The Malaysian Insight

PAKATAN Harapan’s new economic model is different from Barisan Nasional’s development agenda as it places emphasis on spreading wealth equally rather than just boosting growth to achieve global status, said economists.

The new model, called “Shared Prosperity”, was unveiled on May 10 as PH commemorated its first anniversary of winning federal power.

The model is how the administration hopes to tackle some of the most vexing problems that plagued Malaysians under the former BN regime – income and development inequality, and cost-of-living pressures.

But, PH’s model also shares elements of BN’s National Transformation Programme (NTP), in that it mirrors NTP’s three main thrusts – growth, inclusiveness and sustainability.

According to the Economic Transformation Programme (ETP), the principle of inclusiveness is to ensure that the nation’s economic wealth is shared equitably.

So, the question facing PH is, how can it achieve better economic equality than BN?

Two key factors will determine this – concrete plans and the effective implementation of those plans, economists told The Malaysian Insight.

PH must have concrete plans on retraining Malaysians to find additional income streams to supplement what they make from their traditional jobs, said Professor Barjoyai Bardai.

And to make those plans work, it has to get maximum buy-in from the people they are meant to help – the working class and those living in rural areas, said another economist, Ramon Navaratnam.

“This critical new economic model will be fully and widely discussed at all levels of society,” said Ramon, of the Asli Centre for Public Policy Studies.

“People throughout the country, especially those in rural areas and small towns, must be briefed and consulted to win their support for the new model.

“As our prime minister has said, ‘A great plan will not mean anything if it is not implemented correctly or monitored for its outcome’.”

Growth v equality

The first aim of PH’s new model is to reduce income and wealth inequality between classes, ethnic communities, regions and the production supply chain, so that “no one is left behind”.

According to Khazanah Research Institute’s State of Households 2018 report, the vast majority of the country’s districts earned less than the national median household income of RM5,228 a month.

Households in highly urbanised districts had incomes higher than the national median. For example, the median income for households in Petaling Jaya stood at RM7,904; Timur Laut, Penang (RM5,964); and, Johor Baru (RM6,518).

In comparison, Kelantan had the highest percentage of households with incomes below the national mean of RM6,958, with 85.3% of households making less than RM7,000. This is followed by Perlis at 81.6% and Pahang (81.2%).

Although BN’s ETP was also aimed at reducing inequality, PH said it is not enough.

Prime Minister Dr Mahathir Mohamad has described BN’s economic model of the last decade as based on mega projects fuelled by debt, and where development was concentrated in selected urban centres.

“Ownership of national equity was slanted towards foreign owners, and growth and equity ownership for locals were ignored.”

Barjoyai said the previous administration’s focus was on rapid growth, so that the country could reach high-income status by 2020 – a goal that former prime minister Najib Razak often referred to in his policy speeches.

“Previously, the debate had always been about growth v equality,” said Barjoyai, of Universiti Kebangsaan Malaysia.

New taxes, income streams

PH’s model recalibrates the focus from growth to social development, so that wealth is shared more equally, said Barjoyai.

One way of achieving this is to develop more entrepreneurs and traders, especially outside Malaysia’s urban centres, who can market their products online, said the economist.

“This would generate more income streams in regions where traditional jobs don’t pay high wages.”

Ramon believes that the government should raise new wealth taxes, which can provide more money for welfare programmes targeted at the poor.

“Focus should be on meritocracy and competition to better manage excessive brain drain, and all Malaysians should be treated equitably, regardless of race and religion.”

Wan Ya Shin, of the Institute for Democracy and Economic Affairs (Ideas), said PH must recognise that inequality is multifaceted if it wants to do a better job than BN of tackling the problem.

“Reducing inequality is not just about sharing the benefits, but also ensuring equitable access to participate in economic and social opportunities,” said the Ideas research manager.

“Some important measures would be to ensure that structural inequalities are addressed, and that there is socio-economic mobility and equitable access to education and healthcare.”

But at the end of the day, the experts said, PH’s success boils down to implementation and political will.

“Success will depend on implementation, and we need to see the concrete programmes and the task force that will implement it,” said Barjoyai.

Wan echoed this sentiment, saying PH’s vision “needs strong political will and the right policies to come to fruition”. – May 15, 2019.