Friday March 31, 2006

Drafting the early Plans

By IZATUN SHARI

CLASH of minds between policymakers from the Economic Planning Unit (EPU) and Treasury Department over the amount of budget allocation seemed to take centre stage during the meetings for the preparation of the previous Malaysia Plans.

EPU was always trying to justify bigger allocation for economic and social development while Treasury was more concerned about controlling finances.

Navaratnam: The meetings were often a battle of wits between officials from the EPU and Treasury

The two units, together with Bank Negara and the Statistics Department are part of the Inter Agency Planning Group (IAPG), which are involved in the drawing up of Malaysia Plans for every five years.

One of the pioneers involved in the drafting of the first draft Development Plan of Malaya (1960 to 1965), Tan Sri Ramon Navaratnam said the meetings were always intense, often a battle of wits between officials from the EPU and the Treasury, each trying to outdo the other to justify their arguments on budget allocation for the various sectors.

“During the meetings there were always arguments between Treasury and EPU. EPU wanted to expand more and more. We said if we expand too fast, we give you money, we borrow too much and get into debt and the country will go down the drain,” Navaratnam said in an interview recently.

Recalling his involvement in the early days of drafting the previous Malaysia Plans, he said Treasury, which was working together with the Central Bank, was more conservative, careful and cautious in approving budget allocations for investments in certain projects and programmes.

Dr Zainal: ‘Restructuring the society includes getting the bumiputra involved in the modern sectors’

“We had to reach a compromise and ensure check and balance,” he said adding that ideas and views were later discussed at the National Development Planning Committee and eventually decided at the Cabinet Economic Committee meeting chaired by the Prime Minister.

“I remember playing squash with Dr C L Robless who was EPU deputy head then for about half an hour at 7am at the Lake Club and when we went in for the meetings at 8am, the tension somewhat softened a little bit.”

He said government officers involved in the five-year plans had high regards for Bank Negara Governor then, the late Tun Ismail Ali.

“Tun Ismail was a stern man. We would be very careful before we make any presentations and make sure that we meet his high standards.

“The late Tun Raja Mohar (Raja Badiozaman who was then the National Development Planning Committee chairman) was quite friendly. He had a lot of compassion and taught us a lot. He was like a father figure to us.”

He said the Finance Minister then; the late Tun Tan Siew Sin was conservative, very careful and wanted to ensure that the country's budget would not get into a deficit.

“When EPU wanted more money, he (Tan) once asked, 'You think money grows on trees? You think it's your grandfather's money?”

Navaratnam, 71, who was also involved in few other Malaysia Plans until he left Treasury to become the Transport Ministry's secretary-general in 1986, said he was transferred from the Health Ministry to Treasury specifically to help do the groundwork of the draft Development Plan of Malaya because the country was lacking economists.

“There were not more than 15 local economists. We came from University of Malaya in Singapore and subsequently the Harvard Advisory Group came to help us draw up the draft.”

He said an American W. Gilmartin and R. Gulhati, who is an Indian national, from the World Bank later joined Treasury to help start work on the planning of the First Malaya Plan while economist Oscar Spencer was in charge of the EPU and Tan Sri Thong Yaw Hong was then the deputy director-general.

Others who formed the IAPG included Tan Sri Lin Siew Sin who is also former deputy Central Bank Governor and some of Navaratnam's university mates.

Navaratnam said the emphasis of the first draft Development Plan of Malaya was largely on agriculture, rural and infrastructure development.

Datuk Dr Zainal Aznam Yusof, 61, who was one of the pioneers in the formulation of the Second Malaysia Plan (1971 to 1975) and three other Malaysia Plans said the plan was drawn up during a controversial period following the 1969 racial riot.

Dr Zainal, who headed the EPU industry division in the early 70s and served the unit for more than two decades, said EPU was taking the lead in formulating the Second Malaysia plan, which is a blueprint for the New Economic Policy.

He said EPU was pushing for new development as the country was formulating the NEP, which incorporates a two-pronged objective of eradicating poverty irrespective of race and restructuring Malaysian society to reduce and eliminate the identification of race with economic function.

“Restructuring the society includes getting the bumiputra involved in the modern sectors. The emphasis on education projects to uplift the bumiputra requires money but Treasury was cautious about how funds were allocated,” he said, adding that the Central Bank was wary about hurrying into investments without proper planning.

Dr Zainal, who is currently National Economic Action Council committee member, was involved in the drafting of the Malaysia Plans under three former Prime Ministers – Tun Abdul Razak, Tun Hussein Onn and Tun Dr Mahathir Mohamad.

He said Razak worked very well with EPU officials as he understood the workings of the civil service and monitored its performance though the Red Book system where top officials in the service were required to monitor projects in various districts and brief him on the development.

He said Tun Hussein was more meticulous and went around the country personally to ensure continuity to NEP projects while Dr Mahathir interacted closely with technocrats and Cabinet ministers as he was interested in details.

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