THE past few weeks have shown what Malaysia can do when it aims high. The impressive win of national shuttler Lee Zii Jia who emerged victorious in the All England Open Badminton Championships – the world’s oldest and most prestigious badminton tournament – is a great metaphor for this kind of spirit, and it should be replicated in the sphere of economic development.
On March 16, the World Bank in Malaysia released a new Flagship Report Aiming High – Navigating the Next Stage of Malaysia’s Development, which looks at the next frontier of the country’s development as the reality of becoming a high-income economy grows all the more apparent.
Over the next few years, Malaysia will pass the high-income threshold, calculated in gross national income per capita, putting the country on a par with world-leading economies.
This hope will set a higher bar of expectations among Malaysians as they begin to draw comparisons with other high-income countries. We can also draw lessons from the world of sports.
Parallels can be drawn with the young shuttler Lee, who now carries the tag of world champion and is no doubt eager to set himself apart from other aspiring competitors. Naturally, greater expectations are now placed on his shoulders to keep winning; and he will realise that the path forward demands nothing else but consistent, high-level performances.
Similarly, economic planners will feel the great weight of societal expectations once the high-income thresholds are crossed. When we started working on this report, everyone in the team had the same fundamental question: what will it take for Malaysia to truly move towards becoming a high-income, developed nation?
In our report, we look beyond the Covid-19 pandemic to chart out the development pathway for Malaysia in the years ahead, looking at how economic performance could be improved. Malaysia has long aspired to become a high-income and developed economy. How realistic is that prospect?
We find that Malaysia is close to achieving that goal and will likely be reclassified as high-income within the next five years.
However, we also looked at how Malaysia compares to the 19 other countries that made the leap from middle- to high-income in the last 30 years. And, here the gaps start to show.
Business-as-usual is not an option for Malaysia. Its rate of growth, even before Covid-19, was slowing considerably, and there is a growing sense that the economy is not creating enough high-quality jobs.
Reforms are needed to accelerate growth – the gaps in terms of human capital and female labor force participation is particularly large; to improve the effectiveness of public sector institutions; and to build a more meritocratic society that allows growth to benefit everyone.
It is not that Malaysia is doing badly – it is not. It’s just that the country could – and should – do better.
Clearly, some of these reforms will not be easy, especially when it comes to restructuring Malaysia’s tax and expenditure system to collect more and spend better, and modernising the country’s public service in line with the heightened expectations of an increasingly middle-class society.
But, the costs of inaction are high and the returns on reform, significant. For example, we estimate that a strong set of reforms to boost the quality of human capital and raise the rate of female labour force participation to the top 75th percentile of high-income economies would almost double Malaysia’s gross domestic product growth rate.
It is not that Malaysia is doing badly – it is not. It’s just that the country could – and should – do better. As with the mounting pressures on Malaysia’s new badminton champion Lee, expectations of Malaysians for their country will remain high, and rightly so.
The country has an impressive track record and strong foundations to make the leap into the exclusive club of high-income and developed economies. So, anything less than a top performance will be a disappointment.
Fortunately, with the right reforms, there is every likelihood that Malaysia will not just aim higher, but also achieve, the country’s higher promise. It is truly time for Malaysia to aim high. – The Vibes, April 6, 2021
Richard Record and Joshua Foong are World Bank Group country economist and external affairs officer for Malaysia, respectively
