Thursday, February 10, 2011

NEM No More?

A confluence of criticisms by a member of the National Economic Action Council (NEAC), a former Minister and the former US Ambassador to Malaysia, together with an announcement by the Prime Minister, Datuk Seri Najib Abdul Razak himself have confirmed the death and irrelevance of the New Economic Model (NEM). Instead, the Government has chosen to extend the lifespan of the New Economic Policy (NEP) with no expiry date in sight.

Reluctant NEAC member Datuk Dr Zainal Aznam Mohd Yusof argued that Najib’s administration has “insufficient political will” to implement the required reforms, and this has resulted in the canning of proposals such as the “Equal Opportunities Commission (EOC)”.

Similarly, the NEM Part II which was intentionally “watered down” reintroduced the NEP’s 30% bumiputera equity target, which was originally rescinded in NEM Part I. Instead the NEM Part I had proposed the “deliberate shifting of affirmative action towards moving down to the bottom 40 per cent.”

Datuk Dr Zainal also added that the appointment of Tan Sri Mohd Isa Samad as the chairman of FELDA with his “track record of graft had raised alarm bells. It was a sad day when Isa was appointed chairperson of Felda.”

At the same conference, former Tourism, Arts and Culture Minister Datuk Seri Abdul Kadir Sheikh Fadzir also lamented that “if the founding fathers could see what is happening now, they will turn in their graves. Corruption is everywhere, you have to bribe people to get things done. Cronyism is everywhere.”

In a reference to Najib’s plans such as the NEM, GTP, ETP etc., he added that “there are beautiful statements (made), but they do not reflect the real state of affairs.”

Similarly, former ambassador to Malaysia, Mr John Mallot wrote in his Wall Street Journal column that “although Mr Najib held out the hope of change a year ago with his New Economic Model, which promised an ‘inclusive’ affirmative action policy that would be, in Mr. Najib’s words, ‘market friendly, merit-based, transparent and needs-based,’ he has failed to follow through.”

What is perhaps most damning for the NEM is Mr Mallot’s prognosis that Malaysians “will continue to vote with their feet and take their money and talents with them. And foreign investors, concerned about racial instability and the absence of meaningful economic reform, will continue to look elsewhere to do business”.

The Prime Minister himself, has chosen the very same day to hold a “Bumiputera Agenda Supreme Council” meeting and announcing the setting up of “Unit Peneraju Agenda Bumiputera” to drive and co-ordinate bumiputera economic participation. This confirms the criticisms that Najib is placing the race agenda above the original intention of the NEM, which was to steer affirmative action programmes towards the bottom 40% of income earners of the population.

Najib is now proving to be a failed reformer, with his much vaunted “Najibnomics” turning out to be nothing more than an endorsement of the controversial NEP which favours the influential elite and a copycat of Mahathir’s mega-projects and privatisation policies of the 1990s.

The concerns raised in the Government Transformation Programme (GTP) and the NEM Part I on the NEP increasing the income disparity between the rich and poor, the sense of discrimination dissatisfaction between races as well as the resulting brain drain will only worsen as a result. While the major infrastructural spending spree will lead to short term stimulation of the economy as happened in the 1990s, history will only repeat itself as we suffered a decade of real income stagnation and falling competitiveness in the 2000s.

It is most unfortunate that the Prime Minister has chosen to pander to vested political interest of race-based extremists groups such as Perkasa, and forsake his opportunity to make his mark by embarking on genuine reforms on Government policies which will reverse the decline in our economic competitiveness.
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