Shared Prosperity Vision not in line with PH manifesto, says economist

(FMT) – Economist Edmund Terence Gomez of Universiti Malaya said today the Shared Prosperity Vision 2030 (SPV) is but a rehash of the National Economic Policy (NEP) from the 1970s, with similar emphasis on race-based Bumiputera policies.

He said these race-based targets were a departure from the Pakatan Harapan (PH) manifesto, which said that economic policies would be based on needs, and not ethnicity or race.

“If you compare the primary goals of the SPV with the NEP, you will see a lot of similarities and that itself is the first red flag.

“We are seeing a repetition of policies rather than the creation of new policies that would respond to the more contemporary period that we are in now,” he said on the sidelines of the Malaysia Economic and Strategic Outlook Forum, organised by the Economic Club of Kuala Lumpur and the Kingsley Strategic Institute for Asia Pacific.

He added, however, that it was fine to follow the NEP framework if it was tailored to the new economic conditions, which were now highly globalised.

Gomez wondered if the SPV would be hijacked by the Bumiputera elites, who largely benefitted from access to the NEP.

“Are we sure we’re not going to see a hijacking of the SPV now? It also has similar targets like NEP. The same policies will be hijacked by elites who don’t really need help.

“What is the change in the system to ensure the people who really need it have access to it?”

He added that the SPV had failed to address fundamental questions relating to the corporate sector and education, among others.

Corporate sector reforms

Gomez pointed to an absence of clear policy guidelines for the different segments in the corporate sector — government-linked companies (GLCs), multinational companies (MNCs), small and medium enterprises (SMEs) and large public-listed companies.

He said the SPV had put greater emphasis on the SMEs, but these were in fact recycled policies from the NEP.

There are no guidelines on how the SMEs can collaborate with GLCs and MNCs for skill-sharing or exchange of technologies.

Meanwhile, speaking on GLCs in particular, he asked why the government had not attempted to reform them to better serve the national interests. He also said the government should be clear on its strategies for the GLCs.

He said the SPV did not spell out if the government planned on attempting state intervention in the economy — as it did in the NEP — or if it would be focused on divestments and privatisation.

“If it’s a mix, how do we find a balance between the two? In all these issues, we were looking for clarity in the SPV.”

Gomez also noted that there were no guidelines on incentives for research and development (R&D) in industries.

“There’s an acknowledgment that there’s not enough R&D in the economy. If you want to have companies moving up the technological ladder, they have to invest in R&D. What are the incentives to get them to invest in this? I didn’t see that (in the SPV) also.”

Educational reforms for the poor

Gomez also pointed to a lack of effective reforms for education, especially for the poor.

“It’s really major because if we don’t address the issue of poor kids not getting a high-quality education, the poor will be left behind, contrary to what the SPV says.”

He said public confidence in government primary and secondary schools was poor, especially among the middle-class who may often opt out of sending their children to public schools.

“The middle-class can take care of themselves, but what of the poor? The poor still have to go to these schools. If the quality of the schools is just not good, then what kind of education are the poor getting?”

He said, in contrast, the NEP had resulted in a push for poorer kids to attend good schools.

“Under the NEP, the good thing was that it created good schools. They had good teachers and they took poor kids and sent them to these good schools, and from that they created a new middle class.”

Foreign-held equity

According to statistics provided by the government during the launch of the SPV framework, the percentage of equity in the corporate sector owned by both Bumiputeras and non-Bumiputeras had decreased in 2015, Gomez said. This was in contrast to foreign-held equity, which showed a good increase in the same year.

Statistics show that corporate equity held by foreigners was at 45.3% in 2015, compared with 37.2% in 2011. This was in sharp contrast to the year 1990, whereby foreign-held equity was only at 25.4%.

Bumiputera-owned corporate equities saw a drop in 2015 to 16.2%, compared with 23.4% in 2011, while non-Bumiputeras held only 30.7% of corporate equity in 2015, compared with 34.9% in 2011.

“The government should tell us what went wrong,” Gomez said.

He added that despite this, the government had denied free access to complete and updated data for researchers.

“Even this government is not being transparent with data.”

He added that there were still serious questions about equity distribution, with special concern on foreigners holding the country’s assets.

Gomez added that there was also a lack of clarity on the tabulation of the figures, especially whether GLCs were included under the category of Bumiputera-held equities.

The government is promoting the SPV, for the period 2021 until 2030. which aims to bridge the economic inequality across all segments of society. It was officially launched on Oct 5, 2019.