Barking up the wrong tree

Face it, the New Economic Policy and all this screaming about Ketuanan Melayu is frightening investors. They feel that Malaysia is a time bomb waiting to explode. Many have no doubt that May 13 Version 2 is going to happen. They are just not sure when.

NO HOLDS BARRED

Raja Petra Kamarudin

Perfect vehicle

Malaysia is all set to make the quantum leap into the future and realise its goal to emerge as a high-income, sustainable and inclusive nation.

Prime Minister Datuk Seri Najib Razak said the New Economic Model (NEM) laid out by the National Economic Action Council (NEAC) is the perfect vehicle to make the journey.

“However, it won’t be an overnight panacea that can solve all issues. It represents a journey that all of us — the government, the private sector and the people — must undertake together,” Najib said at the launch of NEM’s concluding report here yesterday.

He said the concluding assessment of the NEM by the NEAC would prepare the government to face head-on the challenges to reform the country’s economy.

“The NEM has clearly presented a case of a burning platform in spite of the fact that it may seem fine on the surface.”

“Of course, there are always sceptics and detractors, but actions and results are the best way to sway them. I want to reaffirm the government’s resolute commitment to see through the transformation of Malaysia to become an advanced nation.”

The concluding report outlined challenges and requirements needed to transform the economy into an advanced nation, added Najib, who is also finance minister.

“The NEAC’s economic assessment has identified many areas where improvements must be made if Malaysia is to escape the middle-income trap. Most of these issues are known to the government.”

He noted that piecemeal attempts to address them had proven ineffective, hence the need for concerted and holistic efforts as represented by the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP).

Among concerns raised in the report are the dismal level of investment in innovation and research and development (R&D), which falls far short of the amount required for a country aspiring to become an advanced nation.

Najib said the country’s outdated business regulations and rules had not created a conducive environment to attract investment.

Many of the manufacturing businesses remained inward-looking, used low-cost business models and distinct lack of drive and incentives to move up the technological ladder.

The prime minister said there were four thrusts under the NEM, with the first three dealing with accelerating growth, while the fourth focused on inclusiveness and social cohesion.

Among the initiatives are the government’s plan to reform insolvency laws, which include relief provisions for companies and individuals with financial problems.

On the private sector, Najib said one of the NEM’s goals was to strengthen Malaysian firms’ capacity to make them competitive internationally and succeed independently.

“Their viability depends solely on market terms, without subsidy and with the adherence to international standards and best practices. Without a doubt, companies will have to restructure their operations and business models accordingly.”

In the coming months, Najib said the government would expedite implementation of the ETP, with the Performance Management and Delivery Unit keeping track of the progress. -- The New Straits Times

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My classmates went into banks, worked in state economic development corporations, became stockbrokers, and so on. I never served in any of the financial services. I went into motor engineering and did a stint in Volkswagen as an apprentice. My background is in the motor industry so I am probably the least qualified to speak about the economy. But do you really need to go to Harvard to understand the economy?

Prime Minister Najib Tun Razak talks about the New Economic Model (NEM) as charted by the National Economic Action Council (NEAC). He talks about the need for concerted and holistic efforts as represented by the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP). He promises to transform Malaysia into an advanced nation. He reveals Malaysia’s goal to emerge as a high-income, sustainable and inclusive nation.

These are big words. But what do they all mean? How is he going to achieve all this?

Najib said there were four thrusts under the NEM, with the first three dealing with accelerating growth, while the fourth focused on inclusiveness and social cohesion.

Do any of us understand what this means?

The above statement sounds like it was drafted by an economist. Economists always say things like sustainable growth, cautiously optimistic, and so on, which till today I don’t really know what they mean. But they certainly sound impressive, nevertheless. The fact that we don’t know what they mean is probably why they sound impressive.

Solving Malaysia’s economic problems is not merely about pouring more money into the system. If the life raft is leaking then pumping air into it will not keep it afloat. How long can you keep pumping air into a punctured dingy and hope to keep it afloat? Finally it will sink and you will drown.

You need to plug the leaks first. And in Malaysia’s case there are numerous leaks. Unless the leaks are plugged, more money pumped into the system just means more money down the drain.

In the mid-1980s, when the world-wide recession hit, Malaysia under Tun Dr Mahathir Mohamad scaled down all the projects and many that were not crucial were put on hold. Singapore went the other way. Singapore accelerated their projects and brought forward projects planned for the future. Singapore pumped more money into the economy to ride out the mid-1980s recession.

But then Singapore could do this because it had tons of reserves. Malaysia did not. And the money Singapore spent went into projects, not get diverted into the pockets of its leaders and disappear like in Malaysia. So, what worked for Singapore would not have worked for Malaysia. Malaysia, therefore, had to do the opposite of what Singapore did.

The first thing Najib has to do is to plug the leaks. If the money spent is misused or diverted then only a portion of it would go into the economy. They need to spend RM200 billion to see less than RM100 billion in development.

The other problem is the confidence level of investors. Malaysia’s reputation has been shot big time. Foreigners do not have confidence in Malaysia. The corruption level is very high. Malaysia’s policies are confusing. The government flip-flops and is inconsistent in its policies. Foreign investors do not know whether they are coming or going when dealing with Malaysia.

There are many things fundamentally wrong with Malaysia. Malaysia practices institutionalised racism. No doubt racism exists in every country but only in Malaysia is racism government-sponsored.

I can go on and on but you have probably already heard whatever I can say about the matter. In short, Malaysia is suffering from a crisis of confidence. And unless Najib first solves this crisis then all other problems can never be solved.

The perception people have of a country is most crucial. And the perception they have of Malaysia is very bad. If it is just about making money then there are many neighbouring countries where they can make money. Malaysia is not the only or best place to make money.

Why talk about attracting foreign investors when you can’t even stop fellow Malaysians from transferring their investments overseas? Over the last 20 or 30 years many Malaysians have been winding down their investments in Malaysia and have been transferring them to other countries. And whatever you announce is not going to make them bring their money back to Malaysia.

Face it, the New Economic Policy and all this screaming about Ketuanan Melayu is frightening investors. They feel that Malaysia is a time bomb waiting to explode. Many have no doubt that May 13 Version 2 is going to happen. They are just not sure when.

Who will invest in a country that is about to explode? And if you say that this will never happen, the screams from PERKASA and Umno give the impression that it is inevitable.

Najib said there were four thrusts under the NEM, with the first three dealing with accelerating growth, while the fourth focused on inclusiveness and social cohesion.

How do you accelerate growth? By spending more money? Is that all it takes? And what the hell does ‘inclusiveness and social cohesion’ mean? Can I say I am ‘cautiously optimistic’ that this can be achieved?

No, impressive slogans and big words will not achieve it. It must first start from the political will. Is there a political will, as Najib says, “to transform Malaysia to become an advanced nation with a goal to emerge as a high-income, sustainable and inclusive nation”? How the hell is he going to do this?

How brave and determined is Najib? For example, is he prepared to set up an Ombudsman and invite members from the civil society movements to participate in it?

First, clean up corruption. And if Najib is prepared to set up an Ombudsman to clean up the country, many from the civil society movements will volunteer to serve in it.

But the Ombudsman must be autonomous. There should be no political interference. The final authority to decide on prosecution should not be the Attorney-General. The judiciary should also be free to initiate legal proceedings if it sees fit like in countries such as India or Pakistan where even the top leaders can be brought to book.

Is Najib brave enough to do this? As long as the MACC is a barking dog with no bite and no criminal can be prosecuted without the Attorney-General’s say-so then expect Malaysia’s crisis of confidence to continue. And as long as Malaysia still suffers from a crisis of confidence the economy will never flourish.

People do not trust the Malaysian government. That is the bottom line. And no amount of money or lovely slogans can change this perception.