Do you understand the Madani Economy yet?

 

The government revealed its Madani Economic Report Card last weekend to set out their achievements a little over 18 months since taking office.

The report highlighted the general improvement in the overall economic environment.

A significant increase in economic growth from 2.8% in Q2 2023 to 5.9% in Q2 2024, inflation falling to normal levels, the lowest unemployment rate of 3.3% since Covid-19 lockdowns, steady interest rates and the ringgit at its highest level for many years.

Add in lower deficits, increased trade to RM146 billion in June 2024 from RM138 billion in June 2023, doubling tourist arrivals to Malaysia and increasing foreign investment including RM35 billion from Infineon and US$2.2 billion from Microsoft and the narrative improves.

As an aside to the poor, eradicating hard-core poverty, creating meaningful jobs and combating corruption were also mentioned.

These are all good but the truth is that these results are largely due to conventional economic policy or market developments rather than the Madani framework.

Nonetheless the approach by the government has been less interventionist than earlier administrations which is a much better approach.

In terms of the overall fiscal position the increased spending is conservative, there is an emphasis on cutting wastage, leakages and corruption, especially through diesel rationalisation and the deficit is likely to reduce.

This is clearly a Madani based approach, especially the anti-corruption agenda and the emphasis on more effective management to reduce wastage and leakages.

The policy direction has not been clear and the Ekonomi Madani concept has never been popular or properly understood.

To many it is unconventional and overly complex. So a clearer explanation is welcome.

However the infographics and communications collaterals are very difficult to read.

They look like a mind-map or strategy board for a brain-storming session rather than the presentation of actual achievements.

The policy design, implementation and communication also leave something to be desired and there is no openness to independent advisers and fresh ideas.

The seven Ekonomi Madani targets are unambitious and largely unnecessary and they distract from the real underlying priorities.

The recent debate on an unofficial competitiveness ranking for example was a dangerous distraction. So report cards on these areas are likely to be ineffective.

Overall while the macroeconomic and fiscal environment has improved it looks like the government is still struggling with the Ekonomi Madani concept.

There are many policy initiatives in the pipeline including the roll-out of the progressive wage and Padu to target income support. These are still not finalised.

Other policies have fallen by the wayside as predicted such as Menu Rahmah and the vending machine plan.

Grand plans such as the New Industrial Master Plan (NIMP) are also, as predicted, mostly marketing and have failed to impress.

There are doubts about the high profile technology project spun out by the ministry of international trade and investment and these are an unnecessary embarrassment to the government.

The gig-economy commission is also potentially very dangerous and could harm gig-economy workers and micro-enterprises.

The real pressing priorities are still not being addressed.

These include pension reform and the retirement crisis, low-pay and raising incomes, underemployment of two million people especially graduates, a potential higher education funding crisis, persistent inequality of incomes and opportunities and slow reform of taxes and spending.

In the end people will judge the Madani policy and the unity government based on whether or not they are actually better off, with higher income helping them not just to cope with the cost of living but to thrive.

If the Madani framework improves quality of life for everyone it will be a success. So far it is still a work in progress. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.