KUALA LUMPUR, Feb 13 — Putrajaya’s formation of a new council comprising ministers and business leaders to tackle the economy and arrest the rising cost of living has predictably been met with a mix of criticism and cautious optimism.

While some are lauding the fact that the Pakatan Harapan (PH) government is finally attempting to address its shortcomings with regards to addressing the cost of living and economic growth, others are claiming the Economic Action Council (EAC) is proof of the current administration’s failure to deal with key issues affecting Malaysians some nine months after coming into power.

But pundits and economists believe there is a rationale for the EAC; an urgency to solve economic woes and an electorate frustrated with the current government for not being able to deliver on their election pledges.

Sunway University Business School economist Yeah Kim Leng said that the setting up of the EAC is timely to address the urgency of getting economic policy decisions right, clear and consistent throughout the entire government machinery. ― Picture courtesy of Yeah Kim Leng

What will the council do?

The Prime Minister’s Office has said the EAC’s main objective is to stimulate economic growth and to improve equal distribution of wealth, as well as look at issues related to the cost of living, human resources, poverty, and home ownership.

Jayant Menon, a lead economist in the office of the chief economist at the Asian Development Bank, stressed that Putrajaya needs to provide further clarification on the role, responsibilities and mandate of the proposed new council.

"If it is to play a mainly advisory role, like the Council of Eminent Persons, then there appears to be little harm in it. Indeed, if it is properly constituted, it could provide the government with useful input from a broader spectrum of the community, especially the private sector.

"I think an expanded and more diverse membership than the Council of Eminent Persons would work well,” he told Malay Mail when contacted.

Sunway University Business School economist Yeah Kim Leng said that the setting up of the EAC is timely to address the urgency of getting economic policy decisions right, clear and consistent throughout the entire government machinery.

"The council’s ideas on growth-promoting decisions such as spurring innovative activity, investment in new productive capacity and seeking new markets will be very helpful to the new government in ensuring clarity and co-ordination in economic policy-making that enhances confidence among investors,” Yeah said.

He cautioned that the EAC will have to be mindful of vested interests and recommend bold moves to enhance the efficiency and competitiveness of the economy.

Political analyst Oh Ei Sun said that there seems to have been some consideration made in the drawing up of the EAC, with its substantial private-sector membership, as well as political representatives from all major Malaysian races as well as Sabah and Sarawak.

"I think what people are expecting from the councils are concrete and fast-yielding measures which could stimulate the obviously ailing economy. If it goes the way of previous committees then people would lose faith in this administration even faster and sooner,” he said.

On the other hand, critics like Tun Dr Mahathir Mohamad’s own communications and media advisor Datuk A Kadir Jasin have claimed the formation of the council means the prime minister considers his own administration’s machinery ineffectual.

Responding to this, Oh said that Dr Mahathir is well-known for his high and exacting demands on the performance of his colleagues and subordinates and unlike his previous time as PM, PH is made up of a coalition Cabinet in which its members are appointed based on political representation more than individual merits.

"But the ironic point here is according to popular perception, it was in fact the ministers from his own party whom many consider most ineffectual in their performance,” the senior fellow at the Singapore Institute of International Affairs said, referring to the recent public uproar over Deputy Foreign Minister Datuk Marzuki Yahya’s academic credentials as well as Education Minister Maszlee Malik’s policy decisions.

Both are PPBM members, the party in which Dr Mahathir is chairman.

SERC executive director Lee Heng Guie said the country’s stable economic fundamentals, including a strongly capitalised banking system, is a plus point for the government to undertake structural reforms. — Picture by Yusof Mat Isa

How to fix the economy

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said that the EAC can act in an advisory role in terms of providing input, feedback and suggestions and it can start doing so by using policy recommendations prepared by the now-defunct Council of Eminent Persons (CEP).

"Ultimately, it is the Cabinet who calls the shots,” Lee told Malay Mail.

He said that the country’s stable economic fundamentals, including a strongly capitalised banking system, is a plus point for the government to undertake structural reforms.

For Malaysian Institute of Economic Research (Mier) executive director Zakariah Abdul Rashid, the EAC is not a form of government intervention but an initiative to "stimulate” the private sector to be more responsive in addressing economic concerns.

"The Cabinet comprises lawmakers which will direct the executive, including the private sector to undertake their activities accordingly,” he said.

Is there then, a silver bullet to fixing the country’s economy?

"The silver bullet is ironically for the government to get out of the economy as much as possible, with the private sector given a greater degree of autonomy to effectuate its entrepreneurial spirit, while the government is relegated back to a benign regulatory role, as it should have been from the onset,” Oh said.

Oh added that there will be public scrutiny as to how Putrajaya yields its fiscal and monetary policies to stimulate the economy, and that the EAC with an "exclusively economic focus” should work side-by-side with the Cabinet, which has a much broader portfolio beyond the economy.

For Yeah, government involvement and intervention should be minimised in properly functioning industries and markets, but they are needed in protected and un-competitive sectors where market failures and inefficiencies are rife.

The EAC will be headed by Dr Mahathir. It comprises Economic Affairs Minister Datuk Seri Azmin Ali, Finance Minister Lim Guan Eng, International Trade and Industry Minister Datuk Darell Leiking, and Works Minister Baru Bian from the Cabinet.

The council also includes the prime minister’s economic adviser Muhammed Abdul Khalid, former International Trade and Industry Minister Tan Sri Rafidah Aziz, Permodalan Nasional Berhad chairman Tan Sri Zeti Akhtar Aziz, Council of Eminent Persons member Professor Jomo Kwame Sundaram, Public Bank managing director Tan Sri Tay Ah Lek, Majlis Amanah Rakyat chairman Hasnita Hashim, Bursa Malaysia chairman Datuk Shireen Ann Zaharah Muhiudeen, Asean Business Advisory Council chairman Tan Sri Mohd Munir Abdul Majid, Federation of Malaysian Consumers Association CEO Datuk Paul Selvaraj, lawyer Bah Tony @ Amani William Hunt Abdullah, and Institut MASA director Nizam Mahshar.