Tuesday 30 March 2010

New Economic Model

The Prime Minister has unveiled what I would like to call a 'preview' of the New Economic Model. The model is now open for public feedback, before it is set in stone during the 10th Malaysia Plan later this year.

I must say the NEM looks promising at the onset, with clear promise to dismantle associating affirmative action with race, and providing help for all those who need it, regardless of race. Sounds promising, but I'll hold my horses until this is actually implemented.

The other two key initiatives under the NEM are to transform Malaysia into a high-income economy, doubling the per capita income from 7k USD per annum to 15k USD per annum, and to ensure a sustainable economy for the future generation. Not much details on how this is to be achieved though.

The PM has, however, unveiled some steps that will help move towards the direction of a sustainable, high-income economy that caters for all races. 1Malaysia.

  • State investor Khazanah to sell 32 percent stake in Pos Malaysia.
  • To list stakes in two Petronas units.
  • Facilitate foreign direct and domestic direct investments in emerging industries/sectors.
  • Remove distortions in regulation and licensing, including replacement of Approved Permit system with a negative list of imports.
  • Reduce direct state participation in the economy.
  • Divest GLCs in industries where the private sector is operating effectively.
  • Strengthen the competitive environment by introducting fair trade legislation.
  • Set up an Equal Opportunity Commission to cover discriminatory and unfair practices.
  • Review remaining entry restrictions in products and services sectors.
  • Phase out price controls and subsidies that distort markets for goods and services.
  • Apply government savings to a wider social safety net for the bottom 40 percent of households, prior to subsidy removal.
  • Have zero tolerance for corruption.
  • Create a transformation fund to assist distressed firms during the refom period.
  • Easing entry and exit of firms as well as high skilled workers.
  • Simplify bankruptcy laws pertaining to companies and individuals to promoteo vibrant entrepreneurship.
  • Improve access to specialised skills.
  • Use appropriate pricing, regulatory and strategic policies to manage non-renewable resources sustainably.
  • Develop a comprehensive energy policy.
  • Develop banking capacity to assess credit approvals for green investment using non-collateral based criteria.
  • Liberalise entry of foreign experts specialising in financial analysis of viability of green technology projects.
  • Reduce wastage and avoid cost overrun by better controlling expenditure.
  • Establish open, efficient and transparent government procurement process.
  • Adopt international best practices on fiscal transparency.

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