Propelling Malaysia Towards Becoming A High-Income, Developed Nation
The Economic Transformation Programme (ETP) is a comprehensive effort that will transform Malaysia into a high-income nation by 2020. It will lift Malaysia’s gross national income (GNI) per capita from about USD6,700 or RM23,700 in 2009 to more than USD15,000 or RM48,000 in 2020, propelling the nation to the level of other high-income nations. This GNI growth of 6 percent per annum will allow us to achieve the targets set under Vision 2020.
Successful implementation of the ETP will see Malaysia’s economy undergo significant changes to resemble other developed nations. We will continue our shift towards a service based economy, with the services sector growing from 58 percent to 65 percent in the same period. More than 3.3 million new jobs will be created by 2020, spread across the country in urban and rural areas. The nature of these new jobs will result in a shift towards middle and high-income salary brackets. Greater Kuala Lumpur will be transformed into a world-class city. Finally, growth will be achieved in a sustainable manner, without cost to future generations, through initiatives such as building alternative energy generation capacity and conserving our environment to promote eco-tourism.
The ETP is Different from Past Attempts to Grow the Economy
A bold new approach has been taken to develop the ETP. It is the first time that any effort of this kind has been undertaken in the history of Malaysia, or of any other developed nation. The programme provides strong focus on a few key growth engines: the 12 National Key Economic Areas (NKEAs). These NKEAs are expected to make substantial contributions to Malaysia’s economic performance, and they will receive prioritised public investment and policy support. The ETP will be led by the private sector; the Government will primarily play the role of a facilitator. Most of the funding will come from the private sector (92 percent) with public sector investment being used as a catalyst to spark private sector participation.
The effectiveness of any transformation programme often lies in the details. The ETP presents a departure from norms because it is focused on actions—not on theoretical principles and ideas. We have identified 131 entry point projects (EPPs) that concretely outline actions required to grow the economy. The EPPs and other business opportunities identified under each NKEA are anchored to how much they contribute to GNI; they were selected based on rigorous economic and financial analysis. Any public spending will be allocated on the basis of maximising GNI per ringgit of public expenditure. Finally, the ETP was designed to be rigorous and transparent, with a new ETP Unit under PEMANDU (Performance Management and Delivery Unit within the Prime Minister’s Department) being tasked to monitor and report progress to Government leaders, the business community and the rakyat.
Co-created by the Private and Public Sectors
From its inception, the private sector and the business community have been involved in the ETP. In May 2010, a Thousand Person Workshop was run to help identify the 12 NKEAs. The private sector continued to play a large role, when the labs began in June, with 500 of the best minds from the private sector and the Government coming together to develop plans for the 12 NKEAs.
The lab ideas and the plans that were developed were syndicated extensively throughout the eight-week lab period, with more than 600 syndication meetings with ministries, agencies, multi-national corporations, local corporations and non-governmental organisations. Important stakeholders such as the Prime Minister, Ministers and business leaders, were brought in early to visit the labs and provide feedback to the participants.
Subsequent to the labs, Open Days are being conducted in Kuala Lumpur, Sabah and Sarawak, where visitors (business community, multinational corporations, rakyat and media) can visit NKEA booths and provid further input.
The result of this process is a clear roadmap for Malaysia to become a high-income nation. In launching the ETP, we affirm that the EPPs listed in this roadmap are just the start, and through their execution we will learn and adapt the programme to ensure that we reach our aspirations.
Overview of the NKEAs
The 12 NKEAs are at the core of the ETP. An NKEA is defined as a driver of economic activity that has the potential to directly and materially contribute a quantifiable amount of economic growth to the Malaysian economy. The 12 NKEAs selected are:
- Oil, Gas and Energy
- Palm Oil
- Financial Services
- Business Services
- Improving Electronics and Electrical
- Wholesale and Retail
- Communications Content and Infrastructure
- Greater Kuala Lumpur / Klang Valley
Malaysia will focus its economic growth efforts on NKEAs, which will receive prioritised Government support including funding, top talent and Prime Ministerial attention. In addition, policy reforms such as the removal of barriers to competition and market liberalisation will be targeted at the NKEAs.
The programme will involve deliberate choices and trade-offs. Prioritising investment in NKEA sectors implies reducing investment in other sectors. The designation of sectors as NKEA sectors has to have real resource implications if it is to lead to meaningful change. The same philosophy of prioritisation will also apply to other support provided by the Government to sectors, such as operating expenditure and sector-specific policy and regulatory change.
The NKEAs will have dedicated focus from the Prime Minister and will have fast-track mechanisms to resolve disputes or bottlenecks. The Government is committed to the ongoing support of growth in the non-NKEA sectors. However, the Government will focus its efforts on the NKEAs because of the significance of the GNI contribution that these parts of the economy can drive.