The message Datuk Seri Abdullah Ahmad Badawi has sent to the business community in the first 100 days of his administration is clear: the Government will do its part but the private sector must lead the way, writes JAGDEV SINGH SIDHU.
THE Prime Minister’s blueprint for the economy was revealed during a dialogue with the business community in January, in which he said the government was committed to fiscal discipline and improving the public sector, productivity, global competitiveness and enhancing the performance of Malaysia’s human resources.
He spoke on the need to move up the value-chain, transform Malaysia into a knowledge-based economy and develop the country’s human capital so that it could match the country’s infrastructure.
He touched on the need to enhance performance across all levels in Malaysia, stressing the importance of having “passion for performance, a thirst for quality and a psyche for success”.
Abdullah’s design for the economy, during a time when the economy was chugging along nicely, is simple, but has far-reaching consequences.
His commitment to balancing the books came with the postponement of the double-tracking railway project, which in a way sent a message that fiscal prudence was as important as pump-priming the economy.
But that does not mean that the tap for development expenditure will run dry.
Balancing the budget through prioritising the nation’s needs would mean that the private sector would sooner, rather than later, be weaned off the government’s crutches, which in itself is a good thing.
Getting the private sector moving, which is essential for future economic growth, is more complex.
Corporations and businesses will only start expanding once they feel there is an avenue for them to make a profit.
Here, Abdullah has promised to cut corruption and red tape and improve the efficiency of a variety of government departments and local councils.
These may seem an administrative process but in reality can influence the decision to conduct and the cost of doing business in the country.
And anything that lowers the cost, which indirectly increases profit, is a step in the right direction.
“What was nice to see was his conviction in ensuring that the public sector is very efficient and well run.
“And that it is there to ensure that the corporate sector – what he calls the next engine of growth – will be able to do business efficiently.
“That will make a very pro-business environment for the country,’’ said Datuk Tim Garland, the president of the American Malaysian Chamber of Commerce (Amcham) after the dialogue session.
Another way Abdullah appears to be getting the private sector moving is by having all government-linked agencies lead by example.
The plan for government-linked companies to adhere closely to the doctrine of productivity and competition is viewed as a signal that the administration’s tolerance for under-performance among its companies has worn thin.
Abdullah said productivity-led growth was important for continued competitiveness and that the motivation to invest in innovation to improve productivity came from increased competition.
And he mentioned that was why protected companies or monopolies were rarely ever leaders in innovation.
With that in mind, he said in his speech that the government was in the midst of formulating a comprehensive competition policy to ensure sufficient levels of healthy competition across various industries to promote productivity-led growth.
He is spreading the use of key performance indicators (KPIs), which is being used now by Malaysia Airports and Malaysia Airlines, to other companies such as Tenaga Nasional and Telekom Malaysia.
He said a steering committee, led by Finance Minister II Tan Sri Nor Mohamed Yakcop, will spearhead the task of implementing the use of KPIs across government-linked companies and he urged corporate Malaysia to follow suit.
“The key performance-based index is definitely a prerequisite for good performance and good governance.
“I think these are areas of improvement (although) I am not saying previously there was none.
“There are some companies known to be under-performing. I’m sure the PM has had a lot of input from various sectors and has finally decided on some strategy to improve the situation,” said Tan Sri Dr Ahmad Tajuddin Ali, chairman of Gas Malaysia Sdn Bhd.
Another policy initiative Abdullah spoke about during the dialogue session was on education, saying that the country would need nothing less than an education revolution to ensure its aspirations of instilling a new performance culture was not crippled by its inability to nurture a new kind of human capital that was equal to the tasks ahead.
In that short statement, Abdullah has touched the nerve of many Malaysians, a number of whom have brought up the topic of the quality of education in Malaysia in dialogue sessions where top government officials were present.
Abdullah said it would take time for such changes to yield results but, given the direction of the economy and competition from all four corners of our borders, changes had to be made as the country could not rely on cheap labour as the means of attracting future business and investment.
The Prime Minister has said he fully subscribes to the idea of Vision 2020, and that he has made it clear that the government will continue to welcome foreign direct investments into the country.
He also spoke on nurturing small and medium-scale enterprises and building Malaysia’s comparative advantages, namely in agriculture, tourism, Islamic financial services and healthcare.
His ideas show just how serious the Government is in improving the country’s human capital, productivity and competitiveness, all crucial ingredients in taking the next step up the value chain in terms of economic development.