Bersih rally may point to unequal wealth distribution, says Financial Times

By Clara Chooi
July 14, 2011 | The Malaysian Insider

KUALA LUMPUR, July 14 — Datuk Seri Najib Razak should take heed of last Saturday’s mass protest as a possible show of public distaste on income disparity in Malaysia, aside from a push for electoral reform, the Financial Times has said.

The daily reported in a commentary on its popular Lex column that the prime minister may have to lift the issue of unequal wealth distribution as a priority for his administration, noting that since the Umno president took office, he had chosen instead to focus on boosting Malaysia’s gross national income per capita (GNI).

“Mr Najib may yet come to view the Gini coefficient (measure of the inequality of wealth distribution) as the more urgent priority,” it wrote.

The daily pointed out that the centrepiece of Najib’s Economic Transformation Programme (ETP), launched last October, is a series of investment projects aimed at lifting the GNI to help Malaysia escape its current middle-income rut.

But it voiced doubt on Najib’s targets, saying that while such goals were positive for the long term, past government-led schemes “have floundered for the lack of them”.

“It is even better to hand over responsibility for implementation to a third-party body, as Mr Najib has done… but has he selected the right metric?,” it said.

“Unlike the GDP (gross domestic product), the GNI captures income received from Malaysian-owned foreign output, while excluding profits from foreign-owned domestic output.

“Shifting savings to domestic private investment can therefore lift the measure relatively easily, assuming population growth stays moderate,” the daily added.

It pointed out that the ETP’s estimated investment target, two-thirds of which is to be derived from private investment sources, requires a whopping 70 per cent increase in the country’s total annual investment average since 2005.

According to local news reports, the government’s Performance Management and Delivery Unit (Pemandu) has projected that a total investment of US$444 billion or RM1.4 trillion will be needed for 131 “transformative” projects to make the country a high-income nation by 2020 under the ETP. About 92 per cent of total investment is to be led by the private sector.

Such a target, said the Financial Times, would be “do-able” with sufficient aid from foreign sources and the slew of government mega infrastructure projects such as the multibillion ringgit Mass Rapid Transit (MRT) rail system planned for 2016.

“But in the short term, it is not clear that the benefits of a shrinking capital account will trickle through to the three-quarters of Malaysia’s workforce that is regarded as unskilled.

“Last weekend’s violent demonstrations in the capital, notionally about electoral reform, may also be a taste of public opinion on the distribution of wealth,” the daily pointed out.

Thousands of Malaysians took the capital here last Saturday in a protest calling for free and fair elections. But pundits have also said the massive showing is testament to the growing public dissent against the Najib administration, which has been criticised for constantly backpeddling on its own economic reform promises.

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