Today is the second anniversary of the historical March 8, 2008 general election. This is the date any public relations adviser would tell the Barisan Nasional to avoid in calling for future elections.
It was clear that Pakatan did not win the 2008 general election. It took the three main opposition parties nearly 18 months to formalise a coalition and to iron out their differences.
Without the rejection of BN government in the five states and 82 parliamentary constituencies, the electoral pact between PAS, PKR and DAP would have remained just that - an electoral pact.
BN's stunning electoral setback was inflicted by mostly urban voters who had had enough of political excesses, corruption and power arrogance of the ruling class. And the problems continue.
There are enough signs pointing to a slow meltdown of the urban economy. Malaysia's growth sectors - plantations and oil and gas - are mostly concentrated in rural and semi-rural areas. These sectors do not offer many job opportunities for locals.
The urban population is facing a rising crime rate, slow economic growth, lower new jobs creation, steady increase in inflation and deterioration of living standards. The number of delinquents, dropouts and unemployed are on the rise. An informal report has put the undergraduate unemployment figure at almost 80,000 and climbing.
The workforce structure is another big dilemma for the government. Local unskilled workers find it difficult to compete with cheaper foreign labour who do not mind accepting low wages and zero housing allowance and insurance protection. Almost half of the three million foreign workers have entered the job market illegally.
Skilled and highly educated Malaysians are being led away by higher salary and better perks overseas. This group topped the list of overseas migrations. A parliamentary report had put the migration figures from 2007-2009 at almost 300,000. More than a million skilled Malaysians are believed to be working abroad.
Hence, a number of companies have lamented over the fact that they are facing a serious challenge to fill up highly technical and middle and top management positions.
Ironically, politicians have participated in a blame game. For example, there is an allegation that Penang government had turned away millions of ringgit worth of investment because it could not guarantee the supply of 1,000 skilled electronics engineers. However, it did nothing to facilitate the potential investor's needs.
The incident has a far reaching consequence. It is one of the strongest indications that Malaysia's industrial development structure may have collapsed due to excessive brain drain.
Our economy's inability to retain and attract skilled labour may dent our national development ambition to become a knowledge-based economy and society by 2020. We simply do not have the brain power to move up the economic value chain.
It will not take too long for a full hollowing out effect to be felt in several key sectors - high-technology manufacturing, information technology, financial, professional services, telecommunications and others. Even our assembly plants and low-cost manufacturers are relocating to other lower cost destinations.
Moderates vs conservatives
The administration of Najib Abdul Razak has responded to the socio-economic challenges rather meekly. The premier's liberalisation effort has lost steam after the opening up of 27 service sub-sectors.
Najib's economic vocabulary is quite limited. Arguably, economic liberalisation is not the only option in re-energising the economy. He needs to focus on apolitical reform of the education system which, in turn, will reflect on the quality of knowledge acquisition.
Moreover, his administration has to work extra hard to return public confidence and trust in the public institutions. The market reacts on perception. If public perceptions of Malaysia are negative, the country will not attract productive and long-term investment.
Malaysia must demonstrate its commitment to the rule of law and democracy. The administration must show that it has the wisdom to focus on the important big picture and not on petty religious and racial squabbles which do not benefit anyone.
Two years after March 8, there is little indication showing that the moderate voice in BN has prevailed over that of the conservative. Najib's reform agenda has hit the racial barrier before even it was fully implemented.
A coalition of more than 80 Malay organisations, the Malay Consultative Council (MEC), has stepped up its pressure on the government to keep the affirmative action in the soon-to-be announced New Economic Model. If it prevails, the economic model will be another case of putting 'old wine in a new bottle' and inspire no change to jumpstart the mediocre economy.
Najib faces the risk of being labelled as yet another Abdullah Ahmad Badawi (left), a reformist-wannabe who fears - and is toppled by - his own reforms.
There is a possibility that Najib administration might respond through a conventional way. Faced with the opposition to open up the economy and to allow the private sector to develop freely - which means dismantling the decades old race affirmative policy - the government has reacted by increasing the intake of public servants.
He has an option to expand the civil service and sustain all subsidies and grants. He has dropped the intention to tweak the petrol subsidy structure. His federal budget contained a huge amount of subsidies and grants. He had created a vehicle to help shore up bumiputera equity shareholding and to fund development on Malay reserved land.
These actions will aggravate his operating budget and leave very little for development expenditure. Like Anwar Ibrahim, the premier must exorcise his political ghosts. By allowing Perkasa more room to stir up communal sentiments, he is digging his own grave which may eventually bury his political career.
Read the rest on Malaysiakini.com