A chance to revamp the economy

  • Letters
  • Tuesday, 19 May 2020

EVEN before the Covid-19 pandemic, having been a middle-income nation for many years, Malaysia was very much in need of a growth path that would lead to improved wellbeing of the people, be it in terms of income or other equally important dimensions. With all its uncertainties, the consequences and impact of Covid-19 can only make the state of our future growth more precarious.

While the short-term focus is to restart the economy, Malaysia must not lose sight of the dire need to revamp the economy so that our growth trajectory will be aimed at a high value-added economy.

This will not be an easy task but the repercussions of the Covid-19 pandemic should have given our policymakers a golden opportunity to think hard about the state of our economy, particularly in relation to the sustainable development goals (SDGs) such as eradicating poverty and reducing inequalities (the goals were adopted by all United Nations member states in 2015 and provide a blueprint for ensuring peace and prosperity for all people and wellbeing for the planet).

The gig economy and work-from-home and distance learning practices that many Malaysians are becoming accustomed to during the movement control order period would have given useful insights into what works and what policymakers can do to move the economy forward.

Improving productivity among lower income groups should be one key focus area. However,

without access to capital, technology or an enabling environment this will not be possible for these groups.

A national innovation system that promotes a culture of innovation is absolutely necessary. Each stakeholder must play their role as well as facilitate necessary links, such as between university, industry and the target groups, particularly the micro-SMEs (small and medium enterprises) and the precarious workers in our growing gig economy.

To be innovative and promote entrepreneurship, a culture of experimentation is a must. This is essential if we are to discover more efficient ways of producing goods and services. In Finland, for instance, the government introduced a strategic 10-year plan with the introduction of a culture of experimentation in 2015. With the aim of finding innovative ways to develop society and to promote individual initiative and entrepreneurship, the top-down and bottom-up approaches include rapid grassroots experiments and larger policy trials.

As well as accepting failures, learning lessons from both successes and failures are all part of the journey towards an innovative society. However, for this to happen, the government’s role is essential in putting in place relevant public policy measures that cut across relevant ministries and agencies.

As a free market economy, we would be well served by learning lessons from other similar economies, including those that are ahead of us (the advanced economies) and those in similar predicaments. There are success stories as well as failures. In either, there are useful lessons for Malaysia.

In the advanced economies, despite significant economic progress, improved productivity and technological advances, inequality has been on the rise. This issue has become big on the public policy agendas of these economies, particularly after French economist Thomas Piketty published Capital In The Twenty-First Century in 2014 that focuses on wealth and income inequality in Europe and the United States.

Despite progress in eradicating hardcore poverty, Malaysia has its share of income inequality issues too, with inequalities widening between 1989 and 2016, according to the previous government’s Shared Prosperity Vision 2030 document.

To grow sustainably, institutional reforms are a must. But there must also be political will to lead the necessary changes. Continued political imbroglios, as happened earlier this year, must be avoided. Instead, a democratic space with healthy checks and balances is the only way forward for our nation to progress. To ensure inclusive growth, equally important are the voices of civil society and individuals representing various sections of society, particularly those who have been left behind.

Indeed, the Covid-19 pandemic serves as a grim reminder as well as an opportunity for Malaysia to chart a different growth path that will ensure sustainable growth, be consistent with the SDGs as well as our very own Shared Prosperity Vision 2030. This is a path that would benefit all, especially the less privileged in our society.

MOHAMMAD ABDUL HAMID , Public policy consultant Kuala Lumpur

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