Malaysia Economy

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Title of essay:
Discuss some of pertinent issues and challenges faced by Malaysia in its journey towards a high income nation.

Overview:

Malaysia’s momentous journey in its aspiration towards achieving a developed and high-income economy commenced in the 2010 Budget. Recognizing that the nation has reached a defining moment in its development path as well as the need for structural reforms and mindset change, the New Economic Model (NEM) and the Tenth Malaysia Plan (10MP) were unveiled on 30 March and 10 June 2010, respectively. The 2010 Budget laid the foundation for the development of the NEM and is a precursor to the 10MP. The 2011 Budget will further accelerate the national transformation agenda through strategies and measures to revitalize private investment, strengthen human capital development and improve productivity as well as ensure the well-being of the rakyat .These strategies and measures are anchored on four pillars of the national transformation programme, namely the :

1Malaysia: People First, Performance Now concept, Government Transformation Programme (GTP) Economic Transformation Programme (ETP) and 10MP.
The 1 Malaysia, People First, Performance Now concept is based on the principles of social cohesion and inclusiveness as well as the need for prompt delivery of public services to the rakyat Meanwhile, the GTP which encompasses the National Key Result Areas (NKRAs) and Ministerial Key Performance indicators (MKPIs) is designed to strengthen public sector delivery and enhance accountability of programmes. To address issues of concern to the rakyat, six NKRAs ,covering crime, corruption, education, poverty, rural basic infrastructure and public transport were identified with specific measures and targets for expeditious implementation. The ETP is designed to bring about structural changes through eight Strategic Reform Initiatives (SRIs) to remove impediments and create an enabling environment to boost growth. Among the major SRIs are reinvigorating private investment, strengthening public service delivery as well as enhancing sources and sustainability of growth. To accelerate economic expansion, 12 National Key Economic Areas (NKEAs) with high growth potential were selected and several projects identified for implementation.

The 10MP is the first medium-term plan to operationalise the GTP and ETP. The Plan will promote major structural transformation aimed at enhancing competition through an innovative and skilled workforce, removing market distortions and unleashing private sector entrepreneurship The public sector will play a catalytic role in facilitating private activity while delivering efficient services to the spirit of lMalaysia People First, Performance Now. These initiatives augur well for the nation's long-term growth prospects and will contribute to a higher per capita Gross National Income (GNI) of between USD15,OOO and USD20,000 by 2020 . In the immediate term, the Malaysian economy isexpectedtoregisterstronggrowthof70%in 2010 after contracting 1.7% in 2009. Growth is supported by the upturn in private investment, robust consumption one strong external demand In 201f, with moderate global growth and trade expansion, the Malaysian economy is envisaged to expand between 5.0% and 6.0%, supported by resilient domestic demand as well as the pro-growth strategies and measures introduced in the 2011 Budget .

Fiscal Operations:

The timely and well-targeted implementation of the stimulus packages amounting to RM67 billion or 9.9% of Gross Domestic Product (GOP) in 2009 enabled the economy to rebound in the fourth quarter of 2009 and register strong growth of 9.5% in the first half of 2010. With broad-based recovery and well-entrenched growth, revenue projections were revised upwards, thus improving the fiscal position .

The Government is committed to fiscal consolidation. The fiscal deficit will be contained at 56% of GOP (2009 70%) and largely funded from...
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