by NURUL SUHAIDI / pic by TMR FILE

MALAYSIA needs to reform the immediate policy action that focuses on poverty alleviation for each state as the country becomes a high-income nation by 2025.  

The World Bank’s latest report “Catching Up: Inclusive Recovery & Growth for Lagging States” revealed that Kedah, Perlis, Kelantan, Sabah and Sarawak have the lowest average income and highest incidences of poverty.

“Despite our mission to enable each part of Malaysia to be equally developed and as wealthy as the Klang Valley, the reality is that we have a long way to go,” Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed (picture) said at the Media Briefing and Launch of the Malaysia Economic Monitor June 2022 today.

He added that there are huge disparities that exist in our country, not only in wealth and income but also in education and access to infrastructure.

States such as Sabah, Kedah, Perlis, Kelantan and Sarawak have not experienced the same level of economic success and resilience compared to Malaysia as a whole and are characterised by relatively low income per capita and high poverty rates.

Among all, Sabah stands out among the lagging states, with its poverty rate being three times the national average and there is a high degree of inequality across districts.

The limited economic prosperity in lagging states is partly attributable to weak human capital development, lower economic growth rates, limited structural change, low productivity and climate investment, as well as lack of access to reliable infrastructure.

The latest report, which aims to give input for the government to formulate policies, suggests that to improve these states, an immediate policy action ought to focus on poverty alleviation in these states.

This is done by improving the targeting of, and increasing and enabling access to cash transfers.

The report further suggests that in the longer term, broadening access to quality education and skills training would raise the quality of human capital.

Meanwhile, improving the business environment in these states by bridging access to national markets will create better-paying jobs for the population, subsequently raising living standards.

“This will, in turn, ensure faster economic growth in those states and make them parts of the engines of national growth, placing Malaysia on the right track in the country’s efforts to ensure inclusive recovery and growth,” the report said.

The report also emphasised that Malaysia’s ongoing efforts to free up fiscal space would allow the government to channel more federal resources to localities and households in such areas.

World Bank country director for Brunei, Malaysia, the Philippines and Thailand Ndiame Diop said developmental challenges of populations in lagging states have to be accounted for when national-level policies are formulated.

 “This will also ease and ensure Malaysia’s ambition to reach high-income status in a way that is spatially inclusive,” he said.

He also noted that the launch of this report in Sabah is a testimony of the strong partnership and engagement with the state of Sabah and stakeholders in the development field.

In addition, Mustapa stated that under the 12th Malaysia Plan, which was tabled in October last year, the mission is to multiply the growth of less developed states and reduce the regional development gap.

“As such, priorities will be given to Kedah, Kelantan, Perlis, Sabah, Sarawak and Terengganu by allocating at least 50% of the government’s basic development expenditure, such as the construction of schools, hospitals and roads,” he added.

Meanwhile, Chief Minister of Sabah Datuk Seri Hajiji Noor said, while Sabah continues to face increasing poverty rate and high youth unemployment that were further exacerbated by the pandemic, the state remains resilient and is seeing signs of recovery.

He noted under the guidance of the state’s Hala Tuju Sabah Maju Jaya Development Plan, Sabah recorded RM5.4 billion in revenue in 2021, the highest on record.

“In the first half of 2021, Sabah attracted RM4.4 billion in foreign investment, the third-highest after Kedah and Selangor,” he added during a special address during the launch of the report today.

Hajiji believes that these key investments in manufacturing, tourism and agriculture are expected to create almost 10,000 jobs.

He anticipates the reopening of Malaysia to reinvigorate Sabah’s tourism sector and said the report’s finding is essential to revitalise the vast potential growth of the states toward shared prosperity.

This year, Bank Negara Malaysia has forecasted that Malaysia’s economy will grow between 5.3 % to 6.3 % with growth underpinned by stronger external demand and higher private and public expenditure.