THE 12th Malaysia Plan (12MP) looks good on paper but there is a lack of direction and implementation on how the government will achieve the goals set out in the plan, say economists.

Speaking at an online forum organised by the Malaysian Institute of Economic Research titled “12 MP: Is it a real and rational reset for the rakyat?”, they said while the 12MP promotes sustainability, prosperity and inclusivity as its main thrust, the government will not get far without proper implementation.

The plan, which is supposed to set the country’s economic agenda for the next five years, is now more reflective of the economic plans of the prime minister of the day and not on how to expand the country’s development expenditure, the economist said.

“The objective set out in 12MP, you cannot argue against it. I like inclusiveness, it matters in the long-term development,” Dr Muhammed Abdul Khalid, the managing director DM Analytics, said.

“It departs from 11MP in terms of reducing regional disparity by giving more allocation to poorer states. The impact of Covid-19 on poorer states is more evident, such as Sabah and Sarawak.

“But when you look at the targets and how to achieve them, it’s sad and not serious. This report is too crowded and the target is poor. If we can interfere, we should.

“There are no immediate plans on how to increase the income share of the B40 by 2025, nor are there deep discussions on inclusiveness and social protection.”

Khalid said the government failed to address immediate problems such as the impact of allowing retirement fund withdrawals, which will lead to more people retiring poor with no dignity.

At the same time, issues such as child nutrition, which is a national crisis, was not given enough attention at all, he said.

“12MP is not enough to reset the economy, it’s business as usual.”

The 12MP was tabled by Prime Minister Ismail Sabri Yaakob in Parliament on September 27.

Ismail had announced the government will allocate RM400 billion to meet the needs of the 12MP, especially to fund development projects.

Among the targets for the five-year plan (2021-2025) are gross domestic product (GDP) growth of 4.5-5.5% per annum, increasing gross national income (GNI) per capita from RM42,503 to RM57,882 and increasing employee compensation from 37-40%.

The 12MP also aims to increase the average monthly household income from RM7,160 to RM10,065 by the end of the five-year plan.

Focus will be given to gearing up for the 4th Industrial Revolution, providing an enabling environment for the digital economy and intensifying research and development.

The 12MP stated that with better labour market conditions, Malaysia will regain full employment and in tandem with the economic growth, salaries and wages are also projected to rise, thus contributing to higher household income.

Economist Dr Nungsari Radhi called the 12MP a “skinny decaf latte” which is flat and diluted, and defeats the purpose of having a five-year economic plan in the first place.

“When it first started in 1970, it was a double espresso, now it’s diluted like a latte, with too much milk. So many people get involved in doing it, rather than just the economic planning unit and the treasury,” Nungsari said.

He said these days, the plans are also more reflective of the prime minister of the day.

“The plan has become a platform for prime ministers to present an economic agenda rather than what it used to be before, which was a five-year plan within a 10-year perspective to determine what will be the development expenditure.

“This plan has everything for everybody, and because it has everything for everybody, it lacks a particular focus.”

Implementing the 12MP

In terms of implementation, Prof Jomo Kwame Sundaram, research adviser of Khazanah Research Institute, said it was time that guidance came from the public sector rather than the private sector.

“The public sector provided a great deal of leadership up until the 1970s, until the Asian Financial Crisis. It was the public sector that led and the private sector followed. Domestic leads, foreign follows, with exception.

“What we have done in the guise of privatisation has been to privatise profits and socialise risk and cost. There are major reforms that are needed, and that politicians are not interested in. We need to change the discourse,” he said.

Khalid added that a lack of trust between public and private sectors also makes it difficult for the plan to be executed.

“The overall aim is, there needs to be engagement from both parties. Pemudah (Special Task Force to Facilitate Business) did extremely well in reducing red tape.

“The problem is, there is no trust in the government, which is needed for execution. When it comes to the RM400 billion, how you spend it must be transparent.”

Where will the RM400 billion come from?

As to how the government plans to get the RM400 billion to execute the 12MP, Nungasri said all of it will have to be borrowed.

“The budget deficit will go on. The projection is until 2025, the budget will be in deficit. At the end of 2025, Malaysia is expected to have a debt of RM1.2 trillion. That’s why the inevitability of having to borrow is inevitable.

“While we are borrowing and incurring debt, we have to make sure there is growth. That we are spending on real things that generate growth and address things such as unemployment.

“Chunky things like the East Coast Rail Line (ECRL) are in the tens of millions. But how are things going to resolve unemployment? If we don’t settle unemployment, the economic crisis will prolong.”

Khalid said the government can still turn to windfall tax and auction the building of the 5G network.

Jomo agreed that now is a good time to raise the tax as most companies will not feel the pinch.

“Most companies are not making big money, they don’t feel the tax rate. The world tax regime is changing and we have to rethink the overall tax strategy.

“For a small country, we have so many tax authorities. We should have an integrated tax authority.

“We have a situation where the tax system is regressive. Government spending has also been regressive. We don’t have a serious fiscal economy to look at this in greater detail. There is a need for reform,” Jomo added. – October 14, 2021.