Shared Prosperity economic model: Malaysian economists optimistic, caution government to avoid past mistakes

KUALA LUMPUR, May 17 — The Shared Prosperity economic model mooted by Prime Minister Tun Dr Mahathir Mohamad has piqued the interests of economists and political analysts alike.

Its focus on fair and inclusive equitable growth across all boundaries and aim of narrowing the income and wealth gap between classes, races and territories have drawn comparison to the New Economic Policy (NEP) that was instituted under the second Prime Minister Tun Abdul Razak in 1971.

Datuk Seri Mohd Annuar Zaini, former chief of the national wire service Bernama, finds the new model to be exciting, as it concerns the poor.

“It is very touching when we speak of economic prosperity and how the poor will get the benefit. In the early stages of the NEP, they felt there would be meaningful projects to eradicate poverty and restructure society,” he told Malay Mail.

However, Mohd Annuar, who is also Perak State Economic Advisory Council chairman, cautioned for the need to have “highly-spirited” people carry out the plan.

“Remember that the NEP was not raced-based, but was eventually derailed by certain well-connected elites to enrich themselves and rob the country.

“So the Shared Prosperity economic model is a noble idea, but just as Tun Razak had an initial core of post-Merdeka leaders who were highly competent, sincere with their hearts about the rakyat, so too should it have the same if it is to succeed,” he said.

He especially stressed the importance of eradicating the culture of corruption as a marker of success.

“If say RM100 million is meant for the construction of schools, out of which RM15-20 million is siphoned off, then only RM80 million benefits the rakyat. Can you imagine the same for building roads and hospitals?

“The success of eliminating corruption and kickbacks will determine if the Shared Prosperity economic model benefits the rakyat,” he said.

Asli Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam also welcomed Putrajaya’s Shared Prosperity model.

“The policy is needs-based and not race-based. That is a fundamental breakthrough,” he said in a phone interview.

Calling for more information to be furnished, the veteran economist said the lack of understanding of the new policy may lead to people misunderstanding it.

“We do not want to repeat past mistakes where opportunity was inadvertently given to unfair critics to misrepresent the government,” he added.

Ramon said more consultation and explanation would be timely to allow the people to fully understand, appreciate and support the new policy.

He, however, said the new policy raises the question as to what would happen to the NEP and the National Development Policy, which was meant to replace the former in 1990.

“In my mind, the NEP would be covered by this needs-based economic policy, which I hope will cover all races,” he said, reiterating this was a major breakthrough as the nation has long been preoccupied with race and religion that  led to the present state of discontent in our country.

Universiti Tunku Abdul Rahman political science lecturer Teh Boon Teck said although the prime minister’s intention is to promote economic growth, to date there's been no significant reformation of government policies by Pakatan Harapan.

“It will be meaningless if no efforts are taken to make it work. Things remained the same for economy and education policies.

“The ‘shared prosperity’ proposal is not possible with the existence of such policies,” he said calling for the NEP to be revised.

Teh said when a good student fails to gain admission to a public university despite achieving good results, that student would likely go abroad to study and eventually stay and work there.

“To make the Shared Prosperity economic model possible, talents should be given opportunities to contribute to the country's economy,” he said, adding that accepting unqualified candidates into public universities would only bring harm to a country's economic growth.

Sunway University Business School economics professor Yeah Kim Leng said the prime minister is refocusing the country’s development strategy from a fixation on income growth and a particular group to one that is more redistributive and inclusive.

“It is compatible with the NEP, with the difference being that all races are included in recognition that intra rather than inter ethnic group wealth disparity is the new narrative of the year-old government.

“The gap between the rich and the poor within each ethnic group has widened,” he said.

“So I think the focus on shared prosperity is very apt, given there is a need to shift towards what we call 'inclusive growth' so that Malaysians, irrespective of their ethnicity, will receive the benefits of development under the new economic model.

“It is what we have been advocating all along: to shift from race-based policies to needs-based policies,” he said.

University of Tasmania's Asia Institute director James Chin said the model is not new in the sense that Dr Mahathir attempted a similar tack with the Bangsa Malaysia concept in trying to bring all the different races together.

“So I think this is basically a Bangsa Malaysia 2.0. (He is) trying to build a united country so I don't think there is anything new in this.

“But I suppose the only new thing is that this time he didn't play the racial thing as much as previously and secondly, this emphasis on economic growth has more to do with inequality and rural-urban divide,” he said.

Chin said although there are some new ideas, they are basically a reflection of the current times.

“If you try to build a united country, if you can bring people together, I think that is a good idea, especially given the fact that Umno and PAS are playing the racial game.

“So as a government, the less racial thing they play, the better it is for the country. So I think overall it's a positive thing, with the question being whether they can pull it off,” he said.

Chin said the Shared Prosperity economic model is highly dependent on whether the government can win a re-election. If Pakatan Harapan can win again, then it would be good.

“I think the emphasis on inequality is the correct approach. But this sort of thing is very difficult to implement, I mean, when you talk about inequality, you are basically talking about opportunities, how are you going to spread out the opportunities.

“So for example, if you do not resolve the issue of giving opportunities to a non-Bumiputera, then you are going back to square one. So you still have to tackle the core issues within Malaysia, which is the divide between Bumiputera and non-Bumiputera,” he said.