07Ogos2020

Agenda Daily

WILL THE NEW ECONOMY WORK ?

As we await the Prime Minister’s new economic model for the country, wecan’t help but wonder what exactly it is going to be. Clear communication is vital to enlist the cooperation of all in implementing it and forging ahead as a nation.

 

Later this month, Prime Minister, Datuk Seri Mohd Najib Abdul Razak will announce the country’s new economic model. Last Dec 22, he said the new economic model would form the basis and direction of the country’s future economy.

Since taking over the government last April, Mohd Najib has been talking about the need to chart a new course for the economy.

Since then, he has formed the National Economic Advisory Council and made a controversial decision to appoint the Tun Abdullah Ahmad Badawi-era minister and ex-banker Tan Sri Amirsham Abdul Aziz as its chairman.

Amirsham’s appointment was seen as dampening the Prime Minister’s resolve to transform the economy, as the latter’s achievement in the banking industry and in Abdullah’s Cabinet is not seen as impressive.

Whatever the model the Prime Minister and his advisers have in mind, several key matters, including old issues like poverty, income imbalance among the races and the rural-urban rift, must continue to be addressed.

The Prime Minister would have had an easier time selling his ideas, including 1Malaysia, if the day-to-day concerns of the people like poverty, racial imbalance, law and order, employment and prices are made the key objectives and addressed in an effective manner.

We can talk about high income, and a globally competitive economy, but only a small fraction of the elite may understand and embrace the idea.

But for the masses — the people who are going to determine the rise and fall of the government — the key concerns remain the simpler things like steady employment, reasonable income, stable prices and supplies of goods and services.

Most importantly, the government must be clear about what it’s driving at. Is it striving for a new economic model, or is it, in fact, moving towards creating a new economy for the country?

The Prime Minister has to make it clear to the ordinary mortals. Is he searching for a new model for the old economy or is he intending to create a whole new economic system for which a model is required?

So far, all that Mohd Najib had said, as quoted by Bernama on Dec 22, is that the new economic model would be a comprehensive one, covering not only the economy but all aspects of the ‘nation’s role’.

The latter is either a misrepresentation by the national news agency or something so special that the Prime Minister will explain in greater detail when he announces the model later this month.

The Singaporean model

ONE LESSON that the Prime Minister could learn in the formulation of the new economic model lies to the south — in Singapore.

There’s no denying that Singapore is a successful economy and the government has, in recent years, been intensely looking to copying the Singapore model apart from relying on the republic for foreign direct investment (FDI), although, in the same time frame, more Malaysian FDI has flowed to Singapore than the latter’s entering Malaysia.

The current global economic crisis exposed the Achilles heel of Singapore’s economy. It is too dependent on manufacturing and services.

These two sectors account for almost 90% of its Gross Domestic Product. In contrast, our economy is more broad-based, although manufacturing and services are fast becoming the key sectors.

The government’s preoccupation with manufacturing and services should not blind it from the stark reality that we are a very successful agricultural exporting country. On many occasions, it was agricultural commodities that cushioned the country from the global trading cycles.

Singapore’s economy is essentially a centrally- planned capitalist economy with the state playing a major role in investment and production.

It is also a democracy that has no effective opposition. The People’s Action Party-led government is not exactly tolerant of opposition.

While government intervention in the marketplace, according to some authorities, is kept at a minimum, the state-owned and controlled enterprises account for at least 60% of the GDP.

The linchpin is Temasek, the sovereign fund headed by Madam Ho Ching, the wife of Singapore’s Prime Minister, Lee Hsien Loong.

According to the Temasek website, the investment holding company, which was incorporated in 1974, holds and manages a diversified S$127 billion (US$84 billion) portfolio as at Nov 30,2008, concentrated principally in Singapore, Asia and the OECD economies.

Temasek takes a tumble

TEMASEK has been in the limelight these past two years. Following several major upsets in its investments and massive decline in its assets, the company on Feb 6, 2009, announced the appointment of Charles W Goodyear as, a member of the Board and Chief Executive Office-Designate.

On Feb 10, 2009, Temasek said its investment portfolio value fell by 31%, or about S$39 billion, from March to November last year.

On May 28, Singapore’s Finance Minister, Tharman Shanmugaratnam, defended Temasek’s performance, saying that it had made S$56 billion (US$38.5 billion) in the current market cycle that began around March 2003.

In this six-year period, it achieved annualised returns of 15%, better than the MSCI global equity markets’ 6% returns and ‘respectably’ compared to other reputable institutional investors. Its portfolio had also grown by S$56 billion over the course of the cycle, despite the subprime mortgage crisis.

On July 21, 2009, four months into the leadership transition, Temasek said the board and Goodyear concluded and accepted that there were differences regarding certain strategic issues that could not be resolved.

In light of the differences, both parties decided that it was in their mutual interest to terminate the leadership transition process with effect from Aug 15, 2009.

Goodyear stepped down from the Temasek Board and Ho Ching continued as the CEO of the wounded Temasek. In kiasu Singapore, it was a huge slap in the face of the PAP government.

In typical corporate double-talk, CEO Ho Ching in the same press statement said: ‘In the short time with us, Chip has started a number of initiatives which I believe will help strengthen the Temasek platform. I am sorry he is unable to continue with the leadership transition, and hope to complete the initiatives that he has started.’

On his part, Goodyear said: ‘I’m sorry that we are unable to continue with the leadership transition. Temasek has a fantastic platform and I wish the Board, Ho Ching and the team all the best.’

Industry sources estimate that Temasek lost some US$ 4.6 billion in its recent US misadventure when it sold its entire 3.8% stake in Bank of America for US$ 1.3 billion.

Temasek had acquired the stake after Bank of America bought Merrill Lynch following last year’s shake-up in the US financial market. Temasek had earlier paid US$ 5.9 billion for a 14% stake in Merrill. The latter was taken over by Bank of America on Jan 1, 2009.

The Chinese factor in Singapore

IF TIMES are challenging for Temasek, they are no better for the Singapore government. At least that’s how l see it based on statements made by the Republic’s supreme leader, Minister Mentor Lee Kuan Yew.

In a National Geographic TV documentary and article released recently, Lee was quoted as saying: ‘Over time, Singaporeans have become less hard-driving and hard-striving. This is why it is a good thing that the nation has welcomed so many Chinese immigrants.’

In a sense, Singapore is becoming more Chinese. The Chinese Singaporeans now constitute 74.2% of the population. Singapore is, therefore, more Chinese than Malaysia is Malay or Bumiputera.

While Lee may have found the answer to the falling drive of the native Singaporeans in the hardworking immigrants from China, the Singapore Malays and Indians are worried.

The US-based Singapore-born blogger, Gopalan Nair, writing in his blog The Singapore Dissident, noted: ‘This is a policy which is clearly unconstitutional, illegal and racially discriminatory against Singapore Indians and Malays.’

Nair referred to a Singapore Straits Times article entitled ‘Make it a point to master English’ that appeared on March 23, 2008 in which Lee Kuan Yew urged ‘the new Chinese immigrants’ to study English.

Nair wrote: ‘These new immigrants understand no English at all in their Communist towns and villages in China. Only Mandarin and the various dialects they speak.’

He added: ‘And it is against this background that the Malays and Indians of Singapore must be very worried and concerned. An overwhelming number of immigrants from Communist China are being brought to Singapore for settlement; totally disproportionate to the Malay and Indian native populations of Singapore; deliberately intended to maintain the Chinese majority in Singapore in perpetuity.

‘This is a policy which is clearly unconstitutional, illegal and racially discriminatory against Singapore Indians and Malays.’

According to a report in the AsiaOne news portal, the influx of new immigrants has fanned discomfort among Singaporeans.

It said in 2005, around 99,700 new immigrants and foreigners were granted citizenship and permanent residency, a huge leap from 44,500 in 2004.

Lee’s famous journey through Peninsular Malaysia last June had as much to do with the situation in Singapore. He was trying to understand the new political equation in Malaysia vis-à-vis his growingly Chinese republic.

The opening of doors to mainland Chinese, Taiwanese and the Chinese Diaspora is not only to spur the economy but as much to retain and strengthen the republic’s Chineseness in anticipation of the rise of Islamism in the surrounding Malay-dominated countries.

According to people whom Lee met during the visit, his biggest fear remains the power grab by Pas. Thus, in his meeting with the Chinese political parties in Malaysia, he is said to have urged them to continue to work with Umno.

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