PETALING JAYA,Mar 16: Despite the economic impact of the Covid-19 pandemic, the World Bank Group believes Malaysia will likely transition from an upper-middle income nation to a high income nation in the next five years.
It noted, however, that Malaysia’s current growth rate is slower than other countries that had become high-income countries in the last decade, and faces a number of challenges it must overcome to achieve this status.
Speaking at the launch of the World Bank’s “Aiming high – Navigating the next stage of Malaysia’s development” report, finance minister Tengku Zafrul Aziz said the development model that saw Malaysia grow from an agricultural economy to a manufacturing nation must be re-evaluated to prepare for this milestone.
“We need to relook at the way policies are set, and the roles of government and institutions to improve Malaysia’s future socio-economic growth.
“In this report, the World Bank suggests that to boost economic growth, Malaysia will have to improve competitiveness, create high quality jobs, strengthen institutions and improve its capacity to finance its transition,” he said.
Tengku Zafrul said that with this transition, he is aware that Malaysians want this economic growth to come with tangible effects to their living standards, which must be provided through fulfilling jobs, “not just something that pays the bills” and better public service delivery, “not just the existence of such services”.
Richard Record, the World Bank Group’s lead economist in Malaysia, said there are a number of challenges Malaysia will need to overcome with structural reforms.
He said improving the education system to produce more skilled workers and increasing labour productivity would make Malaysia a more attractive destination for investors.
This would help the country attract higher quality investments that have recently headed to regional neighbours.
These investments will provide a boost to Malaysia’s economic growth, he said, and are an area that lagged over the last 12 months.
Foreign direct investment fell 56% to US$3.4billion (RM14 billion) last year according to a government report last month.