AS the Economic Transformation Programme finishes its third year, it is an appropriate time to reflect upon how things have progressed, what has been achieved and how the programme will change as we move forward.
Let me first look back over the last three years. There are major achievements we have made over the last three years from 2010. Gross national income or GNI per capita between 2009 and 2012 has increased by 49% from US$6,700  in 2009 (SNA 1993) to US$9,928 in 2012 (SNA 2008) and keeps us on track to reach our goal of achieving developed status by 2020, which is a per capita income of US$15,000 achieved with inclusiveness and sustainability.
Inclusiveness refers to including as many people as possible in the transformation process of increasing incomes with the lower income group benefiting the most. Sustainability refers to using our resources in a manner which enables future generations to benefit as well and with regard to environmental conservation.
This is essentially what the transformation programme is about. Our job at the Performance Management and Delivery Unit or Pemandu is to coordinate between departments, measure and manage performance, facilitate transformation and act as catalysts for projects, changes in mindsets and a myriad of other initiatives to bring about this change. The achievements are those of all government departments and the private sector.
A big part of the effort is to encourage investments – and this has been the main impetus to increasing incomes. The compounded annual growth rate of private investment at constant 2005 prices has tripled since the start of economic transformation in 2010 from an average of 5% a year from 2008 to 2010 to 16% a year from 2010 to 2012. This year, the latest Finance Ministry report forecasts a real growth rate of 16.2%. At the end of this year, nominal private investment is expected to hit RM165.3bil, exceeding the target of RM148.4bil by RM16.9bil.
These investments will contribute to income growth as they are translated into projects on the ground and as these projects take place, there will be production, which will boost income again. Many jobs will be created in the process – we expect some 3.3 million jobs up to 2020.
The increased investments are not an accident. All government departments have consciously sought to increase cooperation with the private sector. Bodies such as Pemudah, the facilitating agency for government-private sector cooperation, played a big role in this.
We have seen our rankings in the World Bank Ease of Doing Business Index climb steadily from 18 for 2012 to 12 in 2013 and recently 6 for 2014, surpassing the United Kingdom for the first time. These reflect real improvements made to facilitate business and investments. If we address ease of doing business, we will also be addressing corruption too. For instance, if we make of easy to do business in Malaysia, there is far less reason to bribe the authorities to get approvals.
Our fiscal or budget deficit as a percentage of gross domestic product (GDP – sum of goods and services produced) has been reducing steadily from 6.6% in 2009 and will reach 4% this year. Our target of 3% in 2015 is achievable and the budget should be balanced by 2020.
Government revenues were at record levels for 2011 at RM185.4bil and for 2012 at RM207.9bil. It is expected to come in at RM220.4bil for 2013. There is much that we can justifiably be proud of.
Apart from the many things that we are doing, let me now highlight some key actions that will make a real difference. Moving forward, we must build on this progress. We need to keep going at it.
I believe there are four important things we must do. First, we need the civil service to institutionalise changes so they reinvent and transform. On their own.
We are experimenting with new ways of doing these. We are asking ministries to identify key processes that affect the rakyat and businessmen and then go out and determine which country is doing it best. And then they will examine if they can learn from the processes and improve and adapt it for the Malaysian situation. We have identified 110 projects. If we succeed in leap frogging to world-class standard, it will effectively help us to transform the Malaysian civil service delivery.
Let me give you a couple of examples. Road signages are infamously bad in Malaysia. Sometimes they are there, sometimes they are not, sometimes they are hidden behind bushes and trees. The signs are often too busy – too much information on them – and they have to compete for attention with a multitude of other signs.
The Public Works Department (JKR) has identified the United Kingdom as a country which has great signage designed to take you from one town to another – they say you can’t get lost in the United Kingdom. In a pilot project in Kuantan, the JKR is trying to emulate the United Kingdom and if they succeed, it will spread from there.
Another project involves chemotherapy for cancer in Johor. What we are trying to do is to narrow the waiting time from as long as 16 weeks to 2-3 weeks. So far, this year alone, 13 patients died while waiting for treatment.
We are not running any labs here, we use people in the existing system. The cost is less and the approach makes those involved less defensive. We ask them to simply go forward and find out which country does this the best. Then, we ask them to improve on the best practice of this country and adapt it for Malaysian implementation.
Second, going forward too, we must innovate to improve our products and services, otherwise there will be a limit to how much we can grow our income. It is not just about marketing, it is about structural weakness which inhibit innovation. It is about using existing technology to do things differently – all Malaysians can do this. If we lack talent in some areas, we must be prepared to hire expatriates or experts from other countries.
And this leads me to the third critical action; the ultimate key to innovation and success of a country is quality education and we must use the National Education Blueprint to go as far as possible. No country has achieved anything great without quality education and it is education that will lead to innovation. I know that there is a high propensity for many nations to politicise education. No stones should be left unturned in order to bring Malaysian education system to the best in the world. This is an area where BN and Pakatan should work together and agree what is best for Malaysia and lay down their sword for sake of our country and our future.
The fourth action revolves around net export. Two major components of national income are consumption and investments in productive capacity. The third, which must become increasingly important, is net exports, especially for smaller countries like ours which must seek larger markets.
It is innovation to produce better products and services to sell them competitively in the world markets which will lead to the next income surge, and that will be a more sustainable form of income growth.
At the end of the day, we all must live by our wits. That’s what innovation is about.
Well another year has passed, and what a year it has been. I would like to take this opportunity to wish everyone a Merry Christmas and a Happy New Year. The column will be back in 2014.
The System of National Accounts 2008 (2008 SNA) was adopted in Malaysia early 2012, thus recalibrating Malaysia’s 2009 GNI figures from US$6,700 to USS7,059 and 2009-2012 GNI growth to 41% from 49% previously. 2008 SNA is the latest version of the international statistical standard for the national accounts adopted by the United Nations Statistical Commission.
Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit, and Minister in the Prime Minister’s Department. Fair and reasonable comments are most welcome at firstname.lastname@example.org