Some thoughts on economic reform

In the wake of his resounding return to the Malaysian Parliament, Anwar Ibrahim has said that he wants to focus on the reform agenda. While the range of reforms that Anwar and his Pakatan colleagues intend to focus on covers the gamut of constitutional institutions, draconian laws and socio-political matters, the one aspect that is relevant to this blog is economic reform.

Economic reform need not be the monopoly (pardon the pun) of Pakatan alone. The BN federal government is entitled to or, obliged to, consider the reform issues earlier raised in this blog: An economic agenda to consider.

Privatisation

While my earlier blog referred to above advocates a radical removal of privatisation completely in favour of sovereign debt-raising, I am now offering a decaffeinated version. How about this? The privatisation of state assets for infrastructure development, such as the Corridor projects must be fully and properly valued. Under-valuation allows privateers to appeal for variations that may be open to abuse. Privatisation cannot handed to cronies and people with vested interests on preferential terms. 

But, public spending on infrastructure must be increased with much caution, especially under the present conditions of ballooning commodity prices. 

The government must exercise financial prudence because of the risk that cost-push inflation is likely to impact on and, increase the public debt or budget deficit at a time when the global economic outlook is bleak.

No more cheap labour

From the colonial era until today, Malaysia is still overly dependent on the low labour-cost sector. There must be a clear policy for new investments to be directed at higher value-added industries through appropriate incentives and disincentives. This policy shift must be earnest and, it must be put in place now.

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I want to reiterate all the matters raised in my earlier blog entry as referenced above where I also dealt with the need for a public transportation revamp. Please read the earlier blog entry in light of the impending Budget 2008 although I doubt if economic policymakers ever read blogs like this.