Tuesday, March 30, 2010

Public Response to the NEM (First Flush)

While the NEM is certainly a comprehensive macro-charting of the focus and strategies to be adopted to turn Malaysia into a developed country and a high-income nation, the immediate response from bloggers, opposition stalwarts and some segments of the public (as I had managed to scan so far) can be summed up in one word - SKEPTICAL. It lacks details on implementation, says Kit Siang; no evidence of serious efforts to carry through reforms especially within UMNO to stem out 'renteering' and 'patronage' ( particularly through taking commissions and preempting the distribution of contracts!) say some; how to raise income if industries are not raking in high profits, can pay higher wages, and employ more people? is the the response from many others.

I myself was expecting something new in terms of constructing an economic growth model: something different from the known models like Harrod-Domar, the Big Push model, the Endogenous Growth model etc. What we have is a roadmap for getting Malaysia out of 'the middle-income trap' reminiscent of the Equal Opportunity and Affirmative Action programs launched by the United States in the 70s. It announced 3 principles 'to drive this country to become a fully developed nation' ie. high income, sustainability and inclusiveness, through the adoption of strategieswith 8 reform initiatives viz. 

1) Re-energising the private sector to lead growth; 2) Developing a quality workforce and reducing dependency on foreign labour; 

3) Creating a competitive domestic economy; 

4) Strengthening the public sector; 

5) Putting in place transparent and market friendly affirmative action; 

6) Building knowledge base infrastructure; 

7) Enhancing the sources of growth; and 

8) Ensuring sustainability of growth.The affirmative action policy would be based on 4 principles ie. market-friendly, merit -based, transparent and based on needs.

If those principles and strategies sound familiar, they cannot be said to be 'cliches'. But they certainly are a big mouthful and therein perhaps lies the cause of some skepticims. But take note. These are the broad outlines to be presented to the public to get the public response. NST reports (March 31)," The first part of the NEAC report on the New Economic Model (NEM) was released to the public yesterday. The government will gather feedback from the public before formulating firm policies ( Highlight is mine).

So, no firm policies has yet been framed, is it? What has been released is just the broad perspective, the roadmap, the macro-view. The response that I have read so far seems to argue on the seriousness of the government to put the 'model' to work. There does no appear to me any discussion on the 'practicality' and 'inherent contradictions' contained in the model. Maybe this has not been found out yet. However NST (ditto) did say: " Najib's pledge was loudly applauded by some 1,600 industry captains at the opening of the ...Conference here although many were aware that some of the reform measures could face stiff resistance." (Highlight is mine).

At this point I would like to mention only a few of the initial fears with regard to practicality issues and the contradictions. First, the income level of the labour force depends on the industries' and governments' ability to pay. We can have a 50% labour force with degrees and high-level technical diplomas but can the industry and government employ them with a high pay? The industries must achieve a high level of productivity and profitability to employ more people with a high wage. To do that we need more capital, higher technology, higher consumer demand and more disposable income in peoples' pocket. How can higher market demand be created if wages are low and how can you increase the wages when profitability is low. Thus we have the chicken and egg problem; which comes first raise wages or the profitability of the industries.

Raising the productivity and profitability of the industries is not a matter that can be done through a policy statement. So many factors are involved and we leave that for the time being to the economic and industrial development planners.

Next I would like to point out the contradiction in the second and fourth principles of the affirmative action plan - merit-based and based on needs. Meritocracy has been much debated elsewhere; it's nice and fair when people have more or less an equal start. But some need to be assisted from the word 'go'. A merit based selection will just throw them out. So how do you reconcile the two principles?

For any model to work we have to get rid of the contradictions within the model. We need to test the model for inconsistencies and contradictions and debug them. I think this is what the policy makers, the planners, the implementors and the critiques of NEM should do now. Voicing skepticism and doubts on the seriousness of the government to carry out the NEB would not benefit the country and the people.


rambomadonna said...

Saudara Norzah (hehehe)... saja nak ikut format fellow bloggers that commented on your last entry.

I need to research more on some of the principles mentioned in this entry (high level sangat) but I have to agree with last paragraph.

Many ideas, theories and models must go through "try and error" and "debugging" (programming term sikit) before we get the right formula.

norzah said...

Wei, J, lama tak muncul! I tau u sebuk buat laporan dan tak mau kacau. So dah siap semua laporan tu ke?
Tak lengkao rasanya tak dapat komen dari u. Masih di KL kan? I still prefer kena panggil norzah je....
Well, we've a new economic model now, the brainchild of the NEAC. Dah baca laporan yg penuh ke?

I was really expecting something big and profound. What we have is more like an agenda for action without any theoretical framework that allows easy conceptualization. Kalau human model kan ada curve and swells which make for easy memorization, hehehe. Ini lebih banyak political cliche dari economic concept. Tak dapat nak dikatakan model, huhuhu.

kaykuala said...

Sdr Norzah,
Heavy stuff this! Not got round to digesting the NEM fully but I'm just commenting on the scenario surrounding it.It all comes down to fundamentals. PM for the life of him is to present something that works. He is not there to risk or to hoodwink anybody. It is a measure of regaining credibility for BN and to ensure survival towards GE13 and beyond. The NEM must therefore be workable, acceptable, and transparent in form and delivery. Safeguards must be in place to avoid unsavoury comments that plagued the NEP before.Going by the opposition's euphoria arising from GE12, irrespective of what's on the plate it is not expedient for them to readily see anything good. On the contrary, it will be shot at and shot down. PM must be ready for this reaction - all the more reason PM must believe in it and that what is presented as the NEM is the best there is. In fact he's not done with the whole yet. Do we take it he may revamp some parts, taking the cue from the initial reaction? No way it should go the GST way (that was put on hold) The NEM has to be made to work.There's so much at stake!

norzah said...

Appreciate very much the points raised, KK. You said it yourself - the NEM is a heavy stuff to digest. Will such a document or action roadmap help to attract, endear and convince the public about his earnestness to give the nation a big push to prosperity? I would opt for something more simple and easier to digest and am trying to see if the NEM could be set in a more
digestible form. The NEAC should provide a more simplified version of the model perhaps. Well, we can only comment and suggest things. The economic experts need not necessarily be expert strategists. Salam.

rambomadonna said...

I haven't read the full NEM report yet but being in the Lab for 4 weeks now I quite understand why whatever models or theories that the Government was trying to introduce were received with skepticism from certain groups or individuals. Civil servants are not known to be action oriented or profit oriented. However we try to "rebrand" ourselves, we are still perceived as bureaucrats!

Report not finish yet. I am doing some studies now on rationalizing standardisation of financial contribution by developers in property development. Kena tgk history balik on DEB in the 70s and our Privatisation policy. Not something that PEMANDU ask to do tapi I just nak strengthen my case study jer.

BTW, bangga you when u said "tak lengkap tanpa komen"I hehehe

norzah said...

Strategy 4 in the reform initiatives of the NEM is to strengthen the public sector. How? Create more units like the Unit Penyampaian Ekonomi (UPE) sedangkan EPU sudah ada? Remember some 250 top officials are already engaged in the 8 or 9 Labs and you're one of them. Nak expand the civil service lagi ke atau lebih baik naikkan gaji yang sedia ada, train semula dan change mindset? Nasib baik I dah pencen, hehehe.

abdulhalimshah said...

Sdr Norzah,
Nampaknya huruf "D" dalam DEB yang lama telah diganti dengan huruf "M" mungkin untuk memberikan nafas baru kepada kepimpinan Najib.
Kepada 90% rakyat jelata diluar bandar dan kumpulan yang terdiri daripada 40% penduduk negara ini, retorik saja tiada membawa erti yang akan mengubah hidup mereka hingga keakhir hayat. Apa yang memberi makna kepada majoriti rakyat ialah sama ada apa yang dijanjikan akan tertunai atau tidak. Dalam struktur ekonomi yang dijana oleh pemodal asing dan sektor swasta sebagai pemacu untuk melonjakkan taraf kepada pendapatan tinggi, maka Kerajaan sahajalah menjadi harapan sebilangan besar rakyat untuk mendapat perlindungan. Cerita lama akan berulang kembali dan patutlah banyak pandangan yang 'skeptical' diperolehi daripada pengumuman Najib. Pada saya lebih tepat ia dikenali sebagai " Jalan Tiada Hujung" mengambil pedoman komen Sdr mengenai "Road-map" yang diumumkan itu.

norzah said...

'Jalan tiada berhujung' memang tepat sekali utk roadmap yang bersimpang siur dan sukar dicari oangkal, sambungan dan hujungnya, bro. Bagi saya lebih elok roadmap yang kemas, licin dan mudah diikut untuk memikat dan menyakinkan rakyat. Of course, 'the final test of the pudding is in the eating.'
Kita tengok saja apa rasa rojak M** yang menukarkan
juadah D** itu,

rambomadonna said...

Saudara Norzah (hehehe)

Saya akan membaca MEB itu supaya boleh beri pandangan yang lebih bernas.

norzah said...

Sdri Jaime (kenalah ikut u). Jangan force yourself jika
banyak kerja lain lebih penting. But m certain you've lots of views...