Budget food for thought in Malaysia

Feb 24, 2011

By Zhang Ming Guang

IN THIS year's Budget, which was announced last Friday, the Singapore Government is giving away generous subsidies and 'dividends' worth $6.6 billion, of which $3.2 billion will go into the 'Grow and Share' package. All adult Singaporeans will each receive between $100 and $900 in Growth Dividends.
The remaining $3.4 billion will be used for long-term social investments, such as forming a new Community Silver Trust to provide aid to the long-term care sector, promoting cultural activities and upgrading housing estates.
It is hard not to link the goodies given out by the Singapore Government to rumours that a general election is likely to be called in the second quarter of this year. But the Government is able to share its Budget surplus with Singaporeans because it has reaped the benefits of its bold economic transformation initiatives.
When Singapore experienced development bottlenecks and declining tourism in 2002, the Government began to think about transforming the economy and drew up new competitive strategies.
It formed the Economic Review Committee, which was headed by then-Deputy Prime Minister Lee Hsien Loong and comprised 20 members, seven of whom were ministers or ministers of state. It had seven sub-committees with between 200 and 300 experts from the Government, corporate world, private sector and academic circles studying the future economic direction of Singapore.
At the same time, the younger generation of Cabinet ministers formed the Remaking Singapore Committee to bring about economic transformation by reviewing Singapore's development strategies in the 21st century from the social, cultural and political aspects.
In August 2005, Mr Lee, by then Prime Minister, said in his National Day Rally speech that if Singapore failed to modify its economic model and carry out reform and innovation, it risked becoming a loser in the increasingly competitive global economy.
He cited this as the reason for the Government's decision to ignore public opinion and build two casinos in Singapore. The impact of the casinos, which started operations last year, was immediate.
In addition, Singapore won the rights to host the first Formula One Grand Prix night race in 2008. The opening of the casinos and the staging of the F1 races revived Singapore's tourism and debunked Hong Kong and Taiwanese tourism writers' negative stereotype of Singapore as a boring place.
Buoyed by the launch of the two casinos and positive economic sentiment, Singapore raked in $18.8 billion in tourism receipts last year, up nearly 50 per cent year-on-year. Visitor arrivals also soared and set records for 13 consecutive months. Full year visitor arrivals grew 20 per cent to 11.6 million.
The casinos also created about 35,000 jobs for Singapore. They have generated revenue of US$2.8 billion (S$3.6 billion) since their opening, contributing significantly to Singapore's robust growth of 14.5 per cent last year.
In the wake of increasing competition brought about by economic globalisation, the Singapore Government has maintained a cautious outlook.
By clarifying the direction of the country's economic transformation and goals, adopting strong policies and measures, and undertaking bold reforms and innovations, it achieved impressive results.
We on the other side of the Causeway envy Singaporeans for getting a share of the fruits of their country's economic transformation, but shouldn't we also ponder what path we should take?
After taking office, Prime Minister Najib Razak rolled out an economic transformation programme (ETP) to enable Malaysia to achieve high-income status and per capita income of US$15,000 by 2020.
Faced with resistance from conservatives within the ruling Umno, he does not have a free hand to do as he pleases. However, investor confidence in Malaysia's economy is reportedly growing, which shows that the ETP has produced some results.
But compared to Singapore, the pace of Malaysia's economic transformation is too slow. If we do not do our utmost to catch up, our fear of being overtaken by Singapore as the third-largest economy in South-east Asia will materialise very soon.
This article first appeared in Oriental Daily News, a Malaysian Chinese daily, on Monday.