October 16, 2021 House of Trust

FMT Article: What’s blocking Malaysia’s climb to high-income status

This article written by Imran Ariff was published in Free Malaysia Today.

PETALING JAYA: Political tampering with the economy is interfering with Malaysia’s progress towards becoming a high-income nation, according to an economist.

Benedict Weerasena of Bait Al-Amanah said the prevalence of such tampering and influence on governing institutions and the civil service was “eroding effective economic and financial decision-making”.

Referring to a recent World Bank Group report that foresees the possibility of Malaysia achieving high-income status in the next five years, he said it was “slightly optimistic” but acknowledged that the target was within the realm of possibility if recovery from the pandemic was fast enough, economic growth remained solid and the ringgit stayed stable.

He described political tampering and influence on institutions as being among the “biggest stumbling blocks” and added that reliance on migrant workers had weighed down efforts to promote higher value industries.

To overcome these, he told FMT, pro-market reforms and the development of a business friendly environment would be essential.

Weerasena also called for improved research and development funding to spur innovation.

“Also, Malaysia needs to maximise the potential of its ethnically diverse and multilingual workforce, considering that the three largest ethnic groups in Asia are represented here,” he said.

Another economist, Shankaran Nambiar of the Malaysian Institute of Economic Research, said the pursuit of high-income status should not come at the expense of broader development that would benefit quality of life.

“Being a high-income country is not an end in itself. There are questions of well-being, a flourishing of capabilities, high standards of governance, and the accomplishment of a sense of freedom that the people of Malaysia have to experience.

“Freedom as expressed by the ability to live a life one chooses is perhaps the most important goal that the country should strive for,” he said.

Weerasena agreed on the importance of looking “beyond the numbers” and viewing the concept of development from a variety of angles.

“If Malaysia becomes a high-income nation while pockets of society are suffering in hardcore poverty and alienated from inclusive growth, this achievement will be rather superficial,” he said.

“Hence, in becoming a high-income country, Malaysia should transition towards better social safety nets, especially for vulnerable groups, and promote economic well-being and social prosperity for all by actively eradicating poverty.”

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