Malaysia is on its mark of traveling out from the middle-income trap, peculiarly due to the policy reformation declared by Prime Minister Datuk Seri Najib Razak. One of the aims of New Economic Model ( NEM ) is to transform Malayan economic system to go high incomes state by 2020. When NEM is declared in 2010, income per capita at the clip stood at RM23,000, which is about US $ 7000, hence NEM is aiming at more than double the figure to RM49500, which is about US $ 15000.[ 1 ]
The chief end of NEM is to speed up the economic growing by bettering the productiveness of worker in all sectors. NEM besides aims to authorise the private sector and to take down financial disparity among the richest and the poorest of Malaysians society. NEM is intended to replace the New Economic Policy which had been implemented for the past 40 old ages.
The pro-chancellor of University Tun Abdul Razak, Tan Sri Andrew Sheng Len Tao, said that Malaysia need to acquire out from in-between income trap in order to be competitory on planetary graduated table. He added that strong enterprisers and strong administration are the of import elements for Malaysia to accomplish this end. He gave illustrations of Japan, Korea, Taiwan and Hong Kong, which were non resource rich states but these states could develop strong enterprisers who have succeeded by tapping planetary markets.
Besides, Sheng said, Malaysia has to concentrate on growing of productiveness and private sector and necessitate to retain and pull skilled work force and endowments from all walks of life. If we were to vie internationally, we have to do amendment to the manner we compete and the manner we cooperate. Malaysia has advantage with its geographical location, biological and cultural diverseness.[ 2 ]
There are several properties that Malaysia should hold to be able to accomplish its mark of going high income state.
Generate a cognition and innovation-based economic system
Harmonizing to OECD, cognition economic system is an economic system which is straight based on the production, distribution and usage of cognition and information.[ 3 ]In a cognition and innovation-based economic system, all sectors of economic system comprises of high value-added economic system activity, where the usage of cognition, invention and high productiveness are the indispensable features of this economic system. Besides, cognition and innovation-based economic system is invariably introducing and has an enlargement of cognition industry which includes ICT, monolithic diffusion of personal computing machines, formal and informal educational and research Centre.
Malaysia has bing strong fabrication base, if the current bing industries moves up the value concatenation, it will surely convey Malaysia towards a higher value activity. Subsequently, houses will bit by bit trust on niche schemes, uninterrupted betterments, increasing edification every bit good as greater specialization. For case, the possible countries includes advanced electronics, medical equipment, downstream thenar oil and production of solar panel.
Furthermore, the development of knowledge-intensive services sub-sectors such as information and communicating engineering ( ICT ) , research and development ( R & A ; D ) , calculating, wellness and instruction. Undeniably, little and average endeavors ( SMEs ) are the anchor of Malayan economic system. SMEs play a important function due to its extremely competitory, advanced and dynamic characteristics which will acquire Malaysia out of the in-between income trap.
Make a competitory and private sector-led economic system
Basically, high income economic system is led by private sector in a competitory nature. There are several steps must be taken in order to back up and help the private sector. For case, updating concern ordinance, liberalizing the services sector, acquire rid of market deformation by rationalizing subsidies, suggesting competition statute law and upgrading the interface between authorities and concern.[ 4 ]
Competitive private sector will decidedly lend to the efficiency in resource allotment and besides the formation of vigorous and dynamism in economic activity. However, a strong and convincing institutional model is needed to be able to cover with the possible market failure and to make a just and competitory concern environment for all sectors.
Changing The Way Business Is Done
Up to now, the Malayan economic growing has come from large-scale physical capital investing, sustained human capital investing and the export of makers, natural resource based goods and crude oil merchandises. Merely increasing investing degrees and the measures of low skilled labor will no longer do to drive growing to a higher degree or traveling up the value concatenation. Growth must therefore semen from higher factor productiveness, nurtured by more advanced procedures every bit good as supported by private investing and endowment.
To hold the dynamism to force the state into a higher income economic system, there must be fresh ventures into new and emerging markets and merchandises and this must needfully be driven by the private sector. Hence, there is a demand for a passage from a state-led economic system to private-led economic system. For case, in order for our fabrication sector to travel up the concatenation value there must be competition. Competition through licensing, import liberalisation, more unfastened and just entry entree and a balanced attack to ordinance is needed for the services sector. The traditional Malayan growing mostly driven by Government Linked Companies ( GLC ) and public investing is no longer sufficient. Alternatively, the size of the GLCs and their presence may suppress enlargement of new houses.
Besides, the new manner of forcing economic development is to organize economic bunchs. The traditional manner of distributing economic growing geographically is no longer relevant. Alternatively, we have to larn from the experiences of the advanced states such as South Korea in organizing economic bunchs. By organizing bunchs, houses will happen the chance to join forces and vie in the same location. Not merely that, the competition between bunchs will finally take to competitory and advanced development corridors. Besides that, bunch of advanced houses provide a web of gifted people to exchange and portion thoughts that may turn into major hits.
Another manner of traveling the Malayan economic system into the higher value economic system would be to pull technologically capable houses. In the yesteryear, the pattern was to place specific victors in different Fieldss and industries. However, such a pattern must non be continued as it will merely take to non-competitiveness. The focal point, alternatively, should be on developing a supportive environment for advanced and risk-taking and providing houses the chances to develop higher valued merchandises for the market. In that sense, authorities intercession should be stopped or at least if truly ineluctable, should be left at the custodies of professionals and experts who are well-versed in the industries.
Government as the facilitator of economic growing
Government is playing an of import function on supplying a competitory to do certain that the environment is able for private sector to work expeditiously. Infrastructures such as public transit and modern internet-related substructure, security and basic societal
services such as wellness and instruction should be more accessible by society.[ 5 ]Besides, a complete and comprehensive engineering and invention policy will hike high value-add activity and cognition creative activity. In short, close association among public and private sectors is indispensable to accomplish farther economic growing.
Strengthen the relationship between corporate and public administration
As discussed, one of the grounds why Malaysia is still dawdling behind in footings of economic public presentation is weak administration. In order to vie with other states, there is a demand to beef up and reconstitute the manner the economic system is being regulated. Gone are the yearss where the society, the private sector and the cardinal participants of the economic system can be purely regulated. The deficiency of transparence and equity and the low criterions of answerability has hindered many, local companies and foreign alike, lending to a dead Malayan economic growing. In the Malayan context, there is a demand for a major inspection and repair of the political, economic and fiscal architecture to beef up execution, enforcement and bringing in a transparent and accountable mode. The traditional top-down administration is now no longer applicable. Alternatively, there is a demand for a stopping point and comfy relationship between the cardinal authorities and economic participants to hike the economic system. For private sectors to boom in free, unfastened and competitory markets, the populace sector has got to work on its strengths and nucleus competency. It is a must in advanced states for the public sectors to supply and keep first-class societal substructure, sound public security, effectual protection of belongings rights, carnival and efficient enforcement of Torahs. There must be an efficient bringing of societal services with the minimum degrees of corruptness and bureaucratism. The force per unit area is now to be more efficient, socially responsible, advanced and resilient. A lacklustre from any one of the of import participants will non be tolerable. Corporate and public administration must accommodate to the quickly altering environment due to competition, engineering and globalisation.
To be best in category, there is a demand to non merely run into but transcend planetary criterions of excellence and public presentation. And this can merely be done if all the relevant sectors have the same purposes and attempts to make so. Modern administration revolves around a extremely inter-connected web economic system. Not merely that, it besides means being able to trust chiefly on corporate actions, cooperation and coordination every bit good as competition among the different parts of the web. Any spreads, convergences and structural failings will merely take to inefficiency and the slow economic growing rate, if non the prostration of it.
Hence, the degree of administration in Malaysia must achieve that of planetary criterions. Based on World Bank administration indexs, Malaysia is good behind advanced economic states. Malaysia must therefore seek to be crystalline, accountable to citizens and stakeholders, strategically focused, agile, antiphonal and efficaciously connected internally and externally. In footings of connectivity, no sectors should be left out – be it the academe, the private sectors, the civil service, the society and the authorities.
Effective mechanism to measure and supervise public presentation
Most schemes and execution programs lack a proper mechanism of feedback to let for an honorable rating at the consequence of the alterations being made in phases. Often, when a policy is being implemented, there exists state of affairss where at that place needs to be an rating. And sometimes, there may be schemes which may non be to the full adopted and implemented as there are certain alterations in fortunes. As a consequence, there is a demand for a alteration of policies and at that place has to be farther be aftering involved. As such, if there is no proper channel to acquire feedbacks or no unit to measure the public presentation of the economic system, the economic system is bound to be dead. The New Economic Model is a long-awaited alteration which is much needed. Future growing policies must be invariably checked so as to avoid policy accommodations which may go ad hoc and unimplemented. If left unattended, these defunct policies will non merely non maneuver the economic system towards an uptrend but it will besides expeditiously waste the countryaa‚¬a„?s resources. Economic policies must be aligned harmonizing to altering worlds and remain every bit relevant as possible at in line with altering times.[ 6 ]
Get rid of subsidies and monetary value controls
Malaysia has been enforcing monetary value control since 1946 which is to avoid economic hardship at that clip after World War II. This policy has been held until today. Because of monetary value control, trade goods monetary value in Malaysia is much cheaper compared to those from other state.
Petrol subsidies, should be removed while extended information runs should be carried out to let automobilists to set to populating as the gasoline monetary values are set sing the universe petroleum monetary values. This has been practiced in many other states.[ 7 ]
Subsequently, the Government should do system of societal safety cyberspace more transparent by supplying public assistance aid to society who are in demand such as the handicapped, the aged, the unemployed and the hapless.
Implementing high pay policy
Government should present a similar high pay policy by necessitating vulnerable sectors, for case, agribusiness sector, labor-intensive fabrication sector, building and services sectors to hold sensible and appropriate minimal rewards.
Workers from the plantation companies should be paid higher rewards so that this could pull more people to work in plantation sector.
Employers would so hold to utilize more equipment in the new state of affairs, legion Numberss of Malaysian skilled labors who are working abroad can be tempted to come back to these higher accomplishment places, and this could raise the productiveness of Malayan economic system. Finally, this would pull our endowment back to our state and cut down the sum of encephalon drain.
Provide advanced inducements for hi-tech activities
Malaya has the traditional inducements in the signifier of innovator position and capital investing allowances are no longer appealing as it was. High-tech start-ups are in fact hazardous ventures which need big capital in order to be accessible to venture capital and authorities aid.[ 8 ]They are non able to busy in an working environment where limitations are placed harmonizing to equity ownerships. Most of them are anticipating for rapid decision-making by Malaysians in treating their applications.
Malaysians should be rapid, decisive and agile in our battle with hi-tech enterprisers. Advanced inducements should be introduced to pull them to put in our state. For illustrations, the offer of hard currency grants, research and development licenses to foreign companies to put up their bases here. The Government must besides be willing to allow work licenses and lasting occupant position to foreign skilled endowment such as scientists and besides extremely educated bookmans to pull them to work and populate in Malaysia.
Attract Malayan professionals and experts overseas to return
On the other manus, Government should truly make something to pull or lure our Malayan professionals who have migrated overseas to come back to Malaysia. Incentives and high rewards should be given harmonizing to their professions. Those who are interested to come back should be engaged and this battle should be handled carefully so that their single demands can be assessed and met. Normally, they meet job such as their household could non acquire citizenship and deficiency of R & A ; D grants, so all of these jobs should peculiarly be solved. The Government should take immediate action to guarantee that our professionals will return to their fatherland.