This article was originally published in The Star (Malaysia) on 30 July, 2009

By Wan Saiful Wan Jan

The Prime Minister’s opening up of the economy must continue because it is the right progress, and more needs to be done.

WITH the caveat that a lot more needs to be done, I applaud Prime Minister Datuk Seri Najib Tun Razak’s bold moves to make our economy more liberal.

I must say that our Government is still meddling in too many things and that the market could do better. But recent liberalisation moves are a good start to make amends.

Malaysia’s liberalisation drive is taking place during a time when many other countries are turning to protectionism. In America, many, including President Barack Obama, have talked about the need to “Buy American”.

Other countries are following suit. China, Russia, Australia, and several countries in the European Union are also anxious to protect their domestic industries.

Some Malaysian politicians, inclu-ding those in the ruling coalition, have fallen into the protectionist trap too.

While Najib is trying to open up the markets, some Barisan Nasional politicians support a “Buy Malaysian” campaign, effectively calling for the opposite of the Prime Minister’s effort.

Surprisingly no one seems to realise that this confused political message could damage the liberalisation agenda.

Other Malay politicians are using this as an opportunity to accuse Najib of ignoring Malay rights.

Some PAS leaders are beginning to sound like economic nationalists rather than Islamists.

They claim that Najib’s slashing of the 30% Malay equity quota threatens Malay economic rights.

Rather than championing the free market principles of Islam, PAS now wants to be a champion of chauvinistic Malay nationalism.

At the same time, the socialists in their various guises are only expected to oppose Najib’s initiatives.

Alec van Gelder, coordinator of the Freedom to Trade Coalition (launched at the same time as the G20 Summit in London in April), said in one of his articles: “Protec-tionism made no sense then and it makes even less sense now.

“Today’s global economy is much more integrated and we are all much better off because of reduced trade barriers, especially the poorest countries.”

It is easy to understand why van Gelder feels protectionism makes no sense, especially for a country like Malaysia.

Let’s take just one example, car prices. A new Toyota Camry costs around RM180,000 (US$54,000) in Malaysia, but in America, a similar model would cost less than RM90,000 (US$27,000). It is twice more expensive to buy a similar car in Malaysia because of our protectionist tariffs and import duties.

And if we compare car prices in Malaysia and that in the UK, we will discover the same situation.

That is why many students sponsored by the Malaysian Government to pursue their postgraduate qualifications in the UK return home with a Mercedes accompanying their scrolls.

The well-connected may not feel the impact too much because they can afford the inflated car prices, or they know of ways to avoid the import duties. But the poorer Malaysians can only afford to dream.

When governments introduce policies that knowingly hurt the poor, how can we say that that makes sense?

In fact, any policy that intentionally and knowingly hurts the poor, or keeps them poor, is not just nonsensical, but also immoral.

Malaysia’s economic liberalisation must continue because it is the only moral way forward.

Najib must vigorously pursue a wider liberalisation agenda because that is the moral thing to do.

Having said that, it is not yet time to give a blanket endorsement to Najib’s administration. Yes, the liberalisation moves are good and the country’s economy may prosper, but Malaysia needs much more.

Malaysia will only enjoy a strong and vibrant economy if economic liberalisation is coupled with a drive to strengthen the country’s democratic institutions.

For investors to come into the country, the judiciary must be, and must be seen as, independent.

The Malaysian legislature needs to play its proper role to check and balance the executive.

And so far, the legislature is still impotent when it comes to checking the executive. This must change.

Needless to say, corruption must be curbed too.

It does not help when the very agency tasked with curbing corruption find themselves being accused of racism and allegedly being so careless that a witness died in their own premises.

Even more needs to be done to free our economy.

The Government still has too big a role in the country’s economy, despite recent announcements. There are still dozens of government-linked companies crowding the market.

The Government also needs to stop meddling with the prices of goods. Malaysia Think Tank’s Trade Policy Fellow Hafiz Noor Shams warned that “prices and supply control regimes are still in place to distort signals in the market in the name of welfare, discouraging the development of an adaptive culture in favour of a static one”.

Najib has indeed shown that he prefers the morally superior path of economic liberalisation.

He must continue on that path and do all that he can to create trustworthy institutions to support a freer economy.

> Wan Saiful Wan Jan is Director General of the Malaysia Think Tank (www.WauBebas.org).