I HAVE been living in Malaysia for the last 10 years now having moved from Chicago to KL.
The country has got huge potential to grow. Why? Because the labour force is educated and productive.
Accommodating and burning desire to succeed is the core value and nature of these people. What I like about Malaysian mindset is the forward looking and pragmatic approach to the economic outlook.
Therein lies challenges in every economy and country ever since COVID-19 commenced.
In the last 18 months since the pandemic broke globally, we have seen many challenges being surmounted by the government and people to take the economy forward aimed at boosting the level of economic confidence.
I'd say the government has tried its best and now Malaysia is in a much better position as compared to many economies in the ASEAN region.
ECONOMIC STRATEGY: KEY INDUSTRIES
So, the question is what economic strategy should the govt pursue in order to maintain economic stability in the country with solid economic progression?
In my opinion, Malaysian government can critically focus on these nine sectors in 12th Malaysian Plan to move faster economically, socially and structurally.
I hope the 12th Malaysian Plan can gradually growth to improve the living standards and purchasing power of masses for an inclusive income and equality, for all.
1. Manufacturing
2. Integrated Circuit Technology [ Chip]
3. Healthcare
4. Technology
5. E-commerce
6. LNG market
7. Services
8. Agriculture and farmland
9. Logistics
These sectors have enormous potential to grow in the next 5-10 and Malaysia’s strategic geography provides a pivot to global investors to relocate and to leverage Malaysia strength i.e., labour force, economic confidence, and modern infrastructure. Recent good news is that luxury car manufacturer Porsche is moving to Malaysia and set up a plant here.
Another big item on the global agenda is ICT i.e. chip.
There could be chip shortages and Malaysia can contribute significantly to the global market. Malaysia is providing and holding 10 per cent market share by supplying to the biggest market i.e., China.
China wants to import more from Malaysia due to superior quality and higher value.
I personally know that one of the top manufacturers in Malaysia Pensonic, the Penang-based brand is doing great business globally despite COVID-19. For the record, Penang is a lovely place and it is the manufacturing hub of ASEAN.
The pandemic situation is well under control at present and I give full credit to the government, frontliners, doctors and nurses for their fabulous work. One minister which stands out prominently is Health Minister Khairy Jamaluddin, who has shown remarkable leadership under crisis through engagement strategy .
Next big item on the global landscape is 6G and 5G.
Huawei is already here, and Malaysia is poised to leverage from the high energy companies who are focused on ASEAN region to bring revolution in the 5/6G areas.
In 1973, Henry Kissinger said: whoever takes charge of oil and money will lead the global economy. After 48 years, this mantra has changed. In my opinion, whoever takes control in AI and technology will lead the global economy. Malaysia is almost ready for that due to tech savvy labour force.
E-commerce is growing at a phenomenal pace.
COVID-19 has accelerated the phase of online buying, and convenience for consumers in general.
PGMall in Malaysia is doing fabulous work by tying up with JD.com in China. By 2024, E-commerce industry in China will touch $3 trillion - more than the GDP size of Canada, Spain, and Russia.
LNG is the future of energy market. China will become the largest LNG market by 2025, overtaking Japan. Petronas made shipments to China and can move aggressively to meet the growing Chinese energy market demand.
Service sector has been the key for many successful economies including China, Japan, and Korea. Local companies can move strategically into the sector of higher growth.
The biggest investment in the next three to five years comes in agriculture.
Demand for agriculture is growing and at Juwai IQI, we expect agriculture inflation to hit the global economy next 2/3 years.
Malaysia has got huge deposits of agriculture land and farmland. We can encourage local investors to apply skills and funds to grow the important sectors, for a profit and revenue driven structure to achieve stronger and higher cash flows.
EXECUTION STRATEGY OR ACTION PLAN
Government needs to strategise tactically in order to achieve desired economic outcomes:
1. Improving the skillset of labour force to adopt technology
2. Focus on innovation to a attain growth parameters
3. Consistent policy framework
4. Investing in modern Infrastructure
5. Buffering the foreign exchange reserves to withstand global financial fragilities
6. Effective use of monetary and fiscal policy levers for economic progression
7. Market reforms to build sustainable capacity building continuously
8. Engagement strategy with business councils, chambers, and industry players
I still remember one of the top economics professors at Stanford University Nathan Rosenberg wrote a paper in 2004 on how technological innovation was considered as major force in economic growth and focus should be on innovation to spur economic outlook effectively. Malaysia can apply the same principles to achieve growth trajectory to meet economic outcomes.
The 12th Malaysia Plan, if executed in a pragmatic manner and premised on strong critical thinking, can herald a new era of economic progression. This is going to make Malaysia as one of the leading economies of the world. Globally speaking, Malaysia has the most strategic geography in the globe and many investors want to leverage its geographical significance and productive labor force.
* Shan Saeed is Chief Economist of IQI-Juwai.
** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.
