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Malaysia's new PM to push radical reform

By Saturday March 28th, 2009 No Comments

KUALA LUMPUR (Reuters) – Malaysia’s incoming prime minister will radically restructure the country’s economy and its state companies to make them more efficient and to wean them off dependence on the government, a source told Reuters on Friday.

Najib Razak, currently deputy prime minister, will take over the top job next week and the economic reforms will be mostly implemented within 100 days, a radical departure from the incumbent Abdullah Ahmad Badawi who did not deliver on reform.

“Najib realises that he will need to move fast and that he needs to undertake major reforms, so an extensive plan has been prepared and is just waiting for final approval and to be rolled out once he is in office,” the senior source said.

The source spoke on condition of anonymity and had direct knowledge of the planned reforms, which were the first indications of concrete measures planned by Najib.

Within a week of taking office he will name a new cabinet which will likely be “leaner” than Abdullah’s, which was often criticised as bloated.

Najib was confirmed on Thursday as president of the United Malays National Organisation (UMNO), the biggest party in the National Front coalition that has ruled Malaysia for 51 years, in a party vote that saw key loyalists elected to top posts.

He will formally take office “soon after” the UMNO annual meeting ends on Saturday and will start moves to reform UMNO, which has lost support due to corruption and influence peddling, the source said.

REFORMING STATE COMPANIES

Among the major reforms, government-linked companies are to be made more competitive and to be weaned off the state and there will be big reforms to ministries.

The source said that several ministries would be restructured to streamline administration. Among those considered are the Education and Higher Education ministries, which could be merged.

The Prime Minister’s Department, which oversees law, parliament affairs, internal security and home affairs is also being looked at, the source said.

The Energy, Water and Communications Ministry could be restructured so that energy becomes a ministry of its own, pitting it in a better position to handle all energy issues, including oil and gas, electricity and even alternative energy.

“We expect many of these changes and reforms to be in place in less than a year, within 100 days of Najib taking office,” said the source.

The government will also change management at top companies that are owned or part-owned by the state, including plantations-to-property conglomerate Sime Darby.

Sime recently proposed the government build a new airport on land it owned, a proposal the government recently rejected.

“The aim is to enhance efficiency, because the government feels that the government-linked companies need to move away from … dependence on the government for its profits,” said the source.

Malaysia has slipped in competitiveness rankings and its favoured status as a destination for foreign investment in Asia has dimmed, being overtaken by neighbouring Thailand in the past few years, according to data from the United Nations.

Longer term, Najib wants to move Malaysia away from its heavy dependence on electronics exports, which account for almost 40 percent of the total, and commodities and oil and into the higher-value services sector.

REFORM UMNO

Reform of UMNO is also key if Najib and the National Front coalition are to survive. The coalition suffered its worst ever results in national and state elections a year ago, losing a third of parliamentary seats to the opposition and four states.

Four chief ministers in government-controlled states will likely be replaced to refresh the party and Najib will also oust long-serving federal ministers to boost performance.

“Najib will take a cue from the fact that many new faces were elected into the UMNO leadership line-up on Thursday, so the new cabinet will reflect this,” said the source.

Source : Reuters

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