PRESS RELEASE
17 JUN 2010
SELANGOR LEADERS REVIEWS 10MP

SHAH ALAM: The Selangor Government today held a forum on the 10th Malaysia Plan (10MP) with some 200 civil servants, parliamentarians and state assemblymen.

Held in the Annex building here, the forum had begun with a special commentary by Menteri Besar Tan Sri Abdul Khalid Ibrahim and Selangor State Economic Advisor, Datuk Seri Anwar Ibrahim.

In his review, the Menteri Besar said the Federal Government is politicising its economic administration by ignoring the role of Selangor which contributes 20 percent to the economy of Malaysia.

“The term “Klang Valley” seems to have mysteriously been replaced by “Greater Kuala Lumpur”. For example, a chart in the 10MP document shows Kuala Lumpur’s contribution as a city to Malaysian development. In its footnote, “KL” actually “includes Petaling Jaya, Subang, Ampang Jaya, Shah Alam”.

“This is a strange move, as I would expect it is easier to refer to “Selangor” instead since all those areas fall within Selangor. This is affirmed further when Selangor is only mentioned four times throughout the 10MP document and even so only in reference to statistics.”

While Growth Corridors of Iskandar Malaysia, Northern Corridor Economic Region, East Coast Economic Region, Sarawak Corridor and Sabah Development Corridor are mentioned – but no major plans for development have been given to Selangor, which is a blatant dismissal of its importance to national development.

“But the fact is the Federal Government cannot afford to ignore Selangor – its economic worth is too high,” he said.

He also touched on the issue of “transforming government to transform Malaysia, including driving productivity” mentioned in the plan.

“However, they did not expand upon how they intend to achieve this. I would therefore recommend that the way forward is to introduce a productivity-driven government sector. The government should determine what its “tolerable wage” is. Ideally, when the economy expands, wages will also expand simultaneously.

He an “inflation-proof wages” system that is measured by productivity can be formulated which would allow all work should be measured. “Therefore their salaries will be based on productivity. Government salaries could be revamped by beginning with 50% of civil servants being paid for based on their productivity, while the remaining 50% continues working based on a monthly wage.”

Under this mechanism, it would also be possible to introduce minimum wages into the labour market, that is, a productivity-driven minimum wage. Productivity levels would be determined by the employer based on the average productive output.

“With this productivity-driven civil service salary scheme, it is possible to mitigate the effects of a ballooning government expenditure, the bulk of which goes to operating expenditure which essentially goes to paying civil servants’ salaries. We must urgently address the problem of our unwieldy expenditure, or risk our rapid debt to GDP ratio.”

The Menteri Besar also said that the 10MP also address the federal government’s intention to manage competition to “ensure fair competition for all companies including GLCs”. However, he said the current system and policy are prone to tremendous potential abuse.

Nevertheless, he added, private investment is required to propel the country forward but it has to be done with the right methodology.

“The Federal Government has been using the wrong model all this while. The solution is to never privatise cost, and only privatise revenue. The cost involved in a particular development project can easily be undertaken by the government through open tender.

Project management should be the part that is privatised as this is where companies can then come out with creative means of generating revenues and maximising profits.”

Therefore, he added, the federal government should privatise the section of a project where ideas, creativity, unique business models, can be proposed to generate greater levels of profit as the project would be given to the tenderer who is able to prove the best return on investment, the highest gross development value.

“Upon making the selection of a particular company able to prove this high GDV, the government then is able to raise funding, and then retender it for purchasers. This model therefore does not assume that a blanket process of “privatisation” takes place wholesale. Instead, the government should exercise wisdom and aptitude in selecting which parts of a particular project should be privatised, and which should remain nationalised for public interest. “

Meanwhile, Anwar said the federal government must cease private tenders that doles out projects to undeserving companies which neither has the ability nor the experience to deliver.

As to the issues of subsidies, he said priorities must be given to the people. “What’s the point we are talking about subsidized sugar, oil and other essential items that have direct impact the rakyat, especially low-income groups. What about the subsidies to the IPPs (independent Power Producers)? Here about RM20billion owned by millionaires who obviously do not need financial assistance from the Government.”

PRESS SECRETARIAT
OFFICE OF SELANGOR MENTERI BESAR