Sunday, March 07, 2010

NEM launch delayed for fine-tuning

The Najib Administration has decided to incorporate the proposed New Economic Model (NEM) into the 10th Malaysian Plan (10MP) in June, as fine-tuning and tweaks will go beyond its initial end-March launch.

The Malaysian Insider learnt the delay came after feedback from various quarters prompted the government to rework its ideas and proposals that will turn Malaysia into a high-income nation based on innovation and creativity.

Among those with reservations about the NEM are a Malay rights umbrella group, the Malay Consultative Council (MPM), which yesterday demanded it be based on the 1970s-era New Economic Policy (NEP) and should comply with Article 153 of the Federal Constitution that protect Malay and Bumiputera’s special position.

“There will be no big launch of the NEM by the PM,” said an official familiar with the NEM.

The government had previously indicated the NEM could have been launched either late 2009 or early 2010.

It was understood that Prime Minister Datuk Seri Najib Razak was due to launch the NEM at the annual Invest Malaysia conference to be held after Bank Negara Malaysia unveils its annual report and economic indicators.

The change in plans mean that the National Economic Advisory Council (NEAC) chaired by Tan Sri Amirsham Abdul Aziz will now hand over its report containing their recommendations to the prime minister.

“The PM will study the proposals, add more flesh to some, toss out others and then introduce the NEM as part of 10MP,” the official told The Malaysian Insider.

The NEAC briefed the Cabinet for the second time on March 1, days after engaging with several quarters on various issues related to the NEM.

Sources said the Cabinet had “concerns of political implications” for some measures but Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah has said the political risks would not stop the NEM which stressed on removing costly subsidies and improving competitiveness.

It is understood that eliminating policies that still adhere to the spirit of the New Economic Policy (NEP) — even though the NEP no longer exists and was replaced by the National Development Policy in 1990 — has been received with “trepidation by the Cabinet.”

The NEAC had also focused on the need to look for suitable growth engines compared to the last three economic policies implemented since the 1970s.

Those who are familiar with the draft say it will encourage competitiveness among the many businessmen who receive contracts from the government.

“Those who are good will get more contracts and they will rise to the next level,” said one official who has seen the draft.

Fully aware that this radical shift away from the patronage system so many Bumiputra businessmen are familiar with, the policy makers took pains to pave the way for the NEM’s success by engaging with various pressure groups.

The on-going briefing of the NEM to various stakeholders is absolutely key to ensure a buy-in by various parties once it is unveiled. Even former prime minister Tun Dr Mahathir Mohamad has been briefed and it is understood that his feedback was positive.

The Najib Administration hopes to reset the economy with the NEM that will also focus on innovation and creativity particularly in face of competition from new tiger economies in the region.

It is also expected to be Najib’s main thrust for the next general election where he faces an opposition that denied his ruling Barisan Nasional its customary two-thirds parliamentary majority and took away four states.

But the MPM which met yesterday insisted that thee NEM should not sideline the Malays and remain in line with Article 153 which has 10 parts, with the first part making it incumbent for the Yang di-Pertuan Agong to safeguard the special position of the Malays and natives of Sabah and Sarawak.

“I hope the Prime Minister will not rush in announcing the New Economic Model, and postpone it so that it would not create any controversy especially regarding the interests of the Malay race and Bumiputeras,” MPM spokesman Datuk Ibrahim Ali said after the group’s roundtable discussion about the issue.

“The decision reached was that in the new economic model must be in the framework of Article 153 of the Constitution. The policies that do not practise affirmative action will only bring hardship to the majority, and that is the Malay race and Bumiputeras.

“This is because in a democratic system, the majority is the national agenda. It is not only the agenda of the Malay race and Bumiputeras but in a country the majority has a problem that needs to be solved then it becomes the national agenda,” the Perkasa chief added.

The Independent Pasir Mas MP also said the government must make development of the Malay economy as one of the National Key Results Areas (NKRA).

It is understood the MPM is looking to form a bank for Bumiputeras with a seed fund of RM2 billion as it felt the Malays have fallen behind in the economic ladder.

The government once set up Bank Bumiputra but after the last bailout, it was acquired by Commerce-Asset Holdings Berhad group and absorbed into the CIMB Bank.

courtesy of Malaysian Insider

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