THERE was not an eyebrow raised, neither was a squeak heard when the Attorney-General Tommy Thomas revealed on September 20 that there were more than 350 lopsided contracts favouring counterparties drawn by the previous Barisan National-led government. Perhaps these 350 contracts did not raise public outcry because they were pale in comparison to the mega lopsided contracts with China’s conglomerate that ran into the tens of billions.

The aggregate impact of the more than 350 lopsided contracts believed signed over the last decade would have serious repercussion on our nation’s economy and it partially explains why we are in a middle-income trapped economy. Lopsided contracts allow for secret deals, corruption, money laundering, underground black money movement, and the flight of ringgit to foreign exchange. These are leakages to our economy which otherwise could have positively contributed to our economy in many ways.

The World Bank has categorised (in 2017) middle-income countries as those with a gross national income (GNI) per capita from US$1,006 (RM 4,160) to US$12,235. High-income economy is categorised as one with GNI per capita of more than US$12,235. Malaysia has achieved middle-income economy status in 1992, and we aspire to achieve high-income status by 2020.

In 2009, the year Najib Razak became Prime Minister; our GNI per capita was US$7,181. It gradually increased yearly and surpassed US$10,000 and topped at US$10,814 in 2014. The succeeding two years saw decline to UD$9,214 in 2016. These last four years coincided with the revelation of the 1MDB scandal, along with mega lopsided contracts with China’s conglomerates and obvious secret deals and kickbacks.  

Our current GNI per capita at US$9,660 remains below the peak achieved in 2014, and seems trapped in the ignominious 1MDB hole. A middle-income trap is where a country after having attained middle-income from low-income, remains stuck at that level. Three of the previous four Asian Tigers – Singapore, South Korea and Taiwan have today become high-income economies. Malaysia, the fourth Asian Tiger of the yesteryear, only aims to achieve high-income status by 2020.

To achieve high-income economy there has to be steady growth. Malaysia’s gross domestic product (GDP) annual growth rate peaked at 10.3%, a year after Najib Razak became Prime Minister, due mainly from high external borrowings, or debt spending. Thereafter GDP growth rate gradually declined to a yearly average of 4.8%. At this rate, and with two years to go, our aim for a high-income status economy has to remain a dream.

We are now at an economic crossroads with a choice to do more of the same through political dictate, or a reset driven by good economic sense. The more than 350 lopsided contracts is an attestation of the result of indiscriminately implementing the affirmative action policy that shamefully gave politicians the feeling that corruption is a right. Current calls for the affirmative action policy to be needs-based instead of race-based may be a good start. To continue to do more of the same is certainly a path to ruination

A reset driven by good economic sense has to be bold. A reset perhaps to more than ten years ago when the knowledge-based, or K-based, economy was promoted with much pomp. A K-based economy revolves around utilisation, production and distribution of knowledge as an engine of growth. Knowledge and innovation play an important role to generate and sustain growth. The K-based economy is not a stand-alone economy, but encompasses other aspects of socio-education to succeed. The populace has to be mobilised, every person must feel needed and welcome to contribute positively to the nation’s economy, to have a sense of belonging and patriotic spirit. Needless to say our education system has to be improved. Currying favour for promotion, substandard teaching, plagiarism in academia, and the like have to be confined to history.

Unlike the production-based (P-based) economy, the K-based economy gives prominence to educated and skilled human resources. Each and everyone is an important asset to our economy and our nation. It makes good economic sense that this is the obvious path for our country to achieve high-income status. Besides, it is also politically correct.

Our nation needs bold and decisive political leadership to rise from the middle-income trap to a high-income nation, and to make Malaysia great again. – September 27, 2018.

* Captain Dr Wong Ang Peng is a researcher with an interest in economics, politics, and health issues. He has a burning desire to do anything within his means to promote national harmony. Captain Wong is also a member of the National Patriots Association.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.