This question is mesmerising so long as it is not answered properly.
So far, most of the answers given are either too disjointed or too outcome driven. Let me give you an example. We are now told that for the economy to make the quantum leap we have to be technology savy, created more IP stuff, attract more IP, etc. The policy action then becomes a simple immigration issue.
But by far the most significant underlying trend that is the cornerstone of Malaysian economic policy since 1970 until today (we'll see how the transformation is taking place) is the redistribution of wealth. We all know this. It is obvious. It is explicit as a policy. It is a policy and a national characteristic which we are proud. We defend it, locally and internationally. We even try to export it to Africa.
I think the original idea behind it is good - that there should be a more equitable distribution of wealth in the country, or in any country for that matter. It has always been an economic issue. But unfortunately it has become a political problem.
In its metamorphosis from an economic issue into a political problem, all the energies of government has been turned into an efficient process for the redistribution of wealth - all done simply by the indiscriminate spending of savings and reserves of the people and the nation extracted from the labours of the past in mining, plantations and oil and gas.
During this process of wealth redistribution, the focus has been on how to spend that wealth, which is demonstrated by tall buildings that we have in the capital cities but nowhere else in the country and by the investment of those wealth by individuals in instruments of higher returns which typically are more developed economies which a better organised system.
As the nation is drained of its economic juice and energy, the only major policy that we have going in this country follows the major policy of the other big but dying economy which is the US. It is symptomatic of economic decline when the only policy that seems reasonable is one of monetary expansion brought on by printing of money to finance government and consumer deficits - because banks find it not lucrative to fund industries.
With a loose monetary policies, we know that the value of money (both domestic and external) declines and this leads to increase the suffering of the ordinary people as they go about their daily business of living. This suffering causes a loss of confidence in the government and potentially a change in government.
To reverse the process, therefore, the following would seem appropriate, in decreasing order:
1. Refocus the economy on investment and growth, with redistribution built automatically into the income and wealth tax system. Remove ad hoc redistributive policies.
2. Tighten monetary policy. In the language more comfortable with central bankers - bring about gradually a monetary policy that is not as loose as before but at the same time make sure that the reversal in policy will not be detrimental to the lending activities and growth of the banks and without jeopardising the smooth operations of the banking and financial system.
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Progress is a moving target.
Given fish, rod is next needed. Given rod, hook is next needed. Given hook, instinct where shoals swim is next needed. Given instinct, building boat to go further is next needed. Given boat, trawler is next needed. Given trawler, net is next needed. Then motor for trawler, petrol refining for motor, satnav for safety, local wholesaling, export marketing of surplus, treasury management of earnings, and luck for M3 (money make money).
We stopped at giving fish. Because those who gave and redistributed wealth were all farmers.
The problem was tribalism. Since the solution was tribal, the result retained the problem.
Our middle-income trap remains rent collection. We are a nation of rent collectors. The mee seller employs the foreign worker to do his work. He differentiates to selling chicken rice instead while collecting a portion of the mee stall earnings. By the time he finishes his cycle of life, he accumulates two assets - a house and a car. Those are the only things he can pass on. They don't have skills-building capabilities in them. Preparing mee and rice dishes are low on the global food chain.
The reason why this was not seen almost forty years ago must be because it was a rush job then. Redistribute wealth to stabilize society. Yes, but when the society was stabilized, the temporary measure should have been weaned off. Instead, it became a permanent fixture made central as the only political platform to win votes.
Even before the WB, the MNCs were already asking - what are we doing for our human capital?
They knew it's a 3x3 matrix everywhere. One axis in gradation: resource->investment->knowledge. The other axis in gradation: technology development->venture capital->clustering
We kept mostly at resource economy, leaving foreigners to park their investments on their own agenda and compounded by a wrong language policy which provided no progress to the entire country on knowledge while assuaging ourselves that we were doing all the right things by plumping in overinflated prices for supporting infrastructure, mostly buildings and roads.
A 3x3 matrix cannot form a nine-cell table if one axis is cut at half-line.
The best of infrastructure are useless if their users are not seen as relevant for activities which those infrastructure is to support.
So, we are stumped.
How does one then upgrade skills and knowledge in the next thirty days?
Just ignore the question, open all the doors, and let the world push us to change our paradigms.
Because if we have not done so for the last forty years, we won't be able to do so in the next forty.
What exactly can we say we have at the moment which can stir inspiration to be high-income and advanced state?
We have to change our education system and language policy immediately. We need to open our cultures to interact and assimilate other cultures. We need to make every square inch of this land more attractive for anyone to park money to grow money. We need to send our politicians and leaders to boot camp to change the way they think and see the world and interpret things and how to gain courage to do the right things. And we need to straighten out the governance factor. It's standing on just spin at the moment. There is obvious loss of integrity. The world can see that. It won't come a-calling. Unless to just take the starry-eyed for another ride.
Places like HK, Sg, IL, Ch, Fi and Jp had their backs against the wall. They turned their adversity into ripe pomegranates. We should really get serious and aim all the way. Knowing our past performance, that should at least achieve fifty percent more than what we are doing against reality. Which is zero.
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