thestar: Need for social safety nets

Wednesday March 31, 2010

Reports by JAGDEV SINGH SIDHU, RISEN JAYASEELAN, DAVID TAN, ZUHRIN AZAM AHMAD, IZATUN SHARI, DANNY YAP, THEAN LEE CHENG, FINTAN NG, YVONNE TAN, SHARIDAN M. ALI and EDY SARIF

THE New Economic Model (NEM) needs to have safety nets in place before the proposals for the overhaul of the economy can be put into action.

National Economic Advisory Council chairman Tan Sri Amirsham A. Aziz said those social safety nets were needed as there would be members of the public who might find it difficult to adapt to the changes brought about in implementing the new proposals.

“We need to have a proper system in place to ensure these people are well supported, trained properly and put back into the job market,’’ he told the media at the Invest Malaysia conference yesterday.

“As we try to shift the workforce towards knowledge workers, there are people who might find it difficult to adapt.”



“There are industries too that will probably be dislocated. We are going to give preference to industries that can create high value in the economy,’’ he said.

“So you might find some of the older industries not getting the support they are used to get. They will be struggling for a while and we need to help them transform and move up the value chain.”

The proposals from the NEAC for the NEM generally call for the income of 40% of the population who earn less than RM1,500 a month to be lifted through various policy changes that aim to transform the structure of the economy.

The ultimate goal is to lift gross domestic product per capita from US$7,000 to US$15,000 within the next 10 years.

Amirsham said the proposal to lift the income of 40% of the population would be achieved through education.

“In rural schools, we should give the best in terms of teachers and facilities. These are the people that really require help and if they are able to get the best education, it will only take one generation to get them out of the low income,’’ he said.

As for immediate help, Amirsham said the proposals were still “work in progress” but he did not want to see Malaysia become a welfare state.

Although the NEM would tweak affirmative action policies, Amirsham said that would continue but would be based on capacity, needs and merit.

“We have clearly stated in our document is that we do not want rent seeking and that’s very clear. We don’t want the patronage system to continue. It’s based on merit,’’ he said.

By the third quarter, NEAC would come out with the specific details on the 8 Strategic Reform initiatives they have proposed to the government.

Amirsham said the new recommendations would come in after the 10th Malaysia Plan in announced but before the tabling of Budget 2011.

“When it involves incentives and allocations, the treasury will have to put that through the Budget 2011,’’ he said.

Amirsham, however, did not think the new policy would worsen the budget deficit.

“We have not done our calculations on that yet but for me I think there are many ways of dealing with that. From our proposal, we do need to correct the price distortion in the country,’’ he said.

“If we are able to take the subsidy and give it to the right target group, I think it will be even positive for the Government.”