12th Malaysia Plan: Jobs should be the top priority

As Ismail Sabri Yaakob was forming his cabinet in August, I suggested for the presentation of the 12th Malaysia Plan to be postponed to a slightly later date to accommodate views from all stakeholders, including the opposition.

Datuk Seri Mustapha Mohammad, the same de facto economic minister in the Prime Minister’s Department from the Tan Sri Muhyiddin Yassin cabinet, has since been reappointed, and the Ismail Sabri government is scheduled to present the 12th Malaysia Plan to Parliament on Monday 27th September at 11.30a.m.

Dewan Rakyat will deliberate the plan until 7th October while Dewan Negara from 12th to 21st October.

The 12th Malaysia Plan is both important and unimportant. The five-year plan held sway within the bureaucracy in the bygone years when the state had a larger say in the economy, particularly so when the New Economic Policy was first rolled out in the 1970s. However, in the past two or three decades, global economic conditions have changed far rapidly than any five-year plan could anticipate.

Thus, plans are less important compared to say 40 years ago, and if compared with the annual budgets, which contain immediate policy measures and fiscal injection.

Nevertheless, plans are important for indicative purposes. What the plan commits and omits have policy consequences and would eventually impact on the wellbeing of ordinary joes. In my later post, I will touch on the consequence of the misguided concept of equalising the urban centres and the rural sectors. Only in the 10th Malaysia Plan (2011-2015) that “building vibrant and liveable cities” was given adequate attention, which unfortunately disappeared once again in the 11th Malaysia Plan. 

In a piece I published on 26 December 2020 after a dialogue with Mustapha and Economic Plan Unit’s Director General Dato’ Saiful Anuar Lebai Hussen, I urged the government not to take a linear approach towards growth, but to think of a dynamic one instead.

“We need a dynamic approach to ensure that we organise ourselves to rise, lest we be doomed as others rise further and overtake us.

“To illustrate, if the average growth rates of the last twenty years in GDP per capita for Malaysia and Singapore stayed constant, it would take us 1,600 years to match Singapore’s level. Keynes’ quip “in the long run we are all dead” comes to mind. Conversely, by the same calculation, Vietnam could overtake us by the end of this century.

“In contrast, what does an economy with dynamic growth look like? Forty years ago, Shenzhen was a small, unknown fishing village. Between then and now, its GDP per capita grew by 56 times, and its overall GDP overtook Hong Kong’s in 2018.  If someone had predicted this even twenty years ago, they would have been considered foolhardily sanguine.”

To me, jobs should be the No. 1 agenda for anyone who is thinking about economic planning. Everything else is secondary. This is especially acute post-pandemic.

“Failure is not an option. Muddling through as we did in the past two decades would only exacerbate the current grim reality: Malaysians are voting with their feet and moving abroad in search of better opportunities. Some 500,000 are working in Singapore as cheap labour with a salary of SGD2,000 and below. Thousands also went to Seoul to work as labourers and probably tens of thousands are picking fruits or working on construction sites – mostly without legal permission – in Australia.” 

“While Malaysians are leaving, we fill the gap with foreign workers who are willing to accept salaries far below a living wage in Malaysia because they remit most of their earnings. Many also live in slave-like housing conditions. This reflexive behaviour removes any incentive for the economy to increase productivity and thereby wages. The 12th Malaysia Plan should put the question of jobs at the centre. The Government must pull all policy stops to replace the millions of low value-added, low-wage jobs with good jobs, that pay between RM2,500 and RM4,000 for semi-skilled roles, with their productivity multiplied by automation. Through this, other, more sophisticated workers will also be paid higher.”

“Another cornerstone agenda to increase household income is encouraging and assisting women to get into the workforce and stay in the workforce after child birth. For instance, instead of just talking about “entrepreneurship” among the Bumiputra community, the quickest way to empower and to increase their income is to help women to stay in gainful employment for as long as possible. A low or middle-income Bumiputra family, with proper support in the form of child care and aged care services, could become double-income instead of single-income. This could surely be the quickest way to increase the household’s income? Of course, the economy needs to generate appealing jobs that are worth the trade-off.”

In the same December piece, I asked a question which to me is fundamental,

“It is whether we want to continue having a “pyramid-shaped society” in terms of income, where the bottom is huge, or whether we will devise policies to achieve a “diamond-shaped society”, in which the middle is the largest. We should think along the lines of T20-M60-B20, away from the current T20-M40-B40 categorisation.”

In the weeks to come, I will write more about the 12th Malaysia Plan, Budget 2022, and post-pandemic economic “Build Back Better”.

These questions I asked hopefully would help Malaysians to challenge cliché and think boldly to build a better economy for all.

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