11th Malaysian Plan: eye-catching and challenging

11th Malaysian Plan: eye-catching and challenging
Malaysian Prime Minister Najib Razak speaks at a news conference to announce budget revisions to help its oil exporting economy adjust to the impact of slumping global crude prices, in Putrajaya.

The 11th Malaysia Plan had a different feel to it. Presentation of the voluminous document was done in a breezy and easily digestible way with the mass of text in previous editions giving way to clever diagrams and pastel colours splashed throughout the thick book.

Publishing the roadmap for the country towards 2020 in such a manner was done with the intention of allowing people to easily get the gist of the broad plan.

While pleasant on the eye, the thrusts of the 11MP are varied. The theme of the 11MP - Anchoring growth on people - was obvious throughout the plan. Three of the six main thrusts of the 11MP were people-centric and spoke broadly of various thrusts to improve productivity, skills, wellbeing and income of the rakyat.

There was a long list of plans and strategies on improving infrastructure, power generation, healthcare and property development in the country as there were many changes in the way things will be done to achieve progress. Some of those new methods are a divergence from what is currently being done.

Central to the overall plan was to get the country to a high-income status. And to do so, lifting the wealth of the bottom 40% of the population was an important ingredient.

The aim is to get the monthly household income to hit RM10,540 (S$3,915) by 2020 but the challenge would be how that can be accomplished because it calls for the household income of the bottom 40% to double in five years.

To get wages moving upwards, the share of wages to GDP will also need to be improved. Compensation of employees to GDP was 33.6% in 2013 and the plan is to increase that to 40% in 2020.

That needs to happen as wages of the bottom 40% need to grow faster than the forecast GDP growth of 5% to 6% from 2016-2020.

The Government will establish a National Wage Index that will serve as a guide and benchmark for employers to determine the right wage level for employees in accordance with their qualifications, skills and productivity.

Innovation will play its part as productivity needs to be raised to a growth of 3.7% per annum, a critical factor in ensuring wages commensurate with output.

Vocational and technical training will be important as the 11MP projects that out of the 1.5 million new jobs created, 60% will be for technically skilled people.

The link between Government and industry needs to work better than it has before to achieve such targets. Industry needs to demand such jobs and the supply of technical skilled workers needs to be up to mark.

In order for that all to happen, the economy needs to perform during that period and jobs created. Right now, there is economic volatility globally but Malaysia's growth rate seems resilient with a growth of 5.6% in the first quarter of this year.

The private sector will play a pivotal role as its investments will drive the economy and create the higher paying jobs. Investments are seen to grow by 9.4% during that period and the Government will spend RM260bil on developing infrastructure and services in the next five years.

The Government's fiscal position is another aspect that will help growth. Poor financial health will not feed confidence to the private sector to do its part. Here, the Government kept to its target of balancing the budget by 2020 with a fiscal deficit projected at 0.6% of GDP by then.

Helping to improve the fiscal position will be government revenue which is expected to leap from RM1.05 trillion during the 10th Malaysia Plan to RM1.41 trillion in the 11MP. Revenue in 2020 is forecast at RM326.4bil from a forecast RM222.9bil in 2015.

The Goods and Services Tax will help as the 11MP has forecast revenue from the price of crude oil at around US$70 a barrel.

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