KUALA LUMPUR: There is a need to step up the implementation of the 51 policy suggestions of the eight Strategic Reform Initiatives (SRIs) in order to lift the country’s competitiveness levels higher.
Datuk Seri Idris Jala told StarBizWeek on the sidelines of the third edition of the Merdeka Award Roundtables that the focus on the National Key Economic Areas (NKEAs) alone would not help in boosting competitiveness.
The Merdeka Award, founded in 2007 with the participation of Petroliam Nasional Bhd, ExxonMobil and Shell, aims to promote though leadership and innovation, foster a culture of excellence and encourage a worldview.
This edition’s roundtable would feature the topic “Building a Globally Competitive Malaysia” and besides Jala, the other panelists include Merdeka Award recipient and architect Datuk Dr Kenneth Yeang and McKinsey & Co South-East Asia managing partner Oliver Tonby.
Jala said while the NKEAs focused on the country’s inherent strengths or strong presence in certain industries and sectors, the conditions for competitiveness must be created as specialisation alone would not be enough.
The SRIs come under the New Economic Model portion of the Economic Transformation Programme (ETP) with the NKEAs coming under the project-based portion.
“There’re 51 policy suggestions under the SRIs, they’ve not been fully implemented since last year was the first year of the ETP,” Jala said, adding that the results from the first year had been “very good”.
He acknowledges that Malaysia needs to be a lot more competitive as it is harder now for the economy to move to the high-income bracket from the middle-income bracket.
“We’re on the right track where implementation is concerned but we certainly need to do a lot more in implementing the SRIs because once we step up on the implementation, more investments will come and more importantly, our net trade value will continue to rise,” Jala said.
He said despite the gloomier global economic outlook, the progress of the ETP had shown that the country was going in the right direction. “Last year, we achieved RM830bil in gross national income, surpassing the RM797bil target. We achieved RM94bil in private investments whereas our target was RM83bil although we fell a bit short in jobs creation, achieving 313,700 job creations from a target of 330,000,” Jala said.
He added that trade levels, in particular net trade value (exports minus imports), would need to be increased as this was the other hallmark of a high-income economy.
“Although our total trade (at RM1.27 trillion) is twice the size of our gross domestic product (GDP) last year, our net trade is only 9% of our total GDP,” Jala said, adding that domestic demand comprised 69% of GDP with investments comprising another 22%.
Although having a largely domestic-driven economy was not necessarily a bad thing since the economy would not be fully exposed to a drop in external demand, he pointed out that to become a high-income nation by 2020, trade and exports would need to be increased.
Jala said that total trade value last year was one of the highest achieved in the country’s economy, with the RM1 trillion mark only surpassed twice before while government revenue and foreign direct investment (FDIs) were also the highest in 10 years.
“We even managed to reduce our deficit to 5% while the target was 5.4%. All these tell us is that we’re on the right track, the indicators are clear that our competitiveness levels are growing and the investments are coming in,” he said.
Jala said the FDIs showed that foreign investors were confident of the reforms the country was undergoing. “Its no surprise to me that the World Economic Forum has raised our global competitiveness ranking by five notches,” he said.