Economic Transformation Programme exceeds 2011 targets — PEMANDU
APRIL 2 — In its first year of implementation, the momentum created by the Economic Transformation Programme (ETP) resulted in immediate knock-on effects on the economy with private investments surpassing its 2011 target by 13 per cent to reach RM94 billion and Gross National Income (GNI) by four per cent or RM830 billion.
Minister in the Prime Minister’s Department and Chief Executive Officer, Performance Management and Delivery Unit (PEMANDU), Senator Datuk Seri Idris Jala said, “The Economic Transformation Programme has achieved a vertical take-off. In just over a year of implementation, the 12 National Key Economic Areas achieved 23 per cent above the set Key Performance Indicators (KPI).
“More importantly, the confidence created by the Economic Transformation Programme has had immediate knock-on effects on the economy. According to the latest data from the Department of Statistics, private investments amounted to RM94 billion — the highest in five years (between 2007 and 2011) as reported in the Bank Negara 2011 Annual Report; and Gross National Income (at current price) stood at RM830 billion, marking the highest in Malaysian history since independence.
In addition, 313,741 new jobs are projected to be created according to the eight progress updates.”
The confidence created by the ETP also resulted in Malaysia’s 2011 foreign direct investment to increase by 12.3 per cent to RM32.9 billion as compared to 2010, the highest in 10 years. Trade grew 8.7 per cent to RM1.27 trillion last year alone.
Jala also said the policy reform measures — the Strategic Reform Initiatives (SRIs) — which provide the enablers for Malaysia to be globally competitive, are progressing well. The six SRIs are Competition, Standards and Liberalisation; Public Finance; Public Service Delivery; Human Capital Development; Government’s Role in Business; and Narrowing Disparities.
“The Competition Act has been enforced on January 1, 2012, and some of the measures include removing anti-competitive agreements and abuse of a dominant position. In addition, we are accelerating the development of standards and speeding up adoption of international standards,” he also said.
Out of the 17 services sub-sectors targeted for 100 per cent foreign equity participation this year, eight have been fully liberalised with the remaining nine to be progressively liberalised by 2012.
“On Public Finance, we have collected RM25.3 billion in additional taxes through improved efficiency. Our deficit in 2011 was five per cent of GDP, beating estimates of 5.4 per cent. I am confident we will achieve our budget deficit goal of 4.7 per cent this year,” he added.
To make investing in Malaysia easier, the Public Service Delivery will eliminate or simplify 405 licenses by June 2012. This is estimated to reduce RM729 million in business license compliance costs. Another 271 licenses will be simplified before being made available online.
To enable the private sector to take the lead, the Government remains committed to reducing its role in business.
“Our target by 2013 is to divest 33 companies either through a stake pare-down, listing or outright sale. Last year, 11 companies were divested which included eight divestments by Khazanah amounting to RM7.7 billion.
“This year, 13 divestments are in the pipeline including the listing of Felda Global Ventures Holdings Sdn Bhd. The remaining nine companies will be divested by 2013,” Jala said.
Within the National Key Economic Areas (NKEAs), five key sectors performed 20 per cent above its KPIs. They are Wholesale and Retail; Communications Content and Infrastructure; Greater Kuala Lumpur/Klang Valley (GKL/KV); Business Services; and Education.
In the Wholesale and Retail NKEA, 519 traditional sundry shops were transformed under the TUKAR programme surpassing its target of 500 shops, as well as 55 automotive workshops under the ATOM (Automotive Modernisation) programme.
Within Communications Content and Infrastructure, in its efforts to continuously expand infrastructure and reduce the digital divide, more than 1,500 Kampung Tanpa Wayar and Community Broadband Centres (CBCs) are now operational nationwide. This will positively impact more than one million people in the rural areas.
For Greater KL/KV, 18 river cleaning work packages were under construction in 2011. These are mainly for the initiatives to utilise retention ponds and remove pollutants from sewage, to implement the Drainage and Stormwater Management Master Plan to upgrade drainage systems, to install additional gross pollutant traps, and to construct new communal grease traps, amongst others. The river cleaning works reached 19 per cent completion last year, exceeding its KPI by four per cent.
In a bid to develop local pure play engineering services and capabilities and capture market share, Strand Aerospace Malaysia (SAM) and DreamEdge Sdn Bhd (DESB) were identified in 2011 as globally-competitive engineering services companies. To date, these companies within the Business Services NKEA have successfully executed several local and international contracts.
Under the Education NKEA, four discipline clusters in the areas of Hospitality and Tourism, Islamic Finance and Business, Health Sciences and Advanced Engineering, and Science and Innovation, have been developed in 2011.
In building a hospitality and tourism discipline cluster, the first project by UCSI University was to design and pilot a work-based learning diploma programme. The pilot programme commenced in May 2011 in Sarawak where students are trained in luxury hotels and a convention centre in the state.
“All in all, the six reform measures and 12 NKEAs have got off to a great start. We have shown we can deliver big results fast. However, this is a marathon, not a sprint. We have nine more years to go and all of us from the public and private sector must remain fully focused to realise the goal of transforming Malaysia,” Jala said.
ETP’s 10-year targets have been clearly defined: RM1.4 trillion in investment to generate a GNI of RM1.7 trillion and create 3.3 million incremental jobs, by 2020. This will translate into a GNI per capita of US$15,000 (RM45,000) and catapult Malaysia into high-income nation status.
To ensure transparency and accuracy in the 2011 ETP Annual Report, PricewaterhouseCoopers (PwC), an independent audit firm, was engaged to conduct a series of Agreed-Upon Procedures (AUP).
During the course of the AUP, there was a calibration of committed investments, projected GNI contribution and projected jobs created. The revision is primarily due to changes in business plans over the next five years, in tandem with changing business dynamics.
Additionally, to ensure a rigorous and independent process, the Annual Report was endorsed by an international panel of globally-respected experts who comprise the International Performance Review (IPR) panel.
The IPR panel comprises Michael Hershman (Fairfax Group, President); Ravi Balakrishnan (IMF, Resident Representative); Stephen Sedgwick (Australian Government, Public Service Commissioner); Dr. Yukon Huang (Carnegie Asia Programme, Senior Advisor); Dr. Homi J Kharas (Brookings Institution, Senior Fellow & Deputy Director); and HK Yong (Public Private Partnership — Adviser, Commonwealth Secretariat).
* This is the personal opinion of the writer or publication. The Malaysian Insider does not endorse the view unless specified.