What the prime minister said and left unsaid

Tricia Yeoh

LAST week, Prime Minister Najib Razak gave an outstanding speech to international investors at the Invest Malaysia 2017 conference. I am sure many were impressed with the economic achievements that have been accomplished to date. However, some of the facts that were quoted would require further elaboration.
The speech started with mention of the New Economic Model (NEM), launched seven years ago at the same conference, with a plan that has worked and is continuing to work. 

One of the key approaches of the NEM economic development plan is to move away from “dominant state participation in the economy” towards “private sector-led growth”. However, an IDEAS policy paper published last year examined GLC disposal and investment exercises from 2011 to 2014 (after the NEM was published, by the way) and found that the total acquisition value of RM51.7 billion dwarfs the total disposal value of RM29.5 billion. In simple language, GLICs and GLCs combined have acquired far more than they have sold.
Second, Najib quoted a Bloomberg article which called the ringgit “easily the strongest major Asian currency this quarter”. What was not mentioned was that the ringgit was considered to have made a remarkable improvement only because it had recently rebounded from a 19-year low. 

Anyone who has children studying overseas would know that until as recently as January, the ringgit had lost about 22% of its value since the start of 2015 and was at the point the worst-performing currency in emerging Asia. In fact, an analyst in the very same article seems to imply that the recent growth momentum is strongly related to the impending election, and asks “but what happens after it?

Third, it was said that the government was committed to transparency, accountability and good regulation. Integrity and governance units in all GLCs, at both federal and state levels, should certainly be applauded. However, these units are monitored by the Malaysian Anti-Corruption Commission, which reports to the Prime Minister’s Department. It is difficult to see how any conflict of interest involving the current administration could be avoided if the integrity and governance officers were to uncover wrongdoing within their GLC placements.
Fourth, international bodies such as the OECD, IMF and World Bank were said to have praised Malaysia’s economic performance. While the summaries of these reports might have been relatively positive – of which one could certainly be proud – there were numerous other big, red flags contained in the reports. These warning signs are indicators that not all is perfect. I say this not with the intention of disparaging my own country – far be it for me to discourage investors from coming in to provide valuable capital for future long-term growth – but to be frank about what it will really take to move our economy forward. Unless we face the truth squarely, we will never institute meaningful reforms and will merely chug along.
On this note, IMF was quoted as saying that Malaysia is amongst the fastest growing economies among peers. The very same report also highlights that our country’s “federal debt and contingent liabilities are relatively high, limiting policy space to respond to shocks”. Second, it also says that our “household debt remains high, with debt servicing capacity growing only moderately”. These are only two points that I am lifting from the report – if one looks closer, there are serious challenges that may implode over time if left uncorrected.
Similarly, the World Bank was quoted as saying our economy is progressing from a position of strength; however, the same report says that risks in the economy “arise from growing threats of protectionism” and that there is a need to “accelerate structural reforms in the economy”. In short, there is a need to examine the details and not just gloss over the summaries of these reports, advice I would provide to any investor looking into Malaysia.
Fifth, it was stated that his administration is cracking down on “crony capitalism”, “sweetheart deals” and that there would be no more “national follies kept going to stroke the ego of one man”. Further, it was said that there should be “No more treating national companies as though they were personal property”. Let us hope then that the national agencies such as the Attorney General’s Chambers will lend its co-operation to any and all investigations including those from international bodies to assure us that 1MDB will not fall into such a category.
Sixth, SMEs were hailed as the “hallmarks” of your administration as they are the backbone of the economy. Government policies are therefore meant to be business-friendly and pro small and medium enterprises (SMEs). However, the Price Control and Anti-Profiteering Act is one example of a policy that is adversely affecting SMEs. The mechanism places price ceilings on food and household goods sold at mamak and even small sundry shops. The mechanism to calculate the “right” price is so complicated that some have closed shop altogether because they could not afford to pay the fine. There are numerous other examples of regulations that are in fact making it very difficult for the business community to operate, which have been raised regularly at public forums but seemingly in vain.
Finally, the speech was peppered with many references, obviously targeted at a specific individual. This may have been better said at a platform hosted by a political party. To have these words uttered at a formal international investment conference may have been considered highly unusual. It is hoped that the next Invest Malaysia speech could be more carefully worded – for the sake of future investment into this country. – August 6, 2017.

* Tricia Yeoh 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.

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