Speech by Lim Kit Siang in Parliament on 2010 Budget on Thursday, 29^th October 2009: 

End NEP which has trapped Malaysia in middle-income group instead of becoming a high-income economy

In his first budget, the 2010 budget, presented to Parliament last Friday, the Prime Minister and Finance Minister, Datuk Seri Najib Razak claimed that he is laying the foundation for the development of a new economic model to become a high-income economy.

He stressed that the new economic model must be based on innovation, creativity and high-value added activities so that Malaysian can remain relevant in a competitive global economy.

Najib announced that his government “will transform Malaysia through a comprehensive innovation process, comprising innovation in public and private sector governance, societal innovation, urban innovation, rural innovation, corporate innovation, industrial innovation, education innovation, healthcare innovation, transport innovation, social safety net innovation and branding innovation.”

So far, Najib’s most successful innovation in his First Two Hundred Days is “branding innovation”, as never before has a Prime Minister’s slogan, “1Malaysia”, been promoted so blatantly, not only during by-elections but there is even a 1Malaysia Toilet in Terengganu, putting the previous Prime Minister’s slogan of “Islam Hadhari” to shame – all thanks to the tens of millions of ringgit spent on public relations companies, in particular the US-based Apco Worldwide PR firm to promote the new Najib brand at public expense.

As for “innovation” in other important sectors of national life, Najib has got very little to show.

Najib said the focus of his budget will be on the well-being of the rakyat, with particular emphasis on advancing the role of the private sector as the driver of economic growth and developing high-skilled human capital and enhancing the efficiency of the public service.

This is nothing new as it is said in every budget speech in Parliament as far as I can remember, but they have not been able to stop the significant decline of private investment to below 10 per cent of GDP, with total domestic direct investment decreasing from RM72 billion in 1997 to RM56 billion in 2008, while total net foreign direct investment (FDI) plunged from RM19.7 billion to RM3.6 billion.

Najib should end the 50-year New Economic Policy if he wants to lay claim to innovation or shift to a new economic model as the NEP had stunted Malaysia’s economic growth and prevented the nation from becoming a high-income country.

Although Najib acknowledged the dire choice faced by the country of remaining trapped in a middle-income group instead of advancing to a high-income economy, he is not prepared to take the next crucial step to admit that it was the NEP which had placed Malaysia in such a trap, with the country unable to harness her wealthy human and natural resources because of a divisive and discriminatory NEP.

When we achieved independent nationhood in 1957, Malaya was No. 2 in Asia after Japan in terms of prosperity and income, despite having a per capita income of only US$200.

In the first decade after Independence, Malaysia’s per capita GNP was still ahead of South Korea and Taiwan although behind Hong Kong and Singapore.

Malaysia’s per capita GNP in 1967 stood at US$290 as compared to Taiwan’s US$250 and South Korea’s US$160 with Singapore at US$600.

Singapore, South Korea and Taiwan have long joined the ranks of high-income nations while Malaysia got stuck in the middle-income trap for the past four decades.

The government should commission a study as to how Malaysia was trapped in the middle-income trap for four decades because of NEP if we are really serious in wanting to join the ranks of high-income countries?

In his speech, Najib said the government is committed and serious in undertaking a total innovation to a more advanced economy – with the slogan “Innovative Leadership for 1United, Innovative Malaysia”.

Slogans and sloganeering however will not transform Malaysia into an innovative economy.

Is Najib prepared to pass the first test of an Innovative Economy by bringing to a close the NEP policy, which both stunted Malaysia’s economic growth as well as Malaysia’s nation-building process?

*Lim Kit Siang, DAP Parliamentary leader & MP for Ipoh Timor