The Malaysian Third Way: A Public-Private Partnership

ARCHIVES 2012

By admin-s On May 27, 2012

Prime Minister Najib and Mr. Jala have committed to reduce the country’s chronic budget deficits over five-to-seven years, streamline government to make it more conducive to private sector investment and job creation. And they already have made considerable progress.

Michael Hershman (Forbes Asia)

The debate in Malaysia between those who want more government and those in the private sector who believe prosperity and job creation can best occur with less government is not unusual. It is occurring all over the world—in the U.S., in the EU and the recent French presidential elections, and throughout nations in Asia and the Pacific Rim.

But it is apparent that the ultimate solution is neither total reliance on government nor the private sector, but rather, a third-way path—a public-private partnership to bring prosperity and economic progress to the average citizen.

That is the model that, in the last several years, Malaysian Prime Minister Najib bin Tun Abdul Razak has followed to implement his Economic Transformation Program (ETP) and Government Transformation Program.

When he began the ETP a year ago, he established specific goals to be achieved by the year 2020—to transform Malaysia into a higher development nation with a per-capital income of at least $15,000 and to attract and channel $444 billion in most private investments to break Malaysia out of the “middle-income” trap and economic stagnation that it had experienced in recent years.

Consistent with the “third way” mixture of government and private market leadership, he turned to one of his ministers, Mr. Idris Jala, a former successful chief executive of Malaysia Airlines, to lead the ETP. Prime Minister Najib and Mr. Jala have committed to reduce the country’s chronic budget deficits over five-to-seven years, streamline government to make it more conducive to private sector investment and job creation. And they already have made considerable progress.

For example, the ETP has moved to cut by half 761 varieties of licenses that under the current system are required for most business startups to acquire. And under Najib and Jala’s leadership, the government has reduced the state’s large role in the economy by divesting stakes in 33 companies.

On a variety of social progress fronts, Mr. Najib’s government has moved aggressively to improve the quality of life of the average Malaysian. In 2010 and 2011 participants in the GTP conducted “laboratory sessions” to establish specific, achievable social goals in six areas: raising public living standards; improving education outcomes; reducing crime; advancing the fight against government corruption; enhancing urban public transportation; and improving rural basic infrastructure.

Results have been apparent and measurable. By the end of 2011, Malaysia witnessed a 35% reduction in street crime in high-crime neighborhoods and built over 35,000 low-cost housing units. The government created anti-corruption courts to adjudicate corruption cases within 12 months and passed a strong whistle-blower law to protect the courageous individuals who come forward to report and identify corrupt practices and public officials.

Further measures were enacted to strengthen private-sector competitiveness, including a new law that levels the playing field for businesses and guards against anti-competitive practices. And the movement to reduce government ownership and to divest functions to the private sector, where efficiencies and jobs can be allowed to flourish, continued. The oil, gas and energy sector realized significant incentives for exploration of marginal oil and gas fields.