KUALA LUMPUR, March 2 — He left Malaysia years ago to build his reputation in world financial circles but today Datuk Seri Panglima Andrew Sheng is shaping up as one of the most powerful voices of reforms as the country navigates itself through the global economic crisis.
His mantra: Malaysia must move away from the old export and foreign direct investment model of growth. Malaysia must be open to talent and ideas if it wants to become more innovative society. Malaysia must view the crisis as an opportunity for reform.
Otherwise, China, India and other economies will emerge leaner and stronger and Malaysia will fall even further behind.
Even when the administration was optimistic several months ago that Malaysia would be insulated from the worst effects of the crisis, Sheng was raising red flags, telling his colleagues in the Economic Council (EC) that the downturn would have a deep impact on the country.
In the past week, several ministers have started to paint a dire picture, warning the public to expect the effects of the global slowdown to be deep and long.
Others have talked about the need for structural changes to the Malaysian economy. This more realistic outlook has much to do with the collapse of exports in the fourth quarter as well a presentation which Sheng, the former chairman of the Hong Kong Securities and Futures Commission, gave the Economic Council on February 24.
Several council members told The Malaysian Insider that he culled facts and figures from the United States and other major economies and presented a compelling argument on why Malaysia cannot continue on its present path.
For a start, he noted that the recession being felt in the West would lead to moves to protect jobs in the home countries and cut outsourcing. Similarly, labour power in the affected countries will grow, leading to more rules on imports.
This protectionist trend will have an impact on the flow of FDI to countries like Malaysia and the ability of trading nations to export themselves out of the crisis.
A council member, who requested anonymity because he was not cleared to speak about the briefing, said: “Many of us also know some of the facts that he presented but Andrew was able to pull all these facts together and present a more complete picture on the challenges and opportunities for Malaysia. It also helped that he has studied other crises closely.’’
After training as a chartered accountant, Sheng worked at Bank Negara Malaysia, and held various positions including Chief Economist and Assistant Governor in charge of Bank and Insurance Regulations.
He was seconded to the World Bank, Washington, DC, as Senior Manager, Financial Markets and Payments Systems, Financial Sector Development Department from 1989-1993. He became the Deputy Chief Executive of the Hong Kong Monetary Authority from 1993 to 1998, responsible for the Reserves Management and External Departments.
In 1998, he co-chaired the Working Party on Transparency and Accountability, one of the three Working Parties formed under the Group of Twenty-two Finance Ministers and Central Bank Governors.
In his presentation to Prime Minister Datuk Seri Abdullah Ahmad Badawi, Datuk Seri Najib Tun Razak and other members of the EC, Sheng pointed out that Malaysia grew from a colonial economy to a modern middle income economy because it was able to diversify to oil, electronics and palm oil.
But the country was now being challenged on these fronts. Indonesia was over-taking Malaysia in palm oil , electronics was moving to new cluster areas, FDI was weak and Malaysian companies were moving capital abroad after being crowded out at home.
Also, Malaysia’s addiction to cheap imported labour has kept wages low. The result: companies have no incentives to improve productivity and Malaysia’s best talent goes abroad in search of better wages.
Several EC members said that they came away from Sheng’s briefing with a clear appreciation that there were no easy answers for the Malaysian economy. “I think the underlying message was that we can longer tweak here and there and hope to enjoy the old rate of economic growth. We have to be prepared to reexamine all the assumptions and be open to new ideas,” said a government official, who attended the briefing.
Sheng urged the government to get each government department, university, think tank in the country and NGO to come up with their own strategies for Malaysia. At the same time, the administration should invite suggestions from the World Bank, consulting groups and others.
He also suggested that the government go out in a big way and attract talented Malaysians or foreigners who have been retrenched from their jobs in the US, UK and other developed economies. In this way, Malaysia can bolster the pool of engineers, doctors, managers and tap into the rise of the Middle East, China and India, he noted.
Source: MalaysianInsider
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