Did Adenan get it right on Sarawak’s new economic plan?

By Medecci Lineil

Sarawak Chief Minister Adenan Satem tabled the Sarawak 11th Malaysia Plan during a special State Legislative Assembly sitting on Aug 17.

In his speech, he said that the state government has formulated a long-term perspective plan for Sarawak known as the Sarawak Socio-Economic Transformation Plan (SETP) covering a period of 25 years from 2016 until 2030.

Twenty-five years of an economic planning is very long and indeed, a very expensive one costing RM180 billion to transform Sarawak from all perspectives.

The plan however sounds overly ambitious to me. Why?

Because we are talking about the future and it deals with millions of individual plans, business plans, motivations, preferences of every Sarawakian which fundamentally change constantly, none of them can be quantified accurately.

If Adenan is so convinced that his economic planning will improve our income and standard of living within 25 years, why can’t he use his talented state economists’ skills to predict the stock market or oil market where accurate projecting reaps such rich profits and distribute to all Sarawakian in a short time? Why wait for 25 years?

On the other hand, when the money (RM180 billion) goes into SETP, we must also accept that economic growth causes inflation.

Real economic growth happens when technology and social institutions raise productivity. Higher productivity not only lowers cost per unit of output, but it increases total output, in turn low prices.

Imagine this huge amount of money chasing too few goods and services (not matched with an increase of money supply), what would happen? The answer is inflation.

When the CM outlines six strategic thrusts under Sarawak’s 11th Malaysia Plan (in line with SETP) namely strategising economic growth, strengthening growth enablers, transforming the rural areas, ensuring sustainable environment and resource management, developing human capital as the catalysts of growth and enhancing the quality of life, in principle he is correct.

Take strategising economic growth for example, he said that we must transform the state economy from commodity-based to more value-added economy.

In doing so, we must have a greater ability to produce goods and services that we value. We cannot be tied up with a consumer spending driven economy all the time when in the real world, we have to produce before we can consume.

To acquire that ability, the state government must initiate land deregulation and abolish irrelevant red tape for development in urban and rural areas to make sure more Sarawakians can afford housing and more can venture into commercial agriculture.

The state government must also facilitate greater participation from private sectors, not by giving more subsidies or more regulations but by freeing them to explore their interest in business and industries of construction, infrastructure, energy, IT, food, livestock and so forth so that a variety of choices can be enjoyed by our consumers at lower costs.

Technology and innovation allow less manpower to produce more output and higher productivity, thereby releasing many precious resources, including human labour, for use in producing goods and services that earlier were too costly to produce. Remember we want to transform the state economy from commodity based to more value added economy?

My point is – we should see more spending in infrastructure, agriculture, energy, R&D, technology, more jobs, and higher incomes, more saving in future because those are the results of economic growth.

First published in The Ant Daily on August 26, 2015.

 

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