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Malaysia's Prime Minister Mahathir Mohamad gives a news conference after a cabinet meeting in Putrajaya, Malaysia on May 23, 2018. - Reuters

Mahathir built a stellar team of Ministers, yet they cost less than annual pay of Singapore’s PM

Effective from Wednesday(23 May), Malaysian Prime Minister Mahathir Mohamad announced that the country will cut the base salaries of its Cabinet ministers by 10%.

He said, “When I was first appointed prime minister way back in in 1981, the first thing I did was to cut the salaries of ministers and the senior civil servants.

For Civil Servants, Mahathir added that "As you know, the senior civil servants are better paid than the ministers, it is up to them if they feel that they want to contribute towards lessening the cost of running this country. They can do so, but we are not forcing them”.

Where lower-income workers were concerned, he said that where ”they deserve to be given some extra allowance, we will do so."

This was a sharp departure from an earlier promise by former Prime Minister Najib Razak to increase the salaries of civil servants. Najib had promised to increase the minimum pay to RM1500, and to extend minimum insurance coverage to all 14 million Malaysian workers from 1 July.

Even as new Malaysian leaders have stellar credentials, Mahathir says that he will drop underperforming Ministers

The 92-year-old strongman made it clear that he would not tolerate underperformance from his new cabinet.

“There will always be defects. No matter who we choose, there are bound to be people who will express dissatisfaction. So we will try. If the performance is unsatisfactory, we will drop and choose someone else”.

Yet, the Cabinet Ministers have been stellar if we were to look at their past performance.

For example, Mahathir himself has been credited by the Wall Street Journal for his “own brand of economic nationalism to lift the Southeast. Asian trade hub out of poverty and into the ranks of middle- income countries”. Similarly, the Vulcan post credited him for overseeing “successful economic advancements”.

His Finance Minister Lim Guan Eng has also been credited for successful achievements during his tenure as Chief Minister of Penang. Academic Oh Ei Sun said that Lim “did a stellar job in rebuilding the finances of Penang". The former banker “has both the expertise as an accountant and the credibility, especially incorruptibility, to run the Ministry of Finance”.

Separately, the International Monetary Fund expects Malaysia’s economy to grow by 5.3% in 2018 and reach high-income status. In comparison, Singapore’s growth is expected to be around 3%.

Entire Malaysian Cabinet costs less than the salary of Prime Minister

According to the Malaysian parliament website, the monthly salaries before the pay cut were:

Deputy minister is at RM10,848

Based on the 13 Current Ministers that have been appointed, the entire Malaysian cabinet will have a monthly cost of around RM197,900. (This is not inclusive of the MP pay)

However, this was not the complete payroll costs as Mahathir said that he was still selecting qualified personnel to fill several more ministerial posts. After including representatives from Sabah and Sarawak, the number of Ministers would likely reach 28.

Given that key portfolios have been filled, it is likely that newly appointed ministers will likely take on the role of a Deputy Minister. Assuming another 13 Deputy Ministers, the salary of the entire cabinet would be less than RM584,000 a month (SGD$196,000) or around RM7,000,000 (SGD$2.35 million) a year.

Table of salary from the 2017 salary review

This means the pay of Singapore's Prime Minister, alone, is sufficient to cover Malaysia's cabinet salary. Note that similar to the Malaysian ministers, the above salary of the ministerial appointments does not include the MP salary which is about S$192,500.

The combined salary of two ministers such as Chan Chun Sing and Ng Chee Meng is also enough to cover the whole expense, yet, the newly appointed Malaysian Ministers have shown that they are experienced leaders in their fields and are not lacking in any way compared to our 4G Ministers.

The PM's salary is pegged to two times that of an entry level Minister (ie. MR4) and the annual salary of a MR4 is benchmarked to 60% of the median income of the top 1,000 earners who are Singapore Citizens.

In explaining how the wage of the ministers is derived, the 2017 review committee of the political salaries wrote, "The top 1,000 earners across all professions reflect the calibre of the people Singapore needs for good government, while the 40% discount signifies the ethos of political service. We agree with this benchmark as it strikes a good balance between paying competitive salaries and displaying the ethos of political service."

What do you think?

* Annual Salaries are based on the assumption of an AVC of 1 month, good individual performance and targets for the National Bonus indicators being met. The annual salaries comprise fixed pay of 13 months (monthly salary and 13th month bonus) and variable pay of 7 months (1 month AVC, 3 months Performance Bonus and 3 months National Bonus). PM receives a higher National Bonus in lieu of Performance Bonus (6 months National Bonus if the targets for the indicators are met)