Comparing padi with oil
MAY 9, 2018 has given us an opportunity to correct the wrongs of the past decades. There is a need to re-examine the Constitution with regards to our institutions, the separation of power among the Legislative, Judiciary and Executive, and also the relationship between the federal and state governments.
Sabah and Sarawak are making representations to reclaim the rights accorded to them under the Malaysia Agreement when they joined the Federation. Payment of the oil royalty has become a contentious issue not only for Sabah and Sarawak but also Terengganu and Kelantan. Pakatan Harapan’s pledge to give 20% oil royalty to these oil-producing states is indeed a good move. But what about the rest of the states?
The demographic and economic map of Malaysia has undergone a lot of changes since 1957. Perhaps one can categorise the states into the following:
1. Oil-producing states namely Sabah, Sarawak, Terengganu and Kelantan (with new royalty);
2. The economically-rich states namely Selangor, Penang, Johor and the Federal Territories; and
3. The rest of Malaysia, with the worst of the lot being the padi-producing states of Kedah, Perlis and Kelantan.
How has this come about? The answer is padi, the poor man’s crop which is also the poor state’s crop. Padi doesn’t enjoy the advantages of rubber or oil palm, which are export crops, and was never accorded the same value as oil although it is regarded as a strategic crop.
Perhaps the time has come for padi to be given a value which could be used as a basis for awarding compensation to the padi-pro- ducing states, particularly Kedah which has had to sacrifice thousands of acres of its land to maintain the food security of our nation.
The vast acreage under padi cultivation in Kedah could be used for other more beneficial economic activities for the state. Kedah produces 38% of the nation’s rice and nearly 290,000ha of prime land are under padi cultivation.
Over 300,000ha of prime forests are maintained as catchment areas to feed the Muda, Pedu, Ahning and Beris dams, which supply water for double-cropping. There are also billions of ringgit worth of forest products in these forest, with one estimate pointing to a revenue of RM100mil a year to the state coffers even with sustainable logging operations.
Kedah doesn’t receive any compensation for this sacrifice. Double-cropping has brought economic benefits to the farmers but talk about increasing the quit rent or water tariffs, and there will be a huge outcry – as the previous governments found out to their detriment.
Water from the vast catchment area is used not only for padi cultivation but also for domestic and commercial purposes in Penang and Perlis. Penang pumps thousands of litres of water from Sungai Muda and later sells this for profit. Does Kedah get any money from this? No! The irony is that while Penang makes tonnes of money selling the water, Kedah has to fork out its own funds to maintain the water resources.
The time has come for the new government to study this abnormality to the people of Kedah.
Another issue which needs to be resolved is the tax structure and how tax collected by the federal government is disbursed to the states. After 60 years of independence, the giving of grants to the states based on head count and length of state roads is totally outdated and doesn’t benefit the states at all. A more equitable and beneficial distribution should be worked out.
To be well managed and to be able to bridge the income gap, states have to be financially independent. The present structure where all the taxes collected go into the Federal Treasury and what is given to the states is just a handout must be reviewed. A certain percentage of the taxes should be given back to the states.
As an example, when Kedah developed the Kulim High Technology Park, the development costs particularly for land acquisition and infrastructure were borne by the state through federal loans. The park is totally developed now but the billions of ringgit in taxes collected are going to the federal government while the state still has to service the loans.
This lopsided and outdated structure must be reformed so that states can be better managed and will also be able to carry out their own development projects. A new Malaysia requires a new thinking; the old system of the federal government holding the purse strings is no longer applicable.
Perhaps the Almighty has given our seventh prime minister Tun Dr Mahathir Mohamad, who is from Kedah, another chance to correct this abnormality to give the people of Kedah what they are due so that the state will never be a beggar anymore.