What do Wars, NEM and ETP have in common

As we all know, the Government have announced the Economic Transformation Programme (ETP) and the New Economic Model (NEM) as the way forward for Malaysia to transform itself from a middle income economy to high income economy within a short time period of 10 years. All in all, I think the ETP is like a quickwin project where the endgame is to get investments in from the private and foreign and finally to stimulate the economy to a degree that can increase the income of the nation. In the same time, Malaysia must maintain at least a 6% growth until 2020 to reach a capita income of USD15,000. Ok.. Enough of the facts...

Let's now look at Korea and Singapore. They do not have their ETPs and NEMs or vision 2020 but how can they escape their middle income status long time ago? I think that the nation can have the very best plan or policy in place but if they do not have the people with them, it will be a failure. Singapore as you all know is a very small nation. Their progress into a developed nation is simply because they MUST progress or else they will be bullied by their neighbouring countries. That simple DRIVE that they have probably have the people there united and support the government in anything that would drive the country forward. They MUST obey and implement everything fast. The fear of being bullied is greater since the nation is small.

Now let's look at Korea. The main drive of them progressing is not just because they wanted to become a developed nation but also the main drive is the FEAR of their neighboring country North Korea. They MUST develop and capable in defending themselves from the attack of North Korea without the aid of the US and therefore they develop themselves with the necessary industries such as automotive, iron and steel, shipbuildings, chemical, electronics. These industries are necessary for WARS. Therefore they created the platform for a developed nation out of FEAR from being attacked. The people of Korea rallied upon their leader to make things happen since they also do not want to be invaded by another country.

So, what's the moral story here? Probably the best motivation of a country to progress is simply FEAR. Fear of something that would happen if they do not developed and therefore the people would work with the government in making things happen. Only with unity, a ship can move forward. But to make people unite, there must be a common ground. A common ground where the people will accept and will do whatever it takes to make it happen.

Middle Income Trap

(Img source: PEMANDU)

YAB Prime Minister of Malaysia has launched the new economic model for Malaysia last month. This initiative has an ambitious aim of making Malaysia into a high income economy. As Idris Jala, the head of the PEMANDU keep saying, this is not a plan, this is a program. This is not a plan, this is a program… or maybe better said “Ini bukan cobaan, ini betul-betul”.. “ini bukan cobaan, ini betul-betul”.. Ok, on a serious note. What are these program consists of? 131 Entry Point Projects with 60 business opportunities and 3.3 million job opportunities. From a layman perspective, probably the first question that an individual would ask is ‘what is it for me? ‘ Well, if you one of the head or Board directors of the GLCs or one of the corporate big boys.. There is plenty. But for the normal rakyat.. we can only hope on the spillover effect such as the employment opportunities and also spillover of small projects that is related to the Entry Point Projects.

However, I am not touching much on the New Economic Model. Just let the professional do the analysis on the Model. As for me, I am much interested on the strategy and program on how Malaysia can get out of the middle income. No more blueprint.. no more roadmap.. no more dreaming for the sky….. just pure action or as they call it Entry Point Projects. Implementation is the key. Action is the key. What makes me wonder is that how we as an individual can also apply the same concept and strategy to get ourselves out from the middle income into the high income bracket. Let’s put it this way. Malaysia has been depending on Foreign Direct Investment (FDIs) previously in creating the job and revenues for the government. They came in, open up their factory, provide jobs to locals and in the same time Government can get revenue from taxing the companies and also their workers. It has been good so far but nevertheless it can only give Malaysia so much. Too much dependence on this type of revenue alone could not bring Malaysia further into the high income bracket.

Therefore, Malaysia is trapped in the middle income. The only way Malaysia can increase its GNI or in layman’s term.. Its salary is by applying the same principle that made people millionaires and billionaire worldwide.. multiple streams of income. Do not be overly dependent on one source of income but by creating other type of sources. That’s why the government wants this EPP to happen. By having multiple entry point projects.. it can create the multiple revenues that the government can have in order to become a developed nation. If all the EPPs are implemented successfully, I am confident that the goal of Malaysia in becoming a developed nation by 2020 can be achieved.