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Malaysia: New Economic Model

After months of creating anticipation for the ambitious New Economic Model (NEM), Malaysia's Prime Minister, Najib finally unveiled the first part of the plan detailing the future economic direction. It is a major development following a series of selective liberalization measures introduced by Najib since he became the Prime Minister in 2009, constantly projected to be eloquently driving a strong message in gradual economic liberalization and overhaul of affirmative action for ethnic Malay majority in order to make the country more competitive.

The effort is much lauded especially by policy makers in mainstream press, but the citizen media abounds with skepticism. Meanwhile Najib acknowledged the need to be more transparent about the timeline and implementation plan which will be announced later of the year. So the questions are still centered on two key aspects: Has the government finally gathered enough political will to change? Are there enough change agents to take up the ambitious initiative other than the PM?

South East Asian economies have always been characterized by large-state corporations, Najib has made a direct challenge to call for private-sector driven economy and reduce political patronage. How many will embrace such ideas? As Din Merican pointed out, Malaysia needs the drive of SMEs and entrepreneurs to turn this nation into high-income developed country.

These are the people who have been excluded from participation simply because they only have technical skills but no patronage and no intimate relationship with powerful decision makers.

Controversial writer, Raja Petra Kamarudin gave a colorful critique in Shakespearean metaphors, doubting the policy change will immediately constitute the change of heart of key implementers.

The New Economic Policy (NEP) has transformed into the National Economic Policy and now the National Economic Model. It is certainly a change of clothes. But is the wearer of the clothes the same? If so then it would be old wine in a new bottle.

The affirmative action, NEP has always been at the heart of debate. Najib promised to overhaul it into need-based rather than race-based. But some still reserve doubts about it. As Hafiz Noor Shams said:

Somewhere in the speech, the term market-friendly affirmative action appeared. I am not quite bought by that term. I rather hear the abolition of affirmative action but I am willing to give ground that need-based is far better than race-based affirmative action.

In a collection of interviews of economic policy experts, Stephanie Sta Maria highlighted polarized opinions on NEM. Professor Lim Teck Ghee from the Centre of Policy Initiatives described the framework as pure rhetoric.

The long-term time frame of the NEM is an excuse for inaction or delaying tactics. NEM has no short-term targets and I think it will suffer the same fate as the other ambitious policies before it.

University Malaya's Professor Edmund Terence Gomez also delivered a blunt critique that NEM is a fresh coat of gloss on old ideas.

Najib says that the affirmative action policy will now be need-based instead of race-based. But the aspects of its transparency and market-friendliness are clearly targeted at Bumiputeras (Ethnic Malays). And this is no different from the NEP.

Without a track record in making tough political choices and implementing changes, there is little surprise about the level of skepticism on NEM. While the intent of reform is clear but the end result is not, the job has just begun for the coalition government.  Like balajoe27 articulated:

The fact is NEM is still in its infant stage – there are good items under the NEM but whether it turns out to be another one-sided policy by another name or it can be implemented effectively, it will remain to be seen.

Raja Petra Kamarudin

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