Saturday June 16, 2012
It is a challenge to get the majority of Malaysians to understand the ETP
By CECILIA KOK
MALAYSIA is in for an exciting journey, and Datuk Seri Idris Jala is eager to get this message across to all Malaysians.
The CEO of Performance Management and Delivery Unit (Pemandu) and Minister in the Prime Minister's Department has recently uploaded four video clips on YouTube to tell of this big vision for the country, hoping to engage more ordinary people in this nation-building effort.
“I'm very excited about this (YouTube videos). Hopefully, people will be drawn to it,” Idris says.
“It's about communicating in a simple way people don't want to read this thick book,” he adds, pointing to the Economic Transformation Programme (ETP) 2011 annual report.
According to Idris, communication remains a big challenge for Pemandu. To help as many people as possible to understand the organisation's initiatives, Idris has taken it upon himself to use different mediums, including blogs and twitter, to explain in simple terms what the ETP is all about. And as much as he could, he addresses the various concerns and criticisms raised against the ETP through the mediums.
To Idris, it is about reaching out to the public at large and hope they would catch this “fire” and be enthusiastic about it.
Focus on implementation
Malaysia is lucky today, Idris says, because its economy is still somewhat shielded from what's happening in external markets, thanks to robust domestic consumption and investment.
“But there must come a time in Malaysia when we all do not get into arguments about who owns this little piece of cake', called the domestic market,” Idris asserts.
“The whole cake' is outside Malaysia. Malaysians should be thinking like the Swede, Swiss, Finnish and Dutch, who do not look at their domestic economies as their playground, but look at the whole global economy as their playground,” he explains.
The question is how to make Malaysian companies robust enough to hold their ground in the intensely-competitive global marketplace.
Well, promoting an innovative and productive Malaysia is key, and nothing breeds these two elements much better than “healthy competition” beginning from home ground.
Idris once said this in his column Competition is like charity: it begins at home.
And Pemandu is in this business to promote healthy competition in Malaysia by driving transformation through the six strategic reform initiatives (SRIs) as outlined in the ETP. This is to provide an enabling environment for the private sector to thrive.
Changes are already under way within the six SRIs, namely Competition, Standards and Liberalisation; Public Finance; Public Service Delivery; Human Capital Development; Government's Role in Business; and Narrowing Disparities.
Do not expect overnight changes, though. As Idris puts it: “What we are doing is transitioning, making sure the policy reforms are done in a proper and systematic manner.”
According to Pemandu, 2012 will not be a year to introduce new programmes, but it will be one where they strive to follow through on existing programmes and “execute, execute and execute”.
Work in progress
Under the Competition, Standards and Liberalisation SRI, what has happened is that the Competition Law, which is to safeguard against anti-competitive practices and abuse of dominant market position, has already come into force in January this year.
And of the 17 sub-sectors announced in Budget 2012 for liberalisation, that is, allowing up to 100% foreign equity participation, nine has already been fully liberalised. Eight other sub-sectors are in the pipeline, and are expected to be fully liberalised within these two years.
“We looked at many countries that have made it to the top, such as Singapore and those in Scandinavia; they are testament that liberalisation is good to the economy,” Idris explains.
“But we must do it in measured pace. We cannot simply liberalise everything without looking at standards compliance and the preparedness of local companies to stand on their own you wouldn't want to open up sectors when our guys are not ready,” he adds.
As for the Human Capital Development SRI, incremental progress has also taken place for some of the recommended policy measures. For instance, the Government has recently announced that the minimum wage order will be gazetted on July 1 to take effect in January next year.
Programmes such as MyProCert have also been established to upskill Malaysians to international certification standards, while TalentCorp will continue its efforts in attracting and retaining top talent something that Malaysia lacks, and sorely needs, to drive the economy.
Further reforms in the Public Service Delivery area will see 386 business licences abolished or simplified this year. This initiative is as suggested by the Special Taskforce to Facilitate Business (Pemudah) and Malaysian Administrative Modernisation and Management Planning Unit (Mampu), and will help reduce the number of required business licences in the country from the present 761 to 375. It is also expected to result in savings of RM729mil in compliance cost.
The objective is to make investing and doing business in Malaysia easier. Another side effect of simplifying business processes in the country, Idris says, is less corruption.
And to promote governance and efficiency, the pilot for real time monitoring system for five government agencies will be implemented within this year. This is also part of an initiative to improve public service in Malaysia.
As for narrowing disparities, agencies such as Teraju (Unit Peneraju Agenda Bumiputera) and Teras (High-Performing Bumiputera SME Programme) will work on enhancing and promoting world-class bumiputera entrepreneurs.
GLC exit strategy
In re-defining the Government's role in business, Idris asserts that the long-term view is for the Government not to be involved in business, except for in certain sectors. These sectors include national infrastructure projects such as the mass rapid transit system; strategic fields such as paddy and defence; those that require large growth capital, catalytic or new technology such as projects with long gestation periods like nanotechnology; and those where the private sector needs co-investor or assistance to commercialise their projects.
“The private sector is complaining that the Government is crowding them out They say they cannot compete because the GLCs (government-linked companies) are in every sector, so we start this divestment programme,” Idris says.
Under the programme, 33 companies under six government-linked investment companies (GLICs) have been identified for divestment either through listing, pare-down or outright sale.
This year will see a further 14 companies being divested, while the remaining eight companies in the list will be divested next year.
When asked about the “crown jewels” of GLCs, Idris explains, “We are starting this (divestment) as simple process first, we will take on the bigger ones later because if we implement it immediately on the crown jewels', it will be too big to handle”.
Most importantly, Idris says, the Government must not lose focus on withdrawing from business to allow the private sector be the main engine of growth.
Fighting against time
While analysts acknowledge there has been some progress in terms of structural reforms in Malaysia's economic system, they often point out the need to accelerate the pace of reform so that the country's competitiveness can be enhanced.
One of their main concerns is in the public finance area as Malaysia has been in a deficit position for the last 15 years, and public debt remained high at 51.3% of gross domestic product (GDP) as at the end of March this year.
The country managed to reduce its fiscal deficit to 5.0% of GDP last year from 5.4% in 2010. The target is to reduce it even further to 4.7% of GDP for 2012.
While the objective of the Public Finance SRI under the ETP is to reduce government expenditure and increase revenue, public perception that the Government lacks fiscal discipline remains.
And going by recent reports on its intent to spend money, some of which will be used for what they call populist measures, it is not surprising that some quarters remain concerned about the management of public finances.
As economists have rightly pointed out, there is an urgent need for Malaysia to rebuild its fiscal buffer and manage its finances wisely so that the country can be better prepared for rainy days.
Fairfax Group president and co-founder Michael Hershman, who sits as one of the International Performance Review panellists for the ETP, says perceptions and criticisms of Malaysia from abroad are often based on the belief that the country is unwilling to address difficult policy issues, which among other things, is its finance reform.
“The key point for us is very simple we must reduce our deficit. If our deficit increased, then we had gotten it wrong,” Idris explains.
On the intended implementation of Goods and Services Tax (GST) and subsidy rationalisation programme, Idris says both will be implemented progressively.
“We have to look at the rakyat's needs. When you start managing polarities, you have to find a happy balance,” he explains.
“You can make minor changes and trade-offs along the way, but you must ensure you keep to the plot,” he adds.
For sure, ETP progress and implementation will remain under hawk's eye as external and domestic issues continue to test the nation's resolve for economic reforms. And for Idris, he knows, there's only one way for Pemandu to go about it: push ahead with the necessary reforms.