Malaysia is well on its way to becoming a fully developed and high-income nation by 2020. Laying out the framework to fulfil this vision are the Economic Transformation Programme (ETP) and the Government Transformation Programme (GTP). Both plans address many things but pursue one overriding goal - to raise the quality of life in Malaysia. Take the ETP. Unlike other macroeconomic plans, it is not solely concerned with generating more wealth but also with how wealth is distributed to the entire population. In considering the rakyat, or the people, the ETP embraced the age-old economic theory that a fleet can only run as fast as its slowest ship. The programme also ensures that growth will be sustainable to withstand economic volatility. To clear the road for economic transformation, Prime Minister Najib Razak rolled out the GTP in 2010. It focused on delivering quality government services by addressing seven main social concerns or National Key Result Areas (NKRAs). These are corruption, crime, education, rural infrastructure, public transport, cost of living and raising living standards of low income households. Economic transformation The ETP envisions Malaysia joining the ranks of fully developed nations by 2020. In drafting the plan, the government started out by pooling the best minds in the government and private sectors. For eight straight weeks, about 500 people from both sectors thoroughly discussed how to address the country's economic and social problems. They also analysed macroeconomic trends and best practices in other countries. The intensive consultative meetings produced specific recommendations that were presented to the public across all of Malaysia for validation. People from all walks of life attended the presentations. Opposition party members, non-governmental organisations, teachers, parents, students, bloggers and taxi drivers came to see and challenge the recommendations. The result of all these efforts was the ETP, which the prime minister rolled out for implementation in October 2010. The economic plan targets a per capita income of at least US$15,000 by 2020, the minimum level set by the World Bank for high-income nations. To realise this, Malaysia should achieve 6 per cent economic growth annually and create 3.3 million jobs by 2020. The government needs about 1.4 trillion ringgit in additional investments to fuel such growth. "The ETP is all about focus and competitiveness," says Idris Jala, minister in the prime minister's department and CEO of Performance Management and Delivery Unit (PEMANDU). "We studied the characteristics of high-income countries and found these two qualities in all of them." PEMANDU oversees the implementation and assesses the progress of the ETP and the GTP. The ETP identified 12 National Key Economic Areas or NKEAs where Malaysia has competitive advantages and came up with key strategic reform initiatives (SRIs) to improve the country's competitiveness. These initiatives cover competition, standards and liberalisation, public finance, public service delivery, the government's role in business and human capital development. Competition, standards and liberalisation One of the first things that the ETP introduced was the Competition Act which, for the first time in Malaysia's history, removed anti-competitive agreements and abuse of government positions. These included price-fixing and bid-rigging. The ETP also focused on stricter adherence to quality standards. Malaysia had 6,260 standards but only 10 per cent of them were being enforced. Following the practice in high-income countries, Malaysia took the initiative to heighten the implementation of quality controls. Apart from adapting more international standards and reducing the time needed to qualify for them, the government proposed new local standards and amended existing ones. The ETP also identified several key sectors that have significant potential for growth and can contribute to gross national income. About 17 service subsectors are up for liberalisation this year, nine of which have been fully liberalised to date. The Malaysian government will allow 100 per cent foreign ownership in these sectors, which include service businesses such as hospitals and companies providing architectural, tax or accounting services. The same is true for local partnerships and joint ventures. Public finance In public finance, the programme lined up 21 initiatives in order to increase revenue and reduce expenditure. The reforms focus on increasing the tax base, enhancing audit and enforcement and ensuring maximum value in government expenditure. The use of value added goods and services tax (GST) is one such move. Aiming to make companies more competitive with lower corporate taxes, the GST is estimated to generate additional revenues of 6 billion ringgit to 10 billion ringgit in its first two years at 4 to 5 per cent tax rate. Public service delivery The SRI on public service delivery aims to increase the performance and efficiency of government institutions. One effort is to halve the number of business licences in Malaysia from 761 to 375. Better and more open recruitment policies will ensure a higher ratio of those with private-sector experience. In addition to this, the government is improving its feedback channels. For example, personnel rating machines in government offices, such as immigration counters. Customers can immediately provide feedback on the individual providing the service, ensuring better performance overall. Government's role in business Recognising the private sector as the main driver of economic growth, the government is limiting its direct involvement in business. The government has clearly identified four areas where it will be involved in business: where national security is concerned (e.g. defence, food security), large infrastructure projects (e.g. the MRT system), projects with long gestation periods (e.g. biotechnology) and areas requiring 'tipping point' investment (i.e. economic corridor projects). Through listings, pare down or outright sale, the government is divesting 33 government-linked companies. State asset manager Khazanah Nasional sold its 32 per cent stake in Pos Malaysia to DRB-Hicom. Khazanah also divested its 10 per cent holding in EON Capital to Hong Leong Bank. Human capital development The government has 17 initiatives for human capital development. Modernisation of labour legislation calls for setting the minimum retirement age at 60 for higher productivity, while strengthening human resource management to reduce business costs. Focus was also given to raising women's talent to increase the ratio of women in boardrooms to 30 per cent. Other changes include the introduction of unemployment insurance and undertaking a labour market forecast and survey programme. Government transformation The GTP is focused on improving key areas that the people felt needed urgent attention. The programme assigned measurable targets, created a specific delivery chain and set up an unhindered reporting framework. These and other measures aim to create a more collaborative culture among public servants and drive service delivery improvements for the people. Among the most dramatic reforms were initiated in the fight against corruption and crime. The GTP set up special courts to deal with corruption cases. Photographs of and details about convicted individuals were posted on a government website. The GTP also called for the publication of government contracts to promote transparency. For the first time in its civil service history, Malaysia started to reward civil servants who report incidents of graft and corruption. For effective monitoring and implementation, the GTP also established co-operation among the Royal Malaysian Police, Malaysian Anti-Corruption Commission, and the country's road transport, customs and immigration departments. The programme also initiated reforms to fight criminality. Customer service rating machines in police headquarters enable the public to immediately rate the services they get from the police stations. The government also learned from police forces in New York and Britain how to use research in eradicating crime. Malaysia determined exactly when and where the crimes were being committed and increased the monitoring and deployment of policemen in these areas. Steering committees assess the status of the ETP and the GTP monthly. PricewaterhouseCoopers verifies the programmes' performance and validates results on a yearly basis. The government also formed an international performance review team to evaluate the programmes. Seven globally-respected experts were selected as panellists to examine the scope, effort and results of both the ETP and GTP to provide an independent and unbiased external evaluation. These individuals were chosen for the diversity of their backgrounds. They represent global institutions, national governments, non-governmental organisations and think tanks. "It is very challenging for us because we have no place to hide," Jala says. "The evaluation system makes the government completely accountable." While the responsibility for the end-to-end delivery of the programme outcomes rests with the respective ministries and the private sector, PEMANDU has a crucial role to play in the success of the ETP and the GTP. The prime minister has mandated the unit to catalyse bold changes in the public and private sectors, support the ministries in the planning process and provide an independent programme assessment to the prime minister and ministers. To allow PEMANDU to accomplish its responsibilities effectively, it combines the best talents from both the civil service and private sector. Jala used to be the CEO of Malaysia Airlines before the government called on him in April 2009 to help plan for the programmes. The ETP and the GTP have gone a long way since then. The solid initial success of both programmes confirms that they are the appropriate blueprints for Malaysia to become a high-income nation by 2020. "This is a marathon, not a sprint," Jala says. "This year is not a year for us to introduce new programmes. It is one where we must follow through on our existing plans and execute, execute, execute."
