Published May 4, 2009

MALAYSIA INSIGHT
Good time to put house in order

Backing off every time a group warns of rising costs is not always the best option

By S JAYASANKARAN
KL CORRESPONDENT
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PRIME Minister Najib Razak said on Saturday that Malaysia needs a new growth model to push the country into a higher income bracket, where the increases in worker output would not just be through productivity gains but through measures that boost creativity and innovation.

Towards this end, Mr Najib said that the model would be drawn up by an economic council which would comprise experts from Malaysia and abroad.

'We will not allow the country to remain as it is but find ways to achieve a quantum leap so that we can be in the high income bracket,' Mr Najib said in a speech to mark Workers Day.

It is true that Malaysia needs a new growth driver. The world financial crisis has called into question the wisdom of depending on export-oriented industries.

Nor Mohamad Yakcop, the minister in charge of the economic planning department, has also alluded to this and called for a model that gives greater focus on domestic consumption as the key driver of growth. But to have that succeed would presuppose higher wages, which comes back, full circle, to Mr Najib's thesis.

In the interim, Malaysia remains addicted to migrant, low-skilled labour which completely flies in the face of a high-income economy. And they are everywhere, in every sector of the economy, from restaurants and estates to gas stations and construction.



The government keeps threatening to reduce their numbers but in actual fact, it has continually back-pedalled on the issue. Its latest shift in tack was a quiet announcement last week that the decision to increase levies on the import of foreign workers would be deferred until further notice.

One presumes the reasons for the backtracking lie in the various threats from industry groups - from restaurant owners to construction companies - that costs would go up and be passed on, ultimately, to the consumer.

The threats are irrational. If anything, costs should be going down because the costs of everything from building materials to basic foodstuff worldwide are going down. But they have stubbornly remained high. That is the first thing the government should look into instead of backing off every time a group warns about rising costs.

Mr Najib's new economic model is, indeed, the way forward and we applaud the fact that he is bringing in outside help - as per his allusions to foreign experts - to aid the advisory council. But he will have to rope in the best and brightest from within as well because we do not live in a static universe. Every other country in the world with similar development models to Malaysia's will be reviewing their options and probably have similar ideas.

But he will have to address the problems of foreign labour. It has gone on for too long and is almost out of control. No one has any idea of the actual numbers of illegal immigrants out there.

And no one really knows what happens to laid-off foreign workers whose numbers are apparently rising. Do their employers shell out the money to send them home? Or do they slip into the economic shadows?

It is time to put our own house in order.