KUALA LUMPUR: Malaysia’s long-standing practice of formulating five-year development plans remains a strength, but continuous annual reviews are just as crucial, said Malaysian Institute of Economic Research (MIER).
Its chairman Tan Sri Mohd Effendi Norwawi said only through annual reviews can the plans remain relevant and be implemented with real impact.
Mohd Effendi described the blueprints as “very comprehensive” and widely respected, noting they are recognised by leading consultancies such as McKinsey and Boston Consulting Group.
However, he cautioned that without consistent monitoring and follow-through, even the best-designed plans risk falling short of their goals.
“There’s been some debate, should it still be a five-year plan? Because things change so much,” he said at MIER’s Brown Bag Talk titled ‘The Thirteenth Malaysia Plan (13MP): Policy Empowerment to Sustain Economic Growth’ today.
“That is why the annual review is important. Clear key performance indicators (KPIs) for the implementing agencies are also critical,” he added.
Effendi recalled earlier efforts to establish project management offices in ministries to ensure timely delivery of initiatives.
MOBILISING THE PRIVATE SECTOR
He emphasised the need to mobilise the private sector to drive growth in key industries, saying businesses are generally eager to pursue new opportunities.
Clear government direction on priority sectors, investment clusters and available incentives would help attract greater participation, he added.
“With facilitation, support and incentives clearly defined, the private sector is more inclined to step in. Hence, it is crucial to rally industry players behind government programmes,” Effendi said.
FISCAL DISCIPLINE AND INVESTOR SENTIMENT
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the importance of policy clarity and consistency in attracting investors, particularly as Malaysia pursues fiscal consolidation.
In the first half of the year, government revenue grew 6.1 per cent, supported by stronger services tax collections and diesel subsidy rationalisation.
Afzanizam said this helped reduce the fiscal deficit to RM40.4 billion, or 4.2 per cent of gross domestic product, compared with RM51.5 billion or 5.5 per cent a year earlier.
He added that the government’s 3.8 per cent deficit target is achievable if growth holds steady.
While fixed income investors have reacted positively, he noted that foreign holdings in equities continue to shrink, with RM16.4 billion in net outflows during the first eight months of the year.
“This shows investors want to see more evidence of outcomes.
“Fixed income markets look positive on our fiscal efforts, but equities are not convinced about earnings prospects and the trickle-down impact,” he said.
ECONOMIC STRUCTURAL CHALLENGES
Afzanizam also pointed to structural issues in the economy, where consumer prices remain high despite subsidies, wages have not kept pace with inflation, and underemployment remains elevated.
He said the rate of unionised workers has dropped to 6.2 per cent, while house prices continue to rise faster than salaries.
He gave the example of housing, where some government-linked companies choose to pay penalties instead of meeting affordable housing quotas, and then sell the units at full market prices.
This shows a gap between commercial aims and national housing goals, he said.
On trade, Afzanizam said Malaysia is still heavily reliant on commodities such as palm oil and liquefied natural gas, while sectors like agriculture and pharmaceuticals continue to record deficits.
He said more investment and technology adoption are needed, citing local firm Aerodyne, which uses drones to help farmers improve yields.
UNLOCKING THE THIRD SECTOR AND TALENT
He also called for stronger development of the third sector, made up of cooperatives and non-governmental organisations (NGOs), which can complement both the government and private industry.
Economy Ministry secretary-general Datuk Nor Azmie Diron shared similar views, saying the third sector, though not new, has untapped potential to support both economic growth and social development.
He said the need to strengthen and expand its role by providing more support, resources, and incentives, so that cooperatives and NGOs can play a bigger role.
Nor Azmie also said the government is confident that inflation will remain contained at between two and three per cent over the next six to 12 months despite subsidy rationalisation.
He noted that subsidies would continue to be targeted to ensure support goes to the right groups without pushing prices broadly higher.
On talent development, he said technical and vocational education programmes continue to attract strong demand due to promotions, internships and job opportunities that offer good salaries.
He said that the key priority is ensuring graduates have employment opportunities after training, so that the skills developed are not wasted.
