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NEAC National Economic Advisory Council. New Economic Model for Malaysia NEAC. Section I. Issues and Challenges. www.neac.gov.my. e. We Have Been in the Middle Income Trap for Quite Some Time History shows the need of a compelling reason to change is required to escape. GNI Per Capita

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NEAC National Economic Advisory Council

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Neac national economic advisory council

NEACNational Economic Advisory Council

New Economic Model for Malaysia

NEAC


Section i

Section I

Issues and Challenges

www.neac.gov.my


Neac national economic advisory council

e

We Have Been in the Middle Income Trap for Quite Some TimeHistory shows the need of a compelling reason to change is required to escape

GNI Per Capita

1990 - 2008; USD thousand

(USD thousand)

Korea

22

Slovakia

20

Czech Rep

18

16

14

Poland

HIGH INCOME

BOUNDARY

12

10

Chile

8

Argentina

Malaysia

6

4

Thailand

2

Indonesia

0

Source : World Bank, NEAC Analysis

www.neac.gov.my


Neac national economic advisory council

Malaysia’s Growth Trajectory Has Diverged Lower

Slower growth means our aspirations will take longer to achieve all things being constant

Pre-Crisis growth gradient

Divergence

Post-Crisis growth gradient

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Neac national economic advisory council

n

Post Asian Crisis, Our Growth Rate Has Been MediocreWe are no longer a clear leader in the region having lost our shine

Average annual GDP growth

Pre-crisis

1990-1997; %

Post-crisis

2000-2008; %

China

China

Malaysia

Vietnam

Singapore

India

Vietnam

Malaysia

S. Korea

Singapore

Taiwan

Indonesia

Indonesia

Philippines

Our growth rate is now equivalent to that of our neighbouring countries

Thailand

S. Korea

India

Thailand

Philippines

Taiwan

US

UK

UK

US

Japan

Japan

Average 6.0

Average 5.0

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Neac national economic advisory council

Lacklustre Demand-Side Performance Indicators

Given the state of today, private investment is key

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Neac national economic advisory council

t

Not Investment But Consumption Has Been Driving GrowthThe private sector has taken a backseat with the government filling in the vacuum

Private & Public investment as share of GDP

1989-2008;%

Average annual growth

1991-2006; %

Pre-crisis

1991-1997

Post-crisis

2000-2006

Private consumption

Government expenditure

Investment

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Specific areas of weakness are preventing us from moving forward fundamental reform is long overdue

Specific areas of weakness are preventing us from moving forward- fundamental reform is long overdue

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Neac national economic advisory council

Amidst Global Changes, Our Advantages are Being UnderminedWe must act before our position deteriorates further

Intense competition in our new sources of growth e.g. medical tourism, ICT, and Islamic products and services

Our strong position in commodities and manufacturing is being eroded

Our immediate neighbours have renewed vigour evidenced by growth rates; reforms are well being implemented

Global investment is focusing on larger scale markets, not small economies

Lack of talent and innovation, ineffective institutions and widespread corruption are barriers to growth

In the region, our economy was one of the hardest hit by the recent global crisis

WE CANNOT CONTINUE AS WE ARE

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Section ii

Section II

The New Economic Model

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Neac national economic advisory council

The Prime Minister’s Vision - Transforming MalaysiaThe Two Pillars of the National Transformation Programme

1Malaysia – People First, Performance Now

Preservation and Enhancement of Unity in Diversity

High

Income

Economic Transformation Programme (ETP)

New Economic Model

A High Income, Inclusive

And Sustainable Nation

Government

Transformation

Plan (GTP)

Effective Delivery of

Government Services

Inclusiveness

Sustainabiliy

10th & 11th Malaysia Plan Roll-Out

Macroeconomic growth targets & expenditure allocation

Implementation of Government’s Development Programmes

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The new economic model nem aspirations of a united and advanced nation the goals to be achieved

The New Economic Model (NEM) Aspirations of a united and advanced nation – The Goals to be Achieved

HIGH INCOME

Targets

US$15,000 - $20,000

per capita by 2020

Rakyat

Quality of Life

Enables all communities to fully benefit from the wealth of the country

Meets present needs without compromising future generations

SUSTAINABILITY

Inclusiveness

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The goals

The Goals


Section iii

Section III

The Economic Transformation Programme (ETP)

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Neac national economic advisory council

The Economic Transformation Programme (ETP)

The reforms required to escape the middle income trap

Enabling Actions

Strategic Reform Initiatives

Outcomes

Coherent “big push” to boost transformation and growth

  • Re-energising the Private Sector

  • Developing Quality Workforce and Reducing Dependency on Foreign Labour

  • Creating a Competitive Domestic Economy

  • Strengthening of the Public Sector

  • Transparent and Market friendly Affirmative Action

  • Building the knowledge base infrastructure

  • Enhancing the Sources of Growth

  • Ensuring Sustainability of Growth

Break logjam of vested interests through political will and leadership

High

Income

Middle Income Trap

Prepare Rakyat for change

Sustain-

ability

Inclusive-

ness

Risk

Downward

Spiral

Feedback: Review, Revise

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Neac national economic advisory council

Economic Transformation Requires Tough Decisions and Bold MeasuresHow far are we willing to go in the reforms?

THERE MUST BE A CHANGE IN MINDSET AND POLITICAL WILL

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Eight 8 strategic reform initiatives sris all sris have cross cutting impact over all sectors

Eight (8) Strategic Reform Initiatives (SRIs)All SRIs have cross-cutting impact over all sectors

1

8

2

7

3

4

6

5

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Re energising the private sector

Re-energising the private sector

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Developing a quality workforce and reducing dependency on foreign labour

Developing a quality workforce and reducing dependency on foreign labour

www.neac.gov.my


Creating a competitive domestic economy

Creating a competitive domestic economy

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Strengthening the public sector

Strengthening the public sector

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Transparent and market friendly affirmative action

Transparent and market-friendly affirmative action

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Building the knowledge base and infrastructure

Building the knowledge base and infrastructure

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Enhancing the sources of growth

Enhancing the sources of growth

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Neac national economic advisory council

www.neac.gov.my


Ensuring sustainability of growth

Ensuring sustainability of growth

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Section iv

Section IV

What’s next from the NEAC?

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Neac national economic advisory council

NEAC Part 2 : Policy Measures and Implementation FrameworkParticipation of stakeholders to ensure ownership and buy-in on detailed actions

NEAC Part 2: Policy Measures and Implementation Framework Planning

Current Reform Initiatives already announced: Light the Fuse for Momentum

Roll-out ETP policy measures

NEAC Continuous Engagement of Ministries and Stakeholders

Public

Consultation

NEAC Task Forces on SRIs for Policy Measures

And Implementation Framework Planning

NEAC input for 10th MP

Endorsement of

ETP Implementation

Plan

10th Malaysia Plan

Launch

NEM

Launch by

Prime Minister

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Neac national economic advisory council

Economic Transformation Programme (ETP)

New Economic Model

(NEM)

HIGH INCOME

Targets

USD15,000 - USD20,000

per capita by 2020

8

1

7

Rakyat

Quality of Life

2

Meets

present needs without compromising future generations

6

Enables all communities to fully benefit from the wealth of the country

3

5

4

SUSTAINABILITY

Inclusiveness

End

National Economic Advisory Council

www.neac.gov.my


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