"Global rethink on subsidies"

 

By:   Pofessor Datuk Dr. Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy UCSI University

MANY countries use subsidies to kick-start new economic initiatives. One example is the global initiative to embrace solar power and renewable energy. Subsidies are also deployed to cope with rising prices, especially food and fuel, or to keep alive sectors that are slipping into inaction and malaise. Of course, subsidies to a great extent do cushion the impact of inflation, which is often fuelled by high energy prices. We can see this being played out right now as the world oil price stays stubbornly high, hovering around US$100 a barrel. The conflict in Ukraine is much to blame. There is no denying the fact that many of the initiatives to expand world food production would be challenging without agricultural subsidies. Developed economies, including the EU, United States and Japan, spend large amounts of money to support agriculture. But subsidy is a double-edged sword. Prudently managed, it can be positive for the economy, but over-subsidization can result in negative repercussion.

I recently read an article in a local newspaper on how agricultural subsidies can harm nature. The article highlighted New Zealand's experience with its agriculture industry, which was once so heavily subsidised that slaughterhouse workers were earning more than airline pilots. What disturbed the subsidy watchers was that huge subsidies meant that vast swathes of the country's marginal land were cleared for grazing, fertiliser was overused, and the sheep population boomed to the point where surplus meat had to be destroyed. It soon became clear that the subsidy programmes had taken a toll on nature, not only polluting rivers but also eroding soils, as revealed in a UN study. This prompted New Zealand to go for a total revamp in 1984. In a radical shift, the subsidies were either removed or phased out. The outcome was enlightening. Farming became more efficient while harmful practices such as the excessive use of chemical fertilisers decreased. In fact, fertiliser use declined by 50%, according to the report. While agriculture remains a major source of the country's planet-warming greenhouse gas emissions, New Zealand is still held up by biodiversity campaigners as a "poster child" for reforming subsidies that harm nature and the environment. Around the world, it is estimated that government subsidies, which can potentially harm nature, amount to at least US$1.8 trillion each year, or equivalent to 2% of global gross domestic product. Admittedly, agricultural subsidies, at US$520bil annually, are the largest drivers of ecosystem destruction along with those for fossil fuels at US$640bil. Agricultural subsidies for industries like meat production and fertilisers are also considered a threat to long-term food security. Methane emissions from subsidised livestock farming are creating climate concerns, as methane is the more potent GHG. What is happening in Brazil, where vast tracts of forest land are being cleared for cattle rearing, has come under close global scrutiny. Decision-makers are calling for aggressive subsidy reforms to close most of the financing gap for biodiversity protection, which is estimated at US$700bil annually. Analysts say a major reason reform can be so difficult is that many powerful interests are beneficiaries of subsidies. Research has flagged that agricultural subsidies tend to disproportionately favour large farms at the expense of small farmers. The experience in New Zealand is a case for us to ponder and re-evaluate our own subsidy schemes. What is clear is that subsidies in energy and agriculture need more diligent study. Then impact on nature and climate deserves scrutiny. Otherwise, we may end up with the negatives out weighing the positives.  

"Reconsider Subsidies, Negatives Outweighing Positives"

 

By:  Professor Dato Dr Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy, UCSI University

 

SUBSIDIES have always been an important feature in the world economic management. Many countries use subsidies to kick start new economic initiatives. One example is the global initiative to embrace solar power and the renewables. They are also deployed to cope with rising prices, especially food and fuel. Not to mention to keep alive sectors which are slipping into inaction and malaise. Of course, subsidies to a great extent do cushion the impact of inflation, which is often fuelled by high energy prices. We can see this being played out right now as the world oil price stays stubbornly high, hovering around USD100 a barrel. The conflict in Ukraine is much to blame. There is no denying the fact that much of the initiatives to expand world food production is challenging without agricultural subsidies. Developed economies including the EU, USA and Japan spend large amounts of money to support agriculture.    

    Though there are many positive sides of subsidies, we have also been warned of the darker sides of improperly managed subsidies. Blanket subsidies have come under intense criticisms lately. Non-targeted subsidies often end up helping those who do not really need them, thus creating unnecessary wastage of a country’s resources. Talk of more targeted subsidies is gathering interest. I recently came across an article in the NST on how agricultural subsidies can harm nature. The article mentioned about New Zealand's experience with their agriculture industry which was once so heavily subsidised that slaughterhouse workers were earning more than airline pilots. There are more sheep than people in New Zealand. What has been disturbing subsidy watchers is that huge subsidies then meant vast swathes of the country's marginal land was cleared for grazing, fertiliser was overused, and the sheep population boomed to the point where surplus meat had to be destroyed. It soon became clear that the subsidy programmes took a toll on nature, not only polluting rivers, but also eroding soils, as unveiled in a UN study.

    This prompted New Zealand to go for a total revamp in 1984. In a radical shift, the subsidies were either removed or phased out. The outcome was enlightening. Farming became more efficient while harmful practices such as the excessive use of chemical fertilizers decreased. Fertiliser use in fact declined by 50 per cent, according to the report. While agriculture remains a major source of the country's planet-warming greenhouse gas emissions, New Zealand is still held up by biodiversity campaigners as a "poster child" for reforming subsidies that harm nature and the environment. Around the world, it is estimated that government subsidies which can potentially harm nature amount to at least US$1.8 trillion each year, equivalent to 2 per cent of global gross domestic product. Admittedly, agriculture subsidies, at US$520 billion annually, are the largest drivers of ecosystem destruction, along with those for fossil fuels at US$640 billion which also impact climate change.

    Agricultural subsidies for things like meat production and fertilisers are also considered a threat to long-term food security. Methane emissions from subsidised livestock are creating climate concerns as methane is the more potent GHG. What is happening in Brazil where vast tracts of forest land are cleared for cattle rearing has come under close global scrutiny. The world is warned that a decrease in fertile soil means 95 per cent of land worldwide could become degraded by 2050. Decisionmakers are calling for aggressive subsidy reforms to close most of the financing gap for biodiversity protection which is estimated at US$700 billion each year. However, analysts also say a major reason reform can be so difficult is that many powerful interests are beneficiaries of subsidies. Research has flagged that agricultural subsidies tend to disproportionately favour large farms at the expense of small farmers.

    Subsidy is a double-edged sword. Prudently managed it can be positive for the economy. But over subsidization can result in negative repercussions on the economy. The experience in New Zealand is a case for us to ponder and re-evaluate our own subsidy schemes. What is clear is that subsidies in energy and agriculture need more diligent study. Their impact on nature and climate deserves scrutiny. Otherwise we may end up with the negatives outweighing the positives.    

"Science Needs Reform at All Levels"

 by: Professor Dato Dr Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy, UCSI University 

NATION building would be handicapped without a solid support from science and technology. Science is the prerequisite for technology development. Technology however changes so fast that many are not able to keep up. The fact that technological power is a key determinant of a nation’s competitiveness is a foregone conclusion. And technology thrives in a society which embraces innovation as a culture. There is much evidence to corroborate the fact that together the combination of Science, Technology and Innovation, STI, can deliver wonders to a nation’s socio-economic prosperity and sustainability. This is no more a secret as we see mounting evidence of countries, which invest wisely in STI, becoming more competitive. Investments in STI would include robust R&D spending, vibrant talent development, and a healthy innovation ecosystem which brings  strategic stakeholders, including industry, academia, government and even civil society, together to chart the path forward for technology strengthening.

    Despite various initiatives by the government, we still struggle to put in place a vibrant STI ecosystem. The stakeholders are not collaborating enough, mostly working in silos. Our R&D spending has remained stuck for decades at around 1% GDP. Most developed countries spend on the average 3-3.5% GDP for R&D. It is a concern that the bulk of our R&D spending comes from the government. In the developed economies, at least 70% of their R&D spending comes from business and industry. We need to invigorate higher R&D spending from industry. The R&D ecosystem in palm oil is one model which has worked well. The innovation quadruple helix has taken our palm oil business to great heights in the highly competitive global oils and fats business. Replicating such a model in other industry sectors is worth looking at.

    Building and retaining good talent in STI is another struggle. Not only are we having difficulty attracting new talent, but we are also losing many among our STI talent to other countries. Many have left to participate in better STI ecosystem elsewhere. How do we minimise such brain drain? There is need for serious rethinking about how to not only retain our trained talent but also attract talents from outside to help us realise our STI aspirations. On top of all that, very few students now opt to take up science. Our 60:40 target of getting more to do science continues to elude us. The closest we got to was 30%. Now it is even lower at 20%. This is despite all the efforts to popularise STEM. The lack of interest is mostly due to the fact that a career in STI, especially in R&D, is not so attractive. We do not face much problem getting students to do science to become engineers and doctors. We need to make a career in STI research more rewarding if we are to attract more to do science.

    However, enough funding and good STI talent alone would not guarantee success, We would still face difficulties if the STI ecosystem is not robust and functioning. A weak R&D ecosystem is especially worrying. The disconnect between industry and academia is still there. Again, it is not that the government has not done anything. Over the years, many initiatives have been introduced to close the gap. Unfortunately, they have not yielded the results we hope for. This partly explain why the commercialization of R&D has always been pitifully low. The mismatch between what business wants and what academia delivers remains unresolved. We need new approaches. We should explore models from outside the country which work, and adapt them for the local situation.

    This is where the new administration can bring change. We need new measures to address the underlined STI weaknesses that have persisted for some time now. The STI policies that are already put in place still face execution challenges for example. Institutions must rise above their individual narrow interest to pursue more collaboration for the sake of the nation. Failure to create the right STI ecosystem, and invest wisely in STI, can be retrogressive as we strive to generate a robust return of value from all our investments in STI R&D and tap on the many opportunities coming our way..                      

 

 

"Rare Earths: Break Free of Petroleum Dependency"

 By: Professor Dato' Dr. Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy, UCSI University, Malaysia

W HEN China first stumbled on her rich deposits of rare earth elements, its leader Deng Xiao Peng proudly declared that the West may have oil,but China has rare earths. He had already proclaimed then that rare earths would one day replace oil as the driver of global energy. His forecast has been proven right. In a world economy posturing to move away from fossil fuels, powerful magnets based on rare earths have become indispensable in the electronics of global products and the race to tap the renewable fuel that supports a sustainable world. China wasted no time in bringing its wealth of rare earths to market. Thanks to their large investment in R&D, such environmental concerns are now history. China is now the leading producer and supplier of rare earths to the world. Inevitably, there is a feeling of insecurity in the West, with China controlling more than 90 per cent of the global supply of a critical metal like rare earths. It is unhealthy for one single country to hold the trump card, which determines the development of new energy for the world. This is also made worse by the fact that rare earths have been reported to be a critical material in the defence industry. It’s no surprise that there is active R&D in the world looking for alternatives. I know of many studies evaluating the combination of readily available metals to replace the rare earths. Malaysia has made the right move by bringing in that rare earth investment from Australia. Many in the West regard Lynas as strategic positioning for Malaysia. It is unfortunate that certain unscrupulous groups have been creating problems for the rare earths processing at Lynas. It’s not helping the country embrace a higher-value economy. As the sole largest supplier of rare earths outside of China, Lynas is now much sought after by investors to replicate their Kuantan operations in the West. It has been reported that technical personnel from Lynas are now actively involved in the setting up of a rare earths facility in Texas, the United States. 

    Malaysia should be proud that the majority of the technical experts deployed in the Texas project are Malaysians. This demonstrates that Malaysia has talent that can be developed into world-class athletes. Many countries that have reported viable deposits of rare earths are seriously considering venturing into the business. Here, at home, news of economic rare earth deposit discoveries in a few states has generated much interest. It has just been announced that the relatively poor state of Kelantan has rare earth mineral deposits that have the potential to generate over RM125 billion in revenue for the state. The extraction of such deposits using cutting-edge environmentally safe technologies should boost Kelantan’s economic standing. For many years now, we have been dependent on our oil revenues to drive our economy. That source is slowly but surely depleting. Even Petronas recognises this and is rightfully taking steps to venture into other energy businesses. Hydrogen has been announced as one such new business venture that Petronas is eyeing. The truth is that many countries around the world are actively preparing to tap into the potential offered by the hydrogen economy. Why not rare earths? Judging by the many recent revelations that we do have rich deposits of rare earths, we should waste no time in harnessing such wealth to replace our dwindling supply of petroleum. There is no more excuse not to do so, as the technology in rare earth processing has made great advances in addressing environmental concerns.

"CHANGE IS CRUCIAL: LEADERS MUST THINK OF A SHARED FUTURE"

 By: Professor Dato' Dr. Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy, UCSI University, Malaysia

N OV 19, 2022 was a historic day for us. We voted hoping for a more stable government after the instability of the last three to four years. Alas, after all the votes were counted, we were informed ofasplit. A hung Parliament was the outcome, with no clear winner. No political coalition could secure a simple majority of at least 112 seats. Come Nov 20, no government could be formalised. The coalitions had until 2pm on Monday to reach an agreement. This was later deferred to the same time Tuesday. As usual, there were some premature claims about securing enough support to form a government. All were quickly disposed of as fake. Many of these claims were made by netizens, who have grown impatient and dissatisfied with the long drawn-out affair. What is most distressing is the stand taken by some leaders, not much different from the little Napoleons that we have become used to, who have declared their unwillingness to work with certain parties. These are also the same leaders, who, before the election, declared their unequivocal support for the concept of “Keluarga Malaysia" and non-partisanship. Are such declarations mere rhetoric made just to fish for the most votes? Where is the statesmanship expected from our leaders? Have these representatives of the people forgotten the common agenda for the nation? Many citizens are baffled by what is now being played out in the negotiation process to secure a deal among parties for a workable government. Where has all the cry for a shared future gone to?

This is the first time that the country has been thrown into this state ofahung Parliament. But it is not new in many other countries around the world, including New Zealand, Canada, Germany and Belgium, to name a few. And unlike what we are witnessing now, all the other countries facing a similar situation have managed to sort out the stalemate pretty well. At the end of the d ay, the big g e r agenda than selfish party politics is the nation’s interests and wellbeing. We must be reminded that the 15th General Election is meant for the population to elect good leaders. The next stage is for the elected leaders to decide how best to form a stable government for the nation, not for any selfish political coalition. This is the time leaders demonstrated their statesmanship. Again, we must look at the big picture. What is the state of the nation now? How do we want the nation to look as we journey into the future? What policies do we need to put in place to secure the future we all desire? Listening to the many views and discourses in the media, it is clear that the nation is in chronic pain on many fronts. Our debt level, no thanks to the previous improperly planned borrowing, is running into unmanageable territory. Some are even saying that if we do not manage it well in the coming days, there is no stopping the country from sliding the way of Sri Lanka. We all know the sad episodes in neighbouring Sri Lanka. Like Sri Lanka, which is too dependent on tourism for its revenue, we are also too dependent on petroleum for the bulk of our income. The call to diversify the economy into more high-value-added and technology-driven sectors has yet to find traction with our leaders. We have yet to escape the low-cost labour-intensive economy. The worst is yet to come. 2023 has been proclaimed a recessionary year by literally all the authorities on the global economy. Inflation, they say, will bite hard on consumers. We need to be ready for this dep r e s s e d time. Energy prices are also expected to remain buoyant. Food prices are also rising. We can talk till kingdom come about how to improve our food security situation. Nothing has materialised except for the never-ending policy declarations and promises. Policies that never truly left the paper they were written on. Our foreign direct investments have also shown a declining trend compared with our neighbours. The country’s political insecurity is partly contributing to this malaise. What is certain is that we need change. No more of the same old stuff. And the only way to change is to appoint a new leadership team, one that has never been a part of the previous bank of ineffective leaders.

"Many citizens are baffled by what is now being played out in the negotiation process to secure a deal among parties for a workable government. Where has all the cry for a shared future gone to"

"New Hope and Optimism For the Country"

 By: Professor Dato' Dr. Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy Studies, UCSI University

  THE ongoing election campaign under GE15 is refreshing. Thanks to the power of the internet and the new media, there is more balance in the media opportunities for all the political parties. No more  the  practice of the past when television campaigning was more biased, favouring the government linked parties, which enjoyed more air time and coverage. The new media ushers in a positive development for democracy in the country. As echoed by a panel member of one of the TV discussion recently, democracy should rightfully celebrate differences in views and stands. All must be given the chance to reach out to the electorate. If such an arrangement can be replicated in all future elections, our country is destined for a more harmoniuous, progressive, prosperous and sustainable future.

 What has also lifted our spirit most as we look to the future is the emergence of the new breed of leaders from across the political divide. In Barisan Nasional, KJ, as he is affectionately known among the locals, stands out as a leader who has proven his worth taking charge of the ministries he was tasked to manage. During his time as the Youth and Sports minister, he was visibly involved in bringing improvement to the ministry. Later as MOSTI minister, he was equally dynamic in transforming the ministry into one that, at long last, people can appreciate the important role science plays in building and prospering the nation. But his biggest challenge would surely go to the time he helmed the Ministry of Health. That was when Covid-19 pandemic was at its highest level of threat, cases rising and anti-vaccine feeling high. Credit must surely go to KJ for his persuasive communication and negotiation skills which eventually led to the needed behavioural change among people, not only to get vaccinated but to religiously observe the dos and don’ts of preventive measures prescribed by the ministry.

  Of course, as expected, not many of the elder leaders can tolerate his rapid rise to prominence. Earlier in his political career, some attribute his close relation with the then PM, Pak Lah, and the ability to access the source of power then, for his performance. He was called many unsavoury names then. Now that, even without such access to the high authority, he is able to deliver commendable performance, many now see all such earlier suspicions unfounded. The truth is, KJ has what it takes to perform and deliver, whatever the obstacles. Many welcome his recent pronouncement that he would one day intend to assume the highest post of PM to lead the nation. In fact, some, who are very convinced of his leadership quality, say he is ready right now to assume that PM position.

 The other personality which many agree shows much promise to lead the nation is PKR’s Rafizi. He is also another professional who has never failed to impress the electorate with his brand of campaigning, exposing the rampant leadership malpractice in the country. Unless checked, such mismanagement can lead to negative repercussions for the future of the nation. What is also refreshing is his deployment of the latest data analytics technology to decipher the emotions of the electorate, and use such feedbacks to develop his strategic plan to win votes. His campaigning also uses a lot of the new internet media. As an accomplished debator during his MCKK days, his communication skill comes natural to him. Say what we want, but the fact remains that, as the top leader of the nation, the ability to effectively communicate at all levels is paramount. His party mate, Nurul Izzah, is another promising leader in the making.

 The new secretary-general of the DAP, Mr Anthony Loke is another upcoming political leader that brings optimism and hope to the country. Many salute his pragmatic style of dealing with the very contentious race issue. Then there is UMNO’s Shahril Hamdan who is contesting in Alor Gajah. Watching him offering views on the state of the nation, one cannot help but feel hopeful for the future of the country. I am sure there are many more such young leaders. If not for the new media, all such talents may still lie hidden among the warlords. What is certain is that their emergence has given us all a new hope and optimism.                

 

                

    

 

   

"Create Love of Learning to Nurture Innovation Culture"

By: Professor Dato' Dr. Ahmad Ibrahim, Tan Sri Omar Centre for STI Policy, UCSI University, Malaysia

M ALAYSIA can be a nation of endless possibilities. We do face problems from time to time, which is normal. In dealing with problems, the best we can do is to question what we should strive for. And, we should be proud that, despite the ups and downs, we have resolved our problems pretty well. As the saying goes, where there is a problem, there is an opportunity. We only need to know where the opportunities lie in building a great nation. We should be prepared to grab those opportunities and turn them to our advantage. The truth is, nothing is impossible if we really put our mind to it. Take career development, for example. I have just watched a video produced by a journalist from neighbouring Indonesia. The video talks about how a son of a rubber tapper in Malaysia has risen to become the prime minister of the nation. The video refers to Datuk Seri Ismail Sabri Yaakob. 

    We all know that if your family taps rubber, the entire family would be doing the trade. But I also know of many Malaysians who rose from rubber-tapping beginnings to assume leadership positions in the country. The late Tan Sri Abdul Rahman Arshad, my ex-teacher, was also the son of a rubber tapper. He rose to become the director-general of education. I am sure there are many more examples. Education, of course, made it all possible. That is why we should pay special attention to our education system. If such personalities can make it to the top from relatively poor upbringing, there must have been something working in our earlier education model. Those days, education was not just about forcing everything down a child’s throat. This, unfortunately, is happening now. No wonder children have to carry big bags to school. No wonder too many children lose interest in schooling. In the 1960s and 1970s, the burden of learning was not as heavy. Schooling was enjoyable and interesting. It was a combination of serious study and recreation. Those who went to boarding schools would testify to that. Whenever we had the term breaks, we could not wait to get back to school. Instead of the rote learning that children now experience, those days we were guided on the art of learning and acquiring knowledge. 

    We were taught how to communicate well and think critically. As we enter this era of an innovation-driven global economy, thinking and communication skills become even more critical. At a recent forum on innovation at MRANTI Park in Bukit Jalil, Germany’s Fraunhofer Institute, IEM, based in Paderborn, spoke about partnerships with Universiti Teknologi Mara and Universiti Tun Hussein Onn Malaysia in driving innovation in small and medium enterprises. Funded by the German Ministry of Science and Economy, the partnerships have been running innovation labs in UiTM, Shah Alam, and UTHM, Batu Pahat. Judging by what has been developed in the last three years of operation, both labs, which operate on the innovation model of ideate, create and collaborate, have substantially lifted the innovation interest in the participating SMEs. 

    In fact, I think the innovation lab idea should be replicated in all higher learning institutions. I would hasten to suggest setting up innovation labs even in schools. We know innovation always start with an idea.  How to create new ideas should be taught at schools. This is where the thinking-outside-of-the-box skill is useful. Ideas are never perfect when first mooted. They require critical evaluation and debate. The culture of agreeing to disagree is a good way to generate ideas. The ability to accept criticism is also an important part of the ideation process. Unfortunately, I have dealt with officers in ministries who take criticisms personally. Such an attitude is a big obstacle to innovation. Innovation is all about making changes for the better. The other important attribute of innovators is that they dare to fail. They look at failing as part of the path to success. Innovation labs can be an effective way to sow the seed of an innovation culture to build a great nation.