The Malaysian Insight

THOUGH the Shared Prosperity Vision 2030 (SPV2030) has laudable goals to reduce the gap between the rich and poor, and increase B40 households’ wages, the targets are hard to hit, warned economists.

They told The Malaysian Insight this is because of the present structure of the domestic economy and sluggish growth worldwide, which heavily impacts trade-dependent nations like Malaysia.

Just like the economic blueprints that came before, much will depend on how SPV2030’s policies are executed and whether the government has the will to push through tough reforms, they said.

But if the government is transparent, able to stick to its plan and is aggressive enough, SPV2030 can boost incomes for the country’s working class and narrow the wealth gap, said Dr Yeah Kim Leng of Sunway University.    

“Overall, SPV2030 picks up from what Vision 2020 left unaccomplished,” said Yeah, who heads the Economics Studies Programme at the Jeffrey Cheah Institute on Southeast Asia.  

“More open, transparent and meritocratic policies, with a strong focus on low-income groups, will be crucial to achieve the agenda, culminating in the creation of a truly dignified and united nation by 2030.”

He was referring to one of SPV2030’s 10 targets, which is to double the median monthly income of the B40 group to RM5,800 in 10 years.

SPV2030, Pakatan Harapan’s economic agenda to transform the economy in a decade, was launched by Prime Minister Dr Mahathir Mohamad on Saturday.

Its other targets include:

* Raising the labour contribution (CE) to economic output, or gross domestic product, to 48% from the current 35.7%;

The CE level is a reflection of the value of workers’ wages relative to the economy. Developed economies have CE values of between 45% and 51%.

* Reducing the income gap between Bumiputera, Chinese and Indian households, so that they are equal; 

* Achieving a 4.7% growth rate per year for the next 10 years, so as to generate a nominal GDP of RM3.4 trillion by 2030; and,  

* Reducing the disparity in wages between the richer west coast peninsula states and the rest of the country.

More realistic

SPV2030 aims to achieve these targets through seven strategic thrusts, which include restructuring the business and industry ecosystem, boosting key economic growth activities and developing human capital.

Associate Professor Yusuf Saari of Universiti Putra Malaysia (UPM) said SPV2030 appears to be a return to the principle of “growth with distribution”, ensuring that the economy grows, and at the same time, everyone gets a fair share of the benefits.

He said the economy needs to be overhauled, and feels that SPV2030 addresses this.

“But what is most important is its implementation, as its targets are ambitious.

“An example is the CE contribution to GDP of 48%, when in 2018, it was only 35.7%. In 2015, it was 34.9%. This signals that the economy needs aggressive restructuring to meet this target.”  

Yeah echoed this, saying the government’s ability to ensure that salary increments amount to three-quarters of productivity gains may be constrained, especially in the case of wage-setting in the private sector.

Achieving this target will depend on how much high-value, technology-driven investment can be brought in to help increase productivity, so that firms are able to pay high wages, he said.

“The other targets, such as closing the income gaps between ethnic groups and regions, are laudable, but wide differences in population size and growth rates will make them hard to achieve.

“Greater attention should, therefore, be directed at intra-ethnic disparities.”    

However, he believes that SPV2030’s GDP growth target of 4.7% per year is realistic and in line with the country’s current growth potential.

“But as the economic base grows larger, it is harder to maintain the same growth rate. The uncertain and fragile global economic landscape also casts a long shadow on trade-dependent economies, such as Malaysia.” – October 7, 2019.