New Malaysia plan to spur growth through 2020

New Malaysia plan to spur growth through 2020
Malaysia Prime Minister Najib Razak.

KUALA LUMPUR - Prime Minister Najib Razak has unveiled a plan for fuelling Malaysia's growth through 2020, by creating a larger pool of high-skilled workers and improving their productivity to increase investment.

"With 2020 just five years away, the Eleventh Plan is the next critical step in our journey to become an advanced nation that is inclusive and sustainable," he told Parliament when tabling the 11th Malaysia Plan (11MP) yesterday.

One notable aspect is to keep the economy growing 5 to 6 per cent annually by boosting labour productivity 20 per cent over the next five years. The key to this will be the creation of 1.5 million jobs by 2020, with fully 60 per cent of the high-skilled jobs being held by bumiputeras.

Malaysia's overall aim is to narrow the income gap, reducing the Gini coefficient from 0.401 to 0.385, with wages making up 40 per cent of gross domestic product (GDP), compared with 34.9 per cent at present.

Gross national income per capita is also expected to reach RM54,100 (S$20,100), and average monthly household income is expected to rise to RM10,540 in 2020.

The government hopes to do this by raising the education and skills level of the bottom 40 per cent of households, that is 20 per cent having tertiary education, compared with just 9 per cent last year.

This will double the average household income of the bottom 40 per cent to RM5,270 in five years.

As a result, Malaysia's GDP is expected to reach RM1.4 trillion in 2020, with 35 per cent of the workforce comprised of skilled workers. GDP per capita is projected at RM54,890 and labour productivity is set to increase to RM92,300 in 2020.

Datuk Seri Najib explained that the 11MP will be driven by six strategic thrusts - enhancing inclusiveness towards an equitable society; improving well-being for all; accelerating human capital development for an advanced nation; pursuing green growth for sustainability and resilience; strengthening infrastructure to support economic expansion; and re-engineering growth for greater prosperity.

The 11MP will also allocate RM260 billion for development expenditure from 2016 to 2020, including funds to increase power capacity.

The plan notes that Malaysia's economy is set to benefit from more robust global economic prospects, a recovery of commodity prices and benign global inflation. Its own inflation rate is expected to remain below 3 per cent for the next five years.

The 11MP, the final five-year economic plan, will see the shape of the economy changing with oil and gas expected to make up just 15.5 per cent of government revenue in 2020, compared with 21.5 per cent now.

The manufacturing and service sectors are expected to make up three-quarters of the economy, helping to boost takings from the new goods and services tax to RM31 billion by 2020, double the collection of the defunct sales and services tax last year.

Infrastructure projects, including Klang Valley Mass Rapid Transit routes, the Klang Valley Light Rapid Transit line and the highly anticipated MRT in the Klang Valley, are expected to increase productivity.

Private investment is expected to grow at an annual 9.4 per cent between 2016 and 2020 at an estimated annual investment of RM291 billion. Public investment is also expected to grow at 2.7 per cent per annum at an annual average of RM131 billion.

This article was first published on May 22, 2015.
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