Malaysia to Achieve High Income Status Between 2024 and 2028, but Needs to Improve the Quality, Inclusiveness, and Sustainability of Economic Growth to Remain Competitive
New Delhi: Malaysia is likely to transition to a high-income economy between 2024 and 2028, a reflection of the country’s economic transformation development trajectory over past decades. However, further reforms are required to successfully join the ranks of other leading and developed economies, according to a new World Bank report – Aiming High – Navigating the Next Stage of Malaysia’s Development launched today.
Malaysia‘s GNI per capita is at US$11,200 according to latest estimates, only US$1,335 short of the current threshold level that defines a high-income economy. Progress towards the threshold has been slowed by the impact of the COVID-19 pandemic and the country has the opportunity to undertake bold reforms to sustain future growth and to ensure that the proceeds of growth benefit all segments of the population.
“The Malaysian Government is committed to continually assess the quality, inclusivity and sustainability of Malaysia’s growth. We have built good foundations but we also recognise the need to invest more in developing high-quality human capital to facilitate greater economic opportunities; next-generation reforms for higher productivity; as well as innovation-led private sector growth and policies. The Government has also increasingly embraced the UN Sustainable Development Goals in its annual budgets. All these will ensure sustainable growth through a targeted, outcome-based economic strategy, so Malaysia can reap the opportunities of a post-COVID-19 economy, as well as be back on track to achieve a high-income nation status within the next five years, and its Shared Prosperity Vision by 2030.,” said YB Senator Dato’ Sri Tengku Zafrul Tengku Abdul Aziz. “
Even before COVID-19, it was clear that there was a need for reform to raise not just the rate of economic growth, but the quality and sustainability of growth too. As we look to join the ranks of the world’s high-income and developed economies, Malaysia needs to be able to compete at the global frontier,” said YB Dato’ Sri Mustapa Mohamed, Minister in the Prime Minister’s Department (Economy). “The 12th Malaysia Plan will set out our agenda for the next five years. It is the vehicle through which the Government aims to steer Malaysia’s recovery from COVID-19 and propel our country towards high-income and developed country status and to the achievement of our Shared Prosperity Vision.”
“Malaysia has the ambition to become not just a high-income economy, but one in which growth is sustainable and shared. A core feature of this report is to benchmark Malaysia against not just regional peers in ASEAN; but also against aspirational peers – the OECD countries with advanced economies-– that Malaysia seeks to join; and, importantly, against the 19 other countries that have successfully transitioned from middle- to high-income status during the past 30 years,” said Victoria Kwakwa, The World Bank Vice President for East Asia and Pacific. “Malaysia has all the necessary attributes to successfully make this leap. But navigating the next stage of development will require bold measures and tough reforms.”
According to the report, the development model that worked in the past is no longer enough to help Malaysia navigate the next stage of its development. A different set of policies and institutions will be required to improve the quality, inclusiveness, and sustainability of economic growth in the future. The report noted that to best prepare for this likely income transition and to ensure Malaysia does not trail behind other high-income and developed countries, Malaysia will have to find ways to boost economic growth, improve its competitiveness, create high-quality jobs, strengthen its institutions, ensure greater inclusion and strengthen its capacity to finance the transition to high-income and developed nation status.
To download the report, visit https://openknowledge.worldbank.org/handle/10986/35095.