Revenge against the Chinese will only kill Malaysia's economic prospects, shock the world

The World Bank was spot-on when it said that whilst Malaysia's economy is set to grow by 5.1 per cent in 2013 and 2014, the country needs to speed up structural reforms to ensure a diversified and dynamic economy. The World Bank said that over-reliance on commodities such as crude oil, natural gas, rubber and palm oil whose prices have dropped, rather than on manufacturing has put pressure on growth rates on a commodity-exporting country like Malaysia.

Malaysia needs to accelerate structural reforms to ensure that its economy remains diversified and dynamic. The challenge will be whether the present BN Federal government can implement sound economic policies or will still be a captive of its mindless anger at becoming a minority government following the loss of its popular vote by winning only 47% against 51% for PR in the recent general elections.

The vindictive action of the Melaka state government in closing down the Jonker Walk night trading center in revenge for losing seats in the last general elections does not augur well for responsible economic policy-making and nation-building. Any failure to unite but seeks to further divide and discriminate Malaysians will only cause further damage to Malaysia’s economy filled with rampant corruption evidenced by the highest illicit outflow of funds per capita in the world and the disturbing rise in federal government debt from RM 266 billion at end 2007 to RM 502 billion at end 2012.

Revenge will foil developed nation status

BN’s focus on wreaking political vengeance will only wreck Malaysia’s aspirations of transforming into a high-income developed economy by 2020 if there is no focus on economic structural reforms centered on Malaysia’s comparative and competitive advantage as well as diversifying our growth sectors. This short-sightedness can be seen by BN’s refusal to leverage in on existing world-class and internationally accepted manufacturing clusters in Penang such as electrical and electronic, medical devices and aerospace.

Instead the BN Federal government appears to be focusing on political partisanships by neglecting states with comparative and competitive advantages such as Penang, by pouring money in building up from scratch manufacturing clusters in states other than PR. This had contributed to high-tech manufacturing declining and commodities increasing as a share of Malaysia exports.

As the World Bank advised, to reach its goal of becoming a high-income nation, Malaysia will need to continue building skills and institutions that will support further diversification towards higher productive investments through improvements in human capital. Policies such as allowing only those working in the Iskandar Region the benefit of the flat 15% personal income tax rate is discriminatory and must be extended throughout nationally.

LIM GUAN ENG IS THE DAP-SEC & PENANG CHIEF MINISTER