Drawing up comprehensive development plans is not the only way to grow the economy. – NST FILE PIC
A recent statement by Economic Affairs Minister Datuk Azmin Ali that the 11th Malaysia Plan (11MP) is being reviewed and that the report will be tabled towards the end of the year is encouraging.
The report will definitely update industrialists and businessmen on the recent performance of the national economy and the new policy thrusts of the Pakatan Harapan government. Given the many young faces in the cabinet line-up, it is expected that the new policy thrusts will reflect the new direction the younger generation wishes to have as the basis for wealth creation.
While the economy is expected to sustain an expansion of about 5.0 per cent this year, several adjustments are being made to major public expenditures, and this may somewhat affect growth prospects in the short-term, consequent upon the concerns of public sector debt and their servicing.
The measures may be seen in a more positive light in the medium and long-term because they send the message that the new government is very serious about curbing excessive borrowings and maintaining debt at more prudent levels. In other words, the concern for macroeconomic balance is still being observed and is a factor in managing growth.
While authorities are is reviewing the 11MP, it may be worth reflecting on this subject of development planning given its traditional significance to policymaking exercise. Five-year development planning started initially in Russia and, later, was adopted by many developing countries such as India and Pakistan. We, too, opted for this approach in our attempt to improve our standard of living and address structural impediments.
Developed countries, including Singapore, do not undertake development planning. They rely more on the stimulus of monetary and fiscal measures to drive economic growth and development. Such measures are mainly short-term policies.
However, Thailand and Indonesia still undertake long-term development planning. Given their population distribution and geographical layout as well as overall income per capita, such a long-term exercise is still necessary.
The policy and practice of five-year development planning assumes the critical role of the government and its policy intervention to affect positive changes on society. To let market forces determine the direction of the economy and to expect them to address social issues is a bit much, especially at low levels of income per capita.
The political leaders in developing countries prefer development planning for it gives them reason to mobilise society and resources to achieve societal ideals and goals.
Malaysia’s policy ideals of eradication of poverty, however defined, and eliminating economic imbalances, however measured, are good raison d’etre for long-term development planning to be undertaken and continued for several decades.
However, we may have reached a stage where the private sector can act of its own accord based on the macroeconomic policy environment given impetus by the two major policy instruments, namely monetary and fiscal policies as well as from major development policies and programmes.
This question is perhaps a soul-searching one. Are we ready to adopt the position that we no longer need comprehensive development plans ? Perhaps we are not. We leave it to the new government and agencies like the Economic Planning Unit, the Finance Ministry and Bank Negara Malaysia to reflect on it.
Nevertheless, the nation still has many structural issues and deep-seated social concerns which need to be deliberated and viably resolved. Our heavy reliance on foreign labour and the need for our human capital to rise to a global level are just two of these concerns that need policy attention and long-term solutions.
Thus, at this juncture we can say that long-term development planning may still be necessary for the country, at least an indicative and market-based one, without delving into too much details and targets, the way the 11MP is conceived.
Reading the 11MP one sees that it promises to achieve numerous objectives in the span of five years. It is too ambitious. One who believes in planning knows that there is so much we can incorporate in our planning framework and that there are so many imponderables to be taken into account.
As such it would be good if future development plans are not based on comprehensive planning but are driven by statements of long-term policies and objectives and backed by relevant and specific monetary and fiscal instruments to support the attainment of such objectives and targets. These, however, can be complemented by relevant sectoral policies and major programmes.
The private sector should be competent and resilient enough to take the cue from these broad statements of policies and thrusts to achieve their business targets. In so doing it can help achieve national long-term objectives.