What do you think of Najib’s New Economic Model? It has taken such a long time for the administration to realise that the present low-wage export-oriented model is not working.
The need for a new economic model was pointed out in this blog back in October 2008:
One of the larger issues that arises in the face of the global economic slowdown and recession is that the foreign investor-driven, export-oriented economic growth model is clearly not working, especially in times like this when global demand has shrunk. With global stagflation or recession staring at us, capacity is rising and the trickle of foreign investors is drying up.
We should be focusing more on building up a strong, resilient, sustainable domestic economy by providing basic services (housing, health care, food security, public transport, education) rather than relying on foreign investors and now, foreign retirees.
Is Najib’s new model the solution? There are some encouraging bits in it such as the focus on the bottom 40 per cent of the population and the need to improve skills in the workforce.
But quite clearly, the prevailing mainstream economic thinking leaves much to be desired. For instance, instead of moving towards sustainable farming that empowers farmers, the focus remains very much on corporate agribusiness increasingly driven by control of seeds and supply of chemical pesticides and fertilisers. Instead of promoting accessible health care for all as a basic right, the emphasis seems to be on ‘medical tourism’ and tired market-based solutions such as the Full-Paying Patients scheme. And instead of going all-out to plug “leakages’ and fight corruption, the regressive Goods and Services Tax is still on the horizon.
I discussed Najib’s NEM in this piece I wrote for Asia Times:
Malaysian Prime Minister Najib Razak recently unveiled his anticipated New Economic Model (NEM), a policy shift aimed at moving our export-oriented economy towards higher domestic incomes while coping with flagging foreign direct investment (FDI).
The proposals have met with skepticism from the opposition, which claims they don’t do enough to fight corruption and reform democratic institutions, and from a newly formed right-wing group that favors the economic status quo based on racial quotas.
Najib’s NEM pledges to undertake major reforms to create a more competitive domestic economy supported by a stronger public sector and knowledge-based infrastructure. The main target: to more than double per capita annual income by 2020 to $15,000 from the current US$7,000. Full article here.