Decentralise to drive growth

KUALA LUMPUR: The conditions that justified the surrendering of state powers to the federal government at the time of the country’s independence no longer apply, said Prof Woo Wing Thye, executive director of the Penang Institute.

“States give up their powers only under unusual circumstances. At the time of Malaya’s independence, the communist threat was a serious problem and a centralised police force, for example, was needed,” he said at a roundtable discussion entitled Decentralisation in Malaysia here yesterday. The event was jointly organised by the Penang Institute, which is the state-funded policy institute, and the Institute for Democracy and Economic Affairs (Ideas).

Decentralisation, Woo said, allows people at the local level to prove themselves and go on to bigger things. Citing the example of the Seenivasagam brothers who made their mark as socialist municipal councillors in the 1960s, Woo said they made Ipoh the most livable city in the country.

Of Penang’s progress, Woo said the then chief minister Tun Dr Lim Chong Eu made it the first state to industrialise because he knew that as his Gerakan party was then in the opposition, the state would not be getting federal funds for development. Lim then set up Penang Development Corp (PDC) to bring investments into the state, said Woo.

The PDC Act was enacted to bring the entity under federal control and to prevent “other PDCs” from springing up, Woo said.

“The right to invite investors is now with the federal government,” he said.

“Penang is a proven engine of growth, but this is less possible now, and that is not desirable,” said Woo. “Even if Barisan Nasional rebounds in the elections, it should adopt decentralisation to improve growth prospects.”

Earlier, Ideas founding president Tunku Zain Al-‘Abidin Tuanku Mukhriz said: “Over-centralisation of authority in the federal government has to be fixed since it has permeated almost every aspect of life in Malaysia.”

“Even the party organisation is centralised, which is seen in the selection of candidates for elections” he said. “It is not the leaders at the local level who get to decide, but some people sitting together at the centre.”

Economic growth can be used to push for decentralisation, said Prof Phang Siew Nooi of Sunway University. This is seen in China, which embarked on decentralisation following the 1980s when economic growth made it inevitable, and it happened “by accident”.

Decentralisation of decision making is needed, said political analyst Khoo Kay Peng. For example, In Penang, the chief minister is the main promoter of economic development. “We need to separate political office from functions like investment promotion,” he said.

Ideas chief executive Wan Saiful Wan Jan, who moderated the event, said a framework for competition is required for states to compare their relative performances. For instance, an index for civil liberties among the states would allow their administrations to identify areas for improvement.

UCSI lecturer Dr Ong Kian Ming said decentralisation has multiple dimensions, ranging from the political to administrative, fiscal and economic fields. “The conducting of local elections is the elephant in the room for Pakatan Rakyat,” he said, referring to the slow progress by the coalition towards restoring the third tier of elected government.

So too, in administrative decentralisation, the state could have more autonomy to decide on educational matters, religious issues and other functions. For this to happen, it is important for state-appointed civil servants to be recruited to implement the necessary programmes.

Bukit Bendera MP Liew Chin Tong said decentralisation usually takes place in the context of democratisation, with China providing a rare example of achieving it without democratic reforms. However, the examples provided by Taiwan, South Korea and Indonesia confirm the norm.

The imbalance created by centralisation can be seen in the lopsided budget allocations for federal and state funds, he said. For 2012, the federal budget is RM232 billion, while the combined budgets for the 14 states amount to a mere 6% of this total.

This is because resources are being concentrated at the federal level. In 1900, he noted, Kota Baru had a bigger population than Kuala Lumpur, but today, Kuala Lumpur is eight times bigger than the next biggest cities of George Town and Johor Baru.

“Cities outside KL have been neglected,” said Liew. “The government must recognise that the whole country has urbanised, and there is a need to develop livable cities throughout the country,” he said.

The Edge

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