The IMF projects Malaysia's GDP to contract by 3.5% this year compared to the Malaysian government's forecast of -1% and +1%. Meanwhile, IMF's forecast for Sinagpore is -10%, which is in line with Senior Minister Lee Kuan Yew's comments a month ago.Thus, PM Najb's move to remove the 30% bumiputra equity requirement in 27 sub-services sector (Computer & Related, Health & Social, Tourism, Transport, Sport & Recreational and Business Services) is commendable and marks a first step towards real economic reform for the country.
Removing the NEP policy and the political agenda behind it is essential. But what is more essential for bloggers/the media and the public to understand is that distibution of human and financial resources based on race is economically most wasteful and greatest disincentive for economic wealth.
Allocating economic resources based on race/class(Marxism)/religion/or any other superficial feature is a guarantee for economic inefficiency and waste. There are huge opportunity costs (RM140 billions or 20% of annual GDP?) that Malaysia's affirmative action policies (as distinct from but not unrelated to cronysm) have incurred.
So Najib's move should spark a fresh wave of analysis why Malaysian policymakers need to recognise the absurdity and stupidity of economic disincentives and to allocate its resources in the market efficient way. Everyone benefits from a bigger pie.
Thus, I sincerely hope the policymakers are not just making the right noises but taking concrete steps towards real reform.
