I thank the National Chamber of Commerce and Industry of Malaysia for this opportunity to speak to your members at this annual general meeting. I also spoke at the same occasion on 27 July 2023, just an hour after Prime Minister Datuk Seri Anwar Ibrahim launched the Madani Economy Framework.
Since Covid-19 in 2020 and the Ukraine War in February 2022, as well as the crisis in Gaza since October 2023, the world has essentially shifted from the “just-in-time” pursuit of efficiency to a “just-in-case” quest for resilience.
It is also evident that the world is now entering a multipolar phase, a major departure from the period since the fall of the Berlin Wall in 1989 until just a few years ago. At the same time, the great power competition between the United States and China will have an impact on almost everything.
When the first Cold War started in 1948, most countries were colonies of great powers. Now, in a multipolar world, every nation has agency and would want to have a say. And, many countries are now reasonably rich and prosperous.
The advent of new technologies, such as EVs, renewable energy and AI, are great levelers, bringing closer the gap between countries. Because the world is starting these experiments at almost the same time, no one is sure which country would be ahead. Think about the technologies in China or think about the massive investments some of the oil-producing Arab countries are putting into renewable energy.
Today, I am speaking to the senior leaders of Malaysian businesses and industries. I would like you to imagine two things:
First, the multipolar world that I had just described is just at the beginning. The new cycle may last for 15-20 years, and all previously held assumptions that guided us for all these while may need to be re-looked at and changed;
Second, Malaysia, especially the greater Kuala Lumpur, has the potential to be the business hub or regional headquarters for the Global South.
Malaysia has business leaders and most importantly, workers, who have been working with Western, Japanese and Korean industries for many decades but also connect very well culturally with Arab businesses, Chinese businesses, Indian businesses etc.
Admittedly we need to do more engagements as a nation and as businesses, connecting with Africa and South America.
Not many countries are so deeply endowed culturally like Malaysia. We must harness our strength and help the multipolar world to connect and do business with each other.
On 27 July 2023, Prime Minister Datuk Seri Anwar Ibrahim presented his Madani Economy Framework. A month later, he presented the National Energy Transition Roadmap and the New Industrial Master Plan 2030.
A long-time observer of the Malaysian economy said to me that of the last 20 years, the current government is the most purposeful government with the clearest economic agenda.
Of course clarity on the economy doesn’t mean that our nation will get rich overnight and all the past problems would be swept away.
Nevertheless, the clarity of policy intentions is now appreciated by the market and by the investors. Malaysia approved the highest amount of investment in history in 2023 and the economy is estimated to have grown by 5.8% in the second quarter of 2024.
A year ago, when PM Anwar articulated the aspiration that Malaysia’s economy would be able to grow at 6% per annum, it was hard for many to imagine that. It is now not far-fetched to envisage growing at closer to 5% this year, a bit higher in 2025, and above 6% in 2026 if we get our acts together and if the global conditions are in our favour.
The Madani Economy Framework has clearly articulated the need to raise the ceiling and raise the floor. PM Anwar is very clear in his approach. The nation would not grow if the people are not sharing the fruits of growth.
As we celebrate the anniversary of the unveiling of the Madani Economy Framework, I would like to present my interpretation of the ceiling and the floor to sharpen our thinking.
To raise the ceiling, Malaysia needs to do the 3 I’s – investment, innovation, and internationalisation – very concertedly and intensively.
As identified by PM Anwar, investment constituted about 40% of GDP during the heyday of the first economic takeoff between 1988 and 1997 but hovered around 20% in the last 20 plus years. We certainly need more investments, and a dynamic economy to create more investable opportunities with a decent rate of return.
In the 1990s, among the emerging economies, Malaysian technology was just behind South Korea and Taiwan, and near peer to Singapore. Malaysia cannot just be a trading nation as we used to understand it. The conventional understanding of trading is that we buy and sell stuff.
We need to trade technologies and therefore we need to innovate.
As the world is dealing with many new technologies such as AI and new challenges such as climate change at almost the same starting point, we must invest in innovation.
The next point to raise the ceiling is really to internationalise and be the hub for the Global South.
To raise the floor, 3 W’s are needed – wages, women empowerment, and welfare reform.
Malaysia’s low wage, low skill, low technology and low productivity vicious cycle has to end. We should come to a national consensus to end this silly situation of employing millions of unskilled foreign workers while Malaysians work as foreign workers in Singapore, Australia and Korea.
We must regain the spirit of the 1990s to tell our young generation that the opportunities are here, and we build the nation together.
Making our workers richer also makes perfect economic sense. Their wages will be spent in our economy and thus create stronger aggregate demand, and feed into much larger domestic consumption funded by income and not by debts.
Women empowerment works the same way. 65% of our public university students are women, which indicates a higher enrollment rate of women compared to men. However, the balance changes upon these graduates entering the workforce. 58% of the civil service is constituted by women. At the decision-making level of the civil service (Jusa/super scale C and above), 42% are women, which is very high among developing countries. From 2023 onwards, Malaysia has mandated 30% of public listed board membership to be constituted by women, and compliance is high.
Yet, the female labour participation rate in Malaysia is 56% as compared to 82.9% for men, which is lower than many of the Southeast Asian economies.
It is clear that Malaysia is doing well as far as developing women leadership but women at the lower end of the workforce are finding it hard to stay due to the lack of support.
The more women are paid better and the longer women stay in the workforce, the richer their families would be, and the richer the whole nation would be. I call on businesses to do everything possible to bring more women into the workforce and keep them longer in the workforce.
The last W is welfare reform. We need to do more to improve public health care, child care, aged care, and other parts of the welfare system to create a society that feels secure about their economic well being.
If we could raise the ceiling and the floor at once, the future is very bright for Malaysia and we shall see a second takeoff.
Thank you.