Archive for category Economics
A nation of failed economic development plans
Malaysiakini
AB Sulaiman
Sep 20, 10
COMMENT
The world can be a nasty place especially in terms of planning, where your best and well intentioned plans can produce the worst unintended results. The country’s numerous development plans is a perfect example of this.
Since Independence we have always strived to be a country with strong social, economic and political credentials: a strong healthy and united people, public safety and security, great infrastructure, mature democracy, clean human rights record, good education system, governed under rule of law, and of course, a justice-minded judiciary.
To top them all off we are to enjoy a per capita income equal to the peoples in advanced economies. We wish to be an advanced country in our own right.
The current realities are anything but. The people are fragmented while some are migrating to friendlier lands, our infrastructure while adequate is wasteful, our democracy is an ugly disguise for authoritarianism, our education system produces non-thinking graduates, the rule of law has become the rule by law, and the judiciary is an international laughing stock. Read the rest of this entry »
Najib’s failure to stand up and be counted to condemn extremism and extremists especially from his own camp will be the undoing of his 1Malaysia concept
Posted by Kit in 1Malaysia, Economics, globalisation, nation building, NEM on Sunday, 19 September 2010
Malaysians are witnessing the Prime Minister, Datuk Seri Najib Razak, performing one of his biggest flip-flops in his 18 months at the helm of the country’s administration.
Najib’s attempt to distance or disentangle Umno from Perkasa did not last more than a week from the announcement of the Umno Secretary-General that Perkasa was eroding non-Malay support for Barisan Nasional to Najib’s Malaysia Day message expressing sadness at the rise of extremism in his 18 months as Prime Minister.
Most ironically, Najib chose the Yayasan 1Malaysia seminar themed “Living In a Multi-Ethnic Society” in Kuala Lumpur after the Malaysia Day celebrations in Sabah to perform the flip-flop – refusing to name Perkasa as the worst culprit responsible for the rise of extremism and scaring away foreign investors.
This is now followed by Tengku Adnan’s flip-flop today denying that the Barisan Nasional parties had agreed to keep a distance from Perkasa.
If Barisan Nasional parties had never agreed top keep a distance from Perkasa, are MCA and Gerakan national leaders to “eat their words” for publicly welcoming such a decision? Read the rest of this entry »
ANALYSIS – Malaysia “top-down” reforms set to disappoint
Posted by Kit in 1Malaysia, Economics, Najib Razak, NEM on Tuesday, 14 September 2010
By David Chance | Reuters
Malaysia’s plans to revitalise investment by backing national champions and ending race-based policies may sound ambitious, but the details are hazy and real economic reform will face formidable obstacles.
The government starts public consultations this month on a new round of reforms, but there is growing resistance from voters and disappointment from investors over measures taken so far.
A government think tank has identified a dozen growth industries such as oil and gas, biotechnology and Islamic finance to focus on in a drive to double Malaysia’s income per capita and propel it into the ranks of “developed nations” by 2020.
Prime Minister Najib Razak’s record on reform is patchy — he shied away from big subsidy cuts and reversed tack on race-based preferential equity ownership rules for the majority ethnic Malay population under pressure from activists.
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Will PM Najib Razak push through an effective NEM to transform a failed problem ridden Malaysia?
Posted by Kit in 1Malaysia, Dr. Chen Man Hin, Economics, Najib Razak, NEM, NEP on Tuesday, 14 September 2010
by Dr Chen Man Hin, life adviser DAP
IT WILL TAKE A LIBERAL NEW ECONOMIC MODEL AND A STRONG PRIME MINISTER TO PUSH MUCH NEEDED REFORMS TO TRANSFORM MALAYSIA INTO A HIGH INCOME COUNTRY WITH DEMOCRACY, JUSTICE AND PROSPERITY FOR ALL REGARDLESS OF RACE OR RELIGION.
The political and economic outlook for the country is critical. We are riddled with multiple problems of corruption, lack of judicial independence, racialism, brain drain, with 40% of households living below the poverty level of RM1,500, and four out of five poor households are bumiputras.
All these things are happening even after two years of PM Najib rule since April 2008. His 1 Malaysia and mediocre attempts at reforms have failed.
WORLD RANKINGS OF MALAYSIA
The sorry state of political and economic development is reflected in the world ranking status of Malaysia on areas which indicate whether a society is honest, democratic, transparent,and just.
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When will Najib and his Ministers wake up and realize that the twin crisis of human talents and investments confronting the country are more than a matter of economics?
Posted by Kit in Economics, Finance, Financial Scandals, Najib Razak on Thursday, 26 August 2010
The Minister in the Prime Minister’s Department Tan Sri Nor Mohamed is quoted in today’s press as saying that Talent Corporation has been tasked with attracting at least half of the 750,000 Malaysian professionals working overseas to come home as part of its efforts to draw the best brains in the world to Malaysia.
Speaking at the launching of the Public-Private Partnership’s website www.3pu.gov.my, he said seeking out the Malaysian diaspora for the top brains was necessary as the Government aimed to hit the target of RM115 billion per year in local and foreign investments to turn the country into a developed nation by 2020.
It is shocking that Nor Mohamed could come out with such an unrealistic and “tall order” not only because of the dismal failure of previous government “brain gain” policies but in the light of recent events when the unchecked escalation of the rhetoric of race and religion would have the effect of giving a major push to greater brain-drain from the country instead of pulling back talents from the Malaysian diaspora to return to serve the country.
It is time that the Prime Minister, Datuk Seri Najib Razak and his Ministers wake up and realize that the twin crisis of human talents and investments confronting the country are more than a matter of economics.
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The IMF Report Card on Malaysia
Commentary
by Observer
Background
The IMF, under Article IV of its Articles of Agreement, holds bilateral discussions annually with its Member countries. These discussions are in the nature of a review of member country economic policies, recent economic developments, IMF staff assessments of prospects and the presentation of policy recommendations. A report is then prepared for presentation to the Fund’s Executive Board of Directors. At the conclusion of the Board Discussion, a Public Information Notice (PIN) is released together with the full report. The Article IV consultation with Malaysia for 2010 took place in May/June of this year and following Board consideration, the PIN and the Report were released on August 13th 2010.
In its customary approach, these IMF documents are highly nuanced and attempt to convey the Fund’s views in measured and balanced tones in order to minimize possible disagreements with the country in question. They err on the side of caution and down play differences and criticisms of policies. The 2010 Malaysia report needs to be read in that context. It is remarkable that the report questions past policies, takes a somewhat critical and skeptical view of many current government policies and expresses open disagreement in certain instances. The report also exposes the dithering and inability of the Government to take firm measures in pursuit of its own announced policy reforms. This brief analysis attempts to highlight and bring to the fore a number of issues that in the view of the Fund reflect on the Government’s capacity to take on the task of implementing its modest reform agenda.
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Is the New Economic Model (NEM) a myth or a reality – is it still at “trial balloon” stage?
Recently news headlines on the New Economic Model (NEM) have suddenly dominated the media like “IMF asks Malaysia to take ‘decisive‘ action on reforms” and “Najib tells Chinese to lead reforms under NEM, 10MP” in the past 24 hours.
References to NEM appears to have come into vogue again, coming out from the shadows from where it had been banished when the Tenth Malaysia Plan was unveiled in June in Parliament.
These beg the question whether the New Economic Model, announced by the Prime Minister Datuk Seri Najib Razak on 30th March this year is a myth or reality.
The NEM has been described as one of the four critical pillars of Najib’s National Transformation of Malaysia, representing the ambitious Economic Transformation Programme to transform Malaysia by 2020 into a developed, competitive and high income economy with inclusivity and sustainability.
The fourth pillar, the Tenth Malaysia Plan, which was adopted by Parliament in early July, is to operationalise the NEM in the five years from 2011-2015.
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IMF wants gov’t to take ‘decisive’ action on NEM
The International Monetary Fund (IMF) has asked Malaysia to take “decisive” action on reforms under a model programme aimed at revamping a controversial four-decade-old affirmative action policy.
Malaysian Prime Minister Najib Razak announced in March a ‘New Economic Model’ or NEM, aimed at reforming elements of the policy favouring the country’s majority ethnic Malays in a bid to boost economic competitiveness.
Details of the reform programme, including its timing, have not been announced yet.
The Washington-based IMF said yesterday it was looking forward to the NEM’s rollout.
In a report after annual consultations between the IMF executive board and the Malaysian government, the fund acknowledged the “ambitious vision” of Najib’s administration for a far-reaching economic transformation over the longer term.
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Escaping the middle-income trap
by Michael Schuman | Time
August 10, 2010
I returned a few days ago from Kuala Lumpur, the capital of Malaysia, where the talk of the town – well, at least among economists — is the “middle-income trap.” What’s that, you ask? A developing nation gets “trapped” when it reaches a certain, relatively comfortable level of income but can’t seem to take that next big jump into the true big leagues of the world economy, with per capita wealth to match. Every go-go economy in Asia has confronted this “trap,” or is dealing with it now. Breaking out of it, however, is extremely difficult. The reason is that escaping the “trap” requires an entire overhaul of the economic growth model most often used by emerging economies.
Malaysia’s caught in the “trap” right now, and getting out if is going to be tough. Simply put, Malaysia needs to change what it has been doing economically for the past 40 years. How Malaysia got itself into the “trap,” and how it could escape from it, can provide us with some valuable lessons on development and, more specifically, how developing nations can graduate into becoming fully advanced economies.
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The world has spoke “yes to economic freedom, liberal market, no to NEP and corruption”
Posted by Kit in Dr. Chen Man Hin, Economics, Najib Razak, NEP on Tuesday, 27 July 2010
By Dr Chen Man Hin, DAP life advisor
UNCTAD, a UN body has issued its World Investment Report (WIR) 2010 on Foreign Direct Inflows (FDIs) of world countries.
The report on the 2009 FDIs into the Asean region are as follows
| Singapore | US$16.1 billion |
| Malaysia | 1.38 billion |
| Philippines | 1.95 |
| Thailand | 5.95 |
| Indonesia | 4.88 |
| Vietnam | 4.56 |
The FDI for Malaysia in 2008 was US$7.2 billion, which meant that there was a 81% precipitous drop for the year 2009.
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FDI crashing because investors lost faith, says DAP
By Boo Su-Lyn | The Malaysian Insider
KUALA LUMPUR, July 25 — A lack of confidence in Malaysia’s economy has driven foreign direct investment (FDI) to our neighbours, leaving the once-roaring “Asian tiger” to compete with Indochina countries, the DAP said today.
The World Foreign Investment Report (WIR) 2010 released by the United Nations showed that FDI in Malaysia plunged 81 per cent last year, trailing behind countries like the Philippines, Vietnam, Thailand, Indonesia and Singapore.
“For the first time ever in history, Malaysia attracted less investment than the Philippines,” DAP national publicity secretary Tony Pua said in a statement today.
The Philippines attracted US$1.95 billion (RM6.24 billion) in FDI compared to Malaysia’s US$1.38 billion, while Singapore raked in the most — more than US$16 billion.
“Among Southeast Asian nations, we are now only attracting more FDI than Cambodia, Myanmar, Brunei, Laos and Timor-Leste,” added Pua.
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M’sia’s increasing unattractiveness is ‘karma’
By Joe Fernandez | Malaysiakini
Without getting into the kind of superstition and quackery that many Malaysians swear by most times, it’s safe to conclude that the chickens are coming home to roost.
The 10 percent economic growth rate envisaged this year for the country, if it’s not a flash-in-the-pan, reminds us of the phrase that there are lies, damn lies and statistics. Again, this is indeed the unpalatable fact that we have to deal with in the run-up to 2020 and its aftermath.
The federal government needs to start thinking from now how they are going to explain in ten years time why we have failed to reach developed nation status and a high income economy.
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Bad FDI news for Malaysia: Down by 81 percent in 2009
By Aidila Razak | Malaysiakini
A nosedive in foreign direct investments in Malaysia in 2009 follows a continued downward trend in FDI, increasingly overshadowed by regional players, noted a United Nations report.
According to the World Investment Report 2010 unveiled today, FDI plunged 81 percent from US$7.32 billion (RM23.47 billion*) in 2008 to just US$1.38 billion (RM4.43 billion) last year.
(*Calculated based on exchange rate of US$1 = RM3.20650)
The 2009 FDI is less than half of the annual average FDI inflow between 1995 to 2005, which encompasses the long recovery period following the 1997 economic crisis.
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How to scare away investors – the Perkasa Way
The government’s New Economic Model structural reform agenda is aimed at raising average annual growth to 6% until year 2015. While implementation of the agenda would be positive for Malaysia’s economic fundamentals, even the talk of reform has already provoked considerable political opposition.
When first introduced, the NEM was supposed to be Malaysia’s new selling point to local and foreign investors and the country’s passport to a better future. It now appears to be aborted before birth. Or at best, it appears to be a newly arrived baby in the critically ill ward, and needing an incubator and special attention if it is to survive at all.
Chief amongst its enemies has been Perkasa and Dr Mahathir Mohamad. From them emerged harsh talk about Malays losing power in the country and of Umno allowing the situation of Malay dominance to be so badly eroded that the community is facing a bleak and hopeless future.
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5-in-1 price hike: Fuel, sugar and gas up
Malaysiakini | 15 Jul, 10 6:19pm
Prime Minister Najib Abdul Razak’s administration has taken a politically risky manoeuvre by raising prices of three types of fossil fuels, sugar and cooking gas.
Both RON95 and RON97 grade petrol and diesel prices will be raised by RM0.05 per litre, while liquified petroluem gas (LPG) will be raised by RM0.10 per kilogramme.
Sugar prices will be raised by RM0.25 per kg.
All price increases will take effect from midnight tonight.
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Whole country shocked into eerie silence by Najib’s marriage of NEW and NEP, but we must object strongly
Posted by Kit in Dr. Chen Man Hin, Economics, Najib Razak on Saturday, 3 July 2010
By Dr Chen Man Hin, DAP life advisor
WE ARE SHOCKED BY PM ANNOUNCEMENT THAT THE BUMI 30% QUOTA WOULD CONTINUE, BUT WE MUST OBJECT STRONGLY FOR THE SAKE OF OUR COUNTRY, THE POOR AND OUR CHILDREN
The proposal by Najib that the 30% bumiputra corporate equity would be maintained together with the NEM. Surprisingly the astounding marriage of two conflicting policies has not raised much reaction.
Are the people so shocked that they have lost their power of speech or writing at the amazing reversal of Najib’s crusade for reforms when he became Prime Minister, to become also a promoter of cronyism and rent seeking policies.
There seems to be absolute silence in Parliament from the honourable members, when they should be debating vigorously on the reckless decision of the Prime Minister to discard the recommendations of the NEM commission to dump rent seeking policies promoted by the NEP, which caused the economy to stagnate for 40 years, from the time it was introduced in 1971.
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Can Malaysia escape a trap of its own making?
By Peter Drysdale | East Asia Forum
Malaysia’s recently presented New Economic Model is, on paper, a hugely ambitious strategy for changing the country’s economic and social direction and, hopefully, its economic and political fortunes.
The government of Prime Minister Najib seems inclined to embrace its principles and try to forge a new direction in Malaysian economic and social policy. In the 1980s Malaysia was among the brightest stars in the Southeast Asian economy, with growth around 8 per cent a year and a huge transformation away from its comfortable plantation and minerals past towards a new industrial future, driven by foreign investment and rapidly growing exports of consumer electronics to regional and global markets. Mahathir reigned supreme, dispensing patronage and securing UMNO’s political base under the camouflage of the long-established New Economic Policy, put in place after the racial disturbances of the late 1960s to lift up the bumiputera Malay population and in the process embedding race-based politics into the fabric of political culture.
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Tenth Malaysia Plan: Long Live NEP – RIP NEM
Posted by Kit in 1Malaysia, Economics, Finance, Parliament on Monday, 21 June 2010
The signature theme of Datuk Seri Najib Razak on his accession as Prime Minister in April last year was the national transformation of Malaysia, which is anchored on four critical pillars:
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1st pillar: “1Malaysia, People First, Performance Now” concept to unite Malaysians.
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2nd pillar: the Government Transformation Programme (GTP) to deliver the outcomes defined under the National Key Result Areas (NKRAs).
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3rd pillar: the New Economic Model (NEM) resulting from the ambitious Economic Transformation Programme (ETP) to transform Malaysia by 2020 into a developed, competitive and high income economy with inclusivity and sustainability.
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4th pillar; the 10th Malaysia Plan 2011-2015 as the first policy operationalisation of both the government and economic transformation programme.
The Prime Minister unveiled the New Economic Model on 30th March and the presented the Tenth Malaysia Plan in Parliament on 10th June. A sea-change took place in the intervening two months, with Najib retreating from his national transformation programme when he succumbed to pressures from extremist groups making baseless and incendiary claims such as that the Malays are under siege and that the Chinese would take over the economy and country.
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The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 7 (National Agenda for all Malaysians instead of a mutating NEP)
A dispassionate analysis of the forty years of implementation of the NEP-NDP provides many lessons. These include:
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There is no alternative to pro-growth policies if Malaysia is to attain the original goals of the NEP, namely eradication of poverty irrespective of race and economic restructuring; pro-growth policies are also essential if the Vision 2020 goals are to be achieved.
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Malaysia has achieved rapid growth and prospered when the policy framework has been pro-market and liberal.
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On the other hand, pro- distribution policies such as those favored and advocated by Faaland in the early 1970s and again revived now championed by PERKASA, have led to slow overall growth and more specifically low achievement of the restructuring targets.
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The private sector constitutes the main engine of growth. Over-regulation of the sector under the NEP framework creates impediments to investment, both domestic and foreign, thereby impacting on poverty eradication and opportunities for restructuring.
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There is a high cost of doing business when there is over-regulation or bureaucratic control. Distortions emerge that create opportunities for rent-seeking and corruption.
The 10th Malaysia Five Year Plan : Old Wine in New Bottles – Part 6 (Equity Restructuring/Ownership)
Equity Restructuring and Ownership
The Plan restates that the target of attaining at least 30% Bumiputra corporate equity ownership at macro level remains. It goes on to indicate that the focus will be on promoting genuine economic participation, consistent with the objective of sustainable high growth, rather than corporate equity allocation.
The Plan proclaims that this will be achieved through more transparent, market-friendly and merit-based instruments, focused on:
• Strengthening Bumiputra entrepreneurship to help create competitive businesses in high impact sectors;
• Increasing wealth ownership beyond corporate equity to include other properties and business assets such as retail space landed properties,
commercial buildings, intellectual properties and other services through pooling of funds and institutional investment; and
• Promoting Bumiputra representation in high paying jobs through enhanced capability building and demand-side incentives.
These statements can be cautiously welcomed as they represent a nuanced shift. However, if the past is any indicator, this shift may be no more than illusionary and a mutation of the NEP. Read the rest of this entry »
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