Malaysia's bold economic policy plans

Malaysia Economic Reform

The Malaysian Prime Minister's New Economic Model (NEM) appears incredibly bold at first glance, but the overall plans lack detail and the likelihood of a sustainable economic policy emerging remains under question.

The Malaysian media have praised the NEM for being "all-encompassing, holistic and well-crafted to address the new socio-economic landscape of the country as well as the world."

The long-heralded economic reforms include plans to reduce race-based programmes, in what Prime Minister Najib Razak described as a "bold transformation" but the lack of detail prompted scepticism. At a business conference this week Najib revealed his plans would reform a race-based economic system that has "favoured the majority Malay population for four decades" but which critics say has hurt investment and fostered graft.

Reforms to boost annual growth

"We must recognize that some policies, which served a purpose in a previous era, may now be impediments to success," Najib said.

"Our first priority must be to eradicate poverty, irrespective of race. We cannot have the high income, sustainable and inclusive economy we seek when disparities in income are not addressed."

Economic reforms can boost average annual growth to 6.5 percent in the 2011-2020 period, the National Economic Advisory Council said in a report in Kuala Lumpur today.

In recent years Malaysia's economy growth has slowed and has been in need of swift and aggressive transformation, too many legislative barriers make doing business in Malaysia too difficult and workers finding it increasingly difficult to develop skills.

Encouraging signs

Asia has given rise to many of the world's promising economic regions but Malaysia's slow growth is may threaten to leave it lagging way behind. It is thought the country needs growth rate of 6.5 percent if it is to become a developed nation in 10 years.

Reuters reports that the new plans will be sent for public consultation, a process that has already derailed fuel price rises and a goods and services tax, casting doubts on Najib's ability to force political and economic change in this Southeast Asian country that is facing increasing competition for investment.

And although concerns remain over how effective these reforms will be, it is encouraging nonetheless that Malaysian authorities are taking appropriate action to stimulate growth.

The full list of plans will be announced formally in June.

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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