Malaysia’s gross domestic product (GDP) growth for the third quarter declined 1.2%, which was better than the 3.9% decline in the second quarter. It showed that the economy has been gradually emerging from the recession. Bank Negara projected a 5% GDP growth for Malaysia next year. Would the target be achievable?

A 5% GDP growth was nothing in the last decade but it would be difficult to achieve today. In order to achieve it, there must be a robust revival for the world's economy as well as increase in public spending, consumption, and domestic and foreign investments.

The global economy remains unstable next year and there is a possibility for a second recession. Especially the United States unemployment rate has hit 10.2% and it is expected to have a U-shaped recovery. Therefore, it is impractical to boost the economy based on foreign markets.

Prime Minister Datuk Seri Najib Tun Razak has cut 15% of expenditure in the 2010 Budget to reduce the budget whichis in deficit for 13 years running. Therefore, the government will no longer be the economic locomotive.

Also, Malaysia can no longer expect endless supply of foreign capital like the 90's because of the drastic regional competition for funds. Moreover, Malaysia is not going to open up the market and thus, foreign investment is believed to avoid Malaysia. For example, under political pressure, the Wang Tak International Group Co., Ltd in Hong Kong had no choice but to sell off its 31.52% stake in Padiberas Nasional Bhd's (Bernas). The reason given by politicians was, rice supply was related to national security and thus, it should not be owned by foreign investors.

In addition, Malaysia has been negotiating the bilateral Free Trade Agreement (FTA) with the US for many years. The agreement is not yet achieved as Malaysia is unwilling to open up but to keep protecting local enterprises and Bumiputra entrepreneurs.

Malaysia has lost the opportunity to fight for Chinese investment during the visit of Chinese President Hu Jintao in Malaysia. The licence for the Industrial & Commercial Bank of China (ICBC) has been issued in April this year but the bank must wait until next year to start operation. How is the country going to fight with neighbouring countries with such a low efficiency? Therefore, next year's economy relies only on domestic investment.

Under the 10th Malaysian Economy to be announced next year, the government and the private sector are expected to carry out a variety of projects as partners. The government will provide incentives and administrative convenience while the private sector provides capital. Such a development model is different from privatisation as the private sector needs to bear more risk. The problem is, would the private sector capable enough to become the economic locomotive?

There are still much idle money in the domestic financial system but the country is lack of world-class enterprises. I'm afraid that such a partnership may eventually cause the government to bear heavy debts while big enterprises enjoy the benefits, forming another form of protectionism.

The government must spend more efforts in fighting economy next year and time is running out. Petronas Chief Executive Officer Tan Sri Hassan Marican had warned that Malaysia could became a net oil importer by 2011. If they are not able to restructure the economy next year and the government still continues relying on the 40% oil revenues, the situation will get even worse the year after next.

The government was not vigilant and it did not prudently spend, maintain healthy financial affairs and explore new growth areas when the economy was good. And only now, they are nervously cutting down subsidies, causing pain to middle and low income earners, and they can't even tell whether tomorrow will be better. The government has put forward the vision of becoming a high-income country and hopefully, it can be achieved and will not disappoint the people. (By LIM SUE GOAN/Translated by SOONG PHUI JEE/Sin Chew Daily)