Malaysia to renew push for high-income goal by 2030 despite COVID

KUALA LUMPUR — Malaysia remains determined to become a developed country by 2030 and believes the goal is reachable despite COVID-19’s dire economic impact, a federal minister said in an interview.

Redzuan Yusof, a minister in the Prime Minister’s Department, told Nikkei Asia that the government is committed to attaining high-income status in the next nine years. This is a target Prime Minister Muhyiddin Yassin inherited from the man he elbowed out of power last year, Mahathir Mohamad.

“If we address the COVID-19 health crisis effectively this year and with the national vaccination plan in the pipeline, we are confident that we are still on track to become a high-income nation by 2030,” Redzuan said.

The World Bank defines high-income countries as those with gross national income per capita of $12,536 or more. Malaysia is classified as an upper middle-income country, based on GNI per capita of $11,230 in 2019.

Malaysia has aspired to leap to the next tier for some time. Back in 2009, then-Prime Minister Najib Razak sought to build a high-income economy by 2020 through a national transformation plan. His defeat to a Mahathir-led coalition in 2018 left the plans and prospects hazy.

Then, in October 2019, Mahathir set a new high-income target as part of what he called the Shared Prosperity Vision 2030. The 10-year initiative was to guide the Malaysian economy toward sustainable growth with fair and equitable distribution across income groups, ethnicities, regions and supply chains, providing a decent standard of living for all citizens by 2030.

Before announcing his Shared Prosperity Vision, Mahathir was already known for ambitious attempts to energize the domestic economy. In 1991, Malaysians were introduced to Vision 2020, which aimed to build a self-sufficient industrialized nation. Previously, in the early 1980s, he had unveiled the Look East Policy, which sought to adopt the best practices of successful East Asian economies at a time when Western countries were seen as the only growth models.

Now, according to Redzuan, the Shared Prosperity Vision is being recalibrated to take into account the pandemic’s effects on the domestic and global economies. He suggested that Muhyiddin would announce his own version in March.

“Of course, it will be an uphill battle as the data has shown that the income gaps have widened due to the pandemic,” Redzuan conceded.

“Nevertheless, we believe that the pandemic also allows us to reset and align our strategies to achieve this aspiration with the vision as our guiding principles.”

The government is likely drawing confidence from strong forecasts by the World Bank and International Monetary Fund, which see the Malaysian economy growing in the 6% to 8% range this year. That would be a rapid comeback after a 5.6% contraction in gross domestic product for 2020 — the worst performance since the Asian financial crisis in 1998.

But Yeah Kim Leng, an economics professor at Sunway University, painted a more nuanced picture for Nikkei.

He argued the pandemic poses new challenges and risks that could impede not only the developed nation goal but also other key aspirations — creating a harmonious, progressive and united multiethnic society. He stressed Malaysia will need to capitalize on the post-pandemic recovery to build a more resilient economy that can withstand the next public health crisis, the threat of climate change and other global shocks.

“All these goals will have to be achieved before [Malaysia] gets old when its demographic dividend turns into a drag some time in 2025 or earlier,” he said.

Yeah also said high-income status is not the top development priority.

In his view, closing the gap between the rich and poor is more important. Yeah said Malaysia needs to lift the incomes and living standards of low-wage earners, many of whom have fallen into relative poverty based on a recently revised income threshold.

“Moreover, addressing regional imbalances and still wide inter- and intra-ethnic disparities in wealth should be on the front burner,” he added, “rather than a hollow fixation on high-income status.”

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