A director chair for the Malaysian economy
Written by Dr. Carmelo Ferlito, CEO of Center for Market Education
First published in Focus Malaysia on 28 November 2022
WITH the appointment of Datuk Seri Anwar Ibrahim as Malaysia’s 10th Prime Minister and the decision of creating a unity government, expectations are mounting about the decisions that will be taken with regard to the cabinet appointments.
At the same time, the person of the prime minister (PM) is surrounded by quasi-messianic feelings, as if he could fix, with a magic stick, structural problems built over the past few decades.
It has to be said that no politician should be ever surrounded by such expectations. This is not only because politicians are human beings like others with no special powers and facing the same knowledge problems everybody faces but also as nobody possesses the relevant and complete knowledge of the conditions of time and place which would allow a magical fixing of issues.
The second reason is that those politicians who are welcome as “providence men” turn too often in “ambassadors of hell”, justifying the rise to absolute power with those messianic expectations.
Therefore, the first recommendation we want to advance with the present contribution is that Anwar should seek a confidence vote not simply on his person but more generally on a programmatic platform.
We cannot hide behind a finger: a unity government will have no easy life. Good intentions will encounter obstacles every day, not simply because of the natural power struggle, but above all because of the co-existence in the cabinet of different – and often alternative – visions and perspectives.
If the next Cabinet wants to have a chance of long-term survival, it must go beyond the personal authority and charisma of its leader: when sitting in front of the Parliament for a confidence vote, the PM should be accompanied by a clear short- and long-term policy agenda, on the basis of which he should seek the confidence itself.
At the same time, the Cabinet members should commit to this agenda and link their presence in the government to it.
Furthermore, such a programmatic platform should not just be a wish list, including points like “fighting the cost of living” or “addressing corruption”.
These are general points on which anybody would agree; the commitment, instead, should clearly be on how the cabinet wants to address these issues.
What do we want to do, in example, with inflation? Further hiding it with price controls, further exacerbating it with cash hand-outs or naïve universal basic income schemes? Or are we ready to properly tackle it with government spending cuts?
The second point we wish to raise is the need of a higher degree of coordination between the ministries involved with economic issues.
While the ministry of finance is responsible for fiscal choices, the international reviving of the Malaysian economy cannot happen without the involvement of other ministries such as the International Trade and Industry Ministry and the Human Resource Ministry.
To tackle the structural issues developed in the past decades and during the Great Lockdown, it is necessary for a “control room” which stands above the ministries and is able to grasp the organic dynamism of the economic process.
For such a view to emerge, the person in charge (which could be or not the finance minister) needs to have a background wider than accounting or financial knowledge, like the one possessed by the latest two persons in charge of the Finance Ministry.
In particular, the “director chair” of this control room needs to be occupied by someone that possesses economic knowledge from within; it is very much necessary a clear understanding that the essential engine of the economic system is entrepreneurship and not political will.
The role of government should be the one of enforcing an institutional framework which is conducive to the developing of entrepreneurship rather than replacing the market process outcomes with politicians’ dreams.
For this to emerge, ministries need coordination, in order to understand how each piece of their actions can nurture entrepreneurship rather than suffocating it, like it happened in the past years with the deterioration of the investment climate, stricter labour regulations and price controls.
We need a CEO for the Malaysian economy, with the ministers being his or her managers and the agencies being the executives.
But the Malaysian economy should not be confused with a sort of Malaysia Inc. The task of this CEO and the team should be to nurture institutions that allow entrepreneurship to emerge from the ground, not to exercise it or to create it. – Nov 28, 2022