Twenty years ago, Malaysia’s then Prime Minister, Dr. Tun Mahathir bin Mohamad, laid out a vision for the future. Wawasan 2020, or Vision 2020, was intended to set Malaysia on the path to becoming a fully developed, high-income country by the end of the second decade of the new century.
Today, with eight years to go, the process has been given new impetus. A major transformation of the economy has boosted Malaysia’s economic performance. The focus is on competitiveness – and record trade and investment figures testify to what is being achieved.
Malaysia has one of the most dynamic economies in Southeast Asia, one of the fastest growing regions in the world, and is well positioned to capitalize on the tremendous potential on offer.
Over the years, a nation once dependent on exporting resource-based commodities, such as tin, rubber, and palm oil, has developed a multi-sector economy, with high value-added industries and technology-driven enterprise. Set on creating a knowledge-based economy, Malaysia has become regionally and, in some instances, even globally competitive. It is, for example, one of the world’s largest exporters of semiconductor devices, electrical goods, solar panels, and information and communication technology products.
Malaysia proved resilient in the global financial crisis and, while not immune from the global slowdown, is still registering a rate of growth many countries would envy.
GDP grew 5.1% last year from 7.2% in 2010. For this year, the central bank is forecasting steady 4-5% growth, given a global environment affected by the Eurozone debt crisis and the slowdown in some of Malaysia’s major trade partners, including the United States. However, domestic demand – the main driver of the economy – and private consumption are expected to continue to be the anchors for growth.
The bank says fiscal policies will be geared towards stimulating domestic economic activity and implementing projects under the Economic Transformation Program (ETP), launched by the Barisan Nasional government of Prime Minister Najib Razak in 2010.
Rahamat Bivi Binti Yusoff, Director General of the Economic Planning Unit, says the aim is to develop high value-added industries that not only generate higher growth, but also provide better paid jobs.
“We are focusing on innovation and creativity so that we can promote sustainability within the economy which will lead to further economic growth and achieve our national aspiration to become a developed nation by 2020. Our aspiration is that by 2020, we will have an average income of $17,000 per capita per annum, compared with the $8,000 average income we have now.”
The government has also launched 1Malaysia, the New Economic Model (NEM), and the Government Transformation Plan (GTP), variously aimed at enhancing the delivery of government services, removing barriers to investment, catalyzing change, and initiating a series of high-value, high-impact projects.
Prime Minister Najib, who has been in power since 2009, faces elections this year or early next year. When he goes to the polls, he will be pointing to what has been achieved and emphasizing the importance of stability.
Malaysia has a longstanding and expanding relationship with the United States, which regards it as a progressive Islamic nation. Politically stable, Malaysia is a federal parliamentary democracy, comprising 13 states, and three federal territories. Its multi-racial population, 28 million strong, is a largely harmonious mix of Malays and indigenous groups, Chinese, Indian, and others.
Malaysia is an important regional player. It is one of the most prominent economies in the Association of SouthEast Asian Nations (ASEAN), which is working towards becoming a single market in 2015. It is also a member in Asia-Pacific Economic Cooperation (APEC), and developing closer economic relationships with China, India, and the European Union.
President Obama has met frequently with Prime Minister Najib, and says the U.S. wants to be a strong partner with Malaysia. Economic ties between the two countries are developing through increasing levels of trade and investment.
The United States has made the largest overall commitment to Malaysia of any foreign investor, and was the third-largest source of new foreign direct investment in Malaysia in 2011. Total U.S. FDI in Malaysia is now in excess of $19 billion, with American companies focusing principally on the manufacturing, mining, and banking sectors.
Trade between the two nations has expanded to a value of nearly $40 billion a year, and is likely to be boosted further with the signing – hopefully this year – of the Trans-Pacific Partnership (TPP), a multilateral free trade deal currently being negotiated between the United States and nine other nations, including Malaysia.
Paul W. Jones, the U.S. ambassador in Kuala Lumpur, recently described the partnership with Malaysia as “one of our most promising in all of Southeast Asia”. He is confident that bilateral trade will continue to grow this year, and that the successful completion of the TPP will promote Malaysia as “an investment destination of choice for American companies looking to invest in Asia.”
He says, “Looking ahead, we will be working in 2012 to further expand four critical aspects of our relationship: our economic partnership, our work to strengthen East Asian institutions, our joint efforts to solve global problems, and the strong people-to-people ties that underlie everything we hope to accomplish together.”
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