"The Rising Empire"

Malaysia - Heart Attack!

“Malaysia is trapped in a low-value-added, low wage and low productivity structure. While Singapore and Korea’s nominal per capita GDP grew within the last three decades by 9 and 12 times, respectively, ours only by a factor of 4”.

“Our economy has been stagnating in the last decade. We have lost our competitive edge to remain as the leader of the pack in many sectors of the economy. Our private investment has been steadily in decline”.

“Our private investment is now half of what it was since the Asian crisis while both manufacturing and service sectors have become less capital intensive. For the period 2000 to 2007, our investment per value-added in percentage nominal terms in manufacturing dropped from 30.6% to 21.7% while the services sector, the decline is from 26.8% to 22.1%”.

Lest you think that those lines were the usual rhetoric of the Opposition Chief in the Malaysian Parliament or of the seasoned politician of Ipoh Utara or the younger breed of Pakatan MPs like PJ Utara, Machang or Kuala Selangor, may I say that you are wrong this time round. If you quickly change position to think that it was from the remorseful newly minted Finance Minister-cum-PM, you are wrong again.

These were abstracts of what is now dubbed as the “Earth-Shaking” speech of the YB Dato’ Seri Ahmad Husni Hanadzlah, Minister of Finance II Malaysia
on the occasion of the “National Economic Outlook Conference 2010-2011”
Tuesday, 1 December 2009, organized by the Malaysian Institute of Economic Research (MIER).

He immediately called for sweeping measures including an emphasis on meritocracy and ensuring all Malaysians are given “equal opportunity to participate in the economy”.

“We must also consider the gradual dismantling of our open-ended protection of specific sectors and industries, which has introduced a climate of complacency and artificial levels of supply”.”The long-term success of the nation’s economy must take precedence over the short term interests of a few protected groups.”

Husni has said it all. Yes, all the damning critiques of us, the Opposition (now read as Pakatan) and from the discerning and enlightened citizens of this nation have finally gotten across to the Power-that-be. Has it really? God knows.

As a law-maker, frankly, I am over the moon. I now await the opportunity to debate the real state of the economy in the August House. We have been screaming our throats out to get the PM and his entire Cabinet to admit the stark reality of economy. But for all our tireless efforts, what we got in return would be the usual religious sermon that our fundamentals are strong and we should be ‘out of the wood’ by next year.

Husni seems to be spot on, on many of his assertions of the malaise of our economy. Husni seems to be also reasonable on his prescriptions. Unlike his immediate boss in the Ministry of Finance, he chooses to be more down to earth in recognizing age-old diseases that have crippled our economy and stunted its growth. His assertion that the long-term success of the nation’s economy must take precedence over the short term interests of a few protected groups is very apt and speaks all. Well, almost.

But that’s only the tip of the iceberg in matters of etiology of the ailing economy. A lot more still needs dissecting. We beg the government not to be jumpy in matters of prescriptions – don’t put the cart before the horse. Let’s debate it in all fairness and objectivity.

In matters of defending the national interest, we are bipartisan. This is truly the defining criterion of a patriot. In the final analysis, we must always be the patriots that are ever ready to defend our country, even against our government or our own party. As Voltaire puts it, it’s dangerous to be right, when the government is wrong.

As refreshing and assuring as it may be, many may not be as willing to commend on Husni’s admission until they actually see the actions. Slogans without actions undermine trust. Reminders of such admissions were admittedly aplenty, as BN leaders have a unique penchant for that, especially in dire times. But the nation perhaps would like to give the second finance minister a chance until they are proven wrong again.

Pakatan MPs, acting as His Majesty’s Loyal Opposition and assuming it in good faith now request that the Executive provides the avenue of the August House to debate the motion of ‘What Ails the National Economy?’

The House must address, in all honesty and objectivity, of critical factors that have stagnated and stunted our growth. Despite being one of the richest resource per capita nation in the world, we now are lagging far behind our once-upon-a-time competitors. Most humiliating, we are now struggling to remain afloat competing for FDIs with countries like Myanmar, Vietnam and Indonesia.

Not only are we trapped in a low-value-added, low-wage and low-productivity structure, we are as well handicapped by affirmative policies that are grossly abused and rent-seeking activities of very well-connected few (aka cronies) that have caused huge leakages and hemorrhages in the economy. In short, it is a systemic rot!

Numerous other critical issues must be openly tabled and debated. Merely talking about leapfrogging into a high income economy would largely remain a rhetoric bordering mockery, if we continue to be ourselves baffled with our production of non-enterprising graduates that perpetuate the mismatch of industrial needs and graduates employability.

Turning our workforce into one that befits into a knowledge-led growth model and industries that are knowledge-intensive enterprises would be a challenging and daunting task. We have been talking about turning our economy into the knowledge-based New Economy more than a decade now but we are still stuck in our over-reliance on our income from our oil and gas revenue.

We are still very much an old economy heavily relying on our basic commodities. That may not be as bad if we could gear-up to a higher value-chain and a value-added commodity-based economy, but we simply aren’t.

Subsequently our economy has been stagnating in the last decade. We no longer become the attractive investment destination we once used to enjoy. We have lost our competitiveness in literally everything in the criteria judged as benchmarks. Not the least is the negative perception on our institutional framework failing in both integrity and competency, namely the judiciary and the executive.

The hallmark of the check and balance, namely the parliament is at best a suspect as it’s perceived as a rubber-stamp to endorse the wishes of the ruling elite, ruling with impunity. The ruling government invariably practices Democratic Authoritarianism. The on-going debate on the Oil Royalty payable to the state government of Kelantan is surely one that comes to mind. It smacks of Democratic Authoritarianism to the core. That’s ‘Rule of Law’ at its worst and ‘Law of the Rule’ at its Best.

Hence little wonder why we have lost our competitive edge to remain as the leaders of the many sectors of the economy. Our private investment has been steadily in decline. We are the least attractive destination in the Asean countries.

While others enjoy fund-inflow, we suffer fund-outflow, both from local and international investors. Needless to say of the pathetic brain-drain we are continuously subjected to, instead of the brain-gain of our immediate neighbour in enticing our best talents.

Will the Second Finance Minister has what it takes to put his commendable “Earth-Shaking Speech” to fruition. We want to see it tabled and debated in the parliament. As law-makers only that criterion counts. Time will tell.

Will it be another BN’s empty rhetoric? I honestly hope it’s not!


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