Malaysia’s overall economic policies are we on the right track ?
Malaysia’s Overall Economic
Policies- Are We On The Right
• New Economic Policy
• Malaysia Incorporated Policy
• Privatization Policy
• Human Resource Development
• Small & Medium Enterprise
New Economic Policy
The NEP underscored the importance of achieving
socio-economic goals alongside pursuing economic
growth objectives as a way of creating harmony and
unity in a nation with many ethnic and religious
groups. The overriding goal was national unity. To
achieve this goal, two major strategies were
– To reduce absolute poverty irrespective of race
through raising income levels and increasing
employment opportunities for all Malaysians; and
– To restructure society to correct economic imbalances
so as to reduce and eventually eliminate the
identification of race with economic function.
Societal restructuring programmes generally
focus on the following strategies:
– Direct intervention by Government through the creation of
specialized agencies to acquire economic interests and hold intrust for Bumiputeras until such a time when they are capable of
– Introduction of specially designed rules and arrangements,
whereby the involvement and participation of Bumiputeras are
assisted and facilitated over a period.
– Provision of concessional fiscal and monetary support as part of
the package towards entrepreneurial development.
– Accelerated programme for education and training.
– Increasing Bumiputera ownership through privatization projects.
– Reduce progressively, through overall economic growth, the
imbalances in employment so that employment by sectors and
occupational levels would reflect racial composition.
According to malaysiafactbook.com :
There is Misconceptions about equity ownership in Malaysia
We always read that the equity ownership of the bumiputeras has not reached
the projected 30%. Many wrongly believe that it is the non-bumiputera
Malaysians who own the remaining 70%. But this is not true, because the
Malaysian government has been allowing more and more foreign equity
ownership. In 2011, bumiputeras owned 23.5%, and non-Bumiputera
Malaysians owned 34.8%, with the remaining 41.7% owned by
foreigners, making them the biggest group that own equity in the corporate
sector, according to Minister in the Prime Minister's Department, Datuk Seri
Abdul Wahid Omar, as recorded in the Hansard of the Parliament on 31
October 2013. This means that corporate equity ownership of Malaysians, as a
whole, is now 58.3%. If we just look at the bumiputera share of equity
ownership among Malaysians, then it is 40.3%. At the end of the day, the nonachievement of the bumiputera equity share is because of the failings of the
UMNO-led government in allowing foreigners to own so much of the equity in
Malaysia Incorporated Policy
• The Malaysia Incorporated concept was first announced by the
Prime Minister in 1983 and it represents a new way of
approaching the task of national development. Both the public
and private sectors adopt the idea that the nation is a corporate
or business entity, jointly owned by both sectors and working
together in pursuit of a common mission of the nation.
• To operationalise this concept, several mechanisms were
– Deregulation of cumbersome bureaucratic rules and regulations.
– Improving the delivery system.
– Institutionalizing the consultative machinery between the private
and public sectors.
– Establishing smart partnership programmes in nation building
efforts between the private and public sectors.
– Pursuing privatization.
• It was first announced as a national policy by the Government in 1983. It
represents a new approach in the national development policy and complements
other national policies such as the Malaysia Incorporated policy, developed to
underscore the increased role of the private sector in the development of the
• This approach is to facilitate the country’s economic growth, reduce the
financial and administration burden of the Government, reduce the
Government's presence in the economy, lower the level and scope of public
spending and allow market forces to govern economic activities and
improve efficiency and productivity in line with the National Development
• In respect of ownership of wealth, the privatisation policy forms an integral
part of the Government's strategy in realizing active participation by
Bumiputera in corporate sector to correct the imbalances in the corporate sector
participation. The privatised entity should allocate 30% of its equity to
Bumiputera. Foreign participation in a privatized entity is limited to a
maximum of 25 % of its share capital.
There are 474 privatised projects as of 31 December 2003 as shown in the
following chart which illustrates the percentage by sectorial distribution:
Based on a quote from Malaysia Inc. Features, ‘ Malaysia Incorporated &
Privatization: Its Rationale And Purpose by Tun Dr Mahathir Mohamad
“ The Malaysian Incorporated And Privatization
concepts call for all of us to start formulating and
adopting a common national corporate philosophy
and strategy for action. The time has come for all
managers in the private sector to stop thinking of
progress and development only in terms of what
their own companies and firms intend to do. All
must now start thinking in terms of contributing to
the well being of the nation as part of their
responsibility. Malaysia’s future depends on
improved productivity and the ability to sell more
and more goods to the world. The private sector and
the people as a whole must now play their part,”
He also add,
“In the Malaysia Incorporated And
Privatization concepts, we have the
right combination to propel
Malaysia to greater heights of
achievement to the betterment of
both the spiritual and material well
being of her people.”
Human Resource Development
• Expanding the supply of highly skilled and knowledgeable manpower to
support the development of a economy knowledge based on education and
training. The education system will be re-oriented to enable students to
acquire a higher level of explicit knowledge as well as thinking and
• Increasing educational facilities and quality training to enhance income
generation capabilities and quality of life. Educational facilities will be
increased through the construction of centralized schools in remote areas as
well adequate facilities, infrastructure and trained teachers.
• Improving facilities for quality education and training system to ensure that
manpower supply is in line with technological changes and market demands.
School curriculum will be reviewed to generate creativity and independent
learning among students as well as incorporate new aspects of knowledge
and technology and more innovative teaching methods.
• Promoting lifelong learning to enhance employability and productivity of the
labour force. Employers will be encouraged to promote lifelong learning
through training and retraining to equip workers with new skills and
Based on a quote from Invest KL Malaysia magazine Malaysia on the right
path for human capital development by Palau Shavin:
• On the right track – that's what most experts said about
Malaysia's unexpectedly good showing in the World
Economic Forum (WEF)'s inaugural Human Capital Index
• The report states that Malaysia performs well on most of the
qualitative talent and training indicators in the Workforce
and Employment pillar. However, its education, as well as its
health and wellness pillars need improvement.
• Malaysia's scores for the respective pillars are Education
(ranked 34 out of 122 countries, with an overall score of
0.526), Health and Wellness (39, 0.301), Workforce and
Employment (18, 0.736) and Enabling environment
An editor of a business weekly comment on the index
ranking for Human Capital Development (HDC),
"The result is truly a credit to the Najib’s
government which has worked hard to put into
place initiatives with the goal to transform
Malaysia into a high income nation with a highly
skilled workforce by 2020."
He also said,
"The population demographic for Malaysia shows
that we still have a fairly young population, and in
terms of labour participation, the signs are
encouraging. This should give impetus to
PEMANDU’s Human Capital Development
Strategic Reform Initiative, which is supposed to
focus on enhancing and addressing the country's
human capital capabilities."
Small & Medium Enterprise (SMEs)
As the need to rely on domestic demand and
domestic-oriented industries for the nation’s
economic growth increases, the Government will
continue to provide support to strengthen the SMEs
by introducing new measures and rationalizing
existing efforts to further develop resilient SMEs.
Among the measures that has been identified, are:–
To improve the institutional support system.
To facilitate accessibility to financing.
To upgrade technological skills.
To enhance market access.
To promote the greater usage of ICT.
To increase awareness of product branding and
protection of intellectual property rights.
• In promoting and upgrading Bumiputera SMEs under
the Bumiputera Commercial and Industrial Community
(BCIC), efforts will be intensified to assist Bumiputera
entrepreneurs improve their skills in business
management, ICT, R&D, product development and
marketing as well as establish strategic alliances with
• To enable SMEs in rural industries to penetrate world
markets, efforts to enhance their competitiveness will
be intensified. The concept of one district one industry
will be strengthened to cover a wider area of
participation. Efforts will be geared towards enhancing
the use of technology in rural industry production
processes, acquiring quality accreditation and
upgrading market promotion by establishing links with
corporate and international clients.
Based on a quote from Business Times , ‘SMEs are Malaysia’s
economic saviours ’ by Francis Dass
SME Corp. (M) senior director of economics, policy
planning division K. Karunajothi said during a Q&A
session at the announcement of CPA Australia AsiaPacific Small Business Survey 2013 results
"Typically, SMEs grow at a faster pace than
the overall economy. In Malaysia, SMEs have
been growing at between six and 6.2 per cent
annually from 2006 to 2012, versus the
overall economy. Next year, the official growth
forecast for the country is five to 5.5 per cent
and we expect more (from SMEs) - perhaps
half percentage or one percentage more."
She also said her organisation SME Corp. (M),
which is tasked with formulating and
coordinating SME development policies and
programmes across ministries and government
agencies, is determined to bring Malaysian
SMEs to the next level.
"SMEs have a big role to play... the highincome nation status cannot be
accomplished by big companies alone. The
conditions are there now on how we are
going to do it,"