Malaysia’s economy at the second bottom rung and stagnated for last 10 years
(Malaysian Mirror) – Malaysia’s economy has been stagnating for the past decade and is now trailing badly behind its neighbours, a senior minister said Tuesday, calling for “urgent” and wide-ranging reforms.
Malaysia’s export-dependent economy has been hit hard by the global recession, contracting by a forecast 3% this year and jeopardising its ambitions of becoming a developed nation by 2020.
“Malaysia is trapped in a low-value-added, low-wage and low-productivity structure,” Second Finance Minister Ahmad Husni Hanadzlah told an economic outlook conference.
Among its peers China, India, Vietnam, Indonesia, Philippines and Thailand, Malaysia’s economic growth over the past three years was second-lowest, he said.
Lost competitive edge
“Our economy has been stagnating in the last decade. We have lost our competitive edge to remain as the leader of the pack in many sectors of the economy. Our private investment has been steadily in decline.”
“While Singapore and Korea’s nominal per capita GDP grew within the last three decades by nine and 12 times respectively, ours grew only by a factor of four.”
In a withering assessment, Ahmad Husni said the services sector is underdeveloped, private investment is half the levels before the 1997-98 Asian crisis, and the manufacturing sector is suffering from lack of investment.
“The (need for) transformation is particularly urgent when we take the external environment into account,” he said.
“The global environment is changing. We can no longer rely on our traditional trading partners and we need to address the competitive pressure from other emerging markets on our existing exports.”
He called for sweeping measures including an emphasis on meritocracy and ensuring all Malaysians are given “equal opportunity to participate in the economy”.
Malaysia has for decades practiced a system of positive discrimination for Muslim Malays who dominate the population, but critics say the policy is fuelling corruption and is hurting the nation’s competitiveness.
“We must also consider the gradual dismantling of our open-ended protection of specific sectors and industries which have introduced a climate of complacency and artificial levels of supply,” the minister said.
“The long-term success of the nation’s economy must take precedence over the short term interests of a few protected groups.”
Prime Minister Najib Razak — who is also finance minister — came to power in April with plans to tackle graft which is endemic in the ruling party and society at large.
