The Malaysian Insight

PUTRAJAYA has identified eight reasons why the Malaysian economy is stuck in a rut and the majority of its citizens are complaining of stagnating wages while the cost of living keeps rising.

These eight reasons are the main challenges facing the Pakatan Harapan administration in its 10-year economic agenda, Shared Prosperity Vision 2030 (SPV2030).

SPV2030 was launched by Prime Minister Dr Mahathir Mohamad at the KLCC convention centre this morning.

The new agenda is aimed at building a unified and dignified country, ensuring that Malaysia’s wealth is fairly distributed, and making sure that no region, class or ethnic group is left behind.      

According to documents released by Putrajaya, the eight factors holding Malaysia back are:

* Malaysia’s growth potential has not been fully realised and the economy is not as diversified as it should be.

The country’s economic growth lags behind China and some Asian countries while commodities such as oil and gas products still make up a substantial chunk of its exports at 15.5% of gross domestic product (GDP).

* A large segment of Malaysia’s industries are still low value and employ low technology.

The manufacturing and services sectors contribute 79% of GDP, but only 37% of manufacturing and 20% of services utilise high technology which would create the high skilled and high-paying jobs.

* Workers’ share of the country’s wealth is low at 35.7%, as measured in terms of employees compensation (CE) to GDP.

In comparison, the CE rate in Singapore, South Korea and Australia is 39.7%, 45.7% and 47.2%, respectively.

* There are widening gaps between classes, regions and ethnic groups.

* The Bumiputera economy is not expanding as much as the national economy.

Despite all the help the previous Barisan Nasional government has ladled out to Bumiputera small and medium enterprises, their contribution to economic growth is low at 28% of GDP.

* Monopolies exist in the country’s supply chain of goods and services which lead to high prices for consumers.

* Corruption and abuse of power have stifled economic growth and led to wastage of government funds.

Under the BN regime, RM1.1 trillion in government contracts were given out, of which 50% went to Bumiputera companies. Yet the Bumiputera SME contribution to GDP was 9% in 2015.

Instead of improving the Bumiputera economy, the Bumiputera agenda of the BN years was plagued by corrupt practices and leakages.

* Lastly, national harmony and unity have been jeopardised as a result of these persistent socio-economic disparities. – October 5, 2019.