Message from the Chairman

NATIONAL OUTLOOK CONFERENCE 2020

Theme: Crouching Tiger Initiative

How to Achieve the Shared Prosperity Vision 2030

Due to the COVID-19 epidemic, the 2020 MIER National Outlook Conference has been postponed to a later date to be announced accordingly.

THEME PAPER

MIER is planning to organize its annual conference, the MIER National Outlook Conference 2020: The Crouching TIGER Initiative, on 10-11^th March 2020. The theme of NOC2020 is on achieving economic growth and redistribution through a re-industrialization strategy that is driven by high technology.   The Conference will discuss issues both from a policy perspective as well as the industrial angle. Several industries that have the capacity to bring about radical transformation through the use of technology will be highlighted and industry representatives will offer their thoughts on driving the economy forward.

MIER has since June 2019 embarked on a new five-year research plan to examine the projected outcome and impacts of the Crouching Tiger Strategy.  Detailed studies are being undertaken and some preliminary results showcased at this NOC2020, by focusing on specific areas such as education and human capital, technology and innovation, geo-economics and regionalism, energy and sustainable development, digital economy and services and new agriculture in formulating the Crouching Tiger Strategy.  This MIER annual conference is a part of that exercise.

MIER was established in 1986 to act as an independent think tank to contribute to the government’s Economic Recovery Plan as part of the Fifth Malaysia Plan (1986-90, the last plan of the NEP) to overcome the effects of the 1985 recession, and to support the post-NEP economic planning.  In the period spanning 1988 to 1996, Malaysia’s GDP growth rate was close to or in excess of 9 percent per annum.  In 1990, MIER proposed the Income Doubling Plan emphasizing growth as part of a plan to replace the New Economic Policy, as its contribution to the first National Economic Consultative Council (MAPENI) deliberations. Subsequent to 1998 Asian Financial Crisis, Malaysia’s growth potential had been on the decline, with actual growth rates hovering around five percent.  Malaysia’s performance has been even less impressive since 2012, experiencing a rate that is below five per cent, following a secular trend downward of the historical growth potential path.  Bank Negara has affirmed that Malaysia’s growth rate was 4.3% in 2019, the lowest in the last two decades.

It can be argued that the fall in growth rates is due to the fact that Malaysia is at a more mature level of development and with a higher level of development a lower rate of growth is to be expected.  On the basis of this argument, it is only natural that countries like Indonesia, Vietnam and the Philippines have higher growth rates than Malaysia.

We at MIER hold a different view.  We believe that Malaysia will have to grow at (and can grow beyond) 7.0 percent provided the right strategies are pursued.  Independent economists have over the years, and most recently, the World Bank, IMF been variously advocating structural reforms and, since the Third Malaysia Plan, increased productivity as the means to escape the so-called Middle Income Trap.  Instead the Malaysian economy since 2000, and as early as mid-1995, began to slide through a premature de-industrialization phase, where economic growth was sustained, albeit at a lower average rate, over the last two decades through reliance on consumption, deficit financing and rising debt, while income inequalities have remained stubbornly high.  Concerns over regional disparities, unemployment and new levels of poverty have unbalanced political and social discourse, as the original New Economic Policy remains unfulfilled.

The new Pakatan Harapan Government introduced in 2019 its “Shared Prosperity Vision 2030” (SVP2030) as an extension to the Vision 2020 posed in 1991 for the country to achieve developed status by 2020. SVP2030 has three objectives that include, tackling income and wealth disparity, creating a progressive economy that is knowledge-based and enabling Malaysia to emerge as a leading economy in Asia.  We support these objectives and, as in 1990 when we introduced the Income Doubling Plan, MIER has created a “Crouching Tiger Initiative” to make Malaysia the fifth Asian Tiger.

Malaysia has been in a phase of deindustrialization from the mid-1990s.  For Malaysia to emerge as a Tiger economy this premature deindustrialization process has to be reversed.  This can be done by re-emphasizing industrial development, introducing knowledge-based industries and building on cutting-edge technology to catch-up with four tiger economies.  Technology upgrading and the employment of cutting-edge technologies, such as those consistent with Industry Revolution (IR4.0), is especially relevant in the face of Malaysia’s deindustrialization where the decline in the contribution of the industrial sector to growth has not been addressed.  We thus find low wage growth in many industries, low value added and low contribution to GDP.  This calls for a national strategy that leverages on technology-intensive re-industrialization and modern services. The alternative is for Malaysia to be overtaken by its neighbors such as Indonesia and Vietnam, while the gap with the four Asian tigers and other emerging economies such as Chile keep on widening.

The Crouching Tiger Initiative maintains a focus on industries in oil and gas, renewable energy, aerospace and defense, advanced transport and logistics, medical devices, fintech, new materials, 5G telecommunications, AI and other IR4.0 technology such as robotics, smart agriculture and advanced transport technology such electric vehicles and vactrains and exploiting the halal industry.  Malaysia needs to promote domestic and foreign investments and R&D in high-tech areas such as these.  The strategy that is being proposed is to introduce high technology into relevant sectors with appropriate government support and private sector investment and R&D which, in turn, will increase productivity and wages, bringing Malaysia out of its middle-income trap, and transforming the country into a high-wage economy and becoming the fifth Asian tiger.  Of course, the plan should take into serious consideration the current and future geo-economic scenarios that will certainly influence the success of this Crouching Tiger Strategy.

This two-day conference will present some of the leading thinkers in economic policy on the first day.  The second day of the conference will showcase industry leaders who are trailblazers in electric car technology, bio-jet fuel production from palm oil and experts in new agriculture, telecommunications and the renewable energy sector, among other specialists.  The MIER National Outlook Conference 2020 presents an opportunity for policy makers, industry players, investors and policy and academic researchers to deliberate on some of the most pertinent problems facing the economy and possible solutions in addressing the goals of Vision2030.

Best Wishes.

Tan Sri Datuk Dr. Kamal Salih

Any query regarding our upcoming conference and events, please email to secretariat@mier.org.my