KUALA LUMPUR — July 24, 2018: The World Bank sees Malaysia’s historic election that saw a change of government in over sixty years as a unique window of opportunity to deepen reforms and ensure economic growth benefits everyone.
In describing Malaysia as a remarkable country by many metrics, the bank’s lead economist for group macro-economics and fiscal management global practice, Richard Record, nevertheless observed that there’s a large disconnect between what the numbers show and how people feel.
An intensely fought campaign saw the cost of living issues featured prominently, as well as a debate on whether economic growth was really being translated into gains that improve the lives of Malaysians, he pointed out.
“What we find is that, while average growth might be robust, there is a growing disparity between Malaysians working in services versus manufacturing. Wages in the manufacturing sector, which is mostly export-oriented, are growing at four times as in services,” he said in an article entitled “Why it’s important to look beyond averages when it comes to Malaysia’s development,” released today. Record is based here.
Similarly, while average inflation may be low, food and housing costs have been rising at a much faster pace for several years, even more so in urban areas, where they are now a third higher than in 2010.
He noted that low-income households spend much more of their income on food and housing and the poorest 10 per cent of Malaysians spend two-thirds of their income on these two items, which have seen the greatest cost build-up.
Coupled with stagnant wage growth for those outside manufacturing, it then becomes clearer why many Malaysians feel that growth isn’t benefiting them.
“Ensuring that people have greater opportunities to improve their lives and access to social safety nets to help protect them from shocks are essential to inclusive growth,” he said.
Record, however, suggested that priorities must be given, among others, to raise productivity level, strengthen social assistance for low-income households and facilitate the achievement of inclusive growth, through policies that level the playing field in access to services and economic opportunities, including measures to increase women’s labour force participation.
Indeed, as the country moves closer towards achieving high-income country status, it is important to be aware of the broader aspects of development that are not captured by Gross Domestic Product growth such as in health, education and environmental sustainability.
But he acknowledges that navigating this change won’t be easy.
“But the country now has an opportunity to become known as a nation that is remarkable for not just achieving high rates of economic growth but for sustainable and inclusive growth that truly benefits all Malaysians.” — Bernama