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MODERATE PATH: The government's policy of public-private partnerships is showing results, writes Michael J. Hershman
THE debate in Malaysia between those who want more government and those in the private sector who believe prosperity and job creation can best occur with less government is not unusual. It is occurring all over the world -- in the US, in the EU and the recent French presidential elections, and throughout nations in Asia and the Pacific Rim.
But it is apparent that the ultimate solution is neither total reliance on government nor the private sector, but rather, a third-way path -- a public-private partnership to bring prosperity and economic progress to the average citizen.
That is the model that, in the last several years, Prime Minister Datuk Seri Najib Razak has followed to implement his Economic Transformation Programme (ETP) and Government Transformation Programme.
When he began the ETP a year ago, he established specific goals to be achieved by the year 2020 -- to transform Malaysia into a higher development nation with a per-capita income of at least US$15,000 and to attract and channel US$444 billion in most private investments to break Malaysia out of the "middle income" trap and economic stagnation that it had experienced in recent years.
Consistent with the "third way" mixture of government and private market leadership, he turned to one of his ministers, Datuk Seri Idris Jala, a former successful chief executive of Malaysia Airlines, to lead the ETP.
Najib and Idris have committed to reduce the country's chronic budget deficits over five-to-seven years, streamline government to make it more conducive to private sector investment and job creation. And they already have made considerable progress.
For example, the ETP has moved to cut by half 761 varieties of licenses that under the current system are required for most business start-ups to acquire. And under Najib and Idris's leadership, the government has reduced the state's large role in the economy by divesting stakes in 33 companies.
On a variety of social progress fronts, Najib's government has moved aggressively to improve the quality of life of the average Malaysian.
In 2010 and 2011, participants in the GTP conducted "laboratory sessions" to establish specific, achievable social goals in six areas: raising public living standards; improving education outcomes; reducing crime; advancing the fight against government corruption; enhancing urban public transportation; and improving rural basic infrastructure.
Results have been apparent and measurable. By the end of 2011, Malaysia witnessed a 35 per cent reduction in street crime in high-crime neighbourhoods and built over 35,000 low-cost housing units.
The government created anti-corruption courts to adjudicate corruption cases within 12 months and passed a strong whistleblower law to protect the courageous individuals who come forward to report and identify corrupt practices and public officials.
Further measures were enacted to strengthen private-sector competitiveness, including a new law that levels the playing field for businesses and guards against anti-competitive practices. And the movement to reduce government ownership and to divest functions to the private sector, where efficiencies and jobs can be allowed to flourish, continued. The oil, gas and energy sector realised significant incentives for exploration of marginal oil and gas fields.
By the end of 2011, Malaysia had moved ahead of advanced economies of Germany, Japan and Switzerland on the World Bank's 2012 "Doing Business Report" -- and had achieved the highest gross domestic product in its history.
But Najib knows that serious challenges remain, especially in the implementation of reform through his two-year-old Government Transformation Programme (GTP), and that there is a way to go to guarantee all citizens equal civil rights, the right of political assembly and free speech, and guarantees of equal economic opportunities and justice for all.
This includes the long-term objective of eliminating the vestiges of discrimination, as seen from the past acceptance of the so-called Bumiputera policy favouring Malays in jobs and opportunities over Chinese, Indians and other ethnic groups constituting about 40 per cent of the population. For example, Najib has launched a new edition of the policy called the New Economic Model that would permit need-based preferences, not ethnic-based preferences.
But this will take time, as all important social change does. Najib has shown political courage to challenge members of his own party, Umno, to move forward in progress and prosperity, standing for social as well as economic justice for all, regardless of ethnic heritage or race.
Unlike most politicians who forget their campaign promises, Najib has asked to be judged and held accountable for the progress he has, or has not, made. Over the past year, I have served as a member of Malaysia's International Review Panel created to review the results of both the Government Transformation Programme and Economic Transformation Programme, and I have seen first-hand that real progress is being made.
In other words, Najib wanted a report card -- and better yet, he wanted everyone to see it. And they will. Ultimately, he is prepared to be judged by the ultimate arbiters of success or failure in a democracy: the voters of his country.
The third pathway of progressive government in partnership with a vibrant private sector has been powering Malaysia towards its goals and helping to create a better life for its citizens. Whatever the results of the next election, the Malaysian model is already an enduring legacy of Najib's government. Reprinted by permission of Forbes Media LLC 2012
The writer is a co-founder of Transparency International, a former senior staff investigator for the US Senate's historic "Watergate" committee, and a paid consultant to the Malaysia Anti-Corruption Commission tasked with building a national strategy against corruption. He is the principal in the Washington DC-area firm The Fairfax Group