POST the COVID-19 pandemic era, there remains considerable domestic and external challenges to our national socio-economic development journey.
The social and economic implications from the pandemic would place the Government under greater political and competitive pressures to revitalise and reshape the Malaysian economy, create new industries (smart digitalise, renewable, green, climate change), increase high quality investment, grow skills and high-income employment.
The time for reform is now for a better Malaysia and for future generations. The Government and public institutions must ensure equitable growth and economic distribution as well as the inclusiveness of development and income policies for all Malaysians.
The crisis has already led to changes that will shape our policies in the years to come. Deglobalisation, intense digitalisation, ageing and environmental, social and corporate governance (ESG) are the megatrends shaping tomorrow’s living standards and well-being.
We have built the foundation of growth and economic development but there are still unsettling, uneven weaknesses and cracks in three pillars – institutions, social and political – of the foundation.
Reforms of sorts
Malaysia’s growth potential and prospects look uninspiring in the absence of renewed reform dynamism.
Policymakers are compelled to look for answers to the fundamental weaknesses and structural issues which will shape reforms in the aftermath of the crisis: What kind of Malaysia (economy) do we want to build going forward?
What is the reset economic model that will withstand against future crises and global challenges? What are the new sources of growth that we need to promote and policy measures needed to build highly productive green economy?
It is widely accepted that institutional reforms are fundamental creation of an environment necessary for development and economic prosperity.
Political, judiciary and economic institutional reforms make the economic and social system more efficient through strengthening the rule of law, better governance, effective execution, a sound crisis management, and people interaction principles.
Countries like Singapore, Hong Kong, and New Zealand with efficient economic structure provide a suitable environment and incentives to their people and businesses to grow faster as compared with states having extraordinary powers.
These economically-sound countries are providing business freedom, investment freedom, and secure property rights for the efficient functioning of markets that raise the trust level, reduce uncertainty, and create a sustainable fiscal budget for the economy.
A wide range of reforms are needed in Malaysia. More needs to be done, especially on reforms that ensure stronger and fairer outcomes.
It must begin with an urgent priority to implement Parliamentary, political and judiciary reforms to ensure the accountability and credibility of these institutions.
Strong leadership
The reforms require strong leadership to win consent from bipartisan political parties. Reformers need to act decisively as the cost of the status-quo could be even greater. Half-baked and half-hearted reforms will not improve the country’s growth prospects.
In advancing on the path of reforms, the economy needs to confront the short-run adjustment costs as the benefits of better structural policies may take time to materialise.
Hence, this should not be a deterrent to implementation. More importantly, effective communication and public engagement are of great importance in making reform happen based on a clear evidence and the measurable desired outcomes. – Sept 17, 2021
Lee Heng Guie is the executive director of the think-tank, Socio-Economic Research Centre (SERC).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
