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Speech at DAP Petaling Jaya Dinner

by Lim Guan Eng

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(Petaling Jaya, Thursday): Asians are proud that China is likely to exceed Germany as the third largest economy by the end of this year and that two out of the 5 richest men in the world are Indians. The latest news reports have crowned the owner of India’s Reliance Industries, Mukesh Ambani as the world richest man with a wealth of US$63.2 billion followed by:

• Mexican telecom titan, Carlos Slim Helu with US $62.2993 billion
• Microsoft William (Bill) Gates with US$62.29 billion
• Legendary investor Warren Buffett with US$55.9 billion
• Indian steel magnate Lakshmi Mittal with US$50.9 billion

China's 2006 GDP was $2.8 trillion while Germany had $2.9 trillion. The U.S. remains the world's biggest economy with a GDP of $13.2 trillion last year followed by Japan with $4.4 trillion worth of goods and service produced. China is expected to exceed Germany's Gross Domestic Product (GDP) this year as the third largest economy in the world at more than RM3 trillion.

These are remarkable achievements for a country like China, which was the economic sick man of Asia as recent as 30 years ago. Similarly, in a country where two Indians are amongst the 5 richest men in the world, is remarkable when many Indians remain poor. Whilst we congratulate the achievements of the Chinese and Indians, we should not forget that the success of the Chinese and Indians hold critical lessons of the importance of liberating the human potential of Malaysians and Malaysia from the shackles of the New Economic Policy (NEP).

China and individuals in India can succeed principally because both countries do not have the NEP and adopt policies that stress on merit, competitiveness, and expertise. Whilst we do not deny that Malaysia has progressed economically, we have performed poorly in comparison with other countries. Take South Korea as an example of how badly Malaysia has performed in relative terms.

In 1966 annual per capita Gross Domestic Product (GDP) was less than US$130 as compared to Malaysia’s US$350. By 1980, barely 10 years after the NEP, South Korea had caught up with a per capita GNP of US$1900 as compared to Malaysia’s US$1,830. By 2005 according to the International Monetary Fund, GDP per capita in Korea had far exceeded Malaysia at US$16,421 as compared to Malaysia’s US$5,040. From a position where Malaysia was almost 3 times better than South Korea, NEP has made us three times worse.

The New Economic Policy (NEP) and the 30% bumi equity requirement are the principal reasons why Malaysia performed worse than South Korea. Instead of promoting transparency, we promote corruption. Instead of merit, we have quotas. Instead of technical “know-how” we have political “know-who”. Instead of rule of law, we have “no law”. Lack of competitiveness, inefficiency and poor productivity is the price we pay for the government’s continued reliance on the NEP.

When former Prime Minister Tun Dr. Mahahtir Mohamad presented Vision 2020 on 28th February 1991, he required an average annual growth of 7% during the three decades to 2020. Malaysia is capable of achieving developed nation status only if it achieves an average growth of 8.8 percent in the next 15 years from 2006-2005.

Based on the 6% GDP growth already set for 9MP from 2006-2010, growth for the remaining 10 years to reach developing nation status -- 2011 to 2020 has to be at about 10.2 percent. The target of 10.2% for 2011-2020 is clearly impossible as the National Mission had set a growth rate of only 6.5% for this period. Even this 6.5% growth rate is doubtful as Malaysia is expected to be an oil importer from 2011-2020. GDP growth can only be increased if the NEP is abolished.

With the rise in international oil price to US$100 per barrel soon, the government can neither afford fuel subsidies nor ignore the sufferings of the poor bearing increased financial burdens from inflation. Whilst it may be economically unrealistic to expect any government to perpetually subsidize petroleum and gas without limit, it is socially unrealistic to expect the poor to survive without any assistance once the subsidies are removed. What is economically justifiable can not be socially justifiable if the poor are not given any financial assistance to counter inflationary impact from removal of gas subsidies.

For this reason DAP proposes that the government uses RM30 billion of the RM80 billion in annual profits earned Petronas, by giving an oil bonus of RM3,000 yearly to Malaysians earning less than RM3,000 per month to reduce their financial burden of inflation. There is no reason why Malaysians can not benefit directly from oil revenues when Malaysia is an oil exporter and an oil importer like Singapore without a single drop of oil can afford to distribute S$2,500 every year to poor and middle-class families.