Malaysia's journey on achieving high-income nation status

Performance Management and Delivery Unit (Pemandu) is poised in its effort to steer Malaysia in becoming more competitive as a high-income nation status.

There must be a fixed target as we set our sights on achieving the high-income nation status, said Pemandu in a statement today.

The current high-income target is determined by the World Bank, which classifies all countries with a gross national income (GNI) per capita of above a certain fixed threshold as "high-income".

The standard currency used by World Bank to measure high-income threshold is in US$.

By 2020, the value of this threshold is projected by Pemandu to be US$15,000. This is derived using the compound annual growth rate (CAGR) of the historical high-income threshold by World Bank, for which the GNI per capita of high-income for 2020 is computed to be US$15,000.

This was stated from the beginning and throughout Pemandu’s implementation of various initiatives.

Lack of equality in income distribution

The goal to high-income nation status is not all about income. “Inclusiveness” in the wealth creation journey is equally crucial, ensuring that a per capita income of US$15,000 by 2020 include as many people as possible in that process.

1. GDPI (GDP by income) for Malaysia

According to the Department of Statistics Malaysia’s Gross Domestic Product Income Approach 2010-2015, Malaysia GDP by income growth has been progressing well.

Based on the 1.15 billion in GDP by income, 34.8% is contributed by wages and salaries, followed by 60.5% by business profits and 4.7% by taxes and subsidies.

2. Equality in income distribution

As indicated in the Tenth Malaysia Plan, 2011 – 2015, Malaysia’s overall income distribution has improved steadily, with the average monthly household income of the bottom 40% households income group (B4 households) increased from RM1,440 in 2009 to RM2,537 in 2014.

Furthermore, our Gini coefficient has reduced from 0.441 in 2009 to 0.401 in 2014, exceeding the 2015 target of 0.420, thanks to the slew of activities implemented: https://www.pemandu.gov.my/transformation-unplugged-its-not-all-about-the-income/.

The gap is expected to be further narrowed to 0.385 in 2020 according to the Eleventh Malaysia Plan, 2016 – 2020.

Malaysia’s journey to high-income nation status

As highlighted in our recent reports, our most recent GNI saw us recording US$10,750 per capita. This signifies that that we are only 15% away from the high-income economy benchmark.

Substantial efforts have also been put in to ensure our growth is sustainable, with the country pursuing a mildly expansionary economy with private investment leading the way and, by implementing robust fiscal consolidation measures.

A lot of progress have been made to-date and Malaysia is well on the right track to achieving the high-income nation status.