Malaysia’s New Economic Model announced
Prime Minister Najib Razak has unveiled Malaysia’s New Economic Model (NEM) designed to help the country achieve its goal of “developed nation” status before 2020.
To achieve this, Malaysia’s economy must grow by 6.5 per year until that date (it shrank by 1.7% last year but gained 4.5% in the final quarter). Highlights of the NEM announcement include:
- Facilitate foreign direct and domestic direct investments in emerging industries/sectors;
- Remove distortions in regulation and licensing, including replacement of Approved Permit system with a negative list of imports;
- Overhaul the decades-old affirmative action policy that favors ethnic Malays;
- Reduce direct state participation in the economy and divest GLCs in industries where the private sector is operating effectively;
- Phase out price controls and subsidies that distort markets for goods and services;
- A new Equal Opportunty Commission to cover discriminatory and unfair practices;
- Simplify bankruptcy laws pertaining to companies and individuals to promote vibrant entrepreneurship;
- Liberalise entry of foreign experts specialising in financial analysis of viability of green technology projects.
The government will also make certain provisions for businesses initially disadvantaged by the NEM, as well as households in the lowest 40% income bracket.
The World Bank defines a “developed nation” as one with an annual per capita income of US$11,906 or more. Malaysia’s is currently $7000. The New Economic Model aims to raise that to $15,000 by 2020.
The full plan will be released in June 2010 after the government receives feedback from the public.
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