By Lee Wei Lian
KUALA LUMPUR, July 10 — Business leaders and analysts are cautiously optimistic about the prime minister's reforms so far but the consensus is he has to do a lot more in order to achieve his goal of transforming Malaysia into a high-income nation by 2020.
In his first 100 days, Prime Minister Datuk Seri Najib Razak has burnished his reformist credentials by opening up selected areas of the services industry as well as slashed and in some cases eliminated ethnic quotas altogether in the financial sector. These reforms, however, have yet to impact the capital markets or business sentiment in a significant way.
One reason is that while his announcements are seen as an encouraging first step, the government's track record is littered with examples of well intentioned policies undermined by poor implementation.
Another reason is that none of the reforms address in a meaningful way the structural issues that plague the nation.
To become a high-wage nation, Malaysians need to be sufficiently skilled and productive and this will require not only an overhaul of the education system so that it is equal to that of advanced countries, but also a reskilling of the existing workforce to "move up the value chain."
He will also need to plug the damaging drain of talent and wealth that is streaming to perceived safe havens like Australia, Singapore, Hong Kong and Canada because they have lost faith in the Malaysian system.
According to one Malaysian banker who is now working in Singapore, the issues are all intertwined and will need to be resolved together before the nation can really move forward.
"All the reforms need to go hand in hand," says the banker who requested anonymity. "Why is there an exodus of talent and wealth? It is because people do not feel confident with the investment climate, security conditions and the government in Malaysia. Right now, many have lost faith in the system."
He also suggests that the prime minister go on more road shows to convince the international investment community and points to Indonesia as an example of a country that has successfully rebranded itself.
"Offshore investors dislike controversy, lack of transparency and laws that favour certain ethnic groups. Najib has also been surrounded by negative publicity internationally and needs to regain the trust of foreign institutional investors.
"Indonesian President Susilo Bambang Yudhoyono has done a superb job of it the last three years. He has gone around the world to send the message that Indonesia has changed and turned over a new leaf."
One economist thinks Najib has sent a message that "Malaysia is committed to make the change" but he still has to address the areas of government delivery capabilities, human capital, and security.
He also points out that the country's industrial and currency policies are outdated.
"We need to overhaul the education system to produce workers who are not just trainable but who excel in terms of innovation, creativity and productivity.
"If we want to transform Malaysia, we also need to look at industrial policies. At MITI (Ministry of International Trade and Investment) and MIDA (Malaysian Industrial Development Authority), the policies are tailored towards capital investment rather than knowledge creation," says the economist, who declined to be identified due to the sensitivity of the topic.
He also thinks that the time may have come for the government to formulate a strategy for a strong currency in order to force Malaysian companies to be more competitive without a cheap ringgit.
"We want to produce high-margin products that are not affected by a strong currency," he says.
The prime minister had also pledged a more vibrant private sector by pushing for a level playing field between government-linked companies and private business.
Air Asia X CEO Azran Osman Rani applauds the announcement but says he will wait and see if it gets translated into action and if the government is really pro-competition.
"He is saying the right thing but the meat is in the implementation, in particular market access.
"For example, why is the government not allowing Air Asia X to fly to Tokyo and Sydney? Malaysia is far behind in terms of flights to these cities, but we are still fighting over who gets to fly there when Singapore and Bangkok have triple the number of flights. We await the substantive realisation of this policy statement."
But as Najib has stated his commitment to reforms, the business community will also have to respond by conducting their own reforms.
Federation of Malaysian Manufacturers president Datuk Mustafa Mansur says that the manufacturing and services industry has got to "buck up" in terms of productivity, efficiency and proficiency in order to meet international competition head on.
"We are now living in a very competitive environment. Even our Asean neighbours are becoming very competitive," he says.
That warning is nothing new but should serve as further impetus for Najib to make more meaningful reforms.
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Just remember 1Malaysia is the most lively and powerful communication tool between PM, and the rakyat especially the younger generation of all Malaysians who care for the well being and success of this beautiful country.The middle aged group and senior citizens, like me are also beginning to warm up to PM's innovative vision for all Malaysians to change in the name of progress with equality.
We all have greater hope than the previous two administration under former PMs Tun Mahathir and Tun Abdullah. Just look into the mirror and see whether we are perfect, if not please give Najib a chance and not only 100 days but thousand of days ahead before the 13th general election.
Congratulations to DS Najib and just do not compromise hence on, and do what is within your instinct and most of all be fair to all Malaysians to ensure success of your dynamic vision and leadership.