FOLLOWING the formation of a unity government, the time has come for all Malaysians to unite, for political partisan divides to close, for compromises, and for collaboration in order to maintain a stable and good governance political environment and to implement credible economic management in order to “build back a better” Malaysia.
Malaysia must continue to maintain and enhance its position in the region as a plural and liberal democracy, as well as an open economy.
The new government must be committed to the governing principles of maintaining moderate and progressive policies.
Malaysia urgently needs to ensure and maintain peaceful coexistence among races and close cooperation among ethnically-based political parties to maintain political stability and implement inclusive, viable and enduring socioeconomic development.
Racial harmony, mutual tolerance and understanding among a multi-racial society of great diversity, which has been the recipe for the country’s success, should be upheld at all costs to maintain a harmonious and peaceful living environment for all Malaysians.
In a profound sense, our country’s economic resilience relates to building a society on more integrated and solid systems that are less prone to disintegration from the disruption forces coming from within and outside and better positioned for adaptation and flexibility.
Economic growth and political stability are deeply interconnected.
Both the government’s and lawmakers’ commitment and accountability have become so desirable and competitive, and we want to ensure that our political and public institutions are contributing to a well-functioning democracy, promoting the legitimacy and effectiveness of governance systems, holding our nation and society together, and strengthening our ecosystem for withstanding future crises.
Following the 2008 to 2009 global economic crisis, Malaysia’s growth was largely driven by rising domestic consumption, supplemented by a growing external sector, albeit unevenly.
Malaysia has completed various phases of economic, financial, and corporate reforms in the 1990s, 2000s and 2010s to make our domestic economy, financial system and enterprises more resilient to withstand economic and financial shocks.
As we rebuild a stronger economy post-Covid-19 pandemic crisis, we have to strengthen the three pillars (institutional, economic and social) of the foundation of growth and economic development because there are still unsettling, uneven weaknesses and cracks.
Institutional reforms are needed to improve economic and political governance, enhance the role and autonomy of Parliament, enhance the quality of the law-making process, and strengthen the checks and balances mechanism.
Weak institutions and governance can impose significant economic and social costs. Corruption and misappropriation of public funds lead to more wastage and the misallocation of resources towards unproductive and rent-seeking activities.
A weak legal and rule of law regime undermines both domestic and foreign investors’ confidence, discourages investment and inhibits innovation, resulting in a decline in long-term economic growth. Ordinary people also may be deprived of their justice, freedom, and social harmony.
Reforms for stable and credible public institutions, trust in the rule of law, and a well-governed political system that operates in a parliamentary democracy.
Bipartisan appointment of commissioners to integrity institutions is critical to ensuring the institutions can operate independent of political interference.
Bipartisan committees can nominate the key appointments of four commissions, namely, the Election Commission, Judicial Appointments Commission, and Human Rights Commission as well as the chief commissioner of the Malaysian Anti-Corruption Commission (MACC); and also provide independent oversight of integrity institutions.
MACC, Malaysia’s most important anti-corruption agency, should be freed from the Prime Minister and government of the day by changing MACC’s legal status from a government agency to a commission under the Federal Constitution, reporting directly to Parliament.
We have to undertake painful reforms to address structural issues and weaknesses that are still prevalent in the economy.
Amongst these are narrowed fiscal space, the middle-income trap, low productivity growth, a lack of skilled manpower, slow technology adoption and digitalisation especially by small and medium enterprises, as well as the uneven pace of private investment, especially domestic direct investment.
The most important economic reform is to fix the government’s finances and contain debt and liabilities at manageable levels.
The government has to expedite the enactment of the Fiscal Responsibility Act to enhance transparency and accountability in fiscal management, including the regulation of debt limits and contingent liabilities, and the broadening of the revenue base. Specific legislation that governs the government procurement process is needed for better accountability.
We must address wide and entrenched disparities in economic opportunities and incomes, the role of government and government-linked corporations in the marketplace must be redefined, and affirmative-action programmes must be based on income, needs, and geography, not race.
Income growth gap
Public policies and initiatives should focus on narrowing the income growth gap between B40 households and national income, regardless of race.
The government can map out an income enhancement programme covering education, reskilling and upskilling, commerce and entrepreneurship development, as well as employability, to help improve their income level at a faster rate.
Designing a sustainable mainstream social protection framework is deemed vital to protecting vulnerable populations. Permanent cash handouts are not fiscally sustainable on a long-term basis.
We have to wean ourselves off over-reliance on cash handouts to avoid a drain on the limited fiscal balance sheet.
The government’s programmes and initiatives must focus on providing better education, upskilling and reskilling, improving households’ and individuals’ skill sets to increase their employability, and creating better-paying jobs.
Public policies for social and solidarity economies must look into programmes and initiatives related to equity, basic needs provisioning, social inclusion and redistributive justice, democratic governance, and social, economic and environmental justice.
Public policy reforms aimed at reducing gender inequality, promoting and protecting the rights of women and children, caring for the poor and vulnerable households as well as the elderly, and including workers in the informal economy
Malaysia is officially considered an ageing country, as the population aged 65 years and older is expected to reach 7.3% of the national population this year (6.8% in 2020 and 5% in 2010).
While females made up 47.7%, or nearly half, of the Malaysian population in 2020, their participation in the labour force in 2021 was only 55.5%. This rate is low, compared to Singapore (69.7%) and Thailand (66.8%).
Fiscal spending on healthcare and social community programmes for the elderly will rise as the population ages.
The government’s expenditure on social protection for senior citizens has increased to RM2.4bil in 2021 from RM2.3bil in 2020 and RM1.4bil in 2015.
The government has also spent a total of RM28bil on pension expenditures, which involve about 887,000 public pensioners, where 28.3% represents payments for those aged 65 and over.
An important aspect of the social reforms is the implementation of universal health coverage to ensure that people have access to the quality and affordable healthcare they need without suffering financial hardship, including coverage for marginalised sectors such as informal economy workers.
Lee Heng Guie is the Socio-Economic Research Centre’s executive director. The views expressed here are the writer’s own.