MALAYSIA’S aim of becoming a high-income country is only meaningful if many more Malaysians are given the opportunity to share in a bigger piece of the economic pie. Much of the focus has been on growing a larger and more resilient middle class, said to be the engine of our future growth. In past decades, we have often relied on a low wage policy to produce cheaply for the export market. This is now not an effective or the best strategy as countries, including China, Thailand and Vietnam, with even lower wage structures can play this low wage game better.
One avenue of reform is to grow our own consumer markets. The economic multiplier effect will create investment opportunities for our businesses, and in turn employment opportunities, particularly for our youth. Higher waged workers allow for the growth in our local consumer market. Note that household consumption is the largest component of aggregate demand, which is between 50% and 60% for Malaysia.
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