The Fourth Malaysia plan - role of public sector

Abstract

First of all, let me congratulate the Federation of Malaysian Manufacturers for conducting this seminar on the Fourth Malaysia Plan (FMP). Since the FMP has just been launched and, being a member of the public service, it is perhaps appropriate that I deliver today a paper on the role of the public sector in the Plan. In considering the development of a country, it is pertinent to ask why not leave the whole operations of the economy to the 'invisible hand' of market forces. After all, it may be argued, the objectives of efficiency, optimality, stability and equilibrium are often associated with the laissez faire system. However, under present prevalent socio-economic concept, the market mechanism alone is considered inadequate to perform all economic functions. Apart from market imperfections, there is the problem of externalities whereby the costs and/or benefits of projects are not exclusive to those associated with the projects. There are also conflicts between public and private interests with the latter mainly looking for high financial returns for exclusive groups.