Nothing special about Special Economic Committee
Although the Special Economic Committee (SEC) is new, many Malaysians expected a special package of policy measures to give more substantive backing to its mandate which is “strengthen the fundamentals of the economy”.
Indeed the economic and financial fundamentals are now relatively strong, but the question on everyone’s mind is for how long?
The Special Economic Committee (SEC) is made up of well known experts with wide experience in the government and business sectors.
They have gone through many economic cycles and have contributed much to economic recovery solutions in the past. Hence the economic problems that we face today are not new to them. It is almost dejavu.
Hence it is surprising that the SEC did not come out with a bigger bang, to announce a Policy Package of Structural Changes, to stop the current steady weakening of our fundamentals, which includes our steadily falling ringgit.
True it’s not a case of “doom and gloom“ as yet. But neither is it all happy and bright”. So the SEC has to be bolder to take the bull by the horns so that our economy is not gored and severely wounded.
We all know that in many ways the birds have come back to roost. Many years of corruption, wastage of public funds, wrong budget priorities (where the poor have became relatively poorer), have all caused a serious lack of confidence in our national governance and capacity to govern effectively.
It is true that the external factors that hurt our economy and its prospects are beyond our control. But are we doing enough to solve our internal problems?
As Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz has said `some domestic issues have affected confidence and need to be resolved. Are we taking enough tough measures to solve these domestic problems? Most will say a strong No.
So what can the SEC do now?
The new so called RM 28 billion boost to the economy is nothing special. About RM 20 billion of it is provided to revive ValueCap to boost the stock market.
No doubt the rich will gain and furthermore the Bumi Equity Shares will hopefully rise. But how long can the ValueCap shareholders like Permodalan Nasional Berhad, Kumpulan Wang Amanah Pesaraan and Khazanah National, benefit from this shot in the arm? Can it be sustained?
More importantly how much will this stock market boost contribute to economic productivity and growth and how would it enhance the welfare of the bottom 40% of the poor in our country?
I would think that this is the ideal time and opportunity to really introduce special policies to enable Malaysia to counter the internal and external challenges by making the country more open, more competitive, liberal and innovative.
Abnormal times require abnormal and special treatment. We cannot tinker with the spoilt engine. We have to overhaul it or better still, get a new engine of growth.
This would be the time to break away from the middle income trap by boldly adopting the New Economic Model (NEM). The NEM was drafted by a highly reputed group of experts including some outstanding economists from abroad. But it has been unfortunately gathering dust so far, while the rot in some places gets worse.
But perhaps the SEC is waiting for the Budget 2016 to make the Big Bang? I hope so. But if the budget turns out to be so tame and does not introduce special economic reforms, then the Malaysian economy may be badly hurt and will take a long time to recover from the falling ringgit and deepening gloom, even if it does not end in doom.
We cannot look at the state of the economy in global and macro terms alone.
We have to show empathy for the poor and the weak who are suffering from rising inflation and corruption and wastage of public funds. How much more can we expect the poor “to adjust more?”
Hence some of the SEC measures must in all fairness be given greater credit.
Khazanah will be investing RM 6.7 billion “to support the economic measures” and growth. We already know from bitter experience that government involvement in business can burn us up. In fact this is one internal factor that has reduced confidence in our economic management.
And now the government is doing more business. We learnt that RM 4.5 billion of this amount of the RM 6.7 billion, will be boldly spent to develop the Desaru tourist resort in Johor. Is this our priority at this time of our economic slowdown and the serious ringgit slide?
Should we not review our economic philosophy and policy preferences and allow the risk taking private investors a bigger role in tourist promotion? Is Khazanah growing too big and literally “squeezing out the private investors”?
How far do we want Khazanah to go and grow and at what and whose expense, please? “Investee Companies” like, a Telecoms, Tenaga National, UEM, Axiata, ValueCap, etc and the list goes on.
The SEC has made a good early start, but I believe there was much hope for a faster and stronger take off.
However it is still hoped that the SEC will make much more significant proposals to restructure the Malaysian economy. We need further economic boosts, to prevent the slide in the ringgit and to strengthen the weakening economic and social fundamentals. We have to continue to promote greater growth, income equity, national unity and sustainability in the longer term.
The SEC has to overcome many more tough challenges and we all hope the SEC will have the strength to deliver well and on time, to remove our national stress and the present gloomy and hazy outlook.
You bet you can count on the full backing of the rakyat – good luck!