BY allocating RM130 million to states under the Prihatin Stimulus Package, the federal government is signalling the important role that states, too, have in economic recovery. States can contribute much to developing a business-friendly ecosystem to promote competitiveness, especially at the district and local-authority levels. Competitiveness matters.
It is a magnet to attract talent and investments to a locality while enabling businesses to secure export opportunities. Combined, these business activities will increase jobs and incomes and thereby promote the economic growth of the states and nation. Here are three ways states can enhance their business ecosystems.
FIRST, states and their local governments should simplify regulations by eliminating unnecessary licensing requirements, especially for small businesses. States should also quickly clear the backlog of development applications and accelerate land conversions for development.
Relaxing regulations should not, however, compromise societal welfare or encourage deviant behaviour. It will be tough to determine where the balance lies between over-regulation on the one extreme and under-regulation on the other. But it is a task that must be undertaken as regulations impose a cost on business. Any help offered by state and local governments will, therefore, aid businesses tremendously in their hour of need.
Public services at the local level can also be delivered instantly online. With businesses and government becoming increasingly tech-savvy in using digital technology during this pandemic, such online delivery should not be beyond the pale of state and local governments.
SECOND, states need to forge stronger collaboration with federal agencies. They will have to work closely with Malaysian Investment Development Authority to attract foreign investments. Industrial parks will also have to be upgraded to attract high-tech investments. Specialised clusters of industries will pull in quality investments and offer added confidence to the federal government to locate priority investments there.
By working closely with the Malaysia External Trade Development Corporation, states can boost the export potential of businesses in the state.
THIRD, states should create a district growth council in each district along the lines of the regional economic development councils of the State of New York.
New York has 10 such councils. Comprising representatives from business, academia, local government, and non-governmental organisations, these councils promote economic growth in their respective jurisdiction. They exemplify a community-based, bottom-up approach to economic growth.
Serving as a single point of contact, these councils help businesses navigate state regulations and the public bureaucracy expeditiously. More important, the councils help mitigate regulatory burdens. Consequently, they enhance business competitiveness and economic growth.
Their success at enhancing competitiveness and growth makes these regional economic councils exemplary. It points to a similar arrangement in districts, in the form of a district growth council (DGC).
As the administrative head of the district, the district officer (DO), with the participation of local businesses, can establish a DGC. To signify that it is a partnership, both the DO and an elected prominent business leader can co-chair the DGC. The DGC's membership can mirror that of the New York regional development councils.
However, membership should be kept small. This will make the DGC nimble. A launching grant could possibly be carved out from the state allocation under the Prihatin package. DGCs could then supplement that allocation with contributions from the business community.
For it to be effective, the DGC should champion local business interests and economic growth. To do that, the DGC should first set the vision and strategy for district growth. And it should work towards eliminating obstacles to business and growth. In promoting public-private collaboration, DGCs can sharpen the government's sensitivity to business needs at the local level. Collaboration with academia and training institutions is vital if the DGC is to promote innovation and skills development among small and medium-sized enterprises.
DGCs will constitute a fundamental shift from traditional district management. They will be game changers, improving local business ecosystems and competitiveness. Greater business prosperity and national wealth will be the natural result.
The writer is a professor at the Putra Business School
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times