Malaysia Outlines New Growth Strategy
By LIZ GOOCH
Published: March 30, 2010
KUALA LUMPUR — Malaysia will promote greater private- sector investment and revise a controversial affirmative action policy to focus on need instead of race as the nation strives to become a high-income economy, Prime Minister Najib Razak said Tuesday.
The proposed New Economic Model, unveiled by the prime minister, outlined a variety of economic reforms designed to help Malaysia’s gross domestic product grow by an average of 6.5 percent a year from 2011 to 2020 to allow it to reach its goal of becoming a “developed” nation.
The economy shrank by 1.7 percent last year but posted better-than-expected growth of 4.5 percent in the fourth quarter as exports began to recover. Malaysia’s central bank last week forecast that the economy would grow between 4.5 percent and 5.5 percent this year.
Mr. Najib said Malaysia wanted to make a “quantum leap” from the current $7,000 per capita annual income to $15,000 by 2020. The World Bank defines a high-income nation as one where gross national income per capita amounts to $11,906 or more.
The government will now seek feedback from stakeholders on the New Economic Model, which was developed by the National Economic Advisory Council, before the policy is finalized.
Business analysts welcomed the plan, which focuses on expanding private-sector growth with measures such as boosting the quality of the workforce through improving the education system, encouraging Malaysians working abroad to return home, and increasing privatization.
“There’s a clear recognition in the NEM that the private sector needs to sit in the driver’s seat and the role of the government will be changed from an orchestrator to a facilitator,” said the World Bank’s Malaysia economist, Philip Schellekens.
“Malaysia also wants to introduce creative competition in the economy and I think that’s critical. These are all positive developments that should create opportunities both for foreign investors and domestic investors.”
Mr. Najib said Malaysia could no longer rely on only a few sectors to drive the economy. Economists say that the country depends too heavily on the oil and gas industries and on low-skilled jobs in the manufacturing sector.
While Mr. Najib highlighted the strengths of several sectors including manufacturing and services, agriculture, electrical and electronics, Islamic finance and tourism, he said that the government would not dictate which industries should drive growth.
The government wants to gradually reduce public sector involvement in activities that compete directly with the private sector.Read more..