Putrajaya’s new economic council and the need for courageous reforms

The announcement of the Economic Action Council (EAC) is no surprise as Dr Mahathir Mohamad had resorted to something similar during the 1998 financial and economic crisis.

Some have been quick to claim that the setting up of the EAC signals the failure of the existing Cabinet or some ministries/ministers. This could be an exaggeration.

It is interesting to note, however, that in 1998, there was no dedicated economic affairs ministry, only an Economic Planning Unit. Hence, one could ask why despite setting up a full-blown economic affairs ministry, the prime minister still thought it necessary to set up another body directly under him. Some tongues are bound to wag!

Has the Pakatan Harapan Cabinet failed? With the many promises made before the election and the high expectations after the election, some feel let down by the apparent “lack of ideas, resolve and ability” to implement the various reforms promised.

Nevertheless, the EAC should be seen as a special focused entity dedicated to thinking up effective solutions to the country’s many economic woes. In addition to the internal problems of the country’s finances, the external environment is also rather gloomy. All the more reason for the EAC to be tasked to find solutions in a relatively short time period.

Standard operating procedures and “business as usual” cannot be an option. What is needed are genuine reforms, reforms that are unique and perhaps unconventional. For this to take place we will need capable minds, courageous proposals and effective strategic planning. And for this, we need the right people.

The EAC is made up of capable members, rich in experience, as well as a good balance of public officials and members from the private sector/industry. However, they cannot be expected to think of everything and to come up with details of everything.

While it is important that the EAC gives the overall plan of action and sets clear priorities in what needs to be done, where and how, the details need to be thrashed out by sub-groups consisting of experts/academics, practitioners and government officials.

The broad areas identified by the Prime Minister’s Office with regards to the EAC are economic growth, equitable distribution of wealth and the well-being of the people.

The EAC will also look into issues relating to the cost of living, employment, poverty and home-ownership.

While these areas are nothing new, for each area, sub-areas need to be listed.

For example, how can we have genuine sustainable growth? While the Najib administration in its New Economic Model (NEM) talked about the three pillars of high income, inclusiveness and sustainability, it was the high income pillar that dominated. Surely the type of deals and the levels of debt to be borne by Malaysians was unsustainable.

Equitable distribution of wealth has always been a stated goal of Malaysian economic development. However, since the 1970s, this has always been interpreted in ethnic terms.

While inclusiveness in NEM was meant to ensure that no one was left out, the truth of the matter was that many were left out and greater absolute gaps in inequality of income and wealth occurred in the last decade.

While slogans for the people’s well-being have always been the stated goals of all governments, the truth is that for many people in the B40 category, what more the B20, B10, etc, their well-being has not improved.

The EAC’s task, therefore, is immense.

Problems need to be identified and analyses on the factors causing those problems need to be discussed – no small feat.

Then, diverse solutions need to be proposed and thoroughly debated before the most appropriate ones are chosen. This entire process should engage as wide a spectrum of people as possible.

One suggestion is to develop sub-groups that could be made up of academics and think tanks/research houses. In fact, maybe open up sub-areas and the solutions sought to more than one institution/group of institutions.

Give a specific timeline and provide all data and information needed to these various institutions. Let these diverse groups come up with analyses and proposed solutions which can be presented via “pitch-in” format.

Let there be many proposals for solutions. This way, the best ideas, plans, reforms and solutions can then be shortlisted after being presented, criticised and debated.

For many of the sub-groups and the challenges identified where slightly more research is needed, get undergraduate or graduate students to spend their BA research paper or MA or MSc research paper on these problems, but provide the necessary data and access to information needed.

This would allow a large number of people to get involved with relatively low cost solutions.

Proper management of this process could yield interesting results within a six-month period.

Are we ready to try something new?

Mohamed Aslam Haneef is professor of Economics at International Islamic University, Malaysia.

The views expressed are those of the author and do not necessarily reflect those of FMT.