Glowing or not, keep hand firmly on the steering wheel

IMF REPORT: A vote of confidence on how Malaysia has handled its economy

KEEP a firm hand on the steering wheel, that was the stern advice given by Tan Sri Ramon Navaratnam, former deputy secretary-general of the Finance Ministry (1979-1986) and now president of Transparency International Malaysia, sharing his take on the recent International Monetary Fund (IMF) glowing report on Malaysia.

Glowing or not, economic uncertainties, such as they are today, could rapidly turn for the worse, he warned.

But credit should be given where it is due.

Certainly IMF is fair enough to give that credit to Malaysia. And coming from an institution which speaks with authority, its recent praise of Malaysia's strong macroeconomic performance in the aftermath of global downturn is no small hand that had patted our back. It is a global vote of confidence on how we have managed our economy.

It came following a pow-wow Monday last week with Malaysian officials under IMF annual Article IV consultation process with member countries. After the meeting, IMF declared that the Malaysia's financial system remains sound, well-capitalised and resilient. Thus Malaysia, it said, is well-position to face the challenging external environment in the period ahead.

Such strength did not emerge from thin air. The government certainly deserves some praises. Its ambitious and game-changing reform agenda has enhanced growth potential by removing bottlenecks that had hindered investment and productivity. Every rakyat in every nook and corner of the country has been touched by the changes and is excited to move forward with the nation.

Bank Negara Malaysia has also played its role commendably for the last 10 years.

Under its Financial Sector Masterplan 2001-2011, which was implemented in the aftermath of the Asian financial crisis in 1997, the country has seen its fragmented banking system consolidated and rationalised. It has seen its financial sector diversified with deep and liquid debt securities market. It has seen corporate governance and risk management practices strengthened.

Delivery channels for financial products and services are now more efficient, while gaps in access to financing have been narrowed.

Malaysia has also emerged as an international Islamic financial hub and the list goes on.

All these developments have given support for the changing requirements of the Malaysian economy, while, at the same time, significantly strengthened its foundation for financial stability.

As if this is not sufficient, the country has embarked on a financial sector blueprint 2011-2020, which will take the financial system into a new trajectory of transformation and growth.

Still, we cannot stop and just live more fully in the moment and not worry about what's coming up.

In fact, reading between the lines of the IMF report, one would get some hints of what to tackle. Issues such as the need to improve business climate, enhance competition, upgrade workers' skills, and create more economic opportunities for all Malaysians were mentioned.

And from what we have seen through the Economic Transformation Programme, all these issues are being addressed and will hopefully be resolved.

Yes, this is a blessed country, spared from the pain of economic disaster that had befallen others. But be sure nothing should be taken for granted. That's why we should heed Ramon's advice to firmly keep our hand on the steering wheel and our eyes on the road.

In fact, because of our position of comparative strength, we may do well to step on the gas pedal and move forward while others are struggling.