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Three focus areas highlighted in the Mid-Term Review of the 12th Malaysia Plan

Three focus areas highlighted in the Mid-Term Review of the 12th Malaysia Plan

Driving these focus areas are 12 'affirmations', including improving available future talent, closing the country's inequality gap, and more.

Prime Minister of Malaysia Anwar Ibrahim has shared details on the Mid-Term Review of the 12th Malaysia Plan.

Initially approved in Parliament on 21 October 2021, the 12th Malaysia Plan, 2021-2025 (RMK12) surrounds three themes, four policy catalysts and 14 drivers of change. At the time, GDP contracted by 5.5% in 2020 but began to recover by recording growth of 3.3% in 2021.

RMK12 allocates RM400bn to finance extension and new development projects for a period of five years. For the first two years of RMK12, from 2021 to 2022, the actual expenditure performance was 34%. In 2021, the total development expenditure only recorded as much as RM64.3bn — in 2022 the amount was RM71.6bn.

During the first two years, the country recorded an average GDP growth of 5.9% per year from the previous base which was very low. A total of 31% of the 175 targets set have been achieved, and 59% are on schedule.

In the Mid-Term Review of the 12th Malaysia Plan (KSP RMK12), PM Anwar stated: "Our country is at a crossroads; either maintaining the old policies and methods or implementing islah (change). These changes should include a framework for improving governance, making policy shifts, and introducing new methods and approaches according to current demands."

As such, RMK12 will be re-aligned with the vision of the MADANI Economy, which aims to empower and boost the national economy for a period of ten years.

The Half-Term Review of the 12th Malaysia Plan (hereafter referred to as KSP RMK12) does not follow the usual approach to evaluating the implementation of RMK12 but rather covers new policies and methods to face current challenges. The RMK that was launched in 2021 began to be implemented with the aim of "prosperous, inclusive, sustainable". While the idea in KSP RMK12 aligns with "civilised Malaysia: Sustainable, prosperous and high income".

As PM Anwar shared, the government is committed to spending at least RM90bn per year between 2023 to 2025.

This means, the Government will fully spend the RM400bn allocation under RMK12, and even increase the ceiling by another RM15bn, making the total amount RM415bn. This increase is to increase the need to finance the people's priority areas in addition to improving the quality of management and retargeting subsidies to meet the basic needs of the people.

PM Anwar affirmed that the new shift begins by eliminating extreme poverty, solving basic infrastructure problems and people's basic needs, including improving poor schools and clinics, guaranteeing clean water supply, amongst others. 

Meanwhile, the KSP RMK12 will thoroughly revise policies, strategies and targets taking into account the development gap between the city, countryside and the countryside as well as the rich-poor gap that still exists, the swelling debt, the limited fiscal space and the slow transition of the economic structure.

Elaborating further, PM Anwar highlighted 12 affirmations that are the essence of KSP RMK12 and structured according to three main focuses. Excerpts are shared below.

Focus one: Towards high income countries

In order to boost Malaysia to become a high-income country in line with the goal of being an Asian economic leader, the Government is committed to implementing four affirmations:

Affirmation one: Speeding up economic growth

The government is targeting a jump in economic growth of at least 5% per year during RMK12 by focusing on two main things.

Firstly, by strengthening productivity by accelerating the transition to high-value industries and adopting advanced technology and enhancing skilled talent. In addition, the government will continue to work with the private sector and academics to improve aspects of national productivity.

Second, the government intends to make Malaysia a preferred destination for investors by strengthening competitiveness. The main step is to improve the business environment through the improvement of business rules including through the MyMudah unit.

Affirmation two: Accelerate the reform of the economic structure

The government will strengthen sectors and industries with high growth and high value (high-growth high value, HGHV) covering five areas.

Affirmation three: Driving the competitiveness of strategic sectors and industries

The New Industrial Master Plan 2030 (NIMP 2030) is an industrial policy framework that targets the entry of high-value investments for the country such as aerospace, electricity and electronics, automotive, chemical and pharmaceutical. NIMP 2030 targets as many as 3.3mn new job opportunities for the people with an intermediate salary as high as RM4,510 per month at the end of its implementation period.

As a complement to NIMP 2030, in an effort to transform and drive the competitiveness of strategic sectors and industries, the Government focuses on eight industry segments:

  1. Malaysia as a leader in the international halal market.
  2. Global services have been identified as a strategic industry.
  3. Lately, cracks in the international financial framework are increasingly visible.
  4. The aerospace industry.
  5. Creative industry development.
  6. Tourism industry.
  7. There are still many businesses that have not fully recovered after the COVID-19 pandemic, especially micro enterprises.
  8. The government will emphasise the development of sustainable and resilient transport and logistics infrastructure.

Affirmation four: Increasing the economic potential of the region

A more balanced and inclusive regional development is also an ideal of MADANI Economy. Efforts will be enhanced to optimise the economic potential of the region based on four main points.

First: The economic potential of the region will be enhanced based on local strength.

Second: In an effort to strengthen security and benefit from the potential of cross-border economic development, the Government has approved an allocation of RM1.1bnfor the period 2023 to 2025.

Third: The government is determined to close the income gap ratio between rural and urban areas, from 0.57 in 2022 to 0.67 in 2025.

Fourth: The development of the Sabah and Sarawak regions will continue to be focused on. The government is proving its commitment to address issues arising from the Malaysia Agreement 1963 (MA63).

Focus two: Building a prosperous society

PM Anwar stated: "People's progress should not be measured by economic growth alone, but rather should take into account aspects of wellbeing as a whole. "

With that in mind, the second focus is to improve the standard of living of the people — the government is concentrating its efforts in four affirmations:

Affirmation five: Closing the inequality gap

The well-being of the people is the main goal of the Government and will continue to be fought for along with efforts to boost economic performance. Five main points in efforts to bridge the inequality gap have been identified.

Affirmation six: Improving welfare and cultivating civil society

Malaysia's policies will not only focus on economic aspects and people's income, but also includes a more comprehensive aspect of well-being to raise the status and dignity of the people, and this includes aspects of spirituality, health, housing, social cohesion and community empowerment, summarized in six aspects.

 

Affirmation seven: Improving available future talent

Efforts will be intensified to restructure the labor market and strengthen the education system to provide future available talent. Future talent availability key shifts will be implemented in relation to wages, the foreign worker levy and ongoing skills. The focus is on seven main points.

First: Skill mismatches, low wage levels and slow productivity growth were identified as key issues hindering Malaysia's ability to transition to a high-income economy.

Second: To ensure employment opportunities for local citizens and the transition to automation and mechanization, the policy of foreign workers not exceeding 15% of the total workforce will continue.

Third: The government will intensify efforts to ensure that the female workforce participation rate reaches the target of 60% within 10 years.

Fourth: The empowerment of people with disabilities (OKU) in increasing access to employment will be emphasised.

Fifth: The government is committed to improving the country's education system in order to produce talent available in the future

Sixth: The Government is committed to empowering Technical and Vocational Education and Training (TVET).

Seventh: Efforts to strengthen the culture of the community and the development of MADANI human capital through the application of the concept of insaniah among the community will be expanded.

Affirmation eight: Strengthening national security and defense

The security and sovereignty of the country will continue to be defended to guarantee the security and well-being of the people and the country. The government will focus on three main factos to strengthen the national fortress.

Focus three: Strengthening sustainability and governance

In an effort to raise the country's dignity, the Government is committed to strengthening the country's sustainability and governance to restore confidence through four affirmations:

Affirmation nine: Accelerate the transition to a future-proof economy

Malaysia is working to ensure zero greenhouse gas emissions by as early as 2050 to reduce the negative impact of climate change. In this context, emphasis is placed on the need to support the principle of a just transition towards a green, fair, and inclusive economy. 

Affirmation 10: Improving fiscal sustainability

Fiscal reform is needed to ensure the country's financial management is more effective and sustainable. PM Anwar noted that the government bears full responsibility to re-strengthen fiscal sustainability through major shifts in fiscal sustainability and the financial system. 

Affirmation 11: Improving the efficiency of public service delivery

PM Anwar acknowledged the importance of the public service in ensuring government-level projects runs smoothly.

All the soft visions and directions that outlined in NIMP 2030, NETR, and MADANI economy "will not be able to be translated if the public service is still at a notch or at an old level," PM Anwar highlighted. Therefore, improvement of the efficiency of delivery, while resolving issues involving governance and coordination immediately, is a key focus.

Affirmation 12: Improve implementation and monitoring efficiency

Together with members of the Cabinet, the government will monitor the implementation of RMK12 projects to avoid any delays as much as possible. A plan for monitoring the implementation of KSP RMK12 policy will be provided as a guide to each ministry and agency, and part of the RMK12 KSP target is made into each ministry's KPI.

A special Monitoring Committee KSP RMK12 will be established for this.


Lead image / Shutterstock  

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