Although the Special Economic Committee (SEC) is new, many Malaysians expected a special package of policy measures to give more substantive backing to its mandate which is - ‘strengthen the fundamentals of the economy’.

Indeed the economic and financial fundamentals are now relatively strong, but the question on everyone’s mind is - for how long ?

The SEC is made up of well-known experts with wide experience in the government and business sectors. They have gone through many economic cycles and have contributed much to economic recovery solutions in the past. Hence the economic problems that we face today are not new to them. It is almost deja vu.

Hence it is surprising that the SEC did not come out with a bigger bang, to announce a policy package of structural changes, to stop the current steady weakening of our fundamentals, which includes our steadily falling ringgit.

True, it’s not a case of ‘doom and gloom’ as yet. But neither is it ‘all happy and bright’. So the SEC has to be bolder to take the bull by the horns so that our economy is not gored and severely wounded?

We all know that in many ways the chickens have come back to roost. Many years of corruption, wastage of public funds, wrong budget priorities (whereby the poor became relatively poorer), have all caused a serious lack of confidence in our national governance and capacity to govern effectively.

It is true that the external factors that hurt our economy and its prospects are beyond our control. But are we doing enough to solve our internal problems? As Bank Negara governor Zeti Akhtar Aziz has well said, “Some domestic issues have affected confidence and need to resolved.” Are we taking enough tough measures to solve these domestic problems? Most will say a strong No! So what can the SEC do now?

The new so-called RM28 billion boost to the economy is nothing so special. About RM20 billion of it is provided to revive ValueCap to boost the stock market. No doubt the rich will gain and furthermore the bumi equity shares will hopefully rise. But how long can the ValueCap shareholders like Permodalan National, Kumpulan Wang Amanah Persaraan and Khazanah National benefit from this shot in the arm? Can it be sustained?

More importantly, how much will this stock market boost contribute to economic productivity and growth to and how would it enhance the welfare of the bottom 40 percent of the poor in our country?

I would think that this is the ideal time and opportunity to really introduce special policies to enable Malaysia to counter the internal and external challenges by making the country more open, more competitive, liberal and innovative. Abnormal times require abnormal and special treatment. We cannot tinker with the spoilt engine. We have to overhaul it or better still, get a new engine of growth.

This would be the time to break away from the middle income trap by boldly adopting the New Economic Model (NEM). The NEM was drafted by a highly reputed group of experts including some outstanding economists from abroad. But it has been unfortunately gathering dust so far, while the rot in some places gets worse.

But perhaps the SEC is waiting for the Budget 2016 to make the Big Bang? I hope so. But if the Budget turns out to be so tame and does introduce special economic reforms, then the Malaysian economy can become badly hurt and will take a long time to recover from the falling ringgit and deepening gloom, even if it does not end in doom.

We cannot look at the state of the economy in global and macro terms alone.

We have to show empathy for the poor and the weak who are suffering from rising inflation and corruption and wastage of public funds. How much more can we expect the poor ‘to adjust more?’

Hence some of the SEC measures must in all fairness be given greater credit.

New measures give credit to the SEC

The SEC has to be commended for making some slow start in alleviating the problems faced by the poor. Hopefully it will firm up its own fundamental strength and show that it can influence the government to make more significant policy changes. For this to happen, the SEC has of course to be backed up by strong political will by the government, if the SEC recommendations are to be meaningful and effectively implemental.

This will be the true test of leadership and good governance. Thus the SEC credibility is now at stake and it must show that it can deliver as promised.

Admittedly, some measures that the SEC has introduced are welcome and more will be expected. The provision of 16 more 1Malaysia clinics this year and another 33 next year is most welcome, as the rakyat, who are facing the brunt of the economic slowdown and rising costs, will directly gain from this essential medical service. Similarly the measures to open 25 more Kedai Rakyat 1Malaysia this year and 12 more next year will help more of the poor.

Youth housing schemes that are now given more opportunities for training, are welcome and will benefit about 20,000 young married couples. Here the SEC could take the lead to expand Housing in a much bigger way.

Why not champion the role of the Housing Ministry by pushing for massive use of industrial building systems (IBS). This way we can do away with more unskilled foreign construction workers, raise industrial wages for our own trained workers and reduce crime that is committed by so many foreign workers, About RM28 billion is repatriated by foreign workers every year. Is this not a serious leak in our economy that needs urgent ‘adjustment’?

The government could provide tax incentives to use the IBS; and this can be introduced in the Budget next month.

Unemployed graduates will be given more training. The 1Malaysia Training Scheme (SL1M) and the Graduate Employability Management Scheme (GEMS) will be upgraded to train 10,000 graduates this year and 15,000 next year.

This is beneficial, but why on earth are we spending precious funds to teach graduates who should have been made employable by the many universities in the first place. Are our universities doing so badly in their teaching these unfortunate underqualified graduates?

Should not the universities be restructured to ensure that they are of better quality. The international rating of our universities are generally so low that it is embarrassing.

What has the SEC to say about this structural weakness in our education system?

Why not make the universities more accountable for better academic performance and standards? The problem is that none of our universities are listed amongst the Top 100, so how then can we expect to get more employable graduates, even when ironically, the economy if facing severe shortages in talent and skilled workers.

And yet we still seem to be too slow and quite indecisive in boldly teaching more English language. We flip-flop in this policy and our graduates are thus under qualified and Malaysia’s competitive position is being seriously and steadily eroded.

Can’t the useful Education Blueprint be implemented at a faster pace? We cannot afford to drag our feet for political and other misguided reasons. While we slide in education and other fields, our neighbouring countries are forging ahead.

Is there enough political will to go forward ahead or are we satisfied with mediocrity and being ‘jaguh kampong’? Surely we the rakyat have the right to insist on more quality and meritocracy in our education system and especially in our universities?

More technical schools could be opened up to give our youth more productive employment. The SEC could recommend that the technically inclined students should be given more scholarships, incentives and higher pay. This we will get them off the streets where many spend their time as Ah Longs, Mat Rempits and gangsters and robbers and now demonstrators.

We will then be able to curb the high crime rates and the rising social costs in our society. Our confidence in living in peace and security will also increase.

Khazanah investments

Khazanah will be investing RM6.7 billions ‘to support the economic measures’ and growth. We already know from bitter experience that government involvement in business can burn us up. In fact this is one internal factor that has reduced confidence in our economic management.

And now the government is doing more business. We learn that RM4.5 billions of this amount of the RM 6.7billions, will be boldly spent to develop the Desaru tourist resort in Johor. Is this our priority at this time of our economic slowdown and the serious ringgit slide?

Should we not review our economic philosophy and policy preferences and allow the risk-taking private investors a bigger role in tourist promotion? Is Khazanah growing too big and literally ‘squeezing out the private investors’? How far do we want Khazanah to go and grow and at what and whose expense, please?

The 30 percent bumi equity target is most probably exceeded by now, especially when we include all the Khazanah investments including Khazanah’s ‘investee companies ‘ like Telecoms, Tenaga National, UEM, Axiata, ValueCap, etc - and the list goes on.

Conclusion

The SEC has made a good early start, but there was much hope for a faster and stronger take-off.

However, it is still hoped that the SEC will make much more significant proposals to restructure the Malaysian economy. We need further economic boosts, to prevent the slide in the ringgit and to strengthen the weakening economic and social fundamentals. We have to continue to promote greater growth, income equity, national unity and sustainability in the longer term.

The SEC has to overcome many more tough challenges and we all hope the SEC will have the strength to deliver well and on time, to remove our national stress and the present gloomy and hazy outlook.

You bet you can count on the full backing of the rakyat - good luck.

RAMON NAVARATNAM is chairperson of Asli/Centre of Public Policy Studies.