Growth and Game Changers for 2019-2020

The economy is anticipated to grow 4.5% - 5.5% for 2019-2020. Growth is driven largely by private consumption. Sectorally, the services sector is targeted to sustain growth at 6.3%. Other sectors are anticipated to grow more measuredly. This is the Government’s prognosis in the last mid-term review of the 11^th Malaysia Plan (“Plan”).

Beyond thrusts and pillars, the Plan reviews the following game changers:

(i)        Uplifting B40 towards a middle-class society – that’s laudable, but improvements have been slow. For example, rural B40 household income increased form RM1,760 (2014) to RM1,969 (2016) while the urban household income for the B40 is now RM3,262. The starting salaries of fresh graduates have been “stuck” around RM3,000 – RM3,500 in the banking sector over the last 5-8 years and that is not helpful for private consumption led growth;

(ii)       Enabling industry-led Technical and Vocational Education and Training (“TVET”)-  quality is the issue and relevance to industry. The other problems (not cited in the Plan) in education include:

·         the emphasis of STEM by authorities while no supporting framework exists for graduates to be employed. It is time to have a Scientific Stream in the civil service;

·         then, English and its proficiency – which is poor for the private sector. A huge debate ensues along nationalistic lines if someone mentions the importance of English or Mandarin;

·         Quality schools and quality teachers – elite schools are necessary unless we believe in a levelised system that encourages mediocrity;

·         Issues on private tertiary education and PTPTN, amongst others;

(iii)      Embarking on green growth – the new Minister of Energy seems to be keen on renewables and I sincerely welcome that! It is something TNB may follow reluctantly. Besides SEDA, the regulator, a Renewable Energy Corporation needs to champion it for business, factories and homes;

(iv)       Productivity – a huge area for improvement with automation, AI and digital technology;

(v)        Innovation to wealth – community or sectoral-based research with tertiary institutions encouraged to work with industry/agriculture. Grants should be given based on success of commercialisation of research;

(vi)       Investing in competitive cities – only Kuala Lumpur, Johor Bahru, Kuching and Kota Kinabalu are mentioned. What about Penang, Ipoh or Seremban? The bulk of SMEs are probably on the west coast of Peninsular Malaysia and they provide employment, revenue and exports. So a broader industry-backed platform for innovation and financing is needed. P2P platforms on an industry basis could be helpful besides the traditional bank route.

We need early “fruits” of any Plan to make people believe there is a future and hope for everyone. God Bless!