MALAYSIAN PM NAJIB UNVEILS NEM TO TRANSFORM M'SIA INTO HIGH-INCOME ECONOMY

KUALA LUMPUR, March 30 (Bernama) -- Prime Minister Najib Tun
Razak Tuesday unveiled the much-awaited New Economic Model (NEM) which will
transform the nation into a high-income economy that is sustainable and
inclusive and will position the nation on the right path towards attaining
developed nation status by 2020.

The NEM would make Malaysia more competitive regionally and globally with
benefits accruing to all Malaysians, with their per capita income increasing to
US$15,000 by the end of the decade from US$7,000 currently, said Najib, who is
also Finance Minister.

Under the NEM, the Government would no longer tolerate practices that
support
the behaviours of rent-seeking and patronage, which have
long tarnished the altruisic aims of the New Economic Policy (NEP).

The NEM wil be "inclusive" with all Malaysians contributing and benefiting
from
economic growth -- a fundamental element of any new economic approach, he said
in his speech at "Invest Malaysia 2010" conference.

Among highlights of the NEM are:
* Employees Provident Fund (EPF) will be allowed to invest more in overseas
assets;

*Malaysian Industrial Development Authority (MIDA) will be corporatised
and renamed as Malaysian Investment Development Authority to make it more
effective as an investment promotion agency;

*Government and EPF to form a joint venture to promote the development of
1,200 hectares of land (3,000 acres) in Sungai Buloh into a new hub for the
Klang Valley;

*Several parcels of land in Jalan Stonor, Jalan Ampang, Jalan Lidcol in
Kuala
Lumpur will be tendered out and developed by private sector, failing which it
will be wasteful if the assets were not developed as the government will incur
cost of maintaining them;

*The land development in Sungai Buloh and development of parcels of land in
the city centre is expected to generate new investments worth over RM5 billion
(US$1=RM3.2);

*The Ministry of Finance Inc companies such as Percetakan Nasional Malaysia
(Publishing Company), CTRM Aero Composites Sdn Bhd, Nine Bio Sdn Bhd and Innobio
may be privatised;

*Petronas has identified two sizeable subsidiaries with good track record
to be listed this year on Bursa Malaysia (Malaysia Exchange), a move that will
reduce government's presence in business and enhance private sector's role;

*Khazanah Nasional Bhd will divest its 32 per cent stake in Pos Malaysia Bhd
through a two-stage strategic divestment process;

Khazanah Nasional, the government's investment arm, will have to achieve
greater progress in divesting non-core assets to increase liquidity of these
counters, said Najib.

He also said the government will reassess the subsidy system and broaden
revenue-raising base through proposed Goods and Services Tax (GST).

This will place Malaysia in line with international norms and reduce
unsustainable reliance on a small number of industries, business and taxpayers.

He also said Malaysia should rise out of the "middle-income trap" that
will be a precarious position for any nation in the new global economy, which
means pursuing economic policies in knowledge industries of the future with
high-wage jobs and prosperity that can be shared by all.

The Prime Minister said the NEM, formulated by the independent National
Economic Advisory Council (NEAC), will be integrated into the 10th Malaysia Plan
with a longer term vision that will be delivered through the 11th Malaysia Plan.

"These can transform the economy to become one with high incomes and quality
growth over the next decade," he said.


Najib said Malaysia should make a quantum leap from the current US$7,000
per capita annual income to US$15,000 in 10 years.

"It will be no easy task, but the rewards will be great if we make this
transformation...the challenge is how we will do it," he said.

He said that creating a high-income nation will mean higher wages throughout
the economy as growth is derived not only from capital, but from greater
productivity through the use of skills and innovation, improved coordination,
stronger branding and compliance with international standards and intellectual
property rights.

Najib lamented that 80 per cent of the workforce today have education only
up to SPM qualification -- Malaysia's equivalent of the O-levels, which "is not
in line with the high income economy that Malaysia aspires to be."

The Prime Minister also said under the NEM, no one would be left out in
contributing to and sharing in the creation of wealth as the country progresses.

"Not only do I want the rakyat to earn better but they must also live
better" which is why raising the quality of life is an integral part of
the economic model, he said.

Najib also cautioned that Malaysians will have to experience some
short-term
pain for long-term benefits as certain economic sectors might experience adverse
effects.

"The process of change is never easy and there will be painful moments. But
for the long-term strength of our nation, we cannot afford to duck these issues
any longer.

"While the NEP's original policies are still relevant, it is time to review
its implementation. "We will chase the same goals but transform
the way we do things," he said.

The renewed affirmation action policy will be market-friendly, merit-based,
transparent and needs-based.

A notable point under the NEM was that a competitive and transparent tender
process with set and clear rules for the whole Bumiputera (son of earth)
community made up of both Malay and other indigenous groups was developed, said
Najib.

He also said there would be a renewed affirmative action policy in the
NEM with a focus on raising income levels of all disadvantaged groups.

They include those living in longhouses in Sabah and Sarawak, East Malaysia
states, poor rural households in Peninsular Malaysia and fishermen, petty
traders and small farmers and "not forgetting the aboriginal peoples (Orang
Asli) and low-income urban dwellers seeking out a livelihood in tough economic
circumstances.

He said the NEAC report suggested that focus be placed on the bottom 40 per
cent of Malaysia's income strata -- both individually and regionally. These are
the disadvantaged groups of people special attention is still required.

"The ultimate goal in time is that no Malaysian lives in poverty, that all
get the chance to succeed and share in prosperity," he said.

The NEAC report says the previous mechanism which concentrates on target-
setting should now focus on structured and dedicated capacity-building
investment that allows Bumiputeras to take advantage of new opportunities in
the economy.

With the NEM, he said there was a need to change the perception that
non-Bumiputeras have not benefited from the progress made to date although facts
and figures showed otherwise.

For far too long, implementation of Malaysia's affirmative action policies
have not reached the people who needed them the most, he said.

He also said New Key Economic Activities (NKEAs) will be selected and
implemented under the 10th Malaysia Plan spearheaded by a special Economic
Delivery Unit to be set up to institute the economic reform process as well
as drive innovation rather than simply importing them.

Among the areas are information technology (IT), electrical and electronics
sector, small-and medium-scale enterprises (SMEs) supplying big firms on a
larger scale basis, resource-based industries in palm oil, oil and gas sector,
biofuel from biomass, cosmetics and bio-degradable plastics, tourism and
agriculture.

He said Malaysia's international expertise in energy could help companies in
the industry and beyond to expand internationally by sharing its know-how,
partnering on international bids and offering support on a truly global scale.

Malaysia could also embrace a leadership role in green technology by
developing a niche in high-value green industries and services and emerge as a
green hub from research to design to manufacturing and commercialisation.

Against a backdrop of international competition no longer among countries
but also between cities, Najib suggested that cities like Kuala Lumpur and Johor
Baharu must be developed to be more livable and able to attract top-class
talents.

He said the report on the NEM for Malaysia will be published and made
available to the public to gather their input and provide them the opportunity
to be part of the decision-making progress over the coming months in
transforming the nation's economy.

From today, the Cabinet and the NEAC will begin detailed deliberations on
the NEM to prepare a roadmap for the future, encompassing both the 10th and 11th
Malaysia plans as well as the 2011 budget to be tabled on Oct 15.

The era of "government knows best" was over and that all important
stakeholders -- the people, business leaders and investors will be consulted in
joint efforts to achieve a strong, convincing and effective plan to implement
the NEM, he added.

-- BERNAMA