BOTH the International Monetary Fund (IMF) and World Bank, in their regular reporting on our country, have made encouraging forecasts about our economic prospects, stating that the GDP growth momentum will continue into 2018 on the back of world economic recovery, strong export performance and expanding domestic demand from the private and public sector.
They attribute this favourable outlook to the good policies which the Government has implemented, including the introduction of GST and removal of wasteful expenditures on fuel subsidies.
Their forecasts on national and household debts indicate that these are manageable and therefore unlikely to cause a risk to the country’s financial health.
Their assumption is that the contingency liabilities of 1MDB and the other GLCs will not materialise to fall on the Federal Government’s shoulders.
And while investors and financiers are encouraged by the various reform measures taken in Malaysia in recent years, they also notice that the structural reforms recommended in the New Economic Model (NEM) report to the National Economic Action Council have not made much progress, particularly on the race-based economic policies and the large presence of government-linked companies (GLC) in the marketplace.
Although the Government has introduced high standards of corporate governance guidelines for GLCs to make them operate along commercial lines, private businesses remain sceptical that there is a level playing field especially for young entrepreneurs and start-ups.
Entrepreneurship and risk-taking need to be encouraged by freeing the economy from restrictive policies and reducing government presence in commercial activities.
The recent G25 Report on Invigorating Economic Confidence in Malaysia also covered the same issues raised in the NEM study.
In discussing the economic and financial issues, it focuses on the current concerns on inflation, cost of living and disposable incomes, drawing the same conclusion as in Bank Negara and other reports about the need for wage levels to increase through labour market reforms, higher quality of education and training of school-leavers and graduates, and stricter control over the influx of cheap foreign workers, particularly illegal and undocumented workers, which is causing social and security problems for the country.
More importantly, the easy access to cheap unskilled foreign labour acts as a disincentive for businesses to change their methods of production from labour-intensive to automation and their lines of business from low to high value-added goods and services. Malaysia cannot remain a labour-intensive economy if it wants to be a high-income country.
Virtually all reports on Malaysia from local and foreign analysts stress on the urgency for a wide range of institutional reforms to create openness of Government and transparency and accountability in the management of the country’s economic, social and religious policies.
Many from developed countries and our own well-educated middle class tend to be suspicious about corruption, nepotism and cronyism when the government of a country is shrouded in mystery and secrecy at the official level.
Business leaders are more comfortable with an open system of government that can deal with issues like 1MDB, syariah laws or English as a second medium of instruction in schools in a transparent manner.
Institutional reforms for responsible government should begin with Parliament setting the tone for public institutions to be professional and independent in carrying out their management and regulatory functions.
As an example, Parliament can establish select parliamentary committees to exercise oversight responsibilities on the executive functions of government such that ministers and their civil servants are made answerable for the management of their ministries.
The committees should sit in open sessions with professional advisers, assisting the members of parliament in raising relevant questions and evaluating the annual and special reports of government agencies such the Auditor-General, police and MACC.
As financial issues have become controversial matters of wide public interest, the committees should also conduct hearings on the GLCs by instructing the Finance Ministry and Khazanah Nasional Berhad, or bumiputra development agencies like PNB, Felda, Mara and Tabung Haji to appear before them for briefings, with permission for the public to also attend and listen to their discussions and debates.
The two agencies that need to be closely monitored by the Auditor-General and Parliament are Jakim and Iksim in view of the secrecy surrounding their budgetary allocations and expenditures and their activities.
They must be made publicly accountable like other government agencies and not exclude themselves from public scrutiny.
Appointments of officials to key government posts should be based on merit irrespective of race and religion and open to independent scrutiny by the relevant service commissions to ensure they are not favoured based on political affiliations or business connections.
This should apply especially to senior positions in the civil service, the legal and judicial branches of government and the regulatory agencies as they must be seen to be clean of any suspicions and speculation.
These are some examples of the best practices which are important for ensuring that whatever the political changes, the country has strong institutions to lead its development and maintain high standards in upholding the rule of law for justice and fairness.
Malaysia is eminently capable of becoming a high-income country in a few years’ time because of its rich resource base, well-developed infrastructure, cultural diversity of population and its geographical location in the fastest growing region in the world.
To achieve that goal, it must quickly get its governance system right, with checks and balance among public institutions to prevent abuse of power and make the authorities accountable for any mismanagement and injustice in the implementation of its economic, social and religious policies.
A government that is open and accountable will generate confidence that Malaysia is a progressive Muslim-majority country with good economic and social strategies for the inclusive development of its people.
It will be a government that cares for the rights of all races not only for their basic necessities of life but also in their access to the democratic values of freedom and liberty as enshrined in the Constitution and expressed in the Rukunegara, the national ideology for uniting Malaysians.
That’s the way forward to becoming a fully developed country in the true sense of the word.