Malaysia: Then and Now

The Business Times Singapore today has a very incisive news item. It tells of the moment of truth. Of the day of reckoning.

And so is came to past that Second Finance Minister Ahmad Husni Hanadzlah confirmed belatedly today(7 Dec 2009)that Malaysia had lost its competitive edge. Thus ends the denial. More need not be said.

Reason given: Because Malaysia had stagnated in the past decade and is now in urgent need of wide-ranging reforms to get out of the rut.

Unable to sustain continuous pump priming because of its ballooning budget deficit, the government would like the private sector to take on a more high profile role. I think this will take plenty of motivation. What will they get in return?Forget about blind patriotism!

Ahmad Husni surely paints a forlorn picture of the plight of the economy. He tells bluntly about the the underdeveloped services sector and that the private investment is half the level before the 1997-98 Asian crisis. He added sadly that the mainstay manufacturing sector is suffering from a lack of investment.

Not only has foreign direct investment (FDI) been on the downtrend, local businesses are eschewing the country for better prospects overseas. “We can't blame investors for not increasing their investments locally when the cost of operation in Malaysia is escalating disproportionately due to corruption, red tape, flip-flop policies, a small consumer market, mismatched labour force, etc. It is even harder to grow big when the private sector has to compete with GLCs (government-linked companies) that monopolise many essential services,” an observer posted online.

The Minister's sad revelation now calls for the return of 'genuine meritocracy' and an equal opportunity to participate in the economy — an obvious if indirect reference to the affirmative-action New Economic Policy (NEP), which critics say has been long abused, leading to economic inefficiencies and leakages which bleed the nation.

“The long-term success of the nation's economy must take precedence over the short-term interests of a few protected groups,” stated Ahmad Husni, who as former trade deputy minister, would be only too cognisant of globalisation and the fierce competition globally for investment and talent. Other emerging economies have pulled ahead while insular policies have held Malaysia back.[Basic reason: We are pandering to the narrow interests of a few UMNO warlords!]

At ground level, the response to Ahmad Husni's disclosure ran along the lines of “tell us something new”.[Is there any?]

Truth be told, the myriad problems plaguing the local economy is anything but new. Whether it be an over-reliance on low-skilled foreign labour, corruption, crime, graduate employability, brain drain, untenable subsidies, erosion of confidence in key institutions, religious extremism, a bloated civil service, etc, the numerous structural issues were apparent more than a decade ago.[But they denied it then.]

But owing to complacency and a lack of political will to address the issues, the problems were allowed to fester and grow so much so that today, as National Economic Advisory Council (NEAC) board member Zainal Aznam Yusof observed in an unusually frank assessment: “There are lots of things to be fixed. The roof is not leaking; we do not need a plumber. It is the foundation of the house. Probably the whole house needs to be rebuilt.” [How perceptive!]

The new economic model which is to guide Malaysia towards competitiveness and its aim of being a high- income economy by 2020 is to be unveiled this month. NEAC chairman and head of the economic planning unit Amirsham Aziz has indicated it's not easy to quickly establish a model because the problems are complex and the council wants to ensure the proposals submitted “can withstand the expected public scrutiny”.

“In my opinion, what the prime minister wants is an honest appraisal of where we are today, where do we go from here, and, most importantly, how do we get there.” [Some more wool to be pulled over our eyes or some more sloganeering?]

Because the issues are long-standing, it would be surprising if feedback on the problems and recommendations are all that different from what has been gleaned in the past.[Nothing new just the will to act is absent as it was in the past.]

That the political spirit and flesh are weak is evident in many a capitulation when push comes to shove — the latest being the extension of the much maligned AP (approved permits) system. [Cakap tak serupa bikin!]

Although the vehicle import permit scheme was to be scrapped next year, the government recently saw fit to extend it until 2015. How Malaysia's leaders reconcile this market-unfriendly policy with its stated intent of “the nation's economy taking precedence over the short-term interests of a few protected groups” boggles the mind. [My toes are laughing!]

In the era of ICT and the Internet, investors can easily access and share information. Unfortunately for Malaysia, its tendency to oversell and underdeliver, resulting in a sizeable disconnect between policy execution and rhetoric, has resulted in investors preferring to wait-and-see.[Waiting for Godot?]

That Malaysia stands at a crucial crossroads — or economic emergency, as some see it —is evident. For all the setbacks over the years, the country still has tremendous talents and the ability to help it achieve its stated goals. Acknowledging the challenges is one thing; but if measures to overcome them are not followed through, it is “a sheer waste of time and effort”, as opposition members have observed.

Let Malaysians not have to mourn the loss of yet another lost decade.