by Azlan Awang

1. Impact of the Neoliberal Agenda

2. 5 %
57 %
28 % Salaries & Wages
Profits of Companies(EBITDA)
GDPbyincomeapproach,2005Malaysia-DOSM
10 %
Profits of Unincorporated
Enterprises(Mixed Incomes)
Tax less Subsidies
297.8b
26.1b
52.2b
146.3b
Total GDP(2005)522.4bil
CE/GDP – Wage Share of the Economy

3. 5 %
57 %
28 %
TheGrossDomesticProduct
GDPbyincomeapproach,2005Malaysia-DOSM
10 %
297.8b
26.1b
52.2b
146.3b
Total GDP(2005)522.4bil
Household
Income
Household
Income
CE/GDP – Wage Share of the Economy

4. MALAYSIA IS A SWEATSHOP
Malaysia’s
Wages/GDP only
28% in 2005

5. • Income disparity widening
• GINI coefficient worsening
TheTrends

6. Top 20% households earn
7 times more
than the Bottom 40%7%
34%
53%
66%
76%
87%
94%
1%
11%
23%
34%
45%
61%
76%
1,000 2,000 3,000 4,000 5,000 7,000 10,000
Income Bracket Share of Income
HouseholdIncomeInequality
Average income is RM4,000
but top 20% households
earn nearly 7 times more
than the bottom 40%
Top 20% H/holds
RM10,200
Middle 40% H/holds
RM 3,800
Bottom 40% H/holds
RM1,500Source: EPU/HIS

7. 46.2
42.5
40.0
34.0
43.0
35.6
37.9
36.7
50.9
Malaysia
Singapore
Thailand
Indonesia
Philippines
Vietnam
Cambodia
Laos
Papua
Gini Index
Source: World Bank data and indexmundi.com
13 14 17 20 15 19 18 19 12
35 37 36 37 35 38 36 36
32
52 49 47 43 50 43 46 45 56
Bottom 40% Middle 40% Top 20%
IncomeInequalityamongtheworstinAsia

8. 1. Fiscal policy discipline, avoid large fiscal deficits relative to GDP
2. Redirection of public spending from subsidies toward broad-based provision of
key pro-growth
3. Tax reform, broadening the tax base and adopting moderate marginal tax rates;
4. Financial Liberalization -Interest rates that are market determined and positive
(but moderate) in real terms;
5. Competitive exchange rates;should be managed to induce rapid growth in non-
traditional exports
6. Trade liberalization: liberalization of imports, elimination of quantitative
restrictions (licensing, etc.); liberalization of the service industry
7. Liberalization of inward foreign direct investment; Increasing foreign direct
investment (FDI) - by reducing barriers
8. Privatization of state enterprises;
9. Deregulation: abolition of regulations that impede market entry, regulatory
coherence
10.Legal security for property rights.
11.Secure intellectual property rights (IPR) - without excessive costs and available
to the informal sector
12.Small Government - Reduced role for the state.
The Washington Consensus

9. 654
1,681
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
ETP GNI or GDP target by 2020
@ 9%
growth
Malaysia
GNI/cap =
RM53,000

10. Core features of NEM, RMK-10 and ETP
• Achieve High Income Goal of USD15,000 GNI/cap by 2020
• Achieve GNI of RM1,700 bil by 2020
• Attract more private investments – FDI or DDI
• Incentivize investments
• Liberalize, deregulate, dismantle distributive policies
• Indifferent towards inequality and marginalized groups

11. Strategy is :-
GET
INVESTMENTS
Idris Jala’s Main Strategy
small
net export
gain

12. New Economic Model (NEM)
Does not address
• Household income
• Wages & salaries
• Inequalities inter-ethnic, intra-ethnic
• Assume “trickle-down” effect, once
RM 1.7 trillion GNI achieved,
“everybody will be rich”
• Regards welfare policy as adequate
• Does not address high “cost of living”

13. ETP Wage target by 2020

14. Creating 3.3 mil medium to high income jobs
GNI created by NKEAs is RM800 bil
Source:ETPExhibit2-5Page81Source:ETPExhibit2-11Page87
ETP’s wages/GNI regressing
Projected
Wages/GNI for
ETP’s NKEA is
only 21% in 2020

15. Source:ETPARoadmapforMalaysia,Exhibit2-12Page88
Analysis of PEMANDU’s GNI & Wages Projection
15
ETP use 2020 nominal RM
against 2009 current prices
ETP use nominal prices for 2020

16. 2020 Projected Salary Distribution using 2.8% p.a. inflation
No. of Jobs, millions
2009
2020 (Projected)
< RM 750 RM750-1,500 > RM7,500RM1,500-3,000 RM3,000-5,000 RM5,000-7,500
2.9
3.7
4.4
4.7
3.3
4.0
1.3
2.0
0.3
1.0
0.10.2
+1.3 +1.0 +0.7 +0.7 +0.7 -0.1
2020 Salary
Bracket1
Change in #
of workers,
millions
1 Salary brackets reflects 2020 @ 2.8% p.a inflation
new 1.5m joins
the the poorest
<RM750 bracket
Analysis of PEMANDU’s GNI & Wages Projection
Only 3mil gets >RM3k,
not 4mil as ETP claims
8.7mil earns
<RM3k (1.7m
more), the
urban poor class
Less
employees
with
>RM7k

17. 2020 Projected Salary Distribution using 6% p.a. inflation
No. of Jobs, millions
2009
2020 (Projected)
< RM 750 RM750-1,500 > RM7,500RM1,500-3,000 RM3,000-5,000 RM5,000-7,500
2.9
3.7
6.6
4.7
3.3 3.1
1.3 1.3
0.3 0.3 0.160.2
+3.7 +1.0 -0.2 +0.0 +0.0 -0.1
2020 Salary
Bracket1
Change in #
of workers,
millions
1 Salary brackets reflects 2020 @ 6% p.a inflation
Analysis of PEMANDU’s GNI & Wages Projection
Workers
earning below
RM750
INCREASED
from 2.9 mil to
6.6 mil
Not much change
in these brackets
new 3.7m joins
the the poorest
<RM750 bracket
4.7mil earns
<RM3k (1.0m
more), the
urban poor class

18. 2020 Projected Salary Distribution using 2.8% p.a. inflation
No. of Jobs, millions
< RM 750 RM750-1,500 > RM7,500RM1,500-3,000 RM3,000-5,000 RM5,000-7,500
2.9
3.7
4.4
4.7
3.3
4.0
1.3
0.3
1.0
0.10.2
2020 Salary
Bracket1
Analysis of PEMANDU’s GNI & Wages Projection

19. 2009
2020 nominal
Low Income Medium & High Income
< RM750 RM750-1,500 RM1,500-3,000 RM3,000-5,000 RM5,000-7,500 > RM7,500
This was
ETP’s
gameplan
Bottom 40%
Trends in Workers’ Salaries under ETP

20. 2009
2020 nominal
2020 @6%
Low Income Medium & High Income
< RM750 RM750-1,500 RM1,500-3,000 RM3,000-5,000 RM5,000-7,500 > RM7,500
Bottom 40%
Trends in Workers’ Salaries under ETP

21. Population (29.3 mil)
Young (0-14)
7.8 mil (26%)
Old (>64)
1.5 mil (5%)
Wage Recipient
9.088 mil
Employment
12.7 mil (97%)
Outside LF
6.9 mil (34%)
Labour Force (LF)
13.1 mil (66%)
Working age (15-64)
20.0 mil (68%)
Foreign workers 2.8 mil
Local workers 6.3 mil
The Labour Market (2012)
Self-Employed/
Family
3.134 mil
Source: EPU, DOSM Informal Sector 2012, MTUC Press
Explaining the classifications of the the 12.7 mil jobs, only 9.1 mil jobs are formal jobs
Is job creations lower than forecasted?

22. The Labour Market (2012)
12.7 mil employed but only 6.4 mil registered with EPF
(6.4 mil workers)
Age Groups
Civil Servants
about 1.4 mil
About 4 mil workers registered with EPF earn below RM2,000
About 6 mil workers are not registered with EPF

23. Formal Jobs Created
in 2012 only 150,800

24. Empires
&
Colonies
Nationalism,
Capitalism &
Welfare State
Socialism
World Bank, IMF
Debt-Slavery
WTO, FTAs, BITs
Trade & Investment
Military Power
1800s to 1950s 1938 to 1945 1945 to 1980s 1980s to present
World War II
&
Independence
Yalta Conference
Dividing the world
NeoliberalismDemocracy
Neocolonialism
Wealth controlled by
few economic elites
through
MNCs

25. Military Debt
Trade &
Services
Investment
Govt Proc &
Deregulation
“New Age” FTAs
US-Peru FTA
US-Chile FTA
US-Singapore FTA
TPPA
Colonial Era
Newly
GATT,GATS,WTO
Reg & Bilateral PTAs
Washington Consensus
World Bank, IMF
Loans,
SAP on Defaulters
Independent The GATT years

26. 0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
1820 1850 1870 1890 1913 1929 1950 1960 1980 2000 2020
World GINI Index
Income Disparity
Source: "Global Inequality: Beyond the Bottom Billion“ - UNICEF
Disparity between the
rich and the poor growing
GINIIndex

28. Rationalisation of subsidies to
rakyat but not to industries
Malaysia free-market doctrine is veering
more and more towards neoliberalism
FDI
Obsession
liberalized, deregulated and privatized social
services that had previously remained under
state control – power generation,
telecommunications, waste disposal, water
supply, healthcare services, and tertiary
education
property rights legislation and policies that
advanced market-based capitalism
extend private timber-logging concessions or
oil palm plantation-based cultivation into
Native Customary Land; moves to undercut
communitarian rights by re-developing Muslim
wakaf land and ‘Malay reserve’ land;
repeal of urban rent control
law to benefit a new class of
urban property developers
Reducing Govt
Spendingsystematic control of labor and wages,
whether by deploying unjust measures,
wage suppression
Export-oriented
industrialization
EOI with labor-intensive
industries
liberalization of the financial sector
deeper integration with the global
investment market.
Washington Consensus
NEM,
ETP
Meritocracy out of context
Competitiveness out of context
GDP growth
obsession

29. Apa TPPA
Perjanjian antara 12 negara di pesisiran Pasifik:
• USA
• Kanada
• Mexico
• Peru
• Chile
• Malaysia
• Singapore
• Brunei
• Australia
• New Zealand
• Japan
• Vietnam
TransPacific Partnership Agreement
o Malaysia sertai rundingan pada tahun 2010
o Jepun pada tahun 2013

30. Isu-Isu & Kembimbangan –
yang berat tapi jarang kita dengar:
 Perjanjian TPPA lebih berdaulat dari perlembagaan dan undang –undang
 Perjanjian TPPA dikuatkuasakan di tribunal antarabangsa (ISDS) bukan
mahkamah tempatan, syarikat pelabur asing boleh heret kerajaan
 Menghadkan ruang polisi (policy space) – undang2 baru atau pindaan
untuk mejaga kepentingan masyarakat - sosioekonomi, pekerja dan
buruh, kesihatan, keselamatan, alam sekitar terbatas
 TPPA memerlukan kita pinda perlembagaan, undang2, polisi dan
peraturan sedia ada - perlu dilakukan serta merta apabila TPPA
dimeterai - untuk comply, akur, mematuhi perjanjian TPPA
 Peraturan Pelaburan TPPA jadikan kepentingan pelabur asing lebih
utama dari kepentingan rakyat atau masyarakat atau peniaga2 tempatan
 Failed State. Pembukaan (liberalisasi) sektor sektor ekonomi dan
peraturan pelaburan (Investment Chapter) akan melemahkan ekonomi
negara – Malaysia akan menjadi negara “Failed State”
TPPA

31. Trade Balances of countries who have signed up FTA with USA
NEGARA Tahun
Export to
USA
Import
from USA
Trade
balance
PERU 2008 6.2 5.8 0.4
2012 6.4 9.3 -2.9
CHILE 2003 3.7 2.7 1
2012 9.4 18.8 -9.4
SINGAPORE 2003 15.1 16.6 -1.5
2012 20.2 30.5 -10.3
ARGENTINA 2004 7.5 14 -6.5
2012 9.5 31.2 -21.7
Nilai dalam US$ billion

32. Chile-US FTA 2003
Tanpa Cukai Export di Chile – Bahan2 mentah (copper) di belasah

33. Other issues:
1. The term Neoliberalism is a misnomer. Nothing to do with human liberty and wellbeing.
Free trade, free market, Carnegie’s endowment for peace, TPPA partnership
2. Basic universal principles should be foundation of our political economy - social justice,
equality, welfare of the people, social safety net, protection of the vlnerable, wealth is
distributed, sustainability, asset based financial system, prohibition of usury
3. Normative economics vs positive economics
4. Labour theory of value and Wage/GDP
5. New metrics – dashboard household income, wages, jobs, social mobility, GINI coeff,
NOT JUST GDP
6. Trickle-down effect. Even PM Najib believes this does not happens, but its still business
as usual.
7. Manufactured consent – the political economy of the mass media (Noam Chomsky) –
economic textbooks, media and academia, nobel prize, neoclassical economist
dominates
8. Stiglitz – disagree with GDP growth metric, TPPA
9. Piketty proposes wealth tax to address inequality.
10. FDI – 30% return minimum
11. Wage- led growth strategy, aggregate demand – as opposed to profit-led, export-led,
investment-led
12. Laissez faire, unfettered free market capitalism
13. Impact: Inequality, depletion of resources

34. Thank You