A Point Man On Reform

Idris Jala has another mission: repair not just a flag carrier but, more broadly, Malaysia.


Asia ex-Japan is mostly given a pass in the swirling global concerns about sovereign debt, but the region has its worrisome deficit cases, such as India. Add to that roster Malaysia, which means another assignment for national troubleshooter Idris Jala.

As Prime Minister Najib Abdul Raza's designated "driver" of economic and social reform, Jala has been telling government ministries and the public the same thing: If Malaysia did not immediately slash subsidies and make other changes, its government debt of $110 billion could rise to 100% of GDP by 2019.

"When this happens, Malaysia will become bankrupt. We do not want to become another Greece," he said. Najib has since said "prudent" measures are being taken to reduce public debt. (These aren't yet slated to change much.)

Transformation is 52-year-old Jala's specialty. As chief executive he led the spectacular turnaround of the national carrier, Malaysian Airline System (MAS). When he took the helm in late 2005, on leaving a top post at a Shell oil affiliate, MAS was bleeding cash and had losses to the tune of $400 million. He wasted no time eliminating thousands of jobs and brutally terminating unprofitable routes. These were unpopular decisions, but two years later MAS emerged--before the recession--with record earnings of $260 million.

Jala's work did not go unnoticed. He was approached by Najib, then new to the pm job, to join the civil service. He says, "It was also time for me to leave MAS because the team can do the job. My successor (Tengku Azmil Zahruddin Raja Abdul Aziz) is a great person and had been groomed to take over. Leadership is about being redundant."

The prime minister, who took over a faltering alliance that has ruled Malaysia since independence, evidently isn't keen on a redundancy when voters get another shot in parliamentary elections in 2012 or 2013. Thus, the call to Jala to assume his ministerial-level post and senatorial status.

His new reform agenda extends well beyond disciplining the welter of public subsidies and other budget busters. He is also tasked with addressing crime, corruption and falling educational standards. Recently FORBES ASIA sat down with Jala in Kuala Lumpur to ask about his efforts.

Forbes Asia: The prime minister unveiled a new economic model. What is your role in making this a reality?

Jala: We'll run labs involving key sectors like oil and gas, tourism and palm oil. In the tourism lab, for example, we'll discuss how to double tourism receipts in ten years. We have persuaded the private sector to nominate their best and brightest minds to spend time with us full-time at the labs and to come up with solutions.

Several pressure groups like Perkasa, a group that claims to champion Malay rights, want affirmative action to stay. At the same time, the government talks about further liberalizing the economy. How does the government manage different interests?

For one Malaysia to exist we must embrace and accept the different polarities like the Bumiputeras (Malays and indigenous people) versus non-Bumiputeras. We need to allow people to express their views differently and appreciate that there will be tension. You can't fix the problem by removing one polarity, as it'll destabilize the system.

What is being done to address corruption in Malaysia?

The Witness Protection Act has been approved by Parliament. From our rough estimate based on publicly available data, there were 120 offenders convicted since the beginning of this year, including one member of parliament, representing a total of $530 million in cash bribes. We've not caught any big fish yet. We're also tackling corruption in procurement, with details on 2,665 government contract awards published on a procurement website set up by the Ministry of Finance. Transparency is good, and we will keep doing this.

Eighty percent of Malaysians have only a high school degree or less. What is being done to raise educational standards?

We have started 929 preschool classes--18,000 children are benefiting from this, mainly in rural areas. Fifteen thousand remedial teachers have been trained. And 7,616 primary schools have been ranked to focus on results. There are questions on why the government reversed its decision to teach mathematics and science in English. Korea is successful teaching these subjects in the Korean language because they have quality teachers. In the labs we ran we concluded the problem in Malaysia was the quality of teaching. So we must focus on that before we talk about medium of instruction. This was a tough call. The government was advised that rural children have difficulties understanding English. When implementing policies, you have to identify who the majority is or who is most impacted by your policies, not those who make the loudest noise. This has been my biggest challenge since joining the civil service.

Reforms on subsidies for petrol and utilities are needed to reduce Malaysia's fiscal deficit. That's going to require political will. How are you going to approach this problem?

Nobody will dance in the streets if you tell them you're going to withdraw subsidies. This is one of my biggest challenges. Last year total subsidies were $23 billion. This is 4% to 5% of GDP, higher than in countries like Indonesia and the Philippines. We have to scale back to reinvest in other areas of the economy to become a high-income nation. Subsidies have to be withdrawn gradually rather than in a big-bang approach.

And what of the crime problem?

Crime has been rising for the last three years, but we managed to bring the index crime rate down by 15% and reported street crime rate by 40% in the first quarter of 2010, compared with the same period last year. We spent six weeks collecting data to find out why and where crime happens and ran labs, very intense sessions, to find solutions. Among many measures, we mobilized 14,200 police officers to 50 hot spots, and the police have to explain and report on a weekly basis to the prime minister on what they're doing to reduce crime. Street crime has been reduced but not organized crime. The latter remains high because they're syndicated.

Much of Malaysia is still rural ...

Rural basic infrastructure also saw big improvements. The government is spending more money than ever on this. About 400 kilometers of roads were completed in the first quarter and another 350 are under construction. Eight hundred and eighty-four households were connected with water supply and 347 with electricity. I went with the prime minister to Sarawak on a trip to launch an electricity project. The people living in the longhouses [traditional native homes] were very grateful for this. It was quite an emotional event for me. I called my wife, and told her "Even for this alone, I'm grateful I joined the government." These people ask for very little.

How do you transform the civil service and get it to act with more urgency?

We have to change the way we do things in order to transform character. Ambitious targets have to be set to force people to radically change the way they work. When we published that we want to reduce crime by 20%, people asked if I was crazy, but we managed to bring crime down. The prime minister is hands-on and chairs monthly delivery task force meetings. I hold weekly problem-solving meetings with various ministers, who set their targets, which are published in a book for accountability.

Any recipe for staying focused?

Helen Keller said, "Keep your face to the sunshine and you'll never see shadows." I have no difficulties doing something that won't succeed. The thing I ask myself is whether I did my best and whether that's good enough. It's a very liberating mindset. You have to see this as a calling, not a job.

Source: Forbes Asia

Chinese businesses grill Jala on economic reform

KUALA LUMPUR: Minister in the Prime Minister Departement Idris Jala was greeted with cynicism from Chinese businesses apparently sceptical towards the government's "grand" reform efforts.

Many of those participanting in the MCA-organised Chinese Economic Congress here today wanted to know if the government has the politicial will to implement the various new economic initiatives under the Najib administration's New Economic Model (NEM).

There were also signs that the vigorous campaigning efforts to promote the NEM, a model Prime Minister Najib Tun Razak claimed would elevate Malaysia from its shoddy middle-income economy, have not been succesful when some questioned the need for a high-income economy.

"All the programmes sound good but the hard part is the execution: how to implement the 10th Malaysia Plan (10MP) and the NEM. The public perception is that the public sector is corrupt and incompetent. Is there political will to change this?" asked one participant.

Another participant criticised the contradictory policy of the Najib administration: on the one hand, it promotes free trade but on the other, it practises interventionist policy.

For example, he said because of its interventionist policy, prices of basic goods had increased, thus hindering their profits.

"Businesses are like this: not everyday is a Sunday. Sometimes we make more and have to save it for a rainy day. So when there are times to make money, we want to. If you want free trade, make sure it goes all the way," said the participant.

Another took the government to task over what he described as poor planning in terms of utilising key sectors to the country's economy such as oil and gas and tourism.

"An example is tourism. My foreign friend asked me where to go, so I told him to visit the museum and to take the rail transport. But there is none that goes straight to the museum. He has to cross the highway... there's no connectivity,” he said.

Another participant had doubts about the willingness of the top leadership to implement thorough reforms. He said one of the key drivers of economic growth is a performance-based stewardship.

Hence, he questioned if the government is willing to replace none-performing leaders given that their appointments are politically-driven.

Idris maintains reform on its way

Despite the apparent scepticism, Jala, who heads the government reform task force Pemandu, said the various laboratories held on government reform initiatives showed that confidence in the Najib administration's reform pledges remains high.

He cited the drastic reduction in street crime as one of the six major national key results identified by the Najib government.

"Yes I understand that the people are sceptical if we can deliver but look at the reduction in street crime. I believe, with the right stewardship, we can deliver," he said, adding that Najib himself is personally overseeing the reform efforst by chairing the task force's monthly meeting.

He also said that not all reform initiatives required political will in a bid to quell fears that the nation's economic overhaul programmes may be stalled by politics.

Najib has been on a vigorous offensive charm, promoting tirelessly his NEM and economic reform initiatives, in a bid to win the hearts and minds of the sceptical electorate.

But his flip-flop on policies such as the contradictory position on Bumiputera corporate equity quota have left businesses and investors doubting his reform pledges.

Najib may be all fired up to sell his liberal brand of economy but today's event shows scepticism still persists.

Source: By Syed Jaymal Zahiid

Idris Jala’s subsidy proposals

KUALA LUMPUR, May 27 — In an effort to save Malaysia from becoming bankrupt within the decade, Datuk Seri Idris Jala today proposed several major steps to better manage the government’s growing spending on subsidies.

Among the suggestions include slashing subsidies for 12 items, which would see prices hiking for petrol, diesel, gas, electricity, sugar and flour, among other staples over the next five years.

But Idris also recommended handing cash rebates directly to consumers to offset the burden on the poor, similar to the practice mooted by the former domestic trade minister Datuk Shahrir Samad during the Abdullah administration.

Big savings could be seen only if the government focused on the “big ticket items”, stressed the minister in the Prime Minister’s Department heading the Government Transformation Plan (GTP).
The CEO of Performance Management and Delivery Unit (Pemandu) said his think tank had polled nearly 200,000 Malaysians via a text messaging system and found over 60 per cent were in favour of subsidy cuts and for the government to do it within the next three to five years.

He said it would cutting down on subsidies would save the government RM103 billion over the next five years.

“This does not mean we have more money to spend, but will help cut debt so we will not become another Greece where our national debt equals our GDP,” Idris said.

He further warned the cuts would be highly unpopular with voters but must be done if Malaysia is to avoid becoming another Greece, referring to the European nation sagging under the burden of a €300 billion (RM1.21 billion)debt.

“This is the most unpopular decision the government has to make since Independence,” Idris admitted today at a public forum here to present ideas to better manage the subsidy system.


Source: MalaysiaInsider