Malaysia-Pushing for growth, investment in 2007

The expectation of a slowdown in the Malaysian economy for next year is still a contentious one as there could be forces that could push the growth rate higher than these consensual estimates. ZAINAL AZNAM YUSOF tells us why. LEAVING 2006 and entering 2007 does not mean that the economy is starting completely afresh on a clean slate as there will be spillovers from the old to the new year.

As far as economic growth is concerned, with a growth of six per cent in GDP for the first three quarters it appears 2006 will not turn out to be a dismal year, and the consensus is that the economy is well on the path of growing close to about six per cent in 2006 when the official figure is tallied.

In 2007, however, the expectation appears to be for the economy to be growing at a slightly lower pace, ranging from 5.2 per cent to 5.6 per cent. The external sector is anticipated to be less encouraging; the United States economy, Japan and Europe as well as the fast-growing East Asian economies are all anticipated to have their growth rates clipped.

The expectation of a slowdown in the Malaysian economy for 2007 is still a contentious one as there could be forces in the economy that could push the growth rate higher than these consensual estimates.

Ratcheting the growth of public investment through an accelerated implementation of the programmes and projects under the Ninth Malaysia Plan can make a difference to these growth expectations.

Getting investment to pick up and hence economic growth to rise above the market forecasts for 2007 and beyond will be a key task for policy-makers. Employment opportunities, especially graduate employment, must be expanded and this can only be done when businesses are expanding.

There is no room for growth euphoria and the dangers of slipping down the growth path are still present and real. Investment behaviour and performance must be given special attention. The recently released third quarter numbers on the economy showed that for the three quarters of 2006, the GDP grew at six per cent.

If we assume that the fourth quarter of the year is going to be better than the previous quarter, then there are some reasonable grounds to expect that 2006 will be growing at close to six per cent, which is the growth target of the Ninth Plan.

Looking ahead, the reason for some disquiet and worry has to do with the performance of investment in 2006: Gross fixed capital formation in the third quarter of 2006 grew only at a rate of 3.5 per cent compared with the Ninth Plan’s annual target of investment of 7.9 per cent — less than half of what has been targeted. Even if fourth quarter investment picks up, it will not be enough to reach the target set for it.

If we do reach or hover close to the growth target for the Ninth Plan but on the back of slower investment, then one likely explanation for the outcome is that productivity must have increased substantially and its contribution to GDP growth substantial.

This will need to be assessed so we can apportion the blame and credit for growth in the right places.

Private investment which comprises foreign direct investment (FDI) and private domestic investment has, on the basis of more recent historical records, not been performing outstandingly.

Over the period 2001-2005, private investment contracted by one per cent per annum.

Its share of total investment and of GDP has been falling largely from the fallout of the Asian financial crisis and competition from other emerging economies, particularly China, for FDI. Private investment accounted for 15.5 per cent of GDP in 2000, and fell to 11.8 per cent in 2005.

Major changes will be required in strategies and policies if we are to compete for FDI flows and to raise private domestic investment, and these strategic policy thrusts contained in the Third Industrial Master Plan 2006-2020 (IMP) must be implemented. The targets for private investment are ambitious as the IMP calls (in current prices) for about RM310 billion for the Ninth Plan or about RM62 billion per year. A sizable amount will be channelled to investment in manufacturing (RM101 billion) and services (RM93 billion).

Also these targets will call for some radical institutional changes. New institutions will have to be established while the existing ones will have to be aggressively refurbished. The IMP3 has listed the major institutional changes required.

At the same time, it is hoped that from 2007-2010 public investment as stressed in the Ninth Plan takes off. Its effects will be somewhat drawn out over the next few years.

Many of the high-impact development programmes and projects have been rolled out and many more will be rolled out in the new year. As a rough guide, the average annual development expenditure from the RM200 billion that has been allocated for the Ninth Plan is RM40 billion. Some bunching in spending is to be expected over the next four years as the pace of implementation picks up.

The machinery of implementation must be cranked up and it should not just focus on paper implementation in the sense of just recording that money has been spent because the money must reach the hands of those who have successfully completed the projects. The longer the delays in payments, the more dismal will be the growth sentiments in the market.

As investment sentiment tends to be fickle, the sensible approach would be to avoid initiating measures and emitting signals that would appear to investors to be inconsistent and murky. This calls for a better and realistic sense of proportion of the efforts required to appease and please investors in view of the fierce competition for FDI. In introducing measures to encourage private investment and in reforming institutions, we must avoid the impression they are too little and too late.

With the big push for investment growth, monetary policy and exchange rate policy needs to be supportive of growth and consistent with fiscal policy over the next few years. Monetary policy should be supportive of fiscal policy.

The push for investment and growth should not be accompanied by a tight monetary policy and interest rates will need to be kept at a level that will encourage growth, i.e. they should not be raised. Recent evidence suggests inflationary pressures are ebbing so that the need to raise interest rate to curb growth and inflation will be much less than before.

And an appreciating ringgit could help ease inflation in the economy.

By ZAINAL AZNAM YUSOF
(Datuk Dr Zainal Aznam Yusof is an adviser to the National Implementation Task Force.)



We can make Malaysia a better country

Awoke one night from a deep dream of peace
And saw within the moonlight of his room
Making it rich, like a lily in bloom
An angel writing in a book of gold.
Exceeding peace had made Abou Ben Adhem bold
And to the presence in his room he said
"What writest thou?"
The vision raised its head
And with a look of all sweet accord, answered:
"The names of those who love the Lord."
"And is mine one?" said Abou.
"Nay, not so," replied the angel.
Abu spoke more low
But cheerily, still, said: "I pray thee then
Write me as one that loves his fellow men."
The angel wrote and vanished.
The next night it came again with a great wakening light
And showed the names of whom love of God had blessed
And lo! Ben Adhem’s name led the rest.

— James Henry Leigh Hunt (1784-1859)

A RETIRED diplomat friend of ours sent this poem — part of the syllabus in English classes in the 1950s and 1960s — out to all on his mailing list, wishing us Christmas and New Year cheer.

May we all, the children of Adam, our friend wished, have our names in that book of gold, together with Abou ben Adhem.

How we wish it could be so.

Before we get lost in a dream of Utopia, perhaps we should take a reality check.

That wish will never come true. Why? Because...

• God made us all different.

• The world is not ideal.

• Our environment shapes us differently.

• We’re selfish.

• Self-preservation is a natural instinct.

• It’s easier to be emotional than rational.

• It’s difficult to love another human just for the sake of humanity.

• Human beings are imperfect.

• And because we are what we are.

But to wish we could all be like Abou Ben Adhem is a good wish and to dream that our world could be ideal is a good dream.

In the pessimism that surrounds us, such wish and such dream gives us hope. What would we be if we had no hope left?

I had the good fortune to be given the book The Reluctant Politician, a biography on Tun Dr Ismail Abdul Rahman, one of Malaysia’s greatest leaders and founding fathers, fresh off the press on Christmas eve.

Dr Ismail’s son, Tawfik, a long-time dear friend, flew in from Johor Baru to pass me the book and took the next flight back.

More than a decade ago, Tawfik and I spent days in Johor, going through Tun Ismail’s letters, diaries and notes.

They were from his early years as a medical student in Australia, during the negotiations for independence, and to the last days of his life when he was deputy prime minister of Malaysia.

Those who have lived through this era have always revered Dr Ismail. He was hot-tempered and impulsive, but he was also righteous and fair.

He was feared for his inability to suffer fools and the corrupt; but he was respected for being a man of principles and one who kept his word.

His private correspondence and personal journals only confirm that he was what he was — the private and public persona were one and the same.

The range of tributes to him in the book, from the builders of newly independent Malaysia to people like the great civil servants of that time, Tan Sri Rama Iyer, Tan Sri Abdullah Ali, and people like Tan Sri Philip Kuok and Robert Kuok, and his friendship with great Malaysians such as Tun Suffian Hashim and Tun Ismail Ali, show the kind of man Dr Ismail was.

The accolades by young and upcoming leaders of that time — Tun Musa Hitam, Tengku Razaleigh Hamzah and Datuk Seri Abdullah Ahmad Badawi — and the great warriors such as Tan Sri Ghazali Seth and Tun Haniff Omar show how he had an impact in shaping their lives so that they could be better leaders of men.

Although Tawfik inherited all the journals and notes when his father died in 1973 of a heart attack, he was reluctant to publish the memoirs of Dr Ismail to avoid embarrassing some stalwarts who were in prominent positions.

But 33 years later, although some of those who are indicted by Dr Ismail’s scathing verdict are still alive, Tawfik collaborated to have the memoirs published.

It is a revealing book, though not exhaustive, and though perhaps a little sanitised. And there will be those who would be unhappy to read their names in the book and see what Dr Ismail thought of them.

For those who have forgotten history, do not know, or choose not to remember, it is a book that should be read, especially as we stand on the threshold of a Malaysia going into its 50th year of independence.

It talks about the struggle for independence, the underlying principles of the social contract which has been debated so much in recent months, the heartbreaking moments of separation with Singapore, the confrontation with Indonesia and the racial riots of May 13.

Dr Ismail, who was Home Minister during May 13, gives his views on why it happened. And his letters and notes tell about the trying years of building a nation as envisioned by the founding fathers.

Sure, there have been many books and articles written about all these events and seen from the eyes of other witnesses of history.

Sure, there will be those who disagree with some of Dr Ismail’s conclusions and find his observations disturbing, especially current day politicians from all spectrums.

Yet, from a man who was honest, who served his country and people selflessly, who was fair and believed in doing the right thing, Tun Ismail’s thoughts and experiences could perhaps steer some of today’s politicians, civil servants and younger Malaysians to the path that the founding fathers envisioned we would take as a united people in a united nation.

I may not have been privileged and not old enough to truly understand what it feels like to be colonialised and to build a nation from scratch, but to me, Dr Ismail was one of Malaysia’s Abou Ben Adhems and I am glad Tawfik decided to allow his father’s memoirs to be published.

The year 2006 has not been the greatest year for Malaysia and it ends miserably with the big floods which have destroyed thousands of homes and claimed so many lives.

But perhaps what would have disturbed the founding fathers like Dr Ismail, and what disturbs most right-thinking Malaysians, is the continued antagonism and debate on issues which we should no longer be debating into the 50th year of our independence.

Certainly, it is not all doom and gloom. The economy is sound and the policies and programmes, if properly implemented and executed, will take us to the next level.

Two fundamental issues that need to be addressed are security, particularly in the urban centres, and the education system, which, by any account, has deteriorated over the decades due to myopic policies and political expediencies.

Malaysia has always been fortunate to have the right leaders at the right time and the police force has indeed been very lucky to have Tan Sri Bakri Omar and his successor, Tan Sri Musa Hassan, both of whom have shown great determination in reforming the force and improving security.

And both Education Minister Datuk Seri Hishammuddin Hussein and Higher Education Minister Datuk Mustapa Mohamed have announced plans for reforms of the education system.

Yet, one cannot blame a Malaysian public that may be sceptical because they have heard it all before.

Our hope is derived from the personalities and strength of character of people like Bakri and Musa.

But perhaps, the greatest underlying issue we have is the fragility of the race and religious relations today.

It could have been easy to resort to the familiar response that all is well because all races have a place in the power structure; that if all races are not happy, then we are doing something right; that our greatest strength is our diversity.

But it took courage for Prime Minister Datuk Seri Abdullah Ahmad Badawi to acknowledge, at a dinner earlier this month that ethnic relations were indeed fragile.

In a speech where no one listening doubted his passion, sincerity and desire for a Malaysia as envisioned by the founding fathers, Abdullah related his personal experiences of the early days of May 13, and of a history that many have forgotten.

So many things were said and so many things happened this year. If only level heads had ruled and if only historical perspective had prevailed, then we would not have had so much angst.

In most of the issues relating to ethnic and religious relations raised this year, culpability lies with politicians from both sides of the scale.

When we choose them to represent us — whether they are from DAP, Pas or Barisan Nasional — we expect them to champion our cause and to make this country a better place to live for all of us.

Yet, when the occasion arises to be statesmen and to show true leadership, many of them let us down, accentuating our differences instead of furthering and expanding on the common values and the love of the country that we share.

It is easy to be a champion of one race and to raise emotions of one ethnic group.

The true test of leadership in a multi-racial country like ours is to be accepted and respected as a leader and champion of all Malaysians.

The Reluctant Politician tells of how Dr Ismail and leaders of his time desired that Malaysia move away from the communal-based political party but the window passed and events took place that perpetuated the system we have.

Is there a truly multi-racial, multi-religious political party in the country, after 50 years?

The DAP claims to be one as does Gerakan. But neither is truly multi-racial or multi-religious. In both parties, one race dominates.

Pas? Far from it.

The closest semblance still remains the coalition of parties within the Barisan Nasional but even then, individual race-based parties, when it suits them, play to their gallery because inevitably, there are powerful individuals who are afraid to lose support from within their ranks.

And we have seen enough of it this year, whether at a Gerakan, MIC, MCA or an Umno general assembly.

A purely commercial business deal can become a race issue. An inoffensive cartoon can be made into a religious issue. A keris can be used to send shivers down the spine of a nation. The death of apostates becomes a tug-of-war in which the nation is dragged into.

That is why it is such a pleasure to go back to the small towns, villages and rural areas because the real people, the pulse of our nation, are generally not like that.

When May 13 happened, it was confined to the urban centres like Kuala Lumpur, and in Penang and Perak, and the larger part of the country, though living in fear, was unscathed.

When Kampung Medan and Kerling happened, the rest of the country was unaffected.

But race and religion are very emotive issues and if they continue to be raised and exploited, the country could pay a heavy price because there is no telling how far and fast the flames can spread.

That is the reality.

For those who remember, 1987 was a very bad year. Racial tensions escalated, culminating in Operasi Lallang — again, because of irresponsible politicians and media — and we came this close…

We have to change. The politicians have to change, the media has to be more responsible, NGOs and businesses have to realise that lip-service alone will not do.

The way we lead our lives and manage our organisations will determine our country’s future.

We are fortunate to celebrate 50 years of relative success next August. Most of us will not be around in 2057 when our children and grandchildren prepare for Malaysia’s centennial celebrations.

What kind of country will they be living in? Will race and religion still be a recurring issue?

Would we have a new breed of politicians, media, businesses who are more sensible and rational?

Would a non-Chinese be allowed to become CEO and editor-in-chief of the MCA-owned Star newspaper? Would a capable Malaysian be allowed to head the New Straits Times editorial operations without some powerful agitators raising the race issue?

Will some of the Chinese language newspapers start believing that they are part of a society that is multi-racial? Will some of the Bahasa Malaysia newspapers start believing that?

I don’t know, really. I believe that it is easier for some people to be one-race heroes then to be Malaysian heroes because then, you don’t have to think or try too hard.

Some people say we are a young nation and we shall come out of this.

After all, they argue, the United States had a civil war 70 years after it proclaimed independence and there continued to be official and widespread discrimination and persecution of blacks until the 1960s.

Discrimination is still prevalent in countries like Britain, Germany, Holland, Japan and other more developed democracies.

So what, I say. Are they our teachers that we have to learn to be like them?

Malaysia is a great country but we can make it so much better if only we try just a wee bit harder; if only we weed out and shame the irrational ones in our midst.

We have the foundations, much better than most. And everyday, we do see little things happening before our eyes which warm the heart and give us hope.

Like the Chinese girl in a skirt holding the hands of a "tudung-ed" and baju kurung-ed Malay girl with a leg handicap and helping her cross Jalan Sultan Ismail.

Like the non-Malay girls wearing baju kurung and walking to lunch with their Malay friends who are wearing kurtas and cheongsam.

Like my youngest daughter Lei and her inseparable Chinese friend Adorra who take turns sleeping over at each other’s houses and planning their overseas studies together.

Like my friend Vincent Cheah’s long-time business relationship and friendship with Haji Jiran.

Like Edge editor-in-chief Ho Kay Tat and his family, who lived in Kampung Baru, and were sheltered from the rioting crowds by a Malay family during May 13.

We see things like this everyday, if we care to look, and we wonder why, still, people who should know better, don’t.

In the Brothers Karamazov, Fyodor Dostoevsky wrote: "Everywhere, in these days, people have, in their mockery, ceased to understand that the true security is to be found in social solidarity rather than in isolated individual effort.

"But this terrible state of affairs must inevitably have an end, and all will suddenly understand how unnaturally they are separated from one another.

"It will be the spirit of the time, and people will marvel that they have sat so long in darkness without seeing the light…

"But, until then, we must keep the banner flying.

"Sometimes, even if he has to do it alone, even if his conduct seems to be crazy, a man must set an example, and so draw other souls out of their solitude, and spur them to some act of brotherly love, that the great idea may not die."

Here’s to hoping we all have a happier and better 2007; and as we start to celebrate our 50th year of independence, we pray that the Almighty bless us with another 50 years of even more glory and continued peace.

(NST - Kalimullah Hassan SUNDAY COLUMN)

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OK,whose brilliant idea was it to suggest that we have a Grand Mufti? I rather expected better from the DG of IKIM. Read Marina M "Capo di Tutti Capi..."Here.


Happy New Year !!

New Year cheer for motor vehicle owners

The road tax for all motor vehicles will be reduced from tomorrow.

The cut for privately-owned cars will range from RM10 to RM1,059, depending on engine capacity.

For taxis, the reduction is between RM9 and RM240, while owners of cars for hire will get a saving of RM5 to RM240.

The excise duty for motor vehicles will also be streamlined, which effectively lowers the duties on big cars and motorcycles.

The new road tax structure will also narrow the gap in the rates for owners of petrol and diesel vehicles, as well as those in the peninsula and Sabah and Sarawak.

Floods round-up

The situation in flood-hit Johor is improving with 52,507 victims still at 162 relief centres Sunday morning compared with 54,512 last night.

However, Inspector-General of Police Tan Sri Musa Hassan said he had directed police chiefs in Johor, Malacca, Negri Sembilan, Pahang, Kelantan and Terengganu to mobilise manpower, boats and equipment to prepare for more floods.

He said the police were monitoring the situation.

Deputy Prime Minister Datuk Seri Najib Razak had warned of a possible second wave of floods as the result of heavy rainfall, which was expected to end only in March.

Najib had urged all emergency services to stay prepared and be on the lookout for changing weather conditions.



Malaysia economy 2007 road tax Grand Mufti