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Unformatted text preview: ill likely grow to become significant GNI contributors in the future. As these sectors
develop, it may be likely that they will become candidates for NKEA status. Economic Transformation Programme 71
A Roadmap For Malaysia What Does it Mean to be an NKEA
Malaysia will focus its economic growth efforts on NKEAs. NKEAs will receive prioritised Government
support including funding, top talent and Prime Ministerial attention. In addition, policy reforms such as
the removal of barriers to competition and market liberalisation will be targetted at the NKEAs. The Tenth
Malaysia Plan notes that the comprehensive review of business regulations that will be undertaken to
improve the business environment will commence with the regulations that impact the NKEAs.
This focus will involve deliberate choices and trade-offs. Prioritising investment in NKEA sectors implies
reducing investment in other sectors. The designation of sectors as NKEA sectors has to have real resource
implications if it is to lead to meaningful change. The same philosophy of prioritisation will also apply to
other support provided by the Government to these sectors, such as operating expenditure and efforts aimed
at sector-specific policy and regulatory change.
The non-NKEA sectors will also benefit from policy measures that will improve the general business
environment. This includes the policies announced in the Tenth Malaysia Plan, such as infrastructure
investment, a revamped Malaysia Productivity Corporation and reduced business compliance costs
The Government is committed to the ongoing support of growth in the non-NKEA sectors. However, the
Government will focus its efforts on the NKEAs because of the significance of the GNI contribution that
these parts of the economy can drive. Why is Focusing on the NKEAs Important
Malaysia’s success in transforming itself from a poor country at Independence to a middle-income economy
today was driven largely by a deliberate diversification strategy. Initially, competitiveness across multiple
sectors could be supported by our generally low-cost base. However, an excessively diverse strategy is no
longer sustainable, given that Malaysia can no longer rely on a low-cost base as a source of competitive
In today’s globalised economy, production networks are increasingly regional thus leading to greater
regional integration. The next phase of transformation, from a middle-income to high-income nation,
requires a shift towards higher value-add and knowledge-intensive activities. Competitiveness in higher
value-add activities necessitates speation in terms of having a critical mass and an ecosystem of firms
and talent to drive economies of scale. Malaysia’s relatively small population further limits the number of
areas that its economy can spee in and be truly globally competitive.
A shift from an initial phase of diversification across sectors towards speation is therefore needed.
The benefits from focusing on a limited number of sectors have been observe...
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This note was uploaded on 02/24/2014 for the course ACCOUNTING financial taught by Professor Alan during the Spring '14 term at Howard.
- Spring '14