The government's economic stimulus package, launched in March 2009, has finally paid off. Not only has Malaysia succeeded to cushion the impact of global economic recession, the economy has performed within Asean with Singapore leading the pack at an impressive growth rate of 15.1 per cent followed by Thailand 7.5 per cent, Malaysia 7.2 per cent, Philippines 7.04 per cent, Vietnam 6.48 per cent, Indonesia 6 per cent and Brunei 0.5 per cent, according to the World Bank.
The real challenge for Malaysia this year is to sustain its economic growth against the backdrop of global economic uncertainty and political turmoil besieging the Middle East. This was recently compounded with the natural disaster in Japan that may potentially affect Malaysia's overall export earnings as Japan is Malaysia's third largest trading partner with exports amounting to almost US$21.8 billion (RM66.71 billion) last year.
Although many economists are predicting growth rates of between 5 per cent and 6 per cent for year 2011, many failed to anticipate the expected revenue of RM76 billion generated from the launching of 23 new private investment projects valued at RM14.74. These investments are expected to stimulate higher private-sector interest, which will in turn boost foreign and domestic investors' confidence.
The swing factor that will propel this year's economic growth will be from private investments and this will be buoyed by domestic demand, which is expected to remain strong.
Several subsectors from the services industry are expected to perform well this year, particularly the tourism industry, given the government's relentless effort to promote it. Malaysia's per capita income is set to soar at an unprecedented level this year and this will directly boost the hotel and retail activities.
The telecommunications and banking industry is geared to play a more prominent role in the global market, which is expected to contribute further to the country's external economy; while the construction industry is expected to remain robust with the implementation of the mass rapid transit project.
In short, the government, through its GLCs, has shown its strong commitment to 'ignite' the economy and it is time for the private sector to reciprocate by matching some of the big investment commitments. Another essential ingredient is the need for the public to rally behind the government's effort to realise its vision.
Indeed, we must always be reminded that the global economy is fraught with fierce competition and every nation is striving to achieve economic success by capitalising on its strength. One of the most important factors to achieve economic strength is the ability of the government to forge public consensus and support for its economic agenda. Indeed, history has taught us the danger of violence, disunity and politics of antagonism that often besiege many failed economies.
The successful transformation of East European countries from state socialism to capitalism serves as a valuable lesson. The economic revolution was initially marred with uncertainty because there were hardly any comparable stories to serve as a road map. The only one profound advantage these countries possessed is the solidarity and support from its citizens to initiate economic reforms, even unpopular ones. Today East European's transformation remains a favourite success story in the annals of modern economic theories.
Malaysia's New Economic Model (NEM) is the first step towards a long journey that is mired with hardship and sacrifices. The success of this economic transformation can only be attained if the population is willing to embrace the virtues of our government's economic agenda without reservation. While it is true that no matter how concerted the agenda has been formulated, we are bound to encounter errors, weaknesses and flaws as we travel the precarious journey of economic transformation.
The first battle is to instil unwavering self-confidence that will inspire the population to face many turbulent years ahead as one united people regardless of our political affiliations.
The task of building public's confidence and spreading the virtuousness that lies within the spirit of NEM should be led by every government ministries, agencies, higher learning institutions, professional bodies, MNCs, NGOs and eminent individuals.
While this remains a battle for all of us, it is disheartening to observe cynics who appear bent on criticising every economic policy announced by the government. Opponents of the new economic model had even prophesied a doomsday scenario of Malaysia's economy while equating it with countries like Greece and Ireland. The recent conflict in the Middle East and the subsequent increase in oil prices have been prophesied by the cynics as the final event that will seal all hope of realising the country's vision.
There is, of course, no truth to this prophecy. To begin with, Malaysia's economy remains vibrant despite the political upheavals in the Middle East. Malaysia, as a net oil exporting country, has maintained its debt to gross domestic product (GDP) ratio at about 50 per cent, of which only 7 per cent was foreign-currency dominated while over 90 per cent is held by local financial institutions.
The country has very little exposure on currency and re-financing risk. Since 1997, Malaysia has been enjoying a healthy current account surplus and its budget deficits are projected to narrow in the medium term, funded primarily by domestic liquidity. Malaysia's other fiscal and external indicators are fairly impressive - high foreign reserves, manageable external debt, strong domestic savings of 32.5 per cent of GDP, and net interest payments to revenue that support the notion of sustainability over its debt management programme.
The country's local currency ratings remain at A-plus and there are no signs that future outlook will turn negative.
The government's economic agenda is meant to improvise the country's infrastructure and move the economy to a higher plateau but it must be carried out gradually and with consensus from the public and private sectors. The government has to balance the need of economic reforms against austerity measures that could threaten to offset the country's infrastructure if done hastily.
Every organisation, agencies and individuals should stand shoulder-to-shoulder to prepare the country on its long transformation journey instead of descending into doomsday prophecy and casting negativity on the future of the economy. It is the confidence and economic will of the population that will ultimately decide the success or failure of our government's economic programme.