A Tale of Two Countries: South Korea and Malaysia

According to the World Bank, Malaysia's GDP per capita was USD $375 in 1970, higher than South Korea's USD $279. Both countries were low-income, with much of their economies dependent on agriculture and natural resources. 

Malaysia’s economic growth has been steady but slower than South Korea's. In 1978, Malaysia and South Korea were in the same low-middle-income economic status, with Malaysia’s GDP per capita slightly lower than South Korea’s, at USD1,304 and USD 1,406, respectively. Both countries grew at the same pace until 1985, when South Korea’s growth significantly surpassed Malaysia’s progress. 

South Korea took ten years to move into the upper middle-income economic group in 1988. South Korea made a rapid transition from upper-middle-income to high-income status within 15 years (1988-2003). On the other hand, Malaysia took 17 years to shift to an upper-middle-income economy in 1995. Malaysia has remained in the upper-middle-income category since 1995, indicating a slower rate of economic advancement. In 2023, South Korea’s GDP per capita almost tripled Malaysia’s performance. Nevertheless, the trajectory looks promising for Malaysia to achieve a high-income economic status in ten years. The country could do better to hasten the transition. 

Both countries’ productivity performance almost mirrored their GDP per capita growth. Productivity performance correlates with GDP per capita. Between 1986 and 1995, both countries’ productivity levels grew at about the same pace. Between 1996 and 2022, South Korea’s productivity growth recorded an annual average of 2.9 per cent per year, while Malaysia’s productivity growth was almost half that of South Korea at 1.6 per cent annually. 

Productivity accelerates because of the emphasis placed on supporting local industries through facilitating the business environment, accelerating the use of technology, automation, innovation, and R&D, and building a workforce that meets industry demands. 

As a result of South Korea's policies to increase productivity through business participation in R&D, the country's R&D expenditure as a percentage of GDP rose to over 4.0 per cent in 2022, whereas Malaysia's was approximately 1 per cent, with most of its R&D expenditure coming from the government. 

Malaysia had approximately 30 per cent of skilled labour in 2022, whereas the proportion in South Korea exceeds 40 per cent, and most established nations had around 50 per cent. 

25 South Korean companies were included in the Fortune 500 list of the world's largest corporations, a result of the government's consistent support for domestic industries over the past fifty years. In contrast, Malaysia has only one company on the list, and that is an oil and gas company. 

Malaysia’s Growth in Comparison to Selected Countries, 1960-2023

Malaysia’s Growth in Comparison to Selected Countries, 1960-2022

 

References:

Productivity Report 2024, Malaysia Productivity Corporation

www.macrotrends.net

Pray and See Opportunities Unfold!

To understand how powerful and effective prayer is, look at it from a neurological perspective. At the base of our brain lies a cluster of nerves called the reticular activating system (RAS), which monitors our environment. We are constantly bombarded with countless stimuli, and it's the job of the RAS to determine what gets noticed and what goes unnoticed. For example, you download a new ringtone for your mobile phone. You're sure that you've never heard it before. But after downloading it, it seems like everybody has the same ringtone. It's not that lots of people went out and downloaded it when you did. It's the simple fact that when you downloaded that ringtone, it created a category in your RAS. That ringtone went unnoticed by you before you downloaded it because it wasn't important to you. Once you downloaded the ringtone, the RAS recognised it as relevant.

Source: https://en.wikiquote.org

 

Prayer works that way. When you pray for someone or something, it creates a category in your reticular activating system. And now you notice everything related to those prayers. A pastor writes: 'Have you ever noticed that when you pray, coincidences happen? And when you don't, they don't? It's more than coincidence, it's providence. Prayer creates divine opportunities. But prayer also sanctifies the reticular activating system and enables us to see the God-ordained opportunities that are all around us all the time. And once we see them, we have to [activate our faith and] seize them.'

Prayer is the portal to God's Kingdom and through which his blessings flow to us. So, pray each day and see its impact as opportunities unfold! 

Reference:

The Word for Today by Bob and Debby Gass, 20 May 2025

Malaysia’s 2025 Growth Forecast Softer!

Malaysia’s economy will likely grow at its slowest pace in a year. In the first quarter, household consumption weakened, and exports showed a tepid outcome. Key sectors, including services and manufacturing, expanded slower than in the previous quarter as consumers tightened spending and export momentum faded.

The economy expanded 4.5 per cent in the first three months of 2025 compared to the prior-year period. This is according to the 8–13 May poll of 21 economists by Reuters. The economy grew 5 per cent in the fourth quarter.

In April, economists lowered Malaysia’s 2025 consensus growth forecast to 4.3 per cent from 4.7 per cent earlier in the year, citing trade tensions and weaker domestic consumption, while the International Monetary Fund (IMF) cut its forecast to 4.1 per cent. Malaysia faces a duty of 24 per cent on exports to the United States starting in July unless a bilateral deal is reached.

The US and China – Malaysia’s two major trading partners – agreed to a temporary 90-day truce on tariffs recently, but risks to economic growth remain. In response to a weaker outlook, Bank Negara Malaysia (BNM) has announced a reduction to the statutory reserve requirement (SRR) ratio of 100 basis points to 1.00 per cent, effective 16 May, which will inject roughly RM19 billion into the banking system.

Economists have also adjusted their outlook on interest rates, now forecasting one rate cut in 2025 in a Reuters poll, from an earlier projection that rates would remain flat at 3 per cent this year.

While 2025 is expected to see lower growth as international trade relationships are reforged, the IMF has also revised 2026 projections downward: Global real GDP growth is now projected at 3% next year, down from 3.3% in January. This is 0.7 percentage points lower than the pre-pandemic (2000–2019) average global growth rate of 3.7%.

The U.S. economy is expected to grow just 1.7% in 2026, with the impact of tariffs and trade wars continuously affecting growth over the next year.

We need to prepare for the worst while hoping and praying for the best!

 

References:

Economists dial back Malaysia’s 2025 growth forecast amid softer household demand,

Malay Mail, 14 May 2025

 

Charted: Falling GDP Growth Forecasts for 2025, Niccolo Conte, Visual Capitalist, 2 May 2025

 

How Indonesian Textile Giant Sritex Collapsed?

The Sritex journey began in 1966 when Muhammad Lukminto opened a small shop in Solo. By 1968, the business had expanded into textile production, and by 1978, had become a limited liability company. 

Throughout the 1980s and 1990s, Sritex evolved into a vertically integrated textile manufacturer. That meant it controlled stages of production in turning raw materials into finished goods.

Source: https://id.wikipedia.org

During this time, it became the official supplier of uniforms for the Indonesian Armed Forces before securing contracts with the German military and NATO.  

The company also produced garments for retailers such as Walmart, Sears, H&M, Uniqlo and Zara.  By 2019, Sritex had reached annual sales of U.S. $1.3 billion (21.1 trillion rupiah) Sritex’s troubles began in 2020 when the COVID-19 pandemic disrupted global supply chains and weakened consumer demand. Sales plummeted to $847 million (13.7 trillion rupiah), leading to the company’s first recorded loss since going public, according to its financial reports. 

By mid-2024, Sritex’s total obligations had ballooned to $1.6 billion (26.2 trillion rupiah), nearly double its 2019 debt level.  

Despite reaching a temporary debt restructuring deal in 2022, creditors lost confidence. In October 2024, creditor PT Indo Bharat Rayon filed for Sritex bankruptcy, arguing the company had failed to meet its debt obligations.  

The court ruled in favour of Indo Bharat Rayon and Indonesia’s Supreme Court upheld the decision in December, making the bankruptcy legally binding. 

In the first two months of 2025, at least 10,665 employees lost their jobs across Sritex Group’s four factories in Central Java. 

Between 2019 and mid-2024, at least 36 Indonesian textile firms have shut down, including PT Pismatex, a company that had operated since 1972. In the first half of 2024 alone, 10 textile companies laid off nearly 14,000 workers. 

Indonesia has struggled to compete with countries such as Vietnam and Bangladesh, which offer lower production costs to attract major global fashion brands. 

Sritex’s downfall is expected to have a ripple effect on Indonesia’s economy beyond its former employees. The bankruptcy could reduce Indonesia’s national GDP by 0.1% and cut regional GDP in areas where Sritex operated by 0.5%. Sritex’s bankruptcy highlights a broader issue – the steady decline of Indonesia’s manufacturing sector. Since 2010, manufacturing’s share of the GDP gradually shrank to where it remained below 20% between 2019 and 2024, according to government data. 

Investor confidence in Indonesia’s textile sector is also likely to suffer, potentially discouraging future foreign investment. Competition (from China’s “dark” factories – fully automated), tariffs and financing costs are all causes for the downfall of a major giant or even an industry. It requires a lot more effort now just to survive! 

Reference:

How Indonesian textile giant Sritex collapsed – Analysis, Arie Firdaus, BenarNews, 8 March 2025

Politicisation of Education in Malaysia

A Sabah-based NGO has singled out the politicisation of education as the factor that has divided Malaysia along racial lines. Fazar Arif, founder of Pergerakan Orang Wanita — Empowerment and Revolution, claims that the racial politics practised today has had a significant impact on the curriculum, education policy and management of schools. National schools, envisioned as the great unifier after Merdeka, have increasingly taken on religious and racial undertones, and alienated non-Malay and non-Muslim students in the process. Fazar was commenting on the introduction of a new policy requiring students to wear the Jalur Gemilang badge on their uniform, a practice that the government says will foster unity.She questioned why no political party, has been seen or heard leading serious discussions or conversations among the people or fellow legislators on reforming the education system to foster integration, a more meaningful growth and advancement as a nation.

 

Source:https://www.wikiimpact.com

 

The current education system tends to push the propaganda of the so-called social contract among the three major races in Malaysia. Rectifying the problem would be a monumental task, as it requires political will.

 

Firstly, Fazar said, there is a need to acknowledge that racial division in the country’s school system is real and that it has been compounded by decades of political interference.

 

Secondly, she said, the government must reimagine national schools as truly inclusive institutions. She pointed out that there is a need to remove racial and religious supremacy narratives from the curriculum and make national schools genuinely secular and multiracial in terms of administration, personnel and curriculum. There is also a need to ensure all students are fluent in Bahasa Malaysia and English, but steps must also be taken to strengthen mother tongue languages, such as Mandarin, Tamil and indigenous languages. Is this ever possible with the current Minister of Education?

 

However, Johor is making an unprecedented move to reform its education system by turning to Singapore’s National Institute of Education (NIE) to upskill local teachers — a bold step that could reshape the state’s economic future. With a strong focus on STEM (science, technology, engineering and mathematics) and English language instruction, the initiative aims not only to raise academic standards but also to stem the tide of brain drain that has long plagued Malaysia’s southernmost state. This pilot effort, known as the Bangsa Johor Schools programme, was spearheaded by the Regent of Johor, Tunku Ismail Sultan Ibrahim, in 2024.

 

Johor’s strategy is clear: Improve the quality of teaching, especially in STEM and English, to develop a future-ready, skilled workforce. The ultimate aim is to reduce the state’s reliance on low-wage jobs in neighbouring Singapore and instead retain talent to drive growth within Johor. The Johor government has earmarked RM6.22 million (S$1.85 million) in its 2025 budget to support this pilot. This budget covers 4,300 students and 212 teachers across the four schools in Johor Bahru.

 

Whether this will become a blueprint for other Malaysian states or remain a unique experiment in education diplomacy, one thing is clear: Johor is not waiting for change; rather, it is leading it. And so is Sarawak!

 

References:

NGO rues politicisation of education in Malaysia, Sean Augustin, FMT, 26 April 2025

 

Johor turns to Singapore’s NIE to raise school standards and curb brain drain, Merzsam Singkee, The Independent Singapore, 20 April 2025

The World’s Top 20 Economies in 2025

Understanding our global economic landscape and knowing the top richest nations in the world can help us get a better view of our collective financial future.

Businesses and investors should aim to comprehend the current economic status of the world to make better decisions and better prepare for future changes that are bound to happen over time.

 

Source: https://en.wikipedia.org

Key trends like artificial intelligence, digital currencies, geopolitical movements, aging populations, and environmental concerns are all influencing the global economy and the way countries keep growing or face recessions. 

There are different ways to measure GDP:

 

1.       Nominal GDP. The most common one and it is the total value of all goods and services made by a country, using current prices and converting them to US dollars.

 

2.       Real GDP. Adjusts the nominal GDP according to inflation.

 

3.       Purchasing power parity (PPP). Demonstrates the actual price of things in each country and how much a person can buy. 

Each metric is important for different reasons, and economists and financial analysts usually use two or more of them to see the bigger picture. 

The top 20 economies in this article are ordered based on the nominal GDP disclosed by the International Monetary Fund (IMF) in 2025. 

This is a list of the 20 largest economies in the world according to their nominal GDP as of 2025:

Rank	Country	Nominal GDP (trillions of U.S. dollars)	Purchasing power parity GDP (trillions of international dollars)
1	United States	30.34	30.34
2	China, People's Republic of	19.53	39.44
3	Germany	4.92	6.17
4	Japan	4.39	6.77
5	India	4.27	17.36
6	United Kingdom	3.73	4.42
7	France	3.28	4.49
8	Italy	2.46	3.69
9	Canada	2.33	2.69
10	Brazil	2.31	4.89
11	Russian Federation	2.2	7.13
12	Korea, Republic of	1.95	3.39
13	Australia	1.88	1.97
14	Spain	1.83	2.77
15	Mexico	1.82	3.41
16	Indonesia	1.49	4.98
17	Türkiye, Republic of	1.46	3.61
18	Netherlands	1.27	1.51
19	Saudi Arabia	1.14	2.25
20	Switzerland	0.9996	0.87817

 

It’s important for investors to understand GDP and how the economy of the world is changing over time. Emerging countries can impact the financial market soon, and some important geopolitical changes may modify how we invest and where. 

Countries like the US and China will continue to shape their economy to maintain their positions as economic leaders, while countries like India have the potential to grow exponentially and transform the global economic landscape. 

The current issues in the US and its impact on the world is a self-induced Trumpian philosophy of tariffs. It never works and never will. We need to organise a “Boycott Tariff Day”! Perhaps, even get an ardent Malaysian politician to organise it! 

Reference:

The World’s Top 20 Economies: 2025 GDP Rankings and Insights, FBS, 5 Marcy 2025

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