Philosophy Politics Economics

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Optimistic Growth or Slow Down? Posted: 09 Jul 2010 09:23 AM PDT Come clean on economy, Pua urges government UPDATED @ 01:51:55 PM 07-07-2010By Boo Su-Lyn July 07, 2010 KUALA LUMPUR, July 7 — DAP national publicity secretary Tony Pua demanded today an honest assessment of the economy after the prime minister suggested the possibility of slower growth in the second half of the year. "For the past three months, the Malaysian government has been singing praises about the Malaysian economy... what happened now?" asked Pua today. "We want the prime minister (Datuk Seri Najib Razak) and his ministers to come up with an honest assessment of the country's economy," he said in Parliament today. Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop had also said yesterday that Malaysia's economic performance was "not so well" in the second quarter, but insisted the country was not headed for a double-dip recession. Malaysia's economy grew by an impressive 10.1 per cent in the first quarter of this year, marking two straight quarters of growth following three consecutive quarters of serious contraction last year. Despite signs that the United States is set to join Europe on the economic slow lane, Nor Mohamed had argued that Malaysia remained on track towards meeting its annual growth target of six per cent. "The government must come up with an honest assessment on where we are... and how to mitigate the slowdown," Pua told reporters today. Pua, also the Petaling Jaya Utara MP, cited signs of the economic slowdown such as analysts from the US cutting growth rate forecasts while banks in China were selling loans. "We must not deceive ourselves," said Pua. Najib had said yesterday that despite the uncertainty in the external sector, the Malaysian economy remains resilient. To sustain the growth momentum, Najib had said the government will ensure the implementation and close monitoring of all measures outlined in the 10MP. The Najib adminstration has been trying to introduce economic reforms and spending cuts but has been faced with stiff public opposition. Najib has also been trying to lift Malaysia's profile as a destination for foreign investment to help the country achieve an average GDP growth of at least six per cent per annum over the next five years. Malaysia's FDI rates have fallen faster than other regional players like Singapore and China, and at the same time capital outflows have dampened private domestic investments. Net portfolio and direct investment outflows had reached US$61 billion (RM197 billion) in 2008 and 2009 according to official data. The government will allocate between RM90 billion and RM91 billion for expenditure in the first two years of the 10MP Najib's government has set among the key challenges of the 10MP the stimulation of the private sector investments to grow at 12.8 per cent annually or RM115 billion. It was reported that the country may not be able to achieve the six per cent GDP growth target if the 12.8 per cent growth is not achieved within five years. Najib has said that it was important for Malaysia to have a robust domestic demand to spur and balance the economy. He has also added that while the global economic environment had improved, there are downside risks to the recovery, including the sovereign debt crisis in Europe and the slow recovery in the United States.

Is The NEM Dead? Posted: 09 Jul 2010 09:18 AM PDT Is the "New Economic Model" still a live document, or on life-support or already dead and buried by the Prime Minister, according to the wishes of Perkasa? The "New Economic Model" was meant to be the underlying economic platform for Datuk Seri Najib Abdul Razak to mark a departure and transformation of economic policies from the mistakes of the past. However, the new model's path has been strewn with various hurdles which has resulted in last minute alterations and repeated postponements. Originally, the model was to be revealed at the end of 2009 but was delayed to February, and subsequently, only Part I of the NEM was unveiled on 30 March 2010. The Prime Minister had then announced that Part II will only be released after further consultations, together with the 10th Malaysia Plan. The 10th Malaysia Plan has already been unveiled a month ago on the 10th of June, debated and passed in Parliament without any signs of Part II. It was hinted that Part II will finally be released in the 3rd quarter of this year. The question now is, will there still be a Part II? It is now speculated that the Part II of the much-vaunted New Economic Model will never see the light of day, in any substantive form despite the fact that it was meant to contain more details and specific policies than the Part I's high-level introduction. Was the death-knell to the New Economic Model sounded when Perkasa, supported by various UMNO leaders mounted a vigourous campaign against the Prime Minister, culminating in the May 30th Malay Consultative Council (MPM) congress? At the Congress, Perkasa Chief Datuk Ibrahim Ali told Datuk Seri Najib bluntly in the face that "Malays have rejected the New Economic Model" and hinted at a "vote of no-confidence" towards Prime Minister by the Congress. The Prime Minister had then backtracked on the NEM, by clarifying that the NEM "has yet to be finalised", and now we are not sure if it ever will be. Much to the delight of Perkasa, the 10th Malaysia Plan retained the controversial 30% bumiputera targets for equity, land and property as well as professional jobs, in direct contravention of the NEM which planned to "implement transparent and market-friendly affirmative action programmes focussed on building capacity and capability of low-income households and small businesses, instead of imposing conditions to meet specific quotas or targets". Datuk Seri Najib had on 15 June claimed he had never proposed for the Bumiputera equity target to be dropped saying that "it was a misunderstanding". In fact, during the Prime Minister's inaugural speech on the 30 March to local and foreign investors on the NEM, he had clearly stated that "this approach will mean greater support for the Bumiputera, a greater support based on needs, not race." The U-turn by Datuk Seri Najib has invited criticisms from even his own brother, Datuk Seri Nazir Razak who is the CEO of CIMB Bank who had called for a review of the old New Economic Policy (NEP), adding that the policy has been unfair to the majority of Malays. He said "the time has come for the government to protect the interest of the majority of the Malays and not just selected few", which has been the case under the NEP where a 30% bumiputera target was set. Unfortunately, it appears that the dice has been cast and Malaysians who had been waiting anxiously for the announcement of the transformative "New Economic Model" where the Part II is still mysteriously missing, will be waiting in vain. Perkasa and other vested interest groups have thrown a mighty spanner into the works, ensuring a double-quick retreat by the "reformist" Prime Minister. We still hope that a meaningful and substantive NEM Part II can still see the light of day, one that is based on merit and needs, and not on race. We call upon Datuk Seri Najib to bravely make another U-turn, this time to charge forward and sieze the day to protect the future economic interest of all Malaysians.

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