New Economic Model: Why Malaysia Needs it
Malaysia achieved great economic success in previous
decades by attracting multinational FDI into low-cost manufacturing,
notably electronics. However, the global competitive landscape
has changed, and Malaysia itself has changed. It is no longer
a low income nation, and therefore has become increasingly an
unattractive location for low-cost manufacturing processes, with
other Asian countries such as Vietnam, China and India competing
for such FDI.
Malaysia needs a new model because the old model - the NEP, which worked well for about 10 years, has got too politicised and gone ugly. It caused income and racial inequity whereby the minority gained disproportionately at the expense of the less fortunate majority.
Past successful factors are no longer applicable for the future. It is important to set new goals and high standards. This is important to achieve excellence and avoid mediocrity. The government has a big and bold vision, to transform the nation into a developed high-income economy that is sustainable and inclusive.
Mohamed Iqbal Rawther
The NEM captures the essence of the emerging realities. First, moving the nation on a higher income trajectory is an economic goal: Malaysia’s growth has been impressive, but per capita income growth has not. Second, growth and income distribution have to be on a sustainable and inclusive basis. The NEM addresses the twin objectives as necessary components to the high income aspiration and the status of an advanced nation by 2020.
Malaysia is caught in a middle-income trap. It needs to take bold, pragmatic and decisive measures to move ahead and to become globally competitive and regionally connected. If we don’t transform, we could be left behind our neighbours.
Malaysia needs to upgrade its competitiveness. The new model will help propel Malaysia forward to be a more dynamic nation.