I was invited to be a panelist along with YB Khairy Jamaluddin and Nani Abdul Rahman by Sepakat / IIUM on the topic World Economic Crisis: Is Malaysia Better Equipped to Face the Challenges Ahead.
I said, we must also remember that in order to face the challenges ahead, we need to look at our competitiveness, not just the immediate economic crisis. I pointed out that we failed to overcome our budget deficit during when our economy benefitted from a growing economy and higher commodity prices prior to 2008. Thus, when we need expansionary fiscal measures to come out from todays crisis, our deficit situation worsened to the point that some analysts predict it will reach 10 percent of GDP in 2010.
We do not need to read John Maynard Keynes General Theory of Employment, Interest or Money or understanding economic cycles to comprehend the basic principle. In the Quran, Surah Yusuf, we have the story of the Prophet Yusuf a.s. (Joseph).
The Pharaoh had a dream of seeing seven fat cows being devoured by seven lean ones, along with seven green ears of corn with seven dry ones. None of his nobles could interpret the dream until it reached Prophet Yusuf, who said:
For seven consecutive years, you shall sow as usual and that (the harvest) which you reap you shall leave in ears, (all) - except a little of it which you may eat (il-laqalilanm mim-ma ta-kuluna).
Then will come after that, seven hard (years), which will devour what you have laid by in advance for them, (all) except a little of that which you have guarded (stored) (il-la qalilanm mim-ma tu-hsinuna).
I also pointed out that while our budget expanded throughout all the years, more money is spent on operational expenditure as opposed to development expenditure. Khairy later pointed out this is to inculcate a culture of maintenance, but I do not see the impact of the increased spending. If anything, the latest Terengganu stadium fiasco illustrates the state of our public facilities.
I highlighted the increased dependence on oil. Thus, instead of investing the God-given wealth into productive and sustainable sectors, we seem to be squandering the money. For example, we did not invest sufficiently in public transport, and any expansion keeps being postponed or cut-down.
In the IIUM hall, in front of a largely Malay-Muslim audience, I also mentioned that at the end of the day, we need to address the shift from the NEP to a system based on merit and need, not race. While the NEP played a big role in giving birth to the Malay middle class - largely the audience including the panelists in that forum - we need to come up with a new policy to face the 21st century. The NEP must not be seen as a sacred cow, or a divine revelation that cannot be questioned.
Many in the audience asked about the role of Islamic financial system and Gold Dinar to bring us out from the crisis we face today. I acknowledged that the problem with the neo-liberal model that has been discredited is its reliance on derivatives and speculation, which is alien to the Islamic financial system.
At the same time, today there is a tendency to label products as Islamic from a legalistic perspective without due consideration to the spirit of Islamic finance. I believe we need a lot more research and studies to bring the Islamic financial system to match the sophistication of the conventional system which has benefited from a long history of ground-breaking research and study. We cannot isolate ourselves from the system and I believe our parallel structure today is a good framework to work on.
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Nani Abdul Rahman talks about human capitalby niknazmi00578 views
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