Commemorative Speech Education Forum by UNIRAZAK “Economic Leadership”

SALUTATIONS

YBhg. Dato' Prof. Dr. Husaini Omar,
Director General, Department of Higher Education, Ministry of Higher Education (MOHE)

Yang Berusaha En Amil Izham Hamzah,
Chief Executive Officer, UNIRAZAK

YBhg. Prof Datin Paduka Dr Samsinar Md Sidin,
Vice Chancellor of UNIRAZAK

Esteemed speakers and panellists, Members of the media,

Presenters, students, ladies and gentlemen,

Assalamualaikum Warahmatullahi Wabarakatuh and a very good afternoon,

1. Firstly, I would like to take this opportunity to thank the organisers, UNIRAZAK for inviting me and ensuring this event is a success.
   
   
2. I am honoured to be here, having this conversation with all of you, especially on the topic which has been brought forward today, which is on “Economic Leadership”. It is a topic that I would naturally speak about from the viewpoint of Malaysia—and in context of this distinguished forum—economic leadership in Malaysia particularly viewed through the lens of this global Covid- 19 pandemic.
   
   
3. Just last week, this country saw its 64th Independence Day, or in our words, “Hari Merdeka”. It has been 64 years since this land, which was then known as Malaya, gained independence from British rule on 31 August 1957. About a week from now, we will also celebrate our Malaysia Day to commemorate the founding of a Federation on the 16th of September 1963. This brought Malaya and the Borneo states of Sabah and Sarawak under one flag, developing and prospering as a country called MALAYSIA.
   
   
4. The formation of Malaysia had brought together peoples from vastly different cultures, traditions and ethnicities as a result of migration policies of the British empire then.
   
   
5. Yet, it is with great pride that Malaysians look back at our development over the last 60 years and recognise that what has been achieved was only possible as a result of peace and harmony within multicultural Malaysia. This is a nation that proudly upholds the tradition of ‘open houses’, a well-established Malaysian practice during festive and other celebrations like weddings, where we see neighbours in the community come together.
   
   
6. We do this in respect of each other’s beliefs and also to share in the joys of our neighbours no matter whether Malay, Indian, Chinese, Bidayuh, Iban and these later cosmopolitan days, whether of Australian, American or European origins. There can be no progress without peace and harmony, and this multicultural unity is the hallmark of Malaysia’s economic success story.
   
   
7. The mantle of Economic Leadership in this nation derives its legitimacy, purpose, its raison d’etre (rey-zon det-tra) on this sacred premise: to ensure Prosperity and Peace in Multicultural Malaysia. This provides guidance for past and future leaders and is echoed in our current national blueprint, dubbed “Shared Prosperity Vision 2030”. It is most apt then that during his inaugural speech recently, our Honourable 9th Prime Minister Dato’ Sri Ismail Sabri announced the concept of a “Keluarga Malaysia” (or Malaysia Family) as his vision on the nation’s way forward, to bring all of us—as one big family—out of this pandemic, safely and securely, and to rebuild Malaysia’s economy, leaving behind no member of our great multi-ethnic Malaysia Family.
   
   
8. Undoubtably, the journey of multicultural Malaysia has not been devoid of challenges especially during the formative years. Yet, it is a continuous journey and we are always mindful not to take it for granted. Mis-steps are corrected and realigned, and when the path ahead seems hindered, we find ways to go around: fill gaps, build bridges and ensure the journey is not stopped, to ensure that our diversity be a boon not a bane. This is not an easy task. Like any other nation, this country has had its share of struggles with disruptive politics, wealth disparity, social inequality and many other legacy issues.

Ladies and gentlemen,

9. I believe, the brief historical background just now is necessary to contextualise “Economic Leadership” in terms of the Malaysian perspective.
   
   
10. I now represent an agency which traces its lineage even before our nation’s independence. The Ministry of Finance (MOF) traces its roots all the way to the final years of British Malaya.
    
    
11. Before Merdeka, as a means to fully centralise the financial administration of all the states in Malaya, the Treasury Circular No.15 of 1951 was issued and that document defined the role and functions of the Federal Treasury.
    
    
12. Over the years after Independence and birth of Malaysia, this Federal Treasury gradually evolved into the MOF today – entrusted with the country’s financial management and economic development.
    
    
13. This economic development mandate is carried out in collaboration with the Prime Minister’s Department, specifically The Economic Planning Unit (EPU), the Ministry of International Trade and Industry (MITI), the Central Bank or Bank Negara Malaysia along with other ministries.
    
    
14. Being an emerging market, excellence in economic leadership is crucial to ensure economic development continues to serve the dream of achieving a fully developed State. It needs to lay the grounds for a ‘common shared prosperity’ that enables the nation and its people to realise their fullest potential. In the Malaysian journey, the direction towards this is provided for in the national Shared Prosperity Vision which we hope to achieve by 2030.
    
    
15. In order for economic leadership to be par excellence (par excel- lonz) it is dependent on sound advice and ideas from the corp of the nation’s trained economists, academicians and experts of various fields.
    
    
16. Now, by saying that, I am fully aware I am now encroaching on the dangerous territory of all you educators out there. I shall hope to tread carefully from now on!

Ladies and gentlemen,

17. I would like to draw focus one conomics-related professions, which have ongoing positive influence on the nation’s development policy. Such professions will need to adapt to meet Malaysia’s policy hurdles, especially now—when it is made apparent how a global pandemic like COVID-19 has challenged all conventional economic academia.
    
    
18. More than ever, we need experts to be alive to the shortcomings and misapplication of economic prescriptions. For all the data and technology we now have, we still struggle with our forecast and predictive models as we did 50 years ago.
    
    
19. Hence, the role of economic knowledge is not, and should not be, unchallenged. The big test at hand for economics is to help meet the challenges that policy makers everywhere face today: the terrible twin crises of health and economy caused by the Covid-19 pandemic.
    
    
20. Firstly, policy makers in many countries have to grapple with productivity growth especially in view of the synchronous slowdown of the global economy due to this pandemic.
    
    
21. From the Malaysian perspective, the historic contribution to productivity growth from capital deepening—had showed signs of stalling in the past few years even before the pandemic occurred. Suffice to say that the country did not move as rapidly as it should into mass automation of jobs or tasks that we so often talk about. For us, sectors such as manufacturing and agriculture continue to rely on manual labour, derived mainly from foreign workers.
    
    
22. This does suggest that despite all the other successes from past waves of reform, the economic policy agenda moving forward has to look different to ensure that the nation strides more confidently into the future. The bigger challenge for Malaysia’s economy today is also one of dynamism: the capacity to generate new ideas, products, innovative business models and production techniques, as well as the ability to diffuse them quickly through the economy.
    
    
23. Secondly, in its role as policy maker, the Government is facing challenges of entrenched disadvantage. Despite the improvements in inequality over the last 30 years, Malaysia has yet reached the point where we can comfortably say that we have effectively addressed the issue.
    
    
24. Our observation notes that there is a group of Malaysians who experience prolonged and multi-faceted disadvantage. And for them, usage of technology and digitisation might be necessary, but isn’t sufficient, to provide upward mobility out of poverty.
    
    
25. This is partially due to the fact that between them, there are gaps and issues in delivering assistance to these groups. Some of the assistances are done in relative isolation, leading to fragmentation, inefficiency and some degree of confusion on the ground. The pandemic has most certainly exposed several gaps in public service delivery that current leadership is actively seeking to remedy.
    
    
26. This reflects the much-needed change in the role played by government policy, especially in the provision of social safety nets. The combination of the direct cash assistance and subsidies for day-to-day essential items such as cooking oil and flour that we have today has roughly halved the measured inequality. Yet, there is more to be done in effectively addressing inequality and gaps in social safety.
    
    
27. More often, the traditional modes of service delivery are not fit for purpose. So, the question will be, can the academics and economics offer insights into these issues? I think the answer is a tentative yes, but only if the right mindset is brought to bear.
    
    
28. Ultimately, this is something my Ministry is actively looking into, especially in our recently launched PERKUKUH reform of Government Linked Investment Companies and GLCs, and right now is being addressed in our pre-Budget 2022 consultation with stakeholders.

Ladies and gentlemen,

29. Policy makers are facing challenges in terms of the trust in economic institutions and expertise. There is little doubt that the COVID-19 pandemic has led to greater scepticism of experts in general, and economists in particular.
    
    
30. In some countries, there are also questions as to whether public policies have favoured certain interests over others. Again, I would like to raise; whether economists and academicians alike can play a role in addressing these issues?
    
    
31. Often, we find that the first step to achieving progress on such monumental challenges is taking on a greater humility about what we know and what we don’t.
    
    
32. It’s also important to complement theory with a real world understanding of what motivates individuals. There are clear instances where market competition has not worked well as intended.
    
    
33. Of course, the opposite can also be true — where in real life, people develop their own bottom-up approaches to deliver public goods, manage common resources and address externalities.
    
    
34. Just as we should encourage dynamism through productive entrepreneurship in private markets, we should work to remove the destructive entrepreneurship of rent-seeking. Hence economists and academics alike have a role to play, given that rent-seeking is driven by incentives, and some of these incentives are embedded in market design.
    
    
35. Businesses and corporates also have a role to play by advocating for good general economic policy, rather than specific measures aimed at individual preferment.
    
    
36. My view is that markets and competition, with a strong consumer focus and reinforced with appropriate regulation, remain a strong antidote to monopoly rents.

Ladies and gentlemen,

37. I would also like to share with you some examples of how we at MOF Malaysia seek to address complex real-world issues, often but not always using a basic economic framework.
    
    
38. One example that we will touch more in detail for Budget 2022 is on mental health. Our analysis started with that well-worn economic tendency: trying to quantify the costs of such issue on the economy and on well-being, which are two different things.
    
    
39. Such quantification exercises are, by nature, imprecise. But in the case of mental health, they allowed us to demonstrate a very salient feature where the reason why the measured cost of mental health is so high is because it affects a younger cohort — people with a lot of years potentially ahead for them.
    
    
40. From there, the analysis really follows what one could describeas a general public policy framework, with a focus on incentives, the different types of funding models in place and its impact, as well as the experiences of practitioners and users of the system.
    
    
41. We don’t bring any pre-determined view as to public vs private provision, or what ‘market’ structures would work best. So, as you can see, a lot of our work put us in unchartered territories.
    
    
42. And when economic leadership finds itself in such situation, I believe it needs to marshal qualities like rigour, a systematic approach to gathering evidence and an ability to know when the basic applied microeconomic framework applies, and when it doesn’t.
    
    
43. Therefore, I would say the role of economics and academicians in contributing towards and leading the growth of Malaysia since Independence, has on the whole, been a qualified success. I am certain we are not alone in this, many nations can say the same in their experience, of their own outstanding academicians and experts.
    
    
44. Their role and expertise, accompanied with humility, good judgment and a willingness to explore the unorthodox in unconventional times, can and should continue to have a positive influence on policy making and determining successful outcomes for the world at large.
    
    
45. The main challenge is to formulate workable policies and specific measures that could be implemented at the ground level as intended. There were many instances where gaps between the theoretical and the practical components resulted in policies and measures that did not meet its intended aims.
    
    
46. Academicians could help over come this main challenge by not just in thinking on theoretical level but to help test the various policies and measures being formulated. It is the role of academicians as social scientists that would help contribute to this nation achieving its economic goals.

Ladies and gentlemen,

47. This pandemic has brought upon the world a time of great uncertainty, facing a planet wide threat. Yet, it has also witnessed amazing efforts globally: teams of experts from different nations working together, new ways of sharing knowledge and data and a gathering of minds and resulting research the likes we have not seen before. The very fact this global forum gathers educators from around the world to mutually seek solutions—fills us with hope and confidence that humanity will altogether exit this pandemic, not only to rebuild all that was lost, but even reimagine a better version than what was before.
    
    
48. Before I end,I would like to again express my thanks to UNIRAZAK and the forum organisers for giving me chance to speak. I thank all of you for listening and indulging in my words.
    
    
49. I wish UNIRAZAK well in its efforts to continue educating the masses, especially the group of Malaysians referred to earlier who experience prolonged and multi-faceted disadvantage. I sincerely believe that with creativity and technology, the education of the future leaders of our beloved nation can definitely be improved and enhanced, come what may, Insha’Allah. With that, I wish everyone a productive day ahead, and thank you.