● The Mid-Term Review (MTR) of the Twelfth Malaysia Plan (12MP) evaluates the progress made, recognises the challenges faced, and charts the path to a sustainable, prosperous, and high-income nation. This direction is underscored by 17 “Big Bolds” and 71 main strategies and initiatives, all aiming to realize 'Ekonomi MADANI: Memperkasa Rakyat'.
● The federal government’s revised growth target for the entire 12MP seems rather optimistic, raising it to 5.0% - 6.0% from the original 4.5% - 5.5%. They anticipate a growth acceleration between 5.0% and 5.5% for the remaining period (2023- 2025), largely driven by domestic demand. This optimistic forecast also hinges on the acceleration of structural economic reforms, emphasising high-value-added activities on the supply side.
● Overall, we perceive the adjusted growth target for the remainder of the 12MP as somewhat ambitious and challenging to reach. This perspective also takes into account the normalisation effect, noting that the substantial growth observed in 2021 and 2022 was primarily attributed to a lower base effect, pandemic-related stimulus, and the surge in pent-up demand when the economy fully reopened in April 2022.
● The government has set a per capita income target of RM61,000 or USD14,250 (at an exchange rate of USDMYR=4.28) by the end of 2025. Driven by enhanced labor productivity, this target underscores the government's ambition to elevate Malaysia to high-income nation status by 2025. Notably, this new target surpasses the World Bank's minimum income threshold for a high-income nation, which stands at USD13,845 (or RM59,257).
● While there have been enhancements in the delivery system to minimize leakages and wastages, we remain skeptical that the government can achieve its fiscal deficit target of between -3.5% to -3.0% by 2025 without implementing an efficient consumption tax system like the GST. Consequently, we're maintaining our fiscal deficit forecast at between - 5.0% to -5.2% of GDP for 2023, with a modest improvement projected in 2024 to fall between -4.5% and -5.0%.
● While we remain somewhat skeptical about the government's plan to create a comprehensive household database for more precise subsidy targeting, we see it as a constructive move towards better fiscal management.
● The government's proposed reforms in social protection and healthcare reforms could elevate the standard of living and diminish inequality. However, on the property front, it is crucial to implement measures that prevent overspending on social housing.
● As the nation strives to achieve high-income status, we believe it's essential for the government to bolster food security. This can be accomplished by providing increased support for farming technology, investing further in research and development, and forging strategic partnerships with the private sector.
● The Prime Minister Datuk Seri Anwar Ibrahim tabled a revised Mid-Term Review (MTR) of the 12th Malaysia Plan (12MP) at the Parliament yesterday with an updated approach to bolster Malaysia’s economy and elevate the quality of life of its citizen.
- It incorporates new policies and strategies to adapt to the goals of 'Ekonomi MADANI: Memperkasa Rakyat,' a vision and direction by the Unity Government encompassing aspects of justice, diversity, harmony, and progress.
- With a new theme ‘Malaysia Madani: Sustainable, Prosperous, High Income’, it is set to initiate 17 Big Bolds and 71 main strategies and initiatives.
● According to the Minister of Economy Rafizi Ramli, the MTR of the 12MP is the starting point for efforts to address major economic challenges of the nation, namely disparity in development and income, limited fiscal space and slow structural transition of the economy.
● Its ultimate goal is to ensure that no one is left behind in reaping the benefits of socioeconomic development and has equal access to opportunity in raising living standards and providing a bright future for future generations, regardless of ethnicity, location, gender, or socioeconomic background.
● The framework of MTR of the 12MP outlines strengthening of the public service as the key enabler by improving the governance and efiiciency of the public service, crucial in tackling the perennial corruption and rent-seeking practices.
Source: Kenanga Research - 12 Sept 2023
Created by kiasutrader | Aug 23, 2024
Created by kiasutrader | Aug 23, 2024