September 22, 2020 House of Trust

Response to the Ministry of Economic Affairs Performance Report 2019

Recently, the Ministry of Economic Affairs (MEA) published a report on the ministry’s initiatives, achievement and performance in Malaysia’s socio-economic development for the year 2019. Throughout the report, the ministry claims that they are improving Malaysians’ well-being and boosting the Malaysian economy through various projects and policies implemented last year.

Certainly, we can appreciate some initiatives that the government had done to better our socio-economic conditions as well as our nation’s economy. For instance, the government had invested to continue developing the RISDA rubber plantation regions in Malaysia, as mentioned in the fourth focus point. Not only will this development boost productivity in rubber industry, but it can also create more job opportunities and make the lives of small rubber farmers better. However, the initiative fails to focus on research and development (R&D) activities as well as technological advancement in face of the increase of synthetic rubber demand worldwide.

Photo credit: Free Malaysia Today

Some highlights in the report require a deeper scrutiny and assessment. For example, the report does not clearly spell out the vision, key strategies and target of the minister both on Malaysian economy and agencies under his purview. This is crucial since a clear report enables the public to assess the achievement and performance of the minister more objectively.

The absence of this important aspect makes the report merely about activities and expenses. Key economic indicators have been left out. The citizens are still not clear on what bold actions with long term perspective are taken by the economic minister to make Malaysia the Asian Tiger.

With so much buzz about the power of economic minister especially in controlling the GLCs, other than Shared Prosperity Vision, the minister has failed to initiate any significant agenda and major project relevant to the economy. The minister has also failed to demonstrate his capabilities under MEA’s power to design and approve projects under the Developmental Expenditure.

Photo credit: Jabatan Perdana Menteri

In a more specific manner, there are three major observations that can be made. Firstly, the report does not provide the impression that all citizens had their burden eased by the government last year, even though the fifth focus point of this report is to ease the burden of the people. Some critical groups are either barely mentioned or not included at all in the report, such as fishermen and oil palm farmers. While the ministry proudly claims to be concerned with all the citizens, only a few programmes were implemented to ease the burden of certain target groups. This is inconsistent with what the MEA is advocating for in the report, which is an inclusive and sustainable socio-economic development in Malaysia.

Secondly, there is no mention of financial allocation or assistance for oil palm plantations and oil palm farmers in the report. It is understandable that the government may not have the financial capabilities to aid all target groups, but oil palm farmers are in a very vulnerable position, mostly due to the European Union (EU) and India’s call to boycott Malaysian palm oil. Our palm oil industry is facing a difficult situation, and we can already see that the demand for our palm oil is weakening and production of our palm oil is falling. However, the government is not taking any specific and effective measure to rescue our palm oil industry and the oil palm farmers.

What we have heard and seen so far was only a series of visits to Europe by the Minister of Primary Industries. This is particularly frustrating because during the National Budget 2019 announcement tabled in 2018, the government had promised to allocate RM30 million for small oil palm farmers. According to the MEA report, they did not receive any fund allocation in 2019. Instead, the only aid the small oil palm farmers received in 2019 was loan schemes. We would be more puzzled and concerned if all this development is coupled with various firm and loud pledges by the minister during the tabling of FELDA White Paper, which to date, had yet to produce any result or changes in the life of FELDA settlers.

Photo Credit: The Business Times

Thirdly, even though we welcome the idea of investing in regional economic development for its tremendous benefits for the economy, it must be done with thorough and comprehensive approaches. While specific focuses of the new corridor must be strategically defined, an array of new impetus to existing corridors must also be offered. Unfortunately, it is still very uncertain how MEA and the government will enhance and multiply the economic results of existing economic corridors in Malaysia. For example, it is amazing that the Northern Corridor Economic Regions (NCER) received RM19.93 billion investment last year according to the report, but the real question is how much benefit do local people get from this investment? 

The official number of unemployed individuals in Kedah for 2018 is 27,500, and the official number for 2019 may be higher as the statistic for the past five years has shown an increasing trend. The MEA report claims that NCER provided 7,021 new job opportunities in 2019, but as compared to the number of unemployed individuals in northern region, the figure is still very small. We can make similar arguments on other economic indicators too, such as local poverty rates and environmental impacts on local regions. This issue needs to be raised as one of the focus points of the MEA report is to improve the redistribution of income for sustainable and inclusive development. Economic corridors require big expenses with many stakeholders. It is very crucial to ensure that each party involved in the big projects gets the reward they deserve.

Photo credit: North Corridor Economic Region (NCER)

We appreciate that the report displays both improvements and weaknesses of the ministry’s performance in the previous year, but the key point here is that the government should align its policies and projects to its prescribed objectives and focuses. If the government really wishes to achieve the Shared Prosperity Vision 2030 aspiration, it is imperative that the direction of this nation’s development should be paved accordingly. However, the Shared Prosperity Vision 2030 by itself is insufficient. The most important things we should really thrive for are equitable income distribution, inclusive development, social empowerment and new approaches to boost our economic growth and increase high quality jobs.

*Fariq Sazuki is the Economist of Bait Al Amanah (House of Trust)

**Mohd Daud Mat Din is the Research Director of Bait Al Amanah (House of Trust)

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