MALAYSIA needs to develop new growth areas as its comparative advantage in order to accelerate its transformation into a high-income nation.
In the Economic Outlook 2023 report, the Finance Ministry said it is important to identify the growth areas that will increase Malaysia’s competitiveness and provide a conducive investment ecosystem through the formulation of facilitative policies.
“To support the ecosystem, the National Investment Aspirations is expected to attract quality investments through the provision of incentives, modernised industries and the creation of high-paying jobs,” it said.
Looking ahead, the ministry said emphasis will be placed on restoring Malaysia’s economic growth, addressing socio-economic challenges, ensuring balanced regional development and enhancing competitiveness.
It noted that the Covid-19 pandemic has exposed structural vulnerabilities, highlighting the need for Malaysia to “reform and rebuild” in order to position the economy on a stronger and more sustainable footing. The ministry also cautioned that Malaysia is at risk of losing out competitiveness in comparison to high-income economies such as Hong Kong and South Korea.
Post-2014, Malaysia’s position in the World Competitiveness Yearbook of the Institute for Management Development has largely been on a downtrend. From the 12th ranking in 2014, Malaysia fell to the 25th spot in 2021 and 32nd spot in 2022.
A key factor to drive Malaysia’s competitiveness, said the Finance Ministry, is a solid productivity foundation. This can be accomplished by venturing into knowledge-intensive and high value-added economic activities that generate high-paying jobs.
“More importantly, the government has recognised the significance of effective talent development, rapid digital technology adoption and quality regulations as the key to accelerating higher productivity,” it said.
Among the efforts taken by the government so far to strengthen national productivity are boosting public-private collaboration, enhancing innovation and accelerating the shift to digital technology.
The ministry also said the government needs robust policy tools to monitor the progress of inclusivity and sustainability in the economy.
One such tool is the Multi-Dimensional Poverty Index (MPI) developed in 2016. It is used to measure the non-monetary aspects of poverty such as access to education, healthcare, digital connectivity and other standard of living dimensions.
“Being a robust policy tool, the MPI could help the effort to achieve inclusive development and can be mainstreamed to ensure shared prosperity among the rakyat, including addressing bumiputra participation in the economy,” said the Economic Outlook 2023 report.