Financial Policies Must Benefit The People, Says Raja Nazrin

(Bernama) — Financial policies created must be people-focused and should not be formulated only for investors and their money managers, the Raja Muda of Perak, Raja Dr Nazrin Shah, said Monday.

He said at the start of the current global financial crisis, stark contrasts were painted between the interests of “Wall Street versus Main Street”, adding that Asia could not afford its own version of this duality.

“Policymakers cannot cater to the needs of the elites and ignore those of the man and woman on the street struggling to put food on the table,” said Raja Nazrin, who is also financial ambassador of the Malaysian International Islamic Financial Centre.

He said this in his keynote address at the Asian Development Bank-Bank Negara Malaysia-European Commission Joint Conference themed “Beyond the Global Crisis: A New Asian Growth Model?” held here.

According to Raja Nazrin, the bottoming out of the recession came not at a moment too soon.

“But what lies beyond the global crisis? Is it a return to business as usual? Or do we seek to do things differently?” he said.

Raja Nazrin said there was a need to be vigilant in order to formulate proper policies and plans for the future so as not to be lulled into a false sense of security and be blinded to the clear and present dangers.

“The large amount of money that has been created to combat the recession will have to be neutralised or it will pose a problem rather than a solution. Fiscal deficits will need to be reined in, as will the rising levels of debt,” he said.

Hoping that the worst was now behind, Raja Nazrin said there was also a need to “regularly check our beliefs and assumptions” and be wary about the dangers of “groupthink”.

At the same time, he urged Asia to seek alternative sources of growth besides the traditional “export-led” growth.

Asia’s traditional export markets in the West are weak and poised to grow at much slower rates over the next few years as fiscal and monetary balance was gradually restored, he said.

Raja Nazrin said rising pressures and protectionism were also threatening to constrict trade and investment as governments sought to pander to their domestic constituents, and the increase in competition was also high as many more countries and regions aspired to join the ranks of exporters.

However, he cautioned against inciting a new wave of export pessimism.

“It is fine and well to speak of a global decoupling of the sources of macroeconomic growth. This will create much-needed stability,” he said.

“But we should ask ourselves this: Would any of us like to see a decoupling of the linkages among our economies, linkages that have taken a long time to construct?”