NST: Why ex-envoy Malott has got it all so wrong... by Johan Jaaffar

Why ex-envoy Malott has got it all so wrong

by Johan Jaaffar

NST 12 Feb 2011

I FIND it mindboggling that the former United States ambassador to Malaysia, John R. Malott, could be so wrong in his assessment of the current state of racial relations in this country ("The Price of Malaysia's Racism" -- Asian Wall Street Journal, Feb 8). It was written sadly at a time when the US and Malaysia are enjoying their best ever relationship thanks to President Barack Obama and Datuk Seri Najib Razak. I can understand the ouster of then deputy prime minister Datuk Seri Anwar Ibrahim would still haunt Malott to this day. He has, of course, every right to make his own judgment of what happened back then. For the record, it took place 13 years and two prime ministers ago, historically speaking that is.

I am sure we have all moved on even if he has not. Too many things have changed since then. One positive thing Malott should understand is that freedom of speech and expression has reached new heights as a result of that incident. Malaysians are becoming more open, more vocal and more assertive. The Internet has changed the way people perceive the government, the media and themselves.

Malott should be proud of that fact if he is at all a supporter of all things free and open. The alternative spaces are widening, bloggers are having a field day and people's journalism is making inroads. We have seen the repercussions of that "open policy" -- Barisan Nasional was punished, rightly or wrongly, at the last general election. BN accepted the fact. But BN stands by its motto that this country is better ruled by a coalition of race-based parties than those based on chauvinistic dogmas and fundamentalist leanings.

It is so easy, if Malott had paid some attention while he was here, to play to the gallery. Just play the racial card. Portray oneself as the champion of a particular race. The temptation is irresistible. But BN and the parties in the coalition choose not to, the bigger agenda supersedes short term gain.
In a country like Malaysia, it is easy to create racial tension -- a cow's head, slices of pork, destruction of temples and mosques -- all hell can break loose. Just like that. But that is not the Malaysian way. We have survived despite our problems these many years. After all, we are not perfect.

Just last week, I wrote about the imperfections that I noticed in race relations in this country over the years. In "a bubbling, bustling melting pot of races and religions", it is impossible to be perfect. We are just too diverse, too different. But that does not mean we cannot live alongside each other. We have a reasonably good record in race relations management compared with many other countries. But why should we compare ourselves with others? The US, too, has its racial problems the last time I checked.

Perhaps Malott spends too much time listening to a hotchpotch of diplomatic gossip and irresponsible murmurs, so much so that he finds it difficult to differentiate fact from fiction, truth from hearsay. He was here when Malaysia registered the best ever economic growth. He didn't sound a warning bell about economic discrimination back then. He saw what happened to the region in 1997. He can't blame it on bad governance here when South Korea, Thailand, Indonesia and Singapore were badly if not worse hit. But we did not see turmoil as experienced by some of our neighbours.

The fabric of our society was intact even during the economic meltdown. We have addressed the racial imbalance economically, thank God, after 1969, though the policy was said to discriminate. The Chinese tauke, the Malay tokoh korporat and the Indian businessman were all hit.

The New Economic Policy (NEP), despite being savagely condemned, had achieved some of its desired results. At least it addressed the very issue that has bedevilled all multi-racial societies -- the danger, as Amy Chua rightly pointed out in her book World on Fire, of "market-dominant minorities". The NEP was not carved out from the Robin Hood principle of stealing from others to give to the Malays. The others are prospering, in fact more so after the implementation of the NEP that some segments of Malay society felt they would forever be left behind. The policy favouring the Malays has helped the rise of a new middle class among them, many of whom, for the record, are not enthusiastic supporters of the government. BN has to live with that.

Why invoke Perkasa's position when even the Malays themselves are nervous about it? There are tendencies of raucous chauvinism in the vernacular press -- the trend, while unhealthy, is certainly in line with Malott's notion of an open society. The media -- mainstream or otherwise -- is pushing the envelope and cyberspace has become a lawless domain. The government is not in the business of closing newspapers, suing bloggers or even censoring the Internet. But openness and freedom must come with responsibility. You don't need to go to journalism school to know there is such a thing as the S-word here. There are sensitivities we have to observe or else we will end up with anarchy.

While I agree that many of our people are working outside the country, I find it hard to believe that just because millions of Britons, French, Germans and others work in the US, these nationals are abandoning their country or unhappy with certain policies. We are dealing with a global economy and this is a global phenomenon. People have been crossing borders for better lives since time immemorial.

While it is true many of those working abroad "are skilled ethnic Chinese and Indian Malaysians", let's not forget that the Malays are also complaining that their children are not coming back after their graduation overseas. The brain drain involves Malay young men and women, too. It is not that they love Malaysia less, it is the lure of better pay and opportunities. To cite that "500,000 Malaysians left the country between 2007 and 2009" is an exaggeration at best, irresponsible at worst.

It is easy for Malott to bring up one or two incidents involving ministers or aides to portray the government as not sensitive to other religions. To say that racial instability is one reason for foreign investors to shy away from Malaysia negates the fact that Malaysia remains competitive among many emerging markets. We are not expecting Malott to understand the economic reforms made by the prime minister or his 1Malaysia campaign to unite the people.

Sadly, this old Malaysia hand, if he wants to label himself so, is just too far away and too far off the mark to understand the changing dynamics of this country.

Read more: Why ex-envoy Malott has got it all so wrong http://www.nst.com.my/nst/articles/17malot/Article/#ixzz1DjEB9SvT

East Asia Forum: Can Malaysia graduate?... by Hal Hill, ANU

Can Malaysia graduate?

East Asia Forum
January 19th, 2011
by Hal Hill, ANU

Malaysia is one of the developing world’s great success stories. Few countries outside of East Asia can match its development record. Since its independence over 53 years ago per capita incomes have risen more than eight-fold, and absolute poverty has been all but eliminated.

But it currently faces three key, interrelated challenges, some generic to upper middle income developing countries, others specific to Malaysia itself.

The first, how to graduate to the rich-country club, has been clearly articulated by the country’s Prime Minister, Tun Najib: ‘We are now at a critical juncture, either to remain trapped in a middle-income group or advance to a high-income economy … We now have to shift to a new economic model based on innovation, creativity and high value added activities.’

The second, shared by some of its Southeast Asian neighbours, is the country’s slower development trajectory since the Asian financial crisis of the late 1990s. Even before the current global financial crisis, which it has navigated quite successfully, economic growth in the 2000’s was about two percentage points below that of the decade 1986-96.

Particularly worrisome is the slump in investment, which has been stuck at little more than 20 per cent of GDP since the late 1990s. This is 10-15 percentage points of GDP lower than the country’s historic ratio. With savings remaining buoyant, the country’s external position has been transformed dramatically. In 2002, the country had net liabilities equivalent to 35 per cent of GDP. By 2008, this had been transformed to net assets of 20 per cent of GDP. Put simply, Malaysians have been finding overseas investment increasingly attractive, while foreigners have been less attracted to Malaysia.

The third challenge relates to the development of high-quality institutions to underpin a modern market economy in a country that has experienced continuous one-party rule for over half a century. Malaysia’s ruling United Malays National Organisation (UMNO) is in fact the world’s longest-serving governing party currently in power among all ‘quasi democracies’. Not surprisingly, elements of UMNO exhibit the problems of complacence and arrogance that one expects from entrenched one-party dominance.

Malaysia’s strengths are not to be underestimated. It has always been one of the most open economies in the developing world, to both trade and foreign investment. It has rarely had a severe macroeconomic crisis, in large part because of this openness. It derived a major early mover advantage from its adoption in the early 1970s of export oriented industrialisation through foreign direct investment, before it was fashionable to do so.

Among emerging economy manufactured goods exporters, it has progressed from 15th ranked and 1.2 per cent of the total in 1969-70 to 5th ranked and 5.2 per cent of the total in 2006-07. It is a major player in the global electronics industry. In 2006-07, it accounted for 3.8 per cent of global parts and components exports, in East Asia behind only the highly industrialised economies of China, Japan and Korea.

But Malaysia is struggling to shift out of low-skill activities, where it is no longer competitive with lower wage neighbours. These problems have been exacerbated by its vigourous promulgation of one of the longest running affirmative action programs in the developing world. Designed to redistribute employment and wealth to the dominant Bumiputera – principally ethnic Malay – community after the nasty communal conflict of May 1969, the so-called New Economic Policy (NEP) and its successors played an important role in promoting racial harmony in the country where there are large differences in living standards across racial groups.

But these programs have created a culture of entitlement, and they have resulted in institutionalised leakages that permeate practically every aspect of Malaysian commercial, social, political and educational life. The programs to advance Bumiputera development have benefited spectacularly the politically well-connected within this community, through preferential contracts, share allocations, and general commercial advancement, while all too little has trickled down to the general community. The programs can hardly be justified as anti-poverty programs when the principal beneficiaries are already egregiously wealthy.

As a result, some of the country’s industry policies have backfired. Malaysia might have been expected to be the leading Southeast Asian automotive producer, but Thailand has become the ‘Detroit of Asia’ owing to Malaysia’s disastrous national car program. In addition, the ‘spillover’ benefits from the large multinational presence in manufacturing have been limited by the fact that Malaysia’s small and medium enterprises (SMEs), that are predominantly owned by the ethnic Chinese community, prefer to stay small, below the threshold above which Bumiputera employment quotas become mandatory.

The country’s public universities, once among the region’s best, have also slipped in East Asian rankings owing to these ethnic quotas as well as heavy bureaucratic control. The civil service is bloated and in need of reform, while there is a very large state enterprise sector that functions in a non-transparent manner and subject to little public accountability.

Moreover, Malaysia has missed out on emerging service sector opportunities owing to the slow pace of liberalisation in that sector, itself a product of the very large presence of state-dominated firms and the NEP-preference schemes. And the country continues to experience a substantial brain drain as a result of the exodus of skilled professionals from the Chinese and Indian communities.

It is fashionable in Malaysia to attribute its current malaise to China, a country that is able to out-compete Malaysia in low-end and increasingly a sophisticated range of manufactures. While the ‘export similarity index’ (that is the composition of their exports) for the two countries is quite high, and thus there has some been some loss of market share to China from Malaysia in third-country export markets, the notion that the rise of China explains Malaysia’s current difficulties is untenable. That view overlooks the positive sum game for Malaysia from China’s rise.

As a resource-rich economy, Malaysia has benefited from the general China-fuelled rise in commodity prices, for example its exports of palm oil and oil and gas. Similarly, commercial opportunities in tourism and education have been rising rapidly, with two-way investments rising very quickly. And Malaysia is a central player in the increasingly China-centred East Asian production networks that export to the world.

Hal Hill is HW Arndt Professor of Southeast Asian Economies at the Australian National University. With Tham Siew Yean and Ragayah Haji Mat Zin, he is co-editor of ‘Graduating from the Middle: Malaysia’s Development Challenges’, forthcoming in 2011.

TMI: Investment won’t return without reforms, says economist... By Yow Hong Chieh

Investment won’t return without reforms, says economist

By Yow Hong Chieh

The Malaysian Insider, October 04, 2010

KUALA LUMPUR, Oct 4 — The Najib administration needs to show the business community it has enough political will to carry out reforms under the New Economic Model (NEM) before investors will consider putting their money here again, a top regional economist said.
Citing capital outflow numbers, DSG Asia chief executive Dr Simon Ogus said foreign and local investors remain unconvinced the government has what it takes to turn Malaysia around, despite the NEM and an ample supply of “smart people” in the country who know what has to be done.

“Do you think Umno recognises that it has to change? It’s not an economic question, it’s a political question,” he told The Malaysian Insider at the Megatrends Forum 2010 organised by Khazanah Nasional here today.

“The business community’s not buying into it yet. If we see those numbers starting to turn around, then you will basically know that there’s follow-through... The numbers show that there’s massive capital outflow,” he said, adding that there has also been a net outflow of foreign direct investment (FDI) in the past three years.

Ogus also downplayed foreign direct investment (FDI), saying it was more important for Malaysia to chase long-term investment from domestic players rather than short-term capital from foreign ones to help raise growth rates.

His views echoed those of former prime minister Tun Dr Mahathir Mohamad, who recently said Malaysia should concentrate on domestic investment if it wanted to achieve Vision 2020, Malaysia’s
blueprint for achieving developed nation status by 2020.

At a CEO forum organised by the Perdana Leadership Foundation last week, Dr Mahathir had urged the Najib administration to abandon its policy of chasing FDI as Malaysia now faced too much competition from “much more attractive” regional rivals, and to instead give a leg up to local companies with the potential to be world-beaters.

“Forget foreigners. The foreigners are the cream on the top of the coffee.

“You’ve got to pursue your own domestic investors to commit to the country — that means live in the country, work in the country, invest in the country, educate their children in the country — and then you import best-of-practice techniques and people from overseas to bring up the human capital,” Ogus said.

The Hong Kong-based economist cautioned that potential growth would be limited if capital was not fully employed, and pointed out that Malaysia’s current account surplus was strong only because there was no investment in the domestic economy.

Ogus explained that increased investment, together with changes in population, was the basis for economic expansion, and said insufficient domestic investment had been responsible for pulling down Malaysia’s growth rates over the past 10 years.

Local companies have increasingly put their money overseas in recent years, while foregoing domestic investments. Malaysian companies invested a net total of US$8.2 billion (RM25.4 billion) abroad in 2009, according to the Unctad World Investment Report (WIR) 2010.

Government officials have downplayed this, arguing that capital outflow only meant Malaysian companies were now more integrated into the regional economy.

The Najib administration is depending on private sector investments to drive the 10th Malaysia Plan (10MP) and has set for it a growth target of 12.8 per cent a year, or RM115 billion annually, for the next five years.

The government has redoubled efforts to attract FDI back into the country, while trying to entice domestic companies to invest in Economic Transformation Plan (ETP) projects worth US$523 billion.

The Age, Austalia: Malaysia stumbling,,, by Eric Ellis

Malaysia stumbling

Eric Ellis
TheAge
Australia September 23, 2010

ONE of Australia’s key partners in Asia is struggling. Given the way its leaders have taunted Australia over the years, schadenfreude at its plight would be understandable. But this should be resisted, for if Malaysia stumbles, the effects may ripple across the region.

Erstwhile sponsor of the Carlton Football Club, a cash cow for the Australian education sector, Australia’s 10th largest trading partner and a champion of ”Asian values” – whatever they are – Malaysia seems to be brimming with sky-is-falling Chicken Littles. And their analyses are alarmist; ”failed state”, ”deep pit”, ”national decay”, ”ocean-going corruption”, ”useless mega-projects”.

While some of these could be used to describe the Delhi Commonwealth Games – a massive undertaking Malaysia successfully pulled off 12 years ago by the way – it is about a country oft-regarded as an Asian success, whose rampant economy inspired a cockiness among its leaders to take racially tinged potshots at the ”decadent and immoral” West, and at Australia in particular.

And then there was the International Monetary Fund and the World Bank to demonise, indeed anyone its mercurial then prime minister Mahathir Mohamad didn’t like on any given day. And there was 23 years of it, the Mahathir monopoly on Malaysian power.

So what’s prompted such painful hand-wringing from a tigerish economy that likes to boast how it ditched traditional models to virtually promise endless riches? The answer is some of the nastiest foreign direct investment (FDI) statistics an Asian economy has served up in a generation.

FDI into Malaysia slumped dramatically last year, falling a whopping 81 per cent. In 2009, Malaysia took in just $1.38 billion of new investment, barely enough to build a half-decent bridge in a land where pork-barrelling infrastructure projects are de rigueur. By contrast, India averaged almost double that in any given month. Malaysia’s FDI take was even less than that lured by the Philippines, long the region’s economic basket case.

This worries Malaysians greatly. For all of Mahathir’s bluster, he was careful to suck up to big business, and his less-poisonous successors since 2003 have done much the same. Foreign investment underpinned the Malaysian ”miracle”, transforming sleepy Penang into an Asian Silicon Valley and industrialising the Klang Valley that surrounds Kuala Lumpur to OECD levels, with $40,000 a year average incomes to match.

So has the sky fallen in? Some of the fall can be explained by the 2008 ”trans-Atlantic financial crisis”, as many like to call it in Asia. Malaysia’s reliance on foreign investment made it one of Asia’s most globally connected countries. So when Europe and North America tightened their belts after the subprime meltdown, Malaysia naturally was jolted. But the same external dramas affected just as connected Thailand – which endured a crippling political crisis to boot – and more so globalised Singapore, and both far outperformed Malaysia in ongoing FDI, as did Indonesia.

Malaysian fingers point at Prime Minister Najib Tun Razak and his on-again, off-again will to reform a lop-sided economy Mahathir tilted to favour his bumiputra franchise, the ethnic Malays who comprise about half Malaysia’s 28 million people.

Mahathir advantaged Malays with an aggressive ”new economic policy (NEP)”. Mahathir’s thinking went that Malays were less commercially inclined than their compatriot Chinese and Indian Malaysians and thus needed the state’s help. The NEP’s affirmative action aimed to lift Malays out of poverty, but many analysts have likened it to economic apartheid, a meal ticket that many Malays have got too used to.

The NEP anchored Mahathirism and helped keep him in power for two decades. Malays were lifted but NEP side effects are many and cancerous; corruption, cronyism and an oversized sense of entitlement. Much of Malaysia’s economy is controlled by ethnic Chinese, who pragmatically chummed up to Mahathir. To some, the NEP meant simply installing well-paid and influential Malay placemen on boards to fulfil quotas.

Anti-NEP rancour has been building for years and in 2008, five years after Mahathir retired, voters registered disgust by handing his Malay-centric United Malay National Organisation-led coalition its worst result in history, losing its two-thirds parliamentary majority in a gerrymandered assembly. The UMNO faithful toppled Mahathir’s successor, Abdullah Badawi, and now, as support wavers, his successor, Najib, says he wants to replace the NEP with a ”new economic model”, which he pledges to ”execute or be executed”.

There’s a rising fin de regime tint about the UMNO empire, which has never been out of office and has absorbed Malaysia’s critical facilities of state; the civil service, military, media and the education system. Abolishing the NEP is a particular cross for the aristocratic Najib to bear; it was conceived in the early 1970s by his then prime minister father Tun Abdul Razak.

Najib has a big problem, and it is not just the allegations of corruption and even murder that swirl around his circle. Like Julia Gillard, Najib doesn’t have a popular mandate to govern. Also like Gillard, he got handed office when his party’s faceless men knifed an elected PM, Badawi, in office. Malaysians expect Najib to go to the polls soon to get that mandate, but he doesn’t seem sure it’s a good idea, as a confident opposition calls him to account.

In shades of Gillard’s Labor still, party hardliners are in revolt. While most moderate Malays accept the NEP needs tweaking, if only to keep UMNO breathing and in power, a virulent core of party heavies has organised under the banner of a movement called Perkasa, which means ”mighty” in Malay.

Perkasa claims to be defending the Malaysian constitution, which guarantees Malay ethnic primacy. It says it is fighting for Malay rights against the rising challenge of minorities. But Perkasa feels like a supremacist movement, something a Pauline Hanson might recognise. A former US ambassador to Kuala Lumpur has described Perkasa as ”militant”, while non-Malays condemn it for racial divisiveness. That’s emotive language in a country where people still define themselves by ethnicity over nationality and where the deadly race riots of the 1960s are never far away in thinking and policy – not just in Malaysia but among neighbours alert to ethnic tension.

As he dithers over rolling back the NEP and over an election timetable, Najib seems to think he can spend his way to popularity. Last week, he outlined a Mahathir-esque $500 billion investment plan to transform the economy with mega-projects. He appealed to foreign investors to help. But as China, India and Indonesia boom, they will need convincing it is money well spent.

malaysiakini: Whither the reforms in the ETP?... by Nurul Izzah Anwar

Whither the reforms in the ETP?

Nurul Izzah Anwar
Sep 22, 10
3:03pm

 

MP SPEAKS 

The government has recently announced the launching of the Economic Transformation Programme or ETP which is part of the New Economic Model (NEM) on Sept 21.

I congratulate the government for introducing a comprehensive economic development plan that aims to position Malaysia as a high-income economy by 2020.

However, I wish to ask a few questions from a layperson's understanding of the economy to seek clarification on the eventual implementation of the plan and to obtain answers to the many challenges and contradictions facing us today.

Gross National Income (GNI) projections

Overall, the country's GNI is projected to grow to at least RM 1.7 trillion (US$523 billion) from RM660 billion (US$188 billion) in 2009 (using RM3.25 to US$1 exchange rate) for a 178% growth over 10 years (2010-2020).

What is the impact to the GNI projections if the Ringgit weakens to RM3.50 and above per US$1?

Will floating the ringgit help in meeting the exchange rate needed to achieve the GNI targets?

6% annual growth rate target

This would require a 6% annual growth rate for 10 years (2010-2020). However, from 2000 until 2010, Malaysia's average annual GDP Growth was 4.72%.

How are we going to maintain a 6% annual growth rate for the next 10 years with the predicted global economy remaining weak as compared to the preceding 10 year annual average of 4.72% when the global economy was relatively strong (except for the 2008 financial meltdown)?

ETP's GNI growth contribution target

The ETP projects will provide RM1.258 trillion (US$387 billion) or 74% of the country's GNI of RM 1.7 trillion (US$523 billion) by 2020. The remaining 26% is expected to come from non-ETP project sectors.

The ETP projects are part of the 11 NKEAs. The four largest NKEAs (oil, gas and energy, financial services, palm oil and wholesale and retail) are projected to generate 60% of the 78% ETP based projects incremental GNI growth from the 11 NKEA sectors.

What will be the impact on GNI targets if commodity prices (oil, gas, energy, palm oil) that are the two main NKEAs become lower during the 10 year ETP period?

GNI per capita target

GNI per capita will reach above RM48,000 by 2020 from RM23,700 in 2009, for an increase of 102% over ten years. For context, the income distribution schedule indicates that there are 5.8 million households in 2007. Of that, 8.6% have an monthly income below RM1,000, 29.4% had between RM1,000 and RM2,000, while 19.8% earned between RM2,001 and RM3,000; 12.9% of the households earned between RM3,001 and RM4,000 and 8.6% between RM4,001 and RM5,000. Finally, around 15.8% of the households have an income of between RM5,001 and RM10,000 and 4.9% have an income of RM10,000 and above.

Furthermore, increased GNI per capita should take into account the real cost of living situation faced by ordinary Malaysians.

In the 1970s a car may cost only RM7,000 but today it is at least RM45,000. A comfortable house in the 1970s may cost RM50,000 compared to today's RM350,000. A basic meal in the 1970s may cost RM1 but it is RM5 now. And the starting salary in the 1970s would be RM1,200 compared to RM2,000 today. And it can be assumed that even with the doubling or tripling of average salaries by 2020, the cost of the above items may have also doubled or even tripled likewise due to inflation.

ETP workforce requirement

ETP will create 3.3 million new 'middle class' jobs, of which half will require diploma or vocational qualifications. However, we can find that the quality of our workforce is based on the following characteristics:

• 30% of Malaysians obtained higher education qualifications (2005), compared to Singapore's 46%, Thailand's 41% and South Korea's 89%;

• 80% of our workforce have only received secondary level (SPM) education (2007);

• Only 25% of our workers are high skilled (2007), compared to Singapore where 49% are highly-skilled, Taiwan 33% and South Korea's 35%;

• Workforce productivity for Malaysian labour is an average of 2.9% (1998-2007), compared to China's 9.2%, India's 4.4%, Thailand 3.1% and Indonesia's 3% labour productivity for the same period.

The low quality of our workforce is compounded by:

• Inefficient education services delivery: In 2007, the percentage of Malaysia education expenditure as % of GDP was a high 4.5%, compared to the Philippines' 2.6%, Singapore's 2.8%, Hong Kong's 3.3% and South Korea's 4.2%.

• Rising tertiary education costs, lower education quality: Malaysia has 20 public universities and 627 institutes of higher learning. Under the 10MP, selected public universities will be corporatised and combined with private institutions of higher learning, the fee-paying structure will see fees increase from an average of RM10,000 to RM50,000 per student and it is projected that 90% of tertiary education students will enrol not in public but private institutions.

This makes accessibility and affordability for quality education (only 4% of private institutions compared to 33% of public institution's academic staff has a PhD) a challenge in producing an educated workforce.

Furthermore, with 70% of public institutions' enrolment made up of bumiputeras while 95% of private institutions enrolment are non-bumiputeras, unless more proactive measures are taken, such as more scholarships (not PTPTN loans) and drastic investments along with improvements in primary and secondary education are taken, racial disparity in education will create its own set of challenges.

ETP's innovation key success factor

Innovation is one of the most critical factors to move up the economic value-chain and escape the 'middle income trap'.

However, Malaysia currently has a low research and development (R&D) capacity based on the following statistics:

• 2006 World Bank data indicates that Malaysia's R&D expenditure was 0.6 % of GDP, compared to South Korea's 3.2%, Singapore's 2.3%, Australia's 2.2% and China's 1.4%. Malaysia has a lot more to do to prioritise its spending.

• Based on the number of R&D researchers per million population, Malaysia had 372 researchers per million population. While South Korea had 4,187 per million, Singapore had 5,736, Australia 4,231 and China 927 per million population. Malaysia has to prioritise its human capital development.

ETP investment targets

The ETP requires investments worth RM1.376 trillion (US$444 billion) over 10 years (2010-2020) for the following projects:

• 133 Entry Point Projects (EPPs)

• 60 Business Opportunities (BOs)

The total investments sources are:

• 60 percent private sector or RM825.6 billion

• 32 percent government-linked companies or RM440.32 billion

• 8 percent government or RM96 billion

However, these targets are challenging by the following facts:

• In the past 10 years, private companies invested just RM535 billion. Malaysia's private investment rate of around 10% of GDP is among the lowest in Asia;

• The World Foreign Investment Report (WIR) 2010 showed that FDI in Malaysia plunged 81 percent last year, trailing behind the Philippines, Vietnam, Thailand, Indonesia and Singapore. The Philippines attracted US$1.95 billion (RM6.24 billion) in FDI compared to Malaysia's US$1.38 billion, while Singapore received more than US$16 billion.

• National debt has reached 53% of GDP which is an unsustainable level. According to Idris Jala the government debt stands at RM362 billion and rising, and may reach RM1.158 trillion by 2019 with the possibility that Malaysia may go bankrupt like Greece.

Who are the real beneficiaries of the ETP and NEM?

Based on our past 'national expenditure pricing' experience, could we assume that the following breakdown of the total investment amount of RM1.376 trillion (RM 1,376,000,000,000,000) will be as follows: Legal fees: (2%) RM27.52 billion; consultancy fees (8%) RM110.08billion; facilitation fees (10%) RM137.6 billion; overpricing costs (30%) RM 412.8 billion

Does this mean that the total fees and costs payable of RM 688 billion or 50% of the investment total is to be considered as a normal economic leakage, leaving the remaining 50% to actually be invested in the ETP projects?

Who will ETP's burdens fall on?

If the RM 1.376 trillion ETP investment amount requires a return on investment of 10%, then annually after 2011, the ETPs need profits-after-tax of RM137 billion. Based on a 20% profit margin, this means the entire entry point projects and business opportunities entities must generate RM685 billion in annual gross revenues.

Does this mean in 2020, the 30 million Malaysians must spend at least 80% (with the balance 20% being spending by foreigners as tourist or as importers) - which would be RM22,933 per capita, that is, 47% of the RM48,750 high-income GNI per capita target - to meet the ETP's gross revenue needs of RM685 billion annually just to remain viable?

What about a political reformation programme?

It would appear from this enquiry that the rewards for the ETP will benefit the few while the risk and true cost as always will be shared by the rakyat.

As I said earlier, that the government's comprehensive economic development plan is commendable BUT if the government is sincere in making it a reality to benefit all Malaysians, then immediately, a fifth pillar to the National Transformation Agenda must be added which is a Political Reformation Plan (PRP) which would also be the 'Political Contract' that complements the 'Social Contract' of our country.

The Political Reformation Plan or 'Political Contract' would include repealing all anti-democratic laws, respecting separation of powers, reforming national elections and restoring local government elections, returning the judiciary's and other state institution's independence, fighting corruption, ensuring a free media and by abiding to the true meaning of our constitution, then and only then, will the economic transformation plan become a resounding success for a Better Malaysia.

Isn't that so? Hidup Malaysia!


NURUL IZZAH ANWAR is the MP for Lembah Pantai.

Malaysian Insider: ETP: Malaysia to kickstart private investment

Malaysia to kickstart private investment

Malaysian Insider, September 21, 2010

 

KUALA LUMPUR, Sept 21 — Malaysia today outlined ambitious plans to double its national income (GNI) by stimulating US$444 billion (RM1.38 trillion) of investments over the next 10 years, mostly from the private sector.

A government think-tank has identified 133 projects with investments worth US$444 billion, of which 92 per cent will come from the private sector.

Private firms will invest US$266 billion or 60 per cent, government-linked companies US$144 billion or 32 per cent, and the public sector US$34 billion or 8 per cent. Seven projects worth US$37 billion are ready to go now with a “named investor and serious commitment”, according to Idris Jala, the head of the Performance Management and Delivery Unit.

Following are the key sectors:

OIL AND GAS: It will see investments of RM218 billion over the next 10 years, starting with liquefied natural gas facilities in peninsular Malaysia by 2013. A 10-million tonne regional oil storage hub will be built in Johor state, next to Singapore, by 2015 to turn Malaysia-Singapore into an Amsterdam-Rotterdam-Antwerp type hub.

By 2017, Malaysia will be the number one oil services hub in Asia and by 2020, there will be 5 gigawatts (GW) of hydro capacity, 1.25GW of solar and a nuclear plant.

PALM OIL: It will see investments worth RM124 billion by 2020. This will help boost fresh fruit bunch yields to 23 pe rcent from 20.5 percent and there will be a move into oleochemicals and more downstream industry. This will be led by Sime Darby, IOI, Kuala Lumpur Kepong and state plantations agency Felda.

FINANCIAL SERVICES: This will see investments worth RM211 billion, mainly through leveraging Malaysia’s lead in Islamic finance to target markets like Turkey, Indonesia and Egypt.

KUALA LUMPUR: The city will see investments worth RM172 billion, mainly in the Kuala Lumpur Mass Transit which includes 141km of tunnels built in the largest infrastructure project in Malaysia.

TOURISM: It will see investments worth RM204 billion with plans to join up Kuala Lumpur’s shopping malls in an Singapore “Orchard Road” type development using walkways. There will be a “Malaysia Truly Asia” cultural centre to pull in the tourist dollar with “Broadway quality” traditional song and dance.

ELECTRICAL AND ELECTRONICS: It will see investments worth RM78 billion. Malaysia plans to become the world’s second largest solar panel maker by 2020 and to boost semiconductors, LEDs and industrial electronics.

AGRICULTURE requires RM22 billion in investment.

HEALTH will see RM23 billion of investments and will see a Kuala Lumpur suburb become a “health metropolis”.

RETAIL AND WHOLESALE will see investments of RM255 billion.

CREATIVE INDUSTRIES will add RM51 billion in investment.

EDUCATION will see RM20 billion in investment.

BUSINESS SERVICES will see RM41 billion invested. — Reuters