ON July 27, Prime Minister Anwar Ibrahim presented the Madani economy framework in a speech . The Center for Market Education (CME) is particularly enthusiastic about three of its seven pillars.

1. For Malaysia to be ranked among the top 30 largest economies in the world (Pillar 1);

2. For Malaysia to ranked among the top 12 in the Global Competitiveness Index (Pillar 2); and

3. Commitment towards fiscal sustainability, targeting a deficit of 3% or lower (Pillar 7).

The reflection brought forth in “Focus 1: Malaysia – Leading Asian economy” is particularly important for the development of the country. It contains some points that have been highlighted by CME on several occasions. In particular, we found a common aim in the following points:

* Recognition of Malaysia’s premature de-industrialisation;

* Promoting free trade beyond traditional free-trade agreements and pursuing more bilateral and multilateral agreements to promote free movement of workers;

* Need to improve the ease of doing business;

* Strengthening Malaysian Investment Development Authority action and promoting industrial infrastructure; and

* Importance of reviving domestic direct Investments.

These are not only realistic long-term targets, but imperative actions to revitalise an economic vocation which has been deteriorating in the past years.

However, to achieve these targets, some conditions need to be met. They are policy action at institutional rather than at micro-level with the government avoiding direct control over the economy; and long-term political commitment is necessary, and this implies political stability;
competent people, with both and understanding of economic forces and entrepreneurial experience, are needed to lead the charge.

Other good points are a relaxation of visa regulations and rebuilding of fiscal discipline. CME hopes for fast implementation with amended immigration rules and with a comprehensive fiscal reform that needs to be built on a new GST; improvws collection though fiscal devolution (fiscal federalism); and rationalisation of subsidies and government spending. 

CME is more sceptical of micro-targets such as workforce participation, income distribution, and housing policies. While the macro-targets can be achieved with comprehensive institutional reforms and no direct interference with market forces, micro-targets require more direct intervention and may result in market distortions, delivering outcomes that are not in line with the objectives.

In conclusion, CME invites the government to focus on the implementation of the macro-targets with institutional reforms, pro-market policy actions and commitment to free trade as outlined in the prime minister’s speech. With political stability and the right set of people at the helm, the targets can be achieved.  The positive outcomes will naturally support the achievement of micro-targets as a better economy will improve the living standards of the people. – July 31, 2023.

* Carmelo Ferlito is Center for Market Education CEO.