Recognising the private sector’s role

THE private sector must join the government in its effort to correct the imbalance of income levels in the country, said a think tank institute.

The government should be regarded more as a facilitator for all stakeholders of the nation’s economy to make the Shared Prosperity Vision 2030 (SPV 2030) a success, said Institut Masa Depan Malaysia (Masa) chief executive officer Nizam Mahshar.

Masa was tasked by the government to curate the vision and lay out the plan on paper.

“Under SPV 2030, the country’s leadership can put things in the right direction. We have identified key economic growth activities. These are the areas moving forward in the economy and potential growth areas for the country.

“If necessary programmes are put in place to support these key growth areas, we hope they will drive the economy,” said Nizam.

“The government’s role is to lead the growth and show the pathway, not only to give what the private sector or small and medium enterprises (SMEs) want, but also to provide the right facilities to spur interest from the private sector to do more for the economy.

“By aligning policies with trying to get investments in the right rural spaces, SMEs and private companies can then be incentivised to move out of traditional or conventional spaces to these new key growth activities,” he added.

Khazanah Research Institute (KRI) director of research Dr Suraya Ismail said leaving SPV 2030 in the hands of the government alone meant it would fail as the private sector drives the economy.

“At present, jobs being created in the market are not high valueadded. To have a decent way of life, you must have an income which allows you to have decent purchasing power.

“In 2014, the bottom 70% of our people trade off expenses on other things when they are faced with having to pay for a sudden expense such as a punctured tyre.

“Under SPV 2030, if we are to ensure that everyone gets a fair piece of the economic pie, be it the same one or an expanded one, there needs to be structural changes to the economy.

“However, looking at the way firms are doing now, most of the private sector companies do not do research and development. Therefore, there is no expansion of technology or higher productivity leading to higher wages. The fault lies with the private sector more than the government,” said Suraya.

She pointed out that KRI research has shown that in the current economy, many are doing jobs that they are overqualified for.

“If we see the school-to-work statistics, we will see that most people work in places that are not on par with their qualifications. The job market is not creating professions which are needed. Graduates are working as cashiers and so forth.

“Private firms should realise that they must not wait for the government incentives, especially when the main reason private firms are in business is for more profits,” said Suraya.

Fellow KRI researchers Hawati Abdul Hamid and Gregory Ho said the private sector must move away from low-scale business models.

“When there are high-scale business models, there will be jobs with high-scale wages and the people would have better purchasing power,” said Hawati.

Ho noted: “If there is perpetuity in the way we are doing this, our wages will remain more or less the same.”