Thursday, May 26, 2011,

How prosperity can continue By Azura Abas news@nst.com.my

Raja Muda of Perak Raja Dr Nazrin Shah browsing through the book Malaysia: Policies & Issues in Economic Development which he launched yesterday. With him are Institute of Strategic and International Studies Malaysia chairman Tan Sri Mohamed Jawhar Hassan and its chief executive officer Datuk Dr Mahani Zainal Abidin. — NST picture by Ghazali Bujang KUALA LUMPUR: For Malaysia to stay ahead in the economic race, it must be accepted that successful initiatives in the past may not work in the future, the Raja Muda of Perak said.

Raja Dr Nazrin Shah said some old challenges remained; and new ones had appeared. "Malaysian policymakers are acutely aware of the changes that have to be made if the country is to continue to prosper.

"This begins with the acknowledgement that policies that have worked in the past are unlikely to work in the future.

"To keep internationally competitive, the country needs to take a big step up the technological ladder by moving into high-technology and knowledge-intensive industries." Raja Nazrin said this before launching the Institute of Strategic and International Studies (ISIS) Malaysia's book, entitled Malaysia: Policies & Issues in Economic Development, yesterday.

Also present were ISIS chairman Tan Sri Mohamed Jawhar Hassan and ISIS chief executive officer Datuk Dr Mahani Zainal Abidin.

Raja Nazrin said he believed incentives to be hugely influential in shaping human behaviour. "Create the right incentives and people will respond accordingly."

However, for growth to be sustainable, these incentives must be embodied in institutions. The ability to provide the appropriate institutional environment for markets to flourish and operate efficiently was essential to sustainable development. "Countries that have failed in this respect have experienced stagnant or falling incomes and persistent poverty. "This institutional environment should include the protection of property rights, the rule of law underpinned by a strong legal system, an independent judiciary and the protection of the environment." There must also be incentives for governments to provide good governance, he said. "This could be achieved through mechanisms such as the separation of powers, readily available avenues for the public to monitor public behaviour and rules that inhibited corruption. "They all contribute towards the effective and efficient functioning of a modern economy." Raja Nazrin attributed Malaysia's prosperity to political resolve, economic pragmatism and effective implementation of policies. He said various adjustments made since independence including the introduction of the New Economic Policy (NEP) had in their own way pushed the nation further ahead in the economic race. "Today, the results of the NEP are hotly debated. On the one hand, the NEP is credited with restoring social and political stability to the country by bringing about growth with equity. "The argument can be made that the Malaysian experience is a classic illustration that development, particularly in multi-ethnic societies, consists of more than just unleashing market forces. "It demands economic growth that is broadly shared among all citizens, as well as the necessary institutional environment to help bring it about." On the other hand, he added, some had argued that such results were achieved at a high cost. "They argue that it has resulted in greater income inequality within the Malay community; that it has led to gross inefficiency in the public sector; that it has encouraged a dependency mentality among a section of the population; and, that it has increased the scope for patronage and rent-seeking.

"The debate continues." Raja Nazrin also believed that Malaysia was a more suitable model for other developing countries than the East Asian tiger economies of South Korea, Taiwan, Hong Kong and Singapore. "This is because Malaysia shares common features (a resource-rich nation, having a multi-ethnic, multi-religious population) with many countries in Asia, Africa and to a lesser extent Latin America, that makes it an ideal case study." On the book that documented Malaysia's economic journey, Raja Nazrin, who is also an ISIS Eminent Fellow, expressed his sense of pride in having such a book. The book was conceptualised to coincide with a milestone in ISIS's history -- the 25th anniversary of its establishment. Raja Nazrin paid tribute to the late Datuk Dr Zainal Aznam, whom he described as a distinguished scholar. "It was Dr Zainal who early on impressed upon me the importance of institutions in the development process." Zainal was also one of the two advisers of the Malaysia: Policies & Issues in Economic Development book and he wrote the final chapter entitled "Looking Forward". The book, priced at RM80, hit the shelves of major bookstores yesterday. Earlier, Mahani said the publication of the 22-chapter book was one of ISIS' two main projects. The other project was the setting up of a database to store information including interviews with personalities on their thoughts and feelings on Malaysia's economic development. "The database will continue to be updated to ensure it stays current."

Thursday May 26, 2011

Regent: M’sia must take bold leap in economic policies By RAHIMY RAHIM rahimyr@thestar.com.my

KUALA LUMPUR: Malaysia needs to take a big step up the technological ladder as economic policies that have worked in the past are unlikely to work in the future, said Regent of Perak Raja Dr Nazrin Shah.

The country, he said, should move into high technology and knowledge-intensive industries so that it could stay competitive internationally.

Instead of being driven mainly by increases in the use of labour and capital as was the case in the past, Raja Nazrin said “future growth would have to come from productivity gains and technological breakthrough”.

The ability to provide the appropriate institutional environment for markets to flourish and operate efficiently is essential to sustainable development, he said.

“This institutional environment should include the protection of property rights, the rule of law underpinned by a strong legal system, an independent judiciary and the protection of the environment,” he said at yesterday's launch of Malaysia: Policies and Issues in Economic Development.

The book is a collection of studies on Malaysia's economic development after independence and interviews with economists and policymakers on the nation's economic progress. It is published by the Institute of Strategic and International Studies Malaysia.

Raja Nazrin also noted that there should be incentives for governments to provide good governance.

“This can be achieved through mechanisms such as the separation of powers, readily available avenues for the public to monitor behaviour and rules that inhibit corruption,” he said.

He said Malaysia remained one of the few countries that had managed to transform its rich resource base into sustainable development.

Thursday, May 25, 2011

The silent water wars have begun By Santha Oorjitham

Brahma Chellaney says water shortages are leading to ‘hydrological warfare’ Tension over precious water resources in Asia is already rising, warns Brahma Chellaney in an interview with SANTHA OORJITHAM

Q: THE Tibetan plateau supplies water to 47 per cent of the world's population. How would you rate cooperation between upstream and downstream countries on managing water resources?

A: There are treaties among riparian neighbours in South and Southeast Asia, but not between China and its neighbours.

For example, the lower Mekong states of Thailand, Cambodia, Laos, and Vietnam have a water treaty. India has water-sharing treaties with both the countries located downstream -- Bangladesh and Pakistan.

There are also water treaties between India and its two small upstream neighbours, Nepal and Bhutan. But China, the dominant riparian power of Asia, refuses to enter into water-sharing arrangements with any of its neighbours.

Yet China enjoys an unrivalled global status as the source of trans-boundary river flows to the largest number of countries, ranging from Vietnam and Afghanistan to Russia and Kazakhstan.

Significantly, the important international rivers in China all originate in ethnic-minority homelands, some of them wracked by separatist movements. The traditional homelands of ethnic minorities, extending from the Tibetan Plateau and Xinjiang to Inner Mongolia and Manchuria, actually span three-fifths of the landmass of the People's Republic of China.

Q: What are the main sources of water stress in the Asia-Pacific region?

A: Many of Asia's water sources cross national boundaries, and as less and less water is available, international tensions will rise.

The sharpening hydropolitics in Asia is centred on international rivers such as the Amu Darya, Syr Darya, Brahmaputra, Mekong, Salween, Indus, Jordan, Tigris-Euphrates, Irtysh-Illy, and Amur. There is also the stoking of political tensions over the resources of transnational aquifers, such as al-Disi, which is shared between Saudi Arabia and Jordan, or the ones that link Israel and the occupied Palestinian territories.

Q: Are there intra-state tensions over location and approval of dam sites?

A: Intra-state water disputes are rife across Asia. The more democratic a country, the more raucous the intra-country water disputes tend to be.

In repressive political systems, water protests are quickly muffled. Yet China is discovering the hard way that it is difficult even for an autocracy to fully suppress grassroots protests over new water projects that displace residents or over diversion of water from farmlands to industries and cities.

Q: You have also written about possible interstate tension over reduced water flows. Has this already happened?

A: According to the United Nations, growing competition over water resources has "led to an increase in conflicts over water" in Asia between provinces, communities, and countries. Asia illustrates how rapid rates of population growth, development, and urbanisation, together with shifts in production and consumption patterns, can place unprecedented demands on water resources, bringing them under growing pressure and fostering domestic discord.

Water conflict within nations, especially those that are multiethnic and culturally diverse, often assumes ethnic or sectarian dimensions, thereby accentuating internal security challenges.

If the feuding provinces or areas are ethnically distinct, their water dispute also rages along ethnic lines. This pattern has been most visible on the Indian subcontinent and Central Asia and between Han settlers and ethnic minority people in Xinjiang.

In Central Asia, much of the freshwater comes from the Pamir and Tian Shan snowmelt and glacier melt that feed the region's two main rivers, the Amu Darya and the Syr Darya. The resources of these two overexploited rivers have become the target of appropriation and competition.

One of the underlying causes of the mid-2010 bloody riots in the Fergana Valley -- a minefield of religious fundamentalism and ethnic animosities -- was the local ethnic-Kyrgyz fear that Uzbekistan wanted to absorb that water-rich region of Kyrgyzstan.

Q: What are the policies and strategies you suggest in "Water: Asia's New Battleground" (to be released in June) to prevent "water wars"?

A: The water crisis and competition test Asia's ability to forge a more cooperative future. How Asia handles this challenge will shape not only its water future, but also its economic and political future.

Given that Asia has the fastest-growing economies and the fastest-rising demand for food, its water shortages will only worsen without major efficiency gains in use.

Three strategies are specifically recommended.

The first is to build Asian norms and rules that cover trans-boundary water resources. The second is to develop inclusive basin organisations encompassing transnational rivers, lakes, and aquifers in order to manage the water competition.

And the third is to develop integrated planning to promote sustainable practices, conservation, water quality, and an augmentation of water supplies through nontraditional sources.

Q: Should water be "securitised"?

A: Whether we like it or not, the "securitisation" of water resources has been going on for years. Indeed, in a silent hydrological warfare, the resources of transnational rivers, aquifers, and lakes have become the target of rival appropriation, with these watercourses being treated as national-security assets.

Water has become an important security issue in several important bilateral relationships in Asia, including those between China and India; between China and the other Mekong River basin states; and among states in South Asia, Central Asia, and West Asia.

Singapore also "securitised" the water issue, using its concerns over a potential Malaysian cut-off of water supply to build a stronger military capability.

Brahma Chellaney, professor at New Delhi's Centre for Policy Research, will be speaking at the 25th Asia Pacific Roundtable next week