JEDDAH, 28 February 2007 — In a speech in which he called on all Muslim nations to act as one family and look out for each other, Mohamed Najib Tun Abdul Razak, deputy prime minister of Malaysia urged Muslim countries to rekindle the spirit of unity and cooperation that would enable them to find “strength in each others successes and lessons from each others shortcomings.”
He recounted the history of economic development in Malaysia when, in the 1980s, it was still highly dependent on the export of commodities such as tin and rubber and prices were depressed in world markets. Government, he said, was involved in every aspect of the economy as asset owner and service provider.
Public sector debt was high and there were large budget deficits. It was too extensive, he reflected and government companies were making losses, public sector employment large and growing. “So was unemployment,” he said, “And clear signals that the public sector could not go on creating jobs without the private sector assuming a bigger role.”
Drawing a comparison between Malaysia and Saudi Arabia, he noted that the two countries shared many similarities. “Strong growth, diversifying our economies and pursuing industrialization and higher value added to our natural resources have placed greater demands on social infrastructure and job creation.” For both countries privatization had been a catalyst that brought about much needed investment in infrastructure, improvements in efficiency and productivity and provide the basis for transforming the social structure of our economies.
The objectives of the Malaysian privatization plan, at the beginning of the 1990’s were five: The first was to significantly reduce the financial and administration burden of government to give it greater control over fiscal policy; refocus public sector priorities on law order, defense, social amenities — for example education and health — and health. Secondly, to improve the efficiency and productivity of government enterprises radically and to introduce new talent, private sector management practices and incentives for increased performance. Thirdly, a drive to create foundation for sustained growth and reduce dependence on export of primary commodities that were subject to the external influences of the world market price. In parallel with this was a move to diversify the economic base by encouraging investment in manufacturing, construction and services. Fourth, was the need to create a more balanced role between public and private sectors.
The public sector, Razak said, was dominant and needed catalyst for private enterprise and risk-taking that would power the formation of a market driven economy and a strong banking system. Not least, he emphasized, was the necessity to address long standing economic disparities between the various ethnic groups in Malaysia — the poorest among them being the Muslim minority. “Privatization was seen as an economic restructuring tool to create a more equitable ownership pattern among ethnic groups” he said. A point which he did not mention was the reform of Malaysia’s education system which has been largely responsible for the country’s economic success in the last decade.
Razak outlined the ten-year time frame that Malaysia set itself to achieve its targets. “We began with the listing and sale of equity in the public utility companies including electricity and telecoms, airlines and the shipping companies,” he noted.
