The Merriam-Webster dictionary defines calibrate as to adjust or mark (something, such as a measuring device) so that it can be used in an accurate and exact way or to adjust precisely for a particular function.
The word recalibrate keeps ringing in my ear because it was used for the review of the 2016 budget a couple weeks ago. The 11 steps under the recalibrated Budget 2016 (RB) were supposed to be proactive, transparent and realistic in line with the current global economic climate. Measures taken were formulated after taking into account views and consultations with various parties.
As usual, there will be people who whole-heartedly support while others will give negative feedbacks. Due to space constraints we will discuss a few of the issues and later view it from a positive twist.
Recognising global economy is expected to be more challenging moving forward, companies are trying to weed out inefficiencies and manage costs. Most companies are critically looking at their income to costs ratio. Even Petronas will cut back some capex programs and it has already cut more than 20% in operating expenditures (opex) to arrive to a point where it has to rightsize.
However, the RB allows the yearly salary increment for the bloated civil service as promised earlier. In the same breath, it urged GLCs to narrow the income gap between higher management and employees.
To reduce opex, a benchmark of between 2% and 5% had been set for government agencies. Overall, the RB is expected to help save RM9 billion or approximately 3.7% from the original budget set in October 2015. The lower end of the benchmark of 2% is too lenient and giving the heads of ministries flexibility to decide on the amount does not reflect seriousness in efforts to reduce costs. The Auditor-General will have his hands full. Remember Petronas cutting back more than 20% for its opex!
There will be prudent spending on supplies and services and continue with grant rationalisation. However, there were no exact measures specified in the RB to carry this out. Applying the calibration word here, there should have been accurate and exact measures on prudent spending and on how to implement the grant rationalisation.
Consider this, a friend told me the PM’s department budget is higher than the Higher Education, Defence and Home Affairs ministries. Whilst the Government is concerned over the lifestyle of the rakyat who live beyond their means, the rakyat is also concerned over this matter. Since the RB is centred on the principle of shared responsibility from all segments of society, it is hoped that the government will reciprocate.
The Government’s decision to auction telecommunications spectrum as an easy fund raising exercise rocked the industry for a couple days. True, governments around the world have profited from the sale of such spectrum. But under current high cost of living condition and the propect of local telcos passing on the cost of the new spectrum to consumers, this idea does not seem to protect and safeguard the welfare and well-being of the rakyat (one of the main pillars of the RB).
A U-turn was made a couple days later when it was announced that the 900MHz and 1800MHz spectrums would be assigned “for a fee” for a 15-year period. Things are still unclear and a decision is expected by the end of the year. I guess this group was not one of the parties included in the consultation process.
Saying the increased levy on foreign workers should be seen positively as a way to reduce dependence on migrant labour is very simplistic. It could also mean the attitude towards one of the issue that got us stuck in the middle-income trap. The increase is now on hold. Is it another case of a party not included in the consultation process?
After taking into consideration the current economic scenario, the RB revised the 2016 forecast of GDP growth to 4% – 4.5%. Again, using the word recalibrate, it should have been adjusted precisely and be spot on rather than having a range of growth numbers.
As an add-on, Tan Sri Rafidah Aziz said Malaysia needs to recalibrate its economic, political and moral compasses too.
I still wonder why the word recalibrate is used...
Now, let us have a look at the TPPA approval by Parliament and its signing in Auckland.
The signing does not have real importance or value and a bit theatrical. Even the prime mover has not voted for it.
The real test is the ratification from the 12 countries for it to be effective. Technically, it will enter into force 60 days after all signatories ratify it. If that doesn’t happen, within two years if at least six of the 12 participant countries ratify it and those six countries account for 85% of the combined GDP of the 12 countries.
In short, it means if the US doesn’t ratify it, the TPPA is effectively useless and the US Congress will only vote after mid May.
How do we then interpret statements like these?
1. "TPP allows America - and not countries like China - to write the rules of the road in the 21st Century, which is especially important in a region as dynamic as the Asia-Pacific," and
2. “We should get TPP done this year and give more American workers the shot at success they deserve and help more American businesses compete and win around the world”.
3. “TPP also establishes specific labor reforms that Vietnam, Malaysia, and Brunei must undertake to meet their TPP obligations. The United States will not bring TPP into force with these countries if the reforms are not made. And we will not hesitate to take action against any countries that fail to live up to their obligations in the labor chapter, including through trade sanctions”.
It is not a win-win agreement.
Given the above facts why are we singing praises about its benefits when even PWC did not make strategic recommendations in a cost benefit analysis study they conducted earlier?
Adam Smith, the father of modern economics and a major proponent of laissez-faire economic policies will turn in his grave.
How come an agreement surpass economic principles and guarantee a host of benefits to a small country struggling in the middle-income trap?
The economics of demand and supply, value-for-money, quality products, good after-sales service, product/brand loyalty, etc, etc seems to be no longer relevant as compared to the benefits of the TPPA.
Now, for the positive twist. Let us recommend to Harvard and Massachusetts Institute of Technology (MIT) to recalibrate/change their syllabus to use the word recalibrate in place of review for any budget revisions. We can also recommend to them and also other countries that the TPPA will guarantee a host of benefits which include higher GDP and FDIs.
This will revolutionise future world trade and modern economics.
If you ask me why I chose the two institutions, it is because of their mottos. The motto for Harvard is Veritas (Truth) and MIT, "Mens et manus", which is Latin for "Mind and hand".
Truth is self-explanatory and when the mind thinks and plan, obviously for the better, the hand implement it with diligence and integrity.
Not to forget, my gratitude and appreciation to those involved for their diligence and hard work in coming up with the RB.
May I take this opportunity to wish Gong Xi Fa Cai to Malaysians who celebrate and may the new year bring happiness, peace and prosperity.