13th World Islamic Economic Forum

Sarawak, Malaysia

21 November 2017


Socioeconomic Planning Secretary

National Economic and Development Authority

Republic of the Philippines

Panel Discussion on Global Economic Outlook: Reimagining an Inclusive Economic System


His Excellency Dato’ Sri Najib Tun Abdul Razak, Prime Minister of Malaysia and Patron of WIEF Foundation,

Hon. Datuk Patinggi Abang Haji Abdul Rahman Zohari bin Tun Datuk Haji Openg, Chief Minister of Sarawak,

Hon. Tun Pehin Sri Hadji Abdul Talb Mahmud, Governor of Sarawak,

Hon. Tun Musa Hitam, Chairman, WIEF Foundation,

Distinguished guests and participants,

Ladies and gentlemen,

Good afternoon.

It is a great honor to be here among all of you today, and talk about Re-Imagining Inclusive. We always hear the words “inclusive growth” and “inclusiveness,” but somehow the meaning still remains elusive. When we speak of economic inclusiveness, we talk about high, sustained, broad-based economic growth that generates employment and brings people, especially those at the margin, deeper into the economic and social mainstream.

As economies progress, development goals evolve. And the demand for opportunities grows.

However, inclusiveness should be more than just advancing material welfare. An inclusive economy is stable, sustainable, equitable and one that involves participation and cooperation. An inclusive global economy means that no one is left out of the development process.

The world has greatly changed since the last global financial crisis. Economic growth has since remained slow in many countries. But overall, there is currently a pickup in global economic activity, which should provide the opportunity for timely reforms to address long-term challenges.

Meanwhile, disruptive changes are significantly affecting a still-recovering global economy. These disruptive changes can be incomparable and irreversible, substantially impacting global industries and entire global value-chains.

However, the late Austrian-born American economist Joseph Shumpeter famously coined the phrase “creative destruction”—meaning disruptions that are adroitly handled can result to innovations.

Most of this disruptive change comes from the area of technology. According to business consulting firm Frost and Sullivan, there are 50 emerging technologies that will drive the global economy in the near- and long-term. These are classified under health and wellness, ICT, medical devices and imaging, energy, environment, advance manufacturing and automation, chemicals, microelectronics, and sensors and instrumentation.

Also, the “Hype Cycle for Emerging Technologies” reports that in the next 5 to 10 years, there will be three leading trends—artificial intelligence, immersive experiences, and digital platforms.

While technology offers promising opportunities, jobs are threatened in emerging and developing countries where access to technology is unequal. If this situation persists, inequality can get worse.

So how do we ensure growth, stability, sustainability, equitability and cooperation in an economic system? I put forward seven points.

First, we need to raise potential output. To propel productivity and stimulate the labor force, we need structural reforms that are supported by growth-oriented fiscal policies.

Structural measures include improving the business climate; investing in human and physical capital; and enhancing regional and global trade integration.

Second, we need to strengthen global cooperation. Any action undertaken by any individual economy can be more effective if supported by multilateral cooperation. The preservation of global free trade from narrow-minded and myopic protectionist policies is only one of the many issues that the global economy is facing. Also, we should not take for granted China’s “One Belt One Road” (OBOR) initiative, massive trade diversion, and the potential dominance of the global yuan.

Third, establishing a rules-based investment regime can firm up long-run expectations. This means that the investment regime of any economy must be credible, must have extensive international support, and must aim at sustainability and inclusiveness. This can help reduce uncertainty and improve the stability of investment relations.

Fourth, meeting disrupting change through a proactive stance requires a systematic approach. Governments should consider available resources as well as the values of society in the policy-making process. Resources determine the breadth and depth an economy can use to cope with any disrupting change. Values, on the other hand, influence how policy actions are prioritized or limited.

Fifth, we need an enabling policy environment for developing the digital economy.  The digital economy offers a wide spectrum of opportunities. This includes new foreign markets, e-value chain integration, boosting competitiveness, and improving government services. However, the digital economy is also vulnerable to regulatory issues such as data security, intellectual property protection, consumer protection and safeguarding cultural values. Thus, investment promotion agencies, or IPAs, should be more involved in the formulation of digital development strategies.

Sixth, sustaining financial inclusion initiatives is a key ingredient in achieving an inclusive economy. Access to basic financial services like savings, payments, credit and investments can help individuals and families build financial and material assets.

An inclusive financial system should be able to provide the means to reach the financially excluded. Tapping Islamic finance can help deliver broad-based development, boost financial stability, and advance transformative change in many countries. However, this is only possible if Islamic finance operates on a level playing field and has strong linkages and a fully operational regulatory framework.

Lastly, anchoring a country’s socioeconomic policies on national and international commitments sets a strategic direction for an inclusive economic system. Any economy has to focus on what it wants. It has to set ideal results of a remote future while considering current and near-term conditions. Looking into the desired outcome of a country’s dream, and painting a picture of its people’s desires is a good start for a vision.

A country’s vision has to be backed up by scientific research in order to bridge the gap between dream and reality, and between reason and irrationality. Once there is a collective vision, it is necessary to set and regularly assess flexible strategies and indicators, as they become the building blocks of development over time.

In the Philippines, we went through a similar exercise two years ago, and we recently launched the Filipino national vision for the next 25 years. This vision is meant to guide development planning over four consecutive administrations so that plans and policy directions are aligned and continued from one administration to the next. In 2040, our vision is to achieve a strongly rooted, comfortable and secure life for all where no one is left behind.

At the global level, while there are a myriad of international commitments, the Sustainable Development Goals, or Agenda 2030, encapsulate the call of a truly inclusive economic system to which every economy should subscribe under the spirit of partnership.

The principles of the Stockholm Statement, which was formulated by world economists last year, address the core of Agenda 2030 of an environmentally, economically and socially sustainable development, while emphasizing the joint responsibility of all countries, whether developed or developing, to reach an inclusive and sustainable development.

On a final note, let us always remember what economist Joseph E. Stigliz said: “Development is about transforming the lives of people, not just transforming economies.”

This statement is apt as we re-imagine our economic systems with a view to inclusive growth.

Thank you. Terima kasih.