Frankly Speaking

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Making the passing markWhen Transparency International Malaysia (TI-M) president Datuk Paul Low announced the anti-corruption coalition’s latest Corruption Perceptions Index (CPI) last week, he likened its 0 to 10 grading system to the 0 to 100 marking scale used in school.

In the CPI, 0 means most corrupt and 10 least corrupt. So, a score of 5 can be taken as the passing mark, just as getting 50 out of 100 means a student has just made the grade.

From 2001 to 2008, Malaysia managed a fairly constant rating of between 5.2 and 4.9. This year, however, it dropped to a heart-sinking 4.5. This means, as Low puts it, we can be considered as having failed. He also noted that over 70% of developing countries fall into the “fail” category.

Since we aspire to be a developed country, however, our benchmark must be set against developed countries, and not the “fail” cases. And once again, the obvious comparison is with Singapore, which was on a par with Malaysia in human development in 1965, when it parted ways with us.

Today, our southern neighbour is firmly established as a developed country in terms of per capita gross national income (US$34,760 compared with our US$6,790, far short of the US$11,905 set as the high income level for 2008 by the World Bank). Further, Singapore has climbed to third spot in TI’s latest CPI ranking, putting it well ahead of even global leaders like Japan (17), the UK (17) and the US (19).

The next question is, obviously, why can Singapore make it happen but we can’t? The answer, of course, is that there is no reason on Earth why we can’t and we just must do it.

Every year, students who had failed before prove that they cannot be written off. Now, it is time for Malaysia to show that quality.
Open tender for public landThe government should have held an open tender exercise before it awarded the privatisation of the Matrade Centre development project, involving a 65-acre tract in the Hartamas area in Kuala Lumpur, to the Naza TTDI group.

Last week, it was announced that Naza TTDI Sdn Bhd had won the project. It will construct the Matrade Centre for RM628 million and in return, get the 65 acres in the vicinity for development purposes. According to the company, the gross development value of the project could reach RM15 billion over a 10-year development period.

The Matrade Centre privatisation deal has sparked a few concerns. First, why is there a need for another trade centre while the RM600 million Putrajaya International Convention Centre is still under-utilised? While the argument is that the government does not need to fork out money to build the Matrade Centre, it is, at the end of the day, giving away prime land in exchange for the project.

Let’s not even argue about whether we need to have another trade centre or whether the transaction value of RM628 million is fair. The fact remains that a piece of valuable land is being transacted or privatised without an open tender and this raises issues about transparency and whether the government obtained the best deal for the land.

How the government is going to carry out the privatisation of its landbank will be a particularly hot topic, going forward. With the Matrade Centre deal finalised, the expectation is that the government’s land sale or privatisation scheme is expected to pick up steam next year, involving land in Jalan Cochrane and Sungai Buloh held by the Rubber Research Institute.

Let’s hope it will do the right thing.
Where are we headed?Last week, the World Bank released the Malaysia Economic Monitor November 2009, in which it said, among other things, that the country’s medium-term outlook remains promising but that it is conditional on making headway on the structural reform agenda.

The report points out that the main challenge for Malaysia is to take the next step up the income ladder from an upper-middle to a high-income economy. “This is a difficult challenge — one which only a few countries have successfully met in the post-war period — and requires strong and consistent leadership over a long period of time,” says the World Bank.

For Malaysia to achieve developed nation status by 2020, the report outlined an integrated strategy containing four elements: specialise the economy further, improve the skills of the workforce, make growth more inclusive and bolster public finances.

Greater economic specialisation will lead to demand for skilled labour and raise incomes, but Malaysian firms need to become more innovative. To do this, the Malaysian economy must become more competitive internally. Improving the skills of the workforce to enhance the quality of output is also necessary as the economy specialises further. The World Bank notes that with skilled labour currently at only 25% of the labour force, simultaneous efforts are required to improve the quantity and quality of skilled labour.

The report has a lot to say about the state of the country’s economy, education system and private and public finances, but none of these are things we do not already know. They include issues that have been highlighted by academicians, economists and, indeed, in these pages.

The question is, what are we doing about it? While the government has been talking about a high-income economy, guidance on how this can be achieved has been lacking. The recent Budget 2010 announcement was largely silent on this score. The 10th Malaysia Plan must address the many issues highlighted in the World Bank report and present a proper blueprint to turn us into a high-income economy. Will it be too late then? The danger cannot be dismissed.
This article appeared in Corporate page of The Edge Malaysia, Issue 782, Nov 23-29, 2009.