‘Twin crises impede long-term planning’

The health and economic crises brought about by the Covid-19 pandemic and external shocks have impeded Malaysia’s long-term development planning and its future growth, said economists.

Malaysian Rating Corp Bhd (MARC) senior economist and research head Firdaos Rosli said the “here-and-now” crisis-mode policymaking will drain the resources required to achieve longterm goals.

He said external shocks have forced policymakers to be inward-looking, thus neglecting the policies required to achieve planned targets.

“External shocks have put the Malaysian economy on a perpetual catch-up mode with advanced economies. The competition gets more intense when regional competitors are also pushing for speedier growth,” he told the New Straits Times.

In a recent report on the Shared Prosperity Vision 2030 (SPV 2030), the 12th Malaysia Plan and transitional growth, MARC highlighted the economic crises that had dented the economy despite progressive reforms over the past decade.

The past decade has seen a good number of policy reforms but they either got backtracked by the ruling administration or are weakened by the impact of the Covid-19 pandemic.

The report said the government faces a hard choice of undertaking drastic short-term stabilisation measures to contain the economic fallout.

“I believe the long-term impact will be significant if our development ideology remains the same,” he said.

Sunway University Business School economics Professor Dr Yeah Kim Leng said the twin public health and economic crises are among the factors cited for the delay in the 12th Malaysia Plan.

He said the pandemic has necessitated a major reformulation of the eagerly awaited mediumterm plan, while noting that the delay could also be explained by the unexpected change of government last year.

“The new administration is expected to include its development aspirations and set the direction of the economy from 2021 to 2025,” he told NST.

There are various medium to long-term sectoral plans and roadmaps, such as the Malaysia Digital Economy Blueprint 20202030, Third Industrial Master Plan 2006-2020 and Malaysia Education Blueprint 2012-2025.

While the short-term focus is on relief, resuscitation and recovery, Yeah said the medium to long-term planning’s focus on structural transformation is critical for ensuring good quality, stable and sustainable growth.

“Growth must be inclusive, socially and environmentally sustainable, balanced and equitable.

“It should also be driven by productivity, and innovation rather than input-driven are some of the important structural characteristics of growth to be considered in the planning process,” he added.

Moving on, Firdaos said longterm goals should be a moving target (the carrot) but short-term planning and execution are more important (the stick).

“Static and rigid long-term goals are impractical today. In fact, it is a recipe for failure. The way we conduct mid-term reviews are merely cosmetic and they are not a prelude to realigning the country with the new realities,” he cautioned.

He said near-term planning would be more economically sensible and pragmatic.