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Kindly be informed that MM2H Centre has discontinued the reduction of Fixed Deposit placement based on property purchase worth RM1 million and above in Malaysia. Also discontinued is the MM2H...
Mohd Effendi Norwawi: We must fix our weaknesses Print E-mail
Monday, 21 December 2009 13:21

Our economic survival and competitiveness are at risk. We must try new ways to get new results and overcome the haunting problems of implementation with the same old people, systems and processes.

FROM his Budget speech, it is clear that our Prime Minister has a deep appreciation of the challenges faced by the nation today. He has also articulated well the actions that must be taken to overcome the challenges.

He will reinforce this soon with the announcement of a new economic model. This would be so timely – but the point I intend to make here is, this new economic model will not succeed unless it is accompanied by a new and bold implementation model.

Without a new implementation model, this new economic model idea will suffer the same tragic fate of the many “new ideas” in the past that have never made the distance, mostly because of breakdown at the implementation level.

Mohd Effendi: 'We must try new ways to get new results.'

This time, we must succeed or we will perish in the competition! The challenges we face today are more serious than we think. All the danger signs are there:

1. Private sector participation as engine of growth has dwindled to below 10% of our GDP from 30% of GDP at its highest.

2. Foreign and domestic investment has declined significantly. Outflow of capital – RM117bil for 2008 and RM54bil for the first half of 2009.

3. Here’s a wake-up call! In 1980, of the total FDI inflow into South-east Asia, 35.4% went to Malaysia – less than 1% went to Vietnam. In 2008, from the total FDI inflow into South-east Asia (US$59.9bil), the amount that went to Malaysia and Vietnam are about the same (US$8bil). Is it a foregone conclusion now that Vietnam will soon overtake Malaysia in attracting FDI?

4. Our per capita income ratio with South Korea used to be 1:1 in 1980. Now the ratio is doubled to 2:1, leaving Malaysia far behind.

5. In the 10 years post-crisis of 1997/98, per capita income of South Korea has grown by 104.3% – Malaysia only achieved an increase of 68.4%.

6. In 30 years, the Chinese economy has expanded 15.4 times – compared with Malaysia at only five times!

7. On the World Bank Index “Ease of Doing Business 2010”, Malaysia is ranked 20 out of 183 countries. Sounds okay on the surface – but if you look deeper into critical indicators such as “Dealing with Construction Permits” and “Starting a Business”, our standing is at 109 and 88 respectively out of 183. It’s not so okay.

It’s high time we fix this – it can be done! But not with the same people and same procedure and process and not with the same old implementation model!

8. On the World Bank Knowledge Economy Index (KEI), which is a measurement of our readiness to support a knowledge economy, our KEI in 1995 was 6.12. in 2008 our KEI was 6.07 – no change.

In fact, we slid! Average KEI of the top five countries is 9.41.

9. In 2008, 2.062 million unskilled foreign workers entered Malaysia. (This is the official figure, what is the unofficial?) In the last seven years, entry of unskilled foreign workers have increased by 300%, and they have formed 30% of our work force!

10. On the other hand, entry of skilled workers and professionals into the country has dwindled by nearly 60% (85,000 in 2000 to 35,000 in 2007)! At the same time, we see an alarming number of Malaysian professionals migrating to other countries.

11. Coming up to 2010, our GDP growth is estimated to be 26% below our original 2020 target – our per capita income will be 52% below this same target!

12. We have been in this middle-income group of countries for 15 years now – the risk of being trapped there is increasing. We have to double our per capita income in the next 10 years just to meet the minimum level of the high-income countries. To reach our original 2020 target, we need to treble our per capita income. A tall order!

I’m highlighting this in the sincere hope that Malaysians can see and feel the seriousness of the situation. Even more serious is how these weaknesses can reinforce each other to drag us down even further. Malaysia must wake up. The Prime Minister clearly wants to change things – he is loud and clear about how we can’t go on being just “Business As Usual” anymore. But he can’t succeed on his own – he deserves the support of every loyal Malaysian who has big dreams for this country.

Where do we go from here? Well, I believe the Prime Minister is clear about what he wants to do under his three strategies:

1. Driving the nation towards a higher income economy

2. Ensuring holistic and sustainable development

3. Focusing on the well-being of the rakyat

These are great ideas. But as we know, Malaysia is never short of ideas. Our history is littered with glaring examples where these great ideas just didn’t take off from the drawing board (K-economy idea was mooted in the 1990s). What happened?

We are great with ideas but we are just not great at implementing! Hence my very point – the new economic model will join the congested graveyard of many other great ideas – unless we come out with a new implementation model to go with it! We are not going to get new results with the same people, doing things the same old ways.

So here are my suggestions:

I’d like to focus on the Prime Minister’s strategy number 1 – driving the nation towards a high-income economy.

We are seeing encouraging results from the National Key Results Areas (NKRA) initiative, and the establishment of Pemandu to drive the six NKRAs – reducing crime, combating corruption, expanding access to quality and affordable education, raising the standard of living of low-income groups, strengthening infrastructure in rural and remote areas and improving public transport.

Clearly the six NKRAs are “people-centric”, in line with the Prime Minister’s pledge of “people first”.

Building on this initial success, I propose another initiative – similar to NKRA and Pemandu – except this initiative will focus on national economic transformation. We can call it MyTEN. MyTEN will be dedicated to this number 1 strategy – to transform Malaysia into a high-income economy.

I suggest the commissioning of a dedicated executing team to be responsible for implementing MyTEN. This team must comprise professionals and experts operating on a comprehensive plan with clear KPIs and mandated and empowered to transcend ministries’ and agencies’ “turf” and boundaries. They must have the most capable leader Malaysia can find, and be directly under the charge of the Prime Minister. They must have the clout to demolish obstacles and resistance and to make things happen.

To start with, I recommend the MyTEN team be tasked to deliver the following strategic results:

1. New sources of growth – to determine new economic areas of high potential where Malaysia can focus on and gain global dominance. Again, this has been mooted many times before, proving the point it can only happen if we have a dedicated team of professionals entrusted and empowered to execute this programme.

2. To stimulate private sector investment – foreign and domestic. Initiatives here would include priorities such as:

a) To effectively operationalise public-private sector partnership;

b) To redefine Government’s role in business and walk the talk that Government has no business to be in business; and

c) To produce a new generation of business entrepreneurs on merit and competitiveness and move Malaysia away from the “patronage and rent-seeking legacy”.

3. To accelerate Malaysia’s transformation into a knowledge economy anchored by innovation and quality human capital. This would include successfully executing sound strategies to make Malaysia a high-wage economy. An important part of this would be to turn Malaysia into a destination of choice for global talent.

Global talent is critical to our economic growth and innovation. We know our “brain-gain” and “MM2H” did not deliver the real desired results. This is another example why we need a new implementation model – this programme must be undertaken by new well-trained, well-motivated people with new mindsets, applying new systems, processes and best practices to succeed this time around.

To succeed, MyTEN must be launched as a major national agenda like the NKRA and we have to get every Malaysian, both from the public and private sector, to be on board. This must be a 1Malaysia agenda.

It is always worrying that all these high aspirations of the Prime Minister and the nation will in the end land on the desk of an officer who may not have a full appreciation as to how critical these programmes are to the survival of our country and who might not respond with the necessary sense of urgency.

Another key to the new implementation model is engaging the private sector whenever we can.

One has to be concerned with the rapidly increasing operating expenditure of the Government (from RM80bil five years ago to RM140bil now).

The Government should get an independent and objective analysis to determine government programmes that can be better done by the private sector and let them do it.

For example, I can see how we should engage the GLCs and private sector to take over many of the Agriculture Ministry’s programmes. Only they can bring the real culture of commercialisation to our farmers. It’s a matter of working out the business deals with these GLCs and private companies so they can be profitable in these privatised ventures. The Government can then save billions from doing this themselves (and mostly not as successfully).

We have success models in Sime Darby and their Northern Corridor corn project and Khazanah on their aquaculture and papaya projects. Why don’t we upscale them?

Repeat: we must try new ways to get new results. I think this is why the word “innovation” appeared everywhere in our Prime Minister’s Budget speech. The government must redefine its role, and this will require a new public sector mindset to let go to the private sector at every appropriate opportunity where there is clearly a net gain for the country.

To drive our nation’s economy, we need the most important economic force – the return of confidence!

I’m certain that what will generate this return is if there is belief that there will be real change this time – that the country is serious and has the will and ability to deal with all its challenges. I don’t think that there is any doubt about the Prime Minister’s seriousness, will and ability. But the doubt will be about the old haunting problem of implementation – that is, new ideas but done by the same old people and with their same old systems and processes, with little sense of urgency.

I know I’ll be commenting again on future government budgets… not so far away, I hope to be able to say we are now not just a nation of great ideas, but are also great implementors!

> Datuk Seri Mohd Effendi Norwawi is the founder and executive chairman of Encorp Bhd; he regards his seven years in the Cabinet as national service.


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