Post on 14-Jan-2016
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New Economic ModelProspects & Challenges
Datuk Nicholas S. Zefferys, Member: Pemudah & NEAC
President AMCHAM
9 April 2010
GlobalisationCapitalism
PrivatisationLiberalisation
DeregulationDemocratisation
“Optimising the opportunity for the individual human spirit to hope, strive, achieve, & profit.”
VISION 2020New Economic Model
10MP
2010
10 Year“Window of Opportunity”
Achieving a High-Income, High-ValueFully Developed Economy
“By the year 2020, Malaysia can be a united nation, with a confident Malaysian society, infused by strong moral and ethical values, living in a society that is democratic, liberal and tolerant, caring, economically just and equitable, progressive and prosperous, and in full possession of an economy that is competitive, dynamic, robust and resilient.”
Working paper by former P.M. Tun Dr. Mahathir bin Mohamad
VISION 2020
Macroeconomics of Malaysia
GDP = C + I + G + ( X - M )
AggregateOutput ofa country
Value of allgoods & servicesproduced in 1 year
Personalconsumptionexpenditure
Fixed investment inresidential & non-residential structures,Equipment, & changein business inventory
Governmentpurchases
NetExports
The “Hardware” of Economic Measurement
Socio-Economics of Malaysia
GDM = 1 + I + E + ( BG - BD )
Gross DomesticMindset ofMalaysia
“All for one and one for all” or Unity(Valuing vs. Tolerating differences)
Innovation (Creativity + InvestmentIn R&D); Funding of “ideas”
Education (Talent & Knowledge) Investment (Quality from Primaryto Tertiary & Advanced Degrees)Good “career” opportunities
Net Talent Gain
A Paradigm Shift In “Software” or Mindsets
Socio-Economic Perspectives
The future of the country is ultimately dependent on:
• Confidence & Will• High Aspirations• Competitiveness• Openness• Attractiveness
These are essential elements of a prosperous investment climate in Malaysia
Employment Structure Over Time
Industry
Services
Agriculture
Time, Per Capita Income
Share of Employment
Source: IMF, 1997
Malaysia:58% Svc’s Today70% by 2020
3 Central Goals
High Income; Inclusiveness; Sustainability
8 Strategic Reform Initiatives
Re-Energise Private Sector Develop Quality Work Force
Create Competitive Econ. Strengthen Public Sector
Transparent/Mkt Friendly Affirmative Action
Build Knowledge base Infrastructure
Enhance Sources of Growth Ensure Sustainability of Growth
1+IDNA Code of the Future
One Malaysia Innovation
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Wherefore Malaysia In 2020?• National Mission• MSC• MDEC• 9MP, 10MP, 11MP• Stimulus Packages• Corridors• Budget 2010• GTP• 6 NKRA’s/KPI’s• Affirmative Action• NEM• Pemudah• NEC, NEAC
1Malaysia, People First,
Performance Now
Malaysian Force Field
Opportunity
Fear Driven
Entitlements
Stakeholder Representation
Top-Down Gov’t. Driven Bottom-up Enterprise
Protectionism Market Driven
Ali Baba/One-Eye Closed Transparency/Governance
Legacy Forces Change Drivers
Socratic DebateRote Learning
Media control Free Press
Sovereignty Human Rights
Authoritarianism (Napoleons)
Opportunity Driven
Weak Institutions Professionalism
Weak Judicial System Rule of Law; Independence
Growth Drivers?
FDI•GDP Growth•Quality Jobs Growth•Career Opportunities•Ability to Fund Ideas
Talent
Innovation
R&D
Domestic Inv.
Note: 60% of population is below 30; rising expectations for themselves & their children.
Productivity
Domestic Domestic InvestmentInvestment
PrivatePrivateInvestmentInvestmentAbroadAbroad
Domestic Investment Has DwindledDomestic Investment Has Dwindled
% GDP% GDP 1996-97: 37% range1996-97: 37% range2000-08: 7 to11% range. 2000-08: 7 to11% range.
Private Domestic Investment is not driving growth. •Loss of confidence?•Loss of opportunities? •Greater ROI’s abroad?
Significantoutflows
2010 R&D goal = 1.5% of GDP2010 R&D goal = 1.5% of GDP(currently only = 0.5%)(currently only = 0.5%)Goal of 60 researchers/10,000 pop.Goal of 60 researchers/10,000 pop.(currently one of lowest)(currently one of lowest)
Low-ValueLow-ValueAdding EconomyAdding Economy
R&D Has Not Gained TractionR&D Has Not Gained Traction“A Failure To Launch”“A Failure To Launch”
Japan = 3.2% of GDPJapan = 3.2% of GDPUSA = 2.6% USA = 2.6% Sing. =2.4%Sing. =2.4%China = 1.6%China = 1.6%Microsoft = 30% of RevenueMicrosoft = 30% of Revenue
R&D ProgressR&D Progress
•Poor English & “Soft” skills Poor English & “Soft” skills •Univ. Education Quality/FocusUniv. Education Quality/Focus•Primary/Secondary School FailurePrimary/Secondary School Failure•Engineer, IT, Technical ShortagesEngineer, IT, Technical Shortages•Real Careers Opportunities Better outside of MalaysiaReal Careers Opportunities Better outside of Malaysia•Severe shortages in various skill areasSevere shortages in various skill areas
Loss of talent abroadLoss of talent abroad
Talent Shortage & Brain DrainTalent Shortage & Brain Drain
Shortages of Local TalentShortages of Local Talent
Relationship Between Government, Business & Rakyat
Inevitable mutual dependence between government and business in national productivity
Ongoing dialog needed to remove obstacles, lower unnecessary business costs, create appropriate inputs, information, & infrastructure
PEMUDAH: Solid example of successful PPP
Malaysian Growth Market Prospects?
• 2 Billion new Asian consumers
• Bottled-up demand that will resurface out of necessity
• Return of greater risk-taking
• Emerging industries: health care, renewable energy, bio-tech, fin. services, other.
What’s Needed?
• Improved policies• Sound implementation• Policy coordination
amongst various Government Ministries & Agencies
Positive responses from Investors,Private sector, and the Public.
5 Comfortable Habits Addictions& Systemic Barriers
1. Addicted to cheap labour
2. Addicted to subsidies
3. Addicted to oil funding the government
4. Addicted to oil as a major source of energy
5. Addicted to opaque top-down government
Prime Minister, Nov. ‘09, Bankers Club speech
5 Comfortable Habits (cont’d)
1. Cheap Labour: Must move beyond low- wage & low-value into new technology to be globally competitive
2. Subsidies: Skews the marketplace; Innovation is driven by competition on a level playing field.
3. Oil Funding: Need broader based funding of gov’t.4. Oil Energy: Need alternative sources of energy &
environmental sustainability.5. Peoples’ Government: Gov’t shut off from the
people is shut off from their realities. The new Internet connected & worldly-informed society calls for participatory gov’t that shares information & drives greater innovation; openness to new ideas.
3 Important Drivers• Greater Market Orientation
Focus on delivering what markets/customers need; entrepreneural, innovative, productivity driven
• More Open EconomyPrivate sector encouraged to invest domestically & to expand abroad. FDI welcomed in a liberalised business environment across all sectors. Benchmarking to global standards, Open to expertise.
• Private Sector DrivenLess Government direct/indirect ownership in private sector domain. Government to facilitate vibrant private sector driven growth. Private sector to drive the growth.
Business Current Situation Proposed Engagement Informal - Rural - Women
Off the radar screen & not registered Unaware of aid schemes Low business skills Lack capital & financial ability Subsistence farmers; Small holdings Migrating to urban poverty Financially stressed Marginalised Lack of child care Unaware of opportunities
Engage, advise of business opportunities Educate; soft-loans & grants Train, educate & support network Access to trng & loans/grants Assist to identify business development opportunities Job training & resettlement Micro-financing Empowerment; mentoring networks Child care centres Awareness, exposure, access
Bottom of the Business Pyramid
Micro Hi illiteracy rate Use rudimentary technology Low skills Motivated but unaware Bottom 40% income group No business acumen
Facilitate & assist Micro-financing Educate, avail of management expertise Empower Family planning assistance Train - educate
Small Need for incubation Lack access to financing Lack entrepreneurial skills Poor management/marketing skills Low networking presence Poor ICT usage
Provide office space Financial training, guarantee schemes Skills development; entrepreneur programmes Training & capacity building Linkages & exposure; local & MNCs Awareness of productivity & opp.’s
Business Current Situation Proposed Engagement
Ministerial/Government/Regulatory Institutional Transformation
Moving from THIS . . . . . . to THIS !
Treating Symptoms(i.e. reforming with
one eye closed)
Strategic Cooperation(i.e. constructive
collaboration)
Mgt/Business Transformation
Vertical Command Control
Horizontal SymbioticPartnerships
(with Employees also)
Moving from THIS . . . . . . to THIS !
At the end of the day . . .
. . . it’s all about the proper balance betweenGovernment, Private Enterprise, and Society that will determine if Malaysia is a followeror and innovating country that creates new spaces.
“A Forward Thrust”
Terima Kasih Xie Xie
Nandree Shukriya