Crony Capitalism
Yin Ee Kiong

The BN constantly reminds us that the government’s priority is to look after the rakyat – especially the lower income. However this is not borne out by its policies. Malaysians have long learned to treat such claims as mere rhetoric.

The current economic downturn may have necessitated the cut in subsidies on essential items like sugar and flour but surely such a cut will affect the lower income much more than the middle class or the rich. A more sensible approach would have been to provide the lower income with a cushion e.g. food stamps (for the items where subsidies have been withdrawn) to soften the inevitable rise in their food expenditure. It would be throwing the baby out with the bath water if subsidies – which have its merits - were just removed without some sort of replacement to lessen the hardship on the poor.

The capitalist system is perhaps the most efficient form of economic management. As Adam Smith opined: “It is not from the benevolence of the butcher, the brewer or the baker, that we can expect our dinner, but from their regard to their own interest.”
Put simply: In order to be successful companies must provide the best service or product at the best price in order to survive. This ultimately benefits the consumers.
This is the genius of capitalism as described by Adam Smith over two hundred years ago – “Let man seek his own advantage, sometimes he will flourish, sometimes he will flounder. But always, the process of innovation and failure will reward the common good.”

Capitalism has since undergone changes – mostly to create an even playing field for all players and to ensure that there is no price fixing by cartels. Genuine competition ultimately ensures that resources are used efficiently to deliver the best products at the lowest price.

It’s alright to apply market forces to our economy if that is the government’s intention. But it must be the real McCoy not the ersatz version as practised in Malaysia. Smith would be at a loss for words to describe what we have. It’s called CRONY Capitalism Mr Smith! A form of capitalism where so many sacrifice so much for so few. Where wealth is distributed upwards - the poor supporting the rich.

Every step of the way the rakyat has to pay ‘tax’ to the cronies of the BN Government:

We take our cars to be tested for road worthiness and there is only one source. In many countries you can take your car to any certified garage of your choice.

Why are flour mills and sugar distributors confined only to a select few?

Why must rice come only from Bernas?

Why is there only one company which can distribute medicine to government hospitals and pharmacies?

Why are ‘security seals’ a monopoly? While ‘security seals’ reduce counterfeiting they also raise the cost of these items to the public. Imagine the billions the lucky crony makes by just providing the ‘seals’ which cost very little but add to the final cost of the item. Manufacturers and suppliers do not complain because the cost is passed on to the consumers. In fact unscrupulous manufacturers and distributors welcome the opportunity to add to their profit margin. Just to take one example: Betaton used to be packed in boxes of 500 units but now because of the government’s policy they are packed in boxes of 60 units. This increases the profit of the crony who provides the ‘seals’ but also increase the profit of the manufacturer/supplier. The only loser is the consumer because the unit cost has increased from 24 sen to 35 sen.

Whether it is the road tolls or power supply, sewage and water service, or the supply of uniforms to the National Service Programme, or tender for infrastructure works, or just everyday consumer items, when there is no open competition, everyone pays more. Bad policies and mismanagement ultimately impacts on the rakyat – especially the poor.

It is one thing for the government to make honest mistakes, another to deliberately formulate policies and make decisions which enrich a few.
3/6/09