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NEWS UPDATES 30 March 2010

Malaysia PM unveils ‘bold’ reform plans

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Malaysia on Tuesday unveiled economic reforms aimed at attracting foreign investment, raising incomes and propelling growth to meet its goal of achieving developed-nation status by 2020, reported AFP.

Prime Minister Najib Razak said the "New Economic Model" would boost the quality of the work force and reduce dependence on the millions of foreign workers who power Malaysia's plantations and manufacturing sectors.

He also took aim at a decades-old affirmative action policy for majority Muslim Malays and indigenous groups - collectively known as "bumiputra" - which has been criticised as uncompetitive.

"We need a new way of doing things. While the recovery has begun, we must act now to position Malaysia for the future," Najib said in a speech.

"And this is the choice we now face: To rise out of the 'middle-income' trap that will be a precarious position for any nation in the new global economy, or to stick to what we know, and what is comfortable."

Malaysia's economy shrank 1.7 percent last year as its crucial export markets dried up during the global downturn.

The central bank has forecast 5.5 percent expansion this year but as the region emerges from recession, competition for investment has become fierce, with Thailand, Indonesia and Vietnam eroding Malaysia's attractiveness.

"We want to see a Malaysia that makes a quantum leap from the current $7,000 per capita annual income to $15,000 in 10 years," Najib said.

"Bold reform measures will unlock investment, drive labour productivity and boost efficiency, lifting real growth rate to an average of 6.5 per cent per annum over the 2011-2020 period.

CIMB chief economist Lee Heng Guie said the policy announcement was a "strong statement of intent" but details of how Najib intended to achieve the grand goals were lacking.

Lee said the 6.5 percent annual growth target is "challenging given the uncertain external economic environment".


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