Archive for category Economics
Pakatan Rakyat’s policy statement on New Economic Model (Part 4b)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 4a)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 3d)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 3c)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 3b)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 3a)
Posted by Kit in Economics, Pakatan Rakyat on Wednesday, 21 April 2010
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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Pakatan Rakyat’s policy statement on New Economic Model (Part 2)
Posted by Kit in Economics, Pakatan Rakyat on Tuesday, 20 April 2010
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 »
Pakatan Rakyat’s policy statement on New Economic Model (Part 1)
Posted by Kit in Economics, Pakatan Rakyat on Tuesday, 20 April 2010
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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NEM: Pakatan sets out acid tests for Barisan Nasional to prove its commitment to economic reforms
Posted by Kit in Economics, Pakatan Rakyat on Tuesday, 20 April 2010
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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Lowest Chinese and Indian representation in the civil service in the 53-year history of Malaysia – 5.8% Chinese and 4% Indians as at end of 2009
Posted by Kit in Corruption, Economics, Najib Razak, nation building, Parliament on Wednesday, 7 April 2010
The other two factors which can cause the failure of NEM as identified by the NEAC are:
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Reform programmes have often met with strong resistance from powerful and vested interests, which subsequently forced their derailment; (Perkasa the extremist right-wing racist organization is one such “vested interests”) and
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The implementing authorities failed to stay the course, either due to a lack of political will or inherently administrative weaknesses.
Although NEM proposes a “big push” in policy actions and initiatives to kick-start the transformation process, what ‘big results” have been achieved in the 1Malaysia concept in the past one year?
How can the public have confidence in the Economic Transformation Programme (ETP) when there is no seriousness or commitment by Barisan Nasional leaders in the 1Malaysia Government Transformation Programme (GTP), as demonstrated by the Deputy Prime Minister Tan Sri Muhyiddin Yassin who had declared himself “Malay first and Malaysian second”?
It is sad and tragic that despite my challenge, not only Umno Ministers ran for cover, Ministers from MCA, Gerakan, MIC and other BN component parties also dare not declare that they are Malaysians first and their race whether Malay, Chinese, Indian, Kadazan or Iban second in keeping with the 1Malaysia concept.
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Najib adopting extraordinary construction methods – building his 1Malaysia house with roof first then pillars without floor as NEM Part 2 has been deferred further from 10th Malaysia Plan to third quarter of the year
Posted by Kit in Economics, Najib Razak, Parliament on Tuesday, 6 April 2010
(Updated)
1. Ballooning budget deficit – Parliament has been presented with two sets of supplementary estimates, the second supplementary estimates for 2009 totalling RM11.36 billion (i.e. RM8.98 billion for Operating and RM2.39 billion for Development), after the earlier first RM10 billion supplementary estimates and the first supplementary estimates for 2010 totalling RM12 billion for both operating and development.
We are debating the second supplementary estimates for 2009 Budget which will be followed by the debate on the first supplementary estimates fo 2010 Budget.
These two sets of supplementary estimates before the current meeting of Parliament are most surprising, as the country was told by the Prime Minister cum Finance Minister Datuk Seri Najib Razak when presenting the 2010 budget on 23rd October 2009 that the fiscal budget of the Federal Government had reached a peak at 7.4% of GDP in 2009, and that the fiscal budget is expected to decline to 5.6% of GDP in 2010.
With these two sets of supplementary estimates, Malaysia’s budgeting has again gone awry with the budget deficit in 2009 shooting to as high as 7.9 per cent of GDP in 2009 and over 7% in 2010.
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A Blueprint for Malaysia
Posted by Kit in Economics, Najib Razak on Friday, 2 April 2010
Opinion Asia | The Wall Street Journal
Prime Minister Najib Razak sounds a reform note, but will he follow through?
The times they are a-changin’ in Malaysia. A few years ago it was inconceivable that a Malaysian premier would express dissatisfaction with the “rent-seeking and patronage” inherent in the country’s four-decade-old affirmative action policies and call for a more “transparent” system based on merit and need. Former strongman Mahathir Mohamad used to label people with such ideas “extremists.”
Yet today Dr. Mahathir, who has thrown his lot in with nativist groups like Perkasa, looks extreme. Prime Minister Najib Razak, by contrast, is reflecting the popular will. In announcing what he dubbed a “New Economic Model” Tuesday, Mr. Najib is responding to the obvious: His country’s extensive system of hiring rules, investment quotas and various other perquisites for the majority ethnic Malays drives away capital and labor and entrenches corruption and poverty.
It’s a story investors already understand. For the past few years, foreign direct investment in Malaysia has slowed to a trickle in an economy that used to be one of Southeast Asia’s dynamos. On a net basis, money is flowing out of the country. Part of this trend has to do with state-owned oil behemoth Petronas’s investments abroad. But it also reflects that many Malaysian companies don’t repatriate capital because they see fewer decent investment opportunities at home. The same goes for foreign investors.
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NEM and NEP – Only One Letter Different!
Posted by Kit in Bakri Musa, Economics, Najib Razak on Friday, 2 April 2010
By M. Bakri Musa
With threatening clouds overhead, there are no prizes for predicting the flood, only for designing or building the ark. The recently-released New Economic Model (NEM) Report draws our attention (not that we need it!) to the darkening Malaysian skies, and then goes on advising us to build an ark.
That is as far as the report goes. There are no hints on whether the clouds would bring a tropical drenching or just a midday sprinkle. There are also no suggestions on the type of vessel we should build. A barge, yacht or a sampan will all keep us afloat, but beyond that they serve vastly different purposes, not to mention their enormously varying costs. And if the forecast calls for only a light sprinkle, then a simple umbrella would do; no need to expend scant resources on an unneeded ark.
We are told that following “public input,” another report will be released by June, in time for its recommendations to be incorporated into the Tenth Malaysia Plan and the 2011 Budget. This second report, we are further assured, will contain specific policy prescriptions – the ark design, as it were.
The current report is silent on how this “public input” would come about. Before deluding ourselves that we could participate in robust public debates, let me intrude a cautionary note. Acknowledging that there will be opposition, the report urges the government to take “prompt action when resistance is encountered.”
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Najib Stalls on his New Economic Policy
Posted by Kit in Economics, Najib Razak on Friday, 2 April 2010
Asia Sentinel
Fleshing it out is probably impossible
As expected, Malaysian Prime Minister Najib Tun Razak unveiled his New Economic Model in an 8,000 word speech on March 30 to a national investor conference in Kuala Lumpur. And, as expected, despite the hype and favorable news stories in the international press, it contained virtually nothing of substance. The speech can be found here.
Najib remains caught between the need to eliminate costly subsidies enshrined in 40 years of economic policy that benefit ethnic Malays and the fact that eliminating them would alienate a major part of his United Malays Political Organization political base.
His pledge in the speech to eliminate rent-seeking is fraught with political danger, since UMNO has largely been built on party cadres who have made fortunes on government contracts or other arrangements. As Lim Kit Siang, the leader of the opposition Democratic Action Party, pointed out to Asia Sentinel, Najib’s promise to end rent-seeking was almost an exact echo of speeches by his predecessor, former Prime Minister Abdullah Ahmad Badawi, who was unable to make any progress whatsoever in the face of implacable opposition from UMNO cronies.
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Najib’s NEM has not been able to come out of the long shadow cast by the Perkasa inaugural congress
Posted by Kit in Economics, Najib Razak on Tuesday, 30 March 2010
The general consensus is that the New Economic Model announced by the Prime Minister, Datuk Seri Najib Razak pledging long-promised economic reforms is singularly short of details as to convince Malaysians that there is the political will to match words with deeds.
Even more serious, Najib’s unveiling of the New Economic Model has not been able to come out of the long shadow cast by the Perkasa inaugural congress spouting neo-NEP Malay communalism as it was attended by several Umno Deputy Ministers.
DAP Secretary-General Lim Guan Eng asked yesterday why RM52 billion worth of shares of public-listed companies allocated for bumiputeras under the New Economic Policy were no longer in their hands.
Raja Petra Kamaruddin has estimated in his portal Malaysia-Today that the real cost of the New Economic Policy may be the colossal figure of RM500 billion, saying that this could be a low estimate.
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Where are RM52 billion Bumi shares, asks Guan Eng
Posted by Kit in Economics, Lim Guan Eng on Monday, 29 March 2010
By Shazwan Mustafa Kamal | The Malaysian Insider
KUALA LUMPUR, March 29 — DAP secretary-general Lim Guan Eng wants the government to investigate why RM52 billion worth of shares in public listed companies allocated for Bumiputeras under affirmative action policies were no longer in their hands.
He told reporters in Parliament today that the fact that the shares were no longer in the hands of Bumiputeras was an act of betrayal.
The Penang Chief Minister suggested a Royal Commission be set up to investigate such leakages.
He said that out of RM54 billion in shares allocated for Bumiputeras, only RM2 billion were still in their hands.
“According to a Bernama report, the Prime Minister had been quoted as saying that of the RM54 billion in shares allocated, only RM2 billion worth of shares were left in the hands of Bumiputeras,” said Lim.
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Perkasa, GLCs and the New Economic Model
by Dr Lim Teck Ghee
During the recent Perkasa inaugural meeting, Ibrahim Ali expressed his displeasure with Malay heads of government-linked companies (GLCs) for not attending his Malay rights group inaugural congress. He also criticised the GLC heads for being interested in personal interests instead of the interests of the Malay community.
Introducing a note of intimidation, he warned that Perkasa will monitor the GLCs. According to him, “we will scrutinise the GLCs. We are not only looking at their performance but also the role they play in helping Malay entrepreneurs.”
The rebuff is indicative of a rejection of the Perkasa agenda by the Malay captains of industry who recognize the negative implications of the policies being espoused. It is also salutary that apart from Mukhriz no other member of the Government took part in the gathering of the ultras.
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NEM and the spirit of the individual
The government has just announced that the New Economic Model (NEM) slated to be the catalyst for Malaysia to put on track the elusive target of Vision 2020, will be unveiled to the public on March 30.
The Mother of all Embarrassment to the Malay polity is that despite all of the plans and policies implemented since Independence till today, the success rate of Malay involvement and participation in the wealth creation and distribution theatres (the main target of these plans) as been so dismally low; from one percent in 1959 to a most ridiculous three percent to date, plus 16 percent achieved by trusts and funds, making a paltry 19 percent. This is sacrilege, a huge blow to the Malay mertabat!
Would NEM be another failure? Surely Prime Minister Najib Abdul Razak (right), the NEM architect, would not want that.
As a country we have all of the fundamentals and essential features for economic progress and development not to fail. I’d list some of them.
i. The availability of land and raw materials
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New Economic Model – has it been hijacked by Neo-NEP Umnoputras like Perkasa
Posted by Kit in Economics, Najib Razak, UMNO on Sunday, 21 March 2010
When Datuk Seri Najib Razak became Prime Minister last April, he announced that the government would introduce a new economic model for the country to ensure that Malaysia makes a quantum leap to escape the middle-income trap to become a high-income country through greater emphasis on innovation, creativity and competitiveness.
In May last year, the Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah said the new economic model would be announced in the second half of the year.
Time is clearly of the critical essence to launch a new economic model as Husni subsequently admitted in a very frank speech in December that the country had lost a decade in economic stagnation.
In actual fact, the World Bank had recommended that Malaysia adopt a new economic model three years ago, stressing that industrial countries are already aiming for economic model 3.0, and with competition at economic model 1.0 intensifying, striving to achieve economic model 2.0 is not an option for Malaysia but a necessity.
The question is why the World Bank’s advice that Malaysia migrate to a new economic model 2.0 was ignored for three years, losing more precious time for Malaysia to catch up in the international competitiveness race when the country had become a straggler as compared to other countries.
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Open debate on New Economic Model (NEM)
Posted by Kit in Dr. Chen Man Hin, Economics on Sunday, 14 March 2010
By Dr Chen Man Hin, DAP life adviser
CALL FOR AN OPEN DEBATE ON THE NEW ECONOMIC MODEL AS IT IS A POLICY THAT WILL IMPACT ON THE ECONOMIC WELL BEING OF THE PEOPLE, AND AS SUCH THEY SHOULD HAVE THE RIGHT TO DISCUSS AND DEBATE ON THE NEW ECONOMIC MODEL BEFORE IT COULD BE IMPLEMENTED.
This is absolutely necessary as the New Economic Policy was pushed through parliament in 1971 without a full discussion by the people. Only the cabinet and government under the then prime minister were privy to the details, and it was rushed through parliament.
Implemented from 1971 until today, the aim was to restructure society, to rescue the Malays from poverty and to give them access to all strata of the economy.
Today, admittedly there are more middle class Malays, but the vast majority of them still live in grinding poverty, and many others still live below the poverty line where families subsist on RM1,500 a month.
The wealth which was supposed to be transferred to the Malay poor was hijacked midway by Umno cronies. They have become rich beyond their wildest dreams.
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