The economy of a nation is the best yardstick to gauge a country’s wellbeing – not just about gross domestic product (GDP) growth but also about equitability.
Many factors influence a nation’s economy. Lately, much attention has revolved around the weak dollar, the high cost of subsidies, unemployed graduates, rising borrowing, widening fiscal deficit, and stagnating national revenue.
The rising cost of staple food items and the reported decline in student enrolment in higher education are also disconcerting. The government has rolled out the National Energy Transition Roadmap (NETR) and New Industrial Master Plan 2030 (NIMP 2030) as new policy mechanisms to invigorate the economy.
The fact that traditional sources of national income are fast reaching their limit is a concern. Oil and gas, palm oil, and manufacturing need new directions. The semiconductor business is seen as one of the sectors that promises hope.
Universiti Malaya’s Ungku Aziz Centre for Development Studies partnered with UCSI University’s Tan Sri Omar Centre for Science, Technology and Innovation (STI) Policy Studies to host the first-ever Ungku Aziz Economy Forum on Aug 20 at Universiti Malaya. Tan Sri Professor Noor Azlan Ghazali of Universiti Kebangsaan Malaysia’s Malaysian Inclusive Development and Advancement Institute (MINDA) gave the scene-setting presentation on the state of the nation’s economy, offering evidence of the country’s immense potential but cautioning about the many challenges, saying that while they may be formidable, they can be overcome.
The panellists, comprising some of the nation’s most prominent economists, gave their views. Former economy minister, Datuk Seri Mustapa Mohamed, concluded the forum by alluding to the fact that the country does have realistic potential, which can be achieved, with effectively-executed development policies.
Undeniably, Malaysia faces several economic challenges, but they are not insurmountable. Diversification into sectors such as technology, green energy, and high-value manufacturing can help build economic resilience and stabilise the economy.
Education was flagged as a concern. The declining interest in higher education must not be taken lightly. The emphasis on vocational training is laudable in making Malaysia more competitive.
As an export-driven economy, global competitiveness is vital. The low level of innovation is a concern. All called for a more robust ecosystem to invigorate innovation. This is where the need to strengthen industry-academia partnerships came up for mention.
Related to this, embracing digitalisation and enhancing digital infrastructure must not be compromised. As part of global efforts to combat climate change, Malaysia can focus on sustainable tourism, renewable energy, and circular economy initiatives.
These not only protect the environment but also attract green investments. The issue of preparing the nation for the emerging carbon economy was raised.
Going forward, investments are increasingly evaluated on their carbon credentials. Clearly, fuel subsidies run counter to that.
The government’s recent diesel subsidy rationalisation initiative is a step in the right direction. Other conflicting policies on sustainability were also discussed, especially in relation to transport. Although much investment has gone into urban public transport, including the LRT and MRT, it is not well patronised. Owning cars continues to be the preference.
Income inequality was flagged as a concern. It was mentioned that much of the GDP, almost 60 per cent, is contributed by only four rich states. The other states still wallow in relative poverty.
The forum suggested a rethink on economic planning to give more attention to local economic planning. Implementing policies to reduce income inequality, such as progressive taxation, can ensure more inclusive economic growth, thus maintaining social stability.
There was a strong view to bring back the GST. The panellists agreed that GST is the most efficient way to raise national income. It can support the effort to reduce the nation’s fiscal deficit, which is also a concern for the economy.
As expected, improving governance and reducing corruption came up for strong mention. The fact that these are strongly emphasised by the Madani government is comforting. There is no doubt that strengthening institutions and reducing corruption are critical, as they will improve investor confidence and ensure that public resources are used effectively.
While these strategies are not exhaustive, they represent critical areas where Malaysia can focus to overcome its economic challenges and achieve sustainable growth.
Continuing the legacy of the nation’s prominent economic thinker, Royal Professor Ungku Aziz, the Ungku Aziz Economy Forum is set to be another platform for intellectual discourse on the economy.
Professor Datuk Dr Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an associate fellow at the Ungku Aziz Centre for Development Studies, Universiti Malaya.
The views expressed here are the author’s own and do not necessarily reflect those of Twentytwo13.
