Open protest is a vital social movement strategy for CSOs to succeed (unedited article)

Fighting for a social cause until the desired change in policy and law is achieved is never straightforward or easy. It may even take years or decades, or it may not even bear fruit at all.

We live in an electoral democracy, where democratic voices can be very diverse, competitive and sometimes conflicting. Sometimes the loudest voices can come from a small group of interest lobbies, and these can be influential in influencing lawmakers and their political parties, although this phenomenon is an anti-democratic practice. Or there are social movements that go in the opposite direction and may seem more popular and influential than what some are working on.

It would be naive to assume that a social movement can achieve its goal simply by talking to or presenting its point of view or even research to those in power and along the power corridor (e.g. ministers, deputies, MPs, top civil servants, party leaders), without making the movement even bigger to gain the popular support and get more people to join the cause.

However, in order to determine whether a social movement is successful, it is necessary to look at how far the movement has come towards achieving the desired changes in policy and legislation, and whether the current approaches and strategies are working to bring the movement closer to the goal and target of the social cause.

Outgoing Bersih chairman Thomas Fann's statement on his resignation and the direction of the once popular movement has sparked some discussion and debate on how a social movement should proceed in the event of political change.

Thomas' ideal direction for Bersih to be the 'people's institution' seems to suggest that advocacy in a more professional and organised way, using its internal channels and network, acting as a lobby and sending its own people into the system, would make political reform take root and be implemented.

His rejection of his new deputy's vision of a 'people's movement' may explain why Bersih has not called for open (street) protests after the first change of government to Pakatan Harapan and currently under the so-called unity government, despite the apparent failure of successive Pakatan Harapan-led governments to do enough or sometimes not even wanted to implement the reforms they once promised. While the intention may be to keep connections and internal channels open, open and loud protest may seem to undermine the efforts of these advocates or jeopardise relations with those in power.

Bersih's first objective is to campaign for clean and fair elections in Malaysia. After the first transition to the Pakatan Harapan government, it is not fair to say that there has been no progress or gains in terms of policy changes through its advocacy approach (e.g. automatic voter registration, postal voting, cleaning up the electoral rolls), but too little to show for it, frustrating activists and the general public who still yearn for institutional reforms.

Some reform proposals may be quite familiar to some federal and state ministers who may have come from activist backgrounds and understand the issues. But when the position has changed from opposition member or activist to power holder in government, politicians have different concerns about party self-preservation and self-interest, with the aim of retaining power and increasing their influence and resources. Obviously, repeatedly presenting them with similar positions will not work, not because some politicians do not understand the issues and what might be better for the system or the public interest, but because doing what the advocates want may not be in their own best interests.

When politicians in power drag their feet on a particular reform agenda, civil society has to do what is necessary - build and demonstrate public support for a particular reform policy. This is where the power of the people and external public pressure would come into play, helping advocates to create impetus and urgency for those in power to deliver on their reform promises.

After all, politicians are still under pressure to meet the demands and expectations of the electorate, and a public image of poor performance and lack of political will could work against them at the next election, threatening their security of self-preservation. If open and street protests would help the cause, build the movement's momentum, educate and expand the popular support base, a serious activist should not dismiss the importance of this prong of strategies.

The emergence and victory of Yan Ke's team members elected to the Bersih Steering Committee should reflect the internal voices of the member organisations on what they think about the effectiveness of the previous approach, and their decision to bring in new ideas to make Bersih work better to achieve the coalition's goals.

If it were a football team, Yan Ke and new elected members would be the substitutes sent out to help the coalition score goals, given the new role of strikers or attackers that the previous Bersih team lacked. However, this does not mean that the previous members of the experienced midfielders, defenders and goalkeepers should quit the field. Although I can understand and respect this, I am still disappointed that the captain does not want to continue to lead the new team with added strength, and perhaps he does not see it that way.

Open protests vital for civil society groups’ success

Fighting for a social cause until the desired change in policy is achieved is never straightforward or easy. It could take years or decades, or not happen at all.

We live in an electoral democracy, where voices can be diverse, competitive and sometimes conflicting.

Sometimes, the loudest voices can come from a small group of lobbyists, and these can be influential in persuading lawmakers and their political parties, although this phenomenon is an anti-democratic practice.

There are social movements that go in the opposite direction and may seem more popular and influential than others.

It would be naive to assume a social movement can achieve its goal simply by talking to or presenting its research and point of view to those in power (ministers, deputies, MPs, top civil servants, party leaders) without growing the movement to gain more support.

However, to determine the success of a social movement, we must look at how far the movement has come in achieving its desired changes in policy, and whether its approaches and strategies are effective in bringing it closer to its objectives.

Outgoing Bersih chairman Thomas Fann’s statement on his resignation and the direction of the once popular movement has sparked some discussion and debate on how a social movement should proceed in the event of political change.

Fann’s ideal direction for Bersih to be the “people’s institution” seems to suggest that advocacy in a more professional and organised way, using its internal channels and network, acting as a lobby and sending its own people into the system, would lead to political reforms.

His rejection of his new deputy’s vision of a “people’s movement” may explain why Bersih has not called for street protests after the first change of government to Pakatan Harapan (PH) and after the so-called unity government was formed, despite the apparent failure of successive PH-led governments to do enough or, sometimes, not even want to implement the reforms they once promised.

While the intention may be to keep connections and internal channels open, loud protests may appear to undermine the efforts of these advocates or jeopardise their relations with those in power.

Bersih’s first objective is to campaign for clean and fair elections in Malaysia. After the first transition to the PH government, it is not fair to say there has been no progress or gains in terms of policy changes through Bersih’s advocacy (e.g. automatic voter registration, postal voting, cleaning up electoral rolls), but there is too little to show for it, which has frustrated activists and the general public who still yearn for institutional reforms.

Some reform proposals may be familiar to federal and state ministers who come from activist backgrounds and understand the issues.

But when the position changed from opposition member or activist to power-holder in government, politicians have different concerns around their parties’ self-preservation and self-interests, with the aim of retaining power and increasing their influence and resources.

Obviously, repeatedly presenting them with similar positions will not work, not because some politicians do not understand the issues and what might be better for the system or the public interest, but because doing what the advocates want may not be in their own best interests.

When politicians in power drag their feet on a particular reform agenda, civil society has to do what is necessary – build and demonstrate public support for a particular reform policy.

This is where the power of the people and external public pressure would come into play, helping advocates to create impetus and urgency for those in power to deliver on their reform promises.

After all, politicians are still under pressure to meet the demands of the electorate, and a public image of poor performance and lack of political will could work against them at the next election, threatening the security of their position.

If open street protests would help the cause, build the movement’s momentum, and educate and expand the popular support base, a serious activist must not dismiss the importance of such multi-pronged strategies.

The emergence and victory of Wong Yan Ke’s team members, who were elected to the Bersih steering committee, should reflect the internal voices of member groups on what they think about the effectiveness of the previous approach and their decision to bring in new ideas to make Bersih work better to achieve the coalition’s goals.

If it were a football team, Wong and newly elected members would be the substitutes sent out to help the coalition score goals, given the new role of strikers or attackers that the previous Bersih team lacked.

However, this does not mean the experienced midfielders, defenders and goalkeepers should be benched.

Although I can understand and respect this, I am still disappointed the captain does not want to continue to lead the new team with added strength, but perhaps he does not see it that way. 

184th article for Agora@TMI column, published on The Malaysian Insight, 11 Dec 2023 

The Health White Paper: Is an employment-taxed health financing scheme the right solution?

 KHAIRY Jamaluddin was health minister for barely 15 months (Aug 30, 2021–Nov 24, 2022), yet with the Health White Paper (HWP) tabled in Parliament on June 13, 2022, he has probably made his mark as the first health minister to have made headway — through a call for bipartisan support — with the long-standing agenda for healthcare reform.

Since the mid-1980s, healthcare reforms have been an aim of the Ministry of Health (MOH), with numerous consultant reports and various incarnations of plans, each of which proposed to change the country’s tax-based healthcare financing system to social health insurance. These proposals rarely made it beyond the planning stage, reflecting, observers note, their questionable political viability.

The last was the 1Care proposal, which was launched in 2010 during the Najib Razak administration’s 1Malaysia initiative, and met with an ignominious end in 2013 in the face of strong objections. With the current proposal — the HWP — it would appear that the MOH has learnt valuable lessons from this previous exercise, as it has taken care to engage in various stakeholder consultations at the preparatory stage.

To be clear, the HWP reforms, to be implemented in the next 15 years, include many progressive measures such as establishing community-based public healthcare teams, putting emphases on promotive and preventive care, and moving to electronic medical and health records. Our contention is not with the reforms proposed for healthcare delivery, but with its aim to fundamentally change our tax-based health financing system to a social health insurance system.

The social health insurance scheme in the HWP-proposed healthcare financing is denoted by a dedicated health fund that will be managed by a strategic purchaser procuring services from both private and public sectors for beneficiaries who will be entitled to a basic benefits package. The health fund will be financed primarily by government allocations in the initial period, later ‘enlarged by contributions from large donor organisations’, and finally through a ‘national contributory scheme’ that will eventually be set up.

A dedicated health fund would serve to ring-fence funds for healthcare, arguably giving the MOH some protection from the competitive demands of other ministries. The question, however, is whether and how funding for healthcare could be substantially increased. There is no doubt that public healthcare services have been severely under-funded for the last few decades, and the HWP laudably aims to increase ‘publicly managed health funding from various sources including the government, individuals and companies’ to 5% of gross domestic product (GDP).

Actually, in 2021, the MOH already estimated total health expenditures to be 5.1% of GDP (2.9% public sources, 2.1% private). If we take 2021 figures (the latest available) as indicative, the aim as set out in the HWP therefore is not so much to increase total health expenditures as to shift the bulk of private expenditures into ‘publicly managed health funding’. Nevertheless, 2021 is a year when public spending due to the Covid-19 pandemic was still high.

If we use 2019 statistics, when total health expenditure was 4.3% of GDP (2.3% public, 2.0% private), then the targeted increase would be about 0.7% of GDP, assuming that most of the private health expenditures could be shifted into publicly managed health funds. Currently, about 75% of private health expenditures are out-of-pocket spending by households, 17% from private insurance, and the balance from corporations and agencies (presumably as employers).

The HWP is therefore not only calling for a much-needed increase in public health spending, but for that health spending to come from a new collection through a ‘national contributory scheme’. Most social health insurance systems are based on payroll contributions with specified rates from employee and employer, constituting in effect, an employment-based tax. In Box 1, we set out some rough estimates as to what the quantum of this would involve.

We do not dispute the need to increase funds for healthcare, but would an employment-tax financing system be the best way to do this? The arguments against this are many. First, the new collection system would entail a whole bureaucracy for collecting and disbursing funds, and for assessing the veracity of claims from the various healthcare providers, inevitably increasing the costs of healthcare.

Second, Malaysia has a large informal and self-employed sector from whom it is extremely difficult to collect contributions, thereby limiting the tax base. Third, employment-tax financing schemes are vulnerable to changes in employment levels, with collection diminishing during times of high unemployment rates. Furthermore, when social health insurance is implemented, employers tend to hire more labour as casual labour in order to circumvent the mandatory health payment.

The HWP claims that a universally available benefit package financed by a health fund will allow for a more equitable system due to greater pooling of health and financial risk and wider cross-subsidisation. This is only true if it is compared to a situation where private health insurance dominates, because unlike social health insurance which is compulsory, private health insurance is voluntary, covering only small sections of the population.

If social health insurance is compared to taxation-based health financing, the latter has greater capacity for risk-pooling and cross-subsidisation. Furthermore, social health insurance is equitable only to the extent that the benefit package covers the medical services that are needed. How can it be equitable for patients whose disease conditions are not covered by the benefit package?

These issues notwithstanding, the HWP argues that the proposed financing system will integrate the public and private health sectors through a common payment scheme controlled by a strategic purchaser. It is true that Malaysian healthcare has been polarising into a two-tier system, with the gap in workload and personnel remuneration widening between the public and private sectors.

The strategic purchaser, it is hoped, will rationalise the utilisation of health services in both public and private sectors through a gatekeeper system, and by paying similar rates for both sectors, lead to a narrowing of the gap. But this effect will be limited by the extent to which patients are willing to pay additional co-payments or buy private insurance to cover the higher prices in the private sector.

There are fundamental differences between public and private healthcare as they now exist in the country. First, they have different aims — for example, the private hospital's main aim and responsibility (to its shareholders) is to return a profit, whereas the public hospital's main aim is public service and to keep the population healthy.

Second, in the currently existing system, private specialists essentially function as owner-operators of businesses (businessmen-entrepreneurs), while public sector doctors are employees (of the government). Objectively, these two categories of people are incentivised in very different ways.

With a new financing scheme, a new incentive system is put in place, and things could change in unanticipated directions. Although the plan is for greater integration of private and public healthcare, the opposite may occur. With publicly collected and administered funding available for utilising private healthcare, this could lead to increased demand for, and further expansion of, the private hospital sector, thereby continuing the leaching of expertise from public sector hospitals.

The Malaysian public healthcare system is relatively equitable and accessible. The HWP-proposed financing system, in providing a channel for publicly collected and administered funds to be utilised for private healthcare, risks this equitability. We propose instead an alternative scenario, which is to use the dedicated health fund to strengthen our public healthcare system.

Rather than a strategic purchaser paying both private and public sectors for services, the dedicated health fund should be used to improve the remuneration and service conditions of public healthcare personnel, expand public health facilities, re-vamp and re-orientate towards primary healthcare, and re-invigorate the public health sector in all the ways that have been proposed, and more.

 

BOX 1

Estimate of individual contribution and challenges to the collection of the health fund

The Health White Paper states on page 46 that "Publicly managed health funding from various sources including the government, individuals and companies needs to be gradually increased to 5% of GDP." If this target were to be achieved in 2021, publicly managed health funding would be in the order of RM78 billion, leaving a shortfall of RM32 billion that would have to be pooled from somewhere.

In 2021, 75% of the public health expenditure, amounting to RM33.8 billion, was actually spent on healthcare services. Imagine if we have the new target of increased public health funding, 75% of the RM78 billion would be RM58.5 billion. Assuming that this is the amount that would be needed in the dedicated health fund for the strategic purchaser to buy health services from both public and private sectors on behalf of the beneficiaries, there would still be a shortfall of RM25 billion to be raised from "individuals and large donors". RM25 billion is equivalent to 74% of the revenue collected from personal income tax in 2022, not a small amount.

Let's assume that the government would pay for all B40 household members and automatically enrol them. Then it's most likely that the 9.3 million non-B40 workers will have to fill the RM25 billion funding gap. If the 'large donors' don't meet expectations to contribute financially, then each non-B40 worker would have to pay RM224 per month or RM2,688 per year towards the health fund!

The number of tax payers in 2022 is only 4.2 million, which means that about 5.1 million employees are not taxpayers.

In many social health insurance countries, health payroll taxes are the most effective way of collecting contributions. In Malaysia, given the sheer number of employees who are not regular taxpayers, it will be a challenge to collect the social health insurance premium.

The question remains as to how the strategic purchaser can effectively fill the funding gap by collecting individual contributions. Will the non-B40 families be happy to make such hefty monthly payments for healthcare services?

 

Dr Lim Chee Han is a health policy researcher working on access to medicines, with a particular interest in health financing and public health issues. He is currently a senior researcher at Third World Network and co-founder of Agora Society Malaysia.

Dr Chee Heng Leng was one of the founding members of the Citizens' Health Initiative in 1997. She has been advocating for an equitable healthcare system since then. She works with other healthcare advocates in the People's Health Forum.

Original article was published at The Edge Malaysia, on 1st Dec 2023: https://theedgemalaysia.com/node/692322

社会医保非解决大马医疗体系问题灵丹妙药

卫生部长期以来一直面临资金不足，资源和人力紧张的问题，尽管如此，它仍为马来西亚大多数人口提供医疗保健和公共卫生服务。 

尽管每年的预算都在增加，但过去20年间，卫生部的拨款占联邦预算比例从未超过10.5%，这加重了公共卫生服务的压力。2022年，政府的税收仅占国内生产总值的16.4%，与不断增加的联邦债务相比，显得微不足道。 

倡导医疗融资改革的人士怀疑联邦政府是否有能力充分优先考虑和资助公共卫生领域，因此，他们认为转向社会医疗保险势在必行。近期，全国医疗保险制度的讨论再次引起了公众的关注，尤其是今年6月提交给国会的《卫生白皮书》。该白皮书强烈暗示将目前的医疗卫生制度改以保险为基础，其中提出了包括策略购买者、福利包、累进缴费计划和建立医疗基金等一系列建议和措施。

虽然社会医疗保险可能会使得除了卫生部拨款以外的医疗基金有所增加，但其成本效益以及对公众健康和就业的社会影响令人担忧。如果在像美国这样的国家，人们必须通过私人医疗保险和自付来承担医疗费用，那么社会医疗保险制度无疑将是一种巨大的改进。然而，在马来西亚，目前以税收为基础的制度已经确保了基于权利的医疗保健得到大量补贴。人民只需出示身份证，就可享受医疗服务，无需面临其它的官僚障碍。

在以保险为基础的系统中，病人会被询问是否已加入该健保计划、是否支付了保险费、所需服务是否包含在所涉及的健保配套福利当中，又或者是否需要额外“补贴”才能在私人医疗所享受“更高级”的医疗服务。 

社会医保和私人医保模式的区别在于，前者更具包容性，它会考虑社区风险，而不是根据个人的过往病史进行定向排除。然而，与社会医保不同的是，现行的公共医疗系统并不需要政府花费额外的人力物力来进行行政工作和宣传活动。具体来说，政府无需介入管理参保手续、收取保费、核实或承保来自不同服务提供商（如私人诊所和医院）的医疗索赔。

根据世界银行2009年的一项广为引述的研究，当一个国家从基于税收转变为基于社会保险的筹资方式时，人均医疗支出可能会增加3-4%，但医疗效果并不会有相应的改善。额外的行政成本是导致这医疗支出增加的主要原因。

中产阶层医保费

换言之，如果我们要达到《卫生白皮书》中提出的目标，即公共卫生资金占国内生产总值的5%，那么这意味著卫生基金在2021年应获得780亿令吉的经营资金，其中585亿令吉用于提供医疗服务。

设想一下，由于增聘行政人员造成的3%的效率损失将达到18亿令吉，这笔费用本可以用于其他卫生服务和发展的资金。

医疗基金董事会的成员和决策者将面临来自私人医疗界的激烈游说和谈判。回顾新冠肺炎医疗基金近年与私人界的交往经历，我们对公平交易和降低公众成本的前景感到越来越悲观。近期，政府甚至在面对烟草和电子烟行业（针对《烟草控制法案》）以及私立医院和诊所（对强制药品价格展示政策）的利益游说时，显得无力抵挡。

假设政府为B40家庭的所有成员支付医保费，并自动将他们全部登记，然后所有其他非B40的雇员则必须在政府拨款后的基础上，自行填补资金缺口。这意味著他们需要承担平均每月224令吉或每年2688令吉的医保费。特别是对M40家庭来说，他们是否愿意在目前享受的公共医疗服务上额外支付类似于税收的费用？ 

为了提高社会医保的效率，常见的做法是向雇员和雇主登记并收取医保费。然而，世界银行的研究还发现，改用社会医保可能会导致正规部门的就业率下降8-10%，这意味著一些雇主可能会将某些全职职位改为兼职或短期合同，以规避为其雇员缴纳强制性的医保费用，M40职工可能会再次受到影响。 

如果医疗保健需求大规模地转移至私人医疗机构，如同社会医保制度所允许的那样，那么医疗消费的态势会发生怎样的变化？小城镇和乡村地区的公立医院资金将会遭遇怎样的影响？如果越来越多的人选择使用以盈利为目标的私人医疗保健服务，我们是否真的可以坚信社会医保制度能够有效地降低医疗保健成本？这是值得我们深思的问题。

刊登于《東方日報》《群議良策》專欄2023年12月6日 

東方臉書鏈接

Social health insurance no panacea for Malaysia’s ailing medical system

The public health sector is underfunded, overstretched in terms of resources and manpower, and has been in this chronic state for a long time serving the majority of the Malaysian population. 

Despite annual budget increases, allocations to the Health Ministry (MOH) have never exceeded 10.5% of the federal budget in the past two decades, exacerbating the strain on public health services. 

The government’s revenue collection, a mere 16.4% of GDP last year, pales against the escalating federal debt.

Advocates of health financing reform argue that a shift to social health insurance (SHI) is imperative, given their scepticism on the federal government’s ability to adequately prioritise and fund public health. 

The idea gained traction with the recent renewed interest of discussions on a national health insurance system, and the Health White Paper tabled in parliament in June also strongly hinted at an insurance-based system, using terms such as strategic purchaser, benefit packages, progressive contributory scheme and the establishment of a health fund.

While SHI could potentially boost the health fund beyond MOH allocations, there are concerns about its cost-effectiveness and societal impact on public health and employment.

If a country is like the United States, where people have to pay for their own healthcare through private health insurance and out-of-pocket spending, then SHI would be a big improvement for them. 

But Malaysia’s current tax-based system ensures heavily subsidised healthcare based on entitlement, as simple as showing an ID card, with no other bureaucratic hurdles.

In an insurance-based system, the patient would be asked whether he or she is enrolled in the system, whether the premium has been paid, whether the service required is included in the package of benefits subscribed to, or whether any “top-up” is required to enjoy “more premium” health services in the private sector.

The SHI model would differ from the private health insurance model, in that the SHI would be more inclusive, as it would assess community risk and not exclude people based on their pre-existing medical history. 

However, unlike SHI, the current public health system does not require the government to spend money on additional staff to do the administrative work and campaigning to enrol people, collect premium payments and verify or underwrite medical claims from different service providers.  

According to a widely cited 2009 World Bank study, there is a 3-4% increase in per capita health spending when a country shifts from tax-based to SHI financing, but without a corresponding improvement in health outcomes. The additional administrative costs alone are the main cause of the increase.

To put this in context, if we were to achieve the 5% of GDP public funding target for health as outlined in the Health White Paper, this means the health fund would have RM78 billion to operate in 2021, of which RM58.5 billion would be for the provision of health services. 

Imagine that 3% of the efficiency loss due to additional hiring of administrative staff would be a sum of RM1.8 billion that could otherwise be better spent on other health operations or development purposes.

Health fund board members and decision makers would face intense lobbying and negotiation from the private sector.

Looking at the recent history of the Covid health fund’s dealings with the private sector, one can only be more pessimistic about getting a fair deal and reducing costs for the public.

Recently, the government couldn’t even fend off vested lobbies from the tobacco and vape industries on the tobacco control bill) and private hospitals and clinics (on the mandatory drug price display policy). 

Let’s say the government pays for all members of the B40 household and automatically enrols them all, and all other non-B40 employees and workers have to fill the funding gap after taking into account the government’s allocation, which would mean an average premium of RM224 per month or RM2688 per year, would the M40 household in particular be happy with such an additional tax-like levy on the public health service they currently enjoy?

For SHI to be more efficient, enrolment and premium collection from employees and employers is common practice.

The World Bank study also found that a shift to SHI would reduce the formal sector’s share of employment by 8-10%, meaning that some employers would resort to casualising certain positions to part-time or short-term contracts in order to avoid contributing to their employees’ compulsory health insurance. Once again, M40 workers would be the most likely victims.

What would happen to the dynamics of healthcare consumption if there were a large shift in demand for healthcare to the private sector, as permitted by the SHI system, and what would happen to the funding of public hospitals in smaller towns and rural areas? 

Can the SHI really be realistically trusted to keep health care costs down if more and more of the population shifts to using the services of the profit-driven private health care sector? Think again. 

180th article for Agora@TMI column, published on The Malaysian Insight, 13 Nov 2023 

Social Health Insurance is not a panacea for Malaysia's ailing healthcare system (unedited article)

The public health sector is underfunded, overstretched in terms of resources and manpower, and has been in this chronic state for a long time serving the majority of the Malaysian population.

Despite annual budget increases,  allocations to the Ministry of Health (MOH) have never exceeded 10.5% of the federal budget in the past two decades, exacerbating the strain on public health services. The government's revenue collection, a mere 16.4% of GDP in 2022, pales in comparison to the escalating federal debt.

Advocates of health financing reform argue that a shift to social health insurance (SHI) is imperative, given their scepticism about the federal government's ability to adequately prioritise and fund public health. The idea has gained traction with the recent renewed interest of discussions on a national health insurance system, and the Health White Paper tabled in Parliament in June this year also strongly hints at an insurance-based system, using terms such as strategic purchaser, benefit packages, progressive contributory scheme and the establishment of a health fund.

While SHI could potentially boost the health fund beyond MOH allocations, there are concerns about its cost-effectiveness and societal impact on public health and employment. If a country is like the United States, where people have to pay for their own health care through private health insurance and out-of-pocket spending, then SHI would be a big improvement for them. But Malaysia's current tax-based system ensures heavily subsidised healthcare based on entitlement, as simple as showing an ID card, with no other bureaucratic hurdles.

In an insurance-based system, the patient would be asked whether he or she is enrolled in the system, whether the premium has been paid, whether the service required is included in the package of benefits subscribed to, or whether any 'top-up' is required to enjoy 'more premium' health services in the private sector.

The SHI model would differ from the private health insurance model in that the SHI would be more inclusive, as it would assess community risk and not exclude people on the basis of their pre-existing medical history. However, unlike SHI, the current public health system does not require the government to spend money on additional staff to do the administrative work and campaigning to enrol people, collect premium payments and verify or underwrite medical claims from different service providers. 

According to a widely cited 2009 World Bank study, there is a 3-4% increase in per capita health spending when a country shifts from tax-based to SHI financing BUT without a corresponding improvement in health outcomes. The additional administrative costs alone are the main cause of the increase.

To put this in context, if we were to achieve the 5% of GDP public funding target for health as outlined in the Health White Paper, this means that the Health Fund would have RM78 billion to operate in 2021, of which RM58.5 billion would be for the provision of health services.

Imagine that 3% of the efficiency loss due to additional hiring of administrative staff would be a sum of RM1.8 billion that could otherwise be better spent on other health operations or development purposes.

Health fund board members and decision-makers would face intense lobbying and negotiation from the private sector. Looking at the recent history of the Covid-19 health fund's dealings with the private sector, one can only be more pessimistic about getting a fair deal and reducing costs for the public. Recently, the government couldn't even fend off vested lobbies from the tobacco and vape industries (on the Tobacco Control Bill) and private hospitals and clinics (on the mandatory drug price display policy).

Let's say the government pays for all members of the B40 household and automatically enrols them all, and all other non-B40 employees and workers have to fill the funding gap after taking into account the government's allocation, which would mean an average premium of RM224 per month or RM2688 per year, would the M40 household in particular be happy with such an additional tax-like levy on the public health service they currently enjoy?

For SHI to be more efficient, enrollment and premium collection from employees and employers is common practice. The World Bank study also found that a shift to SHI would reduce the formal sector's share of employment by 8-10%, meaning that some employers would resort to casualising certain positions to part-time or short-term contracts in order to avoid contributing to their employees' compulsory health insurance. Once again, M40 workers would be most likely the victims.

What would happen to the dynamics of healthcare consumption if there were a large shift in demand for health care to the private sector, as permitted by the SHI system, and what would happen to the funding of public hospitals in smaller towns and rural areas? Can the SHI really be realistically trusted to keep health care costs down if more and more of the population shifts to using the services of the profit-driven private health care sector? Think again.

Submission by the Consumers Association of Penang (CAP) on the Implementation of Mandatory Sale Price Display for Medicines (7 Nov 2023)

Submission by the Consumers Association of Penang (CAP) on the Implementation of Mandatory Sale Price Display for Medicines

For a long time, CAP and many other consumer groups have been calling for the mandatory display of the selling price of medicines sold in all healthcare facilities. 

We are pleased that this policy will finally be implemented, as it has been extremely unfair to consumers and patients when certain types of healthcare facilities, such as private clinics and hospitals, have been allowed to practise non-upfront price disclosure to consumers. 

The Medicines Price Monitoring Survey in Malaysia 2017 and 2020 have repeatedly found that medicines sold in private clinics and hospitals are among the most expensive. We believe that there is a causal link between the current practice of non-upfront price disclosure and high mark up. In 2020, the median markup rate for originator and generic drugs in private hospitals with inpatient facilities was 117.1% and 233.5%, respectively, while in private clinics it was 45.8% and 142.3%, respectively.

We believe that the market can only work well for society if there is price competition, comprehensive and accurate information, adequate and timely supply (of medicines) and consumers (patients) can make informed choices. This is not the case in the current pricing situation in private clinics and hospitals.

We are puzzled as to what makes medicines so special that for such a long time these manufactured goods have been given special treatment for retailers not to display prices, while we do not know of any other manufactured goods that have 'enjoyed' such a similar status. At a time when even most services in the commercial world display prices, we do not understand why private clinics and hospitals cannot do the same. 

Technically, it is certainly no excuse that they cannot produce a comprehensive list of medicines for price display, even digital ones would do. In addition the prices of their other non-medical products and services have not even been included in any price regulation policy discussion. Why is it not a technical problem? Because the APHM and MMA claim that their members have long practised detailed billing or are able to provide a price breakdown on request for a detailed receipt. This shows that all the price information is already in the system, so there is no reason for APHM and MMA to not display the prices up front? 

Detailed billing is only what consumers expect, it is not the full picture of price transparency. For example, if price display is not mandatory, would a consumer be willing to go into a restaurant without the price of the food being displayed and only get the detailed bill later when you pay? Pricing is the first fundamental step in consumer protection, both sides have to agree on a price BEFORE the transaction takes place, before it can be called fair.

No one would call a price list in a restaurant menu a form of advertising, it goes against the basic understanding of advertising. The concern of some health professionals expressed in the consultation on 2 November has no basis or logic .

In most cases, the practice of not displaying prices would conceal profiteering conduct , as government agencies and consumers can only prove profiteering if previous prices and dates are known. As a consumer group CAP strongly supports that medicines should not be treated differently from other market products when it comes to price display and transparency.

During the 2 November consultation, a representative of a private hospital claimed that there are situations, for example in an emergency, where only the in-patients know which medicines are used to treat them, price labelling at the bedside will make no difference. This is a very misleading argument that ignores many other scenarios where patients do have time to plan and decide where to go for treatment and where to buy medicines. 

Some argue that medicines are only one part of the total cost of healthcare, so why focus on that? We urge them to look at cancer medicines in particular, where the patients concerned face financial catastrophe, such medicines are not 'only a part' of the total cost of treatment.

Also, with the price display mechanism in place, effective and convenient price comparison is possible, and this would put the onus on retailers not to set an exorbitant price (and hope that patients will foot the bill afterwards) and let the market moderate the range and let consumers make an informed decision with the available price information. 

Community pharmacies are unhappy with the practice of price dumping of medical products by the large chain pharmacies, and we believe that with the mandatory price display mechanism, this kind of market behaviour would be easily exposed and tantamount to anti-competitive practices, and would be subject to investigation by the Malaysian Competition Commission. Consumers may choose convenience and familiarity over a small difference in the price of medicines, similar to other commercial products sold by the local community. 

The mandatory price display mechanism and policy is truly long overdue but a fundamental element for fair market competition and consumer protection. We firmly believe that this policy is non-negotiable and will definitely be an effective market intervention to moderate excessive profits and predatory pricing by private clinics and hospitals. 

This policy is one of the most basic and achievable to meet the expectation of the National Medicines Policy (DUNAS) where it explicitly states that there is a need for a medicine pricing mechanism across the public and private sectors to ensure reasonable and affordable pricing, price transparency and that the cost of medicines will not be the barrier to access to medicines for the rakyat.

Statement made in a public consultation session on the Medicine Price Display mechanism (2 Nov 2023)

Statement by Dr. Lim Chee Han, Consumers Association of Penang and Third World Network

2 Nov 2023

Sesi Libat Urus Bersama Pihak Fasiliti Kesihatan Swasta, Farmasi Komuniti, Penyedia Insurans dan Pengguna Tahun 2023

Selamat pagi saya ucapkan kepada pengerusi majlis KSU YBhg. Dato’ Seri Ir. Dr. Zaini bin Ujang dan pembentang Puan Fatkhiah binti Haji Khalil Timbalan Pengarah Bahagian Amalan dan Perkembangan Farmasi. 

Hari ini saya mewakili persatuan Pengguna Pulau Pinang (Consumers Association of Penang) dan Third World Network untuk memberi pandangan mengenai cadangan mekanisme sebentar tadi. Memorandum bertulis saya akan dihantarkan kepada KKM nanti dengan maklumat terperinci dan data terkini. Saya seorang penyelidik dasar polisi yang telah lama mengambil berat terhadap harga ubatan, saya pun melibatkan diri dalam gabungan People’s Health Forum dan persatuan pesakit barah (Together Against Cancer). Dengan izin, saya akan teruskan ucapan saya dalam Bahasa Inggeris.

First of all, I would like to congratulate the MOH for the genuine and persistent effort to consult and engage with multi-stakeholders from the very beginning of the policy proposal on the Medicines Price Regulation Mechanism, all the way back to 2019. 

It is probably one of the best consultation processes our organisations have seen - the MOH has genuinely practised inclusivity, including the voices not only of the manufacturers and service providers who have the intention to 'sell' their products, but also of the end users, consumer groups and patient groups who have to pay for these products in order to survive or live a better quality of life. 

In every stakeholder engagement, I see the MOH leading the way in rationality and evidence-based approach. They were transparent in  the first cost-benefit analysis CBA 1.0 study conducted by the Malaysia Productivity Corporation (MPC). The study has many limitations, and MPC and MOH acknowledged the data gaps due to the industry's refusal to be transparent about prices. But the study itself at least had a credible analysis. 

However, the second CBA was funded, sponsored and essentially directed by PhAMA, with the technical committee even co-chaired by a senior member of PhAMA itself, showing a blatant conflict of interest, so it is not surprising to see the big negative results of the study - Imagine the tobacco and vape industry giving advice and technical guidance on smoking policy, how good can the policy be for public health and public interest, especially the affected groups and community? 

It is worth noting that the second industry-led CBA Steering Committee was chaired by MITI, not MOH. To date, there has been no official acknowledgement and announcement of who is the so-called independent third party consultant behind the second CBA and the full study report is not publicly available. There is nothing more ridiculous than the fact that the study claimed to have consulted patient groups, but we later found out that the patients they interviewed were from industry’s own patient assistance programme. How can these patients who benefit from PhAMA reflect the majority of patients out there? 

There are many flaws that we found in the second study, which we had submitted in a detailed response. However, the industry and vested interests continue to use the results of this CBA study to pressure the government to withhold or withdraw this Medicines price regulation mechanism policy.

On behalf of the public interest and patient groups I must express my strong disappointment at the compromise and delayed implementation of the MOH’s  policy due to industry pressure. Many lives have been lost, I personally also know a few cases, that many have died because they were unable to afford the most effective cancer medicines, and the fact that many thousands are impoverished by the unreasonably high price of medicines due to the monopolistic market prices set by patent holders and then exorbitant mark-ups by service providers and retailers. 

We are very disappointed that  the policy has been compromised at the expense of the very community, the patients, that the industry claims to be benefiting. Shame on the industry for their uncompetitive and unfair market practices and their unchecked excessive profits, which are causing suffering to many patients. 

The MOH’s medicines price regulation policy actually starts modestly , and it is not the conventional type of price control, but a control mechanism on the maximum markup for the single-source products, up to 30% markup allowance, depending on the initial price of the product. These products represent only a small segment of the total pharmaceutical market, and it is not as if retailers and the supply chain cannot make profits from the mark-up. It is the excessive mark-up profits that the government and the patient groups concerned want to curb and control. 

I would like to point out that the 12th Malaysia Plan, Strategy B2, "Ensuring Financial Sustainability for Healthcare" explicitly states: "A price control mechanism for medicines will be introduced to protect consumers from unfair pricing" (page 4-22). The government is clearly aware of the problem and is trying to address the issue of drug prices. This must be done in the public interest; the government has a duty to protect the most vulnerable and affected community, not to help industry players maintain their excessive or even obscene profits at the expense of patients.

Ideally, a truly competitive market would help solve the problem of availability and affordability of life-saving and life-enhancing products. The 2017 MyCC Market Review report on the pharmaceutical sector clearly shows that this sector is not a free and truly competitive market due to patent laws and flawed practices in granting some patents, which give the patent holders a monopoly over the products for a long period of time. Price regulation is therefore an essential countermeasure to protect the interests of consumers and patients. 

The industry must first comply with the price transparency mechanism presented today. The government cannot compromise further on this. We urge the government to go back to the original modest proposal of controlling the mark-up on single-source products. Even this may not be enough for many patients, but it is the bare minimum that our patient and consumer groups would expect from this medicines pricing policy.

Thank you very much.

Consider This: Social Health Insurance — Weighing the Options (9 Nov 2023)

Description from Astro Awani:

The government is exploring a new healthcare financing model, shifting away from the present tax-based financing and potentially into a social health insurance scheme. Is this the best option for Malaysia to sustainably fund our healthcare sector? On this episode of #ConsiderThis Melisa Idris speaks to Special Advisor to the Minister of Health, Dr Kelvin Yii, and Dr Lim Chee Han from the Third World Network.

藥品強制展示標價政策符合大眾利益

 

強制價格展示機制和政策確實已遲來，但卻是市場公平競爭和消費者保護的基本要素。我堅信，這項政策不容討價還價，必將有效地管制市場的反競爭行為，抑制私人診所和醫院的暴利和掠奪性定價。醫藥行業必須首先接受和遵守政府這次提出的藥品強制標價機制。在這一點上，政府不能再妥協了。我敦促政府回到最初的政策倡議，即控制單一來源（市場壟斷）藥品的加價。即使這對許多患者來說或許也是不太足夠，但這已是患者和消費者團體對藥品定價政策的最低期望。

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【文／林志翰】

不曉得你會否曾有困惑、不滿或不解，為何在私人診所和醫院，藥品價錢通常要等到結單的時候才知道，又或者需要特別先洽詢？為何私人醫療機構業者不能如藥劑店或其他商品和服務項目業者展示標價，這樣的安排和設計合理嗎？

作者代表消費人協會和癌癥病患協會日前出席政府針對實施藥品強制展示標價政策的公開咨詢會，在場聽到許多業者和協會的強烈反對，而有所感慨。長期以來，許多其他消費者團體一直呼籲所有醫療設施必須強制展示藥品售價。這項政策終於得以實施是一個大好消息，因為私人診所和醫院一直被默許不向消費者公開價格，這對消費者和病患來說是極不公平的。

馬來西亞二〇一七年和二〇二〇年藥品價格監測調查報告多次發現，私人診所和醫院出售的藥品是最昂貴的。我認為，目前不預告價格的做法與高加價（mark up）之間存在因果關係。在二〇二〇年，在設有住院設施的私人醫院，原廠藥和仿製藥的加價率中位數（median）分別為 117.1%和 233.5%，而私人診所則分別為 45.8%和 142.3%。

消費者團體一般認為，只有在價格競爭、信息全面且準確、（藥品）供應充足與及時、消費者（病患）能夠做出知情選擇的情況下，市場才能為社會發揮良好作用。而目前私人診所和醫院的藥品定價情況並非如此。

藥物並無特殊地位

我感到困惑的是，藥品為何如此特殊，以至於長期以來，這些藥品一直享有零售商不需展示價格的特殊待遇。而我卻不知有任何其他製成品「享有」類似的地位。當市場上大多數服務項目都展示價格的時候，我不明白為何私人診所和醫院不能這樣做。

技術上而言，私人醫療業者說不能提供一份全面的藥品價格清單，即使是數碼清單也不行，這肯定是個借口。為何說這非關技術問題？因為大馬私人醫院協會（APHM） 和大馬醫藥協會（MMA）聲稱其會員長期以來一直提供詳細賬單，或者能夠在病人要求下領取詳細收據時提供價格明細。這表示所有價格資料已在系統內，APHM 和 MMA 沒有理由不能預先展示價錢？

詳細賬單只是消費者的一般正常期望，這並不是價格透明（price transparency）全貌的依據。舉例說，若不強制要求展示價格，那麽消費者是否願意進入一家不展示菜價的餐館，而在付款時才拿到詳細賬單呢？定價是消費者權益保護的第一步，買賣雙方必須在交易前就貨品或服務價格達成一致協議，才能稱得上公平。

沒有人會把餐館菜單上的價格表稱為廣告，這樣的說法違背了一般人對廣告的基本理解。一些私人醫療業者在公開咨詢會中表達這政策會違反醫藥廣告規定的擔憂是沒有道理和邏輯的。

很多時候，不展示價格的做法會掩蓋牟取暴利的行為，因為只有在知道過去的價格，並且了解資料來源日期的情況下比較，政府機構和消費者才能舉報和證明該商家有牟取暴利的行為。作為一個消費者團體代表，我強烈支持在價格展示和透明度方面，不應將藥品與其他產品區別對待。

在同場的公開咨詢會上，一家私人醫院代表聲稱，在某些情況下，例如在急診中，病人入院時才知道治療他們的藥物。因此，在床邊貼上價格標簽也不會有任何區別。這個說法非常誤導人，因為該代表忽略了許多其他情況下，病人確實有時間規劃和決定去哪裡治療和去哪裡買藥品。如此，病人才能貨比三家，不會對不正確的選擇，造成重大的財務後果。

讓市場調節價格幅度

有些業者認為，藥品只是治療總成本的一部分，為何要把重點放在藥品呢？我敦促他們特別關註癌癥藥物。癌癥患者往往因購買有效藥物而面臨財政災難，這些藥物並不「只是」總治療費用的一部分。

同時，有了價格展示機制，消費者和病人就可以有效和方便地查詢和比較價格，這將使藥品零售商有責任不再制定過高的價格，並且希望病人能事後買單。而這將讓市場來調節價格幅度，並讓消費者根據現有的價格信息做出明智的決定。

社區藥店對大型連鎖藥店的醫藥產品價格傾銷行為感到不滿。我相信，在強制價格展示機制下，這種市場行為很容易被揭露，等同於反競爭行為，會受到馬來西亞競爭委員會的調查和制裁。其實，消費者更可能會選擇方便和熟悉的當地社區小藥房，而不會因為價格上的小差異而棄之遠去。這情況與當地社區銷售的其他商業產品類似。

私人醫療業者和藥廠等既得利益集團持續性向政府施壓，要求暫停或撤銷藥品價格監管機制政策，而自從二〇一九年衛生部的政策因這些利益集團的壓力而一再延遲、讓步和妥協。對此，我深感失望。許多生命已經逝去，我個人也認識一些已逝世的病患例子。許多人因為買不起最有效的癌癥藥物而死亡，還有成千上萬的人因為專利持有者制定的壟斷性市場價格以及供應商和零售商的高昂加價，而導致不合理的高藥價而陷入貧困。

我感到最不忿的是，這些業者聲稱他們在乎病患群體要讓後者受益。但最後到頭來患者的利益卻受到損害和不公平對待。缺乏競爭力和不公平的市場行為以及不受約束的暴利給許多患者帶來了痛苦，這些業者的行為是可恥的。

強制價格展示機制和政策確實已遲來，但卻是市場公平競爭和消費者保護的基本要素。我堅信，這項政策不容討價還價，必將有效地管制市場的反競爭行為，抑制私人診所和醫院的暴利和掠奪性定價。

這項政策是國家藥品政策（DUNAS）裡的最基本和可實現的政策之一。國家藥品政策明確指出，有必要在公共和私營領域建立藥品定價機制，以確保合理和負擔得起的定價、價格透明度以及藥品成本不會成為人民得到治療的障礙。

醫藥行業必須首先接受和遵守政府這次提出的藥品強制標價機制。在這一點上，政府不能再妥協了。我敦促政府回到最初的政策倡議，即控制單一來源（市場壟斷）藥品的加價。即使這對許多患者來說或許也是不太足夠，但這已是患者和消費者團體對藥品定價政策的最低期望。

原文鏈接：https://contemporary-review.com.my/2023/11/07/1-554/

政府支持中小微型企业的理性政策基础

您是否在中小微型企业（MSMEs）工作？很有可能，因为大约有一半的雇用人口──即48.2%的总就业人口，是由这些中小微型企业创造工作机会的。但在2022年，中小微型企业在马来西亚的国内生产总值（GDP）中仅占据了38.4%，出口额也只有10.5%。政府一般认为这在劳动生产率方面不理想，并期望中小微型企业能做得更多更好。 

当然，在这117万家中小微型企业中，必然有一部分企业希望挑战自我，力图超越中小型企业规模发展至大企业或上市公司，但事实上更多的企业却在为生存而挣扎。这就是市场需求对创业精神的残酷考验。

中小微型企业与外国联营公司（Foreign Affiliates，由外国投资者作为大股东控制的公司）在业绩表现上存著显著的差距，这差距应归因于后者的雄厚资本和进步技术以及广阔的全球供应网络所带来的优势，这些优势尤其在跨国公司中显而易见。

在我国，虽然外国联营公司仅有2087家，却在2021年占据了GDP的17.7%。中小微型企业在2022年仍未恢复到2019年或者说是疫情发生前的GDP水平，而外国联营公司却早已在2021年迅速反弹至疫情前的水平。

让我们来探讨并对比一下制造业。在2021年，中小微型企业雇佣的员工人数几乎是外国联营公司的四倍，然而，就GDP产值而言，外资联营公司仍然居于领先地位，占该领域GDP的36.8%，比中小微型企业多出2.2%或80亿令吉。若政府注重中小微型企业的产量和出口表现，那么制造业领域里的中小微型企业将是政府应当合作的对象。 

副财长务实和敏锐

财政部第二副部长沈志强上周表示，政府将在2024财政预算案中重点关注中小型企业，这是一件令人欣喜的事情。许多政治人物更关心的似乎是国家吸引外国直接投资（FDI）的能力，然而沈志强却意识到，国内直接投资（DDI）才是国家经济发展的重要组成部分，尤其是来自中小型企业的投资。

这说明了沈志强副部长的务实态度和敏锐观察力。他关注中小型企业，认为这些企业需要来自各方的大力支持，尤其是政府的扶持。他进而宣称，政府将致力于帮助该行业实现可持续发展，以推动国家经济增长。毕竟许多企业在几年前的疫情中受到了严重打击。 

政府对中小微型企业的关注十分合理，因为它们雇佣了半数劳动力。因此，政府必须明白，如果中小微型企业运营良好，那么劳动力人口便可以获得更稳定的工作和拥有更良好的前景。这样一来，才能吸引并留住人才，从而推动公司的业绩更上一层楼。

消除贫穷、关注劳动工资

首相兼财政部长安华对即将由团结政府发布的第二份财政预算案作出了承诺，表示2024年的预算案将重点关注中小微型企业。他强调，政府正努力推动创业发展，将其视为消除贫困的重要政策之一。这是基于一个假设，即中小微型企业能够创造更多就业机会，从而雇佣贫困家庭的成员，并在最低工资保障下为他们提供更为稳定的收入。

政府也提出了一项累进工资计划（Progressive wage scheme），迄今为止，这已公开给私营机构自愿采纳。该计划是以激励表现（incentive）为基础，以及与生产力水平相挂钩。

或许政府已意识到，劳动工资占国内生产总值的比重偏低，仅为32.4%，这是导致许多家庭陷入经济困境的一个重要问题。对于本地社区经济发展，这并不是一个积极正面的现象，因为消费者没有过多的可支配收入。那么，试问如果当地民众的购买力没有增强，我们应该如何扶持中小微型企业呢？

创业的知识和技能极其宝贵，因为并非所有的中小微型企业管理者都接受过这方面的系统培训。许多中小微型企业经常将“现金流”问题视为经营难题；但若他们不知道如何妥善处理财务问题，还可能因为看不透市场需求低迷而生存困难，那么政府提供再多的企业贷款也无济于事。

数码科技优化业务势在必行

另一方面，中小微型企业已经开始采用数码科技来优化业务，尤其是在行政和营销方面。许多企业已转向使用电子银行/电子商务、会计以及销售点（POS）软件。这些数码服务面对高度的市场竞争，即使是中小微型企业也应该能负担得起。大多数中小微型企业更倾向于将更多的预算投入数码营销上，尤其是社交媒体平台，而减少在报纸或广告看板等传统实体广告上的投入。

中小微型制造业企业面临的另一个挑战是运营──它们的员工往往更多地从事体力劳动，这与外国联营公司的情况不同，后者常掌握资金投入到最新的尖端技术如设备和机器上，以提高生产效率。许多现代设备通过电子传感器优化操作，从而减少人为错误，而且相比于手工劳动，它能减轻工人的疲劳。因此，中小微型制造业企业可能需要在新技术的资本投入上获得帮助以提高效率。

随著2024年财政预算案即将来临，政府既然已对中小微型企业作出了承诺，且让我们拭目以待那些将帮助中小微型企业发展的政策与措施。

刊登于《東方日報》《群議良策》專欄2023年10月11日 

東方臉書鏈接

Government's sensibility to support MSMEs (Unedited article)

 Are you employed by one of the micro, small and medium enterprises (MSMEs)? The chances are probably 1 in 2 - about 48.2% of total employment is contributed by MSMEs. However, MSMEs account for only 38.4% of Malaysia's GDP and 10.5% of exports in 2022. Policymakers often see this as less than ideal in terms of labour productivity and challenge them to do more.

Surely, among the 1.17 million MSME establishments, there must be companies that would like to challenge themselves to grow beyond small and medium size, but many more are struggling to survive, which is the harsh reality of entrepreneurship subject to market demand.

There is a gulf in performance when comparing MSMEs with foreign affiliates (companies controlled by foreign investors as majority shareholders), which should show what capital and technological advances as well as an extensive global supply network can do for companies, especially multinationals. Foreign affiliates have only 2087 establishments in Malaysia, but already contributed 17.7% of GDP in 2021. MSMEs have not yet recovered to their 2019 or pre-pandemic GDP levels in 2022, but foreign affiliates have done so quickly in 2021.

Let's examine and compare the manufacturing sector. In 2021, MSMEs employed and engaged almost 4 times more workers than foreign affiliates, but in terms of GDP output, foreign affiliates come out on top, contributing 36.8% of sectoral GDP, 2.2% or RM8 billion more than MSMEs. If the government is concerned about MSME output and export performance, this is the sector the government can work with.

It's good to know that the government will focus on SMEs in Budget 2024, according to Deputy Finance Minister II Steven Sim. More often than not, many politicians seem more concerned with highlighting the country's ability to attract foreign direct investment (FDI). Recognising domestic direct investment (DDI) as an important component of the country's economic development, especially that which comes from the SME sector, shows the Deputy Minister's practicality and sensibility. Sim's concern for SMEs is also evident in his comment that the sector needs a lot of support from various parties, especially from the government. He said the government would help make the sector more sustainable for the country's economic growth, as many businesses were hit hard by the pandemic years ago.

It makes sense for the government to look at MSMEs, because they employ half the workforce, so the government should know that if MSMEs are doing well, then the working population will have more stable jobs and better prospects. Then the talent can be retained, taking the companies to higher levels of performance.

Prime Minister and Finance Minister Anwar Ibrahim had also made the pledge about the unity government's upcoming second national budget, saying that Budget 2024 would focus on MSMEs. He pointed to the government's efforts to promote entrepreneurship as one of the ways to end poverty, presumably on the assumption that job creation by MSMEs would hire from poor households, giving them a more stable income with the guarantee of a minimum wage.

The government has also proposed a progressive wage scheme, so far voluntarily adopted by private sector entrepreneurs, which Anwar says is incentive-based and linked to productivity levels. Perhaps the government has realised that the low contribution of labour wages to GDP, at 32.4 per cent, is a problem that leaves many households in financial difficulty, which does not bode well for the local economy as they do not have much disposable income. So how can we help MSMEs if local people do not have more purchasing power?

Entrepreneurship knowledge and skills can be valuable, as not all MSME managers are well trained in this area. MSMEs often cite 'cash flow' as a problem for their business; the government SME loan may not help if the MSME does not know how to manage its financial problem and may find that its business is not viable due to poor market demand.

It is also safe to say that the adoption of digital solutions for MSMEs is already underway, mostly in terms of administration and marketing, many have turned to e-banking/e-commerce, accounting and point-of-sale (POS) software. These services can be competitive and are now more affordable even for MSMEs. Most MSMEs would prefer to allocate more budget to digital marketing, especially on social media platforms, and less to physical advertising such as newspapers or billboards.

Another hurdle for MSMEs in the manufacturing sector is operations - they tend to have more workers to do the manual labour and, unlike their foreign counterparts, have the capital to invest in the latest cutting-edge technology such as equipment and machinery to produce more efficiently. Many of the modern machines can optimise the operation through electronic sensors, thus reducing human error, and workers may be less tired compared to the manual work they used to do. MSMEs in the manufacturing sector may need a helping hand in capital investing in new technology.

With the government's promises to the MSME sector in Budget 2024, let's look forward to the measures to help MSMEs.