The New Economic Model

Earlier of 2010, Malaysia authorities introduces the four pillars of national transmutation which the purpose is to accomplish Vision 2020. The New Economic Model ( NEM ) is portion of the four pillars of national transmutation.

The figure above showed the pillars of NEM. NEM consists of several programs and schemes such as Government Transformation Plan ( GTP ) , Economic Transformation Programme ( ETP ) , 10th & A ; 11th Malaysia Plan, and Principle of 1 Malaysia. Combination of these programs can organize the NEM which plays the function of shelter to our state. From the underside, there are 10th and 11th Malaysia Plans. These programs will move as the supported foundation for the NEM. With the AIDSs of GTP and ETP, NEM can be implemented more comprehensive. However, if without the 1 Malaysia constructs, our shelter can non finish. Therefore, construct of 1 Malaysia will move as the roof to cover all the programs and schemes.

The NEM is an economic program in Malaysia which is unveiled on 30 March, 2010 by Malayan Prime Minister, Datuk Seri Najib Tun Razak ‘s. NEM will bring forth benefits for all Malaysians. This economic program is proposed to derive dual income per capital Malaya by 2020. Besides that, one of the NEM ‘s propose is to cut down income disparity between the rich and hapless in Malaysia, better the system of affirmatory action to going more competitory market and investor friendly, and bettering workers productiveness.

Figure 1.2: Goals of New Economic ModelThe focal point of the NEM is to “ transform the Malaysian into a developed and competitory economic system whose people enjoy a high quality of life and high degree of income from growing that is both of inclusive and sustainable by 2020 ” . The keys to the program as described unveiling are “ high income, sustainability and inclusiveness ” , which together will interpret into a high quality of life for the rakyat.

The first end of NEM is high income. NEM aims to convey Malaysia to high income state with per capita income US $ 15,000 until US $ 20,000 by 2020. Currently, per capita one-year income in Malaysia merely worth at $ 7,000 in US currency ; under NEM plan the figure would be dual to US $ 15,000. When achieve this mark, Malaysia would be able to get away from the in-between income trap.

Inclusiveness is 2nd end of NEM. Under inclusiveness, all Malaysian include Sabah and Sarawak enables to to the full profit and portion the state wealth. In extra, inclusiveness which can guarantee that every citizen right could be preserved and no group could be ignored in the state. Discrimination and prejudice will to the full prohibited.

The last end of NEM is sustainability, which it ‘s refers to current coevalss meets present demands without compromising the future coevalss. Because of that, authorities will safeguard the natural resources that we have now from miss-spent. Furthermore, sustainability of the quality life will be prosecuting and authorities takes action in order to reform the sector so that it achieves efficiency and equity.

To accomplish the ends of New Economic Model, there are eight Strategic Reform Initiatives ( SRIs ) those recommendations by NEAC. First SRI is re-energising the private sector. That because private sector play an of import function in heightening economic growing in the state. So, private sectors are encouraged to affect themselves in investing particularly in high value added merchandises and services so that sustained economic system growing and high income state can be generated.

Second SRI is developing quality work force and cut downing dependence on foreign labor. Under this policy, authorities will concentrate on labor markets and guarantee that to work good. Attempts will set on such as workers must work expeditiously to increase productiveness and rewards. Under the accommodation of labour market must be smooth, authorities demand to guarantee that workers are making in the correct occupations which match with their cognition and accomplishment. Brain-drain job demands to be solved to pull our skilled labor so that they can lend in Malaysia economic system. Besides that, authorities besides focuses to bring forthing a talented work force to run into the demands of a high-value cognition economic system. Therefore, wage-restraining labor market deformations, such as inordinate and indiscriminate usage of foreign labor, will be removed.

Making a competitory domestic economic system is a 3rd SRI in NEM. To make the competitory domestic economic system, many deformations such as subsidies, monetary value controls and a myriad of distortion-creating inducements will be removed. Additionally, authorities besides will construct entrepreneurship to accomplish this policy. Therefore, the ETP will assist the vulnerable groups with an enhanced societal safety cyberspace such as wellness attention, instruction and etc, and a particular transmutation fund for them.

The 4th of SRI is beef uping of the public sector. Public sector must be re-engineered. The reform programmes will go on to better and rush up determination devising processes utilizing the “ whole-of-government ” attack and others. Government besides focuses to better the service bringing to rakyat. One chief point in this policy is authorities privation to cut down the “ clash costs ” . That means authorities wants to zero tolerance for the corruptness.

SRI 5 is crystalline and market friendly affirmatory action. Government will promote equal and just economic chances, and guarantee that affirmatory action programmes will go on in order to accomplish the aims, rent-seeking and market distorting characteristics which have limited their effectivity of the programme should be extinguish. Furthermore, this policy besides emphasize in narrowed the spread between rich and hapless. The existent purpose to cut down the income disparity is because in Malaysia still have the bottom 40 per centum of families earn an norm lower than RM1,500 per month. Besides that, authorities want do certain that all Malaysian get just and just chances through the crystalline procedure.

The 6th SRI is constructing the cognition base substructure. The cardinal focal point here is to advance an economic transmutation in the industrial, agricultural and services sectors for invention by beef uping the bringing of high quality instruction that nurtures invention and engineering. The purposes of this policy are to make an ecosystem for entrepreneurship, promote an environment for invention and in conclusion set up stronger enabling establishments.

SRI 6 is heightening the beginnings of growing. Malaysia will command its natural resource gift and made sectors of comparative advantages as the chief beginnings of high value added growing. From that, authorities can maximise spillover effects into new countries of activities. The purposes from this policy are to make value from first mover and other comparative advantages, develop greater integrating between the merchandise and etc.

Last, SRI 8 is guaranting sustainability of growing. Our state is rich in natural resources. So the intent of this policy is to continuing our natural resources from the cachexia. At the same clip, authorities focal points to safeguarding the involvement of future coevalss. The safeguarding involvement of future coevalss will be complemented by sustainable public fundss through rigorous financial subject.

2.0 Why we need NEM?

Figure 2.1: GNI Per Capita ( 1990-2008 ; USD Thousand )

Beginning: The World Bank

The figure had shown the gross net income ( GNI ) per capita for nine selected states which are Korea, Czech Republic, Slovakia Poland, Poland, Chile, Argentina, Malaysia, Thailand, Indonesia that at the in-between income boundary in 1990. This figure reveals the place of the Malaysia had reached a in-between income boundary since 1990. Malaysia had public presentation good in the early 1990 and able achieved 9 percent growing rate of gross domestic merchandise ( GDP ) in the mid 1990. However, Malaysia stood at middle-income place for three decennaries and unable to interrupt up the middle-income trap and accomplish to high income state despite its accomplishment in the past few decennaries ( Abdullah, 2010 ) . The figure show that Korea, Slovakia, Czech Republic and Chile had cross over middle-income trap and achieved as a high income state particularly Korea with the GNI per capita USD 19,830 in 2009 which is high than the end of NEM that USD 15,000 targeted for Malaysia.

NEM study provinces that economic engine is decelerating due to the absence of the private investing, troubles of making concern, low value added industries, low-skilled occupations and low rewards, stagnating productiveness growing, deficient invention and creativeness and deficiency of suitably skilled human capital. Malaysia trapped in a low-priced, low-value economic construction ; relentless low rewards excessively are non pulling and retaining domestic and foreign endowments, doing it more hard to travel up the value concatenation ( Teoh, 2010 ) . The figures 2.2 have shown the private and public investing conditions in Malaysia, Thailand, and Singapore:

Figure 2.2: Private and public investing as portion of GDP ( 1989-2008 ; % )

Beginning: BNM, CEIC, Bank of Thailand

The GNI per capita of Malaysia was earnestly affected by Asiatic fiscal crisis 1997 when Malaysia had a good public presentation in the investing in mid 1990 which occupied 40 per centum of GDP in Malaysia. However, the investing in Malaysia had fallen to 20 per centum of GDP in 2008 ( NEAC, 2010 ) . This was implied that Malaysia was confronting troubles in recovery from the economic recession after 1997. Besides that, the foreign direct investing ( FDI ) and foreign portfolio investing ( FPI ) were the chief grounds that Malaysia suffers in capital flight due to the fiscal crisis. This had supported with the figure above which Malaysia had experienced strict declined in private investing due to the authorities and Government Linked Company ( GLC ) presence has discouraged the private investing and the barriers of the ordinance for foreign company entries Malaysia domestic market ( NEAC, 2010 ) . Importantly, Thailand was recovered from the economic recession rapidly compare to Malaysia that stagnated in private investing. Furthermore, Malaysia ‘s fight in term of pulling foreign direct investing besides show a worsening tendency which Malaysia planetary fight index has dropped to 26th in the 2011 show that Malaysia was less attractive compared to other states such as Singapore are closely related with Malaysia ( World Bank, 2011 ) .

In public investing context, Malaysia had more trust on the public investing instead than private investing which the private and public investing portion are occupied about same per centums of portion in GDP in recent twelvemonth even high than private investing after the economic recession. The norms one-year growing of three constituents contributed to Malaysia ‘s economic growing from 1991 until 2006 was shown as below. The figure 2.3 implies that Malaysia more focal point on the public investing which authorities outgo comparatively increase compared to other two constituents. In contrary, the part of investing toward economic growing was declined from 14 has dropped to 3 implied that Malaysia is trust on the ingestion to driving economic growing instead than investing after post-crisis.

Figure 2.3: Average one-year growing from 1991 to 2006 of Malaya

Whilst NEM stress on forcing Malaysia toward a high income state, the inclusiveness besides highlight in this theoretical account to cut down the income disparities of Malaysia. Harmonizing NEM studies, there are merely top 20 per centum of Malayan income earners shown the strong of income growing as presented in the figure 2.4. The bottom 40 per centum of families have experienced the slowest growing of mean income, gaining an norm of RM1,222 in 2008 ( NEAC,2010 ) . This one of the factor needed to concern in Malaysia in order to help Malaysia achieves the Vision 2020.

Figure 2.4: National household income ( Average by section, 1980-2008 ; RM )

Beginning: Markaz-ud-dawa-wal-irshad

Therefore, the NEM is needed as bold attack that provided policy steps derived from the SRIs in order to forcing Malaysia economic cross over the middle-income trap and supply the just and just chances to Malaysian in order to cut down the spread between poorer and richer broadening. However, the success of the NEM is significantly trust on the steadfast committedness by authorities to implement NEM, the readiness of the rakyat to consist the hard alterations and a ‘big push ‘ of strategic policy steps but non incremental alterations ( NEAC, 2010 ) .

3.0 Conflict between first portion and 2nd portion of NEM

The affirmatory action policy had been implemented for a long period in Malaysia which allowing particular position and privileges strategies to Malays purposes to cut down bumiputera poorness and particular strategy were adopted to reapportion corporate assets in Malaya from Chinese-Malaysians and Indian-Malaysians to the benefit of bumiputeras ( Lee, 2011 ) . This is because bumiputera merely occupied 2.6 per centum of ownership in the corporate sector in 1971 which comparatively lower than other community. This policy besides focuses on bumiputera ‘s part toward national wealth and 30 per centum equity of company modesty to the bumiputera in the certain selected sectors that rise up the authorities outgo which the entire authorities debt is 41.5 per centum of GDP is comparatively high for a government that provide few societal services ( Lee, 2011 ) . Importantly, these strategies had encouraged the rent seeking bumiputera elites dependent on authorities aid and requested the continuance of avowal action.

In this context, the NEM incorporates a new attack which can be summarized as inclusive growing. Inclusive growing is pro-poor growing and is concerned non merely with the degree but besides the consequence of relentless inequality on economic growing and poorness relief ( NEAC, 2010 ) . A cardinal challenge for inclusive growing is to achieve a balance between the particular place of Malays, the indigens of Sabah and Sarawak and legitimate involvements of other group ( Abdullah, 2010 ) . Hence NEM ‘s market-friendly affirmatory action programmes in line with the rule of inclusiveness had revised from the past affirmatory action will stop past patterns that gave rise to unhealthy and permeant rent-seeking and backing activities ; guarantee just and just chances through crystalline procedures ; provided the aid to the bottom 40 per centum of families which 77.2 per centum are bumiputeras and many are located in Sabah and Sarawak ; let right to utilize to resources on the footing of demands and virtue to enables betterment in capacity, income and wellbeing ; have sound institutional models for better monitoring and effectual execution ( The Star Online, 2010 ) .

In SRI 5, NEM proposed that the revised affirmatory action policy should be based on the bottom 40 % of families. An affirmatory action policy based on the low income group such as giving discriminatory intervention to the comparatively disadvantages group proposed in NEM would be in the involvement of distributive justness. Affirmative action will reflect on all cultural groups every bit every bit long as they qualify for entree to resources under affirmatory action. Furthermore, an Equal Opportunity Commission ( EEC ) is proposed with the duty of monitoring and sing instances of favoritism and unjust intervention in the economic system to cover both the populace and private sectors ( NEAC, 2010 ) .

Interestingly, in the NEM reasoning portion, targeted programmes for the bumiputera Commerce and Industry Community ( BCIC ) is one of policy steps for income disparities which contradict with the market-friendly policy. In the targeted programmes, market friendly, transparent and granted on the footing of demands and virtue was emphasized on the particular programmes in order to let donees to accommodate with the impetuousness competitory concern environment to go self sufficient although ablactating them off from prolonged dependance on such particular programmes ( NEAC, 2010 ) . The NEAC recommends that Government and GLC procurance reserve for BCIC should go on but be targeted for bumiputera SMEs merely. This was evidently implied that there is struggle between the reserves for BCIC with the market-friendly affirmatory action that purposed in the first portion of the NEM.

Harmonizing Asia Views, 34 old ages after implement New Economic Policy ( NEP ) , official statistic provinces that bumiputera held equity in Malaysia stood at 18.7 per centum or shut to 11 per centum below the mark ( Teoh, 2011 ) . Furthermore, there are a little bed of people ( and it is a multiethnic group ) have used the policy of affirmatory action for the bumiputera to better themselves through rent seeking, over-priced contracts and bare corruptness. The bulk of the bumiputera have merely received a minor part of the economic aid that they were supposed to hold received, and a big figure of them are still stuck in poorness ( Devaraj, 2010 ) .

However, NEM does non recommend the remotion of the particular place of bumiputera and the legitimate involvements of the other communities ( Abdullah, 2010 ) . There are some statements that support the keeping of 30 per centum bumiputera equity. In the targeted programmes for BCIC, unfastened stamps for authorities and GLC procurances which are reserved for bumiputera small-medium endeavors will further greater inter-racial integrity ( Khoo, 2010 ) .

4.0 Issues confronting by NEM

In NEM, it is an economic theoretical account where it promises to convey Malaysia flight from the in-between income trap and promote to high income degree. The targeted income degree will be USD 15,000 to 20,000 per capital in twelvemonth 2020. Inclusiveness and prolonging are the considered factors in doing policy. There are three of import issues will be highlighted through NEM. There are:


Entrepreneurial Skills

Institutional Reform

First issue that will discourse is instruction. Why instruction will be an issue in NEM? The most likely reply is that instruction is a relentless factor and it was besides the root to Malaysia economic system jobs. Besides that, it is besides the one of the factor that cause Malaysia ‘s investing growing one measure behind if comparisons to our neighbour states such as Singapore and even Thailand. Another important ground is because NEM extremely depends on engineering upgrading, creative activity of a knowledge-economy and the development of a extremely skilled work force. In these three positions, high quality of human capital, invention and effectual R & A ; D is needed. To carry through the demands of NEM, instruction system plays an of import function.

The jobs behind of instruction are instruction reform and brain-drain jobs. First of all, instruction reform is an attempt to alter the present instruction system. When people talk about the instruction reforming, third instruction will be the focal point. University will be the root of incrimination because alumnuss unable to executing in their workplace. However, the incrimination should non merely travel to university. This is because pupils merely spent three to four twelvemonth clip in university harmonizing to their class taken. Primary school and secondary school were occupied most of their clip. Interest, rational wonder, and creativeness should be cultivated from younger period. Besides that, basic cognition should be instilled from immature to assure for the hereafter apprehension. When pupils are weak in the basic cognition, they may happen trouble in their hereafter survey.

Can non be denied, universities have duty excessively. The most likely job is alumnuss can non talk and compose proper English. Lectures and professors in university should learn in proper English. Foreign student exchange programme can promote pupils speak and write better English. Not merely the quality of the instructors in primary school and secondary school should be improves, nevertheless, the quality of talks and professors need to be improved excessively.

Another job related with instruction in Malaysia is Brain-drain job. Brain-drain jobs can be defined as the loss of skilled rational and proficient labor through the motion of such labors to more favorable geographic, economic, or professional environments. In Malaysia, brain-drain jobs reach a critical phase where within the past nine old ages ; merely less than one per centum of Malaysian who work overseas are willing to return to their female parent land ( Chua, 2011 ) .

The inquiries come out with why the professional are non willing to return to their female parent land? Is that they will accomplish illustriousness in executing their forte, societal position even prosperity if they develop their endowment and skill overseas? Surely, there must be several grounds why this happened. The first and the most, attractive rewards in abroad encourage local professionals non ding their forte in their female parent land. For illustration, in United Kingdom, a fresh alumnuss from a grade of jurisprudence can average earn ?36,500 a twelvemonth in a jurisprudence house whereas in Malaysia fresh entryway merely pay RM 21,600 a twelvemonth.

Second ground for encephalon drain in Malaysia will be the occupation chance. Particularly for those occupation are unavailable in Malaysia, they are force to travel to abroad to establish the topographic point where they have opportunities to executing. For illustration, in the political field, Penny Wong, who born in Kota Kinabalu, is a first openly homosexual and at the same clip she is one of the members in Australian Commonwealth cabinet. Besides that, she is besides the Australian Minister for Finance and Deregulation. In Malaya, she might non hold opportunity to step in political field merely because of she has alone penchants.

The other illustration will be the celebrated places designer Jimmy Choo who is expert in manner line. He is besides a Malayan but contribute tonss in London through manner line. If he remains his expertness in Malaysia, he might non that successful because Malaysia has less market and demand in manner line. In scientific discipline and engineering sector, although Malaysia has motif to fall in in this sector, nevertheless, opposition is still particularly in the engineering that we have might loss behind.

Pua Khien Seng, who born in Selangor, was the first in the universe who invented the USB pendrive that we widely use today. He is now presently own a listed company deserving RM4.3 billion in Taiwan. Among the illustration, they are non return to Malaysia possibly is because they can non execute their expertness in Malaysia, but non because of they are non willing to return to their female parent land.

The 2nd issue that been emphasize is the entrepreneurial accomplishment. Entrepreneurship can be defined as the acknowledgment and chase of chance without respect to the resources you presently control with the assurance that you can win, with the flexibleness to alter class as necessary, and with the will to bounce from reverses harmonizing to Bob Reiss, in his book “ Low-Risk, High-Reward: Start and Turning Your Small Business With Minimal Risk ( Hupalo, 2004 ) . ” The ground why entrepreneurial accomplishment is highlighted is because of it is close concern with SRI1 in NEM where its nucleus has the re-energisation of the private sector as its end. When the private sector as the targeted sector to growing, enterpriser will be the focal point because little and in-between endeavor are extremely depends entrepreneurship.

However, the issue buttocks is that bumiputera enterprisers are less representation is state wealth. Since the New Economic Policy, bumiputera enterprisers are given particular intervention where there are 30 % of the equity ownership are been given. Harmonizing to a diary article, bumiputera enterprisers are less successful is due to several factors. The factors include inability to vie, deficiency of competence and capital, customer-related jobs, employee-related jobs, unfavorable economic conditions, bureaucratism, supplier favoritism, and negative community attitudes were found to be important ( Abdullah, Hamali, Deen, Saban, & A ; Abdurahman, 2009 ) . This significance that among the bumiputera enterprisers, they must sharpen their accomplishments to boom without any dependance on authorities press releases. Of class, if NEM want to accomplish successful, the equity ownership issue should be adequately address.

The 3rd issue will be discuss is the institutional reform. Institution reform can be defined as the alterations to transit organisations ‘ policies and patterns to back up authorities execution. Institution reform should in term of norm, wonts and convention in society must back up efficiency and fight of a state. Civil autonomies and more broad political bash helps in promote economic development.

Therefore, the issue buttocks is that how much of our authorities make given the autonomy? It is suppose to hold establishment reform to derive to the full freedom of address, freedom assembly and presentation. Unfortunately, in NEM, it is lack accent on the province gaining control. State gaining control can be defined as the attempts of houses to determine the Torahs, policies, and ordinances of the province to their ain advantage by supplying illicit private additions to public functionaries. It is ever mentioning to corruptness. Although there are zero-tolerance for corruptness been reference in NEM, nevertheless, it merely a list of it. There are no proper and effectual schemes being introduce to cut down the corruptness jobs in our state.

Harmonizing to Corruption Perceptions Index ( CPI ) , Malaysia corruptness mark is acquiring lower from twelvemonth 2008 to 2010. This ranking is based on informations from independent establishment such as World Bank, Economist Intelligence Unit and World Economic Forum. The mark of CPI have the graduated table from zero to ten. The lowest mark nothing show it is high corruptness and low transparence. When the mark is ten, it is high transparence and lowest corruptness. Malaysia corruptness tonss as follow show that corruptness job is acquiring serious from twelvemonth to twelvemonth.

Table 3.1 Corruption Perception Index ( CPI ) of Malaya from 2008 to 2010.




Malaysia ‘s CPI




Beginning: ( Rogers, 2009 )

Therefore, more and more effectual policy and schemes should be pull up to bring around this job in our state.

5.0 Challenges in NEM

NEM is about to alter Malaysia ‘s current economic status to the better economic in 2020 through the NEM ends. “ Change ” is the cant in order to make the ends. However, in order to alter, Malaysia faces challenges in footings of:


Political will

Labor force

Satisfying all quarters?

Prolonging the alteration

Mindset is refers to the manner of how people believing. The people mindset every bit good as the politician ‘s mentality must be ready to the altering in Malayan economic system through the NEM policy. Most of people in Malaysia are non cognizant that Malayan economic systems are dawdling behind some of the states that now experience the emerging economic systems such as China and India. This mentality changing is the biggest challenge for the NEM to accomplish its ends, because the operationalization of NEM is necessitating the whole state ‘s part. If they are non willing to alter their mentality, so there is a large potency for the NEM policy to non work swimmingly or it might neglect in accomplishing its end. As the Malaysian Prime Minister address on March 30, 2010, he said that the procedure of altering the state ‘s mentality is non easy and while the procedure, there will be a painful minutes. This is because in the short term, there will be entrenched resistance and some of economic sectors may see inauspicious effects. But in the long term, the mentality changing will convey tonss of benefit to the states.

Political will is one of the key and of import enabling factors for the NEM in back uping alterations in this new policy. Without the political will, it is difficult for the authorities to accomplish the end in NEM. In NEM study, it has mentioned that the political will and leading needed to interrupt the log-jam of opposition and fixing the peoples. In other words, the authorities must hold the finding to interrupt the log-jam of vested involvement and donees of rent-seeking. If the log-jam of vested involvement and donees of rent-seeking is still exists during the operationalization of NEM, it will do to merely some party gained the benefit of NEM and this consequence to inequality and lead to the failure in accomplishing the NEM ends which is inclusiveness. To accomplish the NEM ends, political together with the rational leading must show the necessary committedness to the NEM besides the political will and leading need an accent on a consistent account of the vision and docket of the NEM and transmutation procedure ( The Star, March 301, 2010 ) . Furthermore, after the authorities disbursement about RM40 billion to came out with the policy, it is a large loss if the political will is non willing to operationalize this new policy.

There must be a mentality changing and political willingness in order to successfully transforming to the NEM and achieved its end while confronting these challenges ( November 12, 2010, Dato ‘ Dr Mahani Zainal Abidin, Institute and International Studies, Malaysia ) :

Geting the needed in investing but this will necessitate reconstructing investor ‘s assurance via suiting concern environment.

Undertake restructuring monetary values for goods and services will better economic efficiency but may ab initio raise consumer monetary values and costs of making concern.

Transforming the instruction system as a medium and long term undertaking but requires policy consistence.

Reduced dependance on foreign labour encourages houses to travel up the value concatenation or embracing mechanization while those can non, will go out and this besides bing some local occupations.

Traveling towards green economic system and advancing energy efficiency but this will necessitate expensive initial investing and may gnaw monetary value fight.

Reducing inequality between income degrees and between rural and urban countries while endeavoring for high economic growing.

Addressing job of urban poorness and bettering substructure while keeping a balance with accomplishing high investings in urban countries.

One of the NEM purposes is doing Malaysia come ining the new stage in the industrialisation procedure, traveling off from a low-priced, export-oriented scheme to a higher value-added capital intensive and high technology-based industrialisation where it is necessitating a highly-skilled labour force. Comparing a knowledge-based economic system or k-economy, NEM is an beforehand economic construction which requires a immense figure of knowing and high-skilled labours in new and emerging Fieldss such as robotic technology, information and communicating engineering and bio-technology and this development requires a high per centum of cognition workers which would go the anchor of the Malayan economic system ( February 18, 2011, Blog Rasmi Jabatan peguam Negara ) . High-skilled work force non merely needed in industrial sector but in service sector as good. Without the bing of high-skilled labour, it is impossible to come ining the new stage besides high-skilled labour besides one of the factors that attract foreign direct investing ( FDI ) to put in Malaysia. But so, Malaysia is now confronting the ‘brain-drain ‘ job where most of the talented, knowing and high-skilled labour force moves to the more developed state such as Singapore. This affair becomes one of the challenges in NEM because in order to carry through the demand of high-skilled labour force, they have to pull back those Malaysian who work outside from Malaysia to work back at their fatherland. Not merely to pull them back but besides find a manner on how to extinguish the ‘brain-drain ‘ job and to cut down the figure of high-skilled labour force that move off from Malaysia. They have to acknowledge what the factors that make all the high-skilled labour work out from Malaysia and develop some policy or jurisprudence to forestall them work out from Malaysia.

Since Malayan people is consist of assorted races and faith, when doing a policy it must fulfilling them all every bit and this is rather hard because since Malaysia has assorted races and faith the manner to fulfilling them might be different from each others. One of the inquiries arises when the authorities came up with the NEM policy is whether the policy will fulfilling all quarters. When running this policy, it must fulfill all quarters in both Malaysia peninsular and Borneo and in both bumiputera and non bumiputera. This is because, if this policy is non fulfilling all quarters, those unsatisfying party will be unhappy with this policy and could take to another job such as an addition of income disparity and even pip it might do a rebellion. This sort of challenges has arisen when the authorities introduces the NEM portion one in March 30, 2010 where the right wing groups are against with one of the thought in NEM which is the creative activity of equal chances committee. They want to fire the NEM Part One and slammed its Malay members of the council for non back uping it cause. The right wing group radical reaction is result from the 30 per centum of bumiputera equity which is written in the Article 153 of the Federal Constitutions where the NEM is against with the Article 153.

After all the alterations have been made which is the mentality, political will, the bing the high-skilled labour and the policy is already fulfilling all quarters, they have to maintain the alteration until the NEM has truly meets it end. After Malaysia has the new face of economic system whereby the NEM has win or in other words the three ends in NEM has been achieve, now it ‘s the clip for the authorities to prolong the alteration. They must prolong the alteration, so that Malaysia will non see once more the Malayan economic system status today. They have to maintain and better the Malayan economic system place if the NEM were truly success in the hereafter.

6.0 Decision

Overall, NEM is a good policy where it is right identified what are the jobs that Malaysia presently is confronting. For case, NEM do reference about Malaysia have been trap in the in-between income degree for more than twenty old ages. It is emphasize that Malaysia needs some different policy to get away from this trap and yearn towards economic development.

Furthermore, NEM do indicate out one of the hottest issue which is the brain-drain job. The brain-drain job is earnestly need to be solves every bit shortly as possible to forestall our gifted and expertness escape.

Thereby, instruction, entrepreneurship, and market-friendly establishments demand reform are the cardinal to convey NEM to successful. However, the inquiry arises when people attempt to inquire, how much of our authorities are willing and ready to implement those policy? For certain these will be the challenges for Malaysia. Like the old treatment, the challenges such as mentality of people and political will are the key for successful. Cooperation from public, enterprisers and authorities drama of import function to hit the marks of NEM. Optimal-pareto should be the rule in execution so that all quarters are every bit happy. If there are some unsated part exist, oppose voice from the populace might be one of the restrain taking to Vision 2020.

As decision, effectual execution is really of import. Without good execution and cooperation from all position, NEM will merely look as a set of paper which deserving RM40 billion. Meaning execution and harmony coordination does assist to accomplish the ends of NEM.

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