KUALA LUMPUR: A think tank has warned that it does not see any serious efforts by Prime Minister Najib Abdul Razak to resolve the crisis of confidence that originated from him.
“We must not forget the elephant in the room,” said IDEAS CEO, Wan Saiful Wan Jan in referring to major financial scandals which have bogged down the Najib Administration. “A major domestic factor that is causing this problem is the fast-declining trust that investors have in our institutions resulting from Najib’s own actions.”
“He destroyed trust in public institutions when he reshuffled the Cabinet and changed key personnel in several agencies which resulted in the removal of the possibility of reliable check and balance.”
The long term solution, he said, remains the implementation of the Strategic Reform Initiatives (SRI) outlined in the New Economic Model, especially those aimed at putting the private sector as the driver of growth and reducing the government’s role in the economy.
He was commenting on the Prime Minister announcing measures on Monday to boost the country’s current economic and financial situation.
“It’s good that the Prime Minister now realizes that actions must be taken to prevent us from going into an economic disaster,” he added. “His focus on SMEs is correct and the desire to stabilize Malaysia’s financial market was very much needed.”
However, he lamented, the announcement also shows that the Najib Administration has not yet been able to shed their reliance on government intervention in the economy. “This latest announcement indicates an increase in the government’s grip on the economy not just through the existing GLCs and GLICs but through a revitalized ValueCap too.”
The latest economic measure, continued Wan Saiful, relies heavily on government money being put into ValueCap and GLCs bringing their money back into the country. “This may work in the immediate term but unless radical economic restructuring is undertaken soon after the pressing problems are resolved, the unintended consequence might be even greater reliance of the economy on the government.”
If that is the case, he stressed, “we might solve an immediate problem but we will be stuck in the middle income trap even longer”.
Back in 2010, he recalled, Najib said that he wants to liberalize the economy and make the private sector the engine of growth.