AWO has spoken, "Is the Malaysian Economy on a Good Track?"

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"Factors such as psychological liberation, democratic maturity and scientific progression are some of the key elements for societal development if we are to achieve Vision 2020" - Datuk Seri Abdul Wahid Omar

ABDUL WAHID OMAR (Datuk Seri), or, also known as AWO, is a figure that I have been closely monitoring since his days as the Chief Financial Officer (CFO) of Telekom Malaysia Berhad. Back then, I was an audit manager who had to present to him the audit findings of Telekom Malaysia Berhad. With sincerity, I must say, AWO is man of integrity. He is a no-nonsense man and keeps a clear mind to focus on issues at hand. He has a very structured thinking process yet approaches matters from out side the box. He is both left brain and right brain. No wonder he is both a Chartered Accountant as well as a bass player when jamming with his fellow CEO-Musician friends such as Izham Omar (TV3/8TV/TV9/ntv7), Dato' Sazalli (Celcom) and Dato' Zamzamzairani (Telekom).

So what is the deal with this man called AWO? From an already dignified position as the CFO of Telekom Malaysia Berhad, he was then entrusted by the Government to take over the management of the Renong/UEM listed group of companies from Tan Sri Halim Saad. Once Renong/UEM was back on its toes, the trust brought him back to Telekom Malaysia Berhad as its Chief Executive Officer (CEO). Whilst it is normal for CEOs of Government Linked Companies (GLC) to move from one GLC to another (as CEO), to move from Renong/UEM to Telekom Malaysia Berhad and then to Malayan Banking Berhad and finally being appointed as a Senator to assume the role of a Special Minister within the Prime Minister's Office, is, in my honest and professional opinion, a damn good CV to be proud of - not so much of the glorious roles but of the trust that AWO has managed to earn.

As you can see, my first two paragraphs are meant to build up his reputation so that readers can have the comfort of a trusted person managing the affairs of the country. Hence, I must declare that he (AWO) has my utmost trust (as a Rakyat). Although his appointment is somewhat political, I find his ways to be very much non-partisan with the sincerity to serve the nation. For these, I recommend that you too (the Rakyat) to also trust him. Nevermind the political roller-coaster that is on air at the moment. What is important is that the country's economy is being looked after while we, as a nation, sort out the political drama. To enlighten us (of the state of our economy), AWO has spoken, "Is the Malaysian economy on a good track?" (As summarised from the New Sunday Times, page 8 - 9, 3 May 2015). AWO had these to share:

HOW ARE WE DOING IN ACHIEVING VISION 2020

AWO believes that Malaysia is on track to achieve its aspiration of becoming a high-income nation with Gross National Income (GNI) per capita of above USD15,000 (RM53,900) by 2020. In 1990, the gap of our income benchmarked to the World Bank high income nation was at 66%. Today it is at 22%. AWO is confident that by 2020, the gap will be nil. Income alone is not a good indicator. Factors such as psychological liberation, democratic maturity and scientific progression are some of the key elements for societal development if we are to achieve Vision 2020. This, he intends to address.   

DEPRESSION IN OIL PRICES IMPACT ON THE ECONOMY

The recent plunge in the oil prices has negatively impacted the economy. This will reduce tax revenue collection, investment and export earnings.However, via various aspects of fiscal policies, the Government has managed to handle the situation as evident by the country's growth of 6% for 2014 and an expected 5.5% for 2015. Malaysia is kept on a balanced exposure so that it is not over-exposed in any one industry or commodity. For example, whilst commodities make up 23% of Malaysia's total exports, more than three-quarters of that comprise manufactured exports that are diverse in terms of product and market. Such diversity can cushion any significant fall in any one of the commodities. 

Basic economics need to be harvested. The country (he believes) should take advantage of the excess disposable income whenever oil prices are low. The extra disposable income should boost consumption expenditure and that will in turn restart the economic growth. Like wise, investments in non-oil related industry should now experience a boost. Although commodity exports are negatively affected, manufactured exports should experience positive growth on the back improving global economy.

SUBSIDIES RATIONALISATION IS FOR A GREATER GOOD

Subsidy cuts are not popular moves, but it works (for the sake of the economy). Since 2013 the Government has been reducing the petroleum subsidies echoing the declining prices of the crude oil prices. As a result, the country has extra funds that came from 1.3% subsidy reduction in 2013 and 6.4% subsidy reduction in 2014. This led to a lower budget deficit. The extra income also made it possible for BR1M that helped increase the disposable income of the low income earners. As mentioned earlier, increase in disposable income can only lead to increase in consumption expenditure that boosts the economy. 

DIVESTMENT OF GOVERNMENT ASSETS

The Economic Transformation Programme, or the ETP, is not just another abbreviation. People need to know that it carries substance that is essential to the economy. The ETP was formulated to achieve three main objectives: (i) avoid crowding out the private sector, (ii) increase the liquidity of the capital market; and (iii) improve the country's fiscal position. The Government will move away from the role of an investor to facilitator. The Government will systematically reduce ownership and control in selected services and assets particularly in some of the GLCs via outsourcing, privatisation and divestments. This will improve quality, promote flexibility, reduce costs and improve Government's fiscal position whilst creating greater opportunities for the private sector participation.

GOODS AND SERVICES TAX (GST) IMPLEMENTATION

GST implementation was tabled in the 2014 Budget together with an "offset" package such as a lower tax rate and longer list of zero-rated and exempt items. This is to ensure that the Rakyat is not over burdened by GST. GST is also one of the tools to battle with the reduced oil related tax revenues. GST itself is an efficient way of taxation. As of mid April 2015 alone we have more than 350,000 companies registered for GST. This higher-than-expected volume is expected to give us extra RM1 billion revenue. Had we not done this, we would have depressed ourselves with the reduced oil related tax revenue. In other words, we must not let ourselves be exposed to a concentration of source of revenue.

SINGAPORE AS LOGISTICAL OUTLET?

Key Malaysian ports such as Port Klang and Port Tanjung Pelepas, are ranked as top 20 busiest ports in the world. Penang Port is popular among ships from Thailand for rubber exports to Japan and China. Those from Iskandar region who uses air freight prefers Changi Airport as it offers better air network. Of course, we should use our own ports as much as possible. However, if better services can be procured from Singapore, then it makes sense to use Singapore. The Government (via Economic Planning Unit - EPU) has, however, recently released five strategies and 21 action items to position Malaysia as the preferred logistics gateway. Cargo exports via Kuala Lumpur International Airport (KLIA) will be boosted and infrastructure at Port Klang will be upgraded. Cargo clearance process will also be simplified to minimise throughput time.

INCOME DISPARITY AND POOR WAGE LEVELS

The growth of mean income for the Malaysian household in the Bottom 40% of income earners (B40) grew by 9.9%, lower than the Middle 40% (M40) growth of 8% and Top 40% (T40) that grew at 7.4%, from 2009 to 2014. This is a positive sign that wage levels are catching up with the rising cost of living and at the same time reducing the disparity between the income groups. It is difficult to compare to Singapore and Korea (as many have voiced out) because those countries have high income earners driving the economy. Malaysia is primarily driven by middle-income earners. This is why we need to structure our economy to be high knowledge-based where we could have more high income paying jobs. 

For this, various initiatives will be implemented to create high-skilled jobs with high pay. This will be a conscious effort from the Government's side when making investments. The focus will be on knowledge-intensive and innovation-based workforce. Existing industries will be pushed to contribute more to the Gross Domestic Product from 33.6% in 2013 to 40% in 2020. This is partly done via minimum wage policy but productivity must be increased. Both Government and the citizens must work together. The Government will facilitate in the quest to produce more technical knowledge based workforce via its Malaysia Board of Technologies. In addition, performance-related pay schemes need wider implementation and upskilling and reskilling of the existing workforce is something very crucial for  a total workforce shift (upwards).

I must declare that he (AWO) has my utmost trust (as a Rakyat). Although his appointment is somewhat political, I find his ways to be very much non-partisan with the sincerity to serve the nation. For these, I recommend that you too (the Rakyat) to also trust him. Nevermind the political roller-coaster that is on air at the moment. What is important is that the country's economy is being looked after.

* kopihangtuah

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