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.
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