KUALA LUMPUR: Malaysia appears stuck in the economic and political quagmire of the late 1990s and is losing ground in an increasingly dynamic region .
While China, Indonesia and its other neighbours are working to transport their economies into the future, Malaysia is trending backwards, according to an opinion piece in the South China Morning Post.
Malaysia is now two rungs lower on the World Economic Forum’s competitiveness report than when Prime Minister Najib Razak took the reins, writes author William Pesek.
Noting the intense rivalry between Najib and former prime minister Dr Mahathir Mohamad, who is trying to replace him, Pesek says a win for either of them is not going to help the nation.
He says: “Neither outcome means Malaysia will raise its game globally. Neither result raises the odds that Malaysia will beat the middle-income curse. Neither aftermath keeps Malaysia from losing ground in an increasingly dynamic region that China remakes every 12 months.
“And neither ending will happily extricate Malaysia’s 31 million people from the late 1990s.
“Malaysia needs a course correction towards a more open and vibrant future, and at warp speed. It doesn’t seem that next year’s election will provide one.”
Pesek says Najib is talking about revival, epochal reform and about Malaysia zooming towards the ranks of the top-20 economies.
“But the problem today, just as 20 years ago, is the quality of gross domestic product gains, not the quantity. The upswing in demand is driven by a populist, election-year budget, which Najib rightfully calls the “mother” of all stimulus plans. It’s also the father of continued complacency – a US$1.5 billion treat for farmers, rubber traders, fishermen and other vested interests that does not raise competitiveness.
“What connects Najib’s spending burst today with Mahathir’s two decades ago is corruption. Najib is overcompensating for – and diverting attention from – the multibillion-dollar 1Malaysia Development Berhad scandal, which has Mahathir demanding his resignation.”
He says cronyism and the patronage system perfected by Dr Mahathir during his 1981-2003 tenure fell like a house of cards in 1997 and 1998.
“Fast-forward 20 years, and the ghosts of cronyism past – Mahathir’s people – are returning to take on a leader scrambling to divert attention from his own controversies. Najib’s people are pushing back with a questionable inquiry into foreign exchange losses at the central bank on Mahathir’s watch.”
This focus on the 1990s says much about Malaysia’s plight.
Najib’s latest budget, for example, lavishes goodies on politically contested districts. Political gimmicks, like eliminating tolls on highways, won’t increase innovation or boost incomes, writes Pesek.
Najib, he writes, has also not dismantled the affirmative-action policy — instituted in 1971 by his prime minister father – which gives Malays priority in government jobs, housing and universities, even though it “turns off foreign investors, curbs productivity and deadens the nation’s animal spirits”.
“That headwind is bearing down on Southeast Asia’s third-biggest economy. If Najib’s henchmen manage to pin 20-year-old currency losses on Mahathir, those headwinds will gain force. In the unlikely event Mahathir unseats Najib, is a 92-year-old firebrand with political baggage the outsider the nation needs?” asks Pesek.