Key SocioEconomic Issues Impacting National Economic Resilience

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Key Socio-Economic IssuesImpacting National
Economic Resilience Competitiveness
ASLI - SEDAR Roundtable Discussion

• by
• Datuk Nicholas S. Zefferys P.J.N.
• Governor Past President American Malaysian
  Chamber of Commerce
• President CEO Applied Consulting Engineering
  Sdn. Bhd.
• Director Southern Bank Berhad
• 14 January 2006

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2020
Requires 7 Avg. Annual Growth (some years
higher-others lower)
The march towards Comparative Advantage And Jobs
9th Malaysia Plan (pending)
2006
Anticipate steady but unspectacular
growth (as reflected in Budget 2006)
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3rd Qtr 2005 Economic Results

• GDP growth _at_ 5.3 (v. 4.4 2nd Qtr) led by
  Svcs. Mining
• Exports up 7.5 (v.28 in 04) led by EE (6.8
  growth 84 of all exports)
• Deficit0.6 of GDP (est. 3.8 for year)
• Inflation tending higher price increases in
  chicken, petrol, other
• Monetary policy tracking with expansion) lending
  rate increased to curb inflation
• Ringgit appreciating slightly curbs imported
  inflation

Building a solid economic foundation
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The Malaysian Model
Socio-Economic Dualities
45 Non- Muslim
55 Muslim
State-owned Enterprises/Jobs/ Education
Private Enterprises/Jobs/ Education
Separate yet integrated economies complimenting
each other Two interactive societies
living/working side-by-side
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The Dual Tracks of Malaysia
Syriah Law Priority School seats 30 Entitlements
Bumi Track
Social
Civil Law Vernacular Schools Global Mobility
Non-bumi track
NEP/NDP/Affirm. Actn. Party Dominance Govt/Bus
Alliance
Bumi Track
Economic
Social-contractEconomic survival Niche strategies
Non-bumi Track
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Where the tracks lead?
This? or . . . This?
Bumi
Malaysians
Non-Bumi
Joint but balanced, and stronger development
Separate, protected -- but lesser development.
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SOCIO-ECO SPHERE
- To Be Regionally Competitive - Drive Mission
Critical Development - Grow the Economy - Meet
Regulatory Social Obligations
Above Surface Goals
Driving Forces Below The Water Line
Leadership Collaboration CEO PM MOF
II Khazanah Nasional PNB EPF LTAT LUTH
NEP
KHAZANAH
Both address structural reforms
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GLC Transformation Manual

• Enhance Board Effectiveness
• Strengthen Directors Capabilities
• Enhance GLIC Monitoring Management
• Improve Regulatory Environment
• Clarify Social Obligations

• Review Revamp Procurement
• Optimise Capital Management Practices
• Manage Develop Leaders Other Human Capital
• Intensify Management Practices
• Enhance Operational Improvement

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Khazanah Transformation Plan

• Phase 1 Launched 29 July 2005 by PM
• Develop Goals Initiatives
• Phase 2 (Aug. 05 - Dec. 06)
• Execution of initiatives
• Phase 3 (2-5 years from now)
• Materialisation of sustained benefits
• Phase 4 (5-10 years onwards)
• GLCs transform into regional champions

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Moving from . . .
Jaguh Kampung
To . . .
Jaguh Dunia
. . . not just in trade, but also investment
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NEP/NDP AFFIRMATIVE ACTION POLICIES
Borne of poverty reduction wealth
redistribution goals As well as preparation
for Globalism.
Perceptions? Realities?
British Legacy - Downgraded Malays -
Intellectual caldron of isms)
Malaysian Legacy Strong Government Central
Control
Government decides market winners losers?
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PM Abdullahs Presidential Speech

• On The Malay Struggle
• WE want to become an advanced nation.
• (The rest of the world) will not formulate
  policies to help Bumiputras.
• The global economy does not recognise quotas it
  will not allocate special projects for
  Bumiputras.
• The global economic lexicon only acknowledges
  terms such as competition, competitiveness,
  productivity, innovation, creativity,
  originality, excellence and efficiency.

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Paradigm Pliancy (A Model for Change) The ability
to stretch the mind and break out of the box!
Existing Paradigm (A)
Breaking out of the Box (B)
Stepping into a New Domain (C)
A B C
Entitlements Affirmative Action
Equal Opportunity Meritocracy
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New Course
Old Course
Changing course or tacking yields a
short period of turbulence as the sail is reset
to a new course and the wind fills the sail
propelling it on its new direction.
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2006
A turning point?
Malaysia has a demonstrated pragmatism for doing
the right things.
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Keadilan Supreme Council
The Edge Nurihsan Majid

• Unanimously approved an economic motion to
  replace race based NEP with a New Economic
  Agenda
• Seeking an ideal of universality
• A racial approach is inadequate to deal with
  complex socio-economic inequality in Malaysia

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Keadilans New Economic Agenda
The Edge Nurihsan Majid

• Emphasis on justice for all Malaysians
  eradicating poverty regardless of race
• Narrowing the gap in rural urban development
• Provide training education to all Malaysians to
  face a K-based economy
• Promote entrepreneurship for a stronger small
  medium sized enterprise backbone of the economy

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Keadilans New Economic Agenda
The Edge Nurihsan Majid

• Promote a delivery system which is worker
  business friendly, that inculcates accountability
  openness for more sustainable development
• Ensure government intervention is limited
  strategic by forging positive partnership with
  the private sector that empowers economic actors
  for a growth-based economy and
• Forge a positive economic strategy to compete in
  a globalised economy.

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A Paradigm Forward?
ECONOMIC
SOCIAL
Moving From Entitlements To Equal Opportunity
Moving From Govt. Run Business To Private
Enterprise
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Xie Xie
Terima Kasih
Thank You
Nandree
Shukriya