MALAYSIA:  STILL AN ARDUOUS JOURNEY TOWARD THE DEVELOPED NATION STATUS DESTINATION

What is the latest progress update on Malaysia’s ambition to achieve Developed Nation status by year 2020? After the vision cum mission was launched in sync with the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) a few years ago, much hype in terms of statements by Prime Minister Datuk Seri Najib Abdul Razak and his cabinet representatives thronged the news media for some while.  However, the upbeat seems to have abated now.

From my Google search, I have traced a report in the Malaysian Insider news portal, dated June 10 2013 (eight months ago), which quoted the PM as declaring Malaysia was set to achieve the target ahead of schedule, barring unforeseen circumstances. This optimism was based on prevailing projections at that point in time, the report reported. However, there was no elaboration of details on the said projections or what the unforeseen circumstances could possibly be.

So, is the progress to-date on track or off track?

As a layman, I can relate some hard facts which perhaps may portray a sketch of the overview of how the nation is faring on the endeavour.

When the direction was first unveiled around 2010, it was specifically mentioned the gauge to hit the target would be an average of 6 per cent GDP growth till 2020. Year 2010 was the best in growth rate in the last four years, at 7.2 per cent. From 2011 to 2012, the scores fell below the 6 per cent mark – 2011 (5.1), 2012 (5.6). As for 2013, New Straits Times, in a front page article on February 13 2014, reported that the economy grew at 4.7 per cent. Going by simple mathematical computation, the average growth rate over the last four years arrived at 5.65 per cent – not too far off the 6 per cent mark.

Obviously, the nation must catch up in accelerating the economy from now onwards.  However, according to various commentaries, the anticipated figure for 2014 would remain below 6 – probably around 5. And if we take 5 as the presumed rate, then the average rate for period of 2010-2014 would be 5.52.

In order to keep in pace with the coveted overall 6 per cent growth, Malaysia has to hit an average 6.4 from 2015 till the end of 2020. The probability of achieving this does not seem remote, yet apparently quite arduously challenging in the face of a not so eventful  prevailing global recovery.

In January 2014, the International Monetary Fund (IMF) set its forecast of global growth rate at 3.7 per cent while The World Bank projected 3.2. So, can Malaysia significantly outperform the globe? Can its GTP and ETP projects successfully propel higher economic development and productivity for catching up?

While being determined to pursue relentlessly the noble cause, the Government may want to recognise a few factors which could pose some pullbacks.

First, it should recognise that of the total expenditure budget for 2014, development expenditure allocation constitutes RM46.5 billion, representing merely 17.6 per cent. Is this proportion sufficient to drive up economic and productivity levels that lend more weight to GDP growth? Should not a larger allocation be granted to support the mission?

The Edge Malaysia carried a big spread out commentary on Malaysia’s GDP growth progress in its February 3 2014 issue. Inflation would be a key risk and challenge for 2014, said the writer. Quote: “Inflation, which has been benign in the last three years, will start to climb in 2014. The commentary added that inflation would be the key risk and challenge this year. At the same time, rising household debt, standing at around 85 per cent of GDP at the end of June 2013, is a concern. Coupled with a weaker ringgit, the purchasing power of Malaysians would be reduced, thus forcing them to cut back on spending.  In essence, the emanating effect is, domestic consumption could be pulled back due to rising inflation and high household debt, which in turn could drag GDP growth.

The weekly magazine also said private investment growth in 2014 would likely remain flat, at around 14 per cent. Meanwhile, public  spending was expected to reduce comparatively to 2013.

Given a moderation in domestic demand, the nation would rely to a greater extent on exports performance. Hopefully, a weaker ringgit would bolster export earnings, which result in higher contribution to GDP. But even with improvement in exports revenue, will that be strong enough to offset the moderation in domestic demand? Is the recovery in US and Eurozone sustainable enough to give leverage to Malaysia’s exports?

In the home front down south part of Malaysia, a slowdown of property purchases in the Iskandar Development Area – the flagship development hub in the state of Johor - is expected because of more stringent conditions for foreign ownership. High-end properties purchased by Singaporeans and other foreigners have had been the prominent scenario in Iskandar but the prominence may somewhat falter. Foreign revenue from this source seems likely to ebb; the question is to what significant scale? Well, let’s see how it turns out at a later stage.

In summing up, as a Malaysian I believe the Government under the leadership of the current prime minister will do the utmost to ardently drive toward the destination according to the set timeline. It is now not a question of desire. It is also not so much a question of will. Desire and determination must be strongly complemented by efficacious strategies and management to make the magic work. 

Resources for activities that do not have much bearing to productivity should be re-channeled to initiatives that carry the positive impact. The Government must do the right things right, right now and till end of 2020. And perhaps a bit of luck is needed.

(Note:  My commentary is compiled from my own perceptions. I shall leave to readers to form opinions whether the points postulated here are plausible or not. Readers are free to agree or disagree; whichever I shall accept in good faith. So, please feel free to comment.)

THE END.