Nation's economic structure needs some rebuilding

 

Though Malaysia had many plans, there seems to be something structurally wrong with the economy since on the average it has not advanced far from where it was 20 years ago.

AS THE government seek ways to shore up the weakened economy, it may as well take the opportunity to look into some aspects of its structure.

There seems to be something structurally wrong with the Malaysian economy since on the average, it has not advanced far from where it was 20 years ago.

Not that there was any shortage of plans. Yes, Malaysia had many plans and quite a number seemed viable and workable.

Its problem, however, seems to be in the execution of these plans. And hence the poor results.

Had Malaysia's strategies formulated within the past 20 years been executed successfully, its economic landscape would have been very different from what it is today.

The economy would have been more diversified, as Malaysia becomes equally active in the manufacturing, agriculture and knowledge-based industries and services.

Unfortunately, many of those plans and strategies have either been undertaken halfway or were not pursued at all and after so much is said about advancing the economy, the big businesses in Malaysia remains in manufacturing, construction, property development, plantation and banking.

The country is largely still reliant on labour-intensive industries.

Once Malaysia thought of relying less on such industries, focusing more on knowledge-based sectors and those with value-added potentials.

That has not materialised. Taiwan, for instance, has gone far beyond any other nations in the Far East in the biotechnology sector and has transferred many of its factories to China where costs are still comparatively low and labour is of abundance.

Obviously, the march towards knowledge-based economy bandied in Malaysia several years ago has come to a halt.

As more Malaysians shun blue-collar jobs, largely on account of low wages, the nation's dependence on foreign labour grows. And so, too, does other problems related to the influx of unskilled foreign workers into Malaysia.

About a decade ago, Malaysia came up with a cluster-based development plan, where several key industries were identified and development plans structured from the research and development stage, financing right through to manufacturing.

The idea was both to promote homegrown technology and also to serve the export market. Not much has been heard about the success of the plan since.

As a result, Malaysia remains the place that manufactures products whose technology are derived elsewhere.

The agriculture sector is another area where although the government has formulated plans to advance the industry, progress has been slow.

Agriculture is not a bad sector to be in. For one, it is recession-proof and the plans Malaysia conceived was not of the small-scale type but of integrated and highly mechanised modern farming.

Even in highly-developed Japan, farming is an important sector and in the world's most developed nation, the US, it takes two days to drive through the southern Prairie grain belt.

These are but some of the many areas Malaysia's economic policymakers could look into while they try to shore up the economy in facing the present downturn.

There are other areas including wages, capacity building, price mechanisms and fair competition.