AMIRSHAM A. AZIZ
Forging Malaysia's new economic model

2009/11/21

SINCE the announcement by the prime minister on the expected unveiling of the new economic model at year's end, public expectations have been heightened on its anticipated shape and form. As the chairman of the National Economic Advisory Council, I have been asked regularly why the work pace and the public engagement of the council is different from our so-called predecessor, the National Economic Action Council (I will refer to it as the "Action Council") which was created to counter the Asian financial crisis. My response is: we may share the same acronym, but that is where the similarities end. Our tasks, objectives and background are vastly different.

Firstly, the economic environment in which we operate today is starkly different from the crisis atmosphere a decade ago. At that time, our financial institutions were on the brink of collapse. The ringgit fluctuated wildly, occasionally taking deep unpredictable plunges. On top of that, foreign capital was withdrawn abruptly while non-performing loans soared. The resulting erosion of the nation's wealth plunged the country into a state of crisis. In response, the government had to come up with policy prescriptions almost overnight to slow down or soften the impact of the fast deteriorating economic situation. The Action Council was specially created to "fire-fight" the crisis on a daily basis.

The post-Asian crisis period has seen slower economic output growth in Malaysia. The current global financial crisis has further impeded our ability to reach our target of being a developed nation as envisioned by Vision 2020. The Advisory Council was set up in response to this concern. Our task involves proposing structural changes to the economy. Our inputs have already been included in the 2010 Budget, which marks the beginning of our nation's move towards a high-income economy. And this will continue with the next two Malaysia Plans covering the next 10 years.

I believe that the mindset challenges we face today are totally different from the crisis of confidence which engulfed our psyche a decade ago. The fact that the country has escaped much of the subprime and credit crunch crisis has resulted in a sense of apathy and complacency creeping in. Many do not appear to realise we are lagging behind some of the emerging economies.

In other words, there is an absence of a compelling need for change. Assessing where we are and proposing the way forward is not a process we can achieve overnight. It involves significant stock-taking, dialogue, analyses and post-mortems of why past policy prescriptions succeeded and others did not. This transformation process involves instituting broad policy and institutional reforms, and changing our mindset and the way we do business.

To date, the Advisory Council has been actively engaging members from the private sector, think tanks, NGOs as well as a broad range of opinion leaders -- albeit in a lower profile -- as we want our stakeholders to give us honest and frank input. Perhaps this deliberate low-profile dialogue strategy has inadvertently given the impression that we have not solicited advice from our external stakeholders. It is important to get a diverse spectrum of ideas as we debate the form and shape of the new economic model. In my opinion, what the prime minister wants is an honest appraisal of where we are today, where we go from here, and, most importantly, how we get there.

The next scheduled meeting of council members will be held in December. In between, the Advisory Council Secretariat has been working with council members to draw up the interim report of the economic transformational blueprint, which will then be submitted to the prime minister by year's end. Even with this process completed, it only spells the beginning. The Advisory Council welcomes a vigorous and healthy debate on our proposals in the months ahead.

Our stakeholders' expectations are high. My council colleagues and I are fully aware of this, and we have an obligation to ensure that the proposals we submit can withstand the expected public scrutiny. We do not take responsibilities lightly. Equally important, we want to do it right.

Tan Sri Amirsham A. Aziz is chairman of the National Economic Advisory Council