NA­JIB: RE­FORM POLI­CIES DE­LIV­ER­ING GOOD RE­SULTS

Even neu­tral ob­servers have com­mended our achieve­ments, says Prime Min­is­ter Datuk Seri Na­jib Razak in this in­ter­view

New Straits Times - - News -

reached their sta­tus at the con­se­quence of wide in­come dis­par­ity be­tween the rich and the poor. Their gov­ern­ments had also ac­cu­mu­lated mas­sive debt re­sult­ing in un­sus­tain­able fis­cal po­si­tions.

That is where Malaysia was headed prior to 2009. Our debt had been climb­ing at a rate of 10.2 per cent per an­num in the last 10 years. If the gov­ern­ment had not reined in its spend­ing or its bor­row­ing, our fis­cal po­si­tion would be sim­i­lar to the likes of coun­tries like Greece, Spain and Por­tu­gal by 2019.

And so, I made a decision with my cab­i­net mem­bers to al­ter course. Only 10 per cent of high­in­come coun­tries went down the sim­i­lar path Malaysia em­barked on in 2010; Switzer­land, Swe­den and New Zealand be­ing some of them. They reached high-in­come sta­tus with a sus­tain­able fis­cal po­si­tion; their fi­nances are in sur­plus or are bal­anced. These coun­tries have also nar­rowed the gap be­tween the rich and the poor.

That was the ba­sis of our trans­for­ma­tion model.

As you rightly put it, the chal­lenges for the gov­ern­ment are aplenty. My cab­i­net and I ex­am­ined the road Malaysia was on prior to 2009 and we agreed that if we con­tinue to carry out busi­ness as usual, the con­se­quence would be that Malaysia would ac­crue in­sur­mount­able debt as a re­sult of un­sus­tain­able bor­row­ing leav­ing the gov­ern­ment in a highly pre­car­i­ous fis­cal po­si­tion.

Since 2010, we have done three things to steer Malaysia back onto a road of sus­tain­able fis­cal po­si­tion. Firstly, we removed fuel sub­si­dies. This was po­lit­i­cally un­pop­u­lar, but based on the coun­sel of var­i­ous eco­nomic and fi­nance ex­perts, it had to be done. Fuel sub­si­dies had reached RM25 bil­lion, ac­count­ing for 13.6 per cent of the to­tal na­tional bud­get. As of 2015, we had man­aged to save RM22 bil­lion from sub­si­dies and de­ployed tar­geted sub­si­dies to the need­ful in­stead.

Se­condly, we’ve also re­duced gov­ern­ment de­pen­dence on oil rev­enue from 41 per cent when I as­sumed of­fice in 2009, to just 14 per cent to­day. This dra­matic re­duc­tion is largely due to a boon in

(Clock­wise, from top left) The GST, Ur­ban Trans­for­ma­tion Cen­tres, Light Rail Tran­sit ex­ten­sion, MRT and 1Azam are prod­ucts of the Na­tional Trans­for­ma­tion Pro­gramme.

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