27/12/2011 (The Star) - We would soon be ushering in the new year, 2012, leaving behind 2011 marked with economic misfortunes in the eurozone and economic malaise in the US economy.

On the contrary, Asian economies China and India included recorded strong economic growth during 2011 but were unable to lift the global economy to a more respected level. The full impact of the fiscal and debt crisis in Europe upon the world economy is yet to be fully felt. The economy in 2012 is going to be impacted by its developments.

Malaysia is indeed fortunate to register economic growth of about 5% for the year, fuelled by strong consumption and private investments. We were also assisted by good commodity prices palm oil and rubber and a strong banking sector.

Thanks also to the earlier exercises to consolidate the banks and to enhance their prudential standards as well as to incorporate foreign banks locally. Many banks in the developed west have not fully recovered from the 2009 turmoil.

On the domestic front, the concern that we need to fully address is government deficit that began since the 1998 East Asian financial contagion. There is so much the Government can do to sustain decent economic growth rates. It is the greater role of the private sector that has to be promoted.

Greater readiness to let the private sector carry out public sector projects but guided with strong governance standards can unlock private sector potential for economic growth while reducing dependence on the public sector.

Management concerns

As the nation moves forward, it not only has to push for physical projects to meet basic needs (infrastructure, health and education) as well as the needs for more modernisation (such as toll highways and new airports). It also need to address national management concerns so as to make economic growth more sustainable.

Thus concerns such as budget deficit, competitiveness of the national economy, labour productivity and wages, and the rationalisation of subsidies and price control, also demand attention. These concerns expect a fine balance between various needs, not the least between entrepreneurship and labour or between profit and wages, as well as between public sector and private sector roles.

In the medium term, the issues of price control and subsidies have to be effectively dealt with so that there is greater role of the market in disciplining both consumers and producers alike and in guiding resource allocation.

Other policy-related issues relating to education and training, which impinge on long-term efficiency and productivity, need to be reviewed even more rigorously as attending to them will help put the national economy on track towards higher economic competitiveness.

The more consideration is placed on critical issues such as skills, productivity, efficiency and market relevance, the more effective is the manpower planning in the country. Other concerns, if any, should take a back seat.

Strong recovery

Indeed, on reflection, when the economy was faced with a recession in 1986, the Government withdrew from many activities through measures such as deregulation, liberalisation, privatisation and public expenditure retrenchments and this had put the economy on an even keel in 1988 and beyond.

These had assisted the economy to move on high speed between 1988 and 1997. There were few big projects then as most of the large projects were carried out towards the mid-90s. Nevertheless, the economy showed strong recovery from the 1986 crisis.

Malaysia now needs economic development efforts with equal emphasis on accountability and good governance after seeing several cases of doubtful project management and oversight as reported by the Auditor-General. We also need social inclusion to reduce any feeling of deprivation.

We equally need responsible and strong private sector involvement in the economy, guided by fair competition and clear public policy. This could be the new growth formula of the nation as we move towards 2020.

This is also the essence of the New Economic Model (NEM) which was well designed but is yet to be fully-communicated and understood by the public. Simplistic responses to the NEM by a few politically aligned groups have somewhat misplaced the major thrusts of the model, resulting in distorted views by some.

Report revisited

Hopefully, the report is revisited and made more plain for public appreciation and acceptance. At this point, Malaysia still needs a strong and sustained economic growth to generate the wherewithal for social transformation and equitable development in the context of the current economic environment.

While the population is waiting for the next general election, the tasks before the future administration have to be guided by the formula of achieving sustained economic growth with greater accountability and good governance, as well as with social inclusion and economic efficiency.

These are, needless to say, consistent with the spirit of 1Malaysia that we are promoting.