Bakri Musa on NEM

April 3, 2010

Bakri Musa on NEM (New Economic Model)

Dr. M. Bakri Musa @Morgan-Hill, Cal

With threatening clouds overhead, there are no prizes for predicting the flood, only for designing or building the ark.  The recently-released New Economic Model (NEM) Report draws our attention (not that we need it!) to the darkening Malaysian skies, and then goes on advising us to build an ark.

That is as far as the report goes.  There are no hints on whether the clouds would bring a tropical drenching or just a midday sprinkle.  There are also no suggestions on the type of vessel we should build.  A barge, yacht or a sampan will all keep us afloat, but beyond that they serve vastly different purposes, not to mention their enormously varying costs.  And if the forecast calls for only a light sprinkle, then a simple umbrella would do; no need to expend scant resources on an unneeded ark.

We are told that following “public input,” another report will be released by June, in time for its recommendations to be incorporated into the Tenth Malaysia Plan and the 2011 Budget.  This second report, we are further assured, will contain specific policy prescriptions – the ark design, as it were.

The current report is silent on how this “public input” would come about.  Before deluding ourselves that we could participate in robust public debates, let me intrude a cautionary note.  Acknowledging that there will be opposition, the report urges the government to take “prompt action when resistance is encountered.”

You can be assured that those UMNO-Putras and others glutton on the NEP-spawned patronage system would be spared this “prompt action.”  They as well as the Perkasa boys can continue with their shrill voices opposing NEM.  For Pakatan folks and others, however, be warned!

Major Conceptual Flaws

On a general level, this report suffers from three glaring conceptual flaws.  One, it fails to recognize that the bane of past policies is in their implementation.  Two, it ignores the major role culture plays in the successful execution of any economic initiative.  And three, there is no attempt at learning from the successes and failures of earlier policies.

This last deficiency is surprising as well as disturbing.  If NEM were to supplant NEP, then we should know the strengths and weaknesses of that earlier policy.  Or if it was basically sound, then what or who perverted it, and where the failures were in its implementation.

No one argues with the twin objectives of NEP:  eradicating poverty and eliminating the identification of race with economic function.  Those are laudable goals; the second in particular for a racially diverse society like ours.  Indeed, the report pays tribute to NEP for reducing poverty and minimizing inter-communal inequities.

Unfortunately, there the report ends.  In an earlier chapter, the report duly lists the numerous problems facing Malaysia to day:  widening inequities especially among  Bumiputras; talented citizens leaving; the rise of a rent-seeking class; entrenched corruption; and the failure of our institutions.

What happened in between?  Unless we know, there is little assurance that the laudable goals of NEM would not be similarly derailed.  If we are unwilling to acknowledge and learn from the mistakes of the NEP, then we are bound to repeat them.

Thus there should be some critical analysis of the NEP, at least an elaboration of the positive elements and the highlighting of the negatives.  The one chapter that should be in the report would be one titled, “How did we get in the mess we are in today?”  I reckon that such a chapter would be filled with narratives on the failures of our institutions.  It is this that doomed NEP.

On the role of culture, it is surprising that a committee made up of mostly Malaysians and those familiar with Malaysia would come up with a report that is totally oblivious of this reality.  This cultural dimension is crucial not only in economics but also in management and health care.  Of all people, Malaysians who are daily immersed in a diverse cultural environment, should be well aware of this.

An initiative that would be embraced by urbanite Chinese in Penang would fall flat among Iban rural dwellers of interior Sarawak.  The solo entrepreneur model would probably find a fertile ground in Penang, but not in Kenawit.  There, the social system would be more supportive of cooperative-like ventures.

Challenges for the urban poor regardless of race are radically different from those in rural areas; race only compounds those differences.  The failure to recognize this dooms many an imaginative plan.  When that happens, those policymakers would resort to blaming and stereotyping the poor victims.  We have heard that many times.

The colonials brought modern schools to Malaysia with the best of intentions.  Non-Malays responded to that gesture and benefited immensely.  Malays did not, and suffered the consequences in terms of our economic and social development.

It would be wrong as well as cruel to conclude that Malays did not value modern education, as many (and not just the colonials and non-Malays) were wont to.  For when those schools were named Tuanku Muhammad School instead of Convent of the Holy Infant Jesus, Malay parents readily enrolled their children.  The content was still essentially the same but only the packaging was different; it was sensitive to the culture of the clients.

American consumers readily respond to their leaders’ exhortations to increase their spending to pull the country out of recession.  For the Japanese however, the more their leaders urge them to spend, the more they save, and hoard.  Same economic circumstances and the same economic rationale, but the responses and results are diametrically different.  Culture explains that.

“Most of economics,” as Landsburg put it in his The Armchair Economist, “can be summarized in four words:  ‘People respond to incentives.’  The rest is commentary.”  Alas what are viewed as incentives in one culture can be definite disincentives elsewhere.  That is the central challenge.  Policymakers ignore this at their own peril.

The British, in an attempt to encourage Malays to save, duly increased the interest rates on Postal Savings Accounts.  However, instead of increasing their deposits, Malays withdrew theirs!  Malays viewed the increase as an inducement to a life of sin.  Those sneaky white devils!

Ungku A. Aziz created Tabung Haji and labeled the investment returns as “dividends.”  Malays swarmed to that institution, making it the largest in the region.  Essentially the same content, but different packaging!  The Ungku understood economics well and fully comprehended its central axiom:  People respond to incentives.

An extension to this observation is that the incentives you offer would influence your responders.  Offer honey, you get bees; rotten meat, maggots.  When the committee decries the economic rent-seekers emerging under the NEP, it should carry the analysis further to find out the incentives offered.  Rest assured that if NEM were to offer rotten meat as NEP did, NEM will too get its share of maggots.

On the crucial issue of implementation, the report only tangentially addresses the strengthening of our institutions when that should be the major focus.  Our institutions are blighted with bloat, incompetence, and corruption; they simply cannot deliver.

Consider the current initiatives to improve the civil service, of which there are too many to count.  First there was PEMUDAH, self-described as “a high-powered task force to address bureaucracy in business-government dealings.”  It is chaired by no less than the Chief Secretary.  Then there was the appointment of Koh Tsu Koon as the minister in charge of “Performance Management.”  He had hardly warmed his seat when yet another minister, Idris Jalla, was made in charge of – you guess it – KPIs!

Who is in charge here?  Meanwhile the civil service continues its bloat and ineffectiveness, as exemplified by Najib’s own cabinet.  And if you have to get your driver’s license, you would still need the services of runners and touts, as well as some duit kopi.

Corruption will not be dented – much less ended – merely with the report blandly declaring “zero tolerance” for it.  Make the Anti Corruption Commission independent, answerable only to Parliament or the King, and appoint a seasoned professional to head it.  If you cannot find a native, recruit from the FBI or Scotland Yard.  That one move would more effectively curb corruption and improve our institutions than all the KPIs, National Integrity Institutes, and NEM’s and others’ declarations of “zero tolerance.”  It would also be considerably cheaper.

Accurate Portrait, But No Revelation

This report is refreshingly different from the usual government publications in that it is highly readable and the content well organized.  The chapter headings too are clear and simple; they accurately reflect the contents, with such titles as “Where We Are?” Where Do We Want To Be?” and “How Do We Get There?”  An index would have been useful, but the well laid-out and sufficiently detailed “Table of Contents” made up for that deficiency.

This report is remarkably free of gross grammatical gaffes and awkward syntax.  The committee staff has also done a credible job with the executive summary.  The report was made available online almost immediately.  These features are rare with our government publications, and thus merit special commendation.

The full report is available only in English, a glaring omission considering that NEM would supplant NEP.  As everyone knows, NEP is dear to most Malays, especially those of the Perkasa persuasion.  Any tampering of NEP, even if it involves only one letter of its acronym, risks raising the hackles of those folks.  Having the full report in Malay would have been a splendid start at trying to influence them, quite apart from being a politically smart gesture.  Malay after all is our national language.

As things stand, those proficient only in Malay would have to be satisfied with the Ringkasan eksekutif (Executive summary).  My hunch is that they would find the going rough, what with such phrases as “Menginovasi hari ini untuk hari besok yang cemerlang,” (Innovation today for a glorious tomorrow) and, “Inisiatif Pembaharuan Strategik” (Strategic Renewal Initiatives).  I would have said it differently, “Cara baru untuk menjamin masa depan yang cemerlang” (A new way to ensure our bright future).

Dark clouds there are – and many – hovering over Malaysia, from the hundreds of thousands of skilled citizens who have migrated, to the anemic growth in our productivity.  The report rightly points out the lack of political will to overcome these myriad problems.  Kudos to the committee for this forthrightness!

The report paints a gloomy picture for Malaysia if it were to stay the course.  Again, few would disagree with that.  I wish those luminaries would help us sketch and build the appropriate ark, one that would meet our unique needs and challenges, instead of merely warning us of the impending flood.

The report does not lack for specifics.  For example, it aims for an economic growth of at least 6.5 percent annually.  Its target too is specific, the bottom 40 percent of Malaysians.

One specific suggestion on improving the government machinery is the proposal to “corporatize” and rename the Malaysian Industrial Development Agency (MIDA) to Malaysian Investment Development Agency.  The committee pats itself for the brilliance of substituting “Investment” for “Industrial,” as then the agency could continue keeping its acronym and logo!

If only they recognize that changing even a single letter in a corporate name would entail changing entire letterheads, advertising plates, and web pages.  The exercise would consume as much effort as if you had changed the entire name.  It would have been more productive if the committee had recommended changes to MIDA’s mode of operations and strategies.  After all, Warren Buffett’s Berkshire Hathaway did not need to change its name in order to diversify very profitably beyond its initial textile roots.

The Report goes out under the signatures of all but one (Dr. Norma Mansor) of NEAC members.  Of the ten who signed and thus responsible for the report, three are non-Malaysians while two are Malaysians (or at least born locally) who have spent their formative careers abroad.

Of the remaining five – the ‘natives’ – only one, the chairman Amirsham Aziz, has substantive private sector experience, having spent his time in banking.  He had a brief political career as a cabinet minister, but that was through the appointive senate route rather than through elections.  In short, the chairman, like the rest of his committee, is short on political acumen as reflected in the lack of a Malay version of the report.

Again referring to the ‘natives,’ all have formal training in economics except for one.  The exception is Dzulkifli Razak, Vice-chancellor of Universiti Sains Malaysia; he is a pharmacist by training.  Two of the ‘natives’ were former academics but now, government bureaucrats.  The resumes of the committee members are impressive, with seven having doctorates, all but one in economics.

I have no quarrel with the committee’s assessment of our current dismal state.  I concur with its observations.  I just wish that the committee members would have been more forceful in pointing out whether the Najib Administration’s many recent moves were in the spirit of or contrary to the committee’s aspirations.  For example, the committee wisely noted the need for devolution of authority to lower levels, yet Najib’s recent response to the request for local elections runs counter to that.

Similarly, the committee decries the failure of our educational institutions.  Yet it does not address whether the recent rescinding of the policy of teaching science and mathematics in English would accelerate or reverse this decline.

I hope that in its final report the committee would be more forceful in addressing these contradictions.  The committee owes this obligation not only to the Najib Administration but also to all Malaysians.  Doing so would also help us design and build a better ark.

14 thoughts on “Bakri Musa on NEM

  1. Dr Bakri has an awesome flowery way with words & a stinging arsenal of synonyms of NajibCONomics. Short of saying Najib and his aide de camps are good only at Big Announcements and Plans, with some minor improvements in English grammar and presentation skills this time around. That has been our 6th PM , God bless Malaysia

  2. There must be political will for massive reforms, and the right implementation strategies and mechanisms for NEM to work. At this stage, I personally want to wait till the feedbacks from stakeholders have been received and dissected by the NEAC and the EPU before making my comments.

    All I can say at the present time is that Najib’s political future is at stake and the Prime Minister has to be deft to balance the needs and aspirations of Malaysians with the demands and challenges of a high income economy in a globalised world where we have to compete and earn our rightful place in the community of nations in the Asia-Pacific region with the likes of China, India, Japan and South Korea and our ASEAN neighbours like Singapore, Thailand, Indonesia and Vietnam. –Din Merican

  3. If Najib and his team succeed, even partially, in carrying forward any of their plans for the future, it will partly be because PR has defaulted on their grandiose promises.

  4. din,
    i fully agree with you that it takes political will to implement reforms. we did not have that with sleepy head even though he had the highest electoral mandate “put that in malaysian records of guiness ” . but, to think that najib can really effect reforms is questionable. unless of course he can cast the senile mamak aside, umno warlords, perkasa, and just be himself as pm of malaysia. you think he can?

  5. din,
    i forgot. if najib were to draw a circle around him in standing position in the circle itself, how many shadows do you think will appear?

  6. Bro. Din,

    Mana lagu bang? Don’t forget people like me who is tired of politiking and want to enjoy life..

    here is some from me.

  7. Call any cow by any other name it is still a BLOODY COW for all intent and purpose..

    The UMNO cheated the MALAYS with NEP for 41 years already!

    Now with the NEM the Malays will still be cheated by the son of the father who advocated the NEP!

    All talk and more talks boils down to NATO – NO ACTION TALK ONLY !


  8. Tean,

    Your DJ is too concerned with issues of this week to enjoy music, Tean. Even Frank and Bean are not posting their choices for our entertainment. Maybe, we can enjoy music next weekend. Okay?

    We are now debating the NEM, ethnicity and nationality, corruption, and reforms that we as a people feel are vital if real and substantive change in the way we relate to each other and the rest of the world. Najib must not take citizenry seriously. In the era of globalisation, citizens have become more demanding of our leaders, politicians and administrators.–Din Merican

  9. Looks like Najib’s NEM will not be implemented in Sarawak and Sabah if the following Parliamentary Meeting materialises in the near future.

    Danildaud should be very pleased if this comes to pass.

    CLICK Here the Text of prepared speech of the convenor of the Meeting


    “….Elections shall commence as soon as the new territories are drawn up. Each constituency shall comprise of circa 30,000 people give or take 20%. Unlike in Malaysia, where Putrajaya has 4,500, and Theresa Kok has 75,000 voters, all competing for the same voting power in Parliament.

    For the first 5 years…. 50% of all oil revenue will be equally distributed among the population regardless of race or creed.

    …New Universities shall be setup, and we will import the best lecturers and teachers from Harvard, Cambridge, Oxford, and the likes of such Ivy League Schools. There will be NO marking-on-a-curve. However, if you fail three times, you will be expelled from the Education system. … In a meritocratic country, there is no safety-net….If you fail, you will fail.

    Religion is a personal belief, and should stay that way. No Government Official shall impose his religion on others. No one shall use his “religiosity” to circumvent academic achievements. Civil Servants will be Civil SERVANTS. They shall never be Civil LORDS like those in Malaysia. Again, three warnings, and you will be fired. Every Civil SERVANT works FOR the Public. NOT the other way around.

    ….Final word, the words “Bumiputra”, “Ketuanan” and “Race”, with immediate effect are deemed “bad words”. On par with other “bad words” like F**K, Pukimak, and so on. Use sparingly; preferably not at all. “

  10. How I wish that’s what Najib had in mind. Anyway, a piped dream will remain piped for the dreamer to enjoy for as long as it lasts. Cheers.

  11. La-di-la,
    How can he come back and help this country when you still have Article 153 in Our Constitution as any suggestion must take into account that part of the constitution. The Vice Chancellor of UiTM in the Hello-Malaysia, Programme screened at 6.00 am on 3rd. April,2010, said in response to a question as to why there are no non-malay students in UiTM said that UiTM was set up under Article 153 of the Constitution and therefore it is for Bumiputra students only.

    I do not think that any Malaysian is opposed to Article 153 of the constitution. What many of us cannot accept is that that Article was implemented without any regard for accountability and the emasculation of key institutions of government. The NEP and the NEM may not necessarily contribute to the building of a strong Malaysian economy. But I am confident that a strong economy will be able to sustain the NEP and the NEM. A shrewd government will, therefore, implement policies that will strengthen our economy and our currency and then worry about how you are going to spend that money.

    Level heads must prevail and I hope that GOD will give the wisdom to our leaders to do at the beginning what they will be forced to do unsuccessfully in the end.
    As far as I am concerned, the Vice Chancellor of UiTM is an idiot and should be asked to retire from his job. We don’t need people like him to lead our nation’s universities. He is playing politics, in stead of focusing on his academic duties. Najib should know that this character is sabotaging 1Malaysia.—Din Merican

  12. As far as I am concerned, the Vice Chancellor of UiTM is an idiot– Din

    Well, I did mention to Tok Cik on another thread that when I first heard/read of the phrase, “Kangkung Professor”, it was in one of the Malay blogs and it was made in reference to the PREVIOUS Vice Chancellor of UiTM (Ibrahim Abu Shah). In Bahasa, it was written as ” professor kangkung”.

    The present VC (Dato’ Prof Ir Dr Sahol Hamid Abu Bakar ) was only recently appointed to the position (1st January 2010).P rior to his current appointment, Sahol Hamid was a civil servant in Ministry of Higher Education attached to the Ministry’s Programme Management Office. No resume on his academic achievements in the UiTM website except to say he had worked with UiTM for 30 years (presumably as a lecture in Civil Engineering). Surely as PROFESSOR and PhD, there should his list of publications in international journals and contribution to the body of knowledge in Civil Engineering (none posted on the UiTM website)

    I manage to retrieve the posting of one Malay commenter who used the word ” Profesor Kangkung” on Ibrahim Abu Shah (VC UiTM) CLICK HERE TO READ THE FULL POSTING IN BAHASA

    “…Fikir-fikirkan, wahai budak UITM.

    Kalau aku, aku keluar dari UITM sebab aku tau dah masa depan aku kurang cerah dibandingkan dengan masa depan grad dari universiti lain.

    AIMS yang India punya, UNITAR yang Cina punya. Tak pulak depa hadkan kemasukan kepada bangsa depa saja. Depa tak pernah buat demo pun. Sebab mereka bertamadun dan mereka ada matlamat dan visi yang jelas.

    UITM ada apa? Matlamat apa? Selain daripada matlamat politik oleh Prof Kangkung yang lepaih ni nak jadi orang politik.

    Itulah bagaimana politik UMNO merosakkan rakyat jelata.

    The following information was later removed from the FORMER VC UiTM (IBRAHIM ABU SHAH) . It is only published in the Malay version of his website (removed after he was replaced/retired by by the current VC)

    1. UMNO Member (1968 – present)

    2. Youth Leader, UMNO Kg. Pulai (1981- 1983)

    3. Committee Member, UMNO Youths Jasin, Melaka (1982 – 1983)

    4. Chairman (Founder) UMNO Club, Carbondale USA (1983)

    5. President, UMNO USA Club (1985 – 1987)

    Below extracted from Vice Chancellor Ibrahim Abu Shah’s Malay-language website

    1. Ahli UMNO sejak tahun 1968 hingga sekarang.

    2. Ketua Pemuda Cawangan UMNO Kg. Pulai, Melaka (1981- 1983)

    3. AJK Pemuda Bahagian Jasin, Melaka (1982 – 1983)

    4. Pengerusi (Pengasas) Kelab UMNO Carbondale USA (1983)

    5. Presiden Kelab UMNO USA Washington D.C. (1985 – 1987)

    6. Exco Kelab Alumni UMNO Luar Negara (1995 – 2006)

    7. Penasihat Kelab Alumni UMNO Luar Negara (2006 – sekarang)

    8. Ahli Biro Penerangan UMNO (2006 – sekarang)

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