EXECUTION is key for the “bold” and “ambitious” five-year 12th Malaysia Plan (2021-2025) tabled by Prime Minister Ismail Sabri Yaakob today, which focuses on rebuilding an economy ravaged by Covid-19, economists said.

A total of RM400 billion has been allocated for development expenditure for the five-year plan, which contains several innovative proposals to reset the economy.

This is RM140 billion more than the RM260 billion allocated for the 11th Malaysia Plan and the highest to date.

Socio-Economic Research Centre executive director Lee Heng Guie said political commitment at the highest level and an inclusive approach through continuous engagement with all stakeholders, including the opposition and civil society groups, is important to ensure the plan’s success.

“The first challenge I see is in terms of fiscal resources. We must have adequate fiscal resources to execute the plan. The RM400 billion development expenditure is the highest ever… about RM80 billion a year,” he told The Malaysian Insight.

Lee drew attention to the development allocation for Budget 2021, which was about RM69 billion, which also happens to be the first year of the 12MP. He said it is important to see whether there is a constraint in fiscal resources.

Apart from that, the government would have to look at bridging implementation gaps and ensure good inter-ministerial and inter-agency coordination to execute the plan, he said.

Lee said instead of a mid-term review as was the norm, the government could consider tabling an annual progress report on the initiatives achieved.

“This will keep the planners and agencies on their toes,” he said while adding that this would also allow stakeholders to keep close tabs and come up with intermediate responses to realign to the goal.

‘Tall target’

On the gross domestic product (GDP) growth target of between 4.5-5.5% a year, he said the Malaysian growth potential had fallen to between 3-4% due to the Covid-19 crisis.

“We still can push by increasing our productivity, efficiency of capital, investing in technology and digital (space) to push for high quality growth and create more high-income jobs,” he said.

12MP also aims to increase the average monthly household income from RM7, 160 to RM10, 065 by the end of the five-year plan.

Commenting on the mean household income target, he said it is quite a “tall target.”

He said this was because many people have been pushed to the Bottom 40 category due to Covid-19, some have depleted their financial resources while others are still out of jobs.

Head of Research at MIDF Amanah Investment Bank Bhd Imran Yusof, said the 12MP appears to be a bold and ambitious plan to not only boost the Malaysian economy following the effect of the pandemic but also to reform and transform its structure.

“It does seem to address the current need of our economy and look to future proof it as well. We opine that technology has been put at the forefront as a foundation and support to the various initiatives, such as increasing productivity and employee compensation to GDP amongst others,” he said.

“We also like the fact (and as we expected) that sustainability was given emphasis, such as the adoption of a circular economy, addressing ESG (environmental, social and corporate governance) issues, and promoting the adoption of green standards in construction to name a few,” he added.

Imran said implementation is key for the high-level strategic plan.

“Therefore, the execution will likely be addressed in the annual budgets. This is something that we should be monitoring closely for the next five years. Other than that, we believe that it does indeed look to address the needs of the country, especially with better adoption of technology to remain competitive,” he said.

On the mean household income target, Imran said that this was achievable with the increase in productivity, and that technology would be a key enabler for this.

Meanwhile, Bank Islam chief economist Mohd Afzanizam Abdul Rashid believed that the sizeable allocation for development expenditure would be positive for GDP growth.

He said if the initiatives are implemented in a timely manner, then it will have an immediate multiplier effect on the economy.

“Nonetheless, the fiscal deficits are expected to be reduced to between 3% to 3.5% by 2025. Perhaps there will be new taxes to be introduced along the way, especially when the economic recovery becomes more sustainable,” he said.

Afzanizam added that technology, particularly the 4G and 5G network and increased spending on research and development (R&D) from 1% of GDP in 2020 to 2.5% of GDP in 2025 are key points to note.

He said this shows that the government has remained committed to leveraging on technology to ensure quality economic growth.

“This would lead to demand for highly skilled labours. In a nutshell, the 12MP has covered a lot of ground. With timely implementation, it could accelerate the economic recovery process,” he said.

Malaysian Institute of Economic Research’s head of research Shankaran Nambiar said the growth rate projections are quite modest for the period, which is to be expected as the global economy may not be vibrant in the next few years.

He also hoped that softer issues such as governance and leakages would also be given adequate attention.

“12MP definitely does address the challenges that the economy faces. We do need to rebuild the economy, given the damage that the pandemic has caused. 

Similarly, there is an urgent need to propel the economy forward. Both these factors are given due attention in 12MP. But, the commendable thing is that, distributional concerns are not being neglected, he said.

There are three themes, four catalytic policy enablers and 14 game changers under the 12MP.

The three themes are: resetting the economy, strengthening security, well-being and inclusivity, and advancing sustainability. The four catalytic policy enablers are: focusing on developing future talent, accelerating technology adoption and innovation, enhancing connectivity and transport infrastructure, and strengthening the public service.

The 12MP will be guided by Wawasan Kamakmuran Bersama 2030 (Shared Prosperity Vision 2030) by focusing on programmes to alleviate poverty, with a specific focus on the hardcore poor or bottom 10%. – September 27, 2021.