3/4/10 VILLAGE ECONOMIC MODEL

Najib New Economic Model (NEM) had placed RM40,000 (at 2010 price) as the average per capita income target for the Country by 2020. If not mistaken, at the launching of the V2020, Dr. Mahathir had targetted the Country per capita income should be eight folds from the based 1990. He even pursue for the 57 million population to ensure greater economic diversification and sustanenance.

(2) I'm not going to talk about the NEM that Najib and the rest are struggling to formulate, of which it would not differ much from the conventional Macro-economic Model with numrerous dynamic and given parameters to be considered. Here, since Najib, Development Trust (NKRA) for the 10-12 Malaysia Plan (MP), had focus on the Rural Development either in term of Infrastructure and Income Enhancment, I would love to dwell on what I would term as Village Economic Model (VEM).

(3) Any cities, doesn't matter where, and when, it originated from a Village. Thereon, through what ever intervention, the Village expanded and evolved into larger and much organized settlement system that later tranforms itself into a city.

(4) As such, Village could be classified as the pioneer and smallest unit of human setllement. Aggregation of Villages then form cities and other urban and pheri-urban dwelling system. Thus, in simple arithmatic, summation of Villages form a State or Nation. Such that, good (wealthy) Villages give rise to better (wealthy) State or Nation.

(5) Thus, it is very pertinent that if Najib want to develop a High Income Nation, it should not be merely measured from the NGDP perspective. He must ensure that even the smallest unit of the Nation geo-physic must also contributed significantly to the NGDP. The resaoning is very simple, Sarawak GDP is among the top three in the Country. Yet, we are among the largest poverty captured population in the Nation. Thus, High GDP doesn't signify the High Income Population State. Therefore, targeting High Income Nation is not the best approach to achieve Developed State Status. We must achieve High Real Per Capita income, rather High GDP-based Income average. So much so, distribution issue must be well address.

(6) In this regard, the Villages in fact are the source of growth of the State. The forest, the land, the water, the fish, even the mineral and all sort of endowments that are available in the Villages (Country-side) are the great economic asset that if being managed efficient would make a Village to prosper better.

(7) In this regard, since we are just 10 years to the 2020, we need to move faster. The 7% GDP growth target, should be translated into the 7% Income Growth Target for Village dwellers. In order to achieve this, it is most rightful that the rural infrastructure must be quickly developed. Opening up rural areas to economic infussion must be given high priority.

(8) This Rural Infrastucturalization must be followed by massive economic development, particularly through unleasing the rural economic assets into commercial venture. Both Public and Private funds must be mobilise for these purppose. Accordingly, the commercial management expertise must also quickly be deployed. Various Development Module must also be properly formulated.

(9) To me, it is best that, the Rural Folks be guided to gain not only High Income, but most important, an ever Increasing Income. In this sense, they must not only be trape into the Agriculture Production Sector, but their source of Income must be package in such that their Income would grow with the Growth of the NGDP.

(10) Thus the VEM must be a Development Package that must enable the Income of the Villagers are not trape into a single sector but transgress into other trickling sectors. The old Agarian Rural Development should no more be placed hinghly as our present Rural Development Module. Since resources are getting limiting, thus, the rural asset must be capitalised to the optimum in a new way!

(11) I strongly believe, countries such as Switzerland, New Zealand, Korea, and Taiwan had the said VEM as I conceptualised above. In Malaysia, we failed to induce much sustain Rural Income Enhancement due to the break in that VEM. Our VEM didn't capture the whole prerequisit of Sustaining Income Growth. We are too focus on income enhancement, which now make us traped into 'certain income bracket'!

Kuching, Sarawak
6 April, 2010