The first report
card on Malaysia's ambitious programme to kickstart its economy will be out
next week, and the government hopes it will blunt criticisms that the plan is
no more than a series of government-funded mega projects.
The report card is produced by the same people who are running the
programme, and is likely to be glowing.
The Economic Transformation Programme (ETP) was unveiled in October
2010 and is one of the most important policies of the administration of Prime
Minister Najib Razak. He is banking on it to turn around the economy and
deliver political support for the ruling Barisan Nasional.
Political analyst Wan Saiful Wan Jan, from the libertarian think-tank
Ideas, noted that Datuk Seri Najib forged ahead without buy-in from his Umno
party.
"It is, thus, important for him to get it right," he said.
The economy has become one of the most pressing political issues in
recent years as wages stagnate due to the country's over-reliance on low-cost
labour.
The ETP aims to double per capita income to 48,000 ringgit (US$16,000)
by 2020, with growth driven by the private sector. But some economists have
questioned the numbers behind the ETP.
While some projects under the ETP may be a catalyst for higher-value
development, many more are actually old projects announced years ago, noted
Azrul Azwar, chief economist at Bank Islam. "It is hard to see how these
old projects can suddenly become transformational," he said. The bulk of
the investments are from the government or government-linked corporations,
which are often not market-driven.
But it is a detailed report by a think-tank, called Research for Social
Advancement (Refsa), that has poked the most holes in the ETP's projections.
The projections were drafted by the government's high-level Performance
Management and Delivery Unit (Pemandu).
"The ETP is just business-as-usual, dressed up in fancy
presentations and long press releases," said Teh Chi-Chang, an economic
analyst who is executive director of Refsa and co-author of the six-part
critique. The first part was released in mid-January and the final part earlier
this month.
Pemandu has sought to rebut the criticism in its blog but has indicated
that it will let its report card do the talking.
Pemandu chief executive Idris Jala, a respected corporate leader who
joined the government to spearhead the programme, told the state news agency
Bernama recently that the ETP has surpassed most of its first-year targets,
including the creation of more than 500,000 jobs and a gross national income of
almost 850 billion ringgit ($277 billion).
But, Teh said, shorn of the glitter, the ETP is still about
government-driven mega projects that benefit well-connected businessmen, and
does little to address income inequality.
"Even if Pemandu achieves all that it sets out to do, the
Malaysian economy will be unbalanced and not sustainable. The ETP is not going
to build a middle class that will keep Malaysia going," he said.
The critique noted that the bulk of the investments still came from the
government, and were focused in the oil and gas sector.
It said two government projects - the Mass Rail Transit in Kuala Lumpur
and Petronas' petrochemical refinery in Johor - account for a whopping 55 per
cent of the total investments of 176 billion ringgit in the first year. More
than half of the investments pledged are in oil and gas.
In addition, it pointed out that in the first year, the government and
government-linked corporations had invested 114 billion ringgit, almost double
the 62 billion ringgit pledged by the private sector. The private sector share
is just 35 per cent, instead of 60 per cent as targeted.
Refsa also argued that while national income will go up, only 21 per
cent will go to wage-earners - which is lower than the current 28 per cent. The
rest of it will go to corporations. Income inequality will only grow, it added.
Pemandu denied some of these criticisms through its blog, saying that
while the private sector involvement may appear low, its data merely represents
a 'snapshot of progress' and does not cover the entire range of investments.
It said overall private investment had risen by 19.4 per cent from 2010
to 94 billion ringgit last year.
Pemandu also said contrary to Refsa's claims, its own estimates show
that 45 per cent of the workforce will take home 51.1 per cent of the total
wages by 2020, making a significant redistribution of income. 'The ETP Roadmap,
as we have always maintained, is a kickstart and it will evolve as we build out
the programme,' it said.
Who wins the war of words is important, with elections looming.
Wan Saiful believed that the ETP is a vote-getter, especially in the
rural areas where many people view it as a government programme to improve
their lives.
"Generally, the ETP is being taken positively," he said.
Carolyn Hong
The Straits Times
Business & Investment Opportunities
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