A Holistic Approach towards High Income Nation

TOMORROW, Prime Minister Datuk Seri Najib Razak will table the 11th Malaysia Plan (2016-2020) at Parliament, bringing to a close the 10th Malaysia Plan (2011-2015).

While the detail of the Plan has been largely kept under wraps, it will see Malaysia through the last five years of its journey towards high-income nation status, as encapsulated in its Vision 2020 statement.

The 11th Malaysia Plan (11MP) Blueprint, prepared by the Economic Planning Unit (EPU) under the stewardship of Minister in the Prime Minister’s Department, Datuk Seri Abdul Wahid Omar, will be rolled out next month.

Further subsidy rationalisation will surely form a major component of its structure, as well as the need to encourage economic and household income growth.

It will carry on from the 10th Malaysia Plan (10MP), which was formulated to lay the groundwork for the 2020 goal.

This five-year development plan focused on supply-side reforms to create a conducive environment for growth amid global recovery from the financial crisis in 2008.

The 10MP targeted average economic growth of six per cent that would increase the gross national income (GNI) per capita to RM38,845 this year.

Though there has been a sharp decline in the exchange rate in recent months, this has largely been achieved, with the EPU’s forecast at RM34,126 (2014).

Numerous initiatives have been introduced towards this end through both the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP) that had been guided by the New Economic Model (NEM) framework.

While the primary indicator of the 10MP has been GNI per capita, the monthly average income for the bottom 40 per cent of households rose to RM1,847 in 2012.

However, imbalance in the distribution of growth is perhaps of greater importance to the long-term sustainability of the Malaysian socio-economy than not falling short of achieving the 2015 targets.

In 2012, at least 80 per cent of households earned less than the mean monthly income of RM5,000. Therefore, in the 11MP, more attention should be given to widen productivity gains, especially among small and medium enterprises (SMEs), as well as in the informal sector.

While Malaysia is more or less meeting its self-imposed growth targets needed to reach developed nation status by 2020 (the economy grew by six per cent last year), supported by domestic activities, including strong private consumption and investment), there are many challenges that will factor into whether the 11MP can guide this dream to reality.

Developed nation status does not simply refer to a country whose citizens have high median incomes. Rather, there are various aspects relating to overall quality of life.

These include political stability, access to quality affordable healthcare, equality of opportunity in education, inclusive growth, a rich and accessible cultural landscape, clean environment, modern infrastructure, and fairness and justice for all.

The Centre for Public Policy Studies (CPPS), through our “11th Malaysia Plan Discussion Note: Towards a First-World Mentality Nation”, has advocated for a more holistic and humanising approach to the formulation of public policy.

Included in this are five groupings that provide a framework for looking at the issue of high-income nation status:

FIRSTLY: Livable cities continue to drive the national economy. This includes a seamless transportation experience; adequate access to public amenities in the face of rapid urbanisation; freedom of expression through arts and culture; and a living environment that is safe and sustainable.

SECONDLY: Convergence in rural communities as the urban-rural divide should be bridged through greater competitiveness of the rural economy; in creased compatibility and human connectivity to cities; as well as the promotion of social entrepreneurship in resolving unique and recurrent on the ground issues.

THIRDLY: Resilient governance to institutionalise the performance-based approach in budgetary planning in order to curb wastages; the creation of a high-performing civil service that meets rising public expectations; and a shift in mindset where the public is empowered to play a direct role in shaping public policy.

FOURTHLY: A competitive nation to increase the gains for SMEs in the global economy; the gradual transition from a resources-based economy and other protectionist measures so that Malaysia can become a merit-based society; and retaining human talent to contribute towards nation-building.

FIFTHLY: Mainstreaming women and gender to address the different needs between women and men; this has to be reflected in public transportation policy, healthcare delivery, women in politics, and strengthening corporations in promoting gender diversity.

Measures like these are needed to develop perspective and to better understand the behavioural aspects of society and how people respond to various incentives and initiatives. In doing so, a broader adherence to a range of various socio-economic measures, rather than just the pursuit of GNI and GDP targets, is needed to be able to truly own the label of developed nation status.

*The writer is senior policy analyst, Centre for Public Policy Studies of the Asian Strategy and Leadership Institute