By Jagdev Singh Sidhu
THE headline numbers were impressive and the ideas put forward in the Economic Transformation Programme (ETP) was a mix of flimsy, common sense and ingenuity.
With some US$444bil in investment expected under the ETP from 131 entry point projects (EPPs) and 60 business opportunities, domestic companies were inundated with proposals that could whet the appetite of idea seekers wanting to know where the next big opportunity will come from.
The purpose of the ETP is simple. The private sector has yet to wake up from its hibernation in driving economic growth in the country and by coming up with proposals on business opportunity, the Government hopes the ETP would be the spark that lights the fire under the private sector once again.
There is no arguing that something needed to be done after years of decline in private investment that has taken an economic toll on the country, and judging by the scale of opportunities and ideas presented by the ETP, it is different than what many other centralised plans or programmes have done in the past.
In this case, the ETP is mainly private sector driven and some suggestions put forward don’t require money at all but just a change in regulations to get a sector more efficient and get private sector activity going again.
Its up to the Government to decide if low hanging fruit should be picked, and whether that is sufficient to get a lot of companies moving and the Government to make the regulatory changes is still left to be seen.
But the ETP also calls for private companies to start putting their money to work as 92% of that vast sums of investments is expected to come from the private sector.
Companies need to assess the returns they can make from any project, the cost of funding such business ventures and the markets and clients where those new ideas and products can tap.
The risk of ideas not translating into actual business is great and the numbers show in the ETP. It’s commendable that there are US$47bil worth of investments for 19 EPPs that are at a stage where commitment is serious or close to.
However, US$169bil worth from 112 EPPs in active engagement, or at an expression of interest stage, means those projects stand a greater chance of not materialising.
Pemandu acknowledges that while some of those projects and ideas could well not be commercialised, its hope is that other projects could come from the seeds it has already sown.
But does the ETP address what were the underlying causes of the malaise in private sector since the 1997/98 economic crisis hit Malaysia?
What has been lacking somewhat has been the sense of risk-taking by companies, being bold enough to try something new or even try and expand the boundaries of their existing business aggressively.
In fact, companies are generating far more cash these days and ironically have chosen to distribute much of their cash in the form of dividends to placate shareholders, instead of taking a chance on something that may or may not pay off.
There is also a growing number of companies finding opportunities outside the country more lucrative as the outward FDI numbers have jumped up substantially over the last few years.
It’s not fair to generalise many Malaysian companies as such, as there are some who are progressively expanding their market share or have ventured into new grounds. But their number isn’t sufficient enough as the private investment numbers have shown.
Identifying projects is a step in getting private sector interest back to Malaysia, but it does not deal with setting the proper foundation for long-term business generation in the country.
A big bang approach is needed. Improvements need to be made expeditiously, legislation needs to be enacted, regulations changed to ensure a fair market place is created and regulators play an independent and fair role so that the private sector can flourish again.
Creating business opportunity without a vibrant and equal marketplace would mean that many of those ideas would sooner or later wilt without a change in mindset that is needed to get investments up again.
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