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IMF Chief's Prescription For Malaysia

Last update: 05/07/2019
International Monetary Fund (IMF) managing director Christine Lagarde with Prime Minister Tun Dr Mahathir Mohamad. --fotoBERNAMA (2019) COPYRIGHTS RESERVED
By Sheriffah Noor Khamseah Al-Idid Syed Ahmad Idid

KUALA LUMPUR (Bernama) -- International Monetary Fund (IMF) managing director Christine Lagarde, who was in Malaysia recently to meet Prime Minister Tun Dr Mahathir Mohamad and Bank Negara governor Datuk Nor Shamsiah Mohd Yunus, had also set aside some time from her busy schedule to present her insights at a special engagement session on 'Ingredients for Good Governance and Economic Prosperity' at the Research, Management and Innovation Centre, Universiti Malaya, which was attended by students, faculty members and the public.

Lagarde’s deep appreciation of students, education and knowledge was evident at this event. An alumna of the American Field Services, she was visibly excited and happy to meet the AFS Malaysia team comprising its chairman Khalilah Mohd Talha, national director Atty Sulaiman and others who were invited to join the session.

Interestingly, Largarde, the first woman to helm IMF, made the Malaysian 'assam laksa' dish as the centrepiece of her insights on Ingredients for Good Governance and Economic Prosperity. As this dish, which has a spicy and sour taste, can be prepared in a multitude of ways and yet achieve the same result, it can be used to explain economic jargon more easily, she said.

Largarde began by looking at the "ingredients" that have made Malaysia’s achievements so special. Then, when mixed together with new "ingredients", it can deliver a fulfilling future for this nation.

She explained that Malaysia, which looks into its own affairs and is introspective and learns from others and also has new ideas that can benefit the country, should specifically look at a more integrated way to restore and strengthen the nation.

She said the new trade barriers will have a direct impact on any open economy, including Malaysia. She advocated the need to not only focus on the short term but also, importantly, to plan for the medium and long term as well.

Raising productivity is essential if Malaysia is to reach its goal of attaining high-income status in the next decade. Despite the economic success of the last 20 years, productivity has not grown as much as hoped and in recent years it has stagnated.

Why does this matter? It matters because productivity growth drives average income growth and raises living standards.

Lagarde opined that similar to preparing assam laksa, there are many different ways to achieve the desired result. The IMF, she said, aims to learn from the wide array of approaches countries are using and come up with fresh ideas that can meet its members’ needs.

The IMF’s goal is an integrated economic policy approach that helps its member countries think through the challenges they face and ultimately assist them in creating a better economy for the future.

Lagarde offered her views on three key ingredients in the face of the current situation: tackling governance and eradicating corruption; investing in high-quality education; and empowering women and increasing the number of women in the labour force.

Lagarde spotlighted the fundamental need to eradicate corruption, explaining that when corruption becomes institutionalised it poisons the ability of a nation to attract investors and create jobs. It is the root cause of injustice people feel in their daily life.

She shared that a recent survey of global youth showed that young people identified corruption – not jobs, not lack of education – as the most pressing concern in their own countries.

She remarked that IMF would focus on this issue and would include improving governance in more of its work with members going forward.

She commented that the IMF recognises that Malaysia is focusing on eradicating corruption and that it has implemented several key initiatives pertaining to this, including setting up the National Centre for Governance, Integrity and Anti-Corruption in 2018 and proposing new ways to improve procurement processes and remove conflicts of interest.

In January this year, the Malaysian government launched a new anti-corruption plan, which focuses on making financial transactions more transparent and strengthening oversight capabilities.

Lagarde found this an excellent progressive step for Malaysia and added that as always, the key is the implementation. She stressed the necessity for it to be embedded in the law and to implement each step of the reform agenda.

She said the IMF is eager to work with Malaysia in this effort as it believes these measures could help attract businesses to invest across Malaysia which, in turn, will generate new jobs and opportunities for all citizens.

Pointing out that Malaysia has become a hub for innovation, Lagarde said it is home to the Bayan Lepas Free Industrial Zone (in Penang), which is sometimes called the Silicon Valley of the East.

Over the last five years, start-ups ranging from digital media companies to web-based financial services and online professional recruitment agencies have sprung up across Malaysia.

“And we know an entrepreneurial economy like this one can only thrive with a skilled workforce,” she said.

Lagarde also said that the Malaysian government’s budget for education (the second key ingredient) -- which is equivalent to five percent of the GDP – is significantly higher than that of most other countries in the region and is a testimony to its commitment to the value of education.

However, she advised Malaysia not to be complacent and added that the quality of education could be improved as the desired outcome is still not being realised.

She cautioned that automation would threaten jobs and proposed several measures, including increasing funding for lifelong learning and offering online and part-time courses to help students improve their skills, which can assist to reduce skills mismatch.

Lagarde shared that as a daughter to parents who were both professors, she is very committed to the need to improve the quality of education and had advocated that one should look at early stage education to set it in the right direction.

The third key ingredient, which Lagarde described as the secret ingredient, is women.

She pointed out that women have less access to the labour market and that in Malaysia, the female workforce was at 51 percent, which is five points lower than the average in the region.

Lagarde praised the government for appointing five women ministers and four deputy ministers, as well as appointing a woman as deputy prime minister for the first time in the nation's history.

She said Malaysian women were asking for change and shared a recent survey that indicated that 80 percent of women were interested in flexible work arrangements, but only 20 percent had ever used them. Another survey showed nearly 60 percent of working mothers were unable to perform their jobs from home.

She remarked that the government is listening and that new laws have been implemented to protect women’s jobs while they were on maternity leave and remove gender discrimination at the workplace.

Lagarde said IMF is confident that Malaysia can raise its female workforce participation rate to over 56 percent by 2020. This, in turn, can boost GDP growth and overall productivity in the economy.

“Like is like making laksa, there are many different ways to achieve the desired result. We at IMF aim to learn from the wide array of approaches countries are using and come up with fresh ideas that can meet our members’ needs.

“The IMF’s goal is an integrated economic policy approach that helps our member countries to think through the challenges they face and ultimately assist them in creating a better economy for the future,” she said.

Lagarde said like assam laksa, there was a variety of combinations that would deliver economic success for Malaysia and that there is no one ingredient or one solution.

She reaffirmed that there are, however, core ingredients that with the right mix could deliver for this country and for this session, she has offered three of the ingredients.

During the question and answer session, this writer proposed to Lagarde that she champion the establishment of a Global Women Leadership Academy to offer women more opportunities to gain leadership skills.

And, in view of Lagarde and the IMF's commitment to supporting countries in innovation, women empowerment and gender equality, the writer presented Lagarde with two of her books on Technological Innovation and Women & Innovation -- Spotlighting on the UK, US and European Experience of Enhancing Women’s Participation in STEM Education, Career and Businesses.

In presenting her books, the writer hoped to share some of the content and strategies on technological innovation and enhancing women’s participation in STEM (Science, Technology, Engineering and Mathematics) with IMF members.

The writer's book on Innovation in Construction was exhibited at the recent International Construction Week 2019. She is now finalising her books on Innovation in the Judiciary, Innovation in Financing, and Public Sector Innovation.

(The writer Sheriffah Noor Khamseah Al-Idid Syed Ahmad Idid is an innovation and nuclear advocate and an alumna of Imperial College, University of London in the United Kingdom.)

Edited by Rema Nambiar


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