Malaysia is likely to transition to a high-income economy between 2024 and 2028, a reflection of the country's economic transformation over past decades. However, further reforms are required to successfully join the ranks of other leading and developed economies, according to a new World Bank report - Aiming High - Navigating the Next Stage of Malaysia's Development launched today.
Malaysia's GNI per capita is at US$11,200 according to latest estimates, only US$1,335 short of the current threshold level that defines a high-income economy. Progress towards the threshold has been slowed by the impact on the COVID-19 pandemic and the country has the opportunity to undertake bold reforms to sustain future growth and to ensure that the proceeds of growth benefit all segments of the population.
"The Malaysian Government is committed to enabling a successful transition to high-income and developed economy status in the years ahead. We have strong foundations but also recognize that serious reforms and a new development model are required to ensure that this transition leads to a new reality for all Malaysians.," said YB Minister of Finance Senator Dato' Sri Tengku Zafrul Tengku Abdul Aziz. "Malaysians expect our economy to generate high-quality jobs and they demand higher quality public services, similar to the level seen in the high-income economies that we aspire to join."
"Even before COVID-19, it was clear that reforms were needed to raise not only the rate of economic growth, but the quality and sustainability of growth, too. As we look to join the ranks of the world's high-income and developed economies, Malaysia needs to be able to compete at the global frontier," said YB Dato' Sri Mustapa Mohamed, Minister in the Prime Minister's Department (Economy). "The 12th Malaysia Plan will set out our agenda for the next five years - and will be an important vehicle for Malaysia's recovery from COVID-19 and its entry into high-income and developed country status."
Representing the World Bank Group, Vice President for the East Asia and Pacific Region Victoria Kwakwa said that "Malaysia is aiming high in line with its development ambition to not only become a high-income economy, but a country in which economic growth is sustainable and shared. A core feature of our Flagship Report is to benchmark Malaysia against three groups of comparator countries: regional peers in ASEAN; OECD countries with advanced economies; and, importantly, 19 countries that have successfully transitioned from middle to high-income status during the past 30 years. Malaysia has what it takes to successfully make this next leap forward but it will require a new development paradigm and a set of bold measures and tough reforms."
According to the report, the development model that worked in the past is no longer equipped to help Malaysia navigate the next critical stage of its development. A different set of policies and institutions will be required to improve the quality, inclusiveness, and sustainability of economic growth in the future. The report noted that the best way to prepare for this likely income transition and to ensure that the country does not trail behind its aspirational peers , is for Malaysia to find the means to increase economic growth, improve competitiveness, create high-quality jobs, strengthen institutions, ensure greater inclusion and boost its overall financing capacity.
To download the report, visit https://openknowledge.worldbank.org/handle/10986/35095.
