A political veteran widely regarded as a technocrat, Minister in the Prime Minister's Department (Economic Affairs) Datuk Seri Mustapa Mohamed is seen as a calm and steady hand to guide Malaysia as the country navigates through worldwide economic uncertainty caused by an unprecedented pandemic.
In the past, the Jeli MP, better known as Tok Pa, held many important roles in government. As a Umno member, he was Finance Minister II (1998-1999) in the aftermath of the 1997 financial crisis, Entrepreneur Development Minister (1995-1999), Higher Education Minister (2006-2008), Agriculture and Agro-based Industry Minister (2008-2009) and International Trade and Industry (Miti) minister for nearly a decade (2009-2018).
These days, the Parti Pribumi Bersatu Malaysia (PPBM) supreme council member is back in familiar territory. From 2004 to 2006, Mustapa held the position of Minister in charge of the Economic Planning Unit (EPU) and led the drafting of the 9th Malaysia plan (RMK9).
Today, as minister in charge of economic affairs, Mustapa is once again overseeing the country’s long-term economic strategy, and will be preparing the 12th Malaysia plan (RMK12). In fact, he is even based in the same building.
But Mustapa recognises that things are different now: “Those days, things were certain, the world was not as complicated, ” he says. The landscape has changed and digital transformation plays a bigger role.
Mustapa nevertheless plans to take it all in his stride and face up to these challenges with “a lot of engagement” with stakeholders and members of the public.
> What exactly is your role as Minister in charge of economic affairs?
My responsibility is on medium to long-term economic planning – overseeing more than 20 departments, agencies and GLCs involved in economic planning and national development, public-private partnership projects, statistical services, corridor development, land development, oil and gas, and the Bumiputera agenda.
The main department under me is the Economic Planning Unit (EPU). The EPU is responsible for determining development expenditure priorities. The EPU is also responsible for value management of development projects and programmes costing more than RM50 million to ensure value for money and project functionality.
I also oversee the Secretariat of Economic Action Council (EAC) that is chaired by the PM. The Secretariat is headed by Prof Tan Sri Noor Azlan, the former Vice Chancellor of UKM. The EAC meets every week.
At the secretariat, we scrutinise all papers to be considered by the EAC. At the regional level, my roles include fostering greater regional cooperation and border area development with countries like Brunei, Thailand, Indonesia and the Philippines through the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA), The Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and the Malaysia-Thailand Joint Authority (MTJA) platform.
> At the end of March, you said that Malaysia’s economy needs at least six months to recover. Five months later, how would you say we have fared?
Over the past six months, we have gone through three phases. The first is dealing with the crisis - the day to day bread and butter issues, putting food on the table and making sure no one is left behind. The second part is to reopen the economy and now we are in the third - the recovery phase.
The focus now is economic recovery. Bank Negara’s official forecast for Malaysia’s 2021 GDP growth is between 5.5% and 8%. The World Bank is a bit more optimistic than we are - they have predicted a 6.9% growth for next year. For the moment, looking at the evidence on the ground, leading indicators, some indices, such as unemployment numbers, manufacturing and retail sales, we are on the right track. But our growth also depends on the recovery of the global economy.
A lot depends on the Covid-19 vaccine. Throughout the world, including in Malaysia, there is a fear of resurgence and a second wave. Some Malaysians are still quite cautious and this will have some impact on growth.
As we all know, the tourism sector has been the worst affected. As long as our borders are closed, we cannot expect full economic recovery. If you look at tourism there is a long chain of people involved. Taxi drivers, restaurants, tour operators, shopping and so on.
The aviation industry is going through a very difficult period. Although there has been some recovery in domestic travel, it will be some months before MAS and AirAsia will return to the pre-Covid situation.
> Unemployment remains a major national concern. How do you plan to manage unemployment and assist youths to secure jobs?
Historically, the highest unemployment rate Malaysia ever saw was 7.4% in 1986 during the 1985-1986 recession. In 1999 at the end of the East Asian Financial Crisis the rate was at 3.4%, and in 2009 during the Global Financial Crisis we were at 3.7%.
The general convention is that a 4% unemployment rate is accepted as full employment. On this basis, we have been enjoying full employment since 1995.
As job protection and retention are important, employment support has been one of the main pillars in the economic stimulus packages. These included support through the Employment Insurance System (EIS), Prihatin Rakyat Economic Stimulus Package (Prihatin), Wage Subsidy programme and Employment Retention Programme under the National Economic Recovery Plan (Penjana).
The economic recovery packages and the gradual opening up of the economy beginning May has helped. This was why the unemployment rate came down from 5.3% in May to 4.9% in June.
In my view, the unemployment rate will remain around 5% in the next few months and will dip below 5% by the end of the year. With improvement in overall economic conditions, there will be further improvement in 2021.
Youth unemployment is a big issue and that is one of the reasons why the government introduced the RM1.5bil of hiring incentive for businesses, including for employers to hire youth and job seekers, which is expected to benefit 300,000 people. In addition, RM2bil was allocated for reskilling and upskilling which will benefit 200,000 youth and job seekers. This is the biggest ever financial support given to employers to retain and train workers.
On reskilling and upskilling, we have to ensure that training providers provide skills which are relevant for jobs in the future. There should also ensure that whatever training provided is aligned to the requirements of industry. In this connection, the government has set a target that at least 80 percent of those who have gone through this upskilling and reskilling process must be able to secure employment. As this is a very major initiative, the Human Resources Ministry has been mandated to effectively coordinate and monitor the implementation of these programmes and report to the EAC Secretariat on a weekly basis.
> How do you plan to assist the hardest hit sectors such as tourism, hospitality and retail?
Prihatin and Penjana have benefited almost everyone in every sector.
However, as the domestic tourism sector has been the worst affected by the Covid-19, we expect some months before we can see the full revival of the sector.
In recent weeks, we have seen strong growth in domestic tourism. Resorts, islands, and a number of other tourist attractions have seen increasing demand. However, we were informed that city hotels are still not doing well.
Domestic tourism is big and makes up about half of the total tourism expenditure. There are currently much fewer foreign travelers which poses a big challenge because tourism depends a lot on the health situation. A RM1bil fund was put aside to help the tourism industry and the Tourism, Arts and Culture Minister will be making a detailed announcement in the future.
> It’s been six months since the Economic Action Council (EAC) was set up. Do you think it is achieving its purpose?
The EAC was set up in view of the urgent need to deal with the economic impact of the Covid-19 pandemic. We have given the highest priority to the protection of lives and livelihoods.
The EAC through its weekly meeting, has played an important role in restoring economic and financial stability. Having implemented most of the measures under the Prihatin and Penjana, the EAC is now focused on stimulating economic recovery.
The Finance Minister and his team have done many engagements and came out with packages amounting to RM295 billion to protect the livelihoods of the people and keep businesses afloat.
The Finance Ministry, through LAKSANA submits a weekly report on the implementation of all the measures taken to the EAC. This regular monitoring has enabled us to ensure that the “no one left behind” tagline is achieved. Overall, the Government has done extremely well in managing the health and economic crisis.
At the EAC Secretariat, one of my main responsibilities is to engage with various stakeholders. The Secretariat, headed by Prof. Tan Sri Noor Azlan, has conducted more than 200 engagement sessions with various business organisations, industry associations, academics, NGOs, and 10 individuals.
When people and businesses are having problems, it is important to talk to them. We have been talking to small and medium enterprises (SMEs), chambers of commerce, retailers, hoteliers, engineers, lawyers, education providers, people in construction and agriculture, manufacturers, investors, foreign and local, you name it, every sector. Feedback from these engagements are tabled at the EAC meetings. To date, 19 EAC meetings have been held with more than 40 papers presented. Malaysians appreciate that we listen to them, but more importantly, we get feedback so that we know the actual situation and can respond to the issues.
For example, the wage subsidy programme was extended by three months partly because the government listened to voices on the ground. Through this engagement, Bank Negara Malaysia also responded by increasing the Special Relief Facility to help small entrepreneurs from its initial RM5bil allocation to RM10bil. The targeted moratorium post September was a result of the Government listening to the plight of small businesses and individuals who have either lost their job or earning lower income.
Let’s look at MyMudah, the objective is to cut redtape and unnecessary burden of regulations – to help business recovers. In recent weeks, the EAC has been working closely with the Malaysia Productivity Corporation (MPC) under the Ministry of International Trade and Industry to reduce 11 red tape. Via their Unified Public Consultation (UPC) portal, businesses can lodge their complaints on hurdles and challenges. The MPC will deal with them.
> You stated that the EAC is formulating medium-term and long-term economic recovery plans in response to Covid-19. What can we expect from these plans?
The EAC is a platform to discuss the current state of the economy. It is also a platform to deliberate on strategies to get the economy moving again. The proposed recovery measures have been followed by consistent and detailed monitoring.
In recent weeks, we have been beginning to look at some medium-term issues. The long-term matters will mainly be addressed in RMK-12 early next year.
Before the Plan is introduced, we will come up with the NERP. The focus is on economic recovery post Covid-19. Covid-19 has motivated us to undertake fundamental reforms in light of the changing socio-economic landscape. After the East Asian Financial Crisis 1997/1998, we took the opportunity to revamp and strengthen our banking and financial sector. And now, the Malaysian banking and financial system is much stronger.
Our economic recovery strategy will be developed based on the need to deal with pressing structural issues and challenges. It plans to address 12 these long-standing structural issues to strengthen our economic fundamentals and resilience along several key dimensions.
The global landscape is changing radically. Digitalisation in government and private sector and indeed the whole country, need to be ramped up. Technology will play an even more important role in the country’s development. We need to enhance automation and resolutely deal with the foreign labour issues. Rules and regulations which are outdated and hinder progress need to be reviewed.
We need to place the Malaysian economy on a sound footing and ensure that it is globally competitive. As we embark on all these reforms, we are mindful that as we run, our neighbours and peers may be running much faster. There is therefore a need to commit the whole nation to undertake fundamental reforms. Otherwise, we will lose out and be left behind. We live in an increasingly competitive environment.
> Public administration reform will be an area of focus for the EAC’s long-term recovery plan. How do you envision this reform?
The civil service is a very important pillar in ensuring Malaysia achieves its socioe-conomic objectives to be developed nation and the Shared Prosperity Vision by the year 2030. We have about 1.6 million in the civil service. The Chief Secretary to the Government (KSN) has been tasked by the Prime Minister to do an overall review of all rules, regulations and procedures that hinder progress and impede the ease of doing business.
What the EAC is doing on public sector reform is to complement what KSN is working on.
The EAC’s main focus on public sector reform is on improving the delivery of services, reducing red tape, better coordination, less duplication, and improving efficiency. How can the civil service respond quickly to changing developments in the economic landscape in terms of delivery? For this country to grow, businesses have to flourish. The Government’s role is to provide quality services at reasonable cost. The Government is also responsible to promote businesses, big and small, especially SMEs.
Digitalisation has to be expedited. We want the government to be business friendly, with improved efficiency in public service delivery. And of course, we have to also make sure that the civil servants are upskilled to be tech-savvy and able to leverage and maximise the available 14 advanced technologies. Coordination and sharing of data will be another area that we are seriously looking at.
Let me share with you two small examples. One, on the issue of the RM500 million floriculture industry. To export our flowers to Japan, we need to only fulfil two conditions. However, our authorities impose four. The EAC decided that we should do away with those procedures. It appears mundane but it improves efficiency and public service delivery.
Another example is delays in the issue of Certificates of Completion and Compliance (CCC). Through EAC, it has now been agreed that the approach of “silence means approved” is adopted - once the applications to technical agencies, such as utility companies like TNB, Indah Water and the water companies are submitted, if they do not come back with any comment within 28 days, the application is considered approved. This will help clear a backlog of more than 9,000 pending cases to date and help businesses to grow.
Covid-19 has motivated us to move at a faster pace in implementing reforms in the civil service and indeed on all fronts.
> The tabling of the RMK12 has been postponed to early next year and based on the Shared Prosperity Vision 2030. What can we expect to see in RMK12?
To the public, including the private sector, the RMK-12 has two main components. It is a five-year plan looking at the future direction of policies and strategies. Secondly, people will be watching out for how much the Government will be spending on development.
RMK12 is the first phase in implementing the Shared Prosperity Vision 2030. The main focus of the RMK-12 will be aligned to the three objectives of the SPV 2030 – development for all, addressing wealth and income disparities as well as making Malaysia a united, prosperous and dignified nation.
In RMK12, a number of new economic sectors will be identified and developed to drive the economy forward and create economic opportunities for our people. Among the focus areas will be digitalisation, aerospace, smart agriculture and a radical review of all our poverty eradication programmes.
We need to take into account the post-Covid global economic landscape and the need to restructure our workforce, improve productivity and efficiency. The original allocation for development of the Eleventh Malaysia Plan (RMK11) was RM260bil before it was rationalised to RM220 billion under the Mid-term Review of RMK11 in 2018 as the Government decided 16 to consolidate its fiscal position. Of course in every Malaysia Plan people will be looking for a bigger amount of money to build roads, bridges, and improving the quality of life of all Malaysians. And that will be a challenge given our narrow revenue base and a tight resource position as a result of Covid-19. These are some challenges that we will be facing. Therefore, we need to be creative in ensuring that we get the best value for every single ringgit that we are spending.
> The poverty Line Index (PLI) was revised using a new 2019 methodology which saw a huge leap in the number of households in poverty. What is the government’s plan to eradicate poverty, in view of this PLI revision?
The Prime Minister visited residents of the Desa Rejang PPR (people's housing project) in Setapak few days ago. He shared with us some challenges families living in those flats are facing. Following the visit, he has asked all Cabinet ministers, KSN, and all ministries to review all our poverty programmes. We have to mobilise the whole government and all civil society organisations to come up with more effective programmes in fighting poverty in the urban and rural areas.
The Welfare Department (JKM) has been one of the main agencies in providing support to low income Malaysians. They’ve been helping about 400 thousand of them, with an allocation of about RM1.5 billion a year.
Going forward, we have to be bold and different in addressing poverty. It has to be sustainable, entrepreneurship-driven, economic based - focusing more on livelihoods and how their incomes can be supplemented.
Welfare assistance like cash handouts will continue - but we have to also focus on income generating opportunities and look at how better quality jobs in rural and urban areas can be created. This will involve training and 18 skills upgrading.
The new PLI has huge policy and financial implications. In this regard, Ministries/ Departments/ agencies and State Governments have been given until end of the year to review policies and assess financial implications, also identify their respective target groups involving programs and projects related to poverty eradication.
There are two main issues in fighting poverty. One is ensuring that we have accurate data on the profile of poor households. Second, there is a need to achieve better coordination among government agencies providing support to the poor as well as coordination with civil society organisations.
At the same time, the Government will have to revisit eKasih system. The eKasih System is an Integrated database of poor households created at the national and local levels to help plan, implement and monitor poverty programs.
> Now that Tun Dr Mahathir Mohamad has set up Pejuang, will you join Tun or do you still stand behind Bersatu’s mission and vision?
Throughout my life, service to the nation and people is number one in my priority list. I started work as a civil servant, I learned many good values as a civil servant. I thank my bosses, current and former, in the civil service and in politics, who have given me the opportunity to serve the people.
As a fulltime politician for more than 30 years, I keep on learning and adjusting to the new demands and challenges of our colourful political landscape.
Politics is a platform to serve the people. Putting people first, understanding their concerns and finding solutions for the rakyat's problems regardless race or religion.
For Malaysia to move forward, everyone needs to work closely together. Cliche as it sounds, we must work on what unites us more than what divides us. Downplay the differences. The challenges we are facing post-MCO are enormous and I can't stress more that we must be united to overcome these challenges.
This National Day, let us remind ourselves of the spirit and courage of our forefathers who laid this country on a solid foundation. Let us understand the Constitution and the Rukun Negara – beyond just understanding, we need to put them into practice.
Let us leverage on our similarities whilst treasuring the differences. That’s the spirit that should be in all of us. And that too is the spirit of the Shared Prosperity Vision 2030. A United and Prosperous Malaysia.
And coming back to your question, I am with Tan Sri Muhyiddin, I am with Bersatu. It is not an issue.
> Last question, what is your favourite song to karaoke to?
Singing is really one of my weakest points. Masihkah Kau Ingat by Kopratasa, is the only song I have sung on stage. Of course, I know some patriotic songs - Inilah Barisan Kita, also Warisan by Sudirman. Perhaps, it is not too late for me to attend a few karaoke sessions to learn a few more songs.