3. Malaysia: lessons from the past...

In order to achieve the Vision 2020, Malaysia needs to sustain an annual GDP growth of about 8 percent for years leading up to 2020. Although it is easy to blame the halt of a high economic growth to the Asian financial crisis, one must also realise the spectacular economic growth in mid 1990s was not sustainable. During the period of healthy economic growth, there was no evidence that investment in productive factors contribute to a mark increased in productivity and/or improved technological competence or knowledge. There was no explicit contingency plan or strategy for Vision 2020 in the event of an economic slowdown. Instead our economy relied on capital injections from foreign investors and government projects to drive high employment market and demand for local services. Foreign investors or multinationals were once attracted to Malaysia through a host of tax benefits. Unfortunately, most investments benefiting from our attractive tax benefits and cheap labour market did not lead to transfer of technology, technical know-how or innovation - which are essential for a sustainable economic growth. The government of Malaysia recognised that our human resources are not equipped with the knowledge or management competence to absorb and acquire the skills and technology from foreign investments. The government responded with a bold education strategy of providing scholarships and sending Malaysian students abroad to obtain higher education qualifications. The government also invested heavily in improving the transportation networks in Kuala Lumpur (e.g., new airport, ligh rail transport) or the federal state (e.g., Cyberjaya and Putrajaya) as part of the strategy to enhance our competitiveness. In brief, there were many other projects initiated by the government in the hope of increasing our economic growth. As with any investment, it is necessary to assess its return-on-investment particularly to our people in terms of raising our standard of living and economic well-being. Whilst there have been many success stories in terms of standards of living about our improved infrastructure in Kuala Lumpur, these are limited to a minority of our population in Malaysia. At the same time, the public transportation system in the capital has not really resolved or eased traffic congestions. This affects not only our productivity and competitiveness but also questions our initial strategic planning. Returning to the government education strategy of sending many Malaysian students abroad, to date, there is no evidence that this strategy has paid off especially the government and multinationals continue to recruit foreign managers to hold key position in an organisation. There is also no sign of high demand for any specific skills or talents of students graduating from abroad. On the contrary, the government embarked on what seemed to an u-turn strategy of educating Malaysians at home by setting up many new local universities or granting licences for local private higher education institutions. By and large, our economic strategy has for the most part failed to materialise and there was no contingency strategic plan to prepare for adverse economic circumstances.