Without NEM, M'sia already 10th most competitive nation

In one private engagement between Tan Sri Amirsham Aziz - the so-called Malay Chairman of the NEAC but allowed minority and foreigners to overwhelmed the NEAC membership, he said that New Economic Policy (NEP) was the reason that Malaysia lost it's competitiveness.

This is the same position taken by all Chinese based political party and think tank, IMF/World Bank inclined opinion makers, and Anwar Ibrahim in his "Harapan Baru Untuk Malaysia" Economic Manifesto produced before 2008 General Election.

Amirsham was not thinking independently and analytical in his Chairmanship of NEAC for his is regurgitating the views of others. Using that stand on NEP, NEAC proposed the New Economic Model to the Government.

All form of affirmative actions and Article 153 based NEP like assistance was removed. There was initially no mention of Bumiputera and affirmative action in the whole NEM document until Perkasa call pressured the Government to "reinstitute a market based and transparent affirmative action" back into the model.

The NEM has yet to start and the economy is still running from the remnants of NEP and NDP but Malaysia was reported to have jumped up 8 notches in terms of competitiveness to emerge in the world's top 10 competitive nation.

The Bernama report today, May 19, 2010:

Malaysia Jumps Eight Notches To Emerge World's 10th Most Competitive Nation

KUALA LUMPUR, May 19 (Bernama) -- Malaysia has emerged the world's 10th most competitive nation from 18th previously, a remarkable jump brought on by significant improvements in economic performance due to a host of factors such as influx of quality investments, pragmatic government policies and low risk political instability.

In giving Malaysia high marks and propelling its position by eight notches, the International Institute for Management Development (IMD) in its World Competitiveness Yearbook 2010, said other telling factors were its effective implementation of government decisions, mainly attributable to the able stewardship of the economy by Prime Minister Datuk Seri Najib Tun Razak.

Also commendable was the adaptability of government policies to economic changes, it said in apparent reference to the RM67 billion stimulus package unveiled by Najib, who is also Finance Minister, to mitigate the economy from the global slowdown due to the fallout from the US subprime credit crisis.

Najib's unveiling of the New Economic Model (NEM) aimed at transforming the nation into a high-income economy has been able to sustain and position Malaysia on the right path towards attaining developed nation status by 2020 also was a strong feature of the adaptability of government policies to changes in the economy.

The IMD World Competitiveness Yearbook (WCY) is the world's most renowned and comprehensive annual report on the competitiveness of nations, ranking and analysing how a nation's environment creates and sustains the competitiveness of enterprises.

It also said in the first 10 places, Australia was at fifth spot, Taiwan at eighth and Malaysia at 10th placing, benefited from strong demand in Asia and implementation of efficient policies.

"The three nations rank very well in government efficiency," the IMD said.

Malaysia was also ranked highly, thanks to what IMD said was the strong resilience of the economy to (down) cycles, sufficient transparency among financial institutions and government bureaucracy not being a hindrance to business activity as evident from the rapid expansion in the economy over the past year.

After languishing from the global economic crisis, the economy recovered in fourth quarter of last year by 4.4 per cent and even more remarkable by a 10.1 per cent in the first quarter of this year.

Among Malaysia's strength which ranked it to the top was its economic diversification and exchange rate while for current account balance it was ranked second and third for exports of goods.

The competitive cost of capital, which encourages business development, the ageing society not being a burden for economic development and unemployment legislation providing an incentive to look for work were also strong points of the econony.

The good news for corporate employers in Malaysia was that competent senior managers were readily available in the country, corporate boards supervise the management of companies effectively while entrepreneurship of managers was widespread in business.

Malaysia also continued to intensify life-long learning and nurture a talented workforce while it also drove productivity and competitiveness through creative and innovative mindsets.

The IMD also said the transparency of government policies was satisfactory, having improved from 3.94 per cent to 5.98 per cent, while protectionism was not a factor in Malaysia's economy as it did not impair the conduct of business.

It said the high rating was also due to quality investments which strengthened the economy and action to groom the small-and medium-sized enterprises for global competition.

Improvements were made in other areas including corruption, bureaucracy, transparency, political stability, long-term unemployment, corporate debt and consumer price index.

In sub-sector rankings, Malaysia topped in financial institutions transparency and low risk factor in financial institutions.

Malaysia's financial sector remained resilient despite the meltdown in the US and Europe financial sectors, having managed to strengthen further its presence in the financial landscape especially in Islamic finance and banking.

Malaysia is now a world leader in Islamic finance, capital market and takaful industries and there is huge potential to become a hub for integrated Islamic financial services.

For instance, Bank Negara Malaysia was currently finalising the establishment of a physical Islamic financial centre and the imminent approval of two mega Islamic bank licences.

The ringgit, at a high of 3.1 to a US dollar, has been the strongest performing emerging Asian currency against the greenback so far this year, gaining more than seven per cent on the country's strong growth prospects.

It also appreciated against the euro by 19 per cent against the euro and 16 per cent compared with the pound.

For public and private sector ventures, funding for technologies, science in schools and high technology exports, the country was ranked fourth best, the IMD said.

The IMD said science in school was sufficiently emphasised.

Under the government efficiency sub-ranking, Malaysia was ranked second for capital cost as there was support for business development.

It was also ranked second for adapting government policies to changes in the economy.

The IMD however did point out some weaknesses in its ranking for Malaysia, including high government subsidies to private and public companies as a percentage of Gross Domestic Product, redundancy costs, government's budget deficit and high number of procedures to start a business.

One wonders whether NEAC got their analysis right or is influence by personal prejudice of its members?

Malaysian economic was robust during the NEP days. Stock market was booming. Investment was abundant. Business ideas was flourishing.

The notion that NEP was the reason Malaysia lost its competitiveness was absurd. It was during the NEP era that all Malaysian enjoyed peace and prosperity. Although NEP was meant to revive the economic sector of the Bumiputera, the non Bumiputera benefited along from the growth driven NEP.

Unlike the NEM, which is too focus on business sector needs, the NEP was a more wholesome economic policy that meets and covers the social, political and security aspect of the nation.

Did Amirsham tried to coverup Abdullah's economic fallacies by blaming it to NEP?

It was during Abdullah's era that he clamped down on spending and personally halted economic growth. His policy and inability was reasons investment fell sharply. There was sufficient money but he refused to spend on strategic projects already planned.

He claimed there was no money and blamed on dr Mahathir's administration but it turned out RM290 billion spending of Petronas money could not be answered. Abdullah diverted money into the unproductive economic corridors.

And, Amirsham wasted billions of Maybank money into the overly priced BII. He didn't even dare answer to Lim Guan Eng's question in Parliament on Maybank when he was Minister.

Thus, it is really not about NEP but more of incompetence, isn't it? The Cabinet should seriously restudy NEAC's proposal.