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Malaysia’s Growth and Development Story

Malaysia’s Growth and Development Story. Steven C.M. Wong Assistant Director General Institute of Strategic and International Studies (ISIS) Malaysia. MALAYSIA’S GROWTH & DEVELOPMENT STORY.

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Malaysia’s Growth and Development Story

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  1. Malaysia’s Growth and Development Story Steven C.M. Wong Assistant Director General Institute of Strategic and International Studies (ISIS) Malaysia

  2. MALAYSIA’S GROWTH & DEVELOPMENT STORY 1. Ethno-religious and territorial divisions – legacies of British colonial rule – required formation of multiracial coalition prior to granting of Independence in 1957 2.Multiracial coalitional politics largely successful; opposition parties not able to garner nationwide support for greater part of past 50 years 3. Critical factor in establishing legitimacy to govern is ability to deliver development therefore close political and economic nexus

  3. MALAYSIA’S GROWTH & DEVELOPMENT STORY 4. After 1969 race riots, stability of multiracial coalition politics tested; response was to introduce sharing of development among races; enter New Economic Policy 5. Maintaining strong political leadership and control over the bureaucracy essential; Executive has strong political interest in ensuring public service efficiency 6. Five-Year Development Plans central to organising and communicating development to the population; system is ‘top-down’, hierarchical and paternalistic

  4. MALAYSIA’S GROWTH & DEVELOPMENT STORY 7. Close political-economic nexus also necessitated being trade, market and private enterprise-friendly to large degree 8. Policy exigencies and priorities occasionally shifts (towards ethno-nationalism) but poor economic results lead to eventual relaxation/reversal 9. Growth and development story incomplete without (A) primary commodities, (B) foreign direct investment, and (B) oil and gas to furnish foreign reserves

  5. MALAYSIA’S GROWTH & DEVELOPMENT STORY 10. In late 1980s to mid-1990s, growing economic confidence led to massive infrastructure privatisation, supported by foreign capital inflows 11. Malaysia moved from being ‘someone else’s production platform’ to recognition as a significant economic entity and market in its own right 12. 1997 Asian Financial Crisis meant “openness” now threatened stability of multiracial coalition; political-economic nexus, however, was not at risk

  6. MALAYSIA’S GROWTH & DEVELOPMENT STORY 13. Measures to address adverse effects of AFC seen as “backtracking” on commitment to economic nexus; domestic political rhetoric partly to blame 14. Post-AFC environment fundamentally different; economic growth and private investments are generally much lower than past 15. Factors include global (A) market liberalisation, (B) competition for FDI, especially from China & Vietnam and (C) difficulties integrating into global supply chains

  7. MALAYSIA’S GROWTH & DEVELOPMENT STORY 16. Per capita income of US$6,800 (2009) clearly significant achievement but seemingly caught in “middle income” trap; how to rise above present levels? 17. Major preoccupation with identifying new sources of economic growth; episodic promotion of ICT, biotechnology, Islamic finance, halal foods, tourism, services, etc. 18. Key policy thrusts include human resource development, innovation clustering, etc. i.e. knowledge-driven activities

  8. MALAYSIA’S GROWTH & DEVELOPMENT STORY 19. Developing knowledge-driven activities is holistic, i.e. institutional, socio-economic and political; also broad-based participation not always possible 20. Added factor is much greater political contestation; After the 1999 and 2008 General Elections, multiracial coalition politics tested as never before. 21. After 50 years of empowerment through development, citizens are educated, have choices and less susceptible to patronage

  9. MALAYSIA’S GROWTH & DEVELOPMENT STORY 22. Purely materialistic concepts of development also no longer satisfactory; demands for spirituality, freedom of expression, human rights, etc. 23. Compounding problem is growing relative income and wealth inequalities; efforts to correct wide disparities in past 5 years not particularly effective 24. Major questions now are future of the political-economic nexus given (A) weakened multiracial coalition politics, (B) reinvigorated (though fragmented) opposition and (C) global economic crisis

  10. MALAYSIA’S GROWTH & DEVELOPMENT STORY 25. Whether political-economic nexus will be broken hinges on whether political-social system – which strives for stability –has capacity to undertake changeNexus will continue to remain robust so long as interests are aligned- Is race-based/racialised politics the way forward?- Is the process of social change and progress grinding to a halt (or devolving)? - Is the erosion of governance and institutions inevitable and consequential?

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