A nation of failed economic development plans
Since Independence we have always strived to be a country with strong social, economic and political credentials: a strong healthy and united people, public safety and security, great infrastructure, mature democracy, clean human rights record, good education system, governed under rule of law, and of course, a justice-minded judiciary. To top them all off we are to enjoy a per capita income equal to the peoples in advanced economies. We wish to be an advanced country in our own right.
The current realities are anything but. The people are fragmented while some are migrating to friendlier lands, our infrastructure while adequate is wasteful, our democracy is an ugly disguise for authoritarianism, our education system produces non-thinking graduates, the rule of law has become the rule by law, and the judiciary is an international laughing stock.
The latest world indices would confirm this. There are many but I'd mention just two. First, the 2009 figures for FDI showing an 81 percent fall from US$7.32 billion to US$1.38 billion. At this paltry level we now have joined investment-unattractive countries like Myanmar, Cambodia, Laos and Timor–Leste.
Not only that, apparently the FDI into Thailand and Indonesia have overtaken that coming into Malaysia, once the darling of international investors.
Two, as for per capita income we are at about US$7,000 while the advanced countries we wish to join are at US$30,000 and above. We are less than a quarter of the way to our self-proclaimed goal.
On looking back, we started well in the arena of economic development, but somewhere along the line we faltered and very badly.
Faltered from the start
I reckon we faltered beginning 1970 when we introduced the New Economic Policy (NEP). This was when we began propounding and experimenting economic development plans beyond the parameters of sound economic principles.
Specifically we made plans and projections not in the interest of the country, but in the interest of a segment of the population, namely the Malays.
Now this might be an explosive statement to make so I have to make my stand clear.
The fact of the matter is that the factors of production in an economic set-up are land, labour, capital, entrepreneurship, and in an increasingly knowledge-based world economy, on the ability to access and utilise knowledge. I 'borrow' these factors as principles for economic development.
For an economy to expand therefore, all scarce resources must be optimally channelled for the development of these principles.
I'd reiterate: develop land, inject capital optimally for investment, encourage entrepreneurship, enhance the level of knowledge through smart education. Only then can the economy expand and achieve sustainability.
This last element of sustainability is important – the developing economy must reach a level when it can sustain or regenerate itself without anymore support from any planning agency.
Anything less than this and we can see an economy not going anywhere, and could in fact regress, like our current situation. Lim Kit Siang sums it well – the economy would be a 'work in regress'.
What has gone wrong with our string of development plans? In my view there are several, and I mention them here despite being aware that many commentators have mentioned them constantly. Perhaps there can be some wisdom in saying the same things again, hoping somewhere along the line the decision makers can begin to listen.
Several hundred billion USD wasted
First, after 1970 we seem to divert the elementary formula for economic development mentioned above, into some non-optimal channels resulting in massive wastage. Our planners channelled land development mainly to the Malays. We made development plans for sectarian, not for national interests.
In this way the Malays gain comparatively easy access to scarce capital they cannot fruitfully use because of their lack in entrepreneurial skill and spirit. Their lack in education and knowledge have rendered their productivity level below that of their non-Malay counterparts.
I am aware of course that this resource misallocation was for a special reason and thereby meant to be implemented only for twenty years. But when this time was up the authorities would merely forget this proviso.
As events turn out, such allocations have proven to be below optimum level; even wasteful of scarce resources. External observers have noted that the NEP wasted several hundred billion US dollars!
Favouring race over economics
When the leaders saw that the Malays could not cope and the non-Malays restive they use race and religion to both spur the Malay on and to push away any non-Malay disgruntlement. In other words the leaders dismissed the traditional economic factors of national asset creation in favour of Malay racism and cultural hegemony under the banner of Ketuanan Melayu; and of Islam.
I might be out of academics but I have never known racism and religion to substitute economic factors in any country's asset creation efforts. Surely the planners have not forgotten that this new formula was experimental in nature and to last only for twenty years.
In any case, here we see the early unintended results of the NEP. On the part of the Malays we see a community of people developing a false sense of confidence that they have progressed ahead on the platform of race and religion; whereas in actuality they have not.
On the part of the non-Malays they see the wastefulness of the country's allocation of scarce resources in the interest of racism and religion as the sure way towards non-sustainability and regression.
The current realities are anything but. The people are fragmented while some are migrating to friendlier lands, our infrastructure while adequate is wasteful, our democracy is an ugly disguise for authoritarianism, our education system produces non-thinking graduates, the rule of law has become the rule by law, and the judiciary is an international laughing stock.
The latest world indices would confirm this. There are many but I'd mention just two. First, the 2009 figures for FDI showing an 81 percent fall from US$7.32 billion to US$1.38 billion. At this paltry level we now have joined investment-unattractive countries like Myanmar, Cambodia, Laos and Timor–Leste.
Not only that, apparently the FDI into Thailand and Indonesia have overtaken that coming into Malaysia, once the darling of international investors.
Two, as for per capita income we are at about US$7,000 while the advanced countries we wish to join are at US$30,000 and above. We are less than a quarter of the way to our self-proclaimed goal.
On looking back, we started well in the arena of economic development, but somewhere along the line we faltered and very badly.
Faltered from the start
I reckon we faltered beginning 1970 when we introduced the New Economic Policy (NEP). This was when we began propounding and experimenting economic development plans beyond the parameters of sound economic principles.
Specifically we made plans and projections not in the interest of the country, but in the interest of a segment of the population, namely the Malays.
Now this might be an explosive statement to make so I have to make my stand clear.
The fact of the matter is that the factors of production in an economic set-up are land, labour, capital, entrepreneurship, and in an increasingly knowledge-based world economy, on the ability to access and utilise knowledge. I 'borrow' these factors as principles for economic development.
For an economy to expand therefore, all scarce resources must be optimally channelled for the development of these principles.
I'd reiterate: develop land, inject capital optimally for investment, encourage entrepreneurship, enhance the level of knowledge through smart education. Only then can the economy expand and achieve sustainability.
This last element of sustainability is important – the developing economy must reach a level when it can sustain or regenerate itself without anymore support from any planning agency.
Anything less than this and we can see an economy not going anywhere, and could in fact regress, like our current situation. Lim Kit Siang sums it well – the economy would be a 'work in regress'.
What has gone wrong with our string of development plans? In my view there are several, and I mention them here despite being aware that many commentators have mentioned them constantly. Perhaps there can be some wisdom in saying the same things again, hoping somewhere along the line the decision makers can begin to listen.
Several hundred billion USD wasted
First, after 1970 we seem to divert the elementary formula for economic development mentioned above, into some non-optimal channels resulting in massive wastage. Our planners channelled land development mainly to the Malays. We made development plans for sectarian, not for national interests.
In this way the Malays gain comparatively easy access to scarce capital they cannot fruitfully use because of their lack in entrepreneurial skill and spirit. Their lack in education and knowledge have rendered their productivity level below that of their non-Malay counterparts. I am aware of course that this resource misallocation was for a special reason and thereby meant to be implemented only for twenty years. But when this time was up the authorities would merely forget this proviso.
As events turn out, such allocations have proven to be below optimum level; even wasteful of scarce resources. External observers have noted that the NEP wasted several hundred billion US dollars!
Favouring race over economics
When the leaders saw that the Malays could not cope and the non-Malays restive they use race and religion to both spur the Malay on and to push away any non-Malay disgruntlement. In other words the leaders dismissed the traditional economic factors of national asset creation in favour of Malay racism and cultural hegemony under the banner of Ketuanan Melayu; and of Islam.
I might be out of academics but I have never known racism and religion to substitute economic factors in any country's asset creation efforts. Surely the planners have not forgotten that this new formula was experimental in nature and to last only for twenty years.
In any case, here we see the early unintended results of the NEP. On the part of the Malays we see a community of people developing a false sense of confidence that they have progressed ahead on the platform of race and religion; whereas in actuality they have not.
On the part of the non-Malays they see the wastefulness of the country's allocation of scarce resources in the interest of racism and religion as the sure way towards non-sustainability and regression.
And yet the authorities would prevent the citizens to even debate the issue.
No post mortem conducted
Come 1990 and the NEP report card had shown the recklessness of this development programme. Malay achievements were nowhere in sight.
Would there be some form of post-mortem analysis to see the good and bad points? To see whether the country should progress ahead in the same race-and-religion principles?
There has been no such effort, not to my knowledge anyway. It has been more of the same: more racism, more religion. And here we see the continuation of a string of failed development programmes.
No post mortem conducted
Come 1990 and the NEP report card had shown the recklessness of this development programme. Malay achievements were nowhere in sight.
Would there be some form of post-mortem analysis to see the good and bad points? To see whether the country should progress ahead in the same race-and-religion principles?
There has been no such effort, not to my knowledge anyway. It has been more of the same: more racism, more religion. And here we see the continuation of a string of failed development programmes.
Dr Mahathir Mohamad (left) announced the Vision 2020 stating that the country would join advanced nations by this magical year. It was well-intended perhaps, but with the economic principles remaining unchanged, that is in favour not of the country but of the Malays, the country began its slide downwards. When Abdullah Ahmad Badawi took the reins of power, many people had thought that he might just do the right thing to put the country back on the right track again. But he used religious motives (remember Islam Hadhari) to lead the people forward – there was no change there either.
Now we have Najib Razak leading the nation out of the dangerous zone of falling into the steep precipice of a failed state. He has his own plans of course, and its called 1Malaysia: people first, performance now. Will he make any headway?
I just say this to him for whatever it is worth. Go ahead with your development plans based on the proven factors of production as mentioned severally above.
But do not be distracted by sectarian interests, nor for religious considerations. Go for optimum scarce resource allocation and economic sustainability.
AB SULAIMAN is an observer of human traits and foibles, especially within the context of religion and culture. As a liberal, he marvels at the way orthodoxy fights to maintain its credibility in a devilishly fast-changing world. He hopes to provide some understanding to the issues at hand and wherever possible, suggest some solutions. He holds a Bachelor in Social Sciences (Leicester, UK) and a Diploma in Public Administration, Universiti Malaya.
