NEM needs political will and mindset change

THINK ASIAN
By ANDREW SHENG

 SOME of you may have wondered why I have not written about the New Economic Model (NEM) that has been in the Malaysian news this week. My colleagues at the National Economic Advisory Council (NEAC) have been working hard in the last few months to make the NEM as robust as possible, and now Part I has been rolled out to be “beta” tested. Part II will come out in the second half of the year.

Just like the iPad, which comes out this week, there is lots of anticipation, but the proof of the pudding is in the eating.

So I was not surprised that there was a lot of scepticism about what’s new and whether there is will to implement the NEM. Even the iPad as an electronic book reader is not new – Sony got there first. But, after the success of iPod and iPhone, people start believing that Apple will launch another killer product.

Development is a process and like any product, the NEM will have to go through the process of conceptualisation, strategy, prioritisation, execution, feedback, review the outcomes and then refine and move ahead.

This week, I had the privilege of listening to legendary Harvard Business School professor Ram Charan talking about execution. He rightly pointed out that the Vision thing is the easy part. The hardest part is to translate a vision into action.

Generals see Vision as Strategy and Execution as Tactics. Ram Charan says this is completely wrong. “Execution is not just tactics – it is a discipline and a system. It has to be built into a company’s strategy, its goals, and its culture.”

Quite right. I also learnt the hard way that it is easy to talk but tough to deliver. Hence, it’s all about discipline, feedback and follow through. You learn to adjust by making mistakes, but you follow through. You cannot make omelettes without breaking eggs.

So the first thing is to admit that we will make mistakes, which is why we have to have consultation and feedback. This column is about inviting the consultation from anyone interested in the NEM to give their views about specific sectors, issues and problems.

The second thing is that we have to be practical – we cannot do everything at once and we do not have the resources to do everything. Tough choices will have to be made. Part I of the NEM is to set the framework to think about what needs to changes and our goals.

We want to be an advanced nation that is high income, inclusive and sustainable. To do this by 2020, we need real growth averaging at least 6.5% per year.

Can we achieve that? Not if there is a massive global crisis in between. But, if the Asian region, and especially India and China, continue to power ahead at more than 8% per year, given our strategic geographic location, our natural resource base and pretty advanced infrastructure, there is every reason for us to be able to achieve that target.

If we don’t, then it would mean that we have failed to remove the bottlenecks to growth and did not execute at the right place at the right time.

When people ask about the political will, they forget what President Kennedy posed: Ask not what your country can do for you, but what you can do for your country.

The NEM is a result of reforms – reforms that need political will and a mindset change of the rakyat. Political will cannot come without the rakyat being willing and able to change their mindset. If the grassroots are convinced of change, the politics will change. If the people will not change, the Government will in turn not change.

This column will not dwell on how we got into the middle income trap but on how we will get out of it. Another of my favourite Harvard professors, Malcolm Sparrow, said we should “pick important problems, fix them and tell everyone.”

There are so many problems to fix, that we will not be able to tackle everything. Indeed, we would be lucky to fix three or four major problems in each specific area or sector. The NEAC has identified eight strategic reform initiatives. If we were to pinpoint at least three key problems to fix in each initiative, we are already dealing with 24 issues.

But the public is expecting us to identify issues and solutions to a whole range of economic sectors. If you run down the list of sectors alone, you can count the education sector, manufacturing, agriculture, services and cutting across these are energy policies, telecommunications policy, housing policy, transport, environment, tourism, health et cetera, et cetera.

I learnt from the power of the Web that none of us is smarter than all of us. Many of you are experts or have first-hand experience in the sectors I have mentioned. Over the next few months, my colleagues and I will be drilling down to build up a concrete implementation plan that not only has bones, but meat.

To give you an illustration, the appendices in the Part I report on the palm oil and E&E (electrical and electronics) sectors show how we worked with market experts to identify the key issues and put forth some suggestions for reform. We are inviting you the readers to give us your views on what we should do to realise the full potential in Malaysia.

The reason why we need your advice and insight is obvious. It is unrealistic to expect the eight members of the NEAC and the secretariat to be experts in all the complex economic sectors and to be able to pick the winners or identify the losers.

For this, feedback from those of you who have direct understanding of the issues in diverse sectors would be invaluable. What we specifically look for is not just problem identification, but concrete and practical solutions on what needs to change and what we can do about it.

Please help us prioritise by picking out the most important issues and give alternative solutions. Over the next few months, the NEAC members and the secretariat will be meeting many stakeholders to map out a detailed implementation plan so as to reduce the margin of error of implementation.

We accept that the mindset change will not be easy, because as Capra and Henderson shrewdly identified, “unlimited quantitative economic growth on a finite planet cannot be sustainable”. “Qualitative economic growth, by contrast, can be sustainable if it involves a dynamic balance between growth, decline, and recycling, and if it also includes development in terms of learning and maturing,” they say.

We look forward to receiving your feedback and ideas, and you are welcome to email us your suggestions to
as@pmo.gov.my or my colleague at the secretariat:
yassif@pmo.gov.my. Please also log on to the NEAC website and take part in the poll at
www.neac.gov.my.
 
● Apart from being a member of the NEAC, Datuk Seri Panglima Andrew Sheng is adjunct professor at Universiti Malaya, Kuala Lumpur, and Tsinghua University, Beijing. He has served in key positions at Bank Negara, the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Commission. He is the author of the book “From Asian to Global Financial Crisis”.