Tuesday, September 21, 2010

Economic Transformation Programme Open Day

I’ve just come back from the ETP open day. I’m sorry to say I didn’t spend much time there, so there won’t be much analysis of the content until the ETP is actually published next month – apparently it’s going to be issued after the federal government budget is tabled in parliament.

The response was pretty good as I saw plenty of interested people browsing through the exhibits – most no doubt from companies who are going to be affected by the ETP proposals (including mine). The free-flow of food probably helped as well :)

Just some quick hit thoughts on some of the things that struck me, reading some of the proposals (thoughts on the actual targets are here):

  1. Those who complained about a lack of detail in the New Economic Model (NEM) document should be satisfied. I saw plenty of specific plans and proposals for most of the identified economic growth areas.
  2. Some of course still won’t be happy – mass rapid transport proposals for instance are still a little nebulous.
  3. There’s been a 180° turnaround in terms of thinking on agriculture – at least to me. The NEM envisioned help for small holders through subsidies and other financial support. The ETP on the other hand sets out a big business approach for agriculture, recognising the scale economies problem with small holdings. There’s going to be some pain here for existing farmers, but long term, this has to be the way to go.
  4. There’s a proposal for capping EPF accounts at RM1 million, by implementing a tiered return policy – amounts over that limit will earn only 2.5%, compared to the 5%+ that EPF has managed over the years. Withdrawals will also be liberalised (sorry can’t remember the details). That will help boost the local fund management industry, and increase demand for financial planning services.
  5. Increasing the free float in shares of GLCs was again mentioned, though I’m not aware of any specific directives to the GLICs just yet. GLICs will also be required to outsource more of their funds to external fund managers.
  6. Direct Domestic Investment (DDI) is going to be a more important priority over FDI, which is more or less in line with my thinking.

In all there are going to be well over 150 major 131 projects to be implemented over the next ten years, in the NKEA areas.

So far…I’m pretty impressed. This is different from the usual development planning we are used to from the government. But as always, planning is less important than implementation. The proposals and projects are detailed enough to be workable, but putting them in place on the ground will be the real measure of success.

I’d also ask for a way to actually measure progress – in a way that actually makes sense for the layman – as the projects are rolled out. That’s going to be difficult because many of these are going to be private sector led instead of government programs, which is nice but complicates monitoring.

The budget is going to be reaalllly interesting this year.


  1. Don't worry it's just talk to feel good but nothing prevails. The mega corridors are still empty.

  2. the EPPs are quite detailed so i think if they really have the political will, most of the targets could be achieved. What i'm worried though is the EPPs are more urban concentrated whilst only 19% are rural projects. Shouldn't this widen the income disparity? and also the programmes dont really address the negative externalities of moving towards a high income status?

  3. Yeah, I had an interesting discussion on that this morning. Whether we get to high income status or not, there's going to be winners and losers in the process, and the less skilled and less knowledgeable you are, the more likely you'll end up being left behind.

    The majority of the population will be happy with the changes, but there's been almost no discussion on how to support the less fortunate - and the NEM and ETP will create many more of these than I think the government realises.

  4. dont u think all these PEMANDU thing is just an academic exercise?

  5. No - it looks real enough to me. There's enough detail in there that people can easily figure out whether the government is putting its weight behind it. There's a lot of ammunition here for the opposition if the government doesn't follow through.

    Now the Malaysia Plans, that's a different story.

  6. Largely government funded at first glance...turns out big ticket MRT & High Speed Train will instead be largely govt funded..tune of RM 60 billion and counting.The purported need & feasibility hinges on a 10 mil population and the vast opportunities from Greater KL.Heard the same argument for Corridors.

    Greater Kl,River of Life..thats all property play.Slight downturn and its 1998 all over again.

    We need to first of all max returns on existing investments eg Putra,Cyber,Iskandar.This fixation for massive infra investments will be our undoing.

    On public transport..there are cheaper and as effective options.The Kommuter is a great trunk.Using various feeders such as trams,buses and with the LRT extensions,upgraded Komuter Network and possibly a few new LRT corridors..we can manage with less investments and OPEX.

    But,its not so easy due to Msia's perpetual Capex Addiction.