Source: The Sun
Date: 11 October 2011
KUALA LUMPUR (Oct 11, 2011): The public sector should consider starting a new business in an uncontested market and apply the "Blue Ocean" approach in line with the government's call for a more private sector-driven economy, says Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam.
He said government-linked companies (GLCs) are crowding out the private sector, resulting in capital outflow as companies invest abroad.
"It is a problem when GLCs with government funding compete with the private sector. You cannot expect the private sector to grow towards Vision 2020. The real issue is, the private sector must be the engine of growth," he told reporters at the opening of the Economic Freedom Network Asia 2011 Conference today.
"We must do a correction, bring it back on track. The GLCs, with their quota and government funding, they will use it to expand and grab market share but is this good for public interest? Let the GLCs compete, but on an even playing field... Find new areas of business instead of taking other people's business; don't take the easy way," he said, adding that the public and private sectors must cooperate.
Ramon also believes that the Competition Act 2010, which comes into force on Jan 1, is important in carrying out the New Economic Policy (NEP).
"There will be conflicts, but we must overcome them, otherwise international investors may not want to come and do business here.
"Competition will increase productivity, wealth, prosperity but we can still follow the NEP by taking the benefits from competition and transfer it to the poor... We must encourage GLCs to be more competitive," he said.
Meanwhile, Ramon said the government's projection of a 5-6% gross domestic product (GDP) growth for 2012 is optimistic and a back-up plan is needed.
"The economy of the world is changing, we must have a strategy. Budget performance must be monitored carefully and if there are signs of the US economy sliding further, we must take counter-action," he said.
Asian Strategy & Leadership Institute CEO Datuk Dr Michael Yeoh described Budget 2012 as "ambitious", saying the government needs to be cautious about the global economic conditions.
"Many private economies tend to think growth next year may go lower than the budget estimate. They are predicting growth of 4-5% rather than the government's 5-6% target.
"A lot depends on two things: the global economic situation which will determine our exports and the level of domestic consumption. If domestic demand is strong, we may achieve close to the 5% target, but I think 6% is a bit high," Yeoh said.
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