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Pakatan Rakyat’s policy statement on New Economic Model (Part 3b)

Contradictions
Having reviewed the NEM in details, what is most damaging to NEM does not even form any part of NEM or the documents published by NEAC.

In the end, the public shall judge Barisan Nasional by its actions – past and present; to determine the level of seriousness and political will. In this department, Barisan Nasional’s contradictory decisions and actions prior to and in the immediate instance of unveiling of NEM shall prove to be the most fatal blow to NEM.

Rent Seeking
YAB Dato’ Seri Najib Tun Razak has openly admitted that out of RM54 billion of equity allocated to Bumiputra, only RM2 billion remains due to immediate and large sell down of Bumiputra shares in the capital market.

Embarrassingly, he went on to admit that “those who received bumiputra shares were not ordinary folk but mainly influential people ‘who sat in the front rows at functions such as Tan Sris and Datuk Sris”.
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Pakatan Rakyat’s policy statement on New Economic Model (Part 3a)

PART III: SHORTCOMINGS AND CONTRADICTIONS
Originality Is Suspect

The three main thrusts of sustainability, inclusiveness and high income bear striking resemblance to basic tenets enumerated in Pakatan Rakyat’s Malaysian Economic Agenda (MEA).

In fact, the concept of needs-based “affirmative action” (rather than the race-based approach as espoused in the New Ecomomic Policy) that is being touted as a major breakthrough for Barisan Nasional is clearly borrowed from MEA which first proposed the idea in 2006.

The extent of copycat does not stop there. NEM talks extensively about the need to abolish rent seeking culture in order to reinvigorate the economy.

In a speech to a dinner function hosted by Harvard Club of Malaysia on 5 May 2005, former Prime Minister Dato’ Seri Abdullah Ahmad Badawi lamented the widespread culture of rent seeking in practice.
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Pakatan Rakyat’s policy statement on New Economic Model (Part 2)

PART II: ASSESSMENT OF CURRENT ECONOMIC POSITION AND CLIMATE
Right Diagnosis Vindicated Pakatan Rakyat

Pakatan Rakyat feels vindicated that the diagnosis on our economic position presented by NEAC in the report corroborates directly with Pakatan Rakyat’s views.

On 25th February 2010, Leader of Opposition YB Dato’ Seri Anwar Ibrahim had cautioned the Prime Minister in prematurely declaring that the “worst is over” for the economy and that Malalysia could put the impact of the global economic recession behind us.

In reality Malaysia’s performance is lagging relative to other economies in the region. YB Dato Seri Anwar Ibrahim highlighted the worrying decade long trend of stagnant private investment which was a direct result of an over reliance on pump priming measures. This analysis was elaborated at length in the NEAC Report published approximately a month later.

Consequently, in his speech to Dewan Rakyat on 16th March 2010, YB Dato’ Seri Anwar Ibrahim again outlined five critical economic areas which require urgent remedy if the country were to escape from the middle-income trap. These are: Continue reading “Pakatan Rakyat’s policy statement on New Economic Model (Part 2)”

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Pakatan Rakyat’s policy statement on New Economic Model (Part 1)

PART I: INTRODUCTION

The question of what direction to steer the Malaysan economy to lift it from its prolonged state of lethargy and decay is one that should command the immediate attention of our government. The decisions that are taken today will have serioues ramifications for the livelihood of future generations.

An all encompassing economic framework designed to dramatically shift the trajectory of our economy should have been given the utmost priority at all level of public and government discourses.

It is therefore deeply troubling that the commendable report prepared by the National Economic Advisory Council (NEAC) was from its onset sullied with partisanship and politicking as the Dewan Rakyat was never consulted during its formulation nor was its content ever presented and deliberated upon even after its launch.
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NEM: Pakatan sets out acid tests for Barisan Nasional to prove its commitment to economic reforms

Press Release : Pakatan Rakyat Leadership Council

Pakatan Rakyat has scrutinised the 193-page report on New Economic Model for Malaysia (Part 1) prepared by National Economic Advisory Council (NEAC); released in conjunction with the launching of New Economic Model (NEM) by Prime Minister on 30th March 2010.

For a start, YAB Dato’ Seri Najib Tun Razak must clarify to the public the status of NEM prepared by NEAC for his Minister of Economic Planning Unit (EPU), Tan Sri Nor Mohd Yakcop has openly declared that NEM is a compilation of suggestions by NEAC forwarded to the government for consideration; and not government policy. This puts into question whether the Government is serious about the NEM, or it’s just another public relations exercise!

Nevertheless, Pakatan Rakyat feels vindicated that our diagnosis on the problems of the economy highlighted over the past 15 years is finally conceded by the Government. The NEM admitted that our “economic engine is slowing”, “private investors have taken a back seat”, “productivity is growing… far too slowly”, “we are not developing talent and what we do have is leaving”, “the gap between rich and poor is widening” and we are “stuck in a middle income trap”.
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Lowest Chinese and Indian representation in the civil service in the 53-year history of Malaysia – 5.8% Chinese and 4% Indians as at end of 2009

The other two factors which can cause the failure of NEM as identified by the NEAC are:

  • Reform programmes have often met with strong resistance from powerful and vested interests, which subsequently forced their derailment; (Perkasa the extremist right-wing racist organization is one such “vested interests”) and

  • The implementing authorities failed to stay the course, either due to a lack of political will or inherently administrative weaknesses.

Although NEM proposes a “big push” in policy actions and initiatives to kick-start the transformation process, what ‘big results” have been achieved in the 1Malaysia concept in the past one year?

How can the public have confidence in the Economic Transformation Programme (ETP) when there is no seriousness or commitment by Barisan Nasional leaders in the 1Malaysia Government Transformation Programme (GTP), as demonstrated by the Deputy Prime Minister Tan Sri Muhyiddin Yassin who had declared himself “Malay first and Malaysian second”?

It is sad and tragic that despite my challenge, not only Umno Ministers ran for cover, Ministers from MCA, Gerakan, MIC and other BN component parties also dare not declare that they are Malaysians first and their race whether Malay, Chinese, Indian, Kadazan or Iban second in keeping with the 1Malaysia concept.
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Najib adopting extraordinary construction methods – building his 1Malaysia house with roof first then pillars without floor as NEM Part 2 has been deferred further from 10th Malaysia Plan to third quarter of the year

(Updated)

1. Ballooning budget deficit – Parliament has been presented with two sets of supplementary estimates, the second supplementary estimates for 2009 totalling RM11.36 billion (i.e. RM8.98 billion for Operating and RM2.39 billion for Development), after the earlier first RM10 billion supplementary estimates and the first supplementary estimates for 2010 totalling RM12 billion for both operating and development.

We are debating the second supplementary estimates for 2009 Budget which will be followed by the debate on the first supplementary estimates fo 2010 Budget.

These two sets of supplementary estimates before the current meeting of Parliament are most surprising, as the country was told by the Prime Minister cum Finance Minister Datuk Seri Najib Razak when presenting the 2010 budget on 23rd October 2009 that the fiscal budget of the Federal Government had reached a peak at 7.4% of GDP in 2009, and that the fiscal budget is expected to decline to 5.6% of GDP in 2010.

With these two sets of supplementary estimates, Malaysia’s budgeting has again gone awry with the budget deficit in 2009 shooting to as high as 7.9 per cent of GDP in 2009 and over 7% in 2010.
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A Blueprint for Malaysia

Opinion Asia | The Wall Street Journal
Prime Minister Najib Razak sounds a reform note, but will he follow through?

The times they are a-changin’ in Malaysia. A few years ago it was inconceivable that a Malaysian premier would express dissatisfaction with the “rent-seeking and patronage” inherent in the country’s four-decade-old affirmative action policies and call for a more “transparent” system based on merit and need. Former strongman Mahathir Mohamad used to label people with such ideas “extremists.”

Yet today Dr. Mahathir, who has thrown his lot in with nativist groups like Perkasa, looks extreme. Prime Minister Najib Razak, by contrast, is reflecting the popular will. In announcing what he dubbed a “New Economic Model” Tuesday, Mr. Najib is responding to the obvious: His country’s extensive system of hiring rules, investment quotas and various other perquisites for the majority ethnic Malays drives away capital and labor and entrenches corruption and poverty.

It’s a story investors already understand. For the past few years, foreign direct investment in Malaysia has slowed to a trickle in an economy that used to be one of Southeast Asia’s dynamos. On a net basis, money is flowing out of the country. Part of this trend has to do with state-owned oil behemoth Petronas’s investments abroad. But it also reflects that many Malaysian companies don’t repatriate capital because they see fewer decent investment opportunities at home. The same goes for foreign investors.
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NEM and NEP – Only One Letter Different!

By M. Bakri Musa

With threatening clouds overhead, there are no prizes for predicting the flood, only for designing or building the ark. The recently-released New Economic Model (NEM) Report draws our attention (not that we need it!) to the darkening Malaysian skies, and then goes on advising us to build an ark.

That is as far as the report goes. There are no hints on whether the clouds would bring a tropical drenching or just a midday sprinkle. There are also no suggestions on the type of vessel we should build. A barge, yacht or a sampan will all keep us afloat, but beyond that they serve vastly different purposes, not to mention their enormously varying costs. And if the forecast calls for only a light sprinkle, then a simple umbrella would do; no need to expend scant resources on an unneeded ark.

We are told that following “public input,” another report will be released by June, in time for its recommendations to be incorporated into the Tenth Malaysia Plan and the 2011 Budget. This second report, we are further assured, will contain specific policy prescriptions – the ark design, as it were.

The current report is silent on how this “public input” would come about. Before deluding ourselves that we could participate in robust public debates, let me intrude a cautionary note. Acknowledging that there will be opposition, the report urges the government to take “prompt action when resistance is encountered.”
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Najib Stalls on his New Economic Policy

Asia Sentinel
Fleshing it out is probably impossible

As expected, Malaysian Prime Minister Najib Tun Razak unveiled his New Economic Model in an 8,000 word speech on March 30 to a national investor conference in Kuala Lumpur. And, as expected, despite the hype and favorable news stories in the international press, it contained virtually nothing of substance. The speech can be found here.

Najib remains caught between the need to eliminate costly subsidies enshrined in 40 years of economic policy that benefit ethnic Malays and the fact that eliminating them would alienate a major part of his United Malays Political Organization political base.

His pledge in the speech to eliminate rent-seeking is fraught with political danger, since UMNO has largely been built on party cadres who have made fortunes on government contracts or other arrangements. As Lim Kit Siang, the leader of the opposition Democratic Action Party, pointed out to Asia Sentinel, Najib’s promise to end rent-seeking was almost an exact echo of speeches by his predecessor, former Prime Minister Abdullah Ahmad Badawi, who was unable to make any progress whatsoever in the face of implacable opposition from UMNO cronies.
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Najib’s NEM has not been able to come out of the long shadow cast by the Perkasa inaugural congress

The general consensus is that the New Economic Model announced by the Prime Minister, Datuk Seri Najib Razak pledging long-promised economic reforms is singularly short of details as to convince Malaysians that there is the political will to match words with deeds.

Even more serious, Najib’s unveiling of the New Economic Model has not been able to come out of the long shadow cast by the Perkasa inaugural congress spouting neo-NEP Malay communalism as it was attended by several Umno Deputy Ministers.

DAP Secretary-General Lim Guan Eng asked yesterday why RM52 billion worth of shares of public-listed companies allocated for bumiputeras under the New Economic Policy were no longer in their hands.

Raja Petra Kamaruddin has estimated in his portal Malaysia-Today that the real cost of the New Economic Policy may be the colossal figure of RM500 billion, saying that this could be a low estimate.
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Where are RM52 billion Bumi shares, asks Guan Eng

By Shazwan Mustafa Kamal | The Malaysian Insider

KUALA LUMPUR, March 29 — DAP secretary-general Lim Guan Eng wants the government to investigate why RM52 billion worth of shares in public listed companies allocated for Bumiputeras under affirmative action policies were no longer in their hands.

He told reporters in Parliament today that the fact that the shares were no longer in the hands of Bumiputeras was an act of betrayal.

The Penang Chief Minister suggested a Royal Commission be set up to investigate such leakages.

He said that out of RM54 billion in shares allocated for Bumiputeras, only RM2 billion were still in their hands.

“According to a Bernama report, the Prime Minister had been quoted as saying that of the RM54 billion in shares allocated, only RM2 billion worth of shares were left in the hands of Bumiputeras,” said Lim.
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Perkasa, GLCs and the New Economic Model

by Dr Lim Teck Ghee

During the recent Perkasa inaugural meeting, Ibrahim Ali expressed his displeasure with Malay heads of government-linked companies (GLCs) for not attending his Malay rights group inaugural congress. He also criticised the GLC heads for being interested in personal interests instead of the interests of the Malay community.

Introducing a note of intimidation, he warned that Perkasa will monitor the GLCs. According to him, “we will scrutinise the GLCs. We are not only looking at their performance but also the role they play in helping Malay entrepreneurs.”

The rebuff is indicative of a rejection of the Perkasa agenda by the Malay captains of industry who recognize the negative implications of the policies being espoused. It is also salutary that apart from Mukhriz no other member of the Government took part in the gathering of the ultras.
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NEM and the spirit of the individual

By AB Sulaiman | Malaysiakini

The government has just announced that the New Economic Model (NEM) slated to be the catalyst for Malaysia to put on track the elusive target of Vision 2020, will be unveiled to the public on March 30.

The Mother of all Embarrassment to the Malay polity is that despite all of the plans and policies implemented since Independence till today, the success rate of Malay involvement and participation in the wealth creation and distribution theatres (the main target of these plans) as been so dismally low; from one percent in 1959 to a most ridiculous three percent to date, plus 16 percent achieved by trusts and funds, making a paltry 19 percent. This is sacrilege, a huge blow to the Malay mertabat!

Would NEM be another failure? Surely Prime Minister Najib Abdul Razak (right), the NEM architect, would not want that.

As a country we have all of the fundamentals and essential features for economic progress and development not to fail. I’d list some of them.

i. The availability of land and raw materials
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New Economic Model – has it been hijacked by Neo-NEP Umnoputras like Perkasa

When Datuk Seri Najib Razak became Prime Minister last April, he announced that the government would introduce a new economic model for the country to ensure that Malaysia makes a quantum leap to escape the middle-income trap to become a high-income country through greater emphasis on innovation, creativity and competitiveness.

In May last year, the Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah said the new economic model would be announced in the second half of the year.

Time is clearly of the critical essence to launch a new economic model as Husni subsequently admitted in a very frank speech in December that the country had lost a decade in economic stagnation.

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 had become a straggler as compared to other countries.
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Open debate on New Economic Model (NEM)

By Dr Chen Man Hin, DAP life adviser

CALL FOR AN OPEN DEBATE ON THE NEW ECONOMIC MODEL AS IT IS A POLICY THAT WILL IMPACT ON THE ECONOMIC WELL BEING OF THE PEOPLE, AND AS SUCH THEY SHOULD HAVE THE RIGHT TO DISCUSS AND DEBATE ON THE NEW ECONOMIC MODEL BEFORE IT COULD BE IMPLEMENTED.

This is absolutely necessary as the New Economic Policy was pushed through parliament in 1971 without a full discussion by the people. Only the cabinet and government under the then prime minister were privy to the details, and it was rushed through parliament.

Implemented from 1971 until today, the aim was to restructure society, to rescue the Malays from poverty and to give them access to all strata of the economy.

Today, admittedly there are more middle class Malays, but the vast majority of them still live in grinding poverty, and many others still live below the poverty line where families subsist on RM1,500 a month.

The wealth which was supposed to be transferred to the Malay poor was hijacked midway by Umno cronies. They have become rich beyond their wildest dreams.
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MCA’s harakiri and its repercussions on the Chinese

By Dr Lim Teck Ghee

MCA is an ineffective political force in part because it has long played only a marginal role in the previous Malaysia Plans — implemented by the Umno-aligned, Malay dominated civil service — that have shaped socio-economic development in the country.

The Malaysian public, especially the Chinese, must be wondering if MCA can ever get its house in order so that it can attend to the important affairs of state, especially the economy.

Besides the economy which affects the wellbeing of all households in one way or another, there are many other issues that should occupy the time and attention of the party.

Rising religious tensions; increasing intolerance of Islamic zealots; growth of rightwing Malay NGOs and extremism; lack of education opportunities for young Chinese and other Malaysians – the list is formidable. Many of these issues have implications not only for the Chinese but for the whole country.

The Najib administration’s New Economic Model (NEM) is being touted as the way forward. Do the MCA leaders know or even care what is in the model?
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Has Najib’s New Economic Model been hijacked by Neo-NEP Umnoputras like Perkasa forcing another delay in its announcement?

The assurance by the Deputy Prime Minister Tan Sri Muhyiddin Yassin that no Malaysian would be sidelined in the New Economic Model (NEM) is not convincing when from all indications, the NEM has been hijacked by Neo-NEP Umnoputras like Perkasa, forcing another delay in its announcement.

When Datuk Seri Najib Razak became Prime Minister last April, he announced that the government would introduce a new economic model for the country to ensure that Malaysia makes a quantum leap to escape the middle-income trap to become a high-income country through greater emphasis on innovation, creativity and competitiveness.

In May last year, the Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah said the new economic model would be announced in the second half of the year.

Time is clearly of the critical essence to launch a new economic model as Husni subsequently admitted in a very frank speech in December that the country had lost a decade in economic stagnation.

In actual fact, Malaysia had lost not only one decade in economic stagnation but four decades in failing to fully realize the economic potential of the rich natural and human resources of the country, resulting in Malaysia losing out not only to other countries including Singapore, Taiwan, South Korea but at risk of being overtaken by an increasing list of other countries like Vietnam, Thailand and even Indonesia.
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What is Najib’s response to the PERC’s “blistering” report and the prospect of Malaysia becoming even more uncompetitive internationally because of his failing strategy to be “all things to all people”

Yesterday, I criticised the Prime Minister Datuk Seri Najib Razak for coming up with a wishy-washy “1Malaysia” concept, which has come to mean “a thousand and one” different things even to Umno and Barisan Ministers and leaders – resulting in his lament that “I am greatly saddened that such an idea, which is not terribly complicated, is so often not understood.”

This criticism has found support in the latest report of the Hong Kong-based Political and Economic Risk Consultancy (PERC) on Malaysia which is quite pessimistic about the Najib strategy of “trying to be all things to all people, but in the end he might satisfy no one”.

In what Malaysian Insider has described as a “blistering report” on Malaysia at the end of January, PERC raised Malaysia’s risk index from 5.24 in December to 5.4 in January – out of a possible maximum score 10 for highest level of risk.

PERC maintained in its report that foreign investments into Malaysia have not been forthcoming, either in direct form or in the equity markets.

It said: “Foreign companies and investors are remaining cautious until they see how Malaysia gets its own house in order.”
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How can Najib inspire confidence in Malaysia 2.0 new economic model when he has done nothing in past ten months to stop brain drain or achieve brain gain

When he became Prime Minister in early April last year, one of the first things Datuk Seri Najib Razak announced was a new economic model for the country to ensure Malaysia make a quantum leap to escape the middle-income trap to become a high-income country.

At first, this new economic model of Malaysia 2.0 was to be announced by the second half of last year, then delayed to January of the new year and now to the first quarter of the year.

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 had become a straggler as compared to other countries.

When the country achieved nationhood in 1957, Malaysia was the second most economically-advanced country in Asia after Japan.
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