I REFER to “Rent seekers must go” (Down2Earth, March 2). Terence Fernandez is right in his belief “that his declining spending power has something to do with useless rent seekers who drain our financial resources.”

Let us examine his thesis. Rent seekers are middlemen who produce nothing, do no work but collect commissions for obtaining licences, approved permits and use their connections to obtain tenders and contracts without having to compete in open tendering.

Because of these commissions paid to middlemen, the prices of these goods and services become more expensive. Hence, consumers suffer with less real spending power. Furthermore, the poor and low-income citizens have to pay higher prices for less goods and services of lower quality. Consequently, national economic growth and income distribution also gets skewed with the rent seekers getting rich and the poor Malaysians getting poorer. Income equity thus gets more distorted.

Since this “dirty money” is often paid abroad or in cash, it is difficult to trace and so it escapes the tax collectors grasp. Thus the government’s budget receives less revenue, the budget deficits grow and the budget allocations for infrastructure and socio-economic services to benefit the rural and urban poor will decline.

These rent seekers leave little trace of their activities and so the Malaysian Anti-Corruption Commission may not have the necessary evidence to nail them.

As Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said recently, RM28 billion was paid out yearly from the practice of “closed tenders” as opposed to “open competitive tenders”. Time Magazine claims that RM360 billion has been lost since 1980 due to closed tenders and rent seekers dirty practices.

These are the reasons why Malaysia has been caught in the middle income trap for so long and why we may not reach the target of 6% economic growth for 2010.

That is why all right thinking Malaysians look forward anxiously to the New Economic Model and the 10th Malaysia Plan that will hopefully be fair and competitive and yet aim to protect the genuine poor in our beloved country.

Then we can expect the private sector to play its proper role in providing the thrust for economic growth and better income distribution. The serious net outflow (loss) of RM17.8 billion and the severe brain drain of thousands of educated and skilled young men and women, can also be arrested, only if we sincerely follow the path of pragmatism and professionalism.

We need to say “enough is enough” and act fast to stem the rising tide of bad governance, corruption and the abuse of privileges that benefit only the crooked and groups with vested interest. Otherwise our country will continue to be trapped by the lack of competitiveness and progress, and even face the greater threat to stability and peace.

I join Terence and most Malaysians in crying out to the powers that be to stop the abuses before it is too late. God bless Malaysia.

Tan Sri Ramon Navaratnam
Chairman
Centre for Public Policy Studies

Source: The Sun – March 5, 2010