Malaysia’s leading economist shares his thought and views on Malaysia and the issues that plague her.

Tan Sri Ramon Navaratnam never sits still. In a meeting, he takes notes, pen running furiously across the page, head nodding vigorously in agreement. At other times, he nods quietly at those around him, a smile here or there.

Strong energy has fuelled the way a life for Navaratnam, these days a corporate adviser and Pro Chancellor (deputy chairman) of Sunway College, and also the chairman of the Asli Centre of Public Policy Studies (ASLI). Yet, for Navaratnam who loves all things to do with economic, public policy and leadership, the solution is: just give him economics. He is among the few Malaysian Indians in the country who stand on the highest peak of a subject close to his heart.

With an economics degree, he could have easily joined a multi-national bank with a huge salary. But Navaratnam showed very early in his career that he preferred not to tread that path. Instead he served as an economist with the Malaysian Treasury for 27 years, where he rose to become the deputy secretary-general. During that time, he also served as an alternate director of the board of directors with the World Bank, before he moved on to become the secretary-general of the Transport Ministry in 1986.

With his forte in economics and public policy, it took him upon his retirement from the civil service to Bank Buruh as its CEO for five years before moving on to the Sunway Group. He has stayed with the organisation since. The company of course has undergone a major transformation in the past several years and Navaratnam has been an active participant in bringing about that change. When the financial world is shaky as it is now, you would want him on your side.

Despite his soft spoken nature, the amiable Navaratnam’s occasional critical comments on national issues have won him the admiration of many people. His services have been sought extensively by both government and the private sector. Many people see him as a good person to bridge that divide, thus his appointment with SUHAKAM, MATRADE, MIGHT, NEAC, MIM, MAPCU, ASLI and a host of other organisations. And recently he was conferred an Honorary Doctorate of Law by Oxford Brookes University in recognition of his enormous contributions to public service.

Apart from his desk, Navaratnam likes to spend time with his family, especially his grandchildren, going on weekly retreats for relaxation with friends to a quiet place out of the city, which in turn has served him well to pen his thoughts in nine books from Managing the Malaysian Economy (1997) to his recent memoir My Life and Times (2010).

“Every step I have taken in my life has made me learn and grow,” says Navaratnam. As I listen to him talk while sitting behind his table in his office, and yet typing away on his computer, I wonder what powers all his excess energy, while heading past his 75^th year. Maybe, just maybe, it is all the positives vibes running through his thoughts as increasing number of people seek him out daily on issues sweeping the country.

In this  exclusive interview with Business Today, Navaratnam shares his thoughts on  Malaysians and why they should not run away but stay and fight for a better Malaysia given the uninspiring turn of events that has engulfed the country of late, from politics right down to the economy.

Business Today (BT): You have written nine excellent books since 1997, the last being ‘My Life and Times’ a memoir.  What lessons can Malaysians learn from these books?

Navaratnam: I hope I’ve sent a clear message to all Malaysians that we have to do our best for our country and not just grumble, grouch and condemn and even contemplate migrating. Why run away? Stay and dig your heels in and fight for a better Malaysia. Nearly five million Malaysians have yet to register to vote. Are you one of these miserable Malaysians?

BT: You are passionate in social and economic matters. What should Malaysians understand when foreign direct investments (FDI) plunge a stunning 81%?

Navaratnam: As an economist I feel terrible.  I hope the decline in FDI and especially our own domestic investments are a flash in the pan.  But if it becomes a trend, as it seems to be over the last few years, then we are in real trouble. It shows a decline in international and domestic confidence in Malaysia’s future prospects. It could become an indicator of a so called ‘failing state’, if we do not arrest this ugly trend.

BT: Some pundits have suggested that Malaysia can forge ahead without FDIs. Is that possible?

Navaratnam: This kind of logic comes from those who do not understand economics or who are so political that they are prepared to mislead the people. It’s not only FDIs that are declining but our domestic investments too are flowing out. This is the result of a loss of confidence and poor governance, like corruption, lack of competition and an indifference to meritocracy. That’s why we have this dangerous brain drain too that can undermine the 10th Malaysia Plan and Vision 2020. All investments funds are of no use unless you have the right brain power to manage these funds efficiently.

BT: What is the state of the Malaysian economy, now?
Navaratnam: The Malaysian economy is still quite strong but the signs are that it is weakening because of declining governance and rising uncertainty in the political economy.  We still do not know what’s coming in the second chapter of the New Economic Model (NEM). So how can there be investor confidence and public faith in the future?

BT: Countries like Indonesia, Vietnam and even the Philippines that lagged behind Malaysia are ahead, in drawing FDIs. Where are we doing wrong?

Navaratnam: We were ahead of all these countries but now we run the risk of falling behind them. Why? Simply because we have too much politics and politicking in economic management. Most Malaysians believe that the 30% equity target under the NEP has been achieved.  The strategic sites of the economy are controlled by bumiputra interests, and yet there is a clamour for even more equity ownership. How much do some people want at the expense of others and the whole country’s future progress?  As long as we harp on bumiputra equity ownership, even after 40 years of the NEP, which should have ended 20 years ago, there will be a reluctance to invest in Malaysia. This restructuring equity policy is now deemed to be unfair.

BT: In your book you’ve mentioned of hearing people using such words as piratisation, personalisation, profiteering and polarisation in government policies. Is it still applicable now?

Navaratnam: Ask any right thinking professional to be sincere in his or her assessment and they will agree with the words used above.  It is pervasive and only the blind will not see the obvious. As you know there have been political cronies that have gained from privatisation. That is why you have nearly 40% of our population earning income below the poverty line.

BT: Nobody speaks much of the New Economic Model (NEM). Can you tell us of this instrument?

Navaratnam: I think the NEM could even save us from the current decline. The NEM has stated that it is for the protection of the lower 40% of the income groups in our country. That’s great if the government pushes proper implementation or it could go awry as in the 9th Plan. The NEM also goes for competition, meritocracy, innovation and clean government. But there are strong vested interests that are resisting the reforms and prepared to fight tooth and nail to protect their narrow interest. So it will depend on the moderate forces or the silent majority to counter these negative forces.

BT: There is also reservation expressed that the government is not carrying all its citizens but is only aggressively implementing policies under the ‘MALAY AGENDA’?

Navaratnam: This is a widespread perception of not just the non-Malays but also many enlightened Malays too. Some bigots forget that we are all Malaysians and must be treated fairly. So all this leads to a growing lack of public confidence.

BT: What is the single most disruptive issue facing the country?

Navaratnam: Greed and disunity and the lack of sufficient political will to make changes and not just say the right things. What we really need is to face reality and not in indulge in rhetoric.

BT: And what are implications if we fail to reform?

Navaratnam: We can lose out to our neighbours like the Vietnam and even the Philippines. In the context of globalisation we can lose out more and become a failing state. Or we can pull ourselves out of the decline but that depends on the political will of the people who can tell the government what needs to be done, for example, through good governance.

BT: There is a phenomenon where our best talents are leaving the country, while millions of low skills workers are finding home here. What is the impact on the economy?

Navaratnam: We have to revise our policies. We need a minimum wage policy. Some critics are too western-oriented in wanting the market to determine wages but that is not how the real world works. There are too many imperfections in the marketplace.

BT: Bursa Malaysia expresses frustration at the lack of IPOs and then Tan Sri Ananda Krishnan and other captains of industries want to go private. What’s happening?

Navaratnam: Remember, these are business people looking for profits. Now they find it ‘unproductive’ and ‘unprofitable’ to go for an IPO or even remain on Bursa. There must be some radical changes in our policies to allow for greater competition and not more protectionism for crony capitalism. Lack of confidence and this has affected stock valuation.  There is a lot of dissatisfaction out there.

BT: Coming back to FDI investments, how important is domestic investment which is also lacking now?

Navaratnam: Yes, there is concern expressed about the lack of domestic investments everywhere in the country. Here again, it is the domestic policies that are problematic. For example, the 7% discount given to ‘rich’ bumiputras are deemed to be unfair. Negotiated tenders are disturbing too. Many business people are losing out here. Therefore, the reforms the business community are expecting aren’t there. Hence, Malaysian investors are taking their funds abroad where they can compete fairly and get better returns from less corruption.