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Oecd amro s2 03_malaysia mr allaudin anuar

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2nd OECD-AMRO Asian Regional Roundtable

2nd OECD-AMRO Asian Regional Roundtable

Published in: Technology, Business

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  • 1. 2nd OECD-AMRO Joint Asian Regional Roundtable By Allauddin Hj. Anuar Economic Planning Unit, Prime Minister’s Department, Malaysia 19th July 2013 1
  • 2. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2007 2009 2010 2011 GNI Per capita income (USD) GNI Per capita income by countries, 1987 - 2011 High income Upper middle income Lower middle income Low income Singapore Korea Mexico Malaysia USA East Asia Developing World Malaysia has been in the upper middle income league since 1988, but has yet to transform into high income country status… 2
  • 3. Slower Growth Post Asian Crisis Relatively Slow Growth in Recent Years "Stuck in the Middle" 7.4 7.3 7.3 6.8 6.3 4.2 5.0 5.6 2.9 3.3 2.5 1.5 0 Japan UK US Philippines India Thailand Indonesia Taiwan Korea Vietnam % 8642 10 Malaysia Singapore China 9.8 1 3 5 7 9 GDP growth 1990-2000* 5.1 4.2 6.6 3.8 3.5 4.7 3.9 6.8 4.3 1.4 1.5 0.7 0 2 4 6 8 10 % 9.5 GDP growth 2000-2010* 3rd highest growth 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 Vietnam Thailand Taiwan South Korea Singapore Philippines Malaysia Japan Indonesia Hong Kong China USD GDP/capita 1970: 2010 (PPP)** 1997 crisisSources: * World Economic Outlook Database, April 2012 ** The Conference Board Total Economy Database™, January 2012, http://www.conference- board.org/data/economydatabase/ 7th highest growth Asian Financial Crisis 1997/1998   3
  • 4. 0 5 10 15 20 25 30 35 Private Public • … largely due to a decline in private investment Private and public investment, percent of GDP % Percentage Private Investment Declined Significantly After the Asian Financial Crisis 1997/1998... -15 -10 -5 0 5 10 15 20 1995 2000 2005 2010 2011 Private saving minus investment Public saving minus investment % Percentage • Savings exceed investments by significant amounts…. Balance as percent of GNP 4
  • 5. Productivity-led growth yet to gain its momentum 37.8 34.5 37.5 17.4 46.9 45.4 57.3 58.2 33.2 30.8 24.0 29.0 34.7 38.5 53.1 54.6 42.7 41.8 58.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 8th MP 9th MP 10th MP JAPAN Korea S'pore UK USA % Source: EPU, EIU  Slow progress in contribution of TFP to economic growth, low compared to the high-income economies  The economy still highly dependent on traditional factor inputs, i.e. labour and capital (2011-2015)(2006-2010)(2001-2005) TFP L K 5 TFP K + L (2006-2010)
  • 6. Low R&D Expenditure in the Economy… R&D Expenditure, % of GDP Source : World Development Indicator, World Bank Note: *2010 6 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1.7 3.4 3.7 1.1 2.4 2.9 1.8 2.2 2.5 1.5 1996 2000 2005 2009 • R&D expenditure recorded at only 1.06% of GDP in 2010, lower than Developing Asia & Pacific average
  • 7. Note LowSec=PMR, UpSec=SPM, PostSec=STPM, Tertiary=Diploma, degree Source: Department of Statistics, Korea IntenationaLabor Organisation, Taiwan Department of Statistics 7 Workforce today still relatively unskilled . . . 77% of workforce educated up to SPM or equivalent only % 4 1998 4 2001 3 2007 4 LowSec Primary 4 None 2009 0 Tertiary 100 PostSec 20 UpSec 40 60 80 1990 0 100 20 40 60 80 % 3% 9% 5% 1% 0% -3% 5.7% 5.0% 2.6% 2.9% CAGR ’90 – ‘07 Singapore 1997 Singapore 2008 Taiwan 2007 Korea 2007 0 100 20 40 60 80 % CAGR ’98 – ‘07 Tertiary PostSec UpSec LowSec Primary None Unskilled Semi-skilled Skilled 77% 28% Management & professionals Semi and unskilled Management, professional and other skilled Only 28% of Malaysian jobs are in the higher skilled bracket Developed economies have significantly higher proportion of higher skilled jobs 20092007 Developing & retaining a first-world talent base
  • 8. Skilled2 labour force Percentage, 2008 SOURCE: World Bank Education Statistics, Economic Intelligence Agency, International Labour Organisation, Korea Ministry of Labour, Singapore Ministry of Manpower, US Bureau of Labour Statistics 8 Malaysia needs to close the gap to achieve the characteristics of a First-World Talent Base 1 Adjusted to Purchasing Power Parity 2 Management, professional and other skilled occupations 3 Tertiary education is the educational level following the completion of secondary education, i.e. after 11-12 years of basic schooling. Colleges, universities, institutes of technology and polytechnics are the main institutions that provide tertiary education Malaysia (2009) S’pore Korea Finland USA Australia UK H.Kong Country OECD average = 37.6 36.0 42.5 42.9 36.3 43.8 29.3 51.0 28.0 Labour force with tertiary education3 Percentage, 2007 OECD average = 27.4 25.6 31.9 32.7 34.1 34.8 35.0 35.9 23.4 Labour productivity US$ PPP1 ’000 per employee, 2009 67.2 71.7 92.9 66.5 52.9 60.8 26.6 OECD average = 64.8 78.6
  • 9. Economic Agenda Different approach Concentrated growth strategy Import Talent Home-grown talent TEVT Autonomy to universities Reform labour law Multiple Angles New Approach Inclusiveness Well-being and liveability Environmental Sustainability Good governanceEfficient, dynamic & responsive governmentSmart partnerships Moving towards inclusive socio- economic development ~ ensure income & wealth are distributed in an equitable manner Building an environment that enhances quality of life ~ raise the quality of life of the rakyat commensurating with high income status Developing & retaining a first- world talent base ~ develop, attract & pertain quality human capital Creating the environment to unleash economic growth ~ foster economic growth with the private sector as main engine driver High- Income Advanced Economy The Transformation Agenda 9 1 2 4 3
  • 10. 0 2 4 6 8 10 12 14 16 18 20 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 USD$(Thousand) Malaysia Minimum HIC -68.9% Malaysia is on track towards a High Income Country GNI per capita income (USD$) Note: Minimun HIC year 2020, estimates: USD$15,300 Sources: World Bank, IHS Global Insight & EPU 2018 USD$15,398 2000 USD$3,420 2010 USD$8,346 2020 USD$17,378 1990 USD$2,370 2013 USD$10,687 1990 USD$7,621 2000 USD$9,266 2010 USD$12,276 -63.1% -32.0% 2013 USD$13,172 -18.9% 2020 USD$15,280 10
  • 11. GNI per Capita* 2010 2012 2013 2015 2020 2010 2012 2013 2015 2020 RM33,010 (USD10,687) Long-term Targets 2011-2020 Real GDP * At current price RM26,882 (USD8,346) RM30,812 (USD9,976) RM38,237 (USD12,379) 11 RM890.0b RM749.1b RM789.9b RM674.9b RM1,150.0b RM53,300 (USD17,400)
  • 12. 12
  • 13. Linked-Charts 13
  • 14. WHERE WE ARE HEADING…. Economic agenda -private sector led ~ Creating the environment for unleashing economic growth ~ enhancing the role of financial sector -innovation ~ ensure that Malaysia becomes an efficient, flexible, and vibrant business environment -role of government in business ~ as facilitator Need a different approach -review of business regulation ~ Modern & market friendly business regulation -remove subsidies ~ Remove market distortions -introduce competition law ~govern all firms including GLCs against anti- competitive practices The Pillar for Transformation Continue… 14
  • 15. - National Key Economic Areas 15 Concentrated growth strategy
  • 16. 16 Early childhood Pre-school Basic education Tertiary ▪ University / Colleges ▪ Polytechnic ▪ Community colleges ▪ TEVT Professional working life Retirees/ Second career Themes ▪ Mainstreaming and broadening TEVT ▪ Enhancing the competency of tertiary graduates ▪ Accelerating labour reform ▪ Attracting & retaining top talent ▪ Upgrading existing talent pool Integrated Talent Development Ages 0+ 4+ 6+ 17+ 20+ Revamping education system to significantly raise student outcomes Raising skills to increase employability Reforming labour market to transform M’sia into a high- income nation SOURCES: EPU ▪ Ensuring every child succeeds ▪ Holding schools accountable for outcomes ▪ Investing in great leaders for schools ▪ Attracting and developing the best teachers 1 2 3 Integrated Human Capital and Talent Development Framework for Malaysia Nurturing, attracting and retaining top talent
  • 17. Principles of new approach to affirmative action ▪ New affirmative action instruments will allow resources to be optimally allocated and will not cause, contribute or perpetuate economic distortions Market-friendly Needs-based ▪ Households in the Bottom 40% of income distribution including specific disadvantaged groups with clear needs will be targeted Merit-based ▪ Programs will encourage competition and award opportunities to the most qualified individuals and businesses Transparent ▪ Policies, procedures, and criteria will be made clear and public Multiple angles in addressing inclusiveness 1Malaysia perspective Aim to provide all Malaysians with equitable opportunities to participate in economic growth Social perspective Ensure that disadvantaged groups are supported to be active participants in society & where necessary, adequately assisted to raise their quality of life Geographic perspective Regardless of location, citizens will be able to enjoy equitable access to basic infrastructure & services Income perspective Focus on households in the Bottom 40% income group to enable their income to move in line with mean national income Inclusive Development The new approach to addressing inclusiveness will require re-orientation of affirmative action instruments Ensuring equality of opportunities & safeguarding the vulnerable 17
  • 18. People-centric public transport system - to make public transport an attractive mode of choice Public transport Transforming healthcare to improve quality and universal access. – emphasises on wellness & disease preventionHealth Access to quality and affordable housing - matching demand & supply for affordable housing, & promoting an efficient & sustainable housing industry Housing Provision of efficient public utilities & essential services - driving efficiency & productivity gains in the provision of reliable services Public utilities Making our streets and communities safer. Reducing crime & improving people’s sense of securitySafety Valuing the nation’s environmental endowments - prudent management & conservation of existing resourcesEnvironment Living spaces Vibrant and attractive living spaces - to live, work and play with a focus on cities Building an environment that enhances quality of life 18
  • 19. The Financial Sector as An Enabler Towards Achieving High Income Country 19 • Main objectives are being to achieve sustainable growth and development, as well as overall prosperity • Banking institutions as the backbone of the financial system, while insurance and other specialized institutions and the capital market will increase in importance • New growth areas, increased role of SMEs will demand wider range of specialised products & services • As domestic corporates expanding, regionally & globally, more capital investment in technology will be required to increase productivity – increase in demand of long-term financing • Trade financing facilities demand to finance the expansion in the international trade and cross border activities • Financing needs to cater the physical infrastructures development Continue…
  • 20. The Malaysia’s Financial Sector Masterplan 20 Financial Sector Efficiency Effectiveness Stability Prudential Infrastructure • Greater penetration of efficient & low cost delivery channels • Scale advantages in operation • Leveraging on world-class skills • Greater investment in technology & skill enhancements • Broaden range of products & services to meet the needs of customers • Financial innovation • Innovation & conducive operational environment • Sound & stable financial system to withstand economic and financial shocks • Efficient, effective & robust financial institutions, strong prudential regulations & supervision, and efficient & reliable infrastructure • Effective prudential regulations & supervision, amid providing an conducive environment to development of efficient & innovative financial system • Strong infrastructure the backbone to the overall stability of the financial system