The unfortunate resignation of Rafizi Ramli as economy minister was no surprise but leaves a hole in the economic policy eco-system and raises questions about his likely successor.
The economy ministry was established in 2018 as a planning organisation focused on devising policies, not as an implementation ministry. So the minister needs to be good at identifying the strategic reform priorities and to motivate the need for reform.
The minister then needs to oversee the design of the right policies and to ensure they are feasible for implementation.
Finally, there needs to be proper monitoring of the outcomes of policy with effective remedies when policy falls short.
This is a technical role and requires economic insight to understand the right economic approach. Most importantly, any good economist knows that “government should” often means “government should do nothing”, or at least “government should do less”.
Politicians do not always understand this and take “government should” as a signal to interfere. Unfortunately, if economic policy gets bogged down in politics it usually fails from the outset and if the economy ministry is politicised it will quickly have no role.
If it is headed by a charismatic, ambitious politician it will be used as a platform to push career agendas rather than necessary long-term reforms.
This will damage both the policy design process and the credibility of the government because reforms will be driven by personal and political agendas often irrelevant to the needs of the people.
It would be a disaster for example if economic policy reforms in Malaysia were captured by the diversity, equity and inclusion (DEI) agenda or misdirected by environmental, social and governance (ESG) advocates who care more about climate than people.
As a defence against this, there should be a strong technocrat leader at the helm who can steer the economic reform agenda without politics. This has proved very successful with the appointment of Amir Hamzah Azizan as finance minister II for example.
The ideal economy minister candidate must have a strong economic background and a detailed knowledge of policy implementation and how to navigate administrative hurdles.
Too many economic policies of the past have created patronage cascades simply designed to pass projects to vested interest groups, leaving the real needs of the rakyat ignored.
The New Industrial Master Plan (NIMP) is a prime example of this with four missions, four enablers, 21 strategies and 62 action plans mostly pre-allocated to well-connected partners to spend RM95 billion to raise manufacturing value added by 0.5% over seven years. If the government did nothing the market would achieve almost the same thing.
The policy priorities for the economy ministry are well-known and include the pensions crisis, stagnant incomes, affordability of necessities and the overall cost of living.
Social protection, access to affordable healthcare, good quality affordable homes especially for the very poor, underemployment and low returns to education and training as well as higher education financing in general are also in urgent need of reform.
More broadly deregulation of markets to improve competitiveness and innovation, reform of GLICs to create a Malaysian Superfund and responsible privatisation of underused government assets require attention.
The government should also consider setting up an independent economic agency like the Office for Budget Responsibility in the UK to provide oversight and analysis of policies and a Department of Government Efficiency (DOGE) to review and scrap outdated projects with money redirected to new priorities.
These need technical economic analysis not politics and so the choice of the new economy minister will determine the direction of long-term structural economic reforms and must be made wisely.
The views expressed are those of the writer and do not necessarily reflect those of FMT.