PART V: CONCLUSION

In the end, NEM is nothing more than a cocktail of reincarnation of Barisan Nasional’s previously failed economic planning mixed with plagiarised concepts and ideas from Pakatan Rakyat.

If anything, NEM strengthens the belief that Prime Minister YAB Dato’ Seri Najib Tun Razak’s administration is obsessed with public relations so much so that even the most important economic document for the country is littered with public relations stunts – high targets albeit unrealistic, big words, lacking in details and political will.

But no doubt this will be spun by the public relations coordinators in Putrajaya to create some excitement and provide the feeling that the economy is heading in the right direction.

Pakatan Rakyat believes that the proofs provided in this document are sufficient to expose this public relations stunt. If Barisan Nasional is serious about re-making our economy and bringing it to a new era, it must respond to the four acid tests outlined by Pakatan Rakyat in this document.
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Introduction of minimum wage
NEM sets a rather ambitious target to achieve income per capita of USD17,700 by 2020.

2020 is less than 10 years away and if going by the non-correlation of economic planning and results achievement of the past decade, it is necessary for any economists to take a more prudent view of the country’s economy for the next 10 years.

While NEM has been touted as the a game-changing economic document that will propel the country to the status of developed nation, surprisingly the measures suggested to improve personal income is not at all game-changing.

The same vague and conceptual measures of upgrading the skills, bringing in technology through R&D and going for high value services have been suggested and included as targets since 2000 in 8MP.

Clearly, the measures did not bring results as expected (more so because they were not implemented seriously as there was hardly any reform in important institutions in the country).
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PART IV: PAKATAN RAKYAT’S “ACID TEST” TO BARISAN NASIONAL

Pakatan Rakyat takes a very strong view on the need to have a strong political will to carry out economic reforms promptly and extensively.

The biggest challenge for Barisan Nasional is to prove that NEM (despite all the contradictions and gaffs already committed by Barisan Nasional leaders) is genuine and not a part of the continuous public relations gimmick, presumably developed by APCO Worldwide.

Therefore, the government needs to immediately response to the lukewarm reception of the market and public by demonstrating early political will to implement certain key economic reforms; failure of which will only confirm the prevailing sentiment that NEM is nothing more than repackaged past failures presented as a public relations campaign.

Pakatan Rakyat hereby outlines four key acid tests for Barisan Nasional that could and should be implemented immediately if it is serious in pushing economic reforms.
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The inherent lack of transparency

The market greeted government’s move to dispose its assets and develops some parcels of lands to spur economic activities with some excitement. One of the first projects announced was the development of government lands in Sungai Buloh for a gross development value of RM5 billion to be jointly developed by government and EPF.

Unfortunately, the positive response was short-lived as news soon circulated that MRCB was expected to be appointed as the contractor for the project; prompting allegations of insider trading.

Whatever optimism there was with regards to the planned disposal of government assets died instantaneously and marred the unveiling of NEM.

The basic issue of transparency did not receive adequate attention and priority in NEM when it is one of the biggest ills of our economy.
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Removing Subsidy

The double standard on the issue of subsidy removal is glaring.

Pakatan Rakyat has maintained that the issue of subsidy removal must be approached holistically. It is morally wrong to take back assistance to the people (in the form of lower petrol prices) in the name of subsidy removal – yet the huge financial incentives and soft loans to big corporations such as Independent Power Producers (IPPs), water concessionaires and toll operators are maintained in the name of “sanctity of legal agreements”.

While the Federal Government continues to dilly dally with water restructuring in Selangor to return the utility back to the public and to ensure minimal tariff in the future; it also provided Syabas with a RM320.8 million 20-year back-loaded and interest free loan.

The issue of exorbitant profits made by IPPs is well known and has become a national topic. PETRONAS has suffered a bill of RM97 billion cumulatively up to 31 March 2009 in gas subsidies; mostly to IPPs. Despite continuous public pressure, Barisan Nasional has not had the courage nor willingness to restructure IPPs given the burden to the national coffers in terms of gas subsidy that could have been used elsewhere.
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Contradictions
Having reviewed the NEM in details, what is most damaging to NEM does not even form any part of NEM or the documents published by NEAC.

In the end, the public shall judge Barisan Nasional by its actions – past and present; to determine the level of seriousness and political will. In this department, Barisan Nasional’s contradictory decisions and actions prior to and in the immediate instance of unveiling of NEM shall prove to be the most fatal blow to NEM.

Rent Seeking
YAB Dato’ Seri Najib Tun Razak has openly admitted that out of RM54 billion of equity allocated to Bumiputra, only RM2 billion remains due to immediate and large sell down of Bumiputra shares in the capital market.

Embarrassingly, he went on to admit that “those who received bumiputra shares were not ordinary folk but mainly influential people ‘who sat in the front rows at functions such as Tan Sris and Datuk Sris”.
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PART III: SHORTCOMINGS AND CONTRADICTIONS
Originality Is Suspect

The three main thrusts of sustainability, inclusiveness and high income bear striking resemblance to basic tenets enumerated in Pakatan Rakyat’s Malaysian Economic Agenda (MEA).

In fact, the concept of needs-based “affirmative action” (rather than the race-based approach as espoused in the New Ecomomic Policy) that is being touted as a major breakthrough for Barisan Nasional is clearly borrowed from MEA which first proposed the idea in 2006.

The extent of copycat does not stop there. NEM talks extensively about the need to abolish rent seeking culture in order to reinvigorate the economy.

In a speech to a dinner function hosted by Harvard Club of Malaysia on 5 May 2005, former Prime Minister Dato’ Seri Abdullah Ahmad Badawi lamented the widespread culture of rent seeking in practice.
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PART II: ASSESSMENT OF CURRENT ECONOMIC POSITION AND CLIMATE
Right Diagnosis Vindicated Pakatan Rakyat

Pakatan Rakyat feels vindicated that the diagnosis on our economic position presented by NEAC in the report corroborates directly with Pakatan Rakyat’s views.

On 25th February 2010, Leader of Opposition YB Dato’ Seri Anwar Ibrahim had cautioned the Prime Minister in prematurely declaring that the “worst is over” for the economy and that Malalysia could put the impact of the global economic recession behind us.

In reality Malaysia’s performance is lagging relative to other economies in the region. YB Dato Seri Anwar Ibrahim highlighted the worrying decade long trend of stagnant private investment which was a direct result of an over reliance on pump priming measures. This analysis was elaborated at length in the NEAC Report published approximately a month later.

Consequently, in his speech to Dewan Rakyat on 16th March 2010, YB Dato’ Seri Anwar Ibrahim again outlined five critical economic areas which require urgent remedy if the country were to escape from the middle-income trap. These are: Read the rest of this entry »

PART I: INTRODUCTION

The question of what direction to steer the Malaysan economy to lift it from its prolonged state of lethargy and decay is one that should command the immediate attention of our government. The decisions that are taken today will have serioues ramifications for the livelihood of future generations.

An all encompassing economic framework designed to dramatically shift the trajectory of our economy should have been given the utmost priority at all level of public and government discourses.

It is therefore deeply troubling that the commendable report prepared by the National Economic Advisory Council (NEAC) was from its onset sullied with partisanship and politicking as the Dewan Rakyat was never consulted during its formulation nor was its content ever presented and deliberated upon even after its launch.
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Press Release : Pakatan Rakyat Leadership Council

Pakatan Rakyat has scrutinised the 193-page report on New Economic Model for Malaysia (Part 1) prepared by National Economic Advisory Council (NEAC); released in conjunction with the launching of New Economic Model (NEM) by Prime Minister on 30th March 2010.

For a start, YAB Dato’ Seri Najib Tun Razak must clarify to the public the status of NEM prepared by NEAC for his Minister of Economic Planning Unit (EPU), Tan Sri Nor Mohd Yakcop has openly declared that NEM is a compilation of suggestions by NEAC forwarded to the government for consideration; and not government policy. This puts into question whether the Government is serious about the NEM, or it’s just another public relations exercise!

Nevertheless, Pakatan Rakyat feels vindicated that our diagnosis on the problems of the economy highlighted over the past 15 years is finally conceded by the Government. The NEM admitted that our “economic engine is slowing”, “private investors have taken a back seat”, “productivity is growing… far too slowly”, “we are not developing talent and what we do have is leaving”, “the gap between rich and poor is widening” and we are “stuck in a middle income trap”.
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