Forward-looking adjustments enable Malaysia to address unpredictability, says economist

KUALA LUMPUR: Malaysia’s ability to face up to unpredictability lies in pursuing forward-looking adjustments that ensure sound macroeconomic management, market openness and liberalisation.

United Overseas Bank (Malaysia) Bhd ( UOB) Economist, Julia Goh, said the country’s ability also hinged on the drive on new opportunities for growth, focus on innovation and technology, greater transparency and governance, fiscal and debt sustainability, human capital development, economic inclusion and social cohesion.

“This is because the external environment posed increasing challenges in the form of global policy uncertainty, protectionist sentiment and geopolitical threats. Malaysia has entered its next growth frontier underpinned by a new economic model that leverages its core strengths – diversified economic structure, good infrastructure, supportive financial system, positive demographics, social and political stability, and strong geographic ties in the region,” she said in a research note titled ‘ Malaysia: Turning 60 – Then And Now.’

According to UOB, Malaysia’s economy had evolved from a low-income agriculture based economy with Gross National Income (GNI) per capita of US$ 240 in 1962 to an upper middle-income manufacturing and services driven economy with US$ 9,850 GNI per capita in 2016.

Much of the nation’s early transformation were attributed to strategic vision, bold policy decisions, and ability to mobilise support from both public and private sectors, and these involved experimental economic policy making and industrial promotion.

Malaysia’s transformative years since independence were defined in four phases of growth, it said.

In the first phase of growth from 1957 to 1970, the country’s mainstays were rubber and tin production as well as entrepôt trade centred in Penang and Melaka.

Businesses were small- scale, localised, and predominantly family-based.

Given the volatility of commodity prices, there was a strategic focus to diversify production and incomes away from tin and rubber.

This paved the way for early diversification within agriculture (from rubber into oil palm and other crops) and diversification away from primary into secondary industries particularly manufacturing. — Bernama