Friday, October 22, 2010

Malaysian model vs. American model

On Oct 20, Malaysian Prime Minister Najib Razak announced that Malacca had achieved the status of “developed state”. This means that, even though Malaysia as a whole was still a developing country, some states were already highly developed. Another state, Selangor, achieved this “status” several years ago. (By the way, Oct 20, 2010 is written in this country as 20-10-2010.)

Upon reading the news on the Web, I couldn’t help but wondered when Perak, where I grew up, would be a developed state too. My guess is not within the next 10 years. Selangor is the wealthiest state in Malaysia, while Perak is one of the poorest.

The disparity between Selangor and Perak underlies one fundamental flaw in the government structure. In Malaysia, most taxes go to the Federal Government, which then distributes the money to individual states. Sadly, the Federal Government has been practicing “favoritism” for the last few decades. Some states get more funding, while other are neglected.

By contrast, state, county and city governments in the United States have the power to collect taxes. For example, every working people pays two types of income tax – one to the Federal Government and the other to the state government. Sales tax also goes to the states. (Oregon has zero sales tax!) Hotel tax, I believe, is determined by the cities. When I was in California some years back, I moved from one hotel to another. Some cities set the hotel tax at 10%, while others had it at 15%.

The local governments will then use the money collected to fund their projects rather than waiting for handout from Washington. Of course, there are times when the states will still need Federal money. To its credit, Washington does not practice favoritism to the same level as Putrajaya. President Obama, a democrat, has been generously enough to support states run by republicans.

I would like to see state governments of Malaysia be empowered. But I am not optimistic this will happen…


  1. developed state?? errr, by what criteria is a developed state defined??

  2. a developed state in an undeveloped country?? errr, sounds rather weird right??

  3. acceptable for Selangor and KL, but then Perak and Malacca as developed state?? errr, amazing i'd say~~

  4. the whole malaysia is just smaller than the smallest state in US.. i really don't foresee such independent state administration happening..

  5. I believe the American model should be the way. I am not sure if people would want to emulate this example set by the Americans.

  6. The American model is what make them prosper so much faster than the rest of the world. While the US appears to have dragged us into this recession this time round, I still think there's alot we can learn from them.

  7. If we follow the US model, states like Penang, Sarawak and Sabah would have long achieved the so-called developed status.

  8. Nah...Malacca is still not a developed state. More like a tourism state if you ask me.

  9. SK
    According to the PM, Malacca has met the developed "country" criteria defined by OECD.
    Rhode Island, the smallest US state, is only 3140 sq km.

    Mei Teng, Shingo
    Apparently US has flaws too, but we only learn the good thing from them.

    Penang used to have the tallest building in the Malaysia - Komtar. Now the tallest building is Twin Towers, in KL. And the next one - Warisan Merdeka - will also be in KL.

    Congratulations, your now live in a developed state!

  10. eh? developed state? means before? @.@

  11. LOL! Reading the title of the post, I thought you were comparing photography models. Oops!

    Our yardstick for developed state must be one that is not too aggressive. I agree that funds should be more equally distributed among the states to ensure progress to be in tandem with each other.

  12. So sad about Perak. It used to be the wealthiest state.

  13. Sometime undeveloped has it own advantage as some of the natural resources are preserved. What matter the end of the day is the living condition of the people in general.

  14. Hey you're from Perak too?? Which part???

  15. While I don't know the situation in Malaysia, I doubt the America is a good solution... look at the US now!

  16. Oh dear! Are you in Java now? Mount Merapi eruption, tsunami, earthquake and all?

  17. Leon
    gotta agree with you.

    K. kangsar.

    US model is certainly not perfect. We should only learn the good parts.
    I think China is in-between.

    That is Central Java. I am in East Java.
    I am OK.