etp_handbook_chapter_1-4_economic_model

Countries that have transformed from middle income to

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Unformatted text preview: d in many other countries, such as Taiwan, Republic of Korea and Singapore. Countries that have transformed from middle-income to high-income have typically focused on priority sectors. 72 Chapter 1 New Economic Model of Malaysia The Government has taken a deliberate decision to focus on a limited number of sectors in order to generate competitive strength in these areas of the economy. One of the important innovations in the ETP is the tightness of the degree of focus. In this respect, the ETP represents a new way of doing things for Malaysia. There are five key reasons why focusing on a relatively small number of sectors is important in generating economic benefit for Malaysia. Align policies coherently Having a clear view of the priority sectors means that it will be easier to deliver a coherent, coordinated policy agenda. It allows the Government to align policies in a range of different areas, such as education, infrastructure and immigration policy, behind a common objective. Avoid sub-scale investment To achieve substantial and sustained impact, the investment and other commitments made to a particular sector need to be meaningful. If investments are spread across too many sectors, the risk is that the investments are diluted to a scale that is not sufficient to achieve transformational change. This is a particularly important for small- and medium-sized countries. Develop a clear value proposition Having a limited number of priority sectors contributes to establishing a clear national-value proposition, which can be readily communicated to investors (both foreign and local). This contributes to a more positive investment environment; potential investors can be confident that government support and investment will be directed to the priority areas. Provide leadership focus Having priority sectors means that relatively scarce government leadership time (the Prime Minister, other Ministers and senior officials) can be allocated in a meaningful way to the priority areas – rather than being spread thinly across multiple areas. Allow for higher quality monitoring A limited number of priority sectors makes it much easier to measure and monitor the performance of these sectors, increasing the likelihood of economic impact. Success of sector-based policy is linked to a rigorous process of monitoring – under-performance needs to be remediated and good performance rewarded. It is easier to do this in a timely manner when the focus is on a tightly-defined group of sectors. CONCLUSION Malaysia faces significant economic challenges. Our growth rates have slowed and global competition is increasingly intense. We face fiscal sustainability issues and we are neither a low-cost nor a high-value economy. To respond to these challenges, the ETP represents a markedly different approach while building on the Tenth Malaysia Plan and incorporating inputs from NEAC. The ETP focuses on 12 key growth engines (NKEAs), relies heavily on the private sector, is based on a series of specific projects and is anchored on GNI. The next chapter discusses the methodology we u...
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