In addition malaysias fiscal policy will be made

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Unformatted text preview: natural resources. In addition, Malaysia’s fiscal policy will be made sustainable. There will be a much stronger focus on investment led by private sector that will avoid reliance on government funding. As stated in the Tenth Malaysia Plan, the Government is committed to reduce its fiscal deficit from 7 percent in 2009 to 3 percent in 2015. In environmental terms, the Government is committed to the stewardship and preservation of our natural environment and non-renewable resources. The Government will ensure that environmental resources are properly priced and that the full costs of development are understood before investment decisions are made. BUSINESS AS USUAL IS NOT ENOUGH Business as usual will not be enough to deliver on the goals of high income, inclusiveness and sustainability. Malaysia is at a critical point in its economic development. There has been a loss of growth momentum over the past decade, and it has become increasingly clear that the historical drivers of growth can no longer be relied on to deliver strong economic outcomes. In an increasingly competitive global economy it is more difficult to generate high rates of economic growth. Growth can no longer be taken for granted, but needs to be earned. To achieve developed nation status by 2020, economic growth of 6 percent a year will be required. Delivering this level of growth demands a comprehensive, structured transformation of the economy. The following are four key reasons why a fundamentally new approach is required. Economic Transformation Programme 61 A Roadmap For Malaysia Historical Growth Engines are Slowing Down Malaysia’s relatively sluggish economic performance over the past several years indicates that the historical engines of Malaysia’s economic growth are slowing down . After strong growth through much of the 1990s, Malaysia’s economic growth over the past decade has been considerably slower – at about half of the average of the previous decade, as shown in Exhibit 1-3. Exhibit 1-3 A large part of the reason for this relatively poor growth performance has been slow labour productivity growth. Transforming Malaysia’s economic performance will therefore require a transformation in productivity growth. Delivering this transformation will require significant improvements in two areas. First, the level of business investment will need to be substantially increased. Private investment grew at just 2 percent per year over the past five years rather than the 10 percent projected in the Ninth Malaysia Plan. The Tenth Malaysia Plan estimates that achieving the 6 percent annual growth rate required to achieve high-income status will require annual growth of private investment of 12.8 percent to 2015, as shown in Exhibit 1-4. 62 Chapter 1 New Economic Model of Malaysia Exhibit 1-4 Private sector investment growth has slowed considerably relative to the pre-1997 period for reasons including the high cost of doing business in Malaysia, lengthy bureaucratic procedures, investors’ concern about the availability of skilled professionals and inadequat...
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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.

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