IDS best placed to produce Sabah’s new economic model
Published on: Sunday, June 16, 2019
By: Datuk John Lo
Text Size:
The combination of Tan Sri Simon Sipuan and Datuk Johan could have been very beneficial for IDS. The coming together of Simon’s long and illustrious career in Sabah government civil service and Johan’s private sector experience is unique for IDS and would have greatly benefitted Sabah’s fundamental research on economic development. Latest news is that things have not worked out.
I hope IDS can recoup quickly for an effective IDS can focus and find solutions for many fundamental economic development issues that need urgent addressing. I like to highlight some of these below.
Sabah’ new economic model vis a vis PH economic model. Tun M has announced PH’s “shared Prosperity 2030” economic model on the anniversary of PH’s election victory. Rather late but better late than never. I expect the Economic Affairs Minister will produce the detailed PH economic model pretty soon. Sabah cannot produce our own model until the national one is in place. In addition, the Sabah model cannot operate effectively in isolation without dovetailing with the national one.
IDS, as Sabah’s official think tank, is best positioned to draw up the Sabah economic model, the preparation of which I hope, is already well underway for the following reasons: [a] The PH economic model has set target year 2030 which is 10 short years from now. For Sabah, time is of the essence, having been an economic laggard for most of the last 50 years! [b] The unveiling of next Malaysian Plan is 2020 which is next year. From our new economic model, we should know what we want out of the Malaysian Plan 2020-2025 or we risk missing the boat. [c] In view of our past under performance in economic development, we must use the PH economic model and 2020-2025 Malaysian Plan to catch up.
Why does Sabah need a new economic model? Simple answer is we need to improve our term of trade. The world is entering into 5G. Soon it will be 6G. The era of AI [artificial intelligence], robots are already onto us. The whole advanced world will be able to upgrade their value chain faster and further from us. Sabah’s present economic model, relying on producing low value basic commodities [even this we have little control/ownership], cannot sustain our present standard of living. Improving it on our present model, is out of the question for the average and poor Sabahans. Sabah’s term of trade which has been unfavourable for a very long time, will worsen very fast 10 years unless we can find ways and means to add value to our existing products, better still, produce new very much higher value products. The way of life as we know it today will lower down quite dramatically if we fail to do so. We have no choice but to improve our term of trade fast. To do this, Sabah must have a new economic model. IDS is best suited to produce this new Sabah economic model.
Singapore, South Korea, Taiwan are best examples of countries that have improved their terms of trade in recent years. With no or minimal natural resources, they have won the battle in their terms of trade and have, from being the back waters of Asia, wrought for their citizens some of the highest standard of living in the world.
The Sabah new economic model can address following fundamental economic and social issues.
Government system. There have been some improvements in the government system in recent years. But much more needs to be done. The model must take into consideration that: [a] there is a cost in time. Delays are very expensive in time cost, financial cost and above all, opportunity cost for the people and negative impact on the overall performance of the economy. This is very fundamental but has been ignored in Sabah for a very long time. Intentional delays must be removed as the idea behind it is to create opportunities for corruption. On the other hand, timeliness or good time management in government system means efficiency, productivity and higher income for the people. [b] Equally important is a positive mindset and policy approach. Malaysia has adopted the old British system “you cannot do anything unless permitted by law”. Whereas the American system is “you can do anything unless prohibited by law”. Sabah has been held back badly by this British negative approach from which we need to be redeemed and liberated.
Economic leadership. For most of Sabah’s history, we have suffered from a dire lack of economic leadership. We have had too many leaders who were good at political games but little talents on economic leadership. I have written on this a few times. With no or little economic leadership means slow economy, slow development, low income for Sabahans. We will never catch up with other progressive states in Malaysia.
Sabah economic model can look into this most important requirement in economic development. Lee Kuan Yew and Deng Xiao Ping are “par excellence” examples in economic leadership. They have literally transformed their countries into economic power houses. The former has given Singapore the 2nd highest income in the world and the latter has transformed China to rival USA as the world’s No. 1 super power.
Proactive policies are very important for the creation of a vibrant economy. We must change our mindset to accept that the present economic model has given Sabah very little progress. We must find out the root causes of our economic backwardness. The GLCs which have received very substantial funds and monopolistic privileges, must contribute a lot more. Close down those loss-making ones. The private sector needs to be revamped, energised and empowered. All these will take a totally different set of policies which will require political courage and economic leadership.
Another mindset that must be scraped is that economic development must be driven by government funds. Not true. Money is a 2-edged sword. Nigeria had a lot of money from oil. So was Malaysia. Singapore, China and South Korea had nothing but the brain between their eyes armed with proactive policies to facilitate their citizens to pursue their economic dreams. Both Nigeria and Malaysia have under- performed. Easy oil money has been a curse in both Niger and Malaysia.
Rural poverty. There has been reduction in absolute poverty in rural poverty. With the abundance of natural resources in Sabah, this should no longer be an issue. There should be focus on issue beyond absolute poverty like financial stability, financial independence, reasonable health care, education and producing high value agriculture and marine products for export. The economic fortune of our rural brothers and sisters, including those in the coastal areas, will be highly dependent on our ability to add value to their production and create access to international markets.
Income/wealth gap. Sabah is facing income/wealth gaps on several fronts. [a] The most important one is Sabah’s income/wealth vis a visa national income. We are very far behind. All the billionaires are in W Malaysia. Sabah’s only billionaire has migrated to W Malaysia. Why? Answers to this basic question can help leaders in decision on economic policies. [b] The income gap between the top richest 1pc and the lowest 30pc in Sabah. I don’t have the figures but would not be wrong to say that Sabah’s wealth is overly concentrated in the hands of very few. Worse still, the biggest chunk of assets is in the hands of non-Sabahans. [c] The income gap between urban and rural/coastal area is growing wider. This must be addressed urgently.
Sabah/Federation government financial relationship. I have expressed concern on this most important and fundamental issue many times. The new Sabah economic model must address the aged old problem of federal government’s economic neglect and take Sabah for granted attitude. Sabah must fight for equity and equitable economic development funds, especially from an equitable portion of revenue generated from our oil and gas and palm oil. We should also be looking into [a] attraction Investment/Investors, [b] diversification and sustainable economy, [c] Sabahan ownership of factors of production.
I hope IDS, when it has resolved its problems, will go beyond holding seminars and undertaking researches commissioned by government agencies and ministries. It would be in Sabah’s primary interest if IDS can focus on the most fundamental macro-economic development issues for our government leaders to make sound decisions.
ADVERTISEMENT
