On October 18, Prime Minister Mahathir Mohamad presented his administration’s mid-term review of the 11th Malaysia Plan (11MP) in Parliament after returning back to session earlier in the week on October 15. The report provides an outlook of Malaysia’s economy and outlines the new government’s reform agenda to improve governance, accelerate innovation, boost productivity, move its industries up the value chain, enhance the wellbeing of its citizens, and achieve inclusive growth by 2020. The report is divided into two major sections. Section one which covers chapters one through eight evaluates the past performance of the plan in achieving its objectives. Section two comprising chapters nine through fifteen focuses on new priorities and emphases for the remainder of the 11MP term (2018-2020). Full text of the mid-term review of the 11MP can be found here.
Summary of Key Points
A central tenet of the mid-term review is the focus on inclusive growth and sustainable development. As such, the report outlines the following six pillars that will form the basis for new policies. Each pillar sets out specific priority areas and strategies to achieve its outlined goals.
- Reforming governance towards greater transparency and enhancing efficiency of public service
- Enhancing inclusive development and wellbeing
- Pursuing balanced regional development
- Empowering human capital
- Enhancing environmental sustainability through green growth
- Strengthening economic growth
The six guiding pillars and corresponding priority areas in the 11MP illustrate the Malaysian government’s commitment to improve its citizens’ wellbeing. Among the goals include raising the income and purchasing power of B40 households, empowering minorities and improving access to quality and affordable housing and healthcare. The mid-term review has also designated the acceleration of development in less developed states such as Sabah, Sarawak, Kelantan, Terengganu, Kedah and Perlis a major priority.
The 11MP also considers the current economic environment and has revised its goals and strategies to ensure Malaysia develops resiliency against potential shocks and global uncertainties. The mid-term review sets the annual growth rate for the remainder of 2018 to 2020 between 4.5 percent and 5.5 percent and unemployment rate at below 3.5 percent which is a 0.7 percent increase from the original target. Gross exports and imports are expected to grow more than 6 percent per year through 2020 with a trade surplus targeted at RM118.3 billion by the end of the period. Both the Minister of Economic Affairs and the Prime Minister have commented that it will be necessary for the country to bear short term trade-offs to build a stronger foundation for sustainable and inclusive long-term growth. The government also states in the review that macroeconomic goals will be pursued together with qualitative aspects through the six pillars to ensure inclusive and sustainable growth is achieved going forward.
A departure from the 11MP is that the mid-term review sets out a different emphasis for institutional reforms, which was central to the new government’s campaign during the election. Among the priorities outlined include enhancing procurement management, enhancing the anti-corruption agenda, improving transparency and reforming public sector institutions. Recently, the Prime Minister announced plans to limit the tenure of the Prime Minister and Chief Ministers to two terms. Such institutional reforms will help Malaysia improve structural issues that hinder its bureaucracy and encourage economic growth and development.
When the 11MP was initially tabled, the economic environment was markedly different from the economic environment of 2018. Malaysia’s current growth trend is likely to be impacted by external factors such as the US-China tariffs dispute. The willingness for the government to reduce its macroeconomic targets reflects its pragmatism. Looking ahead, Malaysia’s export and FDI competitiveness are likely to be impacted positively or negatively by the government’s decision to either ratify or not ratify the CPTPP agreement respectively. Economists and analysts have viewed the goals outlined in 11MP positively, with most concurring that fiscal prudence, inclusive growth and institutional reforms as keys thrusts for Malaysia to weather internal and external economic environments and grow in the medium to long term.
Local Stakeholder Reactions to the Review of the 11MP
Government Reform: https://www.malaymail.com/s/1684365/public-service-transformation-still-insufficient-says-11mp-review
Political Perspective: https://www.freemalaysiatoday.com/category/opinion/2018/10/20/11th-malaysia-plan-review-what-reformasi-agenda/
Economic and Business Reforms: https://www.nst.com.my/business/2018/10/422444/new-priorities-11mp-mid-term-review-reflect-new-govt-aspirations
State Reactions: Sabah https://www.themalaysianinsight.com/s/104779
Manufacturing Industry: https://www.malaymail.com/s/1685498/federation-of-malaysian-manufacturers-aims-for-closer-regular-engagements-w
Human Capital Development and Workforce: https://www.thestar.com.my/business/business-news/2018/10/19/paradigm-shift-needed-to-become-technology-cocreator/
Green Growth: https://www.thestar.com.my/news/nation/2018/10/19/make-green-growth-a-priority-we-must-focus-on-making-sustainable-development-a-mainstream-goal/
Medical Device Industry: https://www.nst.com.my/business/2018/10/424546/medical-device-industry-should-embrace-new-technology-stay-competitive-mida
Construction Industry: http://www.theborneopost.com/2018/10/20/analysts-maintained-neutral-view-on-construction-sector-post-11mp-mid-term-review/
ICT Industry: http://www.theedgemarkets.com/article/uncertainties-linger-over-egovt-service-providers