Why Malaysia can never catch up with the economic efficiency of Singapore, etc.

Unlike the Singapore government and many other economically developed countries, Malaysia lacks a policy that should have been implemented by the government a long long time ago - whether its is to cure inflation or recession or unemployment, to stimulate growth in the economy, improve the Balance of Payment's deficit and stabilizing the currency.

Many would agree with me that inflation could never be cured without the side effects of rising unemployment. Theoratically speaking, when there is inflation, the government would adopt the Contractionary Fiscal Policy, deliberately reducing government spending (like subsidies) and increasing tax rates so aggregate demand and spending would reduce, together with the Contractionary Monetary Policy by increasing interest rates. Thus eliminating the seriousness of inflation in our country by the lowering of aggregate demand. However, when spending is reduced, businesses would in turn cut down their production and output thus leading to unemployment.

Inversely, when unemployment is to be cured the government would adopt the Expansionary Fiscal Policy by increasing government expenditure and reducing tax together with the Expansionary Monetary Policy by reducing interest rates to encourage spending in the economy. Yes, recession and unemployment will be curbed. But the problem of inflation now surfaces as demand exceeds supply.

What the government should be implementing is the Supply Side Policy, having the ratio of Supply Side Policy exceeding the Fiscal and Monetary Policy. The aim of the Supply Side Policy is to increase aggregate supply by increasing productivity in the economy, long term. That would simply mean, in layman's terms, a call to WORK HARDER. (Which Malaysia might have failed, not all, but in certain areas.)

Fortunately, in the labour market, this policy has been implemented via not allowing for unemployment benefits (like in the UK, where citizens choose to stay at home and feed on the unemployment benefits, thus reducing productivity in the economy).
Tun Dr Mahathir has also banned strikes to be carried out by trade unions. Yes, he was quite a dictator in allowing little or no freedom of speech. But I would have to admit this banning of strike is beneficial to our economy because strikes deter productivity, which is linked to the degree and quantity of investments in Malaysia.
Minimum wage is also not allowed as it would create unemployment and thus leading to the reduction in investments.

However, it is not likewise for the capital market. The government has failed in applying this Supply Side Policy here.
In the capital market, government red tape should be reduced. Did u know it takes approximately 3 months for an investor from abroad to get permission from the government department, just to invest? Whereas in Singapore, it only takes 3 hours.
The government should also encourage big firms to provide loans for Small Medium Enterprises (SMEs), which would allow for their growth and coherently contributing to our economy. (This is because banks would not be likely to provide loans for fresh and new businesses as they are aware it is a huge risk to take. Banks, being prudent, would rather borrow to households who buy assets. eg: cars, houses, shop lots. Whether it is for speculation or other personal interests, the banks would gladly lend their money because if the respective parties are not unable to pay interests or down payments, the banks can seize the property, sell it off and obtain their money back.)

In the goods market, the government should also encourage privatization. This would increase competitiveness and thus improving the quality of their services. Yes, companies like TMnet are privatized already. Sadly, I can't brag about their efficiency here.
The government should also remove artificial legal barriers to entry, for investors to come in and plant their businesses. This is called deregulation. Lets take an example of Citibank and Maybank Berhad. Did you know, up till 2007, there were only 3 Citibanks allowed in Malaysia? Its just recently the government has allowed for another 3 branches to be opened. Well, simply because the turnover for 30 Maybanks is no match for the turnover of 3 Citibanks. Talk about being kiasu by eliminating the degree of competitiveness here. (Ps: Many Maybanks are owned by politicians in Malaysia.) Overseas branches of law firms are also not allowed to have their franchises here. The result, documents for sales and purchases of houses are inefficiently produced, as there is lack of competition. Fortunately, low cost airlines like the Air Asia are increasing competitions, forcing our local airline, MAS to reduce airfare tickets too. So now everyone can fly.

Lets all hope the government would stop their squabble over parliamentary seats, racial issues and look into matters like improving the growth of our economy. Things that actually matter.

(Source: Words of wisdom by an Economics lecturer)