High Income Nation

1.  We would like to be a high income nation. By 2020, we aspire to achieve a per capita income of at least RM48,000 or USD15,000.

2.  For this reason, much emphasis has been laid on economic growth and the voices of economists are much welcome.

3.  But what is a high income nation really? Countries of the West have high income yet they are still struggling with bank loans. Clearly, Greece which has a per capita income of USD26,600 in 2010 is seeking bailouts.

4.  In economics, there is a fundamental concept of supply and demand. Policies are made based on this concept.

5.  The New Economic Policy was a supply-side policy. It made more people participate in businesses; ensuring competition and better supplies. But this economic mechanism has become unpopular.

6.  Now, more demand-side mechanisms are being introduced. Skim Rumah Pertamaku, Bantuan Rakyat 1Malaysia and undeserved pay-raise are examples. They are made to stabilize, if not to strengthen relevant demands.

7.  Industry players, knowing the strengthened demand side, would happily raise their prices. Houses, goods and foods (which are set at higher prices) are still going to be purchased in the presence of artificial buying power.

* This is also posted on Tun Dr Mahathir's blog under Minimum Pay