Saturday June 16, 2012
Transforming the nation
By CECILIA KOK
Idris is a man on a mission to fulfil Vision 2020
SINGLE-MINDED and with a clear mission at heart nation-building. That's how Datuk Seri Idris Jala sees what he's doing.
“It's a calling. I don't treat this as a job,” he tells StarBizWeek.
The CEO of Performance Management and Delivery Unit (Pemandu) and Minister in the Prime Minister's Department is indeed passionate about his role.
He calls it “an honourable opportunity” to be able to contribute in any way he could.
“We will do our best, but we reckon that sometimes our best may not be good enough for some people,” Idris says, while impressing the StarBizWeek team by personally serving coffee to them.
“That's what we do in the longhouse,” he explains, highlighting the fact that he comes from a humble background.
By his own confession, Idris' world-view is simple.
“Because of where I come from, I always do not take things for granted. In my village, we still do not have electricity. A lot of people complain about all sorts of things in life, but it is about simple things in life that matters the most,” Idris says.
Idris is of the Kelabit tribe from the Bario highlands in Sarawak. A four-year stint in Malaysia Airlines (before becoming Pemandu chief in September 2009) raised his profile tremendously after he managed to turn the ailing national airline into profitability for a few good years.
Now, as Pemandu chief, the “calling” for Idris is even higher. It is about turning around a nation, remodelling its economy, and lifting it out from the “middle-income trap” so that it can stand tall as a “high-income nation” by 2020.
The mission is clearly defined under the Economic Transformation Programme (ETP). It is to more than double Malaysia's gross national income (GNI) to RM1.7 trillion by driving investments up to RM1.4 trillion and creating 3.3 million incremental jobs by 2020. That is expected to translate into a GNI per capita of US$15,000, which is World Bank's present benchmark for a high-income nation the ETP's “true north”.
(Preliminary results showed Malaysia's real GNI in 2011 at RM540.9bil, up from RM516.8bil in 2010.)
Essentially, the ETP is about ensuring long-term sustainable growth for the country's economy for the well-being of all Malaysians.
For sure, the journey is not going to be easy. The path to its destiny will be full of challenges, some of which are beyond the control of its policymakers. Of immediate concern is the current global economic uncertainty, which could make it even harder for ETP targets to be met.
No man can boast of tomorrow.
As Greece goes to the polls again on Sunday, the world will wait with bated breath to see what the future holds. As it is, the Greeks are already preparing for the worst.
Reuters has over the week reported that Greeks had started pulling their cash out of banks and stocked up with food ahead of the “cliffhanger” election tomorrow that could lead to their country being forced out of the single currency, euro.
Indeed, the big and immediate unknown lies in the 17-nation eurozone, as the region continues to face what looks like a bottomless pit because of its deepening debt crisis.
United Nations, in the latest update of its “World Economic Situation and Prospects 2012” report, says, “the euro area debt crisis remains the biggest threat to the world economy”. It notes that an escalation of the crisis would likely cause “severe turmoil” in global financial markets and lead to a contraction of economic activities in developed countries. Developing economies, such as Malaysia, will eventually feel the heat too.
In fact, the spillover effects have already reached Asian shores. Many countries in the region are already seeing slower economic activities.
Malaysia's gross domestic product (GDP) for the three months to March grew at a slower pace of 4.7% from a year earlier, after growing at 5.2% in the preceding quarter. The country's economic growth was sustained mainly by domestic demand growth on higher private and public sector consumption as contributions from exports fell on lower demand from the eurozone.
In view of the moderation in global economic growth, policymakers expect Malaysia's GDP growth to slow to 4%-5% this year, after growing at 5.1% for 2011.
Now, you've probably heard this from Idris before, but a reminder of that will perhaps benefit us all. He reiterates, “The last thing we need to do in a crisis is to bury our heads in the sand.”
Idris concedes that the Europe crisis is a concern to everyone, especially for trade-dependent countries like Malaysia. But another way to look at it is a slowdown in Europe could potentially benefit the country, as investors seek new opportunities to park their money in booming markets in Asia for better returns.
“We need to stay positive and not have a doom and gloom attitude,” Idris says, emphasising that the right response to challenging times like these is “to get our act together and press on”.
For Malaysia to emerge winner from the present global economic uncertainties, sticking to its transformation programme is essential, Idris argues.
There is really no need for the country to have an alternative plan to the ETP to counter the present economic challenges as long as it keeps true to the transformation agenda the journey of which along the way is expected to create tremendous opportunities for investors and businesses to thrive, and hence, contribute to economic growth.
For Malaysia to realise its dream of becoming a high-income nation by 2020, “focus” and “competitiveness” are keys, according to the prescription of the ETP.
The idea is to concentrate the country's resources on the 12 sectors that have been identified as those that could generate the highest possible income for the country over the next several years towards 2020.
These are called the National Key Economic Areas (NKEAs) and they encompass agriculture, communications content and infrastructure, palm oil, healthcare, wholesale and retail, electronics and electrical, oil, gas and energy, business services, financial services, tourism and Greater Kuala Lumpur/Klang Valley.
According to Pemandu, focus on these NKEAs will ensure high-impact projects. Towards this end, 131 entry point projects (EPPs) have been identified, and these, in turn, are expected to create up to 60 business opportunities (BOs). Effectively implemented, these EPPs and BOs, to be carried out by the private sector are expected to result in significant changes to the country's economy.
But the ETP is not just about having private-sector projects to drive the country's economy without any consideration for the necessary structural reforms.
“We need to be competitive. The six SRIs (strategic reform initiatives) are enablers to ensure competitiveness thrives in our economy,” Idris explains. “We need to ensure that we push ahead with these structural reforms.”
To be clear, the six SRIs under the ETP did not originate from Pemandu.
They are made up of 37 policy measures out of the 51 recommended by the now-disbanded National Economic Advisory Council (NEAC), which was then led by Tan Sri Amirsham Abdul Aziz. And these policy measures have been grouped in six clusters, now known as SRIs, and they are Competition, Standards and Liberalisation; Public Finance; Public Service Delivery; Human Capital Development; Government's Role in Business and Narrowing Disparities.
(For the benefit of those who are not aware, the other 14 policy recommendations not captured under the SRIs have been deemed “cangkul-ready”, which means they are ready for immediate implementation. It is the other 37 policy measures that need “further deepening work” before implementation that have been captured by the SRIs.)
“Two years of discussion involving academicians, big guns and foreign professionals the consensus view is that if we implemented the 51 reform initiatives which they call the structural reform initiatives, we would create a condition for competitiveness to exist in the country.
“Well, we (Pemandu) thought, rather than argue with these wise men', we just take it and implement it; my job is to make sure we run it accordingly,” Idris says.
The roadmap is clear.
All measures and initiatives that experts think are needed to propel Malaysia's economy onto a long-term sustainable growth path, with the private sector being the main driving force, are contained in the ETP.
But here's the oft-repeated assertion: execute, execute, execute.
That's a common concern among economists and financial analysts in general.
Credit Suisse's analysts in one of their reports explain: “This is not a surprise as Malaysia, before the ETP, was infamous for its grand masterplans and poor execution.”
While the team at the international financial services group concedes that the ETP has so far been “executed far better than previous plans”, the market still needs to see a few more years of reasonably strong numbers before they can be totally convinced.
Idris is one that welcomes constructive feedback, and takes criticisms with a positive spirit. He is aware of the concern of many.
On his part, he says, he will remain focused and “keep implementing the right thing for the country”.
To be fair, though, nation building requires the participation and support of all stakeholders in the economy. As some economists tell StarBizWeek, putting the burden of transforming the nation on Pemandu alone simply does not work.
Judging by the headline numbers so far, the ETP seems to be quite an encouraging success story.
In just over one year of its implementation, results have either met or exceeded targets. The overall KPI (key performance indicator) for the 12 NKEAs, for example, stood at 123%.
The glory list, unveiled in April, also included having 72 of the 131 EPPs taken off and more than 83% of the 110 projects announced by the Government either becoming operational or having commenced work. These projects are expected to create 313,741 new jobs.
And of the RM179.2bil committed investments up to 2020, RM16bil had been committed for 2011, although the realised investment, which is a more important gauge, according to economists, stood at RM13bil for that year in review.
Other reasons to rejoice included seeing private-sector investment growing at 19.4% year-on-year (y-o-y) to RM94bil, exceeding the target of RM83bil; and GNI contribution of 11 NKEAs (excluding Greater KL/Klang Valley) reaching RM589bil, surpassing the full-year target of RM494bil and accounting for 70% of national GNI of RM830.7bil.
Pemandu says there has also been a visible shift in the ratio of private to public investment from around 50:50 in 2010 to 55:45 last year.
Internationally, Malaysia has also moved up the competitive rankings, in what Credit Suisse says could be an “early sign” that the ETP is progressing well.
In the World Economic Forum's Global Competitiveness Report 2011, Malaysia moved up five notches to be ranked 21st among 142 countries globally. It came in sixth and second in Asia Pacific and Asean.
Malaysia also moved to 18th spot from 23rd in the World Bank's Doing Business Report 2012, while the AT Kearney 2012 FDI Confidence Index saw Malaysia moving into the top 10, signalling a change in investors' perception of the country's economy.
Most economists have accorded good ratings to the ETP because of those encouraging achievements for the first year.
But not everyone is convinced. From being accused of providing misleading information and fudging the numbers to falsely claiming credit, Pemandu is not short of its critics when it comes to the ETP's progress. Economists who gave good ratings to the ETP have also been accused of painting the wrong picture.
“In the first place, we never really set any target for the ETP. So, our rating is based purely on its (ETP) own achievement, which we think is fair, considering the many constraints they could be facing in this journey of transformation,” an economist tells StarBizWeek.
“If there should be any criticisms, it should be constructive so that policymakers can take the right action and amend the situation,” he explains.
OSK Research in its report argues, “Despite the criticisms levelled at it and the challenges it faces, we believe the ETP is still the best economic programme that Malaysia has ever seen.”
Nonetheless, there are genuine concerns.
Singapore-based economist Dr Chua Hak Bin of Bank of America Merrill Lynch says he remains concerned that private-sector investments have not been as strong as hoped, arguing that it seems the public sector, through government-linked companies, is still playing a huge role in driving investments in the country.
“Overall, the results are still encouraging, but clearly a lot more still needs to be done to boost private-sector investments,” Chua says, while emphasising the need to accelerate structural reforms.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed had recently raised the bar for private investment. The target for 2012 had been set at RM113bil, up from the RM83bil target last year. But the 2012 target is still below the average target of RM115bil per year under the 10th Malaysia Plan, which runs from 2011 to 2015.
Given the uncertainties in the global market, many economists are sceptical about the country meeting the private investment target for 2012.
CIMB Research in its report notes that it expects 2012 to present a huge challenge for ETP to meet its target given the soft external environment and looming general election that it thinks could distract attention from economic reforms.
Its chief economist Lee Heng Guei, noting that it is impossible for the ETP to please everybody, says, “what's critical is for Pemandu to keep the momentum going and continue to deliver, especially on realised investments, notwithstanding the challenging economic times.”
According to Bank Negara, private investment growth is expected to slow from 14.4% y-o-y to 6.9% y-o-y this year as some companies, especially those in the export-oriented sub-sector could postpone investment plans because of rising risks in the global economy. Bank Negara's estimation translates into an expected private investment value of RM106bil for 2012.
An uphill task awaits Idris. But his tune is consistent. He'd like to think that the private sector is already buying into the ETP.
“The investments are coming. For example, private investments last year was the highest in 10 years. If the private sector is investing a lot of money, it means it is confident,” Idris says.
In the first ETP update for 2012 last month, the Government unveiled 21 projects (17 new and four recapped) with total committed investment value of RM20.5bil. These projects were expected to generate RM4.6bil GNI and create 39,918 jobs.
“We must continue to boost local and foreign investor confidence to ensure continued investments in the country's economy, and these can be done through our transformation initiatives,” he points out.
Idris' optimism is contagious. While most noise out there is negative, one thing's for sure: one can never hear anyone singing the blues like Idris sings the transformation blues. (Idris' Transformation Blues column appears regularly on the Monday edition of StarBiz.)