Kuala Lumpur, 20  March  2017 – According to the latest figures by the Economic Planning Unit (EPU) the average income per person in Malaysia has fallen by as much as 15% from USD 10,345 in 2013 to USD8,821 in 2016. This raises serious questions on whether or not Malaysia can achieve its goal of becoming a high income nation by 2020  says the Institute for Democracy and Economic Affairs (IDEAS).

Commenting on the figures, IDEAS Director of Research Ali Salman said, “The figures are rather alarming but t he government has yet to give a full explanation on how they will address the issue. I think this is partly because when the figures were reported in Malaysian Ringgit it showed positive growth in average income at RM32,596 in 2013 to RM37,930 in 2016. But in US dollars, which is what countries generally use as a benchmark, the story is vastly different.

” At an average yearly income of USD8,821 Malaysia today is severely  off-track in our Wawasan 2020 goal of achieving a Gross National Income (GNI)  of USD 15,000. When the GNI was USD 10,345 in 2013, the goal was realistic but challenging. Now it will be extremely difficult and with 2020 being just 3 years away we simply cannot afford to drop further down”, explained Ali.

” One of the main reasons behind the  drop is because of currency depreciation. Malaysia was the biggest loser in the region in 2016. But the drop in currency  is actually  symptomatic of a larger problem which is Malaysia’s decline in competitiveness. Although, Malaysia is still relatively competitive , we have dropped in rank under IMD’s World Competitiveness Yearbook in 2016 by 5 places from 14th in the world to 19th as well as the  World Bank’s Ease of Doing Business Index, from 17th in the world to 18th. And one of the reasons  why we are becoming less competitive is our lack of high-skilled labour. In 2015 o nly  27.4% of Malaysian had  a university education whereas the number of workers in Malaysia with no formal education increase to  12.48%  from  2014 to 2015″, elaborated Ali Salman.
“Our policies  have  also become increasingly unpredictable which is not conducive to a business friendly environment . For example, t he Price Control and Anti-Profiteering Act which was introduced to stop businesses from increasing prices during the GST introduction phase is now being kept indefinitely.  This direct intervention although intended to protect consumers initially, in fact creates unnecessary burden to businesses and has increased the  cost of doing business,” added Ali Salman.
” Ultimately  this inconsistency puts investors off.  In a dynamic economic environment, Malaysia needs a paradigm shift in its policies. What we need is more competition, more free trade and less  controls and interventions  by the government. Only more economic freedom can help us break the Middle Income Trap, which seems to have been more gripping than ever”, concluded Ali Salman.
 

 

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