KUALA LUMPUR – Malaysia needs to transform into a global export player, grow its manufacturing capabilities and create its own multinational corporations to break out of the middle-income trap, said Tan Sri Muhyiddin Yassin.
The prime minister said in the decade before the 1998 Asian financial crisis, the country’s cumulative gross domestic product growth stood at 8.4% annually, but has fallen to 4.6% in the two decades since.
“With productivity growth now stagnant, the annual per capita income has stalled at about US$10,000 (RM40,720) for nearly a decade, suggesting that Malaysia is ensnared in the middle-income trap,” he said in his opening remarks at the virtual Youth Economic Forum 2021, themed “A Brave New World”, today.
On the need to transform into a global export player, he said historically, most countries grew rich by learning to produce new, higher-value products for export.
“Hence, entrepreneurs with global ambitions will be critical in driving growth.”
Malaysia also needs to grow its manufacturing capabilities, to make increasingly complex and sophisticated products, he said.
“Based on the economic complexity index, even one standard deviation increase can elevate Malaysia’s GDP growth by between 0.7% and 1.6% a year.”
In terms of creating home-grown MNCs, he said this is important, as the pay-off is very high in terms of economic growth.
“For example, it has been reported that global giants Samsung and Hyundai, at one point, collectively drove a 30% growth in South Korea’s GDP.”
Muhyiddin said Malaysia must pursue a “moonshot” approach to create competitive domestic firms in frontier technologies.
“The start-ups you build today could and should be the next Amazon, Apple or Tesla.” – Bernama, March 5, 2021
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