Stable Govt For nation’s GROWTH
The necessity for an efficient, experienced and stable government cannot be underestimated for malaysia to meet economic challenges
THE Wawasan Kemakmuran Bersama 2030 (WKB 2030), or Shared Prosperity Vision 2030, blueprint brings new hope for Keluarga Malaysia, because of its vision to ensure that the rakyat and the nation enjoy shared prosperity.
WKB 2030 states that a harmonious society – free from suspicion and prejudice – that celebrates the diversity of races and cultures is fundamental to unity.
Malaysia, therefore, is adopting a new approach to strengthen its economic performance. Initiatives were introduced to build a prosperous nation with sustainable economic development – equitably distributed across all income groups, ethnicities, regions and supply chains.
To achieve this noble desire, the government needs to be committed to mobilise all efforts towards making this vision a reality, says economist Prof Dr Muzafar Shah Habibullah.
This commitment has to be aligned with strengthening political stability, enhancing the nation’s prosperity and ensuring that the rakyat remain united while celebrating ethnic and cultural diversity as the foundation of Malaysia.
According to Prof Dr Muzafar Shah, during the WKB 2030 time frame, the 12th (2021-2025) and 13th (2026-2030) Malaysia Plans will be the basic policy documents used to catalyse the national economy towards the goals in WKB 2030.
“This acceleration is vital because Malaysia’s economy has already deviated far from its target due to political instability after GE14, which was then worsened by the health crisis caused by the Covid-19 pandemic and the economic crisis emerging from the escalating cost of living in 2020 and 2021,” he says.
The economist adds that the country’s annual budget must support the policy goals of the 12th Malaysia Plan and beyond, in order to achieve the goals of WKB 2030.
“Therefore, Budget 2023 will be hugely important when it comes to boosting and shifting the national economy to the original target quickly and accurately.
“This is because Malaysia only has three more years to achieve the goals contained in the 12th Malaysia Plan,” he says.
Malaysians must come to understand that political stability is very important if society wants to enjoy a comfortable life and a better standard of living, at least on par with life before the Covid-19 pandemic, says Prof Dr Muzafar Shah.
“Studies clearly indicate that political stability can lead to higher economic growth,” he says.
Apart from that, an effective government can also elevate the economy’s level of growth.
Prof Dr Muzafar Shah asserts that a 1% increase in political stability can increase economic growth by 0.25%, whereas a 1% increase in government effectiveness can raise the country’s economic growth by 0.61%.
Gross domestic product (GDP) growth forecast in the 12th Malaysia Plan is an average of 5% per year (4.5%-5.5% for the 12th Malaysia Plan period 2021-2025), while the World Bank’s forecast for the 20222025 period is 5.61% for 2022 and a slower rate of growth in 2023-2025.
Meanwhile, Budget 2023 projection of GDP for 2022 is as much as 6.5%-7.0%.
“To achieve the 6.5% growth forecast for 2022, the ruling government must be able, dedicated and experienced to drive the country’s economy to that level of growth,” Prof Dr Muzafar Shah expounds.
“The effectiveness of government and political stability that has been built and nurtured for the last 60 years will allow an experienced government to achieve a high rate of growth, lower unemployment rates, control and stabilise the inflation rate and raise wages and salaries.”
On top of this, indicators show that the unemployment rate is targeted at 4% in 2025 and this means that in 2022 the unemployment rate will drop compared to last year.
Prof Dr Muzafar Shah concludes that an efficient, experienced and stable government with effective policies in place can maintain inflation at an average of 2.7%.
And policies which support the labour market will also be able to raise average wages and salaries of workers between now and 2025.
Dr Muzafar Shah Habibullah is a professor at the Putra Business School and a senior economist at the EIS-UPMCS Centre for Future Labour Market Studies (EU-ERA). He holds a PHD in Economics from the University of Southampton, and is formerly head of Economics Department and deputy dean of Research and Innovation at the Faculty of Economics and Management, Universiti Putra Malaysia.