By Yow Hong Chieh
The Malaysian Insider
December 06, 2010

KUALA LUMPUR, Dec 6 — The Najib administration will face continued investor scepticism until it is more explicit on how to make Malaysia a high-income nation, warned one of those who drafted the New Economic Policy (NEP).

Tan Sri Dr Ramon Navaratnam, who had helped Tun Abdul Razak draft the NEP following the deadly 1969 race riots, said the recently unveiled second New Economic Model (NEM) report was filled with good intentions but “very short” on specific measures.

“And therein lies the problem… Investors, after waiting so long, find they’re back almost to square one in terms of the specifics and policy proposals they can act on,” Navaratnam (picture) told The Malaysian Insider.

“I had expected much more from part two. To that extent, I am disappointed,” the former senior civil servant said about the NEM 2 unveiled last Friday.

The Asian Strategy and Leadership Institute (Asli) Centre for Public Policy Studies chairman stressed that more concrete proposals were needed to reassure domestic and foreign investors alike so they would not take their money elsewhere.

Private sector confidence is critical to the success of Prime Minister Datuk Seri Najib Razak’s ambitious NEM as the government expects the private sector to fund 92 per cent of the US$444 billion (RM1.37 trillion) needed to sustain the Economic Transformation Plan (ETP) over its 10-year period.

“How can FDI (foreign direct investment) feel comfortable when there are a lot of motherhood statements but no specific proposals that can affect policy?” Navaratnam asked.

The former Finance Ministry deputy secretary-general pointed out that investors had already been made “uncomfortable” be delays to the second half of the NEM, as that suggested Najib’s administration had “misgivings” about some of the reforms proposed by the National Economic Advisory Council (NEAC).

“For example, what is the position of Bumiputera equity? Is it on or off? And for how long more?” he asked.

Navaratnam said the government — which rejected an Asli report stating that the 30 per cent Bumiputera equity target had already been achieved and even surpassed — had yet to commission an independent study as recommended by the think-tank.

“This 30 per cent issue, there is doubt as to whether or not it has not been achieved,” he said.

“The Bumiputera share has well exceeded 30 per cent and it’s no longer an issue, unless they’re now bringing about a change in policy and wanting more than 30 per cent.”

The outflow of domestic and foreign investment and capital will continue until the government can convince investors there was enough political certainty in Malaysia, the former Transparency International Malaysia president added.

He stressed that time was critical for investors, who were more than willing to go to Indonesia, China, India, or anywhere else in the world where there was a greater level of certainty.

“My hope and prayer is that, having made the mistake of not coming out with specifics, that these specifics be spelt out as soon as possible in a comprehensive manner and not in dribs and drabs,” he said.

Navaratnam urged Putrajaya to act quickly in this respect, even as the ongoing movement of capital and talent away from Malaysia “erodes” the prospect of Najib’s ambitious transformation plan.

“The sooner the matter is settled, the better for the economy and the prospects for take-off rather than a dive-down,” he said.