10th Malaysia Plan: Going forwards or backwards?
Although the allocation earmarks a RM20 billion ‘facilitation fund’ to boost private sector investment, no clear strategy has been revealed to promote competition across and within sectors to revive private investment and market dynamism. Nor is there any indication that the Najib administration is keen to adopt internationally accepted standards for his economic reform.
By Dr. Lim Teck Ghee
The 10th Malaysia Plan has rolled out optimistic macroeconomic growth targets. Of its expenditure allocation, 55% or RM126.5 billion is allocated for the economic sector. The blueprint indicates a Malay-cum-Umno agenda that is largely protectionist with huge direct public investments – including through GLCs – in selected economic sectors.
Although the allocation earmarks a RM20 billion ‘facilitation fund’ to boost private sector investment, no clear strategy has been revealed to promote competition across and within sectors to revive private investment and market dynamism. Nor is there any indication that the Najib administration is keen to adopt internationally accepted standards for his economic reform.
One major question that must be asked is whether the 10th Plan has set realistic targets? It wants to raise per capita income to RM38,845 by year 2015. The figure last year was RM23,841. Is the projected growth rate of eight percent per annum credible to yield an income increase of a whopping RM15,000? And this to be achieved within a span of the next five years?
The Plan also predicts GDP growth rate of 6.0% as against 4.2% between 2006 and 2010; exports to expand by 10.1% as against 3.6% during the 9th Plan period; and private investment to grow at 12.8% versus 2.0% during the previous Plan.
| Key Indicator | 9th Malaysia Plan | 10th Malaysia Plan |
| GDP | 4.2% p.a. | To grow at 6% p.a. |
| GNI per capita | Expected increase to RM26,420 (USD8,526) in 2010 | Expected to increase to RM38,845 (USD12,139) in 2015 |
| Federal government budget expenditure | RM230 bn | RM230 bn |
| Private Investment
Private Consumption |
Growth of 2% p.a.
Growth of 6% p.a. |
To grow at 12.8% p.a. Expected to grow 7.7% p.a. |
| Public Investment Public Consumption |
Growth of 6.2% p.a. Budget deficit: 5.05% of GDP |
To grow at 5% p.a. Target: 2.8% 2015 |
| Exports | Growth of 3.6% p.a. | To grow at 10.1% p.a. |
| Overall deficit of the federal government | To reduce to 5.3% of GDP in 2010. | To reduce to 2.8% in 2015. |
| Overall debt | RM405.1 billion or 52.9% of GDP. | To reduce to 49.9% in 2015 |
Apart from visible corruption, less open to scrutiny are the suspect transactions involving unsecured loans, multiple directorships and interlocking shareholdings and nominee companies. This cleverly concealed set-up in effect enriches an overlapping elite, multi-racial membership. Their convergent interests are linked to the kinship, business and professional relationships of the powers-that-be.
Benefiting the select has caused much of state money and resources to go to least four identifiable distributional coalitions tied up with trusteeship of the NEP.
‘Distributional coalitions’ are small, powerful and influential groups, organized as cartels, seeking rewards through collusion, transaction costs and other forms of non-competitive bargains. Think Umno, MCA, MIC, PBB, other BN parties and the rest; the bureaucratic circles (PNB, GLICs, SDCs); and also the military top brass who are holders of Tan Sri and Datuk titles if not the religious coterie too. Think also of the professional elites that have jumped on the Crony Express.
An end result of the nice racket they have is a privatization process which prompts asset concentration, and ultimately the privatizing of gains and socializing of losses.
