Written by Carmelo Ferlito, CEO of Center for Market Education and Benedict Weerasena, Economist at Bait Al Amanah (House of Trust), Kuala Lumpur.

First published in The Star on 11 March 2021

THE year 2020 marked the end of the 11th Malaysia Plan and Vision 2020. Since then and more precisely, since Malaysia was hit by the Covid-19 pandemic, there has been no clear medium- or long-term economic direction or development strategy to propel the country’s socioeconomic growth.

As it stands, all we have are the short-term national stimulus packages like Prihatin, comprising mainly stop-gap measures focusing on job and income protection.

Despite the helpful and timely initiatives that have been introduced, Malaysia still lacks a mainline economic narrative to instil confidence among businesses and investors on the future direction of the nation.

Over the past six decades, national development planning has been central in guiding policy-making. Since the commencement of the first Malayan Five Year Plan (1956-1960), successive development plans have promoted growth and key socioeconomic reforms in the midst of both favourable economic climates and tough recessions.

Despite several setbacks, the plans have been instrumental in largely eradicating hardcore poverty, growing the middle class, increasing prosperity and social well-being, diversifying the economy and enabling Malaysia to attain the status of upper middle-income nation.

The clear economic directions also propelled Malaysia into becoming a leading destination for investment in the region in the early years.

However, Malaysia has lost its attractiveness in recent years with regional counterparts such as Indonesia and Vietnam steaming ahead with better growth trajectories and policy competitiveness. Indeed, the prolonged absence of a clear and strategic development direction in addition to political instability will leave Malaysia lagging behind in the years to come.

The key measures that need to be adopted include a tax reform, an investment attraction strategy, a direction on international borders and restructuring of the labour market.

Under this perspective, the CME-BAA Macroeconomic Observatory (MEO), a joint platform promoted by the Centre for Market Education and Bait Al Amanah to monitor economic growth, monetary policy and fiscal policy, is emphasising the crucial need for the 12th Malaysia Plan to be tabled as soon as possible and efficiently implemented.

With the new circumstances and challenges that Malaysia is facing, there is a need to steer the nation in the right direction with fresh ideas and new insights. We cannot allow another eight months of 2021 to go to waste.