Can we talk about affordable childcare now?

This article is written to raise awareness about the need to ensure good quality childcare are available at affordable price in Malaysia. 

Picture with my nieces and nephew, who like every Malaysian child,  

deserve good quality childcare when it is needed, regardless their parents income level. 

Why is affordable childcare an important topic? 

I have no children but affordable childcare is something that is very close to my heart because making childcare affordable is a serious matter in terms of human development as well as social and economic justice. 

1. Childcare is a financial burden to many families. 

Now, full-day childcare monthly fees in Klang Valley ranges from RM 350 to more than RM2,000 per child depending on the quality of the childcare centers. Childcare expenses have become an increased burden to many young families. 

2. The quality of childcare depends on who can pay more. 

Only those who are well-to-do can send their children to good quality childcare centers. In another words, children of the haves and havenots will have completely different starting points, feeding into the vicious cycle of inequality. 

3. Unaffordable childcare increases inequality. 

The lack of good quality childcare at affordable price drives women out of the workforce as it is more economical for them to stay at home to teach and take care of their children. When women stop working, the households go from dual-income and single-income, reducing the total household incomes. Worse still, various reports have shown that this is more likely to happen in low and middle income families, resulting in increased gap between the rich and the poor.

4. When women don't work, it is an economic loss to the country.

Women dropout from the workforce is an economic loss to the country. This is especially true for Malaysia as our women are increasingly better educated than men -  the enrollment to tertiary education is currently about 60% women and only 40% men.  As of now, Malaysia has one of the lowest female labour participation rate in South East Asia with only 54% of women in working age in the workforce. The United Nation Development Program (UNDP) calculated that increasing female participation rate to 70% would boost Malaysia gross domestic product (GDP) by 2.9%, which is equivalent to around RM 33 billion every year.

5. Investment in children gives the best return on investment for government in term of human development. 

James J. Heckman, Nobel Laureate in Economics and an expert in the economics of human development, has been advocating government invesment in early childhood care and education (ECCE). Heckman’s Equation proves statistically that investing in early childhood saves taxpayer monies in the long run - good ECCE results in lower social welfare cost, decreased crime rate and increased tax revenue.  In fact, ECCE investment produces the highest rate of return on investment in human capital development (as shown in the figure below).

What can we do about it? 

To provide good and affordable childcare, Malaysia can learn from Singapore, Australia, Finland and many other Scandinavian countries. Childcare in those countries are subsidized by the the government whereby tiered subsidies are given - amount of subsidies differ according to household income level. The childcare centers in those countries are mainly run by private operators at competitive market. To be eligible for the subsidies, they must meet certain requirements set by the government, which usually comprise of student-teacher ratio, qualifications of the teachers, safety standards and so on, to ensure good quality childcare.The amount of subsidies are computed in such a way that households spend similar percentage of disposable income on childcare. 

In addition, Government must also identify the structural barriers faced by the childcare industry and work to improve macro-environment so that childcare businesses can be run more competently and efficiently, offering better services at cheaper price. 

What does the Selangor government do about it? 

The Selangor government has similar subsidy programs such as TUNAS (Skim Bantuan Tadika Selangor) and Si Kembar (Skim Bantuan Asuhan Selangor). However, they are only limited to households with the income level less than RM2,500 and provide only small amount of subsidies. To expand the program to middle income families and increase the amount of subsidies to include better quality childcare centers are beyond the state government’s financial capability and jurisdictions. The Selangor state government budget is only 1% of the federal government budget and childcare is supposed to be developed by Education Ministry as well as Women, Family and Community Development Ministry. Therefore, we need political will from the federal government to make a more holistic reform in childcare industry. 

Ending

I hope that Putrajaya can consider the proposal above and derive a comprehensive and strategic plan to ensure that good quality childcare is available at affordable price, so that all our children will have equal opportunity to learn and develop in the early age, regardless of the income levels of the families. 

Rosmah Mansor, PERMATA and Early Childhood Care and Education (ECCE) in Malaysia

Article written by Yeo Bee Yin, State Assemblywoman for Damansara Utama on Thursday 29^th  September 2016 in Petaling Jaya.

Rosmah Mansor, PERMATA and Early Childhood Care and Education (ECCE) in Malaysia

For the past two weeks, Rosmah Mansor, PERMATA and her supposedly “UNESCO” award have flooded the news portals. While how the story develops is rather interesting to follow, I believe an important issue that we should also look into is PERMATA, which was first conceived to develop early childhood education in Malaysia. 

James J. Heckman, Nobel Laureate in Economics and an expert in the economics of human development, has been advocating government invesment in early childhood care and education (ECCE). Heckman’s Equation proves statistically that investing in early childhood saves taxpayer monies in the long run - good ECCE results in lower social welfare cost, decreased crime rate and increased tax revenue.  In fact, ECCE investment produces the highest rate of return on investment in human capital development (as shown in the figure below).

Therefore, any government initiatives to develop ECCE including PERMATA should not be brushed off immediately just because of the person who advocates is not likable.  Nevertheless, despite funding PERMATA generously every year, there is generally a lack of strategic direction by Putrajaya in ECCE development. There is no plan to ensure there are good quality childcare and pre-school education at affordable price for all Malaysian children. 

This is not the time to politicize water disruptions.

Media Statement by Yeo Bee Yin, State Assemblywoman of Damansara Utama on Tuesday 27 September 2016 in Petaling Jaya.

This is not the time to politicize water disruptions.

I was appalled watching video clips of Noh Omar’s press conference this evening about Selangor water disruptions. I have expected more substantial suggestions from a minister, but apparently he was more interested to score political point over Menteri Besar Azmin Ali.

First of all, I would like to remind Noh Omar that monitoring river quality is the responsibility of both Jabatan Alam Sekitar (JAS), which is a federal agency, and Lembaga Urus Air Selangor (LUAS), which is a state agency. Both the federal and state government should take collective responsiblities in controlling river pollution. In any case, the focus right now should be to work together to quickly identify the source of the pollution to ensure there is no reoccurence. After that, both governments need to ensure that the main culprit is charged at court and get the heaviest punishment possible as provided by the relevant laws. 

Noh Omar should eat humble pie and ditch his developers-moneylenders plan.

Media Statement by Yeo Bee Yin, State Assemblywoman of Damansara Utama on Saturday 17 September 2016 in Petaling Jaya.

Noh Omar should now eat humble pie and ditch his developers-moneylenders plan.

On 8 September, we were shocked by the announcement made by Tan Sri Noh Omar on his ministry’s plan to allow property developers to give out loans to homebuyers at interest rate as high as 12 to 18%[i].  Since the announcement, except for the former Menteri Besar of Selangor Tan Sri Khalid Ibrahim, [ii] his idea doesn’t seem to get support from the people. Not only did he draw flak from the opposition parties, he also doesn’t seem to have received support from his UMNO colleagues and many others.

The second finance minister Datuk Johari Abdul Ghani said that Noh Omar’s plan is unsustainable and illogical[iii] while CIMB chairman Datuk Seri Nazir Razak in his instagram has described this plan as “dangerous”. The National House Buyers Association of Malaysia (HBA) Secretary General Chang Kim Loong also weighed in to say that the proposal is “ridiculous”[iv]. Even the deputy prime minister Zahid Hamidi and Treasury Sectretary-General Mohd Irwan Serigar Abdullah were very reserved in their responses to this proposal.

Yesterday, rating agency Fitch Ratings has also stated that the scheme, if implemented, will add to the risks associated with rising household debt and many households could struggle to service the loan at such high interest rates.

Putrajaya should abort the plan that enables property developers to become the loan sharks to home buyers.

Media Statement by Yeo Bee Yin, State Assemblywoman for Damansara Utama on Friday 9 September 2016 in Petaling Jaya.

Putrajaya should abort the proposed plan that enables property developers to become the loan sharks to home buyers.

I read with great concern the announcement by the Urban Wellbeing, Housing and Local Government Ministry that there will be an initiative from Putrajaya that allows property developers to give out loans to home buyers at interest rate as high as 12 to 18%[i]. More worryingly, under such scheme the developers have the autonomy to decide who to give the loan to and not only restricted to the first home buyers. The minister Tan Sri Noh Omar said that such initiative is a win-win situation for both the developers and home buyers. I beg to differ. I believe that this will only create “win” to the developers but leave the home buyers unnecessarily and heavily in debt.

Firstly, the proposed new scheme will cause artificial property price hike that does not reflect the real economic growth, similar to the effects brought by Developer Interest Bearing Scheme (DIBS), which was abolished in 2014. The newly mooted scheme enables the developers to loan to the buyers who can’t afford to buy in conventional way. The third (or more) house buyers, who can only obtain 70% loan or less from the banks, will now be able to get additional loans from the developers. The influx of easy loan from the property developers will enable them to sell their properties at artificially high price. Easy loan couples with artificial high price will in turn encourage speculative behavior, pushing the property price even higher and making housing even more unaffordable.

Khazanah in its report “Making Housing Affordable” reported that together with multi-generational loan of 45 years, DIBS inflated property prices by as much as 30%[ii]. The House Price Index (HPI) of the National Property Information Center (NAPIC) has shown clearly that while Malaysian all-house price grew steadily at compound annual growth rate (CAGR) of 3.1% between 2000 to 2009, the CAGR of HPI during DIBS implementation (2009 to 2014) was as high as 10.1%. Comparatively, the economy grew at only half the growth rate of housing price in this period of property boom. As a cooling measure, the government abolished DIBS in 2014. However, why now Putrajaya introduces another scheme that will fuel another round of unhealthy artificial price hike?

Youth Mainstreaming: Economic Perspective

From my Official Facebook Post (13 Aug 2016):

Last weekend DAPSY (DAP Socialist Youth) had a successful political education summit.

DAPSY National Executive Committee

I wasn't able to join them due to commitment at constituency. However, I made a short trip to attend the meeting of DAPSY National Committee and to join my comrades (Rajiv, Nurman, Bryan and Yoke Kong) to speak in one of the forums: Youth Mainstreaming: The technical perspective & Economic Case.

Panel of the Forum 

Here is a short note of what I shared:

1. Malaysia is in a period which we should take advantage of "demographic dividend" - people coming to workforce is more than those who retire. In normal (or even not too bad circumstances), the economy will expand due to demographic change. But are we taking full advantage of this window of opportunity? Or will we let this generation pass without making a signifcant breakthrough?

Showing the Demography Chart 

2. The youths today are facing problem with low and even more depressing, stagnant salary growth. According to the Edge, (from the extrapolation of statistics from the EPF), average wage grew only 3.9% per year over the last 4 years, well below 6-7% during 2000-2008. With increasing inflationary pressure, the real wage is in fact declining. (I didn't have time to talk about how low wages in Malaysia also coupled with high cost of living especially on mobility, i.e transport and public transport, which we could do so much better and cheaper. This leads to very low saving rate among average working youths, which in turn hinder wealth accumulation. Without intervention, the wealth inequality will increase among the haves and the have-nots for this generation.)

Explaining Labour Productivity 

3. Salary growth needs to come from productivity growth otherwise we'll lose out our businesses/capitals to global economy (business may invest elsewhere where labour cost is cheaper). However, the ratio of quantity and quality labour input to GDP has not changed since 2006 at 89:11. (We have not been able to improve labour quality).

4. To improve productivity, we need effective microeconomic policies to create a business environment that rewards enterprise, innovation, technology and skill training. We also need to provide resources needed for firms to identify business opportunities and take advantage of them. In addition, we need macroeconomic stability, sound institutional arrangements and good infrastructure to provide the core where individuals and firms can plan and invest.

5. For Malaysian youths specifically, youth unemployment is higher than national average about 10% compared to about 3% national average. Unemployment among graduates is worrying, 1 in 4 graduate does not have a job 6 months after graduation. Studies shown 3 main reasons: job mistmatch, english skills and employability skills. That's the reason I raised in the state assembly that Selangor needs big scale English intensive training and soft-skills development for our graduates to improve employability. As for job mismatch, it is a much bigger problem that requires commitment at the federal level. Selangor government can focus first on the low-hanging fruits which are english and employability skills.

6. In addition, we need to note that only 30 percent of the labour force in Malaysia have tertiary education, more than 50 percent only have secondary school education. To increase the salary of average young Malaysians, governments need to increase upskill trainings or incentivize firms to do so. For example, the Penang Skills Development Centre (PSDC) runs the German Dual Vocational Training (GDVT) Programme in Mechatronics, which is designed to upskill the existing technical workforce and school leavers with international-level skills and competencies. We need to develop our vocational and non-academic education in a more sophisticated manner. Federal and state governments have different programs for upskill and vocational training but a more coordinated action is needed with strategic goal in mind. (Now it's like all over the place.)

7. I ended my speech by sharing my concern with the young comrades that Malaysia may lose out to Vietnam in 10 years. Vietnam students continuously outscored Malaysia students in Program for International Student Assessment (PISA), an international assessment of 15 year-old students for science, maths and reading. In the latest result, Vietnam achieved 12th in the overall ranking based on maths and science while Malaysia tail behind at 52 out of 76 participating countries. While international media is running the news of our country biggest corruption scandal of 1MDB, the latest issue of The Economist ran news on Vietnam rising economy.

8. Where to Malaysian youths? Act quickly, work hard, both poltiically, economically and professionally, or we'll lose out. "Lost generation" shall not describe us, buck up guys!