NEM – SYSTEMATIC DESTRUCTION OF THE BUMIS? (Part 1)

1. After reading a book entitled “The Shock Doctrine” by Naomi Klien given by my new friend, I was encouraged to read the following related books – “Economic Genocide in Chile” by Andre Gunder Frank; “True Crimes: Rodolfo Walsh” by Macheal McVaughan; and “Unsettling Statecraft” by Conaghan & Malloy. After reading, I became more convinced that I was right when I told the participants of Bumiputera Economic Congress (BEC) that New Economic Model (NEM) is a new tool to colonise the Bumis.

Open Day

2. At the same time, it provoked me with the idea to pen this article to be shared with my readers. However, for the benefit of the doubt, I have to wait until the NKEA Open Day in order to gain more insight. I attended the first Open Day on 20 September 2010.

3. The main objective of this article is to alert the NEAC / government about the possible shortcomings and rectify them, if any, before the various proposed programmes seriously damaged the socio-economic fabric of Malaysian society. More importantly, it is my sincere wish to be enlightened so that I can ‘buy-in’ and collectively share the programmes.

4. The Open Day has 3 main components – (a) the briefings, (b) the exhibitions and (c) the break-out sessions. The objectives are indeed very noble – sharing the output of the 12 labs and expecting / hoping the public to ‘buy-in’.

5. There are already a lot of comments about this Open Day – positive and negative. Ramizah Razak’s, Andrew Ng’s and Gucharan Singh’s comments could be representative of the crowd’s sentiment .

6. Notwithstanding its noble objectives, let’s briefly analyse its implementation with the intention to improve, especially in relation to the effectiveness of knowledge sharing in order to concretize the ‘buy-in’ and, therefore, the associated value for money.

7. Firstly, the briefings were monologues; nevertheless, they were ok. But it sounded too good to be 100% true and defect-free. Secondly, some exhibitions were manned by some experienced hands while a few others were by young cikus. And lastly the break-out sessions – hardly much time; could not even give a comprehensive briefing and answer our questions due to shortage of time.

8. Anyway, based on transparency and value for money principles, the public ought to be informed about the total cost of this Open Day and its outcome.
PM’s Agenda

9. Now let’s recap our PM’s specific agenda. Indeed he does sincerely want to see Malaysia makes a quantum leap to achieve Vision 2020 / High Income Status (GNI per capita = US15,000) by 2020. To achieve the said agenda, YAB Dato’ Sri Najib had constructed 4 vehicles – (a) 1Malaysia, (b) New Economic Model (NEM), (c) Government Transformation Plan (GTP) and (d) 10th Malaysia Plan (10th MP).

10. I wish to focus on the NEM and its associated Economic Transformation Plan (ETP) as well as National Key Economic Areas (NKEAs).

11. In terms of support, one can broadly dichotomise (a) the Non-Malays, so-called liberal Malays and foreigners strongly supported the model while (b) the so-called conservative Malays, largely presented by the Majlis Perundingan Melayu (MPM), strongly opposed the model if the Bumiputera Agenda is not explicitly expressed. This round won by the 1st group.

12. MPM convened Bumiputera Economic Congress (BEC) on 29 May 2010; the Agenda with 31 Resolutions were unanimously adopted and won the support of the PM. It was incorporated in 10th MP (Chapter 4) at the 11th hour upon his instruction. This round won by the 2nd group.

13. Not happy, the 1st group, through the MCA, convened Chinese Economic Congress (CEC) on 14 August 2010; passing 13 resolutions, and seemingly, in retaliation of the BEC’s 31 resolutions and resulting the political polemic. It seems there was no apparent winner.

14. In the meantime, Tan Sri Koh Tsu Koon, Dato’ Seri Idris Jala and the gang are quietly working in the labs to hammer the 12 NKEAs as outlined in the 10th MP – oil & gas, palm oil & related products, financial services, wholesale & retail, tourism, etc. Make no mistake that these 12 NKEAs are actually the explicit heart and soul of NEM and the driver of 10th MP.

15. NEM is guided by three beautiful principles (a) high income, (b) sustainability and (c) inclusiveness. However, the NKEA Open Day basically focussed on high income, emphasising on the traditional input and output equation and mentioned only in passing the more important variables of potential outcome and impact favoured by the PM.

Outputs

16. The output of the 12 NKEA have been widely reported – to mention a few:

• Equal opportunities / free competition,
• Less government role / privatization / selling GLCs,
• 6% GDP annual growth,
• GNI will triple from RM660 billion in 2009 to RM1.7 trillion by 2020,
• GNI per capita will increase from RM23,700 in 2009 to RM48,000 by 2020,
• 131 EPPs and 60 business opportunities have been identified,
• Total investments were valued at US$444 billion; 92% from private sector and only 8% from the government,
• 3.3 million jobs will be created by 2020.

I will comment these outputs later.

17. From the outset, one should ask the reliability of the outputs in respect of the representativeness of the labs’ participants. If the 500 odd participants were representative of the Malaysian society at large, therefore the outputs could easily be collectively shared.

18. Idris Jala has to prove this; not only to show that they came from various cross section of the society [government agencies (32), private sector / various industries (210 companies), NGOs (13), etc] but must also prove that different political affiliations and heterogeneous economic thoughts were adequately represented. Otherwise, Idris could not rest in peace.

Growth & Distribution

19. No one should disagree that ECONOMIC GROWTH is critical for future prosperity. With growth, the wealth can be distributed (please note – ‘can be’, not ‘will /shall be’) amongst the rakyat. Distribution without growth means distributing poverty!

20. However, growth and fair distribution are NOT correlated twin variables. The latter will not automatically happen under the growth landscape. A fair distribution will only happen if there is an explicit and crystal clear socio-economic engineering policy like the New Economic Policy (NEP).

21. According to PM, a fair distribution must encompass the whole spectrum of measuring wealth such as equity ownership, other financial and non-financial assets, and access to wealth creating opportunities such as long-term concessions and contracts. Even in measuring ownership, it should go beyond equity to include other properties, business assets such as retail, landed properties, commercial building, intellectual property and other services as well as managerial positions.

22. I took the opportunity to ask one of the PEMANDU officers about this burning issue. He admitted that specific instruction was to focus on GROWTH; distribution is NOT in the agenda. It means NKEA’s outputs are indeed in pursuance of NEM’s original subtle and cruel stand of anti-NEP. It did not even fully honour its own Principle of Inclusiveness and refused to subscribe to what is crafted in the 4th Chapter of 10th MP (Towards Inclusive Socio-Economic Development).

23. Obviously, this round was won by the first group.

24. Let’s be very clear. In managing a country, if the objective is ONLY to achieve growth it is not that difficult. If the objective is only to create employment, it is not difficult either. One does not have to engage consultants and pay them more than RM130 million just to do that relatively simple job.

25. What is more difficult to deliver is to achieve an output mix of (a) high growth, (b) increased household income, (c) lower poverty, (d) narrowing income gap, (e) full employment, and (g) low inflation. The resultant outcome is a better standard of living as enjoyed by Malaysians (and Melakans) during the last 30 years.

26. Hence I wish to repeat it loudly and clearly that Tun Dr M and DS Ali Rustam must be unreservedly credited for this excellent achievement, alas minus the NEM. They should be appropriately honoured by conferring the Nobel Prize for Empirical Economic Management!

27. Again lets us be very clear. Achieving high income status in terms of GNI per capita does not necessarily means such a country is a developed country. This is openly admitted by the World Bank itself. Therefore, one should not be obsessed with such an idea. Anyway, does anyone recognize Saudi Arabia is a developed country with GNI per capita of US$17,700 in 2009?

  1. #1 by mama on September 25, 2010 - 1:35 am

    Hi, a non-economist should not pretend an economist when he does not know how economic works. M’s policies after 1997 crisis worked only during the aftermath of the crisis but could not be prolonged because we cannot escape the force of globalization we face now. So pls do not compare now and then.

    Second, no one in Malaysia is trying to usurp the right of the Malays, it is Umno which feels threatened politically finds it beneficial to create this fear factor to maintain support. Furthermore, if you feel threatened, it is because of the onslaught of the globalization force. Pls wake up fren.

    • #2 by darahtuah on October 4, 2010 - 2:21 am

      mama,

      1. Are u, Idris Jala & TS Koh an economists?

      2. The billionare Boon Siew, Goh Tong, Robert Kuok, Ananda Krishnan, Al Bukhary – were / are they economists?

      3. Pls name world presidents / PM who were economists?

      4. Who told u that 1997 policies to be prolonged?

      5. Don’t blame globalization – it was there long time ago. Pls wake up.

      Tq.

  2. #3 by sputjam on September 25, 2010 - 9:41 am

    Darah tuah stated:-
    New Economic Model (NEM) is a new tool to colonise the Bumis
    My opinion :-
    bumis of malay ehnicity were colonised by arab culture hundreds of years ago, and those born within this community cannot escape from this domination. Maybe darah tuah can suggest how this particular group can disassociate themselves from this foreign culture.

    a) For businesses to thrive, and evolve freely, there should be minimal state intervention.In New York, failed banks should be allowed to go bust. But this was not done and the thieves, who award themselves huge million dollar bonuses are allowed to freely roam the world and attack markets everywhere. Financing in US have evolved and bank no longer lend money to inspire growth in industrial sectors (real growth), but dump money into markets speculating in forex/commodities and shares creating bubble wealth worldwide.

    b) In order to replace NEP, which stiffles growth, innovation, ambition and dreans of many, I suggest that all natural resources found within the country, be extracted and contracted to bumiputra only companies. No JV etc.
    That means timber/tin/oil and gas/fishing/ extraction licenses and are for bumiputra companies only, and priority and assistance should be given by the govenrment, to assist the bumis living within the resources, in terms of training, financing.
    Other businesses willl be free for all, in a level playing field in terms of taxation/duties and benefit.

    c)Urban location like klang valley/Penang and iskandar region, should have autonomy in order to compete with cities like Singapore/bangkok/Hong Kong and tokyo.Presently elected reps in Kuala Lumpur have no voice in the administration of the city, which is like a dump when compared to singapore and shanghai.If we shackle this urban centres, we are only allowing singapore to take advantahe ofthe situation as they have no competing cities in south east asia in terms of 1) tax evading quality b) money laundering capability. And money from natural resources/industries within ASEAN will always be channeled to singapore, instead of being remitted back into the home country. We need to destroy this because it is a threat to the prosperity of the region. The winners are the owners of the companies, whereby they still control the funds as money from sales are remitted into the marketing companies offshore accounts, and not to the actual businesses, and shareholders have no say in the marketing company based offshore. Corrupted/CBT money, mostly from Indonesia/Yhailand/Malaysia are all channeled into accounts in singapore/hong kong. The financial centres are unsurping the wealth of other asean nations, and we must consider them as a threat. It is also through this financial centrea, where the hedge funds and huge banks undermine currencies, speculate in commodities and other tradeable assets, causing volatility, which is good for them, but very bad for established industries, which thrives on stability.

    d) Therefore, I would like to refute the claim that bumiputras of malay ethnicity are being colonised, as they have long ago, given away their culture and lifestyle, and embrace, middle eastern way of life, including in architecture of prominent buildings, like our high court, new istana, PM’s department etc.

    e) If anything, i feel, darah tuah is more concerned abourt preserving the status of middle eastren culture to dominate the thoughts and lifestyle of bumiputras of malay ethnicity.

    Thank you.

  3. #4 by Noor MD on November 15, 2010 - 9:25 am

    Good analysis!

    One does not have to be an economist to speak of economy. Einstein does not possess a mathematics degree to be a great mathematician. Nevertheless, in this case, being a graduate of the London School of Economics, i believe u are an Economist.

    Your attempt to backup your theory with reasoning–some are quite sound–is admirable. Most people attack succinctly without offering any prove. U did beyond that. Good!

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