New Economic Model of Malaysia

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New Economic Model (NEM) unveiled with much fanfare. It has been accompanied by the usual uncritical write-ups and praise from economic analysts from the mainstream mass media. Maybe they see in it more than what can be discern or maybe can be an incorrigible skeptic with less faith in grand visions, especially those put out by a group of consultants. The National Economic Advisory Council (NEAC) as its name suggests is purely an advisory body with very little – if any – authority or clout in implementation. The theories behind New Economic Model (NEM), firstly though, let’s begin by noting that with the tone of urgency struck by the council in the document. This is a much needed departure from economic documents of the government which have been overly optimistic on the country’s economic future. The preface to the NEM notes that “the time for change is now – Malaysia deserves no less”. Nobody will disagree with this. In fact, in some ways, the Government and NEM may be too late in seeking solutions on many key challenges. The time for change should have been at least 20 years earlier. By consider for example Strategic Reform Initiative 2 on the developing a quality workforce and reducing dependency on foreign labour. According to the NEM, “policies will focus on generating a talented workforce to meet the needs of a high-value knowledge economy while wage-restraining labour market distortions, such as excessive and indiscriminate use of foreign labour, will be removed.” Although over-dependence on foreign labour has been identified as a major constraint to the economy for many years, yet the number of foreign workers in the country – especially if the number of illegals is included – has grown practically every year during the past 30 years. How to put a stop to this is easier said than done. Another major shortcoming is that many of the so-called bold new strategic policy directions are not new. A quick review of government economic documents shows that these...
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