Transcript Presentation by Dato Nicholas Zefferys

New Economic Model
Prospects & Challenges
Datuk Nicholas S. Zefferys,
Member: Pemudah & NEAC
President AMCHAM
9 April 2010
Globalisation
Capitalism
Privatisation
Liberalisation
Deregulation
Democratisation
“Optimising the opportunity for the individual
human spirit to hope, strive, achieve, & profit.”
VISION 2020
New Economic Model
10MP
10 Year
“Window of Opportunity”
2010
Achieving a
High-Income, High-Value
Fully Developed Economy
VISION 2020
“By the year 2020, Malaysia can be a united
nation, with a confident Malaysian society,
infused by strong moral and ethical values,
living in a society that is democratic,
liberal and tolerant, caring, economically
just and equitable, progressive and
prosperous, and in full possession of an
economy that is competitive, dynamic,
robust and resilient.”
Working paper by former P.M. Tun Dr. Mahathir bin Mohamad
Macroeconomics of Malaysia
The “Hardware” of Economic Measurement
Aggregate
Output of
a country
Fixed investment in
residential & nonresidential structures,
Equipment, & change
in business inventory
Net
Exports
GDP = C + I + G + ( X - M )
Value of all
goods & services
produced in 1 year
Personal
consumption
expenditure
Government
purchases
Socio-Economics of Malaysia
A Paradigm Shift In “Software” or Mindsets
Gross Domestic
Mindset of
Malaysia
Innovation
(Creativity + Investment
In R&D); Funding of “ideas”
Net Talent
Gain
GDM = 1 + I + E + ( BG - BD )
“All for one and one for all” or Unity
(Valuing vs. Tolerating differences)
Education (Talent & Knowledge)
Investment (Quality from Primary
to Tertiary & Advanced Degrees)
Good “career” opportunities
Socio-Economic Perspectives
The future of the country is ultimately
dependent on:
• Confidence & Will
• High Aspirations
• Competitiveness
• Openness
• Attractiveness
These are essential elements of a
prosperous investment climate in Malaysia
Employment
Structure Over Time
Agriculture
Services
Malaysia:
58% Svc’s Today
70% by 2020
Industry
Time, Per Capita Income
Source: IMF, 1997
3 Central Goals
High Income; Inclusiveness; Sustainability
8 Strategic Reform Initiatives
Re-Energise Private Sector
Create Competitive Econ.
Transparent/Mkt Friendly
Affirmative Action
Enhance Sources of Growth
Develop Quality Work Force
Strengthen Public Sector
Build Knowledge base
Infrastructure
Ensure Sustainability of
Growth
DNA Code of the Future
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One Malaysia
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Innovation
Wherefore Malaysia In 2020?
1Malaysia,
People First,
Performance Now
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National Mission
MSC
MDEC
9MP, 10MP, 11MP
Stimulus Packages
Corridors
Budget 2010
GTP
6 NKRA’s/KPI’s
Affirmative Action
NEM
Pemudah
NEC, NEAC
Malaysian Force Field
Legacy Forces
Rote Learning
Protectionism
Entitlements
Authoritarianism (Napoleons)
Top-Down Gov’t. Driven
Weak Judicial System
Fear Driven
Media control
Weak Institutions
Sovereignty
Ali Baba/One-Eye Closed
Change Drivers
Socratic Debate
Market Driven
Opportunity
Stakeholder Representation
Bottom-up Enterprise
Rule of Law; Independence
Opportunity Driven
Free Press
Professionalism
Human Rights
Transparency/Governance
Growth Drivers?
Talent
Productivity
FDI
Domestic Inv.
•GDP Growth
•Quality Jobs Growth
•Career Opportunities
•Ability to Fund Ideas
R&D
Innovation
Note: 60% of population is below 30;
rising expectations for themselves
& their children.
Domestic Investment Has Dwindled
Private Domestic Investment is not driving growth.
•Loss of confidence?
Private
•Loss of opportunities?
Investment
•Greater ROI’s abroad?
Abroad
Domestic
Investment
% GDP
1996-97: 37% range
2000-08: 7 to11% range.
Significant
outflows
R&D Has Not Gained Traction
“A Failure To Launch”
R&D Progress
2010 R&D goal = 1.5% of GDP
(currently only = 0.5%)
Goal of 60 researchers/10,000 pop.
(currently one of lowest)
Japan = 3.2% of GDP
USA = 2.6%
Sing. =2.4%
China = 1.6%
Microsoft = 30% of Revenue
Low-Value
Adding Economy
Talent Shortage & Brain Drain
Loss of talent abroad
Shortages of Local Talent
•Poor English & “Soft” skills
•Univ. Education Quality/Focus
•Primary/Secondary School Failure
•Engineer, IT, Technical Shortages
•Real Careers Opportunities Better outside of Malaysia
•Severe shortages in various skill areas
Relationship Between
Government, Business & Rakyat
 Inevitable mutual dependence between government
and business in national productivity
 Ongoing dialog needed to remove obstacles, lower
unnecessary business costs, create appropriate
inputs, information, & infrastructure
PEMUDAH: Solid example of successful PPP
Malaysian Growth Market
Prospects?
• 2 Billion new Asian consumers
• Bottled-up demand that will resurface out of
necessity
• Return of greater risk-taking
• Emerging industries: health care, renewable
energy, bio-tech, fin. services, other.
What’s Needed?
• Improved policies
• Sound implementation
• Policy coordination
amongst various
Government Ministries
& Agencies
Positive responses from Investors,
Private sector, and the Public.
5 Comfortable Habits
Addictions& Systemic Barriers
Prime Minister, Nov. ‘09, Bankers Club speech
1.
2.
3.
4.
Addicted to cheap labour
Addicted to subsidies
Addicted to oil funding the government
Addicted to oil as a major source of
energy
5. Addicted to opaque top-down
government
5 Comfortable Habits (cont’d)
1. Cheap Labour: Must move beyond low- wage &
low-value into new technology to be globally
competitive
2. Subsidies: Skews the marketplace; Innovation is
driven by competition on a level playing field.
3. Oil Funding: Need broader based funding of gov’t.
4. Oil Energy: Need alternative sources of energy &
environmental sustainability.
5. Peoples’ Government: Gov’t shut off from the
people is shut off from their realities. The new Internet
connected & worldly-informed society calls for
participatory gov’t that shares information & drives
greater innovation; openness to new ideas.
3 Important Drivers
• Greater Market Orientation
Focus on delivering what markets/customers need;
entrepreneural, innovative, productivity driven
• More Open Economy
Private sector encouraged to invest domestically & to
expand abroad. FDI welcomed in a liberalised
business environment across all sectors.
Benchmarking to global standards, Open to expertise.
• Private Sector Driven
Less Government direct/indirect ownership in private
sector domain. Government to facilitate vibrant private
sector driven growth. Private sector to drive the
growth.
Bottom of the Business Pyramid
Business
Current Situation
Informal
Off the radar screen & not
registered
Unaware of aid schemes
Low business skill s
Lack capital & financial abili ty
Subsistence farmers; Small
holdings
Migrating to urban poverty
Financially stressed
Marginalised
Lack of child care
Unaware of opportunities
- Rural
- Women
Proposed Engagement
Engage, advise of business
opportunities
Educate; soft-loans & grants
Train, educate & support network
Access to trng & loans/grants
Assist to identify business development
opportunities
Job training & resettlement
Micro-financing
Empowerment; mentoring networks
Child care centres
Awareness, exposure, access
Business
Micro
Small
Current Situation
Hi illi teracy rate
Use rudimentary technology
Low skill s
Motivated but unaware
Bottom 40% income group
No business acumen
Need for incubation
Lack access to financing
Lack entrepreneurial skill s
Poor management/marketing
skill s
Low networking presence
Poor ICT usage
Proposed Engagement
Facili tate & assist
Micro-financing
Educate, avail of management expertise
Empower
Family planning assistance
Train - educate
Provide office space
Financial training, guarantee schemes
Skill s development; entrepreneur
programmes
Training & capacity building
Linkages & exposure; local & MNCs
Awareness of productivity & opp.Υs
Ministerial/Government/Regulatory
Institutional Transformation
Moving from THIS . . .
. . . to THIS !
Treating Symptoms
(i.e. reforming with
one eye closed)
Strategic Cooperation
(i.e. constructive
collaboration)
Mgt/Business Transformation
Moving from THIS . . .
Vertical Command Control
. . . to THIS !
Horizontal Symbiotic
Partnerships
(with Employees also)
At the end of the day . . .
. . . it’s all about the proper balance between
Government, Private Enterprise, and Society
that will determine if Malaysia is a follower
or and innovating country that creates new spaces.
“A Forward Thrust”
Terima Kasih
Xie Xie
Nandree
Shukriya