Reflections on Malaysia’s Path – Charles Santiago

This year marks the first time that 16 September will be an official public holiday, although it is now 47 years since Malaysia as we know it was formed. The Rocket spoke to Klang MP and economic expert Charles Santiago about the meaning of Malaysia Day.

Prime Minister’s Question Time
Growing up in the newly post-Merdeka Malaysia, what were your friendships like?
I lived in a middle-class neighbourhood in Bangsar with many Malay neighbours. Many of the residents were employed at the nearby TNB and all of our parents worked very hard. I attended La Salle school in Brickfields and my schoolmates were from various cultures and creeds so we had an interesting mix.

Our teachers were also wonderful. I still remember Encik Abdul Malik who taught me Malay. Those were interesting moments in Malaysia’s history. Tengku Razaleigh recently spoke about how ‘we were once Malaysians’. I guess I experienced a bit of that. But when I speak to older people who have now retired from government service, they tell me about their many cross-cultural friendships and it was a very normal thing for them to mix freely before. In fact, they are still pals today.

But if you compare them with today’s generation, it is miles apart. Today it is very hard to find an Indian who has a Malay friend or a Chinese who has an Indian friend and so on. We have become less Malaysian compared to previous years. This has much to do with our school system and the way we are divided by race and now, increasingly by religion too.

When did you begin to notice a change in the way Malaysians related to each other?
I think it’s fair to say that the post-Razak days were the beginning of the decline when we became less Malaysian. It had a lot to do with the way the New Economic Policy (NEP) was implemented; not the policy itself, but its execution which has a lot to do with the mess we are now caught in. Dr. Mahathir, of course, is also to be thanked for this situation.

It all happened gradually, with the school system showing us that regardless of who got the better grades, it was the Malay students who would be sent overseas for further studies while the others would have to compete for limited local spots. My nephew is one such example. He now works in Singapore and I remember conversations we had when he was still in school. He asked, “What’s going on here? I get better grades than the rest, so why are they discriminating against me?”

When this happens, your patriotism lessens as you begin to see that there is less for you in this country and that you will continue to be marginalised here. So the inclination to leave and work elsewhere increases rapidly. However, many who have left do want to return home especially to raise their children but they say the government has to change first.

What are some ways for people to return to “the good old days” of mixing freely?
In some ways, we cannot truly return to the way things were. The world economy has changed, our cultural practices have changed; a lot about us has changed. It is a very different world from the one we used to live in. But there are still values around which we can unite. Our cultural, religious and universal values can unite us, such as through interfaith dialogues.

Last year, we had an interfaith dialogue on the concept of fasting during the Ramadan month. I invited leaders from various groups such as Buddhists, Sikhs, Christians, Taoists, Muslims and Hindus. Each of them shared their perspectives and we realised that we actually have so much in common.

So in some sense, we need to return to the basic value systems that we were once known for. We also need to improvise and look for new ideas and ways of thinking because we seem to have stopped thinking. We are also thinking along old models which are dangerous because we are stuck in the past.

Thus, we need new models which belong to everybody and these must be based on shared aspirations and values brokered by all levels of society.

Could this shared set of values come in the form of the 1Malaysia concept?
The opposite of shared values would be tipping points or fault lines. These tipping points can occur over a temple, a mosque, the use of the word “Allah”, the entry quotas for tertiary students, scholarships and so on. Tipping points can go either way and unfortunately for us, these have always led towards greater division.

After 53 years of independence, we should be bold enough to admit that the issue is no longer race; it is now about class. Moreover, issues of class don’t just affect the Chinese, Indians, Kadazans and Bidayuhs, but also the Malays, who are the largest middle class group. So they will be the biggest beneficiaries of any government policy but the current system only benefits the rich who have vested interests. That’s the logic behind the entire NEP, to consolidate the existing bourgeoisie. We need to reject this in favour of a robust community that can compete in the global marketplace.

But at the same time, we need a caring government for vulnerable groups such as single mothers. They are badly in need of help as are labourers and the indigenous people. So we need to move away from race and look at class instead. Even a needs-based system isn’t enough; we need a rights-based system because a need is subjective while rights are not such as the right to water and education.


In conjunction with Merdeka and Malaysia Day, what does it mean to be a citizen as we celebrate 47 years as a nation? Have we achieved nationhood?
Nationhood is a concept that can be discussed at length without a sound conclusion because just to define a nation is complex. Some would say we have two nations in Malaysia, others may say we have sixteen nations!

But I think it’s safe to say at one point in time we had a country with an independent judiciary and a system that could adequately respond to issues of poverty. We had a government that placed people at the heart of development; Tunku (Abdul Rahman) and Tun Razak were certainly such leaders.

Now we have gone the way of free markets which does not benefit the poor. Some argue that it increases efficiency but the truth is that the market is controlled by big corporations and governments. If you look at the economic crises in the world today, it stems from the aggressively liberalised markets.

Our International Trade and Development Minister Mustapa Mohamed says we need to liberalise so that more foreign direct investments (FDI) come in. They did this 18 months ago when Najib first took over. But did we see a rush in FDI then? No, so why would it happen now?

Touching on our FDI, we are the only country in the region this year to register a negative FDI (RM6.66 billion). So how did that happen and how do we revamp our economic growth?
There are many reasons for our drop, one of course, is that the general figures for FDI have dropped globally and the available money is going to countries like China and India which are non-liberalised but offer cheap labour and also tremendous potential for future technological growth. So in a few years when these two nations no longer offer cheap labour, people will still want to invest there because of growth potential.

The reality is that investors don’t feel confident of growth in Malaysia, chiefly because of our policy uncertainties. Often we are not even certain of what our policies will look like in two days time. One moment we support 30 percent Malay participation, in the next we say we want to open up the market. Greater honesty is needed to gain the trust of investors. Even if we want to keep these policies, we must state it clearly and stick to it so that there is stability, which is key for FDI.

Secondly, the quality of our workforce is low, with 75 percent of them below the SPM-level (as quoted by the New Economic Model report). The reason for the rapid growth of nations like South Korea, Japan and Taiwan is due to their educated working class. But we mostly have production workers who can only manage to push out goods and services, which is what we were once famous for. But now investors might as well go to cheaper countries such as Vietnam and Cambodia because we lack a pull factor here.

Our universities are also failing to produce adequate innovations and research. I used to lecture and I can tell you that most of my students used to just memorise the information. Our school system does not create a thinking person who utilises critical problem solving skills.

To revamp our growth, the Tenth Malaysia Plan (10MP) says we need six percent annual growth to become an advanced nation by 2020. But this is a joke because in the last 12 years, the engine of growth was not FDI, rather it was from the government’s pump priming of money from petroleum, oil palm and other sectors. It had very little to do with the private sector; in fact, throughout the Ninth Malaysia Plan, FDI was only two percent.

So we cannot expect money to flow in overnight; what are we offering? That is why our net outflow last year was about RM8 billion while the inflow was RM4 billion. Thus, the challenge is to prevent the money from leaving our country and not to focus on FDI which has never been Malaysia’s basis for growth.

My proposal is to open up new industries in line with a green, low-carbon economy. Malaysia houses the largest producer of solar panels in the world in Kulim. The government should give people incentives to stimulate a green economy which would create domestic-led growth. This would reduce our dependency on FDI and create a more diversified economy which keeps our money within the country.

Basic elements such as improving our public transportation, encouraging rainwater harvesting and recycling are small steps for the government but they run into billions of ringgit each year. So there is much that we can do but because of lack of support from various interest groups, this just does not happen and we remain stuck in the old model. So the only way to change things is now in the 13th general elections.

In light of the PM’s 1Malaysia, do we genuinely see ourselves as Malaysian first and by our ethnic groups second?
In today’s world we are global citizens but we’re global citizens as part of Malaysia. The leaders must recognise that our sense of nationalism is breaking down; in fact, one of the reasons for groups like Perkasa is not so much that it’s anti-Chinese or whatever, but it’s also against globalisation.

When a community feels it is under attack or is afraid to be independent, it becomes vulnerable in a changing world. That is when it finds an enemy from within instead of outside because of a lack of far-sightedness.

As for whether we should be Malaysians first and foremost, it depends on how we perceive the concept. 700,000 citizens have left the country in the last nine years and they had certainly lived as Malaysians while they were here. But today they are working for different countries and when asked why, their answers are always that other countries provide better prospects for their future.

But if you are a poorer Malaysian, you have no choice but to look at this as your country because you cannot afford to leave. So in light of changing global structures which lead to greater economic opportunities, the barriers to income mobility will break down rapidly. So as more Malaysians reach the middle income level, working abroad becomes more plausible for them.

Former United States Secretary of Labor Robert Reich said in his book Work of Nations that although we educate our children, they may not work in our countries, but for a multinational corporation elsewhere. This underscores the endless options available to the middle class today, whereas the poor face the exact opposite reality. Thus, the middle class always aspires for more and more.

Technology only serves to widen this gap and the working class is stuck. In Malaysia, this is worsened by our racial divide. But we are moving towards the day when even the Malay youths say they are done with this country and want to leave; this speaks volumes. They are transcending the old model which Malays were previously caught in.

Going back to the issue of nationhood, a lot of the economic decisions we make today are no longer based on the country, but are instead regionally determined. So then what is the use of a state? Global decisions are not being made in your country.

Merdeka Centre recently found that 43% of Malaysians feel we are more divided than ever. Can we heal this rift or is unity a pipe dream?
I think a united Malaysia is possible but we need to redefine the goals of the country. It cannot be exclusively written by UMNO because I think the majority of Malaysians disagree with that. We need a model that encompasses the interests of all the communities, especially the vulnerable ones. Any system in a developed country must protect the most vulnerable, not the least vulnerable. That’s the hallmark of a nation but today we are protecting the rich over the poor.

A simple example is the slash of subsidies. In 2009, big companies enjoyed subsidies of RM18 billion while direct subsidies for the poor were RM1.2 billion. We have to consider our priorities here but that kind of thinking seems to be lacking. So we keep subsidising the rich and not the poor; a kind of socialism for the rich and free market for the poor.

The numbers are staggering: the NEM says 40 percent of Malaysians earn less than RM1,500 and 34 percent of our workforce earns less than the poverty rate. These are Malaysians of all races, so where is the 1Malaysia spirit then? This is why our focus must move away from race towards the issue of class as 1Malaysia is clearly promoting the interests of the bourgeoisie over the working class. -The Rocket