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NEAC National Economic Advisory Council

NEAC National Economic Advisory Council. New Economic Model for Malaysia NEAC. Section I. Issues and Challenges. www.neac.gov.my. e. We Have Been in the Middle Income Trap for Quite Some Time History shows the need of a compelling reason to change is required to escape. GNI Per Capita

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NEAC National Economic Advisory Council

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  1. NEACNational Economic Advisory Council New Economic Model for Malaysia NEAC

  2. Section I Issues and Challenges www.neac.gov.my

  3. e We Have Been in the Middle Income Trap for Quite Some TimeHistory shows the need of a compelling reason to change is required to escape GNI Per Capita 1990 - 2008; USD thousand (USD thousand) Korea 22 Slovakia 20 Czech Rep 18 16 14 Poland HIGH INCOME BOUNDARY 12 10 Chile 8 Argentina Malaysia 6 4 Thailand 2 Indonesia 0 Source : World Bank, NEAC Analysis www.neac.gov.my

  4. Malaysia’s Growth Trajectory Has Diverged Lower Slower growth means our aspirations will take longer to achieve all things being constant Pre-Crisis growth gradient Divergence Post-Crisis growth gradient www.neac.gov.my

  5. n Post Asian Crisis, Our Growth Rate Has Been MediocreWe are no longer a clear leader in the region having lost our shine Average annual GDP growth Pre-crisis 1990-1997; % Post-crisis 2000-2008; % China China Malaysia Vietnam Singapore India Vietnam Malaysia S. Korea Singapore Taiwan Indonesia Indonesia Philippines Our growth rate is now equivalent to that of our neighbouring countries Thailand S. Korea India Thailand Philippines Taiwan US UK UK US Japan Japan Average 6.0 Average 5.0 www.neac.gov.my

  6. Lacklustre Demand-Side Performance Indicators Given the state of today, private investment is key www.neac.gov.my

  7. t Not Investment But Consumption Has Been Driving GrowthThe private sector has taken a backseat with the government filling in the vacuum Private & Public investment as share of GDP 1989-2008;% Average annual growth 1991-2006; % Pre-crisis 1991-1997 Post-crisis 2000-2006 Private consumption Government expenditure Investment www.neac.gov.my

  8. Specific areas of weakness are preventing us from moving forward- fundamental reform is long overdue www.neac.gov.my

  9. Amidst Global Changes, Our Advantages are Being UnderminedWe must act before our position deteriorates further Intense competition in our new sources of growth e.g. medical tourism, ICT, and Islamic products and services Our strong position in commodities and manufacturing is being eroded Our immediate neighbours have renewed vigour evidenced by growth rates; reforms are well being implemented Global investment is focusing on larger scale markets, not small economies Lack of talent and innovation, ineffective institutions and widespread corruption are barriers to growth In the region, our economy was one of the hardest hit by the recent global crisis WE CANNOT CONTINUE AS WE ARE www.neac.gov.my

  10. Section II The New Economic Model www.neac.gov.my

  11. The Prime Minister’s Vision - Transforming MalaysiaThe Two Pillars of the National Transformation Programme 1Malaysia – People First, Performance Now Preservation and Enhancement of Unity in Diversity High Income Economic Transformation Programme (ETP) New Economic Model A High Income, Inclusive And Sustainable Nation Government Transformation Plan (GTP) Effective Delivery of Government Services Inclusiveness Sustainabiliy 10th & 11th Malaysia Plan Roll-Out Macroeconomic growth targets & expenditure allocation Implementation of Government’s Development Programmes www.neac.gov.my

  12. The New Economic Model (NEM) Aspirations of a united and advanced nation – The Goals to be Achieved HIGH INCOME Targets US$15,000 - $20,000 per capita by 2020 Rakyat Quality of Life Enables all communities to fully benefit from the wealth of the country Meets present needs without compromising future generations SUSTAINABILITY Inclusiveness www.neac.gov.my

  13. The Goals

  14. Section III The Economic Transformation Programme (ETP) www.neac.gov.my

  15. The Economic Transformation Programme (ETP) The reforms required to escape the middle income trap Enabling Actions Strategic Reform Initiatives Outcomes Coherent “big push” to boost transformation and growth • Re-energising the Private Sector • Developing Quality Workforce and Reducing Dependency on Foreign Labour • Creating a Competitive Domestic Economy • Strengthening of the Public Sector • Transparent and Market friendly Affirmative Action • Building the knowledge base infrastructure • Enhancing the Sources of Growth • Ensuring Sustainability of Growth Break logjam of vested interests through political will and leadership High Income Middle Income Trap Prepare Rakyat for change Sustain- ability Inclusive- ness Risk Downward Spiral Feedback: Review, Revise www.neac.gov.my

  16. Economic Transformation Requires Tough Decisions and Bold MeasuresHow far are we willing to go in the reforms? THERE MUST BE A CHANGE IN MINDSET AND POLITICAL WILL www.neac.gov.my

  17. Eight (8) Strategic Reform Initiatives (SRIs)All SRIs have cross-cutting impact over all sectors 1 8 2 7 3 4 6 5 www.neac.gov.my

  18. Re-energising the private sector www.neac.gov.my

  19. Developing a quality workforce and reducing dependency on foreign labour www.neac.gov.my

  20. Creating a competitive domestic economy www.neac.gov.my

  21. Strengthening the public sector www.neac.gov.my

  22. Transparent and market-friendly affirmative action www.neac.gov.my

  23. Building the knowledge base and infrastructure www.neac.gov.my

  24. Enhancing the sources of growth www.neac.gov.my

  25. www.neac.gov.my

  26. Ensuring sustainability of growth www.neac.gov.my

  27. Section IV What’s next from the NEAC? www.neac.gov.my

  28. NEAC Part 2 : Policy Measures and Implementation FrameworkParticipation of stakeholders to ensure ownership and buy-in on detailed actions NEAC Part 2: Policy Measures and Implementation Framework Planning Current Reform Initiatives already announced: Light the Fuse for Momentum Roll-out ETP policy measures NEAC Continuous Engagement of Ministries and Stakeholders Public Consultation NEAC Task Forces on SRIs for Policy Measures And Implementation Framework Planning NEAC input for 10th MP Endorsement of ETP Implementation Plan 10th Malaysia Plan Launch NEM Launch by Prime Minister www.neac.gov.my

  29. Economic Transformation Programme (ETP) New Economic Model (NEM) HIGH INCOME Targets USD15,000 - USD20,000 per capita by 2020 8 1 7 Rakyat Quality of Life 2 Meets present needs without compromising future generations 6 Enables all communities to fully benefit from the wealth of the country 3 5 4 SUSTAINABILITY Inclusiveness End National Economic Advisory Council www.neac.gov.my

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