M'sia’s economic structure needs to be revamped to be leader in Southeast Asia, says PM

Malaysia’s economic structure needs to be revamped to make it the leader of the Southeast Asian economies, said Prime Minister Datuk Seri Anwar Ibrahim.

Anwar, who is also the finance minister, said among the issues plaguing the economic system include issues wherein the industrial growth of an economy slowed down prematurely in its path towards development. For example, the manufacturing sector has declined below the level of 25% of the country’s gross domestic product.

To address the issue, Anwar said the New Industrial Master Plan (NIMP) to be announced next month will reinvigorate industrialisation and catalyse the economy.

All this time, Malaysia has focused on activities in the main sectors such as electrical and electronics and chemistry. Moving forward, the new mission of industrialisation under the NIMP will focus on activities with high added value or economic sophistication for firms to produce sophisticated products.

For example, the cluster in Penang is necessary to focus on high-value electrical and electronics activities, such as integrated circuit design. Meanwhile, in the chemical sector, companies dealing with petrochemicals and oleochemicals need to focus on special chemical manufacturing activities (speciality chemicals).

Additionally, the government will introduce tax-based incentives to support and reward companies that focus on high-impact activities.

Apart from moving up the value chain, Anwar, in conjunction with the launch of the Ekonomi Madani economic plan here on Thursday (July 27), also emphasised that the country needs to have a global mindset to achieve the goal of becoming one of the world's top 30 largest economies.

“In order to be a regional economic champion, we as a country must have a global mindset and prioritise internationalisation to be able to reach the goal of placing [ourselves] in the top 30 of the world’s largest economies in the medium term,” he noted.

He further commented that if the country stays satisfied with the current economic situation, the economy will continue to record growth of 4% to 5%. However, should the country work hard and implement reforms, Malaysia will be able to achieve 5.5% or even 6%.

Therefore, the country needs to forge greater economic integration with neighbouring countries, especially as the world has been facing supply chain pressure.

“Hence, Malaysia needs to come out with more local companies that can penetrate into the Asean region market,” he added.

He further mentioned that efforts need to emphasise trade diplomacy and strategic arrangements that may induce bilateral and multilateral market integration to facilitate the movement of goods, capital, human capital, and technology shared with neighbouring countries.