Economic prosperity, sustainable development and equitable distribution of wealth are all key visions that any nation strives to achieve, including Malaysia. The realization of these visions primarily depends on government policies, particularly economic and development policies, as well as political stability.
In Malaysia, these responsibilities fall under the federal government whilst reputable institutions such as the Malaysian Institute of Economic Research (MIER) and Khazanah Research Institute (KRI) provide valuable insights for policymakers.
Given the multifaceted challenges Malaysia faces today, and will continue to face well into the future – such as geopolitical tension, climate change and income inequality, as well as structural issues within the economy, an independent economic think tank is urgently needed.
Such an institution will provide an independent and balanced approach to complement existing public or private institutions. The proposed think tank adds value by providing expert insights, independent of political affiliation or the current government.
It will also provide the necessary mechanism for check and balance on policy matters, supplementing the role carried out by the opposition. Having an independent think tank is critical for any nation to develop and thrive. Moreover, an independent think tank will complement the whole-of-society approach required to face contemporary challenges.
A key focus area that the new think tank should focus on is on the economics of institutions. In its broadest sense, this refers to rules and regulations, cultures and norms, as well as formal institutions that shape economic behavior within society.
Institutions are critical for the progress of any society as they drive productivity and innovation. For decades, Malaysia has been grappling with the issue of an unconducive innovation ecosystem. A myriad of root causes contributes to this predicament, including shortcoming in the education system, power structure and institutions within our society.
Despite having a large base of SMEs, their productivity and innovation levels remain low. These issues suggest that there are deeper issues within society, hindering Malaysia from achieving its full potential. The issues are tied with informal institutions in our society, namely culture, norms and values.
The new think tank will conduct policy-oriented research to meet the needs of the Malaysian society. It should benefit from the vast body of knowledge in economics and governance from institutions and civilizations all over the world.
For example, advanced economies in Western Europe and North America have robust institutional frameworks from which Malaysia can selectively learn, while tailoring solutions to fit the local context.
However, even as we draw inspiration from these nations’ progress, it is crucial to avoid their mistakes. While modern capitalism has spurred remarkable progress in these countries, it has also led to significant issues, primarily income and wealth inequality.
Concentration of wealth among oligarchs threatens democratic institutions and freedoms that these societies have long cherished. Malaysia must not follow the same path. Although there are areas to emulate, we must avoid replicating these systemic failures.
These lessons remind us on the importance of institutions that are not only suitable, but conducive for Malaysia’s long-term growth and resilience. Achieving this is not an easy feat and requires strong commitment from multiple stakeholders.
While the government should strive its best to serve society, it will be naive to let the government alone to undertake this endeavor. Even in the most advanced economies and democratic nations, governments are not immune to corruption and mismanagement.
This reality reinforces the urgent need for an independent economic think tank to safeguard Malaysia’s progress and ensure resilience.
Mohammad Abdul Hamid
Head of Economic Prosperity Cluster
Pertubuhan IKRAM Malaysia (IKRAM)
