MP writes an obituary for NEM

By Liew Chin Tong Malaysiakini

I would like to pay tribute to members of the National Economic Advisory Council for producing arguably the most candid official report on the problems of the Malaysian political economic structure known as the New Economic Model.

The NEM is indeed stillborn as the old rent-seeking model continues to thrive under its current ill-disguised incarnation.

In what amounts to a farewell luncheon for members of the National Economic Advisory Council, which was tasked to draft the New Economic Model, Prime Minister Najib Razak thanked NEAC members for their work and contribution in preparing the NEM report.

“And, although your work is over, you are most welcome to be part of this journey and be part of future contributions to Malaysia,” he said. Najib said the recommendations contained in the NEM report to transform Malaysia into an inclusive and sustainable high-income economy are now being transformed into an action plan.

The NEAC is now coming to an end as is the New Economic Model. Whereas the Economic Transformation Programme is a different animal altogether. The ETP, executed by Pemandu, is essentially a rehashing of Mahathirist policies.

First, the main premises of NEM is that Malaysia can no longer survives on throwing money at problems. Having more capital investments, be it foreign or local, will not help Malaysia out of its middle-income trap.

NEM recommendations fell on deaf ears

Productivity gains through innovation is the way to go for Malaysia to move out of the middle-income trap, where talent is the basis of innovation. But ETP under Pemandu’s watch is focusing on capital investment numbers and practically nothing else.

Second, social inclusiveness is the one of the three key pillars in the NEM but Pemandu’s ETP pays no attention to the subject. The BN government should have learnt from the example of Singapore where its citizens have voiced out their frustration at the government for focusing on GDP growth purely without being able to solve the rising inflation faced by the men on the street.

The sandwich class will continue to struggle with unaffordable housing, healthcare, and other basic needs as the NEM is unable to meet their needs, fueling the brain drain that is gripping the nation.

Third, while the NEM had argued that economic decision-making powers should be devolved to state and local governments and not concentrated in the hands of the central government; the ETP avoided the question of government structural reforms.

Unfortunately, the key recommendations of NEM (as shown below) fell on deaf ears and the NEAC closes shop as a result.

Approach to economic development: The old versus NEM