Will KL step up to the plate?
But owing to complacency and a lack of political will to address the issues, the problems were allowed to fester and grow so much so that today, as National Economic Advisory Council (NEAC) board member Zainal Aznam Yusof observed in an unusually frank assessment: “There are lots of things to be fixed. The roof is not leaking; we do not need a plumber. It is the foundation of the house. Probably the whole house needs to be rebuilt.”
THE MALAYSIAN INSIDER
The public acknowledgement by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah last week that Malaysia had lost its competitive edge because it had stagnated in the past decade and is now in urgent need of wide-ranging reform to get out of the rut was belated admission of a well-known fact.
Unable to sustain continuous pump priming because of its ballooning budget deficit, the government would like the private sector to step up to the plate. That will take some persuading, if the past decade serves as a guide.
According to Ahmad Husni (picture), the services sector is underdeveloped, private investment is half the level before the 1997-98 Asian crisis, while the mainstay manufacturing sector is suffering from a lack of investment.
Not only has foreign direct investment (FDI) been on the downtrend, local businesses are eschewing the country for better prospects overseas. “We can’t blame investors for not increasing their investments locally when the cost of operation in Malaysia is escalating disproportionately due to corruption, red tape, flip-flop policies, a small consumer market, mismatched labour force, etc. It is even harder to grow big when the private sector has to compete with GLCs (government-linked companies) that monopolise many essential services,” an observer posted online.
Ahmad Husni’s hard-hitting speech at an economic outlook conference called for meritocracy and an equal opportunity to participate in the economy — an obvious if indirect reference to the affirmative-action New Economic Policy (NEP), which critics say has been long abused, leading to economic inefficiencies and leakages which bleed the nation.
“The long-term success of the nation’s economy must take precedence over the short-term interests of a few protected groups,” stated Ahmad Husni, who as former trade deputy minister, would be only too cognisant of globalisation and the fierce competition globally for investment and talent. Other emerging economies have pulled ahead while insular policies have held Malaysia back.
At ground level, the response to Ahmad Husni’s disclosure ran along the lines of “tell us something new”.
Truth be told, the myriad problems plaguing the local economy is anything but. Whether it be an over-reliance on low-skilled foreign labour, corruption, crime, graduate employability, brain drain, untenable subsidies, erosion of confidence in key institutions, religious extremism, a bloated civil service, etc, the numerous structural issues were apparent more than a decade ago.
But owing to complacency and a lack of political will to address the issues, the problems were allowed to fester and grow so much so that today, as National Economic Advisory Council (NEAC) board member Zainal Aznam Yusof observed in an unusually frank assessment: “There are lots of things to be fixed. The roof is not leaking; we do not need a plumber. It is the foundation of the house. Probably the whole house needs to be rebuilt.”
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