Monday, June 7, 2010

Malaysia's Future Economic Direction

At present, the Western civilization is facing a gloomy economic environment with several countries risk going bankrupt. The United States, for example, is now managing their economy under a loan burden as high as $50 trillion.

What has happened to the Western civilization which was previously a big world economic power is the consequence of their failure in arranging their economy with balanced values.

Yet, despite the economic downfall in the West, several countries have emerged with the potential to become new economic powers. Right now, the term BRIIC (Brazil, Russia, India, Indonesia, and China) is so synonymous among political observers as far as this matter is concerned. BRIIC is an acronym of five countries which are experiencing rapid economic growth at the moment.

These countries are Brazil, Russia, India, Indonesia and China. Some also opine that Vietnam should be included as a country with an economy worth our attention.

So our concern is, where does Malaysia stand and head to in this new world economic order? For the Director General of the Institute of Islamic Understanding Malaysia (IKIM), Datuk Nik Mustapha Nik Hassan, after much reliance on the sector of installing components for international companies, the prospect of such an economy was seen no longer relevant in the current economic situation in this country. He said, Malaysia was no longer a strategic country for those companies in view of the rising labor cost in this country.

In comparison, China, India, Indonesia and Vietnam have a much bigger population. Indirectly, these countries have the advantage as they have a big number of experts with low labor cost.

Socioeconomic Implication
In this regard, Nik Mustapha said, the prospective Malaysian economy needed a comprehensive transformation to make sure that the exit of foreign investors would not slow down our national economic growth.

However, the exit of foreign investors will also plunge us into a big dilemma in terms of socioeconomic implication as a huge number of workers in the installation sector will lose their income source. And most of these workers do not have a high educational qualification that can assure their future.

Nearly 80 percent of local workers in most sectors in Malaysia, for instance, have a qualification up to Malaysian Certificate of Education (SPM, equivalent to O Level) only. These workers averagely earn about 1,500 Malaysian ringgit ($469) a month and they can be categorized as the middle income group.

In cities, people earning this income are categorized as the poor. "This is a serious crisis of human capital development because the remaining 20 percent skilled and professional workers would not able to fill the critical needs of the employment market.

Track for Economic Recovery
"To advance towards the goal of a developed country, Malaysia needs more skilled and professional workers with a majority of the people earn about 4,000 ringgit ($1,250) a month in average," he said.

Nevertheless, Malaysia is essentially on the right track for economic recovery as proved by the 10.1 percent growth of the Gross Domestic Product (GDP) in the first quarter of this year.
We are also one of the top 10 countries with promising economic growth over the same period. This proved that the several approaches introduced by the government, especially over the past one year under the administration of Prime Minister Datuk Seri Najib Tun Razak, are correct and effective.

Presenting 10th Malaysian Plan
The economic transformation policy has truly given a big impact to the economic growth in the country despite the world economic recession. The positive impact is expected to prevail in the anticipation of the presenting of the 10th Malaysian Plan (10MP) by the government next month.

It is hoped that all these approaches would eventually lead Malaysia to achieve the status of a high-income nation by 2020 and subsequently become a developed country.

At the same time, our country will continue to compete with new economic powers in the world especially our neighbors, Indonesia and Vietnam which are now developing rapidly. As far as time is concerned, we only have less than 10 years to achieve the status.

This is a critical period and all plans have to be put in order and initiated immediately but wisely. The government machinery is no doubt the most crucial component as it plays the major role in the implementation of the government policies.

Amending National Development Policy
They have to change the dimension of public services by including supplementary values to make sure that the government's targets can be achieved fast and effectively. In the efforts towards this goal, they certainly cannot avoid from introducing religious values such as responsibility, sincerity, honesty and always set the target to give their best.

"Therefore, when measuring the growth of our country every year, we also have to look into the social aspect, on top of the economic aspect. This is because economic growth is closely related to the development of the society and we can say we have made an economic success if the people enjoy a satisfactory living standard socioeconomically," he said. At the same time, he recommended our country to amend the National Development Policy every year to substitute GDP as the measurement of the progress of economy and social welfare.

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