Then, Now and Looking Ahead: The Economy Continues to Grow

Then, Now and Looking Ahead: The Economy Continues to Grow

Since April 3, 2009, when Datuk Seri Najib Razak took over as Prime Minister of Malaysia, there has been one issue at the forefront of the agenda – our economy.

Against a backdrop of a global financial crisis, Najib steadied and then steered Malaysia’s economy safely through the storm. Indeed despite a bumpy transition that saw a contraction in the economy, it has expanded every consecutive year, beating most of the world in fact.

This is no mean feat, particularly considering Malaysia falls well within the range at which many other countries slump into the so-called ‘middle income trap’.

Avoiding that trap and doing so by delivering on shrewd fiscal policy has been a major contributor to Najib’s success, ever since he was handed the keys to the country four years ago.

Now with a fresh mandate after GE13, that progress looks set to continue.

At the heart of these policies is his ambitious Economic Transformation Programme (ETP) that aims to boost annual per capita income to RM48,000, creating 3.3 million new jobs in the process.

The figures in the past four years prove Najib has been effective at the top. The average monthly household income rose from RM4,025 in 2009 to RM5,000 last year, enabling our purchasing power to rise almost two-fold that of the per capita income.

At the other end of the scale, poverty rates have continued their decline – down from more than 60 per cent pre-independence to 1.7 per cent in 2012.

At present, the economy is growing at 5.6 per cent (hitting a remarkable 6.4 per cent in the last quarter of 2012), the country’s foreign investment and exports have all hit record levels, and KL is now considered a global IPO powerhouse.

All this has taken place while the West faces stagnation and growing unemployment that is only now beginning to show signs of recovery, and China is suffering its own slowdown.

Barisan Nasional under Najib has delivered a ‘gravity-defying’ economy. Pakatan Rakyat have delivered fear and uncertainty.

Pakatan pledged to “halt operations” of the RM2.5 billion Lynas plant, the largest rare earths refinery in the world, instead of using it to create jobs in Malaysia and help the nation develop expertise in this technology. Datuk Seri Anwar Ibrahim was forced on his back foot over this during the elections, and suggested that perhaps the plant might stay. Or might not.

It was clear early on that a vote for Pakatan would be a vote for indecision and policy-making chaos – and contrasted with BN’s steady hand, the Government’s renewed mandate was unsurprising.

The next major milestone for the country and indeed the entire region will be the Asean Economic Community – something that the Prime Minister says will be viable by 2015, ready for when Malaysia takes up its chair of the organisation.

“I believe the journey towards AEC is well on course and is irreversible,” Najib said last month.

“Asean has come a long way with three more years to the realisation of the Asean Economic Community in 2015, when Malaysia will be the chair of Asean.”

The proposed single market and production base is designed to ensure the free flow of goods, services, investment, capital, and skilled labour.

This will be a major step forward for the trading bloc, with a population of 600 million people and a combined economy of $2 trillion that is expected to rocket to $10 trillion by 2030.

Beyond 2015 of course is Malaysia’s goal to become a fully developed economy by 2020. But even that is racing ahead of target, with the latest estimates now putting 2018 as the likely goal.

A large part of this final push will likely stem from some potentially hard medicine many Malaysians will be forced to swallow as we step up in the world.

Both subsidy rationalisation and a change in our tax structure are likely on the cards. Yet these things will only be painful for a brief while; the history of subsidy cuts the world over shows that short pain yields enormous growth in no time at all.

There are new global headwinds, and there may be a rough patch coming, but the policies Najib has championed, the transformation, the reform, have made Malaysia one of the few real world-beaters out there.