Taking Malaysia forward on multiple fronts

(Business Times Singapore) KUALA LUMPUR, May 21 — Prime Minister Datuk Seri Najib Razak spoke to The Business Times (Singapore) at Parliament House earlier this week. Looking relaxed and sounding confident, Najib, 55, fielded a wide array of questions on the economy and bilateral relations.

Excerpts:

On Singapore-Malaysia relations

I am very pleased there has been a considerable warming-up and improvement in terms of our bilateral ties. Certainly, the sharp rhetoric of the past has disappeared. And what has appeared now is a much more constructive and cooperative relationship between our two countries.

It is incumbent on our two governments not to allow difficult or thorny bilateral issues to impede whatever progress we can achieve in areas that are more doable.

On what was doable

In the economic field, we — Singapore Prime Minister Lee (Hsien Loong) and I — have talked about the importance of Iskandar and he has suggested that we look into one or two iconic investments that would be a clear manifestation of our growing relationship. We can cooperate in trade as well as in other areas: tourism, cultural exchanges, and even defence. When I was defence minister, I put forward one or two positive proposals where our militaries engaged in cooperative arrangements.

On the straight bridge being a possible iconic project

I don't know. We will take it in our stride. I have just been in office for one-and-a-half months, so it's something that we need to look deeper because of some issues that were tied to the bridge before. If I revive the project, I want to see a successful conclusion. I don't want it to be a repeat of what happened. There is no timeframe. It's not something that will happen immediately.

On whether the Causeway should be replaced

Logic says that progress means change. Progress means development, better communications and transport. If that means the Causeway should be replaced, so be it, but let's not be hasty. Both countries should be comfortable.

On the economy

Well, that's the $64,000 question that everybody is asking. Obviously, if Singapore is talking about minus 9-10 per cent this year because its economy is more open than ours, then we will have to think proportionately in terms of a contraction. Based on first quarter figures, we will come out with a fresh set of figures for this year.

On greater Singapore involvement in Iskandar

We would welcome it. I have said so.

On Tun Dr Mahathir Mohamad's criticism of Singapore investment in Iskandar

Well, it could be. But what is important is the signal from us, the government and that is this: we welcome Singapore investment. But the interest must come from Singapore. I can only prepare the ground and create a conducive atmosphere.

On Dr Mahathir affecting bilateral relations

We can manage our internal affairs. That's an internal matter, we manage that. The important thing is for us to have a good working relationship so that both countries tend to gain. The most important thing is to be in a positive mode to think in terms of what we can gain from our bilateral relationship rather than going back to the old mindset where we start exchanging sharp rhetoric.

On free trade agreements with Australia and America which are tough on the opening up of government procurement

There are certain things that are quite sacrosanct. I wouldn't want to sacrifice national objectives just for the sake of FTAs. But we are willing to be as flexible as possible without sacrificing our fundamental interests.

On whether government procurement is sacrosanct

Yes, in the sense that we are to decide what is the best method of procurement but I am on record to say we are moving towards a regime of openness so there are more open tenders than before, so we are already moving in that regard in line with what is expected when it comes to international practices. There are indications the US might not be objecting too much on this question of procurement.

On the contradiction between Malaysia's addiction to cheap foreign labour and his vision of a high-income economy

That is going to be a medium to long-term position. In the short term, the financial crisis is making companies feel the pinch and they are not able to fork out more money to pay for increase in foreign worker levies.

But we are telling them to restructure their business process and increase productivity so that they can employ more Malaysians and pay them higher wages.

But you can do that if you are competitive which means you just be more innovative. And we have to create incentives for them so they will gravitate towards higher productivity through investments in new plants, machinery, technology, etc.

On whether foreign labour will be phased out

It won't be phased out but there will be a reduction. Unfortunately, because of this present economic crisis, we don't want to add on to the pain that the private sector has to bear. So we just make some short-term adjustments.

On the unsustainability of subsidising fuel, fertiliser, power and food

We have to do mind-conditioning and educate people. Second, it cannot hit so hard that people will be badly affected. Some of the more vulnerable groups may have to undergo a more gradual process. We have to look at not a reduction across the board, but a progressive reduction.

The approach of a gradual reduction together with education should do it. At the same time, real wage rates must go up as well progressively. It's when real income is reduced that people feel the pinch.

On the liberalisation of the economy

Well, I am committed to it. First of all, the New Economic Policy is no longer the policy in place. What we have is a form of affirmative action which is not quite the same as the original NEP.

Moving forward, most Malaysians are not opposed to the idea of a socially just and equitable society. In fact, they support it. It's a question of how you achieve it, the traditional way of imposing quotas, for example, and equity restrictions seem to be hampering achievement and growth. And the principle of meritocracy also could be irritating to a number of Malaysians. So, how can we make adjustments there without forgetting the ultimate goal of having a socially just society.

On whether liberalisation will cause a backlash among the Malays

Every time there is a change, maybe those who will be affected by the change for one reason or the other — it could be personal reasons or differences in ideology — there is some fear. But the alternative is to remain status quo which is worse.

I don't think it's an option. If we remain status quo and there is no change, Malaysia will be out of sync with what's happening globally, and we will be left uncompetitive and everybody will lose out, including the Malays, the Bumiputeras.

There will be some people who will be unhappy — but I can manage that. Whatever you say, there is no pain without gain. You've got to go through some pain to get the gain and I believe the gains will outweigh the pain.

On a backlash from the warlords in Umno

I can manage Umno. That's all right; the warlords are close to me. Don't forget I am the biggest warlord. There are chiefs, but they are smaller chiefs. I am the big chief (laughs).