Malaysia’s overall economic policies are we on the right track ?


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Malaysia’s overall economic policies are we on the right track ?

  1. 1. Malaysia’s Overall Economic Policies- Are We On The Right Track? Farahanis
  2. 2. KEY POLICIES • New Economic Policy • Malaysia Incorporated Policy • Privatization Policy • Human Resource Development • Small & Medium Enterprise (SMEs)
  3. 3. 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 adopted: – 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.
  4. 4. 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 taking over. – 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.
  5. 5. According to : 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.
  6. 6. 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 established: – 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.
  7. 7. Privatization Policy • 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 Malaysian economy. • 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 Policy. • 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.
  8. 8. There are 474 privatised projects as of 31 December 2003 as shown in the following chart which illustrates the percentage by sectorial distribution:
  9. 9. 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,”
  10. 10. 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.”
  11. 11. 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 entrepreneurial skills. • 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 knowledge.
  12. 12. 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 2013. • 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 (22, 1.014).
  13. 13. 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."
  14. 14. 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.
  15. 15. • 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 non-Bumiputera entrepreneurs. • 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.
  16. 16. 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."
  17. 17. 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,"
  18. 18. Thank you 