There is a need for the immediate formation of a National Economic Council to not only counter the economic slowdown, but also to study and propose advance solutions for economic growth and speedy recovery. We require long term perspectives that can look at fundamentals instead of merely focusing on problems at an ad hoc basis. I am of the view that if the fundamentals are not addressed, any short term solution may only aggravate the future. The roots of the “economic system” must be scrutinized and we have to start to customize a workable system. Such a task cannot be undertaken by the Ministry of Finance alone for obvious practical reasons.
A critical part of the path towards recovery is business and investor confidence. Any economist will tell that you positive speculations invariably end up as positive realities. When people speculate that the economy will recover, they will behave accordingly with their resources which in turn will spur the economy towards recovery.
A few bankers and businessmen that I have been meeting for the past week seem to strongly echo the need for the Government to appoint a National Economic Advisor who is not only capable and experienced but whose appointment will instantly create confidence in the business sector. The name that consistently pops up is: Tun Dr Mahathir Mohamad, the former Prime Minister of Malaysia.
They argue that Dr Mahathir has the relevant politico-economic experience and the necessary respect from the industry players, both locally and internationally, to take him seriously. Respect is a key factor. He also has the passion and drive to move things. They point out that Mahathir is thorough in his work and this is important in understanding properly what went wrong and what should be put in place.
They cite the unconventional manner in which the Asian economic crisis in 1998 resulting from currency speculation was successfully handled by Dr Mahathir. They say that Dr Mahathir’s crisis management was correct in one central and critical respect - He opted for a counter-cyclical thrust in opposition to the International Monetary Fund and the market’s pro-cyclical preferences. His capital controls in September 1998 attracted commendation, even from his critics.
As Prime Minster, he had sailed through several recessionary periods and economic crisises. In general. They argue that Dr Mahathir’s credentials justify his appointment as National Economic Adviser.
I had the opportunity to meet up with Dr Mahathir recently. His mind is as sharp as usual and he has that great ability to grasp facts and complex issues and then simply them into manageable parameters! It will be a waste not to use his vast experience and knowledge towards national service (if he is persuaded).