ETP: Part 4 – Private enterprises are rejecting the ETP

(Also published on The Malaysian Insider)

ETP: Part 4 – Private enterprises are rejecting the ETP
Dr. Ong Kian Ming & Teh Chi-Chang

The very basis of the ETP is in jeopardy. A key foundation of the ETP is that the private sector is to lead the massive RM1.4 trillion of investments needed to catapult Malaysia to high-income status by 2020. But the 35 per cent private sector share of ETP investments to date is far below target. The RM114 billion investments by government and GLCs are nearly double the RM62 billion invested by the private sector.

PEMANDU obfuscating again

PEMANDU responds that private sector investments are closer to the targeted 60 per cent share if big-ticket public sector projects like the MRT are excluded. This is intellectually dishonest. The ETP Roadmap Report includes such projects in its desired investment mix. There is no justification to exclude them. It is akin to giving a recipe for a rich chocolate cake and then saying it is not fattening if you exclude the calories from the butter.

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ETP: Part 3 (iii) — Two dud projects

(Also published on The Malaysian Insider)

Doubtful EPPs; doubtful achievements and due diligence

Some PEMANDU “achievements” are doubtful. The Karambunai Integrated Resort and Tanjong Agas Oil and Gas Park do not appear viable and their private sector developers are financially weak. These two EPPs alone account for 7 per cent of the total investments trumpeted by PEMANDU during the first year of the ETP. Their inclusion weakens the credibility of the headline investments, national income and job accretion that PEMANDU claims to have achieved.

Karambunai IR — expensive and crowded? The investment cost for this project in rural Sabah soared from RM3 billion to nearly RM10 billion in the six short months from its first mention before the ETP was launched to its final incarnation as an EPP. At this price, we estimate it needs 2.8 million visitors per year to break even — more than all the passengers arriving at Kota Kinabalu airport!

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ETP Part 3 (ii) — The hothouse labs probably killed innovation

(Also published on The Malaysian Insider)

The ETP resulted from 12 “labs”. Each lab comprised 30-50 experts who had eight weeks to research best practices and innovations, distil them in intense brainstorming sessions and support them with detailed analysis. The result was 131 Entry-Point Projects (EPPs) across 12 National Key Economic Areas (NKEAs) that would maximise gross national income with minimal public-funding support. Such is the PEMANDU narration.

Truly transformative ideas may have had no chance. Much was made of the private sector participation. But large companies would naturally dominate. Start-up companies, even if invited, cannot afford to release staff for eight weeks. Consider this example: 10 years ago, Microsoft, IBM and HP would have dominated any lab to transform the IT industry. Google was a cash-strapped start-up, Apple was in disarray and Facebook did not even exist. The incumbents would have been free to promote pet projects and stifle their competition.

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