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NATIONAL CONFERENCE ON INTEGRATED SOCIAL POLICIES 7-8 FEBRUARY 2007, CAIRO, EGYPT SOCIAL POLICY FORMULATION AND IMPLEM

NATIONAL CONFERENCE ON INTEGRATED SOCIAL POLICIES 7-8 FEBRUARY 2007, CAIRO, EGYPT SOCIAL POLICY FORMULATION AND IMPLEMENTATION IN MALAYSIA. RAJA ZAHARATON RAJA ZAINAL ABIDIN. BRIEFING OUTLINE. Background on Malaysia Development Philosophy and Planning Machinery Major Policy Evolution

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NATIONAL CONFERENCE ON INTEGRATED SOCIAL POLICIES 7-8 FEBRUARY 2007, CAIRO, EGYPT SOCIAL POLICY FORMULATION AND IMPLEM

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  1. NATIONAL CONFERENCE ON INTEGRATED SOCIAL POLICIES 7-8 FEBRUARY 2007, CAIRO, EGYPT SOCIAL POLICY FORMULATION AND IMPLEMENTATION IN MALAYSIA RAJA ZAHARATON RAJA ZAINAL ABIDIN

  2. BRIEFING OUTLINE • Background on Malaysia • Development Philosophy and PlanningMachinery • Major Policy Evolution • Socio Economic Dimensions • Development Record and Prospects

  3. PARAMOUNT RULER PARLIAMENT COUNCIL OF RULERS CABINET MINISTRIES CENTRAL AGENCIES DEPARTMENT & AUTHORITIES MEDIA POLITICAL PARTIES STATE ADMINISTRATIONS NGOs &INTEREST GROUPS INDIVIDUALS FIGURE 1

  4. 1970 1980 1990 2000 2005 2006F 1,132 368 1,247 7.4 1.9 -4.0 0.2 3,737 1,717 4,487 5.6 6.7 -13.5 -1.2 6,299 2,329 5,284 5.1 3.1 -2.9 -2.1 13,333 3,509 8,360 3.1 1.6 -5.8 9.4 17,682 4,690 10,300 3.5 3.0 -3.8 16.4 19.739 5,235 11,100 3.5 3.5-4.0 -3.5 17.2 Major improvements based on key economic indicators . . . • GNP per capita • RM • USD • USD (in PPP) • Unemployment (%) • Inflation (%) • Fed. Govt. account • (% to GDP) • Current a/c of BOP • (% to GNP) 4

  5. POPULATION SIZE AND STRUCTURE,2000 and 2010 % to Total % to Total % growth 2001-10 2000 2010 • Total Population • (million persons) • Bumiputera • Chinese • Indian • Age Structure (years) • 0 – 14 • 15 – 64 • 65+ • Dependency Ratio (%) • Median age (years) 23.3 14.6 5.6 1.6 7.7 14.6 0.9 59.1 23.9 100.0 66.1 25.3 7.4 33.1 62.9 4.0 28.9 18.7 6.5 1.9 8.6 19.0 1.3 52.2 26.7 100.0 68.3 23.8 7.1 29.7 65.8 4.5 2.2 2.5 1.5 1.8 1.1 2.6 3.4

  6. DEVELOPMENT PHILOSOPHY through a MIXED ECONOMIC SYSTEM of free enterprise but with active government support and direction The GOVERNMENT provides the broad thrusts and sets direction for the whole economy, and ensures the achievements of socio-economic goals The PRIVATE SECTOR is free to operate and given appropriate policy, institutional and infrastructural support.

  7. CONSULTATIVE PROCESS Consultations with Civil Society Inter Agency Planning Groups (IAPGs) Inter Agency Planning Groups (IAPGs) Consultations with the private sector MOF Budget Dialogue Technical Working Groups (TWGs) • Through • Government - private sector • dialogues • EPU dialogue • MOF budget dialogue • Bank Negara dialogue • MITI dialogue

  8. PLANNING PROCESS PLANNING FROM THE TOP TREASURY ECONOMIC PLANNING UNIT CENTRAL BANK DEPARTMENT OF STATISTICS INTER AGENCY PLANNING GROUP (IAPG) PRIVATE SECTOR NATIONAL DEVELOPMENT PLANNING COMMITTEE ADJUSTMENT AND MATCHING ECONOMIC PLANNING UNIT CABINET MINISTRIES OTHER AGENCIES STATE GOVERNMENT PROGRAMME AND PROJECTS PLANNING FROM BELOW

  9. PLANNING HORIZON 1. OUTLINE PERSPECTIVE PLAN (Long term plan) * OPP1 (1971 - 1990 ) * OPP2 ( 1991-2000 ) * OPP3 ( 2001-2010 ) 2. FIVE-YEAR PLAN ( Medium term ) 3. MID-TERM REVIEW ( MTR ) OF THE FIVE-YEAR PLAN 4. ANNUAL BUDGET ( Short term )

  10. THE NATIONAL MISSION 2006-2020 Vision 2020 Major Economic Policies Total Development Enhancing Nation’s Capability ~ competitiveness, unity, distribution & quality of life Building a Resilient & Competitive Nation : To raise quality of development & generate high sustainable growth National Vision Policy (NVP) OPP3 (2001-2010) National Development Policy (NDP) Balanced Development : To establish a more united & just society OPP2 (1991-2000) New Economic Policy (NEP) Growth with Equity : To eradicate poverty & restructure of society OPP1 (1971-1990) Post- independence 1957-70 • Laissez-faire / export-oriented • Economic and rural development 10

  11. Social Development Programmes • To integrate the population into the modern economy • To redistribute the wealth of the nation • To improve the quality of life of the people, especially those in the rural areas

  12. Development Expenditure Gives Priority To Economic And Social Sectors . . .(% to Total) 2MP '71-'75 3MP '76-'80 4MP '80-'85 5MP '86-'90 6MP '91-'95 7MP '96-'00 8MP '01-'05 9MP '06-‘10 Sector • 38.5 • 4.6 • 6.0 • 19.0 • 7.5 • 40.8 • 25.7 • 5.6 • 4.1 • 13.0 • 7.7 • 100.0 • 170.0 • 44.9 • 5.7 • 9.9 • 16.2 • 10.9 • 37.5 • 20.6 • 5.4 • 5.0 • 10.6 • 6.9 • 100.0 • 200.0 • Economic • Agriculture • Industry • Infrastructure • Utilities • Social • Education • Health • Housing • Security • Administration • TOTAL • RM billion • 50.6 • 18.3 • 14.6 • 14.4 • 2.9 • 13.1 • 7.1 • 1.9 • 1.7 • 10.4 • 1.5 • 100.0 • 9.8 • 54.4 • 18.7 • 13.0 • 16.0 • 6.3 • 14.6 • 6.2 • 1.2 • 5.2 • 14.2 • 1.9 • 100.0 • 24.9 • 60.5 • 16.3 • 13.6 • 20.2 • 9.9 • 21.5 • 10.1 • 1.6 • 8.5 • 16.2 • 1.8 • 100.0 • 46.3 • 64.8 • 20.8 • 11.3 • 21.5 • 10.2 • 24.8 • 16.1 • 2.6 • 4.1 • 7.2 • 3.2 • 100.0 • 35.3 • 50.6 • 11.6 • 7.4 • 22.5 • 7.8 • 24.8 • 13.4 • 4.4 • 3.3 • 20.1 • 4.5 • 100.0 • 54.7 • 47.6 • 8.2 • 11.4 • 21.0 • 5.5 • 31.6 • 19.9 • 3.8 • 3.4 • 11.8 • 9.0 • 100.0 • 99.0 12

  13. Socio-economic dimensions . . . Malaysia had achieved most of the UN Millennium Development Goals • Eradicate poverty & hunger • Achieve universal primary education • Promote gender equality & empower women • Reduce child mortality • Improve maternal health • Combat HIV/AIDS, malaria & other diseases • Ensure environment sustainability • Develop a global partnership for development

  14. Major Success to Eradicate Poverty (% total households) 2004a 5.7 11.9 2.5 1.2 Note :a/ Poverty Line Income (PLI) revised methodolody for 2004 was RM661 per month in Peninsular Malaysia (household size 4.4); RM888 in Sabah (household size 5.2); & RM765 in Sarawak (household size 4.6). Hardcore poverty is estimated using half of PLI. 14

  15. Poverty Eradication Programmes . . . • Focused on human resource development and quality of life improvements • Emphasize income-generating projects and not on welfare handouts • Major programmes : • Rural development • New land and in-situ development • Drainage and irrigation • Agriculture support services • Village/small industries • Upgrade rural infrastructure - roads, electricity, water • Upgrade schools & health facilities • Other programmes (hard-core poor) • Direct assistance ~ old folks home / the aged, the handicapped • food supplements and scholarships • interest free loans DISTRIBUTION AGENDA

  16. Better Quality of Life . . . % Change 1990/2004 Area Malaysian Quality of Life Index . . . • Working life • Culture & leisure • Housing • Transport & comm. • Health • Education • Income & distribution • Social participation • Family life • Environment • Public safety • MQLI 22.1 21.2 18.9 18.1 18.1 15.9 8.0 6.6 4.2 -0.3 -21.5 10.9 The Malaysian Quality of Life Index (MQLI) is an aggregate measure of the quality of life using forty-two indicators, representing eleven components of life 16

  17. 2 2 Selected Indicators Of Quality Of Life. . . reaching the level enjoyed in advanced economies 1970 1990 2005 61.6 65.6 39.4 4,302 58 17 48 44 68.8 73.5 13.1 2,533 85 131 80 80 71.8 76.2 5.9 1,387 95.1 907 95 98 • Life expectancy (in years) : • Male • Female • Infant mortality rate / 1000 • Population / Doctor ratio • Literacy rate (%) • Telephones / 1000 population 1 • Utilities : • Pipe water (% of population) • Electricity (% of households) Note : 1/ Include mobile phones 2/ Universal coverage in urban areas 17

  18. Real GDP Growth . . . Average 1971- 80 Average 1981- 90 Average 1991- 2000 Average 2001- 05 2000 2001 2002 2003 2004 2005e 2006F 2007F 7.5 % 5.8 % 7.1 % 4.5 % 8.9 % 0.3 % 4.4 % 5.5 % 7.2 % 5.2 % 5.8 % 6.0 %

  19. Transformation From an Agro-based to an Industrial-based Economy . . . (GDP in RM billion at 1987 prices / Percentage to Total in italics) RM billion 300 250 200 58.2 % 57.6 % 150 53.9 % 100 46.8 % 43.1 % 12.2 % 31.6 % 30.8 % 31.9 % 50 37.5 % 17.2 % 24.6 % 0 26.7 % 21.0 % 16.3 % 8.9 % 8.6 % 8.2 % 19

  20. Diversification of exports products . . .(% to Total Exports) Manufactures 80.5 Rubber 33.4 Tin 19.6 Forestry 16.3 Others 9.8 Oil & gas 3.9 Palm Oil 5.1 Palm Oil 3.6 Manufactures 11.9 Oil & gas 9.2 Others 2.7 Forestry 1.3 Rubber 1.1 Tin 0.2 1970 RM 5,163 million (USD2,065 million) 2005 RM 533,790 million (USD141,588 million) 20

  21. Revenue RM120.6 bn (2006) Operating Expenditure RM105.4 bn (2006) Development Expenditure RM34.5 bn (2006) Deficit RM19.3 bn / -3.5% of GDP (2006) Implementing Pragmatic Fiscal Policy . . .The Federal Government Accounts, 1970-2006 (RM billion) Revenue must cover operating expenditure and development expenditure must be financed through non-inflationary methods 21

  22. 9MP Target 6.0 23,573 6,273 13,878 low 3.5 13.4 -24.3 -3.4 10.6 1.5 … Prospects During The 9th Malaysia Plan, 2006-2010 • Real GDP growth (% p.a.) • Per capita GNP (RM) * • Per capita GNP (US$)* • PPP Per capita GNP (US$)* • Inflation (% p.a.) • Unemployment rate (%) * • Current a/c of BOP (% GNP)* • Fed. Govt. account (RM bil.)* • % of GDP • Pub. Sector account (RM bil.)* • % of GDP • External reserve (months of retained imports)* * End of period 22

  23. Gross Domestic Product, 2000-2010 (% per annum) % growth per annum % of GDP Achieved 8MP Target 9MP 2000 2005 2010 • GDP (real) • Agriculture • Mining • Manufacturing • Construction • Services • Govt. Services • Bus. & Non-Govt. Svs. • Utilities • Transport etc • Trade etc • Finance etc • Other Services • 4.5 • 3.0 • 2.6 • 4.1 • 0.5 • 6.1 • 6.7 • 6.0 • 5.6 • 6.6 • 4.3 • 8.1 • 4.8 • 6.0 • 5.0 • 3.4 • 6.7 • 3.5 • 6.5 • 4.5 • 6.7 • 5.9 • 6.7 • 6.8 • 7.0 • 6.6 • 100.0 • 8.9 • 7.3 • 31.9 • 3.3 • 53.9 • 6.8 • 47.1 • 3.9 • 8.0 • 14.8 • 12.7 • 7.6 • 100.0 • 8.2 • 6.7 • 31.4 • 2.7 • 58.1 • 7.6 • 50.5 • 4.1 • 8.8 • 14.7 • 15.1 • 7.8 • 100.0 • 7.8 • 5.9 • 32.4 • 2.4 • 59.2 • 7.0 • 52.2 • 4.1 • 9.1 • 15.2 • 15.8 • 8.0 23

  24. Key Factors For Success . . . • Political stability and harmonious society • Efficient government with pro-business policies • Getting fundamental policy framework right • Macroeconomic management • High savings rate • Industrialization strategy & Competitive investment incentives • Productive agriculture • Human resource development • High-quality infrastructure & social services Conclusion

  25. FACTORS AFFECTING THE SOCIAL POLICY PROCESS • Political environment • Administrative competence and technical expertise • Involvement of private sector and NGOs

  26. Thank You

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