Malaysia should calibrate long-term economic plans, says MARC

The new plan should focus on more relevant and consolidated targets, and ways to achieve them


MALAYSIA should recalibrate the country’s economic plans and focus on more relevant and consolidated targets amid the Covid-19 pandemic.

Malaysian Rating Corp Bhd (MARC) head of economic research Firdaos Rosli said the government have based the previous long-term plans on targets and goals, and not the course of actions to achieve them.

“In the past, as far as the longterm plans are concerned, we have been giving the hope of things would change, but in reality, we have not met those targets and we keep kicking the can down the road, hoping it will happen in the future.

“If we kick the can too many times, people will question your targets. Thus, we should have fewer targets as things are changing as we speak,” he said during the media briefing session on Shared Prosperity Vision (SPV) 2030, 12th Malaysia Plan (12MP) and transitional growth on Monday.

He added that given the current economic circumstances, Malaysia’s SPV 2030, which was introduced in 2019, requires a “major overhaul” and response to the current economic climate.

“The policy focus should be about what the government intends o do rather than what it intends to achieve.

Assuming that SPV 2030’s tacit aspiration is to achieve greater convergence between the Malaysian economy and other high-income economies, another round of transitional growth is a must.

“The real challenge here is to recreate conditions similar to those during the preceding decade to the Asian financial crisis, for example, by reopening and realigning the Malaysian economy to high-income economies, undertaking massive infrastructure investment and having a more commanding parliamentary majority,” he said.

Firdaos added that economic crises have shifted the relevance of long-term plans due to the growth model not being designed to deepen economic integration with the global economy.

“Malaysia’s economic growth model is still based on 1971’s New Economic Policy (NEP). While we acknowledge that the NEP was certainly relevant back then, it may not necessarily be so today.

“Despite numerous national economic long-term plans, the economic convergence between the Malaysian economy and high-income economies, with the US economy as a proxy, gets more complex and wider over time,” he said.

Commenting on the 12MP, which is still in development, Firdaos said the government should not delay in unveiling the plan as it will be the yardstick for the future’s investment strategies.

“I think investors may want to see what the government has in store for in the next five years, that would give some kind of flavour about what is coming and if that is delayed, then the investment decision will be impacted as well.

“If other countries, such as regional competitors, are able to come up with their own version of long-term plans, then we would have to second guess what they are thinking.

“I think we cannot look at the pandemic and long-term growth plans as mutually exclusive. The problem is that the plan has been drafted three years ago and with the current situation, we are still drafting the same thing,” he said.

With regards to the volatile economic situation, Malaysia’s longterm plan has to be adaptable to economic development and present different means for the country to achieve its targets.

“The circumstances have changed and we could no longer be ambitious with our plan. The future cannot wait and if the projection says we will be an ageing society in 2030 and the pandemic will only speed things up.

“In the past, we had 10 to 20 goals and it was difficult to achieve them all. We crafted these plans with the idea of having different constituencies of targets, but the problem is that we cannot run away from the fact they will go against each other. We should look deeper into how we develop our development plans,” he said.