DATUK Seri Nazir Razak
Chairman CIMB Group. He is also chairman of the World Economic Forum’s ASEAN Regional Strategy Group and a member of the International Advisory Board of the University of Oxford’s Blavatnik School of Government.
THE new Pakatan Harapan government is a strong combination of experience and fresh thinking. The combined curriculum vitae of the new Cabinet in terms of academic qualifications and diverse experiences is surely one of the strongest we have ever had. To assist the Cabinet, we have the brain power and expertise of the Council of Eminent Persons. All these fuel the public’s high expectations following PH’s historic victory on a platform calling for government change and structural reforms. Although PH has had a hectic start, it has only been 100 days and it is best to judge the new government on how it addresses critical national challenges over a longer horizon.
In my view, the five most critical issues that the new government needs to prioritise are fiscal sustainability, economic strategies, institutional integrity, educational excellence and national unity. Underlying all of these is the vital need for political calm and stability. Studying the experiences of other countries, we have learnt that the history of first power transitions from dominant ruling parties is decidedly mixed and staying focused on governing and delivering, as well as avoiding infighting, is crucial.
The government’s statement on the national liabilities amounting to RM1 trillion, which accounted for 80% of 2017’s national gross domestic product, drew attention to the fact that the government’s actual liabilities and commitments are much larger than generally understood. We subsequently heard various estimates of other possible understatements of financial obligations. As with any financial restructuring, the government needs to quickly nail down the total picture, set it in proper context and articulate its action plan.
I would suggest that when the government fully sets out its total liabilities and commitments, it also tallies the government’s assets that back them. We should compare very favourably against countries with similar public debt-to-GDP ratios and ratings because of our huge asset base, which includes Petronas and Khazanah.
All eyes will be on the federal budget to be announced in November. By presenting the total picture and committing to a sustainable path of spending, taxation and debt management, the government will allay fears of rating downgrades and enable businesses to sensibly forecast government spending, taxation and interest rates, which will ease investment decision-making.
Building on the sound fiscal foundations, clarity on economic policies will be the complementary strength needed to build economic vibrancy. Given past rhetoric, it would be good to hear a reaffirmation of an overall economic philosophy that strives to reward merit while avoiding a discourse that is in any way hostile to wealth creation, innovation and enterprise. A reiteration of good policies from the previous government, such as those on corporate social responsibility, diversity and sustainability, would also be helpful. And, of course, we also look forward to hearing the sectoral priorities and policies as well as plans to navigate challenges and opportunities of the Fourth Industrial Revolution (4IR).
The Minister of Economics Affairs indicated his preference for needs-based affirmative action when he announced plans to review the New Economic Policy (NEP) and New Economic Model recently. I have long been an advocate of NEP reform to target the less fortunate of all races and really hope that this time, it is for real. It will be a massive administrative task with lots of political potholes, but the potential uplift is significant because the retreat of government from setting business ownership rules will reinvigorate the business sector.
Similarly, there is also an opportunity to reform the presence of government in business — what it should own and how it makes transparent, coherent and steady regulations that are implemented fairly to optimise competition. Again, this will boost business investment and activity.
The new government has moved swiftly to strengthen the integrity of our institutions by changing leadership and reestablishing independence. The setting up of the Institutional Reform Committee, aggressive actions by the Malaysian Anti-Corruption Committee (MACC) and other institutions as well as the proposed autonomy of the MACC and the National Audit Department are all moves in the right direction.
Rebuilding trust in our institutions will take time and perseverance. There will be many challenges and frequent temptations to stray from the new, strict orders of conduct. Every time the government demonstrates respect for the independence of institutions and proper processes, we move a step forward in rebuilding trust.
Integrity starts at the top. I am keenly looking forward to a new framework for leadership selection at key institutions to guarantee the probity, professionalism and competency of leaders. There has to be rigour in choosing and holding leaders of institutions to account.
It is never too soon to address shortcomings in our education system, but it is even more pressing now with the advent of 4IR, which has dramatically changed the needs of the future worker and entrepreneur. The beauty of 4IR is that it is also a great opportunity for those who get it right to leapfrog; many of today’s established academic systems and institutions around the world will find it difficult to change, so this will open up new horizons for creative and ambitious challengers.
The rapid advancement of technology, including robotics and artificial intelligence, could make obsolete a large swathe of jobs that currently allows for a middle-class life. So what do we do about our analogue-era education system that would allow our children to thrive in the digital and information economy? How do we make a giant shift away from drilling knowledge to developing critical and creative thinkers?
PH won the general election because of the massive call for change. However, not all directions of changes are clear, even in the PH manifesto. Not surprisingly, the most contentious issues are those on race and religion. Are we ready for Malaysian Malaysia or do we persevere with race-based politics and policies? What about vernacular schools? Are we an Islamic or secular state? Are Sabah and Sarawak different?
The PH manifesto proposes the setting up of a Consultative Council for People’s Harmony, which is akin to the National Consultative Council of 1970. This needs to be done soon, before sensitive issues start to surface in debating reforms in various areas. Communal issues are best deliberated by a wide set of stakeholders — representatives of the Rulers, community leaders, religious leaders, politicians, non-governmental organisations, businessmen and civil servants, among others. There will need to be trade-offs in the interest of what is best for the nation in the long term and the people will need to be guided by leaders they most respect.
I have identified five critical issues that the government needs to address over the short to medium term. There are many other issues and some may disagree with my choices and suggestions. However, just writing this has been uplifting because of the sense that the reforms that some of us dreamed and talked about in the past could actually happen. Recalibrating Malaysia is a huge task and we must give the new men and women in the arena support in the form of ideas, praises and criticisms so that they can succeed for all of us.