Unlike previous infrastructure projects that were largely concentrated in Klang Valley, the future projects should be dispersed throughout the country to create an even distribution of economic prosperity.
According to Malaysian Rating Corp Bhd (MARC) chief economist Firdaos Rosli(pic below), the infrastructure investments also need to take into account the local population’s accessibility to basic infrastructure such as piped water, stable high-speed Internet and proper shelter.
“After the 1997-1998 Asian Financial Crisis (AFC), we were not able to bring our investments up to the level prior to the AFC. That was because, perhaps, we gave very little emphasis on infrastructure.
“In the past decade, there have been quite a number of infrastructure projects but some of them are either in question, delayed or stopped altogether,” he told reporters during a virtual briefing.
MARC released the third and final part of its Shared Prosperity Vision (SPV) 2030, 12th Malaysia Plan and transitional growth report yesterday.
Firdaos said progressive infrastructure development would not only alleviate instances of poverty and encourage job creation, but also improve the economy’s investment prospects over time.
“As the quality of infrastructure improves, so will the need for greater economic openness to take advantage of greater economies of scale. Hence, a higher quality of life,” he added.
The report by MARC noted that Malaysia is among the world’s best in terms of global infrastructure-related rankings.
However, in reality, it said that there is a massive infrastructure gap between developed and least developed states or regions in the country, masked by a steady increase in growth indicators.
Meanwhile, Firdaos highlighted that Malaysia’s current economic model is still premised on the New Economic Policy (NEP) of 1971 and is undergoing the test of time.
“While we acknowledge that the NEP was certainly relevant back then, it may not necessarily be so today,” he said, adding that the economic convergence between Malaysia and other high-income countries have become more complex and wider over time.
Hence, given the present economic circumstances, he argued that the SPV 2030 policy requires a major overhaul.
The SPV 2030 is the country’s long-term development policy for the next 10 years, and was introduced under the previous Pakatan Harapan administration.
Firdaos said the SPV 2030 had overly ambitious targets, especially in a post-Covid-19 world.
Among the targets are a gross domestic product (GDP) size of RM3.4 trillion by 2030 and an average GDP growth rate of 4.7% annually from 2021 to 2030.
The policy also aims to raise the compensation of employees to 48% of GDP, as compared to 35.7% in 2018.
He said the SPV 2030 policy focus should be about what the government intends to do, rather than what it intends to achieve.
“In any case, assuming that SPV 2030’s tacit aspiration is to achieve greater convergence between the Malaysian economy and other high-income economies, another round of transitional growth is a must.
“The real challenge here is to recreate conditions similar to those during the preceding decade to the AFC namely, by reopening and realigning the Malaysian economy to high-income economies, undertaking massive infrastructure investment, and perhaps more importantly, having a commanding parliamentary majority,” said Firdaos.
Despite numerous long-term plans and economic blueprints over the years, Firdaos pointed out that Malaysia has yet to reach 50% of the value of GDP per worker in the United States.
“This calls into question the effectiveness of Malaysia’s long-term economic planning. Are we meeting our development targets? And if we are, do these targets matter when looked at from a global perspective,” he said.
When asked whether the Malaysian economy would require a prolonged duration to recover to pre-pandemic levels, Firdaos said “it will not take much” for the economy to rebound.
“All we need to address is how we view lockdowns.
“Once we can come to terms with how much lockdowns have cost us and how much it will cost us in the future, then we would realise that having lockdowns may not necessarily be the best way to address the pandemic,” he said.
Instead of lockdowns, Firdaos called for the review of Covid-19 standard operating procedures (SOPs) in making sure that the implementation of such SOPs do not result in unwanted outcomes.
“For example, in supermarkets, limiting the number of cashier counters would just cause a long queue. What we should have instead is more counters to ease the congestion.
“Less restrictive SOPs, instead of lockdowns, would help the national output to return to pre-pandemic level much faster,” he said.