Economy 101: So, What Is New in NEM? Part 1

NEM Economy Najib New Economic Model

(Najib’s NEM – looks good on paper but will it stick in reality? Can Malaysians afford to make that leap of faith with Najib’s ideas and face the world? Image source: Research Gate)

Najib has just launched NEM or in full, New Economic Model (some says identical to Pakatan Rakyat’s economy model) which supposedly replaces the New Economic Policy. But the question is what the impact on Malaysia and its people is?

The gist of the NEM framework as reported by Reuters is as follows:-

  • State investor Khazanah to sell 32 per cent stake in Pos Malaysia
  • To list stakes in two Petronas [PETR.UL] units
  • Facilitate foreign direct and domestic direct investments in emerging industries/sectors
  • Remove distortions in regulation and licensing, including replacement of Approved Permit system with a negative list of imports
  • Reduce direct state participation in the economy
  • Divest GLCs in industries where the private sector is operating effectively
  • Strengthen the competitive environment by introducing fair-trade legislation
  • Set up an Equal Opportunity Commission to cover discriminatory and unfair practices
  • Review remaining entry restrictions in products and services sectors
  • Phase-out price controls and subsidies that distort markets for goods and services
  • Apply government savings to a wider social safety net for the bottom 40 per cent of households, prior to subsidy removal
  • Have zero tolerance for corruption
  • Create a transformation fund to assist distressed firms during the reform period
  • Easing entry and exit of firms as well as highly skilled workers
  • Simplify bankruptcy laws pertaining to companies and individuals to promote vibrant entrepreneurship
  • Improve access to specialised skills
  • Use appropriate pricing, regulatory and strategic policies to manage non-renewable resources sustainably
  • Develop a comprehensive energy policy
  • Develop banking capacity to assess credit approvals for green investment using non-collateral based criteria
  • Liberalise entry of foreign experts specialising in financial analysis of the viability of green technology projects
  • Reduce wastage and avoid cost overrun by better controlling expenditure
  • Establish an open, efficient and transparent government procurement process
  • Adopt international best practices on fiscal transparency

Whilst some of the calls under NEM is nothing new for example “zero tolerance for corruption” which can be considered as redundant if you ask me (fight against corruption should not come under specific policies, there should be zero tolerance for corruption from day 1), the pertinent question would be – is NEM just another name for the abuse ridden, crony, favoured NEP?

RPK stressed the same point on NEM:-

The New Economic Model should not be Version 3 of the National Economic Policy, which in turn is Version 2 of the New Economic Policy.

We should scrap the NEP foundation altogether and come out with Version 1 of an entirely new operating system. Bugs can never be totally eliminated with upgrades to a problematic operating system.

And Najib seems to be singing the same tune when he said this:-

As a government, and as prime minister, our aspirations for Malaysia and the Malaysian people go far beyond guiding our nation through a recovery.

Indeed, the work we have done for the past year will be wasted if we simply retreat to the status quo.

This is unacceptable to me.

Well Najib, it is also unacceptable to us if the status quo means perpetuating corruption, wastage and cronyism.

Then again coming up with the ideals is great but what about the implementation?

What about the enforcement?

And we need not go far. Let’s just take one of the items listed – “Have zero tolerance for corruption”. Just how effective MACC has been other than getting involved in a mess called Teoh Beng Hock? What is the progress of the case on the PKFZ scandal?

There has been silence since now and much of the attention on it has been distracted by the in-fighting within MCA, where some of the names are deeply involved in the PKFZ scandal.

Let’s take another – “Reduce wastage and avoid cost overrun by better controlling expenditure”.

Does this mean the wastage of public funds as reported in the Auditor General’s yearly report is going to reduce? Have the necessary sanctions and cost-cutting measures been put in place to meet this aspiration?

As a reader mentioned in Malaysiakini:-

Anyone can make a thousand proposals, but the agencies trusted to implement these changes themselves are not reliable.

This should be addressed first before any new policy is designed. Otherwise, it’s a sheer waste of time and money. I have not seen or felt any changes and I don’t think I will in the near future.

We will still pay more for cars, earn less than others, suffer more, and cronies are still getting richer

What about the proposed Equal Opportunity Commission under NEM?

Will it be like the toothless SUHAKAM – the human rights commission who can make noise but is powerless to book the offenders? And just how “equal” does the Equal Opportunity Commission want to be? The very mention of the word “equal” already got the Malay rights movement like Perkasa up in arms. So, is it back to the status quo?

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. One can just hope that NEM will not turn out to be another fresh coat of gloss to old ideas instead of crafting new ones.

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