PETALING JAYA: The success of the 12th Malaysia Plan (12MP) relies on clear-cut implementation and a good monitoring mechanism.
Amid the worldwide race to attract quality investments, the 12MP is the “opportunity” for the government to prove its willingness to enact reforms and make Malaysia a key investment destination in Asia, said economists.
Speaking to StarBiz, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid (pic below) said the market-oriented initiatives under the five-year plan would boost business confidence.
Among such initiatives are the allocation of RM400bil to support ongoing and new projects, the pledge to cut red tape, a greater focus on eight high-impact industries and transforming micro, small and medium enterprises (MSMEs).
The initiatives would also accelerate the economic recovery process, he said.
“What matters is the pace of its implementation and the impact it may have on the economy.
“In a nutshell, the 12MP has covered a lot of ground,” according to him.
Mohd Afzanizam said the sizeable allocation of RM400bil for development expenditure between 2021 and 2025, if implemented in a timely manner, will have immediate multiplier effect to the economy.
“Nonetheless, the fiscal deficits are expected to be reduced by between 3% and 3.5% by 2025.
“Perhaps, there will be new taxes to be introduced along the way, especially when the economic recovery becomes more sustainable,” he said.
Meanwhile, AmBank Group chief economist Anthony Dass (pic below) said the 12MP shows a clear and inclusive economic vision for Malaysia in the new decade.
He welcomed the medium-term plan’s focus on market-oriented reforms.
While Malaysia remains a business-friendly country, Dass pointed out that there is an urgent need to reinvigorate business dynamism through regulatory approaches to achieve a robust post-Covid-19 recovery.
“For business dynamism, the key focus should be on how easy it is for new firms to enter the market, or for entrepreneurs to start up new businesses and with the country’s transitions to high-income status, the future sources of growth will increasingly need to shift to innovation and productivity gains.
“Hence, there is an urgent call for further improvements in business dynamism, adding that ensuring a regulatory environment encourages effective competition for the long-term growth and sustainability of the country,” he said.
Dass also highlighted that the 12MP not only aspires to boost economic growth, but also to ensure that the country’s prosperity would be distributed more fairly and equitably, without neglecting environmental sustainability.
Rakuten Trade head of equity sales Vincent Lau (pic below) believes that the 12MP is generally positive for the market, especially for the construction sector.
This was because the 12MP has outlined major development expenditure for 2021-2025, with at least 50% of total basic development expenditure to be channelled to the six least-developed states.
Examples of basic development expenditure projects are construction of schools, hospitals, roads, industrial areas and poverty eradication programmes.
“In addition, with the government giving more attention to the eight high-impact sectors under the 12MP, it is expected to make Malaysia more appealing to foreign investors,” stated Lau.
The eight sectors are electrical and electronics (E&E), global services, aerospace, creative, tourism, halal, smart farming and biomass.
While the 12MP has set some ambitious targets to be achieved by 2025, Centre for Market Education CEO Carmelo Ferlito (pic below) was quite sceptical about the ability to achieve the goals in a “top-down” centrally-planned approach.
He said that the world history of top-down plans is a history of poor results.
“If we look at the 12MP, it is difficult to identify points on which not to agree, in theoretical terms. These are all desirable outcomes.
“The real point is, how do we achieve them?
“Will we unleash market forces in order to determine the outcome that is dictated by the interaction of individual preferences, or will we impose a government strategy which aims to overcome individual preferences?
“The weakest point I see in the plan is the desire to strongly steer the economic system in a direction, which may not be the one created by the market,” according to Ferlito.
However, he welcomed the government’s plan to reduce red tape, although he said the move needs to be paired with a truly market-oriented approach.
He also added that major development expenditures may not necessarily produce “development”, if the amount spent is not directed in the direction indicated by the market.
“To spend is not enough and the outcome is better the more it is generated by the interaction with market actors,” he said.
Meanwhile, former deputy secretary-general of the Treasury Tan Sri Ramon Navaratnam said “The implementation of the 12MP needs transparency, with a zero tolerance against corruption.”
To ensure success of the 12MP, Navaratnam, who is also the chairman of ASLI’s for Public Policy Studies, has called for the creation of a robust monitoring mechanism for the plan’s delivery and outcome assessment.
“The monitoring can be done via a parliamentary committee or even through an independent monitoring by a coalition of non-governmental organisations.
“Considering the major investments to be made under the 12MP, the initiatives must be properly monitored to prevent failed investments,” said Navaratnam.