While Malaysia’s economic performance has been very successful, public policy has more potential to address social and governance challenges while making growth stronger, greener and more inclusive, recent news article noted.
The article cited the latest report from OECD, entitled the Economic Survey of Malaysia. The report discusses how boosting productivity and implementing new structural reforms can help Malaysia move up global value chains and reach its goal of achieving high-income country status by 2024.
The survey projects the economy will remain resilient, with growth just under 5% this year and next, but cautions that trade tensions, geopolitical uncertainties and weaker advanced economies are downside risks.
The Survey, presented in Putrajaya by the organisation’s Deputy Secretary-General and Malaysia’s Deputy Finance Minister, discusses the need to make public finances more sustainable, improve skills acquisition for all, strengthen integrity and boost productivity.
It was noted that while the Malaysian economy is performing well, the march toward high-income status will require further reforms. The current aims for policymakers are boosting growth as well as improving the quality of growth. That will mean ensuring greater environmental protection and creating the conditions for the development of a more innovative and dynamic economy that promotes higher living standards for all.
To ensure sustainability of public finances, Malaysia will need to reform its fiscal policy, the Survey stated. This must include increasing the currently low level of tax revenue, notably by eliminating numerous tax exemptions, but also through improving the efficiency of the tax system, broadening tax bases and increasing indirect tax revenue, in particular, consumption-related taxes to reduce reliance on oil-related revenues. Strengthening fiscal accountability and improving budget process transparency and public debt management will also be necessary.
The Survey also underlines the need to further enhance integrity across the public sector. This could include ensuring greater transparency and more competition in public procurement processes, better accountability in the governance of state-owned enterprises, stronger regulatory frameworks for public-private partnerships and enhanced anti-corruption measures.
Malaysia faces substantial labour market imbalances and shortages of workers across the skills spectrum, with further difficulties expected under the impulse of automation and population ageing.
Greater investment in education and training will be required to prepare the country for the future of work and help it move up the value chain. Adults need better access to up-skilling and re-skilling opportunities to ensure that their skills remain relevant, the Survey said.
Technological adoption is critical to boosting productivity and transition to a high-income economy. Efforts should continue to attract foreign direct investment, promote entrepreneurship and uptake of new technology.
To make growth greener, the Survey says Malaysia can eliminate energy subsidies, in favour of targeted cash transfers. It also highlights the positive impacts of greater coordination of environmental policy at the sub-national level and points out the opportunity for greater use of environmental taxation, notably a carbon tax.
Another recent report noted that industry experts state that SMEs must integrate technology into all aspects of their businesses for sustained growth.
The Chief Business Officer of Malaysia’s largest network was a panellist at the SOBA LAB’s Engine of the Growth panel discussion. He stated that a common hurdle is a mindset that technology adoption is costly, or that it is not the right time due to current market conditions.
While companies understand the importance of technology in their businesses, smaller companies might not know where to begin.
SMEs should break down the complexities around digitisation by looking into what they want to achieve and implement small projects to pave the way for further technology adoption.
Hence, businesses and agencies at all levels, and in both the public and private sectors, must work to employ technology more widely and pervasively in their processes.
