by NUR HAZIQAH A MALEK / pic by TMR FILE
Malaysian economy is projected to grow by 4/6% this year, although downside risks are elevated given its deep financial and trade integration with the global economy and unresolved trade tensions.
According to the 20th edition of the World Bank’s Malaysia Economic Monitor, heightened protectionist tendencies among major economies, drastic slowdown in larger economies and financial and commodity markets’ volatility pose as growth risks in the near future.
The World Bank report suggests reforms to mobilise public sector revenues to both diversify away from traditional yet unstable oil-related revenues as well as to support future public investment.
“Current plans to move towards a targeted fuel subsidy framework would bring savings that could be used to expand core social welfare programs,” it said.
The report further added that policy actions should target to enhance fiscal buffers and facilitate private investment, while securing adequate social protection for lower-income households, focusing on refreshing public service.
“In the medium term, bold reforms and measures are needed, particularly to boost human capital and to increase the level of public sector revenues,” it said.
Currently, the local public service performs well in regional standards, but falls short in relation to advanced economies especially in terms of openness and transparency, especially in its run to transition into a high-income nation.
“For the public service to fully realize its potential, Malaysia will need to invest in human resources management; to encourage and develop a more open, transparent environment; to undertake reforms to attract, manage and retain the best talent, and to embrace new and emerging trends, including those related to rapidly-evolving technological innovations and digitalization,” it said.
The nation’s revenue from personal income taxes and consumption taxes both fall below the average levels seen in other upper middle-income economies and high-income countries.
“Reforms to widen the tax base should be accompanied by measures to expand and improve the existing social protection system to boost resilience and protect the vulnerable,” it said.
Meanwhile, World Bank Brunei, Malaysia, Philippines and Thailand country director Mara Warwick said the government has prioritised good governance and integrity.
“We are very pleased to see that the government has prioritised ‘good governance’ and ‘integrity’ in its national development plans as they are critical enablers of the country’s transition to developed nation status in the next few years,” he said.