IN light of three looming economic policies – the Industrial Master Plan, the Midterm Review of the 12th Malaysia Plan and Budget 2024 – along with the Madani economic narrative in August, the Finance Ministry has opened up a platform for the public to share ideas on the “Suarakan Pendapat Anda - MOF” portal.

Recognising that the economic challenges in Malaysia are tough, as well as the pressure of global economic outlook, with high levels of national and household debt, slow global economic growth, food and fuel supply disruptions, increasing cost of living and high interest rates, I am proposing arguments below with a focus on three major areas: economy, subsidies, and social development.

Firstly, the Madani economic narrative should provide a radical change to national economic policies. The philosophy of Adam Smith’s economics must be fully implemented – an open market alongside ethics and morality to prioritise the concerns of the marginalised and the poor. Hence, the social market must be strengthened, revitalising a humane economy. The people must prosper, while the wealth of the nation must be distributed fairly.

The Malaysian economy must shift from being primarily driven by government companies to being majorly driven by micro, small, and medium enterprises (MSMEs), which contribute to more than 90% of business accounts in the economy, with a focus on necessities areas such as food security. An economic boost from MSMEs will bring about a significant national economic growth.

This economy must avoid excessive reliance on debt because debt leads to recession as outlined by Ray Dalio in his template on economic cycles every 8 to 10 years. A stable economy undoubtedly desires a sustained productivity with low risks of severe downturns.

Islamic social finance, which derives funds from philanthropy, zakat, and wakaf, must be maximised to replace project financing models, ensuring that national infrastructure projects are not burdened with profit-driven financing, thereby alleviating the burden on the majority of the people.

On subsidies, the principles of subsidies should ideally be established through a specific Act to prevent them from being easily  changed according to political preferences and seasons. 

A profit-sharing mechanism or a two-tier pricing method should be considered heavily on natural resources production such as oil and gas, as well as cash crops like palm oil and cooking oil, so that the people can enjoy the country’s resources at lower rates, not at the world market prices that end up burdening them. For example, the price of Petronas gas for domestic energy usage can be rationalised to not follow world market prices, making it affordable and subsequently benefitting the entire population across income levels.

In essence, the principles of subsidies must be clarified whether it is an assistance to the people or it is the people’s rights?

Thirdly, social development should fully harness the potential of Islamic social finance, such as iTEKAD, with the intention of uplifting the dignity of the poor from abject poverty. Cooperation with wakaf and zakat institutions should be streamlined and expedited. Burdensome project financing models should be replaced with social financing that lowers costs.

Collaboration with highly skilled organisations should be encouraged as a means of upskilling the workforce to meet the demands of the Fourth Industrial Revolution, focusing on current needs such as digitalisation, green economy, and renewable energy. This approach should be implemented extensively in every region, from urban areas to the hinterlands.

In formulating policies based on Madani economic narrative, the principles must not be detached from the guide of a verse of al-Quran, which urges us to act justly with care and compassion.

Hence, if we believe economic issues can be resolved entirely through economic policies, we overlook the paramount factor of education and training that focus on developing human capabilities, enhancing skills, and strengthening integrity and trustworthiness values.

We risk repeating embarrassing practices if the current blossoming excellence and confidence in long-term investments are once again infected by the epidemic of misconduct and corruptions in business processes, stemming from the loss of ethics and integrity within our national system. Ignorant past practices, including instigating religious and ethnic tensions, spreading falsehoods and slanders, concentrating wealth among selected groups, and pursuing national politics that do not prioritise the prevention of corruption, misconduct, and abuse of power, must be eradicated through the implementation of just laws and regulations, as well as the empowerment of the people’s institution, namely parliament.

Education’s mission is to not only to build excellent character of Malaysian children but similarly to develop ethical, knowledgeable, and responsible citizens. This approach will not only support economic initiatives but also ensure the uplifting of people’s dignity and the nation to the level of a new centre of civilisation in this region, guided by the principles of Madani.

Malaysia finds itself in a defining moment to radically transformed its economic structure, guided by the civilisational principle of Madani. This entails empowering MSMEs, reducing dependence on debt, harnessing the potential of social financing instruments, clarifying subsidy principles, and prioritising training and knowledge enhancement to cultivate people’s abilities, expertise, and unwavering integrity. 

It is importance to translate sustainability, care and compassion, respect, innovative, prosperity and trust into meaningful policies that bring positive progress to the people, business community and national interest. – June 20, 2023.

* Muhammad Yasir Tamizi reads The Malaysian Insight.

* 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.