NB: This speech was  delivered at a forum hosted by the Penang Institute on 6 April 2012. The following reproduction is abridged.

As the global economy undergoes a paradigmatic shift and the world prepares itself for what is increasingly seen to be the “Asian Century”, Malaysia should be capitalising on our logistical and historical strengths as the epicentre of the next growth region.

Unfortunately, 21st century Malaysians have inherited a lagging economy stricken with the cancer of rent-seeking and patronage, where productivity is inhibited and where talent has become an export commodity rather than a growth driver. Faced with the dire problems of income inequality, spiralling household debt and slowing economic growth, the Prime Minister launched the New Economic Model (NEM) on 30 March 2010.

The NEM is a bid to transform the Malaysian economy based on three goals: achieving high income status by 2020, ensuring inclusivity in economic access, and creating sustainability in order to cater to future needs.

And so, in line with the objectives of the NEM, the Government through the Performance Management and Delivery Unit (Pemandu) sought to conceptualise the now much-famed Economic Transformation Programme (ETP) with its eight Strategic Reform Initiatives (SRIs) and 12 National Key Economic Areas (NKEAs), based on the premise that if successfully implemented, Malaysia’s gross national income (GNI) per capita would be doubled to USD15,000 by 2020, thus turning our country into a high income nation. Ultimately it is forecasted that RM1.4 trillion of investments in 131 entry point projects under the NKEAs will create 3.3 million jobs.

However, there has been much debate about the viability and success of the ETP. Critics such as the research institute REFSA (Research For Social Advancement) have recently released a series of articles attempting to debunk and deconstruct the ETP, pointing out many discrepancies and what they believe to be “creative accounting” on the part of Pemandu.

However, Pemandu has in turn issued responses to defend and deflect the criticisms levelled at the ETP. Two years in, they claim that most of their targets have not only been met, but even surpassed, and that they are well on the way to achieving their ultimate objectives.

Pemandu CEO Dato’ Sri Idris Jala, for example, points out that last year’s GNI figure of RM830 billion (at current prices) had exceeded the target of RM797 billion, while RM94 billion worth of private investments – the highest in five years – were recorded against the target of RM83 billion. The statistics for job creation is also expected to reach its target.

Now, one cannot deny that Pemandu’s efforts have been substantive and that their approach has certainly been proactive and novel, at least in the context of the public sector, yet many questions abound about its actual results and whether it makes sense in the bigger picture. For example, the objective of raising income and productivity must also address the issue of distributive justice. A GNI per capita of USD15,000 may sound like all Malaysians are going to be rich, but it could just as easily mean that we are going to create a few more billionaires while the rest of the country struggles with increasing cost of living and suppressed wages. And this is now apparent when we consider that while absolute poverty levels in Malaysia have decreased over the years, the relative poverty level has increased by folds. In other words, the income gap has widened. I could go on about this, but that would be digressing.

We at Penang Institute believe in encouraging more open debate and discourse, especially on public policy. After all, differing views and opinions are a sign of a healthy democracy and most definitely a step in the right direction as we seek to cultivate a more mature society. To that end, we are very pleased tonight to host this forum on the ETP.

I believe tonight’s discussion is timely, and will go a long to help us deepen our understanding and familiarity not only with key government policies but also with the critical challenges facing our nation.

Thank you.