What you must know about our economy
A new World Bank country report has this to say about Malaysia:
‘The economy seems to be caught in a middle-income trap - unable to remain competitive as a high-volume, low-cost producer, yet unable to move up the value chain and achieve rapid growth by breaking into fast growing markets for knowledge and innovation-based products and services’ (see page 53 of the full report).
We are unable to break into higher-value markets because our brightest minds leave the country in droves while our research institutions, such as our local universities, have woefully poor track records as far as research and innovation is concerned (negligible amount of publications in top academic journals and no significant, original product development; innovation effort against GDP per capita is lower than for Vietnam, Indonesia, Thailand and the Philippines).
Our education system in general appears to stifle true and unbounded thinking and dissent — the preconditions for creativity and innovation. There are structural and institutional causes for this quagmire.
The prime minister promises ‘new economic models’ by year-end to help propel Malaysia into the high-income nation's league.
But what special economic models does the Malaysian government believe it can possibly concoct that all the brightest economists from all the different schools of economic thought and institutions around the world have not yet thought up of?
What can mere economic models on paper do, especially when fundamental problems remain unaddressed?
Would this state of affairs then herald desperate economic measures that involve sacrificing our rights and sovereignty, such as the selling off our land and resources to investor countries with big stashes of cash?
Already we see our permanent forest reserves (which should be kept and exploited as natural forests) being converted into rubber wood plantations in joint-venture schemes with countries like China. This is but one example. There are others. More are no doubt in the pipeline.
If it comes down to this, then we as a nation are in a serious predicament.
We cannot leave the livelihoods of our people and the economic future of the nation in the hands of a clandestine, non-transparent National Economic Action Council (NEAC) and its closed-door meetings.
The full suite of economic options for our country should be openly discussed so that decisions are made that maximally serve the rakyat as a whole, with a focus on the poorer class, even if it is at the expense of the welfare of a small group of powerful, vested interest groups.
In the spirit of participatory democracy, I believe it's time we had a sincere and open (televised, if possible) national dialogue and debate on Malaysia's economic condition and prospects in the broadest terms, in which the rakyat and their elected representatives are given the opportunity to participate.
The relevant experts - economists of different stripes (free-marketers to welfarists) and those involved in the energy and natural resources sectors (eg, petroleum consultants, forestry managers and environmental specialists) - should be roped in. There is no reason why there should be resistance to such a proposal.
But who has the guts to get the ball rolling on this? Will it be the prime minister himself, or the opposition?
And by the way, in which country is recession a good thing? In Malaysia, it seems.
Mainstream economics views positive economic growth as a good thing (economic growth can be bad, but that's another story for another day). Under this pro-growth paradigm, policies that spur economic expansion are looked upon favourably because there is now ‘more’ to consume. Contractions (lesser things to consume, at whatever rate it happens), just do not cut the mustard.
Let's put it plainly. If your chocolate cake is getting smaller, it doesn't matter if it is getting smaller quickly or slowly, whether now five rats are nibbling at it when earlier 10 rats were.
The fact that it is shrinking cannot be cause for celebration when what is desired is an increase (or at least no change) in the size of the cake.
Here in Malaysia, the media appears to be praising the government for having negative growth — a contraction of the economy.
Read the following news report: ‘Kuala Lumpur, Nov 21 — The Najib administration received a fillip yesterday with new economic data showing that the prime minister’s moves to rev up the economy are working (?). Gross domestic product contracted 1.2 percent in the third quarter from a year earlier, shallower than the 2 percent drop predicted by most economists. The economy shrank 6.2 percent in the first quarter of the year, but improved a bit (?!) in the second quarter by contracting 3.9 percent.
Policies working? If they are we'd be growing. And ‘improved a bit’? What's ‘a bit’? And how is a shrinking an improvement?
Now let there be praise where praise is due and not jump the gun. But the media and policymakers seems to be clutching at straws to paint a Panglossian picture when cautious concern should be the attitude adopted.
More odd news: 'For the third quarter to Sept 30, Malaysia’s gross domestic product (GDP) growth declined 1.2%, which was 5.7% better (a ‘better’ decline?) compared with the preceding quarter. ‘This is stronger than what we were expecting. For now, the economy remains in a sweet spot,’’ Citigroup economist Kit Wei Zheng told Reuters yesterday.'
In ‘a sweet spot’ the economy is, while still clawing with a recession? Outrageous.
If any economy is in ‘a sweet spot’ in our region, it is Singapore. Hit by the worst recession in its history, it is now officially out of it and has registered positive growth. One cannot help but feel that the spin regarding Malaysia's economy is some sort of pre-general election mood-shaping. But this is just my conjecture.