Doubts about reforms package persist despite NEM 2 report

By Yow Hong Chieh, The Malaysian Insider

The New Economic Model 2 (NEM) report has yet to dispel doubts about the Najib administration’s will to implement ambitious market reforms as analysts said it contained little, if any, innovative thinking. 

The much anticipated policy measures for Prime Minister Datuk Seri Najib Razak arrived with a whimper summed up in one sentence that had been repeated countless times — Malaysia needs to reform affirmative action and be more efficient and market-friendly. 

The report unveiled yesterday had a slew of measures mentioned in the past and contained initiatives like a second sovereign wealth fund that is seen as reinforcing the government’s role in business. 

Merdeka Centre director Ibrahim Suffian told The Malaysian Insider that for the man on the street, it appeared that only “very limited” action has been taken by government to realise its self-assigned goal of achieving high-income nation status by 2020. 

He said the public was still “waiting and seeing” despite Najib’s reassurance last night that his administration remains committed to moving Malaysia out of the middle income trap, even as other fast emerging markets nip at its heels. 

Similarly, investors “quite excited” by investment opportunities available under the Economic Transformation Programme (ETP) are waiting to see what level of commitment the government can extract from the domestic private sector before committing, Ibrahim added. 

“They like hearing what the government is saying but they’re still waiting to see how the policies will be implemented,” he added. 

He echoed doubts that Najib (picture) has yet to prove he has the political will to push through the proposed reforms given his administration’s penchant for policy reversals in the face of pressure, particularly from the influential Bumiputeras, for whom any change in status quo is anathema. 

The backpedalling over a controversial goods and services tax, not to mention the lack of transparency in licences for Ascot Sports and, more recently, YTL Communications, remains fresh in most people’s minds. 

It also mirrored doubts that greeted the first NEM report unveiled last March, despite Najib’s assurances that his government will follow the reports and implement reforms that could radically reduce affirmative action policies that have kept crucial Bumiputera support for the ruling Barisan Nasional (BN). 

Political analyst Dr Ong Kian Ming, however, warned that investors will remain cautious until Najib succeeds in delivering a “consistent message”. 

“It goes beyond one or two announcements from Najib,” he said. 

Ong said much focus was now on the results of Performance Management and Delivery Unit’s (Pemandu) brainchild EPPs which, unlike the abstract NEM, were “tangible”. 

“Investors will gain more confidence from that because those are tangible results that can be delivered,” he added. 

The UCSI lecturer, however, pointed out that the political dimensions of the far-reaching NEM could not be overlooked, and did not discount the possibility that Najib was taking advantage of it to restore public confidence in BN. 

The ruling coalition suffered its biggest electoral loss since 1969 in Election 2008, which saw the opposition control an unprecedented five states to deny BN its traditional two-thirds parliamentary majority. 

“Overall, Najib’s strategy is to try to position himself as a proactive leader who’s doing stuff. 

“There will be many detractors that will pooh-pooh these iniatives… but, politically speaking, given that the opposition hasn’t really countered Najib’s big messages — the ETP, the GTP (Government Transformation Programme), the NEM – with credible alternatives, Najib has gained, for the moment, the upper hand,” Ong added. 

He said BN wins in the recent Batu Sapi and Galas by-elections had given Najib “much more confidence”, increasing the probability that he will call for snap polls concurrent with the Sarawak state election, which must take place by July next year.