The Truth Serum Behind Najib’s Economic Transformation Programme (ETP)

When Prime Minister Najib Tun Razak launched the Economic Transformation Programme (ETP) on 21st September 2010, it was done with the intention of keeping Malaysia on the right track to a high-income status nation by the year 2020. In 2012, ETP boasts 72 out of 131 EPPs launched, surpassing its GNI target of RM830 billion and also surpassing its private investment target worth RM94 billion.[1] The ETP also boasts itself of the pool of acronyms; EPP, NKEA, SRI, SEDIA, IRDA, NCIA, RAPID, BOs, BLESS, and much more. And yet, your average Joe and Jane on the street not only does not fully understand the ETP, they seem to be left out from the fruits of labour of the ETP.

Failures of ETP
Prior to Najib’s ETP and GTP address on RTM last night, the failures of the ETP listed include; falling surplus in which the share of external trade to GDP (gross domestic products) shrunk to 145% caused by weak external environment; the silent death of the Equal Opportunities Commission (EOC) which was supposed to be a part of the ETP; Malaysian investment abroad worth RM19.5 billion in the first half of 2012 surpassed the RM13.6 billion worth of inward investment; the GNI per capita of 49% as boasted by Najib in from USD$6,670 in 2009 to USD$9,970 in 2011 was misleading. The real figure was a minor 16.2% according to World Bank data. Recycling old failed projects such as the Karambunai Integrated Resort City and the Tanjung Agas poject. The failure to attract foreign investment to Educity, Iskandar. Of the ten institutions approached by the government, only two have been fully functioning.
Think tank Political Studies for Change (KPRU) believes Najib should also show the other set of glaring failures of the ETP which includes the falling of Malaysia’s rankings in the World Economic Forum’s Global Competitiveness Report (WEFs GCR; Table 2). Amongst the fall in ranking are the fall in wastefulness of government spending ranking; a fall in labour market efficiency, a fall in the government’s budget balance position ; a fall in the labour market efficiency; a fall in the women in labour force, ratio to men, a fall in the technological readiness under NKEA and more.

Dazzling but Substance Lackluster ETP Speech
During the ETP and GTP speech, Najib claimed 149 EPP projects have been announced but in actual fact, according to the 2012 Annual Report, the real number is 152 EPPs planned with 408,443 employment created and it’s expected GNI contribution is RM135.64 billion. Najib used ringgit Malaysia as the currency for GNI, however in an earlier 2012 report, American dollars was used instead. Why the discrepancy and non-compliance of currency? Najib also claimed an increase of 22 percent in private investment from 2011 to 2012. However, what can be seen is that still the major contributor of investment are from the government. Najib boast the ‘success’ of the RAPID Pengerang project and in the 2012 report state drawing the likes of Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Institute of Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC), Reading University Iskandar, Raffles American School and Marlborough College Malaysia (MCM). Yet, he seems to have left out the representatives of those institutions facing immense struggles of bureaucracy causing a mismatch of departments put in place and a lack of students with staff interested to work in Educity.[2]
Najib in his speech also quoted several international rankings such a the World Bank Ease of Doing Business Report  2013, World Competitiveness Yearbook 2012/2013, AT Kearneys FDI Confidence Index, Globe Shopper Index by the Economist Intelligence Unit, and also the International Living Magazine to display Malaysia’s positive international outlook. Yet, KPRU sees that while Najib likes to bask in the so-called glory of the ETP, Najib have failed to state the rankings stated by the World Economic Forum’s GCR Report, in which Malaysia pretty much fell in the expectations of accountable and transparency or that 50% of business lost business in Malaysia over corruption as stated in Transparency International. Malaysia be a leader in global shopping but Malaysia also suffers a heritage loss such as the crumble of iconic places in Jalan Sultan, Tun Perak, Lebuh Pasar and even the infamous yet iconic Pudu Jail and the non-discriminatory loss of our million years old forests particularly in East Malaysia.

Epilogue
Najib may have claimed much successes over the implementation of the ETP but what remains is the amount of gold felt by the common people of Malaysia. He may have boasted on the ‘surge’ felt in the Kuala Lumpur Bursa and the sukuk investment revealing in dazzling numbers, percentage and tables but KPRU sees that none of all that matters when those who feel the returns are the corporate and political figures rather than the common people of Malaysia. In a nutshell, Najib’s ETP is a series of projects benefiting UMNO rent seekers rather than the ordinary Rakyat that he used to claim in his Janji Ditepati rhetoric.

Table 1: List of ETP Activities and its Failures

No.	Failure	ETP 2012 Report
1.	Falling surplus – the share of external trade to GDP has shrunk to 145% caused by weak external environment.[3]	As of 31st December 2012, 149 EPP projects were launched worth RM211.34 billion.
2.	Oil palm replanting programme – the target plant areas was 126,500ha but only 103,000ha was achieved.[4]	113,000 hectre  of oil palm planted
3.	Growth of real GNI is only 4.7%, much lower than 6% target in ETP. Its claim of RM797 billion “target” for 2011 GNI was lower than the MoF forecast of RM811 billion. This “target” was only publicised after the GNI data was released by the MoF. Furthermore, it is very low, calling for just 7.8 per cent growth, well below the average 8.8 per cent targeted in the ETP Roadmap Report. The ETP focuses on GNI, but CEO Datuk Seri Idris Jala misdirected Malaysians by citing the stronger GDP numbers.[5]	GNI per capita increased 49 percent in 3 years. 2010- RM8100 2011-RM9700 2012-RM9970 GNI in 1957 was merely USD257 Purchasing power parity is 2x of the Malaysian GNI.
4.	1 on October 25, 2010, PEMANDU said LFoundry Sdn Bhd, a subsidiary of German-based Landshut Silicon Foundry GmbH, would undertake a 200 mm water fab worth  RM1.9 billion project. Yet nothing was mentioned in the “Achievements” section of the ETP Annual Report. Instead, a much smaller RM100 million equipment refurbishment and training centre project was highlighted.Lfoundry in Germany is declaring itself insolvent and going into bankruptcy proceedings.	-
5.	Damansara City 2 project by GuocoLand (Malaysia) Berhad was unveiled in the 3rd ETP Progress update on January 11, 2011. There was no status report, it was not even mentioned in the “Moving Forward” section. Instead three additional heritage routes and the upgrading of Masjid Jamek were highlighted instead.  Marina Island Pangkor’s International Resort & Entertainment Extension Project was showcased in the 4th ETP Progress Update on March 8, 2011. Strangely though, no progress update was given in the Annual Report on this huge project.[6]	-
6.	According to Asia-Pacific Sovereigns Andrew Colquhoun, ETP has failed to boost Malaysia’s average income fast enough to avert a middle income trap.[7]	-
7.	According to Refsa, only 21% of income will eventually go to the workers as opposed to the current 28%. Only 21% of the income created by Pemandu’s ETP will go to workers. Compare this to Singapore which allocates 40% and South Korea and the US which set aside 50%.[8]	-
8.	Karambunai project was initially announced in October 2010 during Datuk Seri Najib Razak’s budget speech as a RM3 tourism project which more than tripled in value to RM9.6 billion when it was included in the fifth ETP update on April 19, 2011.[9]	Between in 2011 and 2012, Malaysia attracted 50 million visitors with RM100 billion GNI.
9.	Abdul Jalil Abdul Rasheed, who helps manage US$3 billion as CEO of Aberdeen Islamic Asset Management in Kuala Lumpur, is worried the lion’s share of the billions in private investments needed for the ETP will come from government-linked companies who then raise funds by issuing bonds. These bonds then get government guarantees, making the government’s debt position even more worrying should a default happen.[10]	TERAJU manages the Skim Jejak Jaya Bumiputera (SJJB), a Government initiative introduced in 2007 providing “lastmile” support to eligible Bumiputera companies for listing on Bursa Malaysia. The initiative will consequently allow for greater Bumiputera corporate equity. Khazanah Nasional Bhd and Permodalan Nasional Bhd have identified a total of 10 companies to be divested to Bumiputera companies. Eight of these have officially been tendered for divestment.
10.	1Malaysia email or MyEmail project from last year that was taken by then public-listed Tricubes Bhd. It recently lost its listing status as it was not able to regularize its financials. RM5 million was invested but only 22,000 Malaysians registering for it. Lfoundry scrapped its operations in Kulim Hi-Tech Park.[11]	2012 Report state the failure of the Myemail is due to failed public relations with the public.
11.	According to Standard Chartered, a more focused approached than the ETP is needed to transform Malaysia. Instead of the ETP, Malaysia should emulate South Korea and Taiwan in reinventing its economy and moving up the value curve to high-quality products.[12]	Between 2011 and 2012, 1087 sundry shops were transformed under the TUKAR scheme with shops experiencing an increase of 30% of sales.
12.	The Equal Opportunities Commission (EOC), which was supposed to be part of the Economic Transformation Programme (ETP), has died a silent death due to pressure from certain NGOs.[13]	-
13.	RM594 billion of the incremental RM594 billion GNI that the ETP creates will go to corporate profits; Just RM166 billion will go to wages for employees; and RM40 billion will go to the government in net taxes.[14]	GNI will contribute RM135.64 billion and 404,443 employment opportunities.
14.	PEMANDU’s target is to double nominal income per capita to RM48,000 by 2020. But using its forecasts for income and population growth, and inflation, the target should be RM54,145, not RM48,000.[15]	-
15.	MSC was renamed MSC Malaysia, the name of the lead agency changed from MDC to MDeC (while still remaining the Multimedia Development Corporation), MDeC is straitjacketed – it has been given the mandate to oversee and implement an initiative that promises to be as transformative as the other TPs were supposed to be, but without the teeth to do so.[16]	MdeC will focus on ongoing industry initiatives on two thrusts: Maintaining a competitive environment in Malaysia to attract foreign investment in outsourcing; and increasing the competitiveness of local companies by enhancing their scale, credibility and market reach.
16.	According to HwangDBS Vickers Research, GLC/Bumiputera developers tipped to benefit from government land redevelopment, owners of large land bank and investment assets in KL should also stand to benefit from ETP.[17]	48 MRT package contracts contributing to RM19.8 billion and 45 percent of those 48 contracts are awarded to Bumiputeras worth RM8.9 billion
17.	Foreigners withdrew $42 million from Malaysian offshore equity funds in the last six months of 2012, while adding a net $129 million and $230 million to Philippine and Thai funds respectively.[18]	-
18.	Malaysian investment abroad of RM19.5 billion in the first half of this year surpassed the RM13.6 billion worth of investment that the country received.[19]	RM547 million worth of creative output and 157 hours of man hours was poured into the making of the Academy awarded of the movie Life of Pi.
19.	Cypark Resources Bhd has covered the 26ha former landfill in Nilai, Negeri Sembilan, with up to 32,000 solar panels, turning the area into what is said to be the largest solar photovoltaic (PV) farm in the country and South-East Asia.[20]	-
2	In 2009, Najib dismantled a long-time restriction that benefited “sons of the soil.” They can now own 100% stakes in businesses in 27 sub-sectors. Najib’s 2012 budget extends that reform to 17 more sub-sectors such as medical and education services. But bigger reforms are absent from manufacturing and the labour market that suffers from entrenched affirmative-action policies.[21]	18 subsectors liberalised including quantity surveying that will be liberalised in 2013. Competition Act 2010 gazetted in 2012 and the first case is solved.
21.	Only 30% of Malaysians obtained higher education qualifications compared to Singapore’s 46%, Thailand’s 41% and South Korea’s 89% in 2010. 80% of our workforce only receive secondary level education and only 25% of our workers are highly skilled compared to Singapore’s 49%, Taiwan’s 33% and South Korea’s 35%.[22]	MSC Malaysia MyUniAlliance Programme is a new initiative by the MDeC with support from PEMANDU. The goal is to develop graduates who are industry-ready and employable.
22.	Najib says the GNI per capita rose 49% from US$6,670 in 2009 to US$9,970 in 2011. But World Bank note the figure was only 16.2%.[23]	GNI per capita increased 49 percent in 3 years. 2010- RM8100 2011-RM9700 2012-RM9970 GNI in 1957 was merely USD257
23.	Foreign education institutions are struggling to launch in Educity. Of ten institusion approached to open campuses, only two institutions have officialy fully operated.	Globally recognised institutions including Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Institute of Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC) and Reading University Iskandar have set up campuses.
24.	Recycled old projects such as the Tanjung Agas that was originally launched in 2009 with an investment shot of RM8 billion[24] that is relaunched under ETP as a transforming project.	-
25.	IHH Healthcare IPO falls flat, expects not dividends as it is no longer attractive to investors nor is it supportive of its rich valuation.[25]	-
26.	The renaming of the Kuala Lumpur International Financial District (KLIFD) or now known as Tun Razah Exchange (TRX)  worth RM25.07 billion with the possibility of creating a propertyglut.[26]	RAPID Pengerang will provide 4000 employment opportunities with 20,000 contruction workers.

Table 2: Fall in Malaysian Ranking in the WEF GCR from 2011 to 2012[27]

Indicator	Ranking in WEF GCR 2011 and 2012	NKEA/SRI
Wastefulness of government spending	12 to 19	Public finance reform SRI
Government’s budget balance position	96 to 110	Public  finance reform SRI
Intensity of local competition	26 to36	Competition, standardisation and liberalisation SRI
Extenct of market dominance	14 to 19	Competition, standardisation and liberalisation SRI
Labour market efficiency	20 to 24	Human capital devfelopment SRI
Women in labour force, ratio to men	114 to 119	Human capital devfelopment SRI
ICT use	57 to 68	Communications, content and infrastructure (CCI) NKEA
Technological readiness	44 to 51	Communications, content and infrastructure (CCI) NKEA
Broadband internet subscriptions	62 to 68	Communications, content and infrastructure (CCI) NKEA
International internet bandwith	60 to 83	Communications, content and infrastructure (CCI) NKEA

*WEF GCR is an abbreviation for World Economic Forum Global Competitiveness Report

Nazri's remarks raise doubts in PSD, ETP, NEM...

By Ramon Navaratnam,

The announcement by the Minister in the Prime Minister's Department Mohd Nazri Aziz, that it is government policy not to publish the list of Public Service Department scholarships, is most unfair and unreasonable!

I hope it is the minister's own personal decision and not that of the government, as it directly contradicts and negates all government's policies and the Prime Minister Najib Abdul Razak's frequent pronouncements, to promote more integrity, transparency and accountability in the whole government.

The suspicious secrecy surrounding the PSD scholarships will undermine the public confidence that was being rebuilt recently to ensure a more fair and equitable allocation of PSD scholarships.

These awards that are stated to be based on academic achievement (20%), racial composition (60%), bumiputera in Sabah and Sarawak (10%) and the socially disadvantaged (10%), will now be widely questioned, as to how reasonable these ratios are and how honestly they have been followed.

The governments`s credibility will now be unnecessarily and increasingly questioned not only in this vital area of the fair award of PSD Scholarships. All other issues relating to the implementation of the government`s Economic Transformation Programme and the New Economic Model will raise doubts.

Even today's announcement of the nine new Project Initiatives that are expected to generate RM2.77 billion in investment and 36,595 jobs will also be regarded as doubtful! Such are the problems of poor public perception and the need to be more transparent to win public support for government policies.

The public will also be peeved by the minister's claim that there is still “a lack of public understanding despite efforts to educate the people through the media”.

What the public cannot understand is the blatant lack of transparency that is worsened by the minister's attempt to justify the secrecy and his indifference to accountability and to integrity.

Hence, I am sure that the public would greatly appreciate the open and honest publication of the whole list of PSD scholars. 

We appeal to the government to fulfill the public's expectations for the government to practise the high standards of integrity that it promotes, by revealing the 'PSD secrets' urgently.

The writer is chairperson of the Center of Public Policy Studies

Najib Announces Nine New ETP Projects Worth RM2.27 Billion

KUALA LUMPUR, June 13 (Bernama) -- Prime Minister Datuk Seri Najib Tun Razak Monday announced nine new initiatives under the Economic Transformation Programme which will bring in a total of RM2.27 billion in investment, gross national income (GNI) impact of RM18.67 billion and create 36,595 jobs by 2020.

He recapped six Economic Transformation Programme projects that were announced recently which include a refinery and a petrochemical integrated development (Rapid) which will cost RM60 billion.

Combined, these 15 initiatives within seven National Key Economic Areas (NKEAs) will account for about RM63.38 billion in investment, RM66.31 billion in Gross National Income (GNI) and 63,531 new jobs.

On a cumulative basis, the ETP has to date recorded RM170.28 billion in investment, RM220.15 billion in GNI and 362,396 new jobs, Najib said at the ETP Progress Update Six here today.

Among the initiatives announced today were the UCSI Group, parent organisation of the UCSI University, to develop a 64ha integrated health education cluster in Bandar Springhill, Port Dickson.

The development will comprise the first private teaching hospital in the country. The 1,000-bed UCSI University Hospital will feature Malaysia's only anti-aging, aesthetics and regenerative medicine facility.

The group is expected to invest RM850 million by 2012, which will generate RM1.3 billion in GNI and 2,000 jobs by 2020.

Another initiative, a consortium comprising SEGi Education Group and eight early childhood care education (ECCE) providers will upgrade qualifications of existing workforce to a minimum of diploma level and provide multiple and accessible training as well as develop national programme standards for ECCE training.

The ECCE will be fully operational by 2015, the investment is worth RM700 million and will generate RM900 million in GNI.

Others include Sime Darby Healthcare Group investing in the establishment of two specialist hospitals, Sime Darby Medical Centre Ara Damansara (SMDC AD) and Sime Darby Medical Centre Desa ParkCity (Parkcity).

SMDC AD and Parkcity will cost RM240 million and RM40 million, respectively.

Under the ETP Progress Update Six, the Agriculture NKEA initiatives will feature two star products, premium shrimps and swiftlet nests.

Najib said JEFI Aquatech Resources Sdn Bhd was spearheading an initiative to develop Malaysia as a leading shrimp producer for the global and halal market by developing agro-entrepreneurs in the country's rural areas.

The three main components of this project are the establishment of the Jefi Aquatech Centre and Jefi Aquatech Farm, which includes the development of Agro-Entrepreneur Programme.

This initiative will require RM575 million in investment.

In another initiative, Yanming Resources Sdn Bhd is investing RM5 million to increase its edible bird's nest production capabilities, this will increase mechanisation in the processing line, up to 60 per cent from the current 10 per cent. It is expected to create RM88.7 million in GNI and 103 new jobs by 2020.

Moving on the Communications Content and Infrastructure NKEA, VADS Bhd and Cisco have signed a collaborative agreement to build the first TelePresence Exchange Infrastructure in Malaysia to offer Managed TelePresence Services to the private and public sectors in the country and the region.

This investment is worth RM11.3 million.

Meanwhile, the government-funded initiative to stimulate sales of energy-efficient appliances will cost RM50.2 million in 2011. The programme is spearheaded by the Energy, Green Technology and Water Ministry to improve energy efficiency in the country through five initiatives.

Lastly, to create stronger growth for the retail sector, the Unified Malaysia Sale will unite the three main sales events into one central coordinated event.

This year, the 1Malaysia Unified Sale will be introduced for the first time from Wednesday to Aug 31, 2011 which will encompass more than 50 sectors as compared with just garments and footwear previously.

Guan Eng claims ‘leakages’ in Najib’s ETP

Lim questioned why such a large investment was needed to create new jobs.

KUALA LUMPUR, Jan 16 – Lim Guan Eng took a swipe today at Datuk Seri Najib Razak’s Economic Transformation Programme (ETP), claiming that RM67 billion in investments thus far appeared too much to create 35,000 new job opportunities.

The Penang chief minister said Pakatan Rakyat (PR) through its 100-day reform plan would be able to create more employment opportunities by restoring the country’s economy through careful spending as well as distribution of bonuses and incentives.

Earlier this week, Najib said the ETP has kicked into high gear, boosting the stock market and stimulating the country’s economy with some RM67 billion in investment.

Lim, in turn, questioned why such an amount was needed to create new job opportunities.

“In other words, RM67 billion is needed to create 35,000 new jobs … that is almost RM2 million for one new job.

“The huge amount of RM2 million for each new job shows leakages in Najib’s plans – in the form of corruption and mismanagement which can only be solved with PR’s victory in the coming elections,” said the DAP secretary-general in a statement.

The projects announced by the prime minister recently under the ETP include RM15 billion in investments in the oil and gas sector by oil majors and a RM1.25 billion Health Metropolis in Petaling Jaya by Universiti Malaya.

But it also included previously announced projects such as the RM36 billion KL MRT, the RM5 billion Pengerang oil storage facility and the Talent Corporation.

Najib also derided PR’s reforms plans, and said the proposals were “too good to be true” and would bankrupt the country.

Both rival coalitions are at great pains to prove they have a better economic plan for the one-time Asian Tiger which has been left behind due to affirmative-action policies that economists say has hurt the country,

In response today, Lim said that it was the Barisan Nasional (BN)’s spendthrift ways which would cause the country to suffer huge financial debts, and added that a vote for PR was the only solution to the country’s economical woes.

“BN’s mega projects have nothing to do with low income earners ... Malaysia has the highest income gap between the rich and the poor in the whole of Southeast Asia,” he added.

The Bagan MP said that PR’s policies will ensure that senior citizens, Felda settlers and other low-income earners are given financial assistance.

He cited Penang as a shining example of the success of PR’s policy plans, where it had earned praises from the Auditor-General’s report in 2009.

With Penang’s surplus budget totalling RM88 million in 2008 and RM77 million in 2009, Lim said that the state government was able to help combat poverty by making sure each family in the state earned a monthly income of RM500.

“We have allocated RM20 million as part of our senior citizen’s programme annually, with RM100 payments to those above the age of 60 ... this programme will be extended to single mothers as well as the physically-challenged by this year,” added the Penang CM.

He also said that RM11.3 million had been allocated to religious as well as Chinese and Tamil schools in the island state.

“All these people-friendly programmes have never been implemented during BN’s 51 year-rule but could be done within three years of PR’s rule in Penang,” said Lim.

PR is hoping that its reform plans will be able to tackle Najib’s ETP projects, and is also banking on its first-ever economic summit in March to expose the “sustainability” of the ETP.

Officials said the summit was also part of PR’s bid to disprove claims that the federal opposition had “unrealistic” economic reform plans.

The Malaysian Insider understands that the upcoming meet will flesh out details of the opposition’s 100 day reform plans unveiled during the second PR convention last month, as economic experts from various fields would be invited to the summit to give “critical and honest” feedback on PR’s economic agenda.

FTA talks: Risky or beneficial?

By Patrick Lee - Free Malaysia Today

PETALING JAYA: Malaysia's policies and the Federal Constitution may not be as easy to amend as some politicians think, even with the risk of the private free trade agreement (FTA) talks.

Klang MP (DAP) Charles Santiago said recently that the outcome of the two FTA negotations could change Malaysia's laws and the Federal Constitution without parliamentary consent.

Monash University political analyst James Chin, however, disagreed with Santiago's warnings, saying that it was difficult to change the constitution without involving the monarchy.

“You cannot touch articles such as Articles 151, 152 (and) 153 without the consent of two-thirds of Parliament and the Rulers,” said Chin.

Certain Articles involving the special position of Bumiputeras or the status of Islam require the approval of a two-thirds parliamentary majority and the Conference of Rulers.

Chin added that it was more likely that several Malaysian regulations and laws would be modified to fit labour practices after the FTA negotiations had been concluded.

Nevertheless, he said that Parliament needed to be wary of Bills being passed when changes were being introduced.

“The Malaysian Parliament is not very good with technical details. Sometimes, four to five Bills get passed at once,” he said.

Chin also cautioned against crying wolf against the FTA. “It's too early to tell or to raise an alarm over what may happen. They haven't even agreed on an agenda yet,” said Chin.

He said that FTA negotiations did not need to be conducted in the open as with other major trade talks such as the World Trade Organisation (WTO) discussions.

Major step for the country

Unlike Chin, former Transparency International Malaysia president Ramon Navaratnam said that the Malaysian public needed to be familiar with the topics in the FTA negotiations.

“There should have been talks and discussions by the ministers involved as was done with the Economic Transformation Programme (ETP),” he said.

Navaratnam said that the public deserved to know which way the country would be heading when it came to the FTA because it was a major step for the country.

“It's better to have discussions and consultations later than not have it at all, otherwise it can cause problems for the people,” he said.

Malaysians, said Navaratnam, would not be happy if policy changes were announced without warning. If push came to shove, the government would lose out at the ballot box.

Santiago had warned that the FTA negotiations could adversely affect the business future of small and medium enterprises (SMEs). More than 95% of Malaysia's business comes from SMEs.

Even so, Navaratnam was not opposed to the idea of an FTA.

“FTAs are part and parcel of a worldwide trend. We must face reality and look forward instead of resorting to being on the defensive,” he said.

"Malaysia must look towards competition and meritocracy to progress. We are no longer an agricultural or a manufacturing-based economy.

We are moving into a services-based economy, and have to follow economic forces instead of tilling the soil and making cheap electronics.”

Malaysia is expected to begin its first round of FTA negotiations with the European Union in Brussels from Dec 6-7.

Separate negotiations with the US and eight other nations, including Australia, Singapore and Vietnam over the Trans-Pacific Partnership FTA are scheduled from Dec 6-10 in New Zealand.

ETP Different From Previous Development Plans, Says Najib

Najib (left) and Nor Mohamed Yakcop, holding the replica book on ETP. Pic: Rushdan Manan

KUALA LUMPUR, Oct 25 (Bernama) -- Prime Minister Datuk Seri Najib Tun Razak today stressed that the Economic Transformation Programme (ETP)is different from development plans previously implemented.

"What we are doing now has previously not been attempted. There are six distinguishing factors between the ETP and whatever previous plans," he said at the launch of the ETP Roadmap here Monday.

The first factor, he said, is that the ETP is a programme and not a plan.

Najib said the significant difference in the ETP is that it is a programme containing specific projects and specific action with a timeline, project owner and a measure of performance.

The programme has 131 Entry Point Projects (EPP), 12 reporting labs and 60 business opportunities, all aimed at creating 3.3 million additional workers.

Secondly, the ETP he added, is based on Gross National Income (GNI) and provides a clear direction.

He also explained that the aim of the government is to achieve a GNI per capita of US$15,000 in 2020.

In the 10 years to come, 131 EPPs and 60 business opportunities will respectively spur the additional GNI of US$138 billion and US$112 billion.

When combined with the organic growth from the National Key Economic Areas (NKEAs)and non-NKEA, the total GNI in 2020 is estimated to reach US$523 billion.

Thirdly, Najib said, the ETP is jointly formed with the private sector with an open and transparent approach, where it is also market friendly based on merit and needs.

He said to strengthen transparency and take into account the views of the people, the ETP Programme had been exhibited and discussed together with 13,000 people through Open Days, including publishing where government contracts have been given on the government website.

Fourthly, the ETP will change the role of the government from being the financier to facilitator to reduce the public sector spending, where 92 per cent of investments for the ETP is from the private sector and 72 per cent will be contributed by domestic direct investment.

Fifthly, the ETP has the quality of being inclusive where all Malaysians will get to feel, no matter how small, the positive impact from the implementation of projects under it.

"Finally, as a whole, all 133 entry point projects will cover the entire country. A total of 68 entry point projects will benefit Sarawak and 71 for Sabah, as well as 106 for those in the rural areas.

"Generally, this is in line with the ratio of the urban and rural population in the country," Najib explained.

He also said that specifically, for those in the rural areas, the EPP is expected to create 323,596 new jobs in 2020 and this will benefit owners of Native Customary Rights (NCR) land, especially in Sabah and Sarawak.

The Prime Minister hoped the ETP will bring benefits to the women's work force.

At present, only 3.95 million women aged between 15 to 64 are working.

"It is clear that the ETP will embrace all layers of the community. The impact of eventual development will be experienced by all Malaysians, with no one being let out of the mainstream of economic success," he said.

ETP projects all in Idris’ ‘dream’, say analysts and politicians

KUALA LUMPUR, Oct 1— Datuk Seri Idris Jala’s insistence that the Economic Transformation Programme’s (ETP) mega projects will spur growth towards Vision 2020 has not completely convinced analysts and politicians.

They are doubtful as to whether the government’s ETP, which promises a heavy commitment from the private sector, would be able to transform Malaysia towards a high-income economy by the year 2020.

Political analyst Dr Lim Teck Ghee described Idris as a “cheerleader” appointed to rouse support for the ETP without possessing expertise in economics.

“I think he’s being the cheerleader without having a full understanding of the economic issues and problems in the country,” said Lim.

“He is presenting a kind of a dream scenario. What will happen in real life is likely to be very different,” he added, pointing out that many of the projects would likely not see the light of day in the event of a double-dip recession.

Lim noted that the various projects in the ETP did not go through a rigorous process of selection as only a small number of government-linked company and business leaders discussed those projects.

“The projects have to be scrutinised by, first of all, people who are in the market and who are in the know, who scrutinise objectively and independently. That has not happened,” he said.

Merdeka Center director Ibrahim Suffian expressed concerns that Idris’ bold development plans under the ETP which includes the new Kuala Lumpur mass rapid transit (MRT) system would not completely take-off.

“These plans place a heavy reliance on private investment. But Idris has not answered the question of how the government plans to attract private investment in the first place.

“How is the government going to attract private investors to come in and pump in the cash? The plans are good, yes, but the question remains as to how it will translate into real progress or growth,” Ibrahim told The Malaysian Insider.

The analyst cautioned that if no transparent plan was mapped out, the Najib administration’s plans for economic growth would fall short of achieving its goals of economic reform.

“The ETP’s plans might be like the economic approach in the past where the purpose was to strengthen business among the Bumiputeras, but this plan did not translate into real economic growth,” he said.

The various projects in the ETP include the MRT system, the “River of Life” Klang River beautification project in the Greater KL region as well as future 1 Malaysia malls in China and Vietnam.

Other plans include building a huge oil storage facility next to Singapore to form a regional oil products trading hub. A casino project in Sabah is also being considered.

The Performance Management and Delivery Unit (Pemandu) said it had identified investments worth RM1.38 trillion over 10 years, of which 60 per cent would come from the private sector, 32 per cent from government-linked companies and eight per cent from the government.

The investment aims to double per capita income and push Malaysia into the ranks of “developed” nations by 2020, rebalancing Asia’s third-most export-driven economy towards domestic demand and the service sector.

Umno Youth chief Khairy Jamaluddin echoed Ibrahim’s views, saying that the “proof of the pudding” in regards to the ETP lies in the government’s ability to implement all these plans before 2020.

“The projects promised under the ETP are great on paper, but the onus is on the government to be able to get it going, (to) get it started now. We’ve only got nine years left. Projects like the KL MRT system needs to get started now, the projects need to be implemented on the ground,” said Khairy.

The Rembau MP told The Malaysian Insider that the ETP needed to include how it was planning to raise capital for the projects.

“There are questions in mind... how are we going to spur private investment? How are we going to convince the various financial institutions to raise the capital needed to get these projects started,” said Khairy.

Salahuddin says Idris is misleading the public with mega projects. — File pic

However, PAS vice-president Salahuddin Ayub dismissed Idris as another Barisan Nasional (BN) politician misleading the public with mega projects.

“He is just the same like other BN politicians,” claimed Salahuddin.

“Idris Jala, we are not fooled. You are trying to mislead us by talking about the Economic Transformation Programme, but all the projects that you mentioned are stimulus economy projects, not economic transformation projects,” he told The Malaysian Insider.

The Kubang Kerian MP pointed out that economic transformation required plans on political and institutional reform.

“When you talk about transformation, you need to talk about a human capital transformation… the quality universities we have, standards and skills of labour,” said Salahuddin.

Surprisingly, DAP national publicity secretary Tony Pua praised Idris over his role in the ETP, saying the Cabinet minister had done his job.

“He is not your typical BN man where you are just looking at largesse,” Pua told The Malaysian Insider.

“Idris Jala has done his part, which was to find areas for Malaysia to grow. Now, it’s for the prime minister to commit to the necessary reforms to take the country forward and to achieve the goals stated in the ETP,” Pua said.

The Petaling Jaya Utara MP dismissed the need for the government to fill in the details of the ETP, but stressed instead that its main role was to explain why the private sector should invest in the planned projects.

“The ETP is not going to be detailed because we are not going to be a government-driven economy. The underlying question that needs to be addressed is really why should people invest,” said Pua.

He pointed out that Datuk Seri Najib Razak had to convince the private sector by addressing concerns on a lack of institutional reforms, perceived unfair treatment based on affirmative action policies, and a civil bloated service.

Pua, however, expressed doubt about Najib’s support of Idris’ various economic proposals such as the earlier Government Transformation Programme.

“From what I can tell he is not getting full support from the prime minister. The problem isn’t so much what the Idris team is doing, but the Cabinet as a whole led by the prime minister that is unwilling to take the proposals full-blown,” he said.

Currently in Malaysia, only 28 per cent of the total workforce is employed in the high-skill job bracket, reflecting the low level of educational attainment among a large segment of the workforce.

What the NEM (ETP) needs

By Nurul Izzah Anwar

COMMENT I wish to outline my big picture impression of how to make the NEM (ETP) a success for all Malaysians as part of my continuing constructive engagement initiative.
It was said by some observers that the opposition only critiques without offering any alternative solutions to the ETP in particular.

However, all if not most of the ideas presented here have already been suggested, and I only wish to repeat them for the purpose of outlining the necessary steps to make NEM a reality.

I hope that this ‘big picture’ commentary with suggested actions will be considered seriously and explained by the government in the upcoming 2011 Budget announcement in Parliament.

The critique
Returning to my articles on the ETP, the response received from the public in support or otherwise of the position I presented is most welcomed in the spirit of free speech in a democracy. This debate is a healthy development, albeit mostly through the alternative media.

The main points to my ETP articles and the various responses can be summed up as follows:

The ETP is a huge economic development or transformation plan that has its merits.

However, the numbers and various acronyms must not be a deterrent from discussing economics especially on its impact on all stakeholders.
The possible inconsistencies and accuracy of GDP growth projections was revealed when the PM last year, at an internationally attended multimedia super corridor event, claimed he was misquoted on his announcement of the 9% annual growth target for the next 10 years of being actually 6%.  Even a prominent local research house alluded to an 8% growth rate.

Some have said that if real GDP growth is 6% annually, it will only take us to the target of US$17,000 nominal GNI per head if Malaysia's population grows at a 1 per cent compound rate a year for the next ten years. However, from 2000-2010, population grew by an estimated 1.86% (Dept of Statistics). If population grows at this faster rate instead of 1% over the next decade, then real GDP growth would also have be faster by this difference.

Also, the GDP growth projections didn’t include if any, the plans related to requiring a quality workforce by increasing government spending and investments in education and research and development capacity building.

It appears that most of the EPPs and BOs were proposed by specific companies such as the RM43 billion MRT project proposed by Gamuda-MMC. The question is, will the proposed project be awarded to the proposer or open for competitive international bidding? If this is not clarified, than the EPPs and BOs would only be a self-serving exercise for certain businesses.

To illustrate this point, would Pemandu be interested in my RM500 billion atmospheric dome proposal covering Kuala Lumpur against climate change or as a friend suggested a scaled down RM50 billion eco-project utilizing gigantic fans to blow existing pollution to our neighbouring countries?

As the proposer, all I need is an official award letter and a parliament act to set a price on the atmosphere along with a government guarantee letter to help me raise the needed DDI and FDI funds. My RM500 billion dome would increase GNI substantially and become a center of excellence as we would be the first in the world to do it. Isn’t this truly innovative?  So let all Malaysians submit their innovative proposals to Pemandu for consideration, which can be named RPP (Rakyat Proposed Projects).

Furthermore, if most companies perceive that they do not have a fair chance to compete relative to favoured companies and with a lack of transparency, then this will have an adverse impact on investor confidence. For example, can we have more details on the 1Malaysia Development Fund to know if this exercise to acquire public assets is in the public interest?

The proven track record of not achieving the previous Malaysian Plans is also troubling. For example, 8th Malaysian Plan target of 7.5% growth only achieved an average 4.5% growth while the 9th Malaysian Plan target of 6% growth as of date is at an average 4.2%. This brings our past 10 year historical average growth to less than 5%.

The need to expand participation for national consultation should not be limited to various ‘laboratories’ involving big business, professionals and civil service inputs. The ordinary rakyat especially the rural and urban poor, youth, workers and civil society were not sufficiently engaged on the ground. Some may be intimidated let alone can afford to attend these public participation events or ‘Open Days’ in conference halls.

The widening income inequality and limited higher education opportunities, which is a contributing factor to widening the gap must be addressed adequately.  Economic policies may have reduced the absolute poverty rate but they have also worsened the distribution of income. Thus, the bottom 40% of all households accounts for 15% or less of household income while the top 20% of households account for 50% or more. Sabah, Sarawak and East Coast states bear a disproportionate number of hardcore poor, poor and low-income households.

The most fundamental determinant of any competitive economic plan, which is innovation, requires freedom. How are we free to be creative when our national cartoonist is arrested for humouring us?

Rushing to conclude a matter of national importance just to meet the 2020 year milestone and changing big plans introduced previously such as economic corridors, that are later repackaged by new Prime Ministers only adds to the inconsistent policy making culture (some say flip-flopping) that undermines confidence in the plan’s success.

The plan appears to works backwards from developed country status to high-income status in 2020. This is the source of the problem, silly as it sounds. The impact of this is not only to make the targets "costly, confusing and convoluted" but also conjectural.

Even Tun Dr Mahathir Mohamad recently alluded to the possible failure to achieve Vision 2020’s objectives, which is the premise for the NEM timeline.

Overall, there is much room for improvement in making the ETP viable, realistic and sustainable. And to do that, I now shall outline some suggestions in the form of a formula.

Formula for NEM (ETP) success
I am providing a ‘4E’ formula to keep in line with the many acronyms introduced by the government recently. To be fair I find acronyms useful as mental markers to organize the numerous concepts needed to frame a big idea such as the NEM.

The ‘4E’ formula to make NEM a success is; Education + Empowerment + Efficiencies = Economic Growth (NEM).

The main thrust of the 4E formula is to 'Build Capacity' for productivity, innovation and sustainability through a one-time massive government investment similar in effort to the US Space Project, in education, research and development, political reforms and effective policies.

And on balance with the need for huge investments, we also need to reduce waste through efficiencies and transparency so that every ringgit invested in 'Capacity Building' provides the highest returns for the benefit of all Malaysians.

First E: Education
The NEM already stated the need for at least 3.3 million quality workforce. This includes for more than half to be first degree and diploma holders.

To produce quality workforce requires quality education.

Before I proceed, I would like to note that the recent announcement by the Deputy Prime Minister who is also the Education Minister that vocational education will be revamped is commendable.

The suggested actions to be taken are:

Depoliticize Education
The Deputy Prime Minister’s recent statement of his inability to take action on the case of the two principals for racist remarks due to administrative procedures may have an unintended consequence of reaffirming the separation between politicians and the civil service.

It is hoped that this ‘depolitisation principle’ includes all government ministries and to a certain extent also to the judiciary and other institutions. I hope it is not selectively applied for political expediency only.

Removing the Universities and University Colleges Act (UUCA) will add towards improving the innovation culture and quality standards of tertiary education to meet NEM objectives profoundly.

Pre-school, Primary And Secondary School Enhancements: Offer Pre-school education to all Malaysian children. The current education NKRA achievement where 54,569 children have benefited from 1,358 pre-school classes is a step in the right direction.

However, it should be accelerated to cover all children numbering at least 1.5 million for three pre-school age group cohorts.

Enhance teaching capacity: Hire more teachers and assistant teachers by 50%, upgrade teacher qualification and professionalism, increase salaries by 50%.

Enhance school curriculum: Move towards a critical and creative thinking approach including for examination questions.

Increase school hours: Adding 45 minutes daily can increase academic achievement significantly.

Single session schooling: Build more new schools and additional classrooms in existing schools. Also continue to fully equip them with ICT infrastructure.

Tertiary Education Quality, Accessibility and Affordability
In summary the following should be considered for tertiary education excellence: greater autonomy, massive Phd Programs for academic staff, increase research and development capacity, increase salaries, hire foreign academic staff talent, itroduce ranking system, convert PTPTN loans to scholarships and provide more scholarships and subsidies

All these actions would require political will and increased public financing to succeed.

The political will to depoliticise and democratize education along with repealing the Universities and University Colleges Act (UUCA) will signal the government’s sincerity and commitment to make the NEM a true success for all rather than just for a few Malaysians.

From a public finance perspective, even if the above measures add another 4.5% to the government’s 4.5% average education spending for a total 9% of GDP annually for the next 10 years, this will indicate to the people and the international community of our determination to meet the NEM objectives.

As a possible source of funds, I had proposed earlier that 30% of Petronas annual profit be a mandated contribution to a National Education Fund. This also would include implementing an NEP Bumiputera Equity Redistribution Plan (Quota – in a –Quota) where 25% of current Bumiputera equity ownership of both publicly listed or privately held companies be sold at par-value (which is the official equity ownership calculation criteria) to the same National Education Fund entity.

Second E: Empowerment
One of the most if not the most important key success factor for NEM’s success is innovation. And innovation needs freedom. Freedom can only come from empowering society.

To empower society, I had suggested that we need to add a fifth pillar to the national transformation agenda which is already based on four pillars of 1Malaysia, GTP (Government Transformation Plan), ETP (Economic Transformation Plan) and 10th Malaysia Plan, to be called the PRP (Political Reformation Plan).

PRP includes repealing all anti-democratic laws, respecting separation of powers, reforming national elections and restoring local government elections, returning the judiciary’s and other state institution’s independence, fighting corruption, ensuring a free media and by abiding to the true meaning of our constitution.

By doing so, I am sure that the international community specifically the foreign investors will find it attractive to return and contribute more than the 25% FDI needed to finance the ETP.

Third E: Efficiencies
There are three efficiencies that must be considered to make NEM successful. They are Government Service Efficiency, Market Efficiency and Social Security Efficiency.

Government Service Efficiency
The current Government Transformation Plan (GTP) already addresses this matter to a certain extent.

However, I hope that the initial trend of depoliticising the civil service inadvertently introduced by the Deputy Prime Minister in regards to the two principal racist remark affair shall be a permanent feature to transform the government as planned.

I would also suggest that more talented Malaysians be recruited into the civil service by making it more attractive with market-rate salary and benefits. I believe quality should be the main consideration as we already have quantity with a huge civil service.

We also need a significant and empowered technocracy (i.e. professionals with specialized skills just as in Singapore, Taiwan and Korea.) There is no point in developing our human capital development to a very high level in these areas if they are not then placed in senior decision-making management and administration positions. It is possible to make bureaucrats out of technocrats but not the other way around. They must be empowered, evaluated and promoted based on achievements and track record.

Another important factor that will improve government efficiency and accountability is to return the Local Government Elections immediately. This third tier of government will provide a faster response by the government in delivering services for the real needs of the ratepayers.

Market Efficiency
Information or rather the quality of information is necessary for market efficiency. This would include timely, accurate and consistent information on policy, events and plans.

One of the ways that information is reliable is to allow for a free media.

Therefore, as a step forward, I hope the government will allow more permits for daily newspapers to be approved including my own permit for Utusan Rakyat.

Structural distortions by favorable policy and selective benefits to certain sectors, economic leakages, corruption, opaque procurement practices and inconsistency policy statements will never make NEM a success for all stakeholders.

Social Security Efficiency
The households who live below the poverty line must be assured of equitable assistance from the government. This includes targeted subsidies for essential goods and services such as health and education.

As a first step it is necessary to review the Poverty Line Income (PLI) which should be RM1,886 rather than the government’s PLI average of RM800 per household . This would ensure existing policies and programmes are realigned accordingly to provide an effective safety net for the people.

Another step is to implement a living wage of at least RM1,500 per month.

And to ensure affordable living expenses, the government must enforce anti-monopoly laws across all sectors combined with fighting corruption and white collar crime that add cost to prices for consumers.

Fourth E: Economic Growth
I fail to see how Education, Empowerment and Efficiencies with the suggested actions are not crucial contributing factors for Economic Growth.

The absence of policies, funding and political will to implement these factors will only add to the current skepticism in the NEM initiative.

I hope that our economist and policy makers will add to this discussion with more details. I also hope that a more constructive debate on these factors will take place with all stakeholders especially in the next Parliament sitting.

Furthermore, I would even dare to suggest that implementing the ‘4E’ formula will definitely benefit the current government’s standing and make the opposition more competitive for votes.

This is a price I believe the people and even the opposition should be willing to pay for a better Malaysia. The cost of doing the right thing is nothing compared to the cost of a failed NEM plan leading to a failed nation.

Nurul Izzah Anwar is PKR's MP for Lembah Pantai.

THE 4 Es : WHAT THE NEM (ETP) NEEDS

The main thrust of the 4E formula is to 'Build Capacity' for productivity, innovation and sustainability through a one-time massive government investment similar in effort to the US Space Project, in education, research and development, political reforms and effective policies.

By Nurul Izzah Anwar, MP Lembah Pantai, Kuala Lumpur

I wish to outline my big picture impression of how to make the NEM (ETP) a success for all Malaysians as part of my continuing constructive engagement initiative.

I had written two articles on ETP, the first ’15 Questions on ETP’ and the second ‘Fantasy or fallacy: ETP 6% annual growth rate calculations?’

It was said by some observers that the opposition only critiques without offering any alternative solutions to the ETP in particular.

However, all if not most of the ideas presented here have already been suggested, and I only wish to repeat them for the purpose of outlining the necessary steps to make NEM a reality.

I hope that this ‘big picture’ commentary with suggested actions will be considered seriously and explained by the government in the upcoming 2011 Budget announcement in Parliament.

As a footnote, the ETP Part 2 was conveniently announced publicly on 21 September, which is one day after the 20 September dateline for Parliamentary questions submissions.

The Critique

Returning to my articles on the ETP, the response received from the public in support or otherwise of the position I presented is most welcomed in the spirit of free speech in a democracy. This debate is a healthy development, albeit mostly through the alternative media.

The main points to my ETP articles and the various responses can be summed up as follows:

The ETP is a huge economic development or transformation plan that has its merits.

However, the numbers and various acronyms must not be a deterrent from discussing economics especially on its impact on all stakeholders.

The possible inconsistencies and accuracy of GDP growth projections was revealed when the PM last year, at an internationally attended multimedia super corridor event, claimed he was misquoted on his announcement of the 9% annual growth target for the next 10 years of being actually 6%. Even a prominent local research house alluded to an 8% growth rate.

Some have said that if real GDP growth is 6% annually, it will only take us to the target of US$17,000 nominal GNI per head if Malaysia's population grows at a 1 per cent compound rate a year for the next ten years. However, from 2000-2010, population grew by an estimated 1.86% (Dept of Statistics). If population grows at this faster rate instead of 1% over the next decade, then real GDP growth would also have be faster by this difference.

Also, the GDP growth projections didn’t include if any, the plans related to requiring a quality workforce by increasing government spending and investments in education and research and development capacity building.

It appears that most of the EPPs and BOs were proposed by specific companies such as the RM43 billion MRT project proposed by Gamuda-MMC. The question is, will the proposed project be awarded to the proposer or open for competitive international bidding? If this is not clarified, than the EPPs and BOs would only be a self-serving exercise for certain businesses.

To illustrate this point, would Pemandu be interested in my RM500 billion atmospheric dome proposal covering Kuala Lumpur against climate change or as a friend suggested a scaled down RM50 billion eco-project utilizing gigantic fans to blow existing pollution to our neighbouring countries?

As the proposer, all I need is an official award letter and a parliament act to set a price on the atmosphere along with a government guarantee letter to help me raise the needed DDI and FDI funds. My RM500 billion dome would increase GNI substantially and become a center of excellence as we would be the first in the world to do it. Isn’t this truly innovative? So let all Malaysians submit their innovative proposals to Pemandu for consideration, which can be named RPP (Rakyat Proposed Projects).

Furthermore, if most companies perceive that they do not have a fair chance to compete relative to favoured companies and with a lack of transparency, then this will have an adverse impact on investor confidence. For example, can we have more details on the 1Malaysia Development Fund to know if this exercise to acquire public assets is in the public interest?

The proven track record of not achieving the previous Malaysian Plans is also troubling. For example, 8th Malaysian Plan target of 7.5% growth only achieved an average 4.5% growth while the 9th Malaysian Plan target of 6% growth as of date is at an average 4.2%. This brings our past 10 year historical average growth to less than 5%.

The need to expand participation for national consultation should not be limited to various ‘laboratories’ involving big business, professionals and civil service inputs. The ordinary rakyat especially the rural and urban poor, youth, workers and civil society were not sufficiently engaged on the ground. Some may be intimidated let alone can afford to attend these public participation events or ‘Open Days’ in conference halls.

The widening income inequality and limited higher education opportunities, which is a contributing factor to widening the gap must be addressed adequately. Economic policies may have reduced the absolute poverty rate but they have also worsened the distribution of income. Thus, the bottom 40% of all households accounts for 15% or less of household income while the top 20% of households account for 50% or more.[1] Sabah, Sarawak and East Coast states bear a disproportionate number of hardcore poor, poor and low-income households.

The most fundamental determinant of any competitive economic plan, which is innovation, requires freedom. How are we free to be creative when our national cartoonist is arrested for humoring us?

Rushing to conclude a matter of national importance just to meet the 2020 year milestone and changing big plans introduced previously such as economic corridors, that are later repackaged by new Prime Ministers only adds to the inconsistent policy making culture (some say flip-flopping) that undermines confidence in the plan’s success.

The plan appears to works backwards from developed country status to high-income status in 2020. This is the source of the problem, silly as it sounds. The impact of this is not only to make the targets "costly, confusing and convoluted" but also conjectural.

Even Tun Dr Mahathir Mohamad recently alluded to the possible failure to achieve Vision 2020’s objectives, which is the premise for the NEM timeline.

Overall, there is much room for improvement in making the ETP viable, realistic and sustainable. And to do that, I now shall outline some suggestions in the form of a formula.

Formula for NEM (ETP) Success

I am providing a ‘4E’ formula to keep in line with the many acronyms introduced by the government recently. To be fair I find acronyms useful as mental markers to organize the numerous concepts needed to frame a big idea such as the NEM.

The ‘4E’ formula to make NEM a success is; Education + Empowerment + Efficiencies = Economic Growth (NEM).

The main thrust of the 4E formula is to 'Build Capacity' for productivity, innovation and sustainability through a one-time massive government investment similar in effort to the US Space Project, in education, research and development, political reforms and effective policies.

And on balance with the need for huge investments, we also need to reduce waste through efficiencies and transparency so that every ringgit invested in 'Capacity Building' provides the highest returns for the benefit of all Malaysians

First E: Education

The NEM already stated the need for at least 3.3 million quality workforce. This includes for more than half to be first degree and diploma holders.

To produce quality workforce requires quality education.

Before I proceed, I would like to note that the recent announcement by the Deputy Prime Minister who is also the Education Minister that vocational education will be revamped is commendable.

The suggested actions to be taken are:

Depoliticize Education

The Deputy Prime Minister’s recent statement of his inability to take action on the case of the two principals for racist remarks due to administrative procedures may have an unintended consequence of reaffirming the separation between politicians and the civil service.

It is hoped that this ‘depolitisation principle’ includes all government ministries and to a certain extent also to the judiciary and other institutions. I hope it is not selectively applied for political expediency only.

Removing the Universities and University Colleges Act (UUCA) will add towards improving the innovation culture and quality standards of tertiary education to meet NEM objectives profoundly.

· Pre-school, Primary And Secondary School Enhancements:

Offer Pre-school education to all Malaysian children

The current education NKRA achievement where 54,569 children have benefited from 1,358 pre-school classes is a step in the right direction.

However, it should be accelerated to cover all children numbering at least 1.5 million for three pre-school age group cohorts.

Enhance teaching capacity

- Hire more teachers and assistant teachers by 50%

- Upgrade teacher qualification and professionalism

- Increase salaries by 50%

Enhance school curriculum

Move towards a critical and creative thinking approach including for examination questions.

Increase School Hours

Adding 45 minutes daily can increase academic achievement significantly.

Single session schooling

Build more new schools and additional classrooms in existing schools. Also continue to fully equip them with ICT infrastructure.

· Tertiary Education Quality, Accessibility and Affordability

In summary the following should be considered for tertiary education excellence:

-Greater Autonomy

-Massive Phd Programs for Academic Staff

-Increase Research and Development capacity

-Increase Salaries

-Hire Foreign Academic Staff Talent

-Introduce Ranking System

-Convert PTPTN loans to scholarships

-Provide more scholarships and subsidies

All these actions would require political will and increased public financing to succeed.

The political will to depoliticise and democratize education along with repealing the Universities and University Colleges Act (UUCA) will signal the government’s sincerity and commitment to make the NEM a true success for all rather than just for a few Malaysians.

From a public finance perspective, even if the above measures add another 4.5% to the government’s 4.5% average education spending for a total 9% of GDP annually for the next 10 years, this will indicate to the people and the international community of our determination to meet the NEM objectives.

As a possible source of funds, I had proposed earlier that 30% of Petronas annual profit be a mandated contribution to a National Education Fund. This also would include implementing an NEP Bumiputera Equity Redistribution Plan (Quota – in a –Quota) where 25% of current Bumiputera equity ownership of both publicly listed or privately held companies be sold at par-value (which is the official equity ownership calculation criteria) to the same National Education Fund entity.

Second E: Empowerment

One of the most if not the most important key success factor for NEM’s success is innovation. And innovation needs freedom. Freedom can only come from empowering society.

To empower society, I had suggested that we need to add a fifth pillar to the national transformation agenda which is already based on four pillars of 1Malaysia, GTP (Government Transformation Plan), ETP (Economic Transformation Plan) and 10th Malaysia Plan, to be called the PRP (Political Reformation Plan).

PRP includes repealing all anti-democratic laws, respecting separation of powers, reforming national elections and restoring local government elections, returning the judiciary’s and other state institution’s independence, fighting corruption, ensuring a free media and by abiding to the true meaning of our constitution.

By doing so, I am sure that the international community specifically the foreign investors will find it attractive to return and contribute more than the 25% FDI needed to finance the ETP.

Third E: Efficiencies

There are three efficiencies that must be considered to make NEM successful.

They are Government Service Efficiency, Market Efficiency and Social Security Efficiency.

* Government Service Efficiency

The current Government Transformation Plan (GTP) already addresses this matter to a certain extent.

However, I hope that the initial trend of depoliticising the civil service inadvertently introduced by the Deputy Prime Minister in regards to the two principal racist remark affair shall be a permanent feature to transform the government as planned.

I would also suggest that more talented Malaysians be recruited into the civil service by making it more attractive with market-rate salary and benefits. I believe quality should be the main consideration as we already have quantity with a huge civil service.

We also need a significant and empowered technocracy (i.e. professionals with specialized skills just as in Singapore, Taiwan and Korea.) There is no point in developing our human capital development to a very high level in these areas if they are not then placed in senior decision-making management and administration positions. It is possible to make bureaucrats out of technocrats but not the other way around. They must be empowered, evaluated and promoted based on achievements and track record.

Another important factor that will improve government efficiency and accountability is to return the Local Government Elections immediately. This third tier of government will provide a faster response by the government in delivering services for the real needs of the ratepayers.

* Market Efficiency

Information or rather the quality of information is necessary for market efficiency.

This would include timely, accurate and consistent information on policy, events and plans.

One of the ways that information is reliable is to allow for a free media.

Therefore, as a step forward, I hope the government will allow more permits for daily newspapers to be approved including my own permit for Utusan Rakyat.

Structural distortions by favorable policy and selective benefits to certain sectors, economic leakages, corruption, opaque procurement practices and inconsistency policy statements will never make NEM a success for all stakeholders.

* Social Security Efficiency

The households who live below the poverty line must be assured of equitable assistance from the government. This includes targeted subsidies for essential goods and services such as health and education.

As a first step it is necessary to review the Poverty Line Income (PLI) which should be RM1,886 rather than the government’s PLI average of RM800 per household . This would ensure existing policies and programmes are realigned accordingly to provide an effective safety net for the people.

Another step is to implement a living wage of at least RM1,500 per month.

And to ensure affordable living expenses, the government must enforce anti-monopoly laws across all sectors combined with fighting corruption and white collar crime that add cost to prices for consumers.

Fourth E: Economic Growth

I fail to see how Education, Empowerment and Efficiencies with the suggested actions are not crucial contributing factors for Economic Growth.

The absence of policies, funding and political will to implement these factors will only add to the current skepticism in the NEM initiative.

I hope that our economist and policy makers will add to this discussion with more details.

I also hope that a more constructive debate on these factors will take place with all stakeholders especially in the next Parliament sitting.

Furthermore, I would even dare to suggest that implementing the ‘4E’ formula will definitely benefit the current government’s standing and make the opposition more competitive for votes.

This is a price I believe the people and even the opposition should be willing to pay for a better Malaysia.

The cost of doing the right thing is nothing compared to the cost of a failed NEM plan leading to a failed nation.

[1] Richard Leete, "Malaysia: From Kampung to Twin Towers", p. 169