PETALING JAYA: Economists have warned that Malaysia hasn't yet learnt from its past mistakes which could disrupt its efforts in charting new economic direction via the New Economic Model (NEM).
At a seminar on the implications of the great financial crisis on Malaysia, they noted that many of the ideas contained in the NEM are extremely conservative and a repetition of past, unresolved issues.
According to Professor Terence Gomez, the economic practices that were prevalent during the 1997 crisis still threaten the Malaysian economy today. He named these practices as neo-liberalism and the concept of revolving doors.
“Neo-liberalism was discredited after the financial crisis,” he said. “Yet it continues to play a role in the creation of our NEM. And herein lies the conundrum.”
“One the one hand, the government is aware that state intervention in Malaysia has led to the catch-up effect (poorer economies growing at a faster pace than richer economies). On the other, it also knows that this has led to a decline in investors. So the state declared the necessity to deregulate, privatise and allow the market to be the agent of growth.”
“But how do we deal with a situation where we have this hegemony of parties over the state which can abuse resources and yet argue for the point that we need to have state intervention? This is a serious dilemma.”
Beware of revolving doors
Terence pointed a finger at the revolving door concept as the main culprit of cronyism, which also contributed to the financial crisis. This concept involves the movement of personnel between two different roles.
“The most clear dimension of the revolving door is the one of businessmen going into politics and then back into business and sometimes back to politics,” he noted. “Former finance minister Daim Zainuddin is our own revolving door and has contributed to significant problems in terms of public policies.”
He went on to identify three new forms of revolving doors that exist today. The first is professionals who enter politics like Idris Jala while the second is professionals leading government-linked companies like the Multimedia Development Corporation (MDeC).
The third is professionals who act as bureaucrats like the Performance Management & Delivery Unit (Pemandu), which was set up by the government to drive the Government Transformation Plan (GTP).
“Is this the way forward?” he asked. “Let us be careful of the revolving doors that exist within our own economy. Let's learn from the lessons of Daim.”
He added that he has no faith in the reforms and changes that are coming about as he doesn't see any major changes in policy direction.
“The NEM is meant to be an opportunity now for us to grapple with the state of play and we are not doing that. We need to do away with neo-liberal ideas and talk about really new forms of development.”
“For all the lessons that we have learnt from the crisis, we still have not instituted the reforms that are truly required. We are back on the same path and this is a very frightening thought ”
Professor Rajah Rasiah, who was also present at the seminar, agreed with him.
“Zaid Ibrahim made a statement after his defeat in Hulu Selangor which I thought was very exciting,” he said. “He said that old politics have triumphed over new politics. The politics of ideas, reforms and progress have failed over money, machinery and media.”
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