In case no one was counting, let me point out that the latest budget calls for a sixth year of budget deficit and a likely seventh year which amounts to a total of RM20 billion. The deficit spending accounts for about half of the projected growth in GDP, meaning that without deficit spending, Malaysia will easily fall back into a recession if global growth slows just slightly.

The truth is that Malaysia has been dependent on foreign direct investment (FDI) and privatisation for growth for much of Mahathir's administration. Most people forget that in the early 1980s, Malaysia's financial was precarious.

Timely bold moves to liberalise trade and investments, and aggressive privatisation were the key to our growth all along. These two factors no longer hold true and cannot be sources of growth because:

  • China and other countries are sucking up most of FDI and will continue doing so for the foreseeable future; and

  • There is not much more privatisation that can be done in Malaysia;

    • The government plan to use South Korea as a model for growth is at best hopeful; years of New Economic Policy have made our labour force uncompetitive. The truth is the BN government wasted years of growth without upgrading its education system and labour force.

    The South Korea labour force has always been competitive, with high literacy, high post-graduate education and high investment in skills. Malaysia is nowhere near South Korea or Taiwan. In fact, skills-wise, Malaysia is on par with Thailand and Indonesia, and China is fast surpassing all of us, if not already. We are still manufacturing TVs and VCRs when China is making cell phones, networking equipment, satellites, bio-engineered rice and drugs.

    More bad news also comes from the fact that Malaysia has been lucky in the last several years due to high oil prices and high palm oil prices. When our oil reserves run dry and Indonesia starts to be a bigger exporter of palm oil, things will not be so rosy for us.

    The truth is, we have left it too late to restructure our economy which will take at least a decade. The time to improve English was a decade ago. The time to introduce meritocracy in universities and tertiary education was years ago. The time to start removing the New Economic Policy and its present manifestation is now.