Saturday June 16, 2012
Remodelling the economy
Remodelling the national economy is not a job for the faint-hearted. What's more when Malaysia is at the crossroads as the global economy is in a very challenging period with the eurozone crisis.. It looks almost like an impossible task, but Performance Management and Delivery Unit (Pemandu) CEO and Minister in the Prime Minister's Department Datuk Seri Idris Jala (pic) takes the challenge in his stride, choosing to remain optimistic in ensuring Malaysia remains on the right track. He takes some time off his busy schedule to answer questions from StarBizWeek. Below are the excerpts:
SBW: Whatever that could go wrong in the eurozone economy has gone wrong, and it looks like worse is yet to come. Are we prepared for such eventuality?
Idris: My view is that the Europe crisis is a concern for everyone. It will continue to have a global impact.
Malaysia will also be affected, as we, like Singapore, are export-dependent economies. However, in a slowdown, there are always winners and losers.
Who are the winners? Countries that are competitive.
Hence it is absolutely imperative for us to create the conditions where Malaysian companies and companies that operate here are competitive in order to survive the tough situations in an economic slowdown.
It's those that make the most wind during tough times that will benefit the most when the economy rebounds as they will be on top.
The last thing we need to do in a crisis is to bury our heads in the sand. It's going to be tough but we need to be more diligent in the way we pursue our objectives.
A slowdown in Europe could be an opportunity for Malaysia as businesses still need to go on. The Europeans might be looking for a place to invest outside of Europe.
We need to stay positive and not have a doom and gloom attitude. It's not a rosy picture but we need to get ourselves organised, get our act together and press on.
Can the Economic Transformation Programme (ETP) sufficiently cushion the country's economy from what is possibly going to be a severe downturn in the global economy?
Our gross domestic product (GDP) growth for the first quarter (1Q) was 4.7%. This is within the range of 4%-5% that we expect of the GDP growth this year. Our GDP growth is mainly spurred by domestic demand with private consumption and investment remaining relatively steady.
ETP has played a key role in encouraging domestic private investments and foreign direct investments.
To ensure continued investments in Malaysia's economy, we must continue to boost local and foreign investor confidence through our transformation programmes.
Do we need a plan B?
Before you embark on any transformation programmes, you'll first need to diagnose the problems or issues and then prescribe the solutions. As we were working on the ETP, we scanned all countries that have achieved high-income status. We realise that the successful countries are those that have “focus”. That's why we have the 12 NKEAs (National Key Economic Areas).
We also recognise there is a need for competitiveness. We are creating the conditions for competitiveness via the six Strategic Reform Initiatives (SRIs) so that Malaysian companies can successfully compete in the global marketplace.
With these two pillars focus and competitiveness I am confident Malaysia is set for growth that will help us become a high-income nation by 2020.
At the same time, it is important for us to understand that a successful transformation programme is one that evolves and responds according to the changing environment it is a living document.
However, in this process of evolution, we must not lose sight of our true north. If we keep the transformation plans dynamic, there is no need for a Plan B.
Our biggest challenges are focus and competitiveness. If you do not put any emphasis on being focused, we will not become champions. So, we really need to stay the course. It is tough because along the way, we will say this sector is important and then, that is important. Before long, everything is important and we have lost our focus.
We must remain focused on the sectors that offer the highest GNI (gross national income), attract solid investments and create more job opportunities.
Additionally, when I say focus, it means that we must dedicate money, time and attention to propel the selected industries to grow their GNI contributions.
At the same time, we also need to be competitive. The six SRIs will create the conditions for competitiveness in Malaysia. We need to ensure that we push ahead with these structural reforms.
To what extent has the current political climate affected the implementation of the ETP and structural reforms? How does Pemandu navigate through these constraints to change the economy?
In any transformation process over a long period of time, you can make minor changes and trade-offs along the way. Hopefully, over time, you don't lose the plot. In other words, you must work hard to ensure that you keep to the true north, that is, RM1.7 trillion GNI, attract RM1.4 trillion investments and create 3.3 million jobs by 2020.
Post-election (regardless of the outcome), what are the immediate priorities to put the country on the right track for “long-term” sustainable growth?
Regardless of the political landscape, we must push ahead with what we have set out to do. The ETP is about ensuring long-term sustainable growth.
Ever since we kick-started the ETP in 2010, our path is clear. And we are determined to keep to our course of action to enable Malaysia to move from a middle-income to a high-income nation.
Understandably, the changes you intend to implement under the SRIs take time. Do we have sufficient time, especially with Vision 2020 just years away?
In everything we do, it is very clear you cannot get to a new beginning without managing the old. So, transition is required, and that takes time.
What we are doing is transitioning, making sure that the policy reforms are done in a proper and systematic manner. The important thing is to push ahead with the reforms.
You mentioned that low-hanging fruits have already been plucked in GTP 1.0. So, how are you going to up the game in GTP 2.0?
This year will be another challenging one for us with many targets to achieve. The transformation journey is not a sprint but a marathon that will run its course until 2020.
Moving into GTP 2.0, we must ensure that those responsible for implementing the programme do not run of out steam. We have plucked the low-hanging fruits from the first phase and the labs will look at pushing the envelope further by setting even more ambitious targets and addressing the shortcomings from GTP 1.0.
The lab members, some of which are from the first labs, are committed to the challenge by setting tougher measures to produce initiatives with proper direction and timeline to deliver big fast results.
While the measures currently in place were developed in the first round of labs for the GTP, we will continue to refine those areas or initiatives that were found to not accurately measure the effectiveness of the implementation of the National Key Results Areas initiatives this time around for GTP 2.0.
The first phase was initially conceived as a three-year programme and we have just completed the GTP 2.0 labs to move into the second phase. Now, we will continue the good initiatives from GTP 1.0 and initiate new programmes that will further strengthen this programme in its second phase. We will release details in a roadmap before the fourth quarter of the year and implementation will begin in 2013 and end in 2015.
Malaysia is not getting any better when it comes to people's perception of corruption in the country. Could you shed some light on this?
Corruption is a tough one. We are following what they have done in Hong Kong. We are putting basic building blocks in place such as introducing the Whistle-blowers Protection Act, Corruption Integrity Pledge for the business sector and special courts.
However, people want the big fish to be prosecuted. When that doesn't come through as the rule of law must apply, it is very difficult to manage these perceptions. To put the efforts to eradicate corruption in perspective: Hong Kong took 10 years to bring the corruption level to where it is today.
The lack of skilled workers has been a sore point for Malaysia for many years. How is the progress of addressing this talent gap in the country?
To retain Malaysian talent, draw Malaysian talent back home and attract foreign talent, we must be able to offer them better jobs, higher salaries and a better standard of living.
We are addressing these issues under the Greater Kuala Lumpur/Klang Valley NKEA. There are nine initiatives to improve the city's liveability. At the same time, we have special purpose vehicles such as InvestKL and TalentCorp, which are tasked with attracting investments and talent, respectively.