Monday, 25 March 2013

PTPTN solution: BN vs PR

Please note that the educational loan, called the PTPTN, is proven to be a problem to the nation. Both sides agree on this.

Solution proposed:

BN via Khairi:
Continue as it is. Hoping that the transformation initiatives made by BN will increase the purchasing power of graduates so that they can repay their loans.

What are the transformation initiatives?
Increase the productivity of villages? Build mega projects? Already been done before but had made Malaysia worse in terms of income of graduates and even in terms of per capita income growth. Malaysia's per capita income has not grown significantly compared to our neighbours Singapore and Brunei, that used to share the same economic parameters because they share currency and government administration styles.

The new things done was the giving of cash and other incentives to those earning less than RM3000, but these do not benefit graduates. Salary scale increases do help graduates in the government sector. However these probabaly contribute to the sudden increase in the per capita income of Malaysians from US7,000 in 2009 to US10,000 in 2012. These salary scale increases are policies that had been done before Mahathir and still being done by Singapore and Brunei.

It has proven to be effective in making Singapore the richest nation on earth by 2013 despite having no natural resources at all. By not continuing with the salary increases for government servants, Malaysian per capita income has stagnated. Tun Dr. Mahathir's method of giving economic stimulus by building mega projects had proven to be not effective in increasing the living standard of most Malaysians, and in fact had increased the income gap between the rich and poor.

Will the salaries of graduates in the commercial sector also increase? So far there is little evidence of it happening in Malaysia but in Singapore, the salaries of graduates had increased significantly compared to Malaysia. The commercial sectors must increase salaries in order to recruit the best graduates. It is still too early in Malaysia for us to see significant increases but if it can happen in Singapore, i.e. increase in salary of graduates in other non-government sectors, it can happen in Malaysia sooner or later.

Datuk Najib had implemented the salary increased just before the election. Will he continue with these salary increases even after the election? There is no indication that salary increases of government servants are part of the transformation strategy for a high-income economy. It was implemented just to please voters. Hopefully Datuk Najib will continue with this policy above that of mega projects, or even housing projects. Giving soft loans to buy houses as an economic incentive has led to the increase in the price of houses to the point that it is beyond the income ability of graduates, let alone the ability to repay their loans, but this is still on-going and will continue to bleed the Malaysian economy.

Khairi also proposed to support of private education for dropouts, but this will increase the financial burden of the nation. In summary, BN likes to commercialise education. Controlling the quality of education is more difficult as profiteering is more prominent.

PR via Rafizi:
Innovation is implementing the seemingly impossible. If it is so obvious, then it is not an innovation, just a development.

PR solution to the PTPTN problem is to provide free education up to the university level, by abolishing PTPTN. It shows that PR is innovative. I can't even imagine such a solution. It is against the normal flow of thinking but we should study its proposals first, before we reject it completely. After all, we are already in trouble, created by the PTPTN. It may be a political gimmick but it is done in good faith, similar to PTPTN. It is what voters want although it may not be good to the nation at first impression. Hopefully we will not become as bankrupt as Greece because we don't have anyone to bail us out, unlike Greece.

PR also proposes to build more universities instead of encouraging private enterprises to provide the education, although it allows high quality private universities to be given subsidies equivalent to the subsidy given to public universities.

The difference is only in varius shades of public versus private education system. BN favours private education, whereas PR prefers public education. right versus left. BN is right, PR is left. Similar to the USA. Republican is right. Democrat is left.

Either way, it is alright. It is only in the implementation. No matter how good the idea is, if not implemented properly, it will lead to a disaster. The problem with BN is that it is riddled with cronyism and corruption that makes capitalism fail. PR is not yet proven to be similarly afflicted.

My opinion on this issue is that we should opt for th PR solution. Abolish PTPTN before it is too late. It will lead to less graduates but it is better than having disillusioned graduates that will not have jobs but burderned with debts. PR solution will actually lead to less graduates, but those graduates who are rejected should try to look for other professions or careers instead of becoming useless graduates. We may lose a few potential good graduates but our economy may not be able to accommodate them all at the moment. It is all a matter of timing.

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