If I Were The Finance Minister....

Malaysian government proudly announced the projected GDP for the year; a growth that can only be dreamt by some other countries - including the developed ones. To Mahathir and his main henchman i.e. Daim - it is an achievement which summarised their success story; that no matter how immoral and undemocratic their rule is perceived, they are still seen as the best team to manage Malaysian economy. This has characterised Mahathir's rule - substantial economic growth but the clock is turned backward as far as social progress is concerned. Unlike some other countries, there seems to be a divergence between economic growth and socially oriented programs - the more the economic grows, the less the people benefit from it.

Malaysian economy has been sustained by a healthy export sector for the past twenty years. The astronomical growth of computer industry gives Malaysia an opportunity to become a main exporter of microchips and computer components. Therefore, though domestic consumption has shrunk considerably since the 1997 economic crisis, the growth seems unabated as a result of this stable export sector. Moreover, a devalued ringgit means Malaysian electronic products are much more competitive in the global market.

If you are wondering what I am getting at here - I am of the opinion that the growth figure as presented quarterly by the government does not correlate with the living standard of the people. It does not reflect the domestic consumption nor does it indicate a growth in people's wealth. It is merely a growth in one sector which unfortunately is not translated meaningfully to improve the people's living standard. As the Malaysian government was very keen to point out in 1998 and 1999 that the Composite Index was not indicative of the health of the economy, this growth rate does not mean anything to John Doe in Petaling Street.

The price is going up - petrol has gone up and consequently all other prices had been increased too. The agricultural commodity prices especially that of palm oil have plummeted so badly that more than 100,000 of small holders now fall below the poverty line. The lack of government's commitment to offer meaningful assistance or push the price up worsens their fate by the day.

Now a bigger problem is looming - the Malaysian exports which have been sustained primarily by electronic products and petroleum are about to suffer from USA's much speculated recession. Since USA is Malaysia's biggest trading partner, a demand in electronic products sets to decrease gradually. Malaysian government has to content with just the petroleum export to push up its growth figure. The bad is about to get worse.

Though Malaysia has enjoyed a stunning above 8 percent growth for more than ten consecutive years, there was a serious under investment in public sector. Not enough was invested in education and health services that when the 1997 economic crisis hit Malaysia, it was definite the public would have to suffer more.

Ever since Mahathir took office in 1981, he proudly paraded his Malaysian Inc. all around the world - his model of a public-private partnership based on a capitalism model to develop Malaysia. Malaysian Inc. became Mahathir's obsession whose success he must ensure for his own pride.

The public does not benefit much from this policy but a few selected businessmen, Daim included. Mahathir hoped that this partnership would lessen the public sector's burden to carry out development program and at the same time generate enough business for the private sector to spur the economic growth. It worked for a couple of years but when the government becomes too involved in supporting this selected group of people by generating business on their behalf - it leads to that dreaded 'B' words: BOOM and BUST.

Mahathir applied his ultra unorthodox economic management approach yet again to provide a life support system for his pet businessmen. Whereas in most other countries wealthy private corporations are taxed to generate revenue for public investments especially in health and education - the public was indirectly 'taxed' heavily (through denials of satisfactory public services since the public funds are diverted elsewhere and failure to curb inflation - though comparatively low to other countries, the price increase is still too burdening for the public) to support the ailing corporations in Malaysia. Financial institutions with public vested interest like EPF and LTUH became cash cows to provide cash to keep these companies solvent.

So despite the impressive growth posted by Malaysian economy each year, it is the reality that counts. The reality is a far cry from that impressive figure - people are poorer than they were four years ago, public savings are misused freely and under investment in public sector comes to a point where Malaysia is at risk of being left behind by other competing countries.

I may not be a genius economist but this one thing I am sure of: If I were the Finance Minister of Malaysia, the interest of the people will be of paramount consideration even when it might ruin the good statistics. It is better to have a modest economic growth with a world-class education system and health service than a staggering 10% growth but hardly enough universities to accommodate prospective students.