might be a small business operator attending a trade fair in search for products for your trade, an officer who has to travel outstation for work purposes, or a family attending a wedding of a relative.  You do not have to be a tourist at all. As long as you stay in a hotel or a rumah tumpangan, you must pay money to the government through this tax.  If you already feel the pinch caused by the GST, then from July you will have to bear with this hotel tax too.

The cost implication is not just from the tax itself.  Hotel operators will have to record the amount of tax you charged clients, and they must keep the money aside to pay the government.  There is an additional cost of compliance on the hotel operators, which is logically going to be passed to consumers.

Consumers staying at the bigger and more expensive hotels may not be sensitive to changes in pricing.  But consumers staying at the lower end hotels, especially the rumah tumpangan, could be more price-sensitive.  Even a slight increase in price may push them away.  If you total up the cost of compliance and the tax itself, the charge to consumers may become higher, increasing the risk of their customers opting for the unregistered and untaxed options like homestays and Airbnb instead.  Therefore it is the smaller businesses who would face the real pressure from this new tax, especially if consumer behaviour shifts.

This is why as soon as this issue cropped up, and before most chambers of commerce and business associations responded, we at IDEAS immediately issued a statement to say that the government needs to rethink their decision on this matter.  We are worried if this new tax on hotel stays will increase the cost of doing business and badly affect especially the small and medium sized operators.

This new tax also does not come at a good time​ because the tourism industry is just ​picking up and our inflation is now at an all-time high.  The tax will certainly increase ​costs ​for hotel stays, even more so in the states that are already charging a similar tax.  For example, Melaka introduced in 2012 the Heritage Tax on everyone staying in hotels in the state.  Hence this new federal tax will add to the cost even further.  It would be better if these duplications are removed first, and for the implementation to be planned more carefully.

As for the politicians who are bickering with each other, I would like to suggest that they stop their childish behaviour.  It is ugly to watch people who claim to be a senior forgetting how seniors should behave.

Wan Saiful

Wan Saiful is Chief Executive of the Institute for Democracy and Economic Affairs, Director of the Southeast Asia Network for Development and Chairman of the Istanbul Network for Liberty.

2017-06-20T07:48:31+00:00 11th April 2017|Government & business, Opinion|Comments Off on Are we achieving Vision 2020?