6% Economic Growth: Fact or Fantasy?
Khoo Kay Peng
PM Najib announced the country is poised to grow by at least six per cent this year fuelled mainly by domestic demand. An immediate reaction from some segments of the public and people on the street is that they do not feel the growth.
The government should not merely focus on growth numbers which can be quite misleading and not reflective of the situation on the street.
There are several economic reform and development issues which have not seen much progress lately:
1) The focus of current political debate on economic policy especially the NEM and NEP has taken a very narrow path of destructive racial rhetoric. The government should not allow such an important discourse to take such a course. The government should find out what is wrong with the NEP. Admittedly, a number of leaders had acknowledged the weaknesses of NEP. In response, the PM even came out with a new policy direction, the NEM. PM Najib should focus on correcting the policy weaknesses and work to enhance public confidence on his NEM which was half announced.
2) It is quite obvious that the local economy has been overly dependent on resource based industries. Apart from the resource based industries e.g. oil & gas, palm oil and rubber, the manufacturing, services and tourism industries are lacklustre. Malaysia’s regional economic corridors are not attracting investors. These corridors are just another real estate projects without the support of any economic cluster. This is another reason why the government should not focus merely on growth figures.
3) Apart from a lack of economic success story, local and foreign investors are spooked by the high profile failures of public projects such as the PKFZ, Bakun Dam, Cyberjaya and a host of other projects. The government must not take these failures lightly. Najib administration must address these problems and introduce a comprehensive structure to ensure that public funds are not wasted on useless and wasteful projects. Limited resources should be used to bring vibrancy back to the Malaysian economy.
4) The government is still on its denial mode regarding the quality of local education. Malaysian universities performed very poorly on global education ratings. It is granted that these ratings may not represent the quality of education in the country but they provide a good yard stick to measure the progress of our universities. Without a total review of the eduction system, there is very little sustainable economic reform can be achieved. Malaysia’s hope to move up the economic value chain to become a knowledge economy will remain a grand vision or a pipe dream.
5) The government spoke about enhancing income per capita from USD6k to USD15k by 2015. Doubling the per capita income will truly help local industries through enhanced consumption power. This is a bold commitment but we are interested to know how the government is going to achieve this milestone. Without an integrated policy coordination and implementation, it is hard to see how the government can move the economy away from its low cost/ low salary orientation.
