By Wong Chen
This article is part one of a condensed version of a speech that I delivered at the first ever Unity Government National Convention on 14th May 2023. I was invited to be the first speaker of the convention and I talked about the way forward for the Malaysian economy.
For the last decade, I was tasked by my party, PKR to monitor and formulate economic policies. However, since the formation of the Unity Government in December 2023, I have been redirected to focus on international affairs and international trade, with a side focus on two other topics; (a) science and technology, and (b) human rights. The focus on science and technology relates more to my Inter Parliamentary Union (IPU) work concerning SDGs and climate change and as for human rights, the time for the ASEAN Parliamentarians for Human Rights (APHR). At the moment, I am also holding three additional positions which keeps me very busy at all times.
Nevertheless, from time to time, I have been asked by reporters and my constituents to comment on the economy. I would like to begin by saying that despite extremely challenging global economic problems, the Unity Government has done relatively well in containing inflation and keeping unemployment under control.
However, in view that the ringgit has underperformed of late, the base lending rate is under pressure to increase, and that we have had sluggish economic activities in Q2 2023, I feel that my economic speech which I delivered more than two months ago, is now more urgent and relevant.
My speech began by noting that our labour production costs has been increasing. As this continues to happen, Malaysia will continue to lose its low-cost production competitiveness against many of our ASEAN neighbours. In order to stand out in this cost competitive environment, we need to re-look at what we have and then re-imagine a new economic plan.
I then urged the audience to keep in mind the challenges of climate change, which will have a profoundly negative impact on the global economy in the coming decades. Then I focused on the state of our forests, our crucial carbon sinks. I noted that as per World Bank 2020 data, Malaysia has relatively good carbon sinks with 58.2% forest cover. Compared to most of our immediate economic competitors in ASEAN, we are ahead of Indonesia (49.1%), Vietnam at (46.7%), Thailand (38.9%), and Singapore at (21.7%).
By leveraging on this advantage of sinks, with the right political will and policies, we should be able to reach net zero faster and outflank all our economic competition. Taking pole position on sustainability in the region in the backdrop of climate change, should make us the ASEAN if not Asian hub for all matters related to green science and technology. Manufacturing, research and consulting services, carbon trading and the likes will provide us a green technology and investment niche. That in turn, will pay steady and strong economic dividends for all Malaysians in the next five decades. It will transform our manufacturing capabilities and create meaningful high paying jobs, all geared to make us a crucial partner in the global fight against climate change.
Specifically, we need to implement this sustainable and green technology ethos into five sectors of the Malaysian economy for the next five years. They are as follows; (a) agriculture; (b) power generation, (c) mining, (d) manufacturing and (e) services.
The planning needs to start now, its deployment immediate within a year or two. We must work on buy-ins from all Malaysian stakeholders including bipartisan politicians, civil servants and society at large.
Malaysia lags in the agriculture sector with low yield productivity. We need to deploy behavioural economic solutions to address the relatively low yield of our produce in comparison to our neighbours. Despite the subsidies poured into this sector, our overall national yields remain stubbornly low. About six years ago, I sent my then officers on a field trip to Kedah. They visited a very successful farm (with superior yields compared to others) and observed that the farmers in that farm were guaranteed a fixed monthly income. In other words, this income security enabled them to be full time professional farmers. Whereas other farmers did not have this security and as such pursued various odd jobs in the village to make a living, hence often neglecting their crops, resulting in poorer yields.
I believe that the current subsidy schemes of the government need to be re-consolidated, re-looked and then re-deployed using behavioural economics as a tool. Perhaps, the provision of income security for farmers could be the key, or maybe it is something else. What we do know is the yield data from agriculture shows low efficiencies. Tackling this should then be a priority of the Unity Government and this will go some way to helping rural folks economically. As for the crops that they may pursue, the removal of monopolies and restrictions will enable farmers to choose better value crops, hence more diverse of produce.
On the sustainability and green technology front, the Unity Government too need to push hard on the planting of crops that have potential to be biomass feedstock for renewable energy. An agriculture blueprint with the right incentives and support, as we have done for rubber and palm oil many decades ago, can encourage the mass planting of biomass energy feedstock such as corn, napier, bamboo and smaller wood trees. In the decades to come, the world would need to transition from coal power to biomass and biogas power, and we need to prepare to meet that curve in demand now.
In order to meet net zero and transform our economy, we need to keep our forests and work hard on converting our coal-fired plants to run instead on sustainable biomass. Is this possible? The answer is an absolute, yes. In Denmark, the company Ørsted has successfully undertaken a massive biomass conversion programme, rebuilding and upgrading their coal-fired combined heat and power plants to run 91% on sustainable biomass. We can and must do the same.
Wait for part two of this article in the next SJ Echo. I would also like to take this opportunity to thank Michelle Ng for her dedicated services in the last five years as ADUN of Subang Jaya. I wish her all the very best in the upcoming ADUN elections in Selangor.
