KUALA LUMPUR, Feb 10 — Policymakers need to remain agile in their approach to policies and not be too rigid in their own ways in neglecting changes in the environment, said Bank Negara Malaysia (BNM).
Governor Tan Sri Muhammad Ibrahim said the world will be transformed with rapid advancements, namely in technology and communication and big data.
“The willingness to renew and redirect policy is critical to successful policymaking. From the outside looking in, the redirection of policy is often perceived to be regressive.
“ In reality they reflect policies that aim to be more, rather than less, responsive to changing conditions,” he said in his remarks titled, “Public Policy Perspective-Some Thoughts and Contemplations from a Central Banker”, at the 40th Anniversary Dinner of Harvard Business School Alumni Club of Malaysia here yesterday.
Muhammad said that in the same way that businesses expect governments to relax and adapt policy to capture new opportunities, authorities have a professional duty to redirect policy, however unpopular, to maintain stability and harness collective growth potential when risks or unintended outcomes become apparent.
This requires much more confidence, boldness and courage, he noted.
The governor also called on policymakers to protect and value their autonomy in the conduct of policies and not to be constrained by prevailing rules and consensus thinking established by the international community.
“They (policymakers) must not be afraid of instituting bold policies if they are deemed necessary, and this is especially important, during times of stress or marker failures that risk the orderly functioning of the economy and financial system.
“There should also be clear and transparent communication. Policies will not be effective if the motivations and understanding between policymakers and the public are not aligned,” he said.
Muhammad also said that policymakers must not formulate public policy in isolation, but instead, promulgate policy with hard facts, backed by statistics and sound theoretical evidence.
“Foremost, we should not forget about the lives of people we are trying to help. A strong gross domestic product growth figure will be less meaningful if they do not create good quality jobs, better distribution of incomes and higher standard of living for the people.
“Formulation of public policies must continue to be based on sound economics and have the ultimate goal of improving the welfare of society,” he added. — Bernama