THE World Bank’s latest Malaysia Economic Monitor report on Thursday, December 14, had some good and some disappointing news.

The good news is that Malaysia’s economic growth has exceeded all expectations. It is now estimated to achieve the highest growth of 5.8% this year since 2014, and to keep a steady pace to attain about 5.2% growth next year.

The latest International Monetary Fund (IMF) report is more optimistic and projects growth from 5% to 5.5% for next year.

However, the sad news is that these high growth rates have not been sufficient to ensure that Malaysia will achieve its target of becoming a developed country, or attain high-income-nation status, by the target date of 2020.

Instead, we might only acquire “development-economy” status by 2020 to 2024! Apparently, we cannot achieve our target by 2020!

But here again, the World Bank has a serious caveat. To make this vital breakthrough, we have to undertake some more major reforms or undertake greater socio-economic transformation.

These proposed reforms have been stated before. Indeed, we have adopted some reforms, but they have not been adequate to move the economy forward strongly enough, to become a developed country by 2020!

More reforms needed

The World Bank, in its characteristic diplomatic style, has mildly urged us to enhance productivity, raise our lack of competition in key markets, and reduce critical skills deficits.

I wish the World Bank would have made more specific recommendations on how to improve our productivity, competition and critical skills. It recognises the heart of our socio-economic and even political problems, but seems constrained or reluctant to provide the particular prescription to treat our major underlying economic structural weaknesses!

That is why, perhaps, the World Bank has also not highlighted the major complaints and concerns of most Malaysians. These pertain to rising inflation, the weak ringgit, high unemployment rates especially among graduates and low international ratings for our education standards in general.

All this has caused some decline in the standard of living and quality of life for, especially, low-income groups.

We wish the World Bank would also measure our socio-economic performance against more wealthy former developing countries that were, once upon a time, weaker than us. What reforms did they introduce and implement that we failed to, or did so somewhat slowly, even weakly?

What has gone wrong, that has caused us to miss our target of achieving developed-nation status by 2020?

The latest Moody’s Investors Service report specifically cautioned that “Malaysia’s reserves at current levels are insufficient to meet maturing external long-term debt repayments and short-term debt”. Moody’s, however, consoles us that our economic growth and other factors “could mitigate this vulnerability to sudden shocks”.

But the message is clear. We need to build larger reserves and stronger economic resilience.

The World Bank expects private consumption to remain the main driver of economic growth. However, household debt is also high and, therefore, not very healthy.

We are also disturbed to learn the new trend of our youth of between 25 and 44 forming the largest group, about 60%, of the 94,408 bankrupts reported from 2013 to August this year.

So, we can ask whether our private consumption and economic growth are, to some extent, being pushed up by the rising number of young bankrupts. Their conspicuous and wasteful consumption must be discouraged or we will have more problems!

Conclusion

I believe that Prime Minister Najib Razak is right when he says the World Bank and IMF’s international reports are “proof that we are heading in the right direction”. However, they also subtly and cautiously warn that our successes may not be sustainable, unless we reform more strongly and at a faster pace!

Greater public confidence can stimulate faster economic growth, a stronger ringgit, higher productivity, lower inflation, and higher wages and incomes, especially for low-income groups.

There is also no doubt that more racial and religious understanding, and tougher action against extremism from all quarters, will help raise domestic and foreign confidence in our national capacity to sustain our progress faster towards, and prevent the postponing of, the target of being a developed country by 2020!

Hence, we cannot be complacent. We have to reform more and faster, before and especially after the 14th general election, when the politicking has settled down and we can all march forward as a united nation, towards achieving much greater heights!

Finally, let’s hope and pray we all have a Happier New Year! – December 18, 2017.

* Ramon Navaratnam is chairman of the Asli Centre for Public Policy Studies.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.