Congratulations to the Right Honorable Prime Minister Datuk Seri Anwar Ibrahim on the recent formation of the new cabinet.
I am confident that everyone will strive to contribute their best for our nation, particularly in implementing the Madani Economic plan and realizing each outlined goal. The unity of the cabinet members is crucial to ensure the fruition of the Madani Economic vision.
The government has also established a new unit within the Prime Minister's department, namely the Madani Monitoring Unit, responsible for overseeing the Madani Budget and related policies announced by the government. With the strengthening of this institution, the government's actions are poised to become more robust.
Each of the 7 goals of the Madani Economy must be anchored in strategic actions leading to the achievement of these objectives. More importantly, these strategic actions must be monitored for their implementation and effectiveness.
How will the attainment of these goals significantly benefit the people and the country? It is of utmost importance to understand this from the outset. Cabinet members must understand and work towards the realisation of these 7 goals. Here is a quick introduction to the 7 main aspirations of the Madani Economy for the newly formed cabinet members. These are actually medium-term targets with seven intermediate indicators that are to be achieved within the next 10 years, namely:
Goal #1
Malaysia to become the 30th largest economy in the world. Currently, Malaysia is the 37th largest economy globally, with Thailand holding the 30th position. The size of the economy is not an absolute determinant of a nation's wellbeing.
Some large economies have a high per capita income, while others, despite their huge economic size, have a low per capita income. Should the target of the Madani Economy be the size of the economy, or perhaps the per capita income is what ought to be worked on? In terms of per capita income, Malaysia is at number 68. Isn't this where the attention should be? Working to improve the per capita income while at the same time, the size of the economy would obviously have to grow, the metaphorical pie needs to get bigger. This needs thoughtful discussion.
Goal #2
Malaysia to rise to the 12th position in the Global Competitiveness Index. As per the World Competitiveness Yearbook (IMD) report for 2023, Malaysia currently ranks 27th. We once held the 12th position in 2014. Looking at the Index carefully, out of the 20 competitiveness indicators, 11 are below the 30th position. A comprehensive action plan is needed to address the overall competitiveness of the country.
Goal #3
Malaysia to achieve the 25th position in the Human Development Index (UNDP).
Presently, Malaysia is ranked 62nd. Our best ranking in the last 33 years (since 1990) was 53rd in 1999. In the context of Human Development, Malaysia is currently categorized as 'very high', with a score of 0.803, just slightly above the threshold of "high"; which is 0.799. Therefore, the issue is what needs to be done for Malaysia in order for the country to climb to the 25th position within 7 years?
A tall order to attain a remarkable improvement!
Goal #4
Increasing the share of labour income (CE: Compensation of Employees) to 45%. CE refers to the portion of the economic pie obtained by workers. Over the past 10 years, CE has increased every year from 31.7% (2010) to 37.4% (2020), a total increment of 5.7%. Due to the COVID-19 pandemic, CE fell to 32.4%, which is equivalent to the CE level in 2011. The Madani Economy target is for CE to increase to 45%. This requires a 12.6% increase within 7 years! Again another tall order to achieve such a remarkable improvement!
Goal #5
Malaysia to rank the 25th position in the Corruption Perception Index. This is the Prime Minister's top priority to 'cleanse' the nation. Currently, Malaysia ranks 61st in the Corruption Perception Index (CPI). Among ASEAN countries, Malaysia is in the second position after Singapore (5) and followed by Vietnam (77), Thailand (101), Indonesia (110), and the Philippines (116). While having a corruption-free economy with high integrity is important. It is a necessary but not actually a sufficient condition for the success of an economy.
Goal #6
Fiscal deficit to be reduced to 3% of GDP. Typically, the government increases public expenditure whenever Malaysia faces a crisis. For example, take a look at the figures in brackets which are our fiscal deficits, in 2000 (5.5%), 2009 (6.7%), 2021 (6.4%), but subsequently after 9-10 years, the fiscal deficit averages around 3%. High government debt, poor tax collection, and high debt service payments are the current fiscal challenges. Government revenue almost matches the Operating Expenditure (OE), meaning development expenditure needs to be fully financed by borrowing. There must be well thought planning and unwavering commitment to improvise the country's fiscal position.
Goal #7
Women's participation in the labor force to reach 60%. Women's participation is currently at 55.8%, a significant increase from 46.8% in 2010. However, it is still lower than the national labor force participation rate (69.3%) and the male participation rate (81.9%). What causes women's participation in employment to be lower? In-depth research is needed to understand this issue. The levels of participation and remuneration for female workers also needs further attention and deliberation.
Best wishes to all newly appointed cabinet members in carrying out their duties.
Taking inspiration from the Prime Minister's launch of the Madani Economic plan, let's make Malaysia a key player in the newly emerging geopolitical landscape.
However do take note that, even the best-laid schemes can go astray. Even very careful designs or projects do not always succeed. In 1785, the Scottish poet, Robert Burns famously wrote this quotation, "The best laid plans of mice and men gang aft agley, and leave us naught but tears and pain from promised joy," in "To a Field Mouse." Or in other words, "The best laid plans of mice and men often go awry," 229 years later, this still remains true.
*Samirul Ariff Othman currently serves as a Senior Consultant at Global Asia Consulting (GAC) and has a background as a senior researcher at the Malaysian Institute of Economic Research. The viewpoints articulated are solely those of the author.
