Will govt impose a strategy to overcome market forces in some cases, asks analyst

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

THE 12th Malaysia Plan (12MP) outlined by the prime minister (PM) yesterday had a lot of good strategies, but analysts are already questioning whether some of the goals can be achieved.

One of their key questions was how to achieve the desired outcomes of the 12MP in light of real challenges.

Centre for Market Education CEO Dr Carmelo Ferlito asked if the government would impose a strategy that will overcome market forces in some cases.

He said the weakest point of the 12MP outlined yesterday was an attempt to guide the economic system in contradiction of the market, like the emphasis on high-tech investments and jobs for instance.

“We need an education reform which will allow secondary schools to professionalise our students and re-dignify jobs that are now considered of a lower level. If we fail to do so, and we keep on supplying mass tertiary education, the value of tertiary education will decrease.

“Then we will have a mass of frustrated unemployed people and then we will need more and not less foreign workers, because of the wrong expectations created by mass tertiary education,” he told The Malaysian Reserve (TMR).

PM Datuk Seri Ismail Sabri Yaakob yesterday tabled the five-year (2021-2025) plan, 12MP themed “A Prosperous, Inclusive, Sustainable Malaysia”, which aims to steer the nation out of the Covid-19 pandemic and put the economy back on track.

Among the areas of the development roadmap’s focus are social welfare and protection for workers and the rakyat, particularly the needs of the bottom 40% group. Other key areas include bridging the development gap between states and areas in the country, particularly through digitalisation and the use of advanced technology.

While the cut of red tape is welcomed, Ferlito believed it needs to be paired with a truly market-oriented approach.

“So-called development expenditures do not necessarily produce development if they are not directed in the direction indicated by the market.

“Their outcome is very much determined by the direction in which they are spent. To spend is not enough and the outcome is better the more it is generated by the interaction with market actors,” he added.

He said obviously, all these considerations are coming from a preliminary read of the plan.

“My bottom line is the risk of an increased desire from the government to be the main driver in terms of direction and magnitude of economic growth when we know that sound and sustainable growth is the result of private entrepreneurship responding to market signals,” he said.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the sizeable allocation for development expenditure would be positive for GDP growth as the impact, if it implemented in a timely manner, will have an immediate multiplier effect on the economy.

Nonetheless, he said the fiscal deficits are expected to be reduced to between 3% and 3.5% by 2025.

“Perhaps, there will be new taxes to be introduced along the way especially when the economic recovery becomes more sustainable. In respect to the development programme, focus on technology in particular the 4G and 5G network has been mentioned in the early part of the speech.

“Similarly, the research and development spending is expected  to go up from 1% of GDP in 2020 to 2.5% of GDP in 2025. In that sense, the government has remained committed to ensuring that the economy will continue to grow with quality, the one that will leverage the technology,” he told TMR.

Mohd Afzanizam said this would lead to demand for highly skilled labourers.

“In a nutshell, the 12MP has covered a lot of grounds. With timely implementation, it could accelerate the economic recovery process,” he said.

Kota Melaka Umno Wanita chief Datuk Haryaty Hamdzah welcomed the government’s proposal to empower women in economic development and decision-making processes with a target to reach 59% by 2025.

She said there is still discrimination against women, especially regarding salary determination and technical/professional positions in this country.

“It is a sad thing that in this era of advanced technology there are still parties with such a third class mindset.

“Therefore, I hope that a comprehensive effort and action from the government can be done to curb this issue from becoming an unhealthy practice of employers,” she said in a statement.