kheru2006 (kheru2006) wrote,
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kheru2006

The truth is out there

DATUK Seri Idris Jala must be lauded for taking on Bloomberg’s William Pesek for what Idris describes as the latter’s recent “disgracefully biased and ill-informed article” on Malaysia, “Article was disgracefully biased” (The Star, June 22).

What are the acrimonious issues between Idris and Pesek?

Firstly, Pesek mentioned Malaysia’s “underlying economic distress” and “prolonged slow growth” caused by “race-based policies that strangle innovation, feed cronyism and repel multinational companies”.

Idris denied these allegations, stating that economic growth expanded by 6% last year and would grow at an internationally projected 5.6% for the next four years.

Idris is right, but that doesn’t mean Pesek is wrong. Actually, if not for some race-based policies, expenditure wastage, extremism, cronyism and corruption, economic growth could have been greater given Malaysia’s rich natural and multiracial human resources.

So, much more could have been done to better distribute income and spread the economic benefits across the 40% lower income groups.

Secondly, fiscal deficit and debt have been restrained, said Idris. But the question lingers on that it would be difficult to sustain this fiscal management given the continuing corruption, wastage of public funds and the 1MDB debt overhang.

It is also misleading to compare our high deficits and debts to the even larger deficits and debt of the United States, Japan and Singapore. Don’t forget they are rich developed countries that have wider margins of economic resilience to rely upon.

Our economy in fact is and can be perceived as less robust and sustainable in the longer term. This is due to the doubts and uncertainties resulting from the growing racial, religious and political polarisation and excessive politicking going on now.

Thirdly, poverty, especially absolute poverty, has actually been considerably reduced, as highlighted by Idris. But with rising prices, especially with the declining ringgit, GST and other charges, the urban poor now find it extremely difficult to make ends meet.

At the World Bank Global Economic Prospects Report 2014 seminar, which I chaired at Bank Negara, it was stressed that transport costs take a high toll on the incomes of the 40% low income urbanites.

Then you add high house rentals, tuition fees, rising food prices, etc, there is an almost hand-to-mouth existence.

Fourthly, it is true that inclusive policies and developments have been impressive, and Idris has shown that Pesek is woefully wrong in his criticism here.

Public services like water, electricity, roads, schools, hospitals and clinics are spread all over the country.

Idris and all of us can be happy that even remote areas in Sabah and Sarawak have now greater access to government facilities and amenities. But much more needs to be achieved not only in quantity but also quality.

Despite high and consistent investment in education to raise literacy and employment, productivity and incomes, our education standards from primary schools to universities have been weak by international standards and ranking.

This is what causes “economic distress” and keeps us stuck in the middle income trap. The poor standards in English, Maths, and Science are doing us considerable harm.

I believe Idris will agree with these views, which are shared by a large number of Malaysians. But most political leaders will not act faster to overcome these problems, so how could Idris rebut Pesek on this?

Fifthly, on Pesek’s “alleged failure to dismantle race-based policies that strangle innovation” point, Idris countered that “Malaysia eased rules governing overseas investors”. But this does not adequately cover Malaysian non-bumiputra investors. Malaysians are moving their private capital and potential investment here by the billions. The bumi-non-bumi dichotomy is depleting our capacity to compete.

The brain drain continues as many Malaysians, including Malay colleagues, feel more insecure about rising extremism and perceived discrimination in so many fields.

Pesek is not wrong here and we cannot afford to be indifferent to the reality on the ground regardless of more liberal treatment given to foreigners at the expense to Malaysians.

Sixthly, the ringgit is indeed weakening. Pesek argued that “the ringgit’s fluctuations are a decent summary of the country’s wayward course in recent years”. I agree with his views, as I have publicly written earlier.

The decline of the ringgit reflects the confidence in the national economy. Idris suggested that Pesek perhaps “would like to discuss this matter with Tan Sri Zeti Akhtar Aziz, one of the most admired central bankers in the world”.

But knowing the good Governor, I think she would be the first to acknowledge that economics is not an exact science and that there is no place for economic analysis or judgments that can be cast in stone.

The ringgit’s decline could worsen if the economic structure and our policies are not transformed more substantively. This is where Idris could help from an economic point of view, with help from the Treasury and the Economic Planning Unit.

Seven, Pesek, I believe, is facetious when he suggests “a return to old leadership is urgent”. I would not presume, like Idris, that Pesek has criticised the country “to please a former Prime Minister .

But Pesek’s logic is somewhat skewed here. Many would argue that our present predicament is largely due to past failed policies and practices, so what is he really up to?

Eight, Idris is reasonable in saying that we will attain “a high income status nation by 2020”. But the rakyat would respond: “What is in it for me?”

If the socio-economic welfare of the rakyat continues to deteriorate, they will feel more frustrated. So we have to ensure the economic benefits seep down to the bottom 40%.

Ninth, Idris is not wrong in stating that “many countries and institutions can see the progress we are making”. Indeed, we have and are doing well so far. But will we be able to sustain this progress? Compared to most of the developing world, we are streets ahead. Many countries admire our several successes and want to know how we made it despite our many divisive forces.

Tenth, as Idris asserted, there are differing opinions on our performance and future path as a developed country after 2020.

The overriding question, however, is whether our present strong economic fundamentals are sustainable in the long term.

This is where Idris and Pesek genuinely differ. Idris stressed on our generally successful economic past and our present achievements.

But he was quite quiet about our many weaknesses while Pesek examined the structural weaknesses and light transformation of our economy in the interests of long-term sustainability.

I believe the truth is to be found somewhere between the two respected professionals.

TAN SRI RAMON NAVARATNAM Chairman Center of Public Policy Studies (ASLI) The STAR Home News Opinion Letters to the Editor 26 June 2015
Tags: ekonomi, truth
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