HAVE we shot ourselves in the foot by pursuing an obsession with rapid industrialisation?

Have we developed an export economy that has come too much at the expense of domestic food production? The simple answer to both is yes, and our response to the food crisis indicates that we have failed to learn from the painful lesson of the 1997 Asian financial crisis. For a number of years, Malaysia has been a net importer of rice and these imports (conducted by Bernas in amonopoly) account for some 30 per cent of our total consumption. World food prices are, however, rising quickly due to the global focus on other cash crops (such as oil palm estates), the conversion of agricultural land into industrial zones, and speculation on the rice futures market. When Thailand was forced to raise export restrictions on its rice crops, we found out – again – just how exposed we were to world market fluctuations. The Government responded on April 19 by approving a RM4bil expenditure on rice buffer-stocks to last three months and a new “rice-bowl” in Sarawak that will yield its first crop, also in three months’ time. These measures will certainly guarantee supply at stable prices for the moment, but the over-emphasis on microeconomic solutions to “people’s problems ” betrays a misunderstanding of the more permanent problems afflicting labour and the shrinking purchasing power of ordinary Malaysians. Real wages have remained in a state of constant diminution despite the growth of our economy. The same RM5 buys us much less today than it did !ve years ago, and most of us have heard the apocryphal stories about the fresh graduate earning the same pay today as she would have in 1998. It is, strangely, for these same reasons that the Government refused on May 3 to accede to the Malaysian Trade Union Congress ’ (MTUC) request for a RM900 minimum wage. Last Tuesday, Human Resources Minister Datuk Dr S. Subranmaniam said increased labour costs would make Malaysia uncompetitive, while the Prime Minister said on May 4 that a minimum wage would cause in”ation. These objections are “awed. If we base our competitive edge on labour costs alone,we have already been overtaken by China, Vietnam, Bangladesh and any other emerging economy with an abundant supply of even cheaper labour. (Incidentally, the three countries above also enforce minimum wage standards to no obvious economic detriment.) As for fuelling inflation, MTUC president Syed Shahrir Syed Mohamud responded by saying that the Government increased civil service remuneration schemes last year without appearing to have had the same concerns – and prices had in fact been rising before the civil service pay increase. Even so, and despite the MTUC’s failure to have it approved, the RM900minimum wage is appallingly low in a country that boasts an average monthly household income of RM3,686 — a figure released by the Department of Statistics in March this year. The European Union calculates its poverty line at 50 per cent of the median monthly household income. If we judge ourselves by their standards, ours would be roughly RM1,843 — a reasonable !gure, but it stands nearly three times higher than the official RM691 derived in the Ninth Malaysia Plan. Even at our lower figure, the MTUC’s statistics put many of its members firmly within the ranks of the hardcore poor. In a survey of 165 companies nationwide, it found that 46 per cent of these companies paid a minimum wage of RM400 per month. Ignoring rent and other fixed expenses, how much of this RM400 is expended immediately on consumables such as rice, cooking oil, transport, water and electricity? And yet these same things have been subject to price increases within the past 12 months. Even if the price of rice promises to be stable for now — and our solution will remain temporary as long as we are overexposed to the world market — can we reasonably expect the average worker to survive, let alone remain competitive? One thing is certain: If we continue to let price fluctuations have a direct effect on basic necessities such as food, and if we add this uncertainty to our diminishing purchasing power, the results will be explosive. U-En Ng has a degree in mediaeval languages and had past jobs as journalist with the New Straits Times and The Sun. He is currently Malay Mail’s parliamentary sketchwriter.

Source: Malay Mail – May 12, 2008