Anwar unveils new economic framework to reboot Malaysia’s economy
Tan Ai Leng
[KUALA LUMPUR] Malaysian Prime Minister Anwar Ibrahim on Thursday (Jul 27) announced a new growth plan with a vision of guiding the country into the world’s top 30 economies over the next decade.
In a speech to announce the country’s new 10-year plan, he also spoke about the aim to achieve a fiscal deficit of 3 per cent of gross domestic product (GDP) or less, and improving on the country’s human development index ranking to enter the world’s top 25.
These were part of seven benchmarks he listed in the new economic framework to help Malaysia tap the global market, instead of relying only on the domestic economy to generate more growth.
The framework is titled Madani, an acronym that Anwar uses to emphasise his core values of sustainability, prosperity, innovation, respect, trust and compassion.
In recent months, Anwar’s unity government has faced pressure from the opposition on economic-related issues such as income inequality, rising living costs, a weak ringgit and shrinking exports. The upcoming six state elections on Aug 12 are seen as a key test of the level of confidence in his leadership.
In his speech, Anwar described Malaysia as being trapped in a vicious circle of high costs, low wages, low profits and a lack of competitiveness.
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“We need a new economic paradigm,” he said at an event held at the Securities Commission in Kuala Lumpur. “My utmost priority in the near term is to rebuild the country’s fiscal capacity. We are all aware of the national debt situation. Without any reforms, we will face a very serious crisis that would undoubtedly affect the country’s structure.”
He noted that the economy and people benefited from a boom from 1960 to 1980, when the country enjoyed growth of above 7 per cent annually. The Asian financial crisis in 1997, however, widened the gap between economic growth and income.
“If we are satisfied with the status quo, it is expected that our economic growth will continue to expand between 4 per cent and 5 per cent. However, if we work hard towards implementing reforms aligned with the Madani economy, we are more than capable of reaching 5.5 per cent, and I believe it is not impossible to hit even up to 6 per cent.”
Among the issues plaguing the economy today is the declining contribution of the manufacturing sector to the country’s GDP to below 25 per cent, down from 30 per cent in 2000.
The problems faced by the manufacturing sector will be tackled in the New Industrial Master Plan 2030 to be announced in August, Anwar said.
Anwar, who is also finance minister, said he wants Malaysia to become a regional economic powerhouse by being more integrated with neighbouring countries as well as nurturing more local companies to penetrate the South-east Asia market.
To attract foreign investments, he said the government will review the investment incentives to focus on encouraging investments that generate high-income jobs for Malaysians.
In order to have more unicorn companies, Anwar said the capital market would need to be “more lively” to encourage more companies to go for listings. To achieve this, the Securities Commission will introduce a set of reform policies for the financial market, he said. These policies will, among other aims, help to attract more investors to finance micro businesses and new growth activities, as well as raise the level of competitiveness of Malaysia’s capital market at the international level.
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