Najib unveils New Economic Model
Malaysian Prime Minister Datuk Seri Najib Razak today unveiled economic reforms that he said would make his country a developed nation by 2020, but provided few clues as to how he would get there.
Najib said the “New Economic Model” will see more divestments of government holdings in listed companies and the government is still in consultation on the reform of its subsidy policy.However, there was no timeframe for the new taxes and for cuts in a subsidy regime that sees Malaysians pay one of the lowest prices for petrol in Asia and that cost the country RM24.5 billion in 2009 out of RM160.2 billion in federal government operating spending.
Bernama reported that the New Economic Model targets to raise per capita income of Malaysians from US$7,000 to US$15,000 in 10 years time, said Najib.
Malaysia will corporatize its industrial development authority and rename it the Malaysia Investment Development Authority to attract capital investment, Najib said.
Malaysia will revise its affirmative action policies to focus on the bottom 40 per cent of households by income, Najib said. The new policies will be fair and transparent, he said.
Khazanah Nasional, the government's investment arm, will have to achieve greater progress in divesting non-core assets to increase liquidity of these counters, said Najib.
He also said the government will reassess the subsidy system and broaden revenue-raising base through proposed Goods and Services Tax (GST).
This will place Malaysia in line with international norms and reduce unsustainable reliance on a small number of industries, business and taxpayers.
He also said Malaysia should rise out of the "middle-income trap" that will be a precarious position for any nation in the new global economy, which means pursuing economic policies in knowledge industries of the future with high-wage jobs and prosperity that can be shared by all.
The Prime Minister said the NEM, formulated by the independent National Economic Advisory Council (NEAC), will be integrated into the 10th Malaysia Plan with a longer term vision that will be delivered through the 11th Malaysia Plan.
"These can transform the economy to become one with high incomes and quality growth over the next decade," he said.
The following are some of the highlights of what Najib announced:
* State investor Khazanah to sell 32 per cent 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.
* 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 banking capacity to assess credit approvals for green investment using non-collateral based criteria.
* Reduce wastage and avoid cost overrun by better controlling expenditure.
- Reuters/Bernama
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