Good start but a mountain of reforms still awaits Najib

ARCHIVES 2009

By admin-s On Jul 10, 2009

(The Malaysian Insider) KUALA LUMPUR, July 10 — Business leaders and analysts are cautiously optimistic about the prime minister's reforms so far but the consensus is he has to do a lot more in order to achieve his goal of transforming Malaysia into a high-income nation by 2020.

In his first 100 days, Prime Minister Datuk Seri Najib Razak has burnished his reformist credentials by opening up selected areas of the services industry as well as slashed and in some cases eliminated ethnic quotas altogether in the financial sector. These reforms, however, have yet to impact the capital markets or business sentiment in a significant way.

One reason is that while his announcements are seen as an encouraging first step, the government's track record is littered with examples of well intentioned policies undermined by poor implementation.

Another reason is that none of the reforms address in a meaningful way the structural issues that plague the nation.

To become a high-wage nation, Malaysians need to be sufficiently skilled and productive and this will require not only an overhaul of the education system so that it is equal to that of advanced countries, but also a reskilling of the existing workforce to "move up the value chain."

He will also need to plug the damaging drain of talent and wealth that is streaming to perceived safe havens like Australia, Singapore, Hong Kong and Canada because they have lost faith in the Malaysian system.

According to one Malaysian banker who is now working in Singapore, the issues are all intertwined and will need to be resolved together before the nation can really move forward.

"All the reforms need to go hand in hand," says the banker who requested anonymity. "Why is there an exodus of talent and wealth? It is because people do not feel confident with the investment climate, security conditions and the government in Malaysia. Right now, many have lost faith in the system."