Monday, March 08, 2010

PM slammed for chickening out on new economic model

Pakatan Rakyat leaders have challenged Prime Minister Najib Razak to explain why there is so much delay in the announcement of his pet project – the New Economic Model – with which he had hoped to revive confidence in the country and himself after a series of political bllunders.

“Why is he chickening out? This is the second or third delay,” PAS strategist Dr Dzulkefly Ahmad told Harakahdaily.

“He promised to bring it to Parliament at the last sitting. Now it looks like Pakatan will have to ask him in the coming sitting, why is he procrastinating on urgent reforms badly needed by the economy?”


Already presented to the Cabinet twice, the NEM – set to replace the New Economic Policy - was to be launched later this month. But the buzz in the market is that it has once again been pushed back and may now be announced together with the 10th Malaysia Plan in June.

Clearly, the 57-year old Najib may be finding the going tougher than expected. For the NEM to be able to turn Malaysia around, Najib has to drastically raise competitiveness – a move he may be unready for.

“To bring out the NEM, he has to deconstruct the NEP and reconstruct a brand new set of economic guidelines and tools,” Dr Dzulkefly said.

“This means getting rid of the current economics of patronage, of cronies, of handouts and putting resources where they should not be put – in the hands of the undeserving, the unskilled and the incompetent.”

Introduced by his late father Abdul Razak Hussein, the second prime minister, the NEP is a set of affirmative action policies aimed at eradicating poverty and helping backward groups get a toehold in the economy.

Spawning endemic corruption

But through the decades, its implementation has been severely abused by the Umno-BN government. In particular, top Umno leaders have used the NEP to feather their own nests and build political support by handing out economic largess and government contracts.

As 90 percent of these politically-motivated deals were given to untrustworthy and unscrupulous cronies, Malaysia has suffered huge leakage of funds. Corruption, with the bulk of money siphoned off to personal accounts rather than invested in a project, has made the nation uncompetitive for foreign direct investment.

In the 2009-2010 Global Competitiveness Index, already on a downtrend, Malaysia fell three more rungs to 24th place, compared with world No. 1 Switzerland, No. 2 the United States and No. 3 Singapore.

“Najib is facing the same problem that his predecessor Abdullah is facing - lack of political will and support. He has to take on the nation’s No. 1 enemy and that is none other than his own Umno party,” Dr Dzulkefly said.

"People slam the NEP for favoring bumiputras but the ones who actually benefit are not the ordinary Malay folk, it is the Umnoputras."

Ignoring World Bank advice

So far, information about the NEM has been sketchy. The plan aims to transform Malaysia into a high income economy, shift reliance from a manufacturing base dependent on semi-skilled and low-cost labour to one that hinges on a high technology and modern services sector dependent on skilled and highly paid workers.

Its implementation will require a major and comprehensive policy overhaul in many areas but the biggest obstacle will be to get the Malays – which make 60 percent of the 27 million population – to accept it.

“At first, this new economic model was to be announced by the second half of last year, then delayed to January of the new year and to the first quarter of the year,” said DAP adviser Lim Kit Siang.

“In actual fact, the World Bank had recommended that Malaysia adopt a new economic model three years ago, stressing that industrial countries are already aiming for economic model 3.0, and with competition at economic model 1.0 intensifying, striving to achieve economic model 2.0 is not an option for Malaysia but a necessity.

“The question is why the World Bank’s advice that Malaysia migrate to a new economic model 2.0 was ignored for three years, losing more precious time for Malaysia to catch up in the international competitiveness race when the country has become a straggler.”

Watered-down version for political survival

Indeed, despite his public relations machinery making it seem the NEM was a Najib initiative - first announced when he took over from his predecessor Abdullah Badawi in April 2009 - the National Economic Action Council has been studying the World Bank proposal.

Economists now fear Najib may not even be able to make the new June deadline.

They are also expecting a heavily watered-down version where due to pressure from Malay rights groups like Perkasa, Najib may even strengthen affirmative action policies in order to gain political ground with Malay voters.

“Najib will end up like Abdullah, out in the political cold, because he was unable to control racial politicking caused by his own party. At the end of the day, Najib has to choose between tough reforms for the good of the country and winning the next general elections," Dr Dzulkefly said.

"Which do you think he will choose? This means that although his minders may spin it that he is being pressured by Perkasa and Mahathir Mohamad, it is could be he himself who is jettisoning the NEM for his own political survival."

written by Wong Choon Mei and courtesy of Harakah Daily

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