Good leaders make good schools

August 13th, 2018
(File pix) Students at a school in Chicago. The city has one of the highest principal retention rates of any large urban system. NYT Photo

THE solutions to the nation’s problems already exist somewhere out in the country; we just do a terrible job of circulating them.

For example, if you want to learn how to improve city schools, look how Washington, New Orleans and Chicago are already doing it. Since 2011 the graduation rate at Chicago public schools has increased at nearly four times the national average, to 77.5 per cent from 56.9 per cent. The percentage of Chicago students going to two- or four-year colleges directly after graduation increased to 63 per cent in 2015 from 50 per cent in 2006.

Sean Reardon of Stanford compared changes in national test scores between third and eighth grade. He found that Chicago students were improving faster than students in any other major school district in the country. Chicago schools are cramming six years’ worth of education into five years of actual schooling.

These improvements are proof that demography is not destiny, that bad things happening in a neighbourhood do not have to determine student outcomes.

How is Chicago doing it? Well, its test scores have been rising since 2003. Chicago has a rich civic culture, research support from places like the University of Chicago and a tradition of excellent leadership from school heads, from Arne Duncan to Janice Jackson, and the obsessive, energetic drive of Mayor Rahm Emanuel.

Chicago has expanded early childhood education and imposed universal full-day kindergarten. After a contentious strike in 2012, Emanuel managed to extend the school day. But he and the other people who led this effort put special emphasis on one thing: principals.

We’ve spent a lot of time over the past few decades debating how to restructure schools. We’ve spent a lot of time trying to help teachers. But structural change and increasing teacher quality don’t get you very far without a strong principal.

Researchers from the University of Minnesota and the University of Toronto studied 180 schools across nine states and concluded, “We have not found a single case of a school improving its student achievement record in the absence of talented leadership.”

What do principals do? They build a culture. Researchers from McKinsey studied test scores from half a million students in 72 countries. They found that students’ mindsets were twice as powerful in predicting scores as home environment and demographics were. How do students feel about their schooling? How do they understand motivation? Do they have a growth mindset to understand their own development?

These attitudes are powerfully and subtly influenced by school culture, by the liturgies of practice that govern the school day: the rituals for welcoming members into the community; the way you decorate walls to display school values; the distribution of power across the community; the celebrations of accomplishment and the quality of trusting relationships.

Principals set the culture by their very behavior — the message is the person.

Research suggests that it takes five to seven years for a principal to have full impact on a school, but most principals burn out and leave in four years or less. Chicago has one of the highest principal retention rates of any large urban system, 85 per cent. Principals are given support, training and independence. If you manage your school well for a couple of years in a row, you are freed from daily oversight from the central office.

But the big thing is transforming the role. Principals used to be administrators and middle managers, overseeing budgets, discipline, schedules. The goal was to be strong and decisive.

Today’s successful principals are greeting parents and students outside the front door in the morning. That Minnesota-Toronto study found successful principals made 20 to 60 spontaneous classroom visits and observations per week.

In other words, they are high-energy types constantly circulating through the building, offering feedback, setting standards, applying social glue. In some schools, teachers see themselves as martyrs in a hopeless cause. Principals raise expectations and alter norms. At Independence Middle School in Cleveland, principal Kevin Jakub pushes a stand-up desk on wheels around the school all day.

Research also suggests a collaborative power structure is the key. A lot of teachers want to be left alone and a lot of principals don’t want to give away power, but successful schools are truly collaborative.

By David Brooks.

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Reel experience in language learning

August 13th, 2018

LANGUAGE learning need not be a classic case of boring chalk-and-talk and grammar exercises.

Star Media Group’s latest language initiative, English for Better Opportunities (EBO), is set to make learning English an engaging and enjoyable experience for all.

With the success of Star Media Group’s Newspaper-in-Education (Star-NiE) programme, now in its 21st year, the media company is widening its English language programmes through a host of activities that include holiday camps, outdoor challenges, confidence building workshops, theatre workshops, as well as a junior movie club.

The EBO project is a multi-level platform aimed at making immersive driven English language programmes interactive, fun and accessible to all.


Joining in on the effort is Golden Screen Cinemas Sdn Bhd. As part of creating and delivering enriching cinema experiences to its customers, the country’s leading cinema operator is partnering with Star Media Group to host three special screenings at its 16-screen GSC Paradigm JB multiplex. The three movies – Christopher Robin, Goosebumps: Haunted Halloween, and Fantastic Beasts: The Crimes of Grindelwald — will be held in August, October and November respectively, and will be preceded by language activities and quizzes.

The movies which are all book-based, will lend its power of visual stimulation to the spirit of the story.

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80 pct of childminders at nurseries don’t have minimum qualifications

August 13th, 2018

Datuk Seri Dr Wan Azizah Wan Ismail – Bernama file photo

PUTRAJAYA: About 80 per cent or 13,700 childminders for those aged (0) to four in nurseries registered with the Department of Social Welfare (SWD) still do not meet the minimum qualification of the Permata Early Childhood Care and Education (KAP) course as of June 2018.

Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail said the lack of qualified caregivers had a negative implication on the number of registered nurseries.

“The census projection by the Malaysian Department of Statistics in 2010 estimated the number of children aged between zero and four in 2018 to be 2.3 million,” she said the launching ceremony of the 2018 Nursery Day here, today.

She said based on these statistics, if it is assumed that 50 per cent of children in Malaysia aged up to four years old required nursery care, our country would need 38,333 nurseries.

However, she said SWD’s database showed there were only 4,302 registered nurseries nationwide.

Wan Azizah, who is also Women, Family and Community Development Minister said the numbers showed a clear shortage in terms of the requirement and availability of nurseries in the country.

“The lack of qualified caregivers and the number of registered nurseries will have implications on the quality of care and safety of our children,” she said.

Wan Azizah stressed that the availability of nurseries was important to provide a support system for working parents to manage their children while they were at work.

“This will indirectly help the country achieve its goal of increasing the number of women in the workforce to 59 per cent in 2020 compared to 54.7 per cent in 2017,” she said.


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Experiential learning to teach real-world skills

August 12th, 2018
Idyllic class: Several NMC’s Marine Technology students spent more than two weeks in Sulawesi to apply everything they learned on the table to the waters of the Bunaken National Park. — AFP

Idyllic class: Several NMC’s Marine Technology students spent more than two weeks in Sulawesi to apply everything they learned on the table to the waters of the Bunaken National Park. — AFP

SHANE Perkins just returned from a 16-day trip to Indonesia, where he helped conduct marine, aerial and water quality surveys of coral reefs that surround Bunaken Island.

Perkins is one of several students in Northwestern Michigan College’s Marine Technology programme who made the trip to Bunaken National Park, putting everything they learned on the table in the capstone course.

“You can learn a lot of stuff in the classroom, but you really learn it out here,” says Perkins, waving his arm toward the Grand Traverse Bay.

Back in Indonesia their surveys may be used to prevent ships from damaging the coral reefs, which are also facing threats from climate change, overfishing and more.

They describe not only dodging giant centipedes and sharing their beds with rats, but also using their skills and thinking on the fly to operate, repair and troubleshoot remotely operated vehicles (ROVs), unmanned aerial systems (UASs) and water quality sensors, while working in hot, humid, “real-world” conditions.

The two-week outing is an example of how the college’s Experiential Learning Program is permeating the culture at NMC.

But President Tim Nelson would like to see more.

“One of the things the whole college is working on is connecting students with area business,” Nelson says.

“More and more people are hiring our students because they want economic prosperity and we can supply workers who have those skills.”

A team made up of faculty and staff has been working for about a year on ways to better integrate experiential learning throughout the curriculum and to make it more consistent and better known to employers in the community, Nelson adds.

Other examples include the culinary programme, which has students visiting Italy to work on farms with chefs, learning things such as how to make cheese and how to use fresh food that is on hand in their cooking.

Culinary students have also partnered with business students and travelled to Ecuador, where they helped women set up small businesses to produce and sell things like jellies and jams.

Closer to home visual communications students work with local non-profits to design and create brochures, logos and websites.

“It’s relevant learning,” Nelson says.

“It’s not an exercise for the sake of exercise. They’re learning something.”

Instructors are becoming more like learning coaches, he notes, instead of just teaching at the front of a classroom.

Perkins spent 12 years in the US Army and was looking for a career in the ROV sector, which could be in the field of oil and gas, renewable energy or scientific research, he says.

The Record-Eagle/ Tribune News Service
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Making TVET a relevant choice

August 12th, 2018

THE Asia Technical Vocational Education and Training (TVET) Forum 2018 recently concluded with Education Minister Dr Maszlee Malik promising to make it the first choice for students in Malaysia.

Few countries have attracted a majority of their students to join a vocational track as their first choice. An exceptional case is Germany.

I visited Germany last year as a TVET visiting professor. I believe the German students are attracted to TVET due to its first-class infrastructure, industry-driven curriculum and high employability.

When visiting a German Berufsschule (vocational school); it was as if I was at a Technical University with first-class equipment, advanced technology and teachers with Masters’ degrees and craftsman qualifications. No wonder, German students are attracted to making this their first choice.


Elite Meister High School in South Korea has attracted high-achievers to choose the vocational track because of its prestige.

In the Fourth Industrial Revolution, the usage of smart robots, autonomous vehicles and Artificial Intelligence should be ubiquitous. Klaus Schwab, the founder of the World Economic Forum, asserts that the fourth industrial revolution will fundamentally alter the way we live, communicate, work and play.

According to McClean (2018), it is estimated that 75% of future jobs will involve Science, Technology, Engineering and Mathematics (STEM) knowledge and skills. We will increasingly need workers who have critical thinking and problem-solving skills; have multidisciplinary and cross-cultural competencies; communication skills, and social, emotional, digital and vocational intelligences. In other words, a learner with multiple intelligences should be welcomed to join TVET.

A Korn Ferry recent report shows that a major faux pas is imminent throughout the world. Demand for skilled workers will outstrip supply in most countries. On the global scale, the report has highlighted a global talent shortage of more than 85.2 million people by 2030. In the context of talent crunch, the shortage in Asia Pacific region could reach 12.3 million people and estimated US$4.23 trillion (RM17.46 trillion) of revenue loss by 2030 due to the talent deficit in certain sectors. Even companies that are using Artificial Intelligence and smart robots foresee a growing need for human talent with advance intelligent skills. The Korn Ferry report shows that 67% of CEOs believe that advanced technology is critical for companies’ growth.

The gap between TVET and industry should be reduced. Lack of specific legislation in Malaysia that requires companies to shoulder training hand-in-hand with the public vocational training institutions as in Germany is evident.

Since 1969, Germany’s Federal Legislation makes it compulsory for industry involvement in Vocational Education and Training.

As a TVET expert, I admire the German Vocational Education and Training System because of its focus on quality without any political interference. Excellence in any system requires two things: quality and merit. We need a critical mass of intelligent-workers who are using cutting edge technologies. Malaysia should also become a magnet for attracting the best foreign talent. But more importantly, the government should be mindful of its citizens’ employability in the context of the global talent market.

Adjusting teaching styles

It is essential that TVET institutions and industry invest in intelligent skilled talent, first-class infrastructure and provide continued access to both formal and on-the-job training opportunities. In this sense, the government should embrace more flexible education and training eco-system and labour laws.

Generation Z or millennials will make up 60% of the workforce by 2020. These techno-junkies and Wifi generation prefer an interactive approach to learning, which blends information through a montage of images, icons, sound, video, animation and Artificial Intelligence. Gen Zs take advantage of the enormous resources of the cyberspace by using digital technologies to create something innovative. Unless teachers possess digital intelligence and skills, Gen Zs will get bored. Educators have to adjust their teaching styles to accommodate the psyche of Gen-Tech. A new digital pedagogy is required.

In the digital age, to accommodate the expectations of the Gen Zs, educators need to possess digital intelligence, digital literacy, creative thinking, agility and flexibility. The future of education will be more virtual, mobile, interactive, personalised, dynamic and innovative. Digital learners prefer customised curriculum, instruction, and assessment. To embrace true digital transformation, the need for visionary, creativity, agility, flexibility and esprit de corps among teachers and learners is a must.

SThe intelligent-based TVET model isn’t only about technology, it is about bringing together the power of innovation, a new culture and a new mindset that embraces the change brought by the Fourth Industrial Revolution.

TVET has been rebranded several times in the past. They mostly focused on enhancing the quality of TVET talent and skills. But building “intelligent TVET” is missing from the reform agenda. An intelligent-based TVET model should be developed to bridge its curriculum with the industry’s needs.

Key resolutions from the Asia TVET Forum 2018 are to enhance the 3As: Accessibility, Articulation and Accreditation. But what is lacking is the fourth A – Autonomy for TVET institutions.

American philosopher of education, John Dewey argued that in order for education to flourish, it requires “substantial autonomy” for institutions, teachers and learners.

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Getting in tune with music education

August 12th, 2018
UPSI undergraduates can pick their musical instrument of choice, for example, the gamelan.

MUSIC education bestows many benefits on a child’s performance in school. In Malaysia, music was first introduced as a compulsory subject in primary schools in 1983.

Over the years the curriculum has changed with music being a component of arts education, taking only 30 minutes of one-hour slots in primary schools.

This has impacted the teaching and learning of music in schools and will further impact the intake of students and music education at the tertiary level.

Universiti Teknologi MARA Academia Muzika and Centre for Music Advocacy director Associate Professor Dr Ramona Mohd Tahir said Malaysian society still takes the importance of music and music education lightly. Malaysia’s desire to become culturally developed is not fully realised compared to developed countries which have focused on music education in their education system.

“Parents underestimate the importance of music in their children’s early life and the knowledge of musical elements is not being disseminated to the public who generally thinks music is just entertainment.

“The Chinese send their children for private music lessons but society as a whole lack awareness of music education at an early stage in life,” she said.

Associate Professor Dr Mohd Hassan Abdullah, who lectures at the Faculty of Music and Performing Arts in Universiti Pendidikan Sultan Idris (UPSI), said music education is important in the early ages especially at primary school because it helps in all areas of child development and skills for school readiness.

For example, he said, music is inter-related to intellectual thinking, social and emotional behaviour, language and literacy.

“It helps the body and mind to work together. Exposing children to music during early development helps them to learn sounds and meanings of words,” said Mohd Hassan.

“Many studies found that music helps a young child develop cognitive, psychomotor and affective domains. Research found that learning music facilitates learning other things and enhances skills that children inevitably use in other areas.

“Musical training physically develops the left side of the brain known to be involved with processing language. So learning music early in life is very important to every child.”

At UPSI, a lot of effort including talks, conferences, workshops and publications has gone into creating awareness of music education.

“However, the current education system in the country focuses on other subjects especially those which include informal summative examinations such as science, mathematics and English language.

“Music is a non-exam subject which is often treated as an unimportant component in the education system. We have to put more effort into advocating music education for the Malaysian citizen.”

Ramona added that many fail to realise that music education is an important educational area which can no longer be nurtured at schools.

“Trainers lack experience and skills in music as a result of limited exposure to the subject. Institutions of higher learning may face a decline in the recruitment of music students as a result.”


In 2014, the Malaysian Association for Music Education (MAME) organised a music forum to discuss the impact of reducing the amount of time spent on music education at primary schools.

Forty participants consisting of music lecturers from local universities and institutions, music teachers, school inspectorates, music textbook writers, school administrators and tertiary music undergraduates attended the event.

The following year, MAME presented the findings to the then Deputy Education Minister 1 Datuk Mary Yap. MAME suggested that music education subjects return to two 30-minute sessions per week.

However, the proposal was put on hold after a cabinet reshuffle and Yap was posted to the Higher Education Ministry.

Ramona, who is also MAME president, said the results of the survey show that the reduction of time spent on teaching music in primary schools has put a constraint on the achievement of the Primary School Music Education Curriculum objectives.

Mohd Hassan said the music curriculum developed by the Curriculum Development Division of the Education Ministry should be able to create interest among pupils.

“However, due to many factors, the implementation of a music education programme in schools is not what we expected of the curriculum.

“The policy to shorten the teaching period of the music subject in primary schools made it worse. What can pupils learn in 30 minutes per week?

“Some schools use this time for other ‘important’ exam subjects. Furthermore, in some schools, non-music major teachers teach the subject, while some music teachers do not teach the subject in schools at all.”

He added: “The aim of the curriculum is to equip students with knowledge and skills to develop their self-potential in creativity, critical and innovative thinking as well as appreciate the beauty of art and cultural heritage.

“But with a time limit, I don’t think the primary school music curriculum will be able to develop a career path in music education for pupils.

“However, learning music at private centres is different from learning it at school. Music centres nurture performance skills in students. This can develop a career path in music.”


The oldest music faculty in the country, UiTM celebrated its 34th anniversary this year. Ramona, who was former Faculty of Music dean, said the faculty began as the Department of Music under the School of Art and Design in 1984.

However, music has been a part of UiTM history since 1980 when it was offered as an elective subject. Subsequently, the School of Art and Design submitted a proposal to offer the Advanced Diploma in Music equivalent to a general degree.

“This course was approved by the ministry on June 21, 1983, and the first cohort of students enrolled in 1984 under the Department of Music, School of Art and Design.

“UiTM is the first institution of higher education in the country to offer a degree course in music and it has the largest number of such students in the nation.”

The university prides itself on being an innovator in higher education and recognises the role of music in shaping the development of a holistic person as well as music’s contribution to the country.

Its Faculty of Music offers a variety of music programmes at the diploma, bachelor and postgraduate levels which focus on the development of academic competence and professional skills with critical and creative abilities.

“The faculty aims to spearhead the advancement of music performance, music composition, music business and music education in the country and on the international front through creative music learning-teaching strategies and cutting-edge music research.”

UPSI has places for 60 music students per intake every year. It offers both a diploma and degree course in music education.

The diploma programme does not prepare the student to become a music teacher. However, its graduates can pursue the bachelor’s degree programme in music education or any other specialisation in music.

UPSI has some 377 students pursuing the bachelor’s degree in music education and doctoral degree majoring in music education courses.

“Since 1998, we have produced 40 to 60 qualified music teachers every year. They are posted at secondary schools throughout the country.

“However, the number of student intake varies in number every year because we abide by the Education Ministry’s projection. In some years, the ministry only projected 20 students per intake.

“However, with the open policy in recent years, we can decide on the total number of students per intake. Every year we receive more than 1,000 applications from throughout the country,” Mohd Hassan added.

Apart from educating future music teachers, the Faculty of Music and Performing Arts at UPSI conducts research to acquire new knowledge in the field of music as well as find solutions to issues in music education.

“We also organise many musical activities such as performances, music competitions, workshops and talks.”


UiTM students, Huzaifah Yukirin, 24, and Mohamad Danial Mohd Nazrin, 22, not only share a love for music but also a passion for teaching it.

Inspired by her music teacher to become one herself, Huzaifah said: “Music is universal as everyone loves music. We are exposed to different genres but getting the young ones to appreciate music is difficult. And that is where I come in.”

Huzaifah is doing her practical at SK Section 18, Shah Alam.

For Mohamad Danial, both his parents who are teachers inspired him to follow in their footsteps.

“I pursued a diploma course in music where I studied the fundamentals. Then I enrolled in the Bachelor in Music Education programme.

By Zulita Mustafa

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Diabetic loses toe, but all’s not lost

August 12th, 2018
Fresh food provides a better chance of preventing Type 2 diabetes complications.

NOT long ago, complications from Type 2 diabetes caused Tom Shicowich, an American, to lose a toe, a month of his life in hospital and rehabilitation, and his savings.

But today, Shicowich is doing much better.

He’s lost 20kg, and his blood pressure and blood sugar have dropped so much that he may soon get off his medication.

He can enjoy a walk with his girlfriend and climb stairs easily.

His improvement didn’t come from a new surgical intervention or wonder drug.

He credits his turnaround to the help he received as part of Geisinger’s Fresh Food Pharmacy programme.

The programme gives free groceries and meal plans to low-income patients with Type 2 diabetes in Shamokin, Pennsylvania, the United States.

Those enrolled in the programme, like Shicowich, get five days’ worth of healthy food per week that’s recommended by the American Diabetes Association to control blood sugar.

The food prescription includes vegetables, fruit, lean proteins and whole grains.

Patients receive education and support.

Patients in the programme are seeing results similar to Shicowich’s.

They have significant declines in their haemoglobin A1C levels, the blood test that shows how well blood sugar levels are controlled.

That drop in A1C gives them a much better chance of avoiding the complications of Type 2 diabetes.

Shamokin was the perfect place to pilot this concept. One in three Shamokin residents is considered food insecure, and nearly 50 per cent are predisposed to diabetes, mostly due to obesity. Those are among the worst statistics in the US.

By removing the barriers to getting fresh food, which can be more expensive and hard to find, we not only improved the diets of the patients with diabetes, we helped entire families.

Participants are provided with food for themselves and their families to break the chain of unhealthy eating.

This can prevent diabetes and lifestyle-related conditions in future generations.

The knowledge that a better diet can improve the outcome for those with Type 2 diabetes is not new.

But a health system giving food to people outside of hospitals may be revolutionary and long overdue.

Our goal as healthcare providers must move from dealing only with the medical crises that come to our doors. We need to disrupt the forces in our communities that trigger preventable illness and early death.

These social determinants of health — income, education, employment and environment — guide our understanding of our patients and reveal how we can make a difference in their long-term health outlook.

Our investment in the programme is the right thing to do for patients. We’re also looking at how it affects the cost of their care.

Our early results show that it’s good value.

For every one-point decrease in haemoglobin A1C, we save US$8,000 in cost of care because of the complications that are prevented by the programme.

That’s a great return on the US$1,000 per year we spend on the programme participants.

We’re expanding this pilot programme to other Geisinger locations.


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Why the GST failed

August 12th, 2018
Malaysia may have to return to the Goods and Services Tax (GST) sometime in the future. The government would need to initially introduce a revenue-neutral GST. (FILE PIC)

THE argument that the Goods and Services Tax (GST) was a major factor in price increases found receptive ears among Malaysians.

The promise to abolish GST was a powerful card played successfully by then opposition Pakatan Harapan to wrest power from Barisan Nasional. The question that begs to be answered is why GST proved to be so unpopular in Malaysia.

GST is a tax on the value added at each stage of the production distribution chain and is generically known worldwide as Value Added Tax (VAT). GST has been prescribed as a panacea for all economies facing revenue shortfalls by the World Bank and the International Monetary Fund (IMF). About 160 countries have adopted the GST or some variation of it.

As a revenue generator, GST’s performance is unrivalled because of its broad consumption base. Since consumption cannot be hidden, even people who evade or avoid taxes on income are forced to pay taxes when they consume. Furthermore, because the tax is collected at multiple points in the production distribution chain, revenue loss is minimised. And in theory, an invoice trail is created by the invoices that have to be obtained and produced in order to subtract the taxes paid on inputs from the taxes owed on outputs. This enables the tax authorities to check on the tax revenue collected and forwarded by businesses and their claims for credit on taxes paid on inputs and minimise the scope for cheating. This is why economists describe GST as being “efficient”. Since the customer knows exactly how much he is being taxed on each purchase, GST is “transparent” as well.

GST will protect revenues when we become an aging society and the revenue from income taxes decline as more people drop out of the workforce. Being a tax on consumption, and because even the aged must consume, revenue from GST will continue to flow into government coffers. These features make it attractive to governments, especially ones that are strapped for funds.

There are, of course, downsides to the GST that are largely ignored. And it is when these concerns are sidelined that a groundswell develops against it.

First and foremost, GST can turn out to be a major liability in the hands of fiscally irresponsible governments; the ease with which it generates revenue does not provide a strong incentive for governments to be frugal. Since virtually every individual is hit by the tax, there is greater interest on how the revenue is spent. Unless it is clearly seen to be spent for the welfare of the populace, discontent will build up.

Second, the GST is a complicated tax to administer and a considerable amount of preparation is necessary before it can be implemented smoothly. Although many developing countries have implemented variations of the GST, not many have done it efficiently and the complications and difficulties they faced or are still facing receive no publicity from international agencies that try to sell GST to cash-strapped governments. Sri Lanka and India are examples of countries struggling with poorly conceived and implemented GST regimes. There are many more.

Third, it is commonly held that businesses do not bear the burden of GST as they can pass the tax forward to consumers. However, businesses are in fact affected from two angles. On one side, passing the tax forward means raising prices and so long as goods have negatively sloped demand curves, this will reduce sales and revenues of businesses. On the other side, and this is frequently ignored by governments, is the compliance cost borne by businesses, with the compliance burden falling more on small rather than large businesses.

The compliance cost includes not only the expenditure necessary to prepare businesses to be GST compliant, but also the continuous cost of acting as a tax collector for the government without any compensation for the time and effort involved. Not surprisingly, many small establishments and family-run businesses ceased operations when the GST was introduced.

Fourth, GST burdens the consumer (taxpayer). However, because it is a broad-based tax, the burden is felt more under the GST than the Sales and Service Tax (SST) that it replaced because virtually no one escapes its effect. The impact on the consumer arises from two sources. One, the GST will raise prices and this lowers the purchasing power of consumers. Two, being a tax on consumption, it is likely to be regressive; that is, it will extract a large proportion of income by way of taxes from low-income groups compared with higher-income groups. If efforts are not made to ameliorate these effects, the GST will impose a heavy burden on consumers.

Finally, it is important to bear in mind that the GST evolved in a developed country context where income taxes are securely in place. The GST is a tax on consumption. If both taxes remained, the taxpayer would be hit both on the income and consumption sides. Therefore, when GST was introduced in developed countries, income tax rates were reduced to afford some relief on the income side. Since a large proportion of the working population pay income tax in developed countries, the reductions in tax rates to offset the effect of the GST on the consumption side benefited a large section of the working population, and this helped to mute protests against GST.

This experiment could not be replicated in Malaysia. With the bulk of the population spending a higher proportion of their income on consumption and only 15 per cent of the 14.6 million workers paying income tax (in 2016), a GST accompanied by a reduction in personal income tax hit poorer consumers with a “double whammy”. They paid more taxes via consumption (thanks to the broader base of the GST relative to the limited base of the then prevailing SST), but enjoyed no benefits from the lowered income taxation since they were outside the income tax net to begin with.

On the other hand, richer consumers probably enjoyed a “double dividend” — lower consumption taxes as a proportion of total income (since consumption expenditure as a proportion of income typically falls as income increases) and greater relief from income taxes.

One of the issues with the GST is its effect on the general price level. While there is no reason to believe that the introduction of the GST will trigger inflation per se, there is evidence to indicate that it could result in a one-time increase in the general price level. Or stated differently, if all other factors remain unchanged, it could lead to a one-time fall in the purchasing power of consumers. The GST was only found to trigger inflation when it was introduced in economies that were already predisposed to inflation due to factors like constraints on the supply of goods and services, or because an easy money policy was being pursued.

Countries that tried to minimise the impact of GST on the price level followed several strategies. First, they ensured that the GST was revenue neutral when it was first introduced. In other words, the GST was structured in such a way as to ensure that it generated about the same revenue as the tax it replaced. Thus, if the GST was designed to replace a sales tax, it should have been designed to initially bring in the same revenue that would be lost by abolishing the sales tax. Second, the timing of the GST is important and should be introduced when the economy was not facing inflationary pressures from other sources or causes. Third, auxiliary measures need to be put in place to check that general prices do not rise unjustifiably immediately after GST’s introduction.

A widely-cited study on the price effects of the VAT or GST by Alan Tait of the IMF covered 36 countries, 21 of which were developing economies.

In the developing countries sample, the tax was found to impact only negligibly on the consumer price index (CPI) in 14 countries (or 66.7 per cent of the sample) but these countries had adopted measures to minimise the impact on the price level. In another four cases (19 per cent), the tax triggered a clear, one-time (permanent) increase in the price level. In three cases (14.3 per cent), expansionary wage and credit policies were already in place and so the tax was suspected of accelerating inflation. This would suggest that in an economy not already facing inflationary pressures, the GST will probably not trigger inflation but could result in a one-time increase in the general price level.

A more detailed look at the experiences of 10 countries that put in place measures to minimise the price effects of the GST is revealing. Unfortunately, it focused entirely on European countries with the exception of South Korea, which was one of the few Asian countries to adopt the GST at the time of the study. Nevertheless, the study suggests that the outcomes were surprisingly similar for the European economies and South Korea.

In countries like New Zealand, South Korea, West Germany, the United Kingdom and Ireland where the effects of GST on prices were small or negligible, their tax regimes had either been consciously designed to be revenue neutral and/or had put in place auxiliary measures to minimise price effects, such as price and wage freeze, education campaigns, penalties for unjustified price increases and price-monitoring mechanisms.

Consumer groups were active in moderating unjustified price increases. In other words, complementary strategies were required in the wake of GST to keep its impact on prices minimal. Where adequate attention was not given to auxiliary measures (as in the case of Denmark, for instance) prices did rise beyond expectations.

More importantly, the lesson that emerges from the study is that even if measures to control the impact on the general price level are successfully implemented to negate major increases in the CPI, it can often hide substantial price changes across commodity groups within the CPI basket of goods, which could adversely affect the consumption of lower-income households.

Now, let us look at the Malaysian context. The first point to note is that the GST was not revenue neutral and it was never intended to be. The purpose of the exercise was to generate much-needed revenue. It covered 60 per cent of all the goods and services in the basket of goods used to compute the CPI. Thus, while the abolition of the SST resulted in an estimated loss of revenue of RM17.1 billion (in 2014), the GST brought in revenue of RM27 billion in the first nine months of its implementation in April 2015. In 2016, the GST generated RM38.5 billion, and RM44 billion last year. This implies consumers forked out RM27 billion more for goods and services last year than they did in 2014. Thus, it is not hard to see that the GST did impact the general price level.

The related point is that the economy was already facing pressure on the price level when the GST was introduced. The major upward pressure on the price level was caused by the almost simultaneous move to cut subsidies on basic goods, such as cooking oil, flour and sugar. While subsidies needed to be rolled back, it was unwise to do it when the GST was being brought in. Besides, there were other pressures on the general price level that were left unchecked.

Electricity tariffs were increased by 15 per cent in the peninsula and by about 17 per cent in Sabah and Labuan in January 2014 preceding the introduction of the GST. Water rates were increased in Johor in August 2015 after the GST came into effect, and Penang followed suit by announcing an increase in its water “surcharge” this year.

There were also supply-side constraints on imported basic food items (like onions, chillies, potatoes and so on) that raised their prices. Delays in refunding claims to businesses further aggravated the situation with affected businesses attempting to pass the costs forward by way of price increases. Finally, the weakening ringgit made imports of everything, including foodstuff more expensive. If not for a softening of oil prices, Malaysian consumers would have been hit even harder.

Thus, whatever role the GST had in raising the price level was aggravated by other factors that put an upward pressure on prices. However, protests regarding rising prices were dismissed by trumpeting the fact that the CPI increases were small after the introduction of the GST. This was despite the fact that important players in the retail sector had complained of severe decline in sales.

I am not aware of any systematic attempt by the authorities to track the increase in the components of the CPI that affected the daily lives of ordinary consumers either. I am, of course, ignoring the valid argument that the basket of goods used to measure the CPI is badly in need of revision to accurately capture the changes in the price level.

For me, the GST experiment in Malaysia failed because it was implemented hastily as a fire-fighting measure without adequate thought or preparation. When the GST is designed to increase revenue (as in the case of Malaysia) and implemented in an environment already predisposed to rising prices (due to reductions in subsidies of key commodities like petroleum, flour, sugar and cooking oil, etc) it is to be expected that it will result in price increases than otherwise would be the case.

It was perilous to ignore the consequent impact on low-income consumers. While BR1M (1Malaysia People’s Aid) payments helped, the purchasing power of these payments was eroded by rising prices. Besides, leakages in implementation resulted in some payments being diverted to those not needing the assistance. Actually, attention was necessary on two fronts: rising prices in general and the differential impact of the increase in the general price level on different commodity groups within the CPI. Both were sadly lacking.

It must be added that there were enough examples of countries that rescinded the GST soon after introducing it to learn and understand where they went wrong. At least four countries abolished the GST — Malta, Grenada, Ghana and Belize (British Honduras). Malta introduced it in January 1995. Initially, revenues rose substantially but the high-compliance cost faced by medium-sized enterprises and the complications from extensive zero-rating saw the tax being abolished by the new government that took over in December 1996.

Hong Kong is an example of an economy that decided against implementing the GST, after nine months of debate from July 2006 to December 2006. There is some evidence to suggest that even China may be contemplating replacing the GST with a Retail Sales Tax.

The advantage of the GST as a stable, efficient, transparent and effective revenue source cannot be ignored. Malaysia may have to return to the GST sometime in the future. It is instructive to add that nearly all of the countries that abolished the GST either reverted to it at a later date, or are considering a reversion. The important point to note is their commitment to avoid the mistakes made during the first attempt at GST.

By Dr Suresh P.P. Narayanan

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The great power of institutional reforms

August 9th, 2018
The new government, led by Prime Minister Tun Dr Mahathir Mohamad, has launched institutional reforms to weed out corruption and promote economic growth. FILE PIC

WHEN I was a young boy, my siblings and I would anxiously wait for the long-anticipated rain. Upon the start of the downpour we would rush outside, romp in the rain and stomp on the welling puddles of water. It was a relief after enduring a hot weather.

And so it was, with the installation of the new government. It was a time of exhilaration. As the rains would soften the parched lands after a long drought, it was a catharsis after a six-decade-long rule of the previous regime.

After the fun and frolic, and amid the tapering rain, my siblings and I would sheepishly tip-toe indoors only to be confronted by our angry father, patently unamused by our antics. So it is, with the new government. As the honeymoon ends, and the exhilaration wears thin, the government has three fundamental issues to confront.

FIRST , it has to confront the imperfect state of governance.

SECOND , it has to display deft fiscal management to reduce public debt without compromising the budget-deficit-reduction trajectory and economic growth.

THIRD , it has to restore public trust in government institutions.

James Baldwin, an American novelist and social critic, once said: “Not everything that is faced can be changed, but nothing can be changed until it is faced.” The new government has demonstrated a profound awareness of the issues. It has sought to resolve them with alacrity.

Institutions matter. Be they in the promotion of economic growth or good governance, institutions have strong transformational power to institute changes needed in society. That is why the government has unleashed institutional reform on a scale hitherto unseen, primarily, to weed out corruption and promote economic growth.

Our corruption-index ranking had plunged from 36 in 2000 to a dismal 62 in 2017. A one-third improvement in the corruption index can cause a five per cent increase in investments in the economy and a half-percentage point spike in gross domestic product (GDP) growth.

As part of the government’s reform agenda, new institutions have been created while existing ones have been reformed or abolished. The mammoth prime minister’s department has been clipped. Some of its agencies have been transferred to related ministries. Close to 30 departments have closed shop. Others have had their functions merged.

To ensure greater accountability to the people, nine agencies, including the Election Commission, Malaysian Anti-corruption Commission, Attorney-General’s Chambers, Auditor General’s Office and appointing commissions have been put under direct parliamentary supervision. Even Parliament will undergo reform through the revival of select committees to better scrutinise departmental expenditure.

Obviously, the government is not short on ideas for institutional reform. Nonetheless, here are some suggestions.

FIRST , the government needs to strengthen institutions that promote inter-faith tolerance and national unity. Unless the stirring of racial hate is eliminated, a true Malaysian identity cannot fully blossom. Bills on anti-discrimination, national harmony and reconciliation, and religious and racial hatred are to be tabled before Parliament. It is a commendable effort in the right direction. Upon becoming law, these should act as a bulwark against racial strife.

SECOND , there is a need for an overarching framework within which the government can tackle its reform agenda. Such a plan will impart greater clarity to the government’s actions. It will also promote transparency and public debate on the best way forward. This transformation architecture will also inject greater investor confidence in our economy. More important, the reforms will seem less fragmented and more coordinated.

THIRD , private agencies to whom public services have been sub-contracted should be reviewed. Such third-party agencies create an unnecessary bureaucracy. They are also a drain on public coffers as that revenue would have otherwise accrued to the government were the work done in-house. These intermediaries also charge higher fees. The deciding criterion for their continued retention is whether they add net value to the customers they serve.

Fourth, public faith in government and its institutions should be revitalised. Public trust is sacred as it is the basis of a government’s legitimacy. As Ralph Waldo Emerson, an American poet, once said: “Our distrust is expensive.” Some of the public trust was redeemed upon the installation of the new government.

However, there is a yawning gap between public perception of safety and statistics on crime-reduction. Enforcement agencies will have to reform if they are to be effective in dampening the escalating cost of living. We need institutions to be proactive in tackling issues of the future.

For example, urbanisation will be an issue to contend with as 80 per cent of Malaysia becomes urban in 20 years. An ageing population has to be catered for as 15 per cent of Malaysians reach 60 years and beyond in 25 years. We are on the cusp of Industry 4.0. We need to be tech savvy and innovative if we want to retain our global competitiveness. Needless to mention, our education system has to be reformed, too, to ensure that it produces employable skills.


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Cuepacs: Civil servants should not divulge confidential gov’t info

August 8th, 2018
(File pix) of Employees in the Public and Civil Services (Cuepacs) president Datuk Azih Muda. Pix by Rohanis Shukri

KUALA LUMPUR: Civil servants are required to practice the principles of integrity and honesty by not sharing any government information or confidential documents on social media.

Congress of Unions of Employees in the Public and Civil Services (Cuepacs) president Datuk Azih Muda said civil servants should be aware that divulging government confidential information via Whatsapp, Facebook and other social media platforms means the violation of integrity and oath of secrecy.

“What is the real purpose of civil servants leaking government secrets? Was it because of fun or wanting to be popular… do they know that this irresponsible act will have implications on the government and the country?

“Civil servants must abide by the oath and be responsible in safeguarding government secrets in accordance with the general circular letter and government security directive,” he said when contacted by Bernama here today.

He was commenting on a statement by Chief Secretary to the Government Tan Sri Dr Ali Hamsa yesterday that civil servants, who are bound by the Official Secrets Act, should never share any confidential government information or documents on social media.

Azih said leakage of government confidential information was like ‘the enemy within’ because it exposes the government and the country to risks and there would be certain parties who would take this opportunity to use it for their own interests or agenda.

by  Bernama

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