Datuk Seri Najib Razak’s economic advisers were worried that the prime minister’s New Economic Model (NEM) brainchild was just a short-term public relations exercise without any lasting policy impact, according to a leaked United States diplomatic cable.
According to the cable released by whistleblower website Wikileaks, the National Economic Advisory Council (NEAC) was frustrated with the slow responses from government ministries and the lack of high-level political commitment outside of the prime minister’s office.
The entire cable, which quoted NEAC acting director of research Tong Yee Siong and American Chamber’s Nicholas Zeffries, among others, was published in the Malaysia Today news portal today.
“Tong told us that achieving any of the goals developed by the NEAC will require significant political buy-in to operationalize the policy changes necessary to reinvigorate investment and spur additional growth.
“However, Tong commented that NEAC members are frustrated with a lack of high-level political commitment outside of PM Najib (picture) as well as the slow responses from Ministries which impeded progress on the NEM,” according to the cable sent from the US Embassy here to Washington.
It quoted Tong further as saying “that some NEAC members are concerned that the NEM maybe merely a public relations exercise that will have no real long-term policy impact.
“Zeffries told us that he was not confident that PM Najib has a sufficiently strong political position to pursue the NEAC’s upcoming proposals,” the cable added further.
Najib launched the NEM last year in two parts but dropped certain sections including one on the Equal Opportunities Commission (EOC) which was severely criticised by NEAC member, the late Datuk Dr Zainal Aznam Mohd Yusof.
Zainal Aznam, who died on April 30, accused the Najib administration of succumbing to Perkasa and lacking the political will to implement reforms, including the formation of the EOC.
In a summary in the cable, US diplomats said: “Leading Malaysian economists believe that Najib is sincere in his desire to address these problems.
“However, they question his ability to make major changes in the government’s long-standing discriminatory Bumiputera preference policies which have discouraged domestic investment and new business formation and are driving the ‘brain drain’ of young professional Malaysians frustrated with limited opportunities under this system.”
The diplomats said local economists expect Najib’s effort “to establish a policy framework that will foster a more gradual move away from ethnic preferences to a merit-based economy, but believe that may be insufficient”.
“If PM Najib is unable to deliver on NEM reforms, they expect the opposition will seize the reform agenda as an issue for possible 2012 elections,” it said.
“Each of our contacts agreed that political will is the key to reform, but none are convinced all of the coming announcements of plans to reform Malaysia’s economy will be backed by substantially broad concrete measures.
“After early enthusiasm for economic reform, some Umno insiders do not want reform that would take away the economic rents and patronage system they have relied on to maintain the party’s power base for over a generation,” the cable said.
The cable said that Umno leaders are challenging Najib’s reforms because the party will not “survive in power by moving to an open and transparent system.”
Najib has embarked on an effort to sell his NEM to sceptical Malay voters, arguing that a new direction is needed to pull the ailing economy out of its middle-income trap by freeing the market of the crippling Malay largesse.