Ignore fault lines at your peril

I REFER to the glowing reports of NTP achievements. Although the achievements are substantial, the evaluation results of a near perfect score would have carried a bigger impact on public opinion if it came from an independent body outside the government and the ruling party.

As mentioned in the latest Bank Negara Malaysia Annual Report, economic conditions in the country are strong and stable, giving confidence that 2018 will also see good GDP growth on the back of the close to 6% growth in 2017. All this is commendable and acknowledged. But as the box articles in the report and other research publications point out, there are fault lines in the economy, giving rise to concerns about wage levels for the B40 (bottom 40%) and M40 (middle 40%) households, and their difficulties in coping with the rising costs of urban life. As such, problems can stoke social instability, they should be openly recognised as major challenges that the government has yet to come to grips with.

The government faces a major challenge to control the excessive reliance on cheap foreign labour because of the vested interests benefiting from this human trade. However, the challenge must be met, because the lax policy on employment of foreign labour, and worse, the entry of undocumented foreign workers, have a depressing effect on wage levels across all sectors.

While export manufacturers become rich with paying them low wages, and political cronies make easy money importing foreign labour, the working class remains poor and does not feel any benefit from the strong economic fundamentals.

There are not enough highskills jobs that pay better wages because the economy is not re- structuring fast enough to wean itself of the old methods of production to automate and produce the jobs of the modern age.

There are signs that youth and graduate unemployment is much higher than the national average. This is worrying because frustrated young men and women can easily fall prey to extremists.

The country requires major structural reforms in economic policies to generate competition, entrepreneurship as well as innovation and creativity and become like the East Asian Tigers.

These Asian countries have become fully developed with high levels of transparency and accountability. They have modernised with much lower ratio of foreign labour by using labour saving technologies to raise productivity and enable them to pay good wages.

We should be like them to develop an eco-system that is conducive for long-term investments. Apart from macro-economic fundamentals, investors also place high expectations on the governance structure of public institutions, the rule of law and clean government in making their business decisions.

There is an urgent need to modernise the education and training system with more emphasis on teaching of English, science and mathematics as corporations look at education standards to assess the availability of high quality human resources to operate the technologies in their plants and offices.

All these are the deciding factors for the economy to generate the jobs and incomes that make GDP growth meaningful to the working population.

Tan Sri Mohd Sheriff Mohd Kassim Kuala Lumpur