Prime Minister Najib Abdul Razak impressively presented the Report on the Malaysian Transformation Programme for 2013.

It marked entering the mid-point of the Transformation Plan and was indeed welcome very informative but insufficient.

Impressive results

Many targets have been achieved despite the global slowdown and uncertainty, Malaysia has overcome global and domestic threats to our economy and society so far.

Economic growth has been steady at about 5.1 percent per annum in the last three years, employment and incomes have risen and the budget deficit has been brought under control.  

However, structural changes were inadequate. Inflation has been rising and the cost of living has been going up. Hence, the quality of life for the bottom 40 percent of the income groups has not improved but has most probably declined.

Inflation

Inflation is now the nagging problem due to persistent economic structural problems. How much of our economic success has benefitted the poor and the underprivileged and the low income Malaysians? They still struggle to make ends meet.

The income of the bottom 40 percent of households is expected to reach an average of only RM2,007 per month. That income is for a household of about five persons per household. That works out to about RM401/- per person per month! How well can they survive on that low income?

Its interesting for the government to explain what proportion of the bottom 40 percent of our people earn RM2,007 per household per month and how many of them live in the urban areas. I wonder how the poor and lower income Malaysians, especially in urban areas can manage to live day to day, from hand to mouth?

That explains why household debt has been rising and loan sharks have been thriving. These are poor and the low income Malaysians who will be forced to cut down on their daily expenditure on food, medical care, shelter and transport if possible. And then private consumption which constitutes 52 percent of the Gross Domestic Product of the economic cake will slow down and reduce economic growth.

That is why the rakyat fear rising prices now and in the future, especially after the mid-point in the Transformation Plan, when the Goods and Service Tax (GST) will be introduced in 2015!  

This is one major cause for the resistance generally shown against the GST. The prime minister is right in proposing that the government should come out soon with the full list of essential goods and services that will exempted from the GST for the poor and low income groups. Let them clearly see that it’s the wealthy who will be more affected by the GST.

Strictly, the GST should only apply to the wealthy and well-to-do who consume luxury goods and services that are non-essential. The wealthy have the choice to avoid purchases if they choose to. Unlike the poor who must have their essential goods and services, just to survive!

Protest against GST and insufficient structural transformation

In the spirit of the Economic Transformation Plan, we have to be more empathetic and ask why there is so much public protest against the GST? Taxes are necessary for development and good governance.

But fair and reasonable taxation is welcome by most people on one condition. People will pay their taxes more willingly if they believe that these hard earned taxes are being used responsibly by the authorities.

Thus the government has to come out more transparently and  speedily, on new tough structural transformation measures to  combat corruption, crime, cronyism, inadequate competition and of course wasteful spending, as highlighted in the Auditor-General's honest Reports.

Then public confidence will rise and people will support new and fair  taxes which would benefit particularly the poor, if there is more of Good  Governance and fairness.

Instead the rakyat sense the creeping adverse effects of ‘state capture’ which can enable the rich and powerful to look after their own vested interests first and foremost.

That is why we need to fully adopt the New Economic Model’s recommendations in the National Transformation Programme!

The government could win more public confidence, if it comes out openly, to fully accept and adopt the New Economic Model.  

It’s also vital to recognise that our Economic and Government Transformation Programme can only bear good fruit if the overall socio-economic and political environment improves at a faster pace.

The government has to come out more firmly and fairly to combat racism, religious bigotry and wild irresponsible and hurtful hate statements by extremists, who seem to be getting away scot free!

This could show weak governance which reflects our creeping elements of ‘state capture’, that can only poison our governance and society. The New Economic Model will achieve all our aspirations for a more equitable, peaceful United and progressive Malaysian society, and realise Vision 2020, on schedule - but our Report must show more Structural Transformation please.  

RAMON NAVARATNAM is chairperson, Asli Centre for Public Policy Studies.