MALAYSIAN NEW ECONOMIC MODEL

(NEM)

INTRODUCTION Malaysia has progressed from an

economy dependent on agriculture and primary commodities to a manufacturing-based, export-driven economy. To move the country forward, the Government has crafted a framework comprising four pillars to drive the change.

FIGURE 1: FOUR PILLARS OF TRANSFORMATION PROGRAM

(Source: http://www.mida.com.my , 2012)

INTRODUCTION The New Economic Model (NEM) to

be achieved through an Economic Transformation Programme (ETP) constitutes a key pillar which will propel Malaysia to being an advanced nation with inclusiveness and sustainability in line with goals set forth in Vision 2020

ETP- 12 SECTORS IN FOCUS (NKEAS)1. Oil, Gas and Energy2. Palm oil and Rubber3. Business Services4. Tourism5. Financial Services6. Education 7. Wholesale and Retail8. Electrics and Electronic9. Agriculture10. Healthcare11. Communication content and Infrastructure12. Greater Klang Valley and Kuala Lumpur

INTRODUCTION New Economic Model (NEM) was

introduced by Sixth’s Malaysian Prime Minister Dato’ Seri Najib Tun Razak

It was introduced on 30 March 2010 Consist of 2 Part: 1st Part – start 30 March 2010 2nd part – announced after 10th Malaysia Plan

INTRODUCTION 1st phase of NEM: Part 1 - Strategic

Policy Direction 2nd phase of NEM: Concluding Part -

Strategic Policy Measures

FIGURE 1 : APPROACH TO ECONOMIC DEVELOPMENT: THE OLD VERSUS NEM

(Source: : NEAC , Part 1 New Economic Model-Strategic Policy Directions , 2010, page 15)

FIGURE 2: GOALS OF NEM

(Source: NEAC , Part 1 New Economic Model-Strategic Policy Directions , 2010)

GOALS OF NEM Transform the Malaysian economy to

become one with high incomes and quality growth by 2020

The goal of the NEM is for Malaysia to be a developed and competitive economy

People enjoy a high quality of life and a high level of income resulting from growth that is both inclusive and sustainable

GOALS OF NEM The Malaysian economy will be market

leader, well-governed, regionally integrated, entrepreneurial and innovative

Private sector – the main driver of economic growth (innovation and creativity)

Public sector – the public goods provider (regulatory framework)

8 STRATEGIC REFORM INITIATIVES (SRIS)SRI 1: Re-energising the private sector to drive growthSRI 2: Developing a quality workforce and reducing dependency on foreign labourSRI 3: Creating a competitive domestic economySRI 4: Strengthening the public sector

8 STRATEGIC REFORM INITIATIVES (SRIS)SRI 5: Transparent and market-friendly affirmative actionSRI 6: Building the knowledge base and infrastructureSRI 7: Enhancing the sources of growthSRI 8: Ensuring sustainability of growth

FIGURE 3: THE NEW ECONOMIC MODEL: ENABLERS AND STRATEGIC REFORM INITIATIVES

(Source: National Economic Advisory Council (NEAC), 2010)

CHALLENGES FOR NEM On 2010, Malaysia per capita income

was US$7000 approximately RM23,100- The target is to doubled it in 10 years.

The gap between rich and poor is widening- 64% between rich and middle income.

Malaysia caught in the middle of income trap- Middle income countries cannot compete in all fields again all corners(NEAC,2010)

FIGURE 4: NATIONAL HOUSEHOLD INCOME (AVERAGE BY SEGMENT, 1980-2008; RM)

(Source: National Economic Advisory Council (NEAC), 2010)

FIGURE 5: GNI PER CAPITA USD THOUSAND

(Source: Nationmaster, UN, World Bank)