by Tengku Razaleigh Hamzah
Dec 12, 09

(Speech by former finance minister and Umno vice-president Tengku Razaleigh Hamzah at the one-day Young Corporate Malaysians Summit this morning)

In a speech I made in April this year, I spoke of where we stand in our developmental path and what I felt we must do to move forward.

I need to revisit that argument in order to develop it further.

We are stagnating. The signs of a low-growth economy are all around us. Wages are stagnant and the cost of living is rising.

We have not made much progress in becoming a knowledge and services based economy.

According to the World Bank, Malaysia’s share of GDP contributed by services was 46.2 percent in 1987. Ten years later, that share had grown by a mere 0.2 percent.

Between 1994 and 2007, real wages grew by 2.6 percent in the domestic sector and by 2.8 percent in the export sector, which is to say, they were flat over that 13-year period.

Meanwhile, our talent scenario is an example of perverse selection at its most ruinous. We are failing to retain our own young talent, people like yourselves, let alone attract international talent to relocate here, while we have had a massive influx of unskilled foreign labour. They now make up 30 to 40 percent of our workforce.

Alone in East Asia, the number of expatriate professionals here has decreased. Alone in East Asia, private sector wage increases follow government sector increases, instead of the other way around. We are losing doctors and scientists and have become Southeast Asia’s haven for low-cost labour.

I said that we are in a middle-income trap, stuck in the pattern of easy growth from low-value-added manufacturing and component assembly and unable to make the leap to a knowledge-intensive economy. Read the rest of this entry »