The way forward: thoughts on the 15th General Election

These are notes from a presentation by Dr. Jeyakumar Devaraj in a “GE-15 Forum” organized by Persatuan Kawan Karib Pulau Pinang on the 24th of July 2022, in the U Hotel in Penang.

We live in challenging times. Times like this require strong leadership, a proper analysis and a clear plan of action. Frankly, I believe only the Left can provide this kind of leadership.

The International Situation.

The collapse of the Soviet Union in 1989 shifted the balance of class forces to the right. In the past 32 years, the biggest capitalists have re-structured the global economy to further benefit the billionaires. The large corporations outsourced their production to low wage countries to increase their profits.

Massive outsourcing of industrial jobs weakened the previously powerful unions of the developed world. Union influence over the social democratic parties of the developed countries became weaker resulting in these parties shifting to the right and adopting neo-liberal policies. Over the past 15 years we have seen quantitative easing for the richest corporations but austerity for the ordinary people. The safety net in the developed countries has been steadily cut back – health benefits, free tertiary education, old age pension and many other benefits have been reduced over time. This has led to the emergence of right wing populist parties that scapegoat immigrants and foreigners.

These 32 years of neoliberal dominance has reshaped the global economy. The richest and largest multi-national corporations (MNCs) have won many concessions through WTO conventions and Free Trade Agreements. These agreements require developing countries to give “national treatment” to the MNCs. This means that developing countries have to give the same terms to MNCs as we give to our local companies. At the same time, intellectual property rights have been heightened. These developments make it more difficult for developing countries to build an independent industrial base.

As a result, industrial development in smaller countries like Malaysia is tied to global chains that are dominated by the MNCs. The MNCs give contracts (and provide the machines and technology) for the same product or component to more than one company in ASEAN. This enables the MNC to push down the prices of the products produced in developing countries because if the local firm in Malaysia demands a higher price, the MNC can shift its orders to the more compliant firm in Vietnam or Thailand. This enables the MNC to transfer a large share of the surplus to it’s coffers. Employers in Malaysia, Vietnam and Thailand are forced to keep wages as low as possible so as to make some profits.

The Minimum wage in California is now USD 14 per hour. If you calculate based on an 8-hour day and 22 working days a month, and an exchange rate of 4.2 Malaysian Ringgit to the US Dollar, the minimum wage in California is more than 10,000 Malaysian Ringgit per month. The minimum wage in Malaysia is now 1500 Malaysian Ringgit per month – about 1/7th the minimum wage in California. This gross under-valuation of labour in the Third World has resulted in the massive transfer of wealth to the MNCs which are situated in the US, Europe and Japan. The pillaging of Asia, Africa and Latin America that started 500 years ago still continues today. Wage suppression in the developing world is the reverse image of super-profits of the largest MNCs. The distribution of global income has become even more skewed with the top 0.1% receiving a larger share of global income every year.

Governments can compensate for low wages by providing subsidized social services. But to do this, governments need to have a decent revenue. Unfortunately, corporate taxes have been slashed all over the world – in Malaysia it was 40% of corporate profits in the 1980s. From 1988 onwards it has been reduced in stages. Corporate tax is now only 24% of profits in Malaysia and our government wants to reduce it further because in Thailand corporate tax is only 19% of profits. And we are competing with Thailand and Indonesia for investors. This reduction in corporate tax rates is happening all over the world. Many governments are afraid that introducing wealth taxes will result in re-location of their biggest corporations to other countries. In November 2021, Dutch Shell decided to relocate its headquarters to Britain as Shell was unhappy about the 15% tax on dividends that the Dutch Parliament enacted.

As a result of falling corporate tax rates, governments do not have enough funds to strengthen the safety net for citizens. Neither do governments have the funds to invest in renewable energy, electric buses for public transport and re-forestation. Governments give lip service to combating climate change but have trouble walking the talk as they do not have sufficient funds. Many governments, including Malaysia’s, indulge in quite a lot of greenwashing.

The Malaysian Political Situation.

Malaysian society has undergone a lot of changes in the past 60 years. Among these are

  • Large scale migration of the Malay community to towns where most of them make a living as workers and small businessmen.
  • Class differentiation within the Malay community has resulted in the emergence
    • of a wealthy elite class that is tied to UMNO,
    • a significant contractor class that relies on the government for business opportunities,
    • a large under-class of low paid workers and micro-businesses
    • and the persistence of the self-employed in rural areas – the padi farmers and rubber smallholders tilling small plots of land and subject to the low prices of agricultural commodities.
  • In the 1960s and 1970s, the funds allocated for uplifting the Malay poor were channeled through government agencies. Now many of these agencies have been subverted and much of the funds meant to help the poor Bumiputras is hijacked by Bumiputra contractors.
  • The neo-liberal policies of the government have increased the cost of living, and many in the Malay B40 are under financial pressure.

The above set of factors led to the dissatisfaction of a significant portion of the Malay electorate with the super rich in UMNO. This is why, in the 2018 elections, 25% of the Malay electorate voted for Pakatan Harapan – for change. They were angry with the UMNO elite. However the PH was not able to retain and consolidate its Malay support because PH leaders did not really understand the situation, needs and anxieties of their Malay supporters. 2 major mistakes were made by the PH in this respect –

  1. Several subsidies to the Malay poor were withdrawn in 2018 – for the fishermen, the rubber smallholders, for single parent families who received BRIM before, for small businessmen with SSM registration, etc.
  2. PH leaders did not understand that the “Malaysian Malaysia” concept deviates from the 1957 Constitution as much as, but in the opposite direction from the “Ketuanan Melayu” concept. If all Malaysians are completely equal and if the Malays are also “pendatang” from Sumatra and Java, then the basis of the term “Tanah Air Melayu”, Malay being the national language or Islam being the “religion of the Federation” is undermined.

The Malays who voted for PH in May 2018 had not expected these changes in policy. It is no surprise that they easily accepted UMNO and PAS propaganda that Malay interests will be betrayed by the PH government “because the PH is under the sway of the DAP”. That is why Malay electoral support for the PH has fallen from about 25% in May 2018 to about 7% in March 2022.

The PH is in a weakened state right now. Merely harping on corruption in the ruling elite is not going to attract many Malays back to the PH. They would rather go to Bersatu which is perceived by the Malay community as being opposed to the super-corrupt UMNO leaders while at the same time, a reliable “defender” of the “Malay Agenda”. At present it looks like UMNO-BN will get a comfortable majority in parliament in GE15 despite only getting 42% of the popular vote because the anti BN vote is badly split with the non-Malays going for PH and the Malays who are anti UMNO aligning with Bersatu and PAS.

The Way Forward

The PSM believes that we need to plan long term. GE15 is just too near. We need a 10 year political project to contest for political power. The following steps have to be taken

  1. Develop a class based program that pushes for stronger social protection such as
    1. Universal pension of RM 500 per month for all individuals above 65 years of age who are not government pensioners
    2. Building of more PPR houses for rent in all our urban centres
    3. Doubling our Health Budget to solve the chronic under-funding of our Public Health Care System.
    4. A bus-based public transport system

And there are several others.

  1. Intensify PSM’s grassroot work with communities and sectors facing eviction or are oppressed by bad policies, and build these sectors into a strong Peoples’ Movement that can articulate the needs of its members. It is particularly crucial to organise the rural Malays to question the elites who are now misappropriating a large part of the funds meant for the ordinary Malays. This is happening in the distribution of fertilizers and pesticides to the padi farmers, the building of PPR houses in kampungs, the management of the FELDA schemes, the replanting of rubber for smallholders, etc
  2. Continue with certain ethnic based affirmative actions in sectors where Malay/Bumiputra participation is still low eg the SME sector. But effective steps should be taken to ensure that the assistance given is used to develop entreprenuel capacity in the Malays/Bumiputras. Individual who misuse this help through Ali-Baba schemes should be de-funded. Affirmative action needs to also be taken in fields where the non-Malay participation is low – government service and academic staff in the public universities – these sectors should be opened up to more non Malays.
  3. Draw up a realistic transitional economic program for the country. This is not the 1960’s when there was an alternative economic bloc of nations that a country could align with. The option of withdrawing abruptly from the global capitalist system does not exist in the post 1990 era. Instead, if a left coalition comes to power it would have to manage the Malaysian economy such that a larger share of the wealth created is returned to the people through better wages and more comprehensive social protection. But without causing capital flight and unemployment.

So, we cannot just “copy paste” slogans that were relevant 60 years ago. We need a realistic analysis of what should be done now – of what can be done given the current scenario. Our short term goals might be modest, but we need to continually strategize to shift the balance of class forces to the Left both nationally and in the international arena so that we can reverse the suppression of wages and commodity prices in the developing countries and use a larger share of the economic surplus to expand the Commons.

Building the Left Coalition

The steps outlined above need a nation-wide, multi-ethnic political movement. PSM’s immediate goal would be to catalyse the development of such a movement by

  • Developing the analyses mentioned above
  • Demonstrating how the mobilization of the Malay B40 and M40 along socio-economic lines can be carried out
  • Attracting sufficient idealistic individuals to build a cadre of grassroots and political leaders to carry out this program. Leaders who are socialist in their analysis and lifestyles, but pragmatic – they understand that the Left needs to build support from the public and consolidate it’s program.
  • Creating the culture and institutional safeguards to ensure that this cadre of leaders are not bought over by the corporate class

Hoping to negotiate with Coalition A or Coalition B for a few seats to stand in GE 15 and GE 16 is definitely not the main aim of the PSM. Our aim is to transform the Malaysian political landscape by bringing in new ideas and a new vision for the country – to outline the path to a better, more egalitarian society in this country. A huge task for a small party!

We need your ideas, your criticisms and your support. Thank you for giving me this opportunity to share our vision.

Jeyakumar Devaraj
Chairperson,
Parti Sosialis Malaysia.

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