I am sorry if I am stating the obvious. But sometimes what is obvious is not obvious when we are inclined to delude ourselves.
1. Basic Premise
Where Malaysia is now at is the result of bad thinking - that the Malays are the rightful inhabitants of Malaysia and that Chinese and Indians are immigrants.
Even this simple statement is erroneous if you take into consideration the orang aslis, the babas and the nyonyas and others in Malaya and not excluding the 30 to 40 ethnic groups in Sarawak and Sabah.
There is a correction to be made in the basic premise of the nature of Malaysia - that obviously Malaysia is the homeland of each and every Malaysian, i.e., anybody who is born in Malaysia and anybody whom one parent is a Malaysian or any foreign born who has been granted Malaysian citizenship.
If we can't get this simple sentence right in our head, then I don't think we are going to get this country right in any direction but self-destruction.
First, they said get the colonists out so that Malaysians could rule ourselves and enjoy the keep the fruits of our own labour. Let us fight the colonists together. Independence was won.
Second, by year 12, it was decided that the Chinese were doing too well and the Malays were not. Therefore, redistribute wealth as a matter of national policy. We control all policies and use government tax revenue to acquire Chinese assets for the Malays, i.e., the UMNO elite.
Third, the eventual purchase by Petronas of the KL Twin Towers woke up the Sarawakians and the Sabahans that they had also been plundering the wealth of the Borneo states.
The rot started in 1970 with beginning of the systematic replacement of Chinese and Indian bureaucrats with Malay ones, coinciding with the replacement of English with Malay as the medium of instruction in schools. This created an insular civil service and brought about the closing of the Malay mind. With that began the Malayanisation of Malaysia. As the East Coast rejected KL and with the ascent of PAS, this evolved into an Islamisation of Malaysia when UMNO strived to be more Islamic than PAS.
There is a need now to level the playing field for everyone and abolish the NEP immediately. Except social services for the very old and very young and those who are incapacitated. Pursue economic efficiency as the instrument for economic restructuring, not restructuring while championing inefficiency.
The rise of the power of senior civil servants and political dynasties led to the creation of GLCs who are now monopolising the entire economy, in the name of NEP. The cost of living in Malaysia has escalated because of these monopolies which must pay annual dividends to the government for the politicians spend on big projects. The GLCs should be privatised or dismantled and the government should retreat from business. There should be a clear separation of politics from business and business from policies. While politicians will operate according to the law, businesses must operate according to policies.
The head of the central bank is called the Governor. The designation is given to signal that the politicians including the Prime Minister or the Fiance Minister cannot intrude upon the duties of the Governor. There is a separation of the central bank from the finance ministry.
The job of the central bank is to protect the value of the local currency. The key method is to ensure that there is no excessive supply of the local currency as well as that there is no excessive and unproductive borrowing of foreign currencies. The central bank can implement monetary policies and the foreign exchange policy to protect the value of the ringgit, without resort to the government. If the government intervenes, the Governor can bring its case to parliament.
The deterioration of the value of the ringgit by 60% from 2.50 in its prime days to 4.00 today is a clear case of the bad management of the ringgit and poor monetary policies. We have been suffering from a prolong period of central bank silence, probably except on non-monetary issues.
I hope things will change and improve from here onwards.
For a start, raise ringgit interest rates in line with the US interest rates. BNM had said in the past that it cannot differ from the US Fed when rates fell. Ditto, the reversal. Otherwise, we will see another bout of ringgit deterioration, regardless of what the PM may say about its fair value. I would say the fair interest rate is 5% pa.
4. Growth, Growth, Growth
This cannot be over-emphasised. We heard in the 1980s that the government was prepared to sacrifice growth to achieve "fair" distribution. Today is what that looks like, and this is not what we want.
There are rich Chinese and there are poor Chinese. There are rich Malays and there are poor Malays. There are rich Indians and there are poor Indians. There are rich Ibans and there are poor Ibans. There are rich Kadazandusuns and there are poor Kadazandusuns. The same applies to all races.
Every population profiles fall into a natural distribution. You cannot create a perfect profile for your race at the expense of every other races because it will not happen.
The challenge for any government is to raise the economic profile of everyone so that Malaysia can really boast itself it be a nation that creates that the best economic opportunities for everyone. This will make Malaysia an attractive place for people to come and we should welcome them so that we can build the society together.
The urban-rural divide occurs everywhere because of the investments that are poured into the urban centres. The rural areas will always be caught in a material dilemma as they struggle to hold on to their traditional ways of life which have been encapsulated as their traditional cultures, which is correct, by definition. It is a good strategy if a good urban-rural balance can be maintained. I see the key instruments are education and technology.