‘M’sia yet to learn from past mistakes’

By Stephanie Sta Maria, FMT

Economists have warned that Malaysia hasn’t yet learnt from its past mistakes which could disrupt its efforts in charting new economic direction via the New Economic Model (NEM).

At a seminar on the implications of the great financial crisis on Malaysia, they noted that many of the ideas contained in the NEM are extremely conservative and a repetition of past, unresolved issues.

According to Professor Terence Gomez, the economic practices that were prevalent during the 1997 crisis still threaten the Malaysian economy today. He named these practices as neo-liberalism and the concept of revolving doors.

“Neo-liberalism was discredited after the financial crisis,” he said. “Yet it continues to play a role in the creation of our NEM. And herein lies the conundrum.”

“One the one hand, the government is aware that state intervention in Malaysia has led to the catch-up effect (poorer economies growing at a faster pace than richer economies). On the other, it also knows that this has led to a decline in investors. So the state declared the necessity to deregulate, privatise and allow the market to be the agent of growth.”

“But how do we deal with a situation where we have this hegemony of parties over the state which can abuse resources and yet argue for the point that we need to have state intervention? This is a serious dilemma.”

Beware of revolving doors

Terence pointed a finger at the revolving door concept as the main culprit of cronyism, which also contributed to the financial crisis. This concept involves the movement of personnel between two different roles.

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