The failure of ‘trickle-down’ policies
By Dr V. Sivapalan October 23, 2012
- ‘Govt knows best’ method of trickle-down policy-making has to stop
- Start by asking industry what it needs and formulating policy to meet those needs
IF you’ve been following the US Presidential elections, then you would have noted that both candidates often use the phrase “trickle-down economics” or “trickle down policies.” What they mean by this is the Republican party’s stand on lowering taxes for the wealthy, arguing that the wealthy will then invest their savings in the economy (the trickle-down effect), thereby creating jobs and growth.
I don’t buy this argument but I am not using the term “trickle-down” policies quite this way.
I am instead writing about the “top-down” policies of our Government, where policies are formulated by bureaucrats and then forced upon the beneficiaries in “government knows best” implementations. This mode of policy creation has failed for years, yet we continue to make policies in this way.
It is trickle-down because bureaucrats do not formulate holistic policies but instead create such policies in an ad-hoc manner; and these policies trickle down to beneficiaries as and when some bureaucrat decides a policy needs to be changed or a new one implemented.
So, you are wondering, what triggered this article?
Well, at the first DNA-TeAM Disrupt event (pic), the chief executive officer of the Multimedia Development Corporation (MDeC), Datuk Badlisham Ghazali (center), asked the audience to send him policy recommendations that MDeC could implement for the benefit of technopreneurs, instead of just MDeC or the Government coming up with initiatives that they think is best for the industry. I applaud Badlisham for this.
Secondly, the Malaysian Technology Development Corporation (MTDC) that provides the Business Growth Fund (BGF) recently changed its funds usage policy to disallow using the grant for salaries – that means you can use the funds for everything else but not for hiring talent.
In a knowledge economy, where talent is the key to success, you cannot use the grant for talent? What about the “people are our most important resource” argument?
This sudden change in policy by MTDC is the sort of trickle-down policies created by some bureaucrat somewhere (apparently not in MTDC itself, we are told) that greatly impacts the very companies the Government is trying to help with its funding policies.
From the list of companies the MTDC has funded (found on its website), six out of 11 are information and communications technology (ICT) companies for whom the biggest single expenditure is knowledge workers, except they now cannot use the grant for that purpose. So much for the knowledge economy!
Surely, you say, the powers-that-be cannot be so blind to the fact that if these companies cannot use the funds to hire talent then they will not be able to grow and become successful?
Well welcome to the world of Malaysian policy-making, where “they” decide what’s best for us and we just have to follow – because they know what’s best for us.
This nonsensical method of policy-making has to end. It is about time they did what is right and formulate policies that will actually help the industry to really grow and succeed based on “bottoms-up” policy making and not “trickle-down” policies.
You formulate “bottoms-up” policy by asking industry and industry players what they need and formulating policy to meet those needs. That way you can be sure of creating policies that will help industry and thereby the economy. It’s really that simple.
But where can they find such policies, you ask?
Over the last 10 years I have been involved in determining what industry needs and have presented policy papers to government agencies and ministries either through the Technopreneurs Association of Malaysia (TeAM) or on my own, but I am sad to say very little has been taken up by the Government.
This is despite these requests being based on discussions with and input from industry players over a long period of time. You can find a couple of the papers as follows:
1. Fostering the Creation of the Next Generation of Innovative Technology Enterprises in Malaysia (formulated in 2011)
2. TeAM White Paper and Action Plan on Fostering a Sustainable Environment for Technopreneurship in Malaysia (formulated 2002 but still relevant today)
I am sure many of you can identify with these policy recommendations as they were developed via your input. The 2011 policy paper was formulated for the Unit Innovasi Khas (UNIK) of the Prime Minister’s Department, together with another 12 other such papers, but there has been no word on their implementation – which is sad, because a lot of good people put a lot of effort into this in the hope of creating a high-value, high-income economy in Malaysia.
The above are examples of the “bottoms-up” policies that we have been strongly advocating but with little success because bureaucrats just cannot get out of their “government knows best” mindset. It’s time to change this because the nation is facing great competitive challenges in the region, and the old ways of doing things are no longer good enough.
As a start, I hope Datuk Badlisham will review some of the recommendations above and look at implementing them via MDeC because this is what he asked for; and secondly, I hope MTDC will also review its BGF usage policy because what it has implemented will not help companies but will instead severely constrain their growth.
In fact, the best usage of funds for knowledge-based companies is for talent and if this is not allowed, then what’s the point of the grant in the first place?
Dr Siva has worked with government for 12 years trying to get them to see the light, but instead they seem to be as blinded as ever
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