• Economy to grow at slower pace of 4.5% to 5.5%
• Gross national income (GNI) per capita is expected to reach RM47,720 or USD11,700 in 2020
• Malaysia anticipated to breach threshold of a high-income nation by 2024 • Current account of the balance of payments to remain in surplus at RM39.9bn or 2.5% to GNI in 2020
• Budget deficit estimated to widen to 3.0% of GDP
• Public investment to contract at 0.8% per annum
• Gross exports expected to be sustained at an annual average rate of 6.2%
• Services and manufacturing sectors will continue to drive growth for the remaining Plan period

The mid-term review of the Eleventh Malaysia Plan (11MP) 2016-2020 themed, 'Anchoring Growth on People' was unveiled by Prime Minister Tun Dr Mahathir Mohamad. The plan aims to reform existing policies and outline the revised socioeconomic targets for 2018-2020.

The government will balance economic growth objectives and fiscal consolidation initiatives to ensure continuous and inclusive development without impairing growth prospects. The Prime Minister said that “cost-saving measures for 2018 to 2020 could hurt economic growth, but this is only temporary”.

Operational spending will also be reined in to maintain the current-account surplus, by reforming state agencies, improving procurement process, and reviewing programs and development projects. The government will especially look into project governance to reduce the risk of delays and cost overruns.

The Mid-Term Review outlines six pillars to support inclusive growth and sustainable development. They are:

Pillar 1: To reform governance towards greater transparency and enhance efficiency of public services

Pillar 2: To enhance inclusive development and the wellbeing of the rakyat.

Pillar 3: To pursue balanced regional development

Pillar 4: To empower human capital

Pillar 5: Enhancing environmental sustainability through "green" growth

Pillar 6: The foundation to strengthen economic growth across all sectors of the economy.

The government seeks to address lagging productivity growth, limited fiscal space, low compensation of employees and inequality in household incomes in the coming years. The report pointed out the goal of becoming a developed nation goes beyond merely attaining a high-income level as it must also be accompanied by higher purchasing power. It said the aspiration of becoming a developed nation requires Malaysia to progress in many other dimensions, such as economics, politics, culture, psychology, spiritual and social.

Source: BIMB Securities Research - 19 Oct 2018