Malaysia approaches a major milestone with much harder development work still ahead
KUCHING: Malaysia may be only a couple of years away from becoming a high-income country, but reaching that milestone should not be mistaken for reaching the end of its development journey.
UNDP Asia and the Pacific Chief Economist Philip Schellekens said Malaysia was approaching the high-income threshold after a prolonged period in the upper middle-income category.
“Malaysia is about to become a high-income country. Within a couple of years, we can be quite confident that Malaysia will reach that stage, but that will just be the beginning,” he said.
The scale of the challenge beyond that threshold remained considerable.
“The richest country in the world is still 10 times richer than what Malaysia will be when it crosses the threshold. So there’s this whole agenda ahead of us,” Schellekens said.
He said Malaysia should therefore focus not simply on reaching high-income status, but on building institutions, strategies and practices capable of sustaining growth and broader development afterwards.
“So we should be more focused on putting in place today institutions, strategies and practices that will not only get us over that threshold, but will sustain the momentum of growth and progress holistically for the years to come,” he said.
Against that backdrop, Schellekens rejected the view that Malaysia was caught in a middle-income trap.
“Malaysia is not in a middle-income trap. Malaysia has had a difficult time climbing out of the upper middle-income category into high income, but that doesn’t mean it is in a trap,” he said.
He said describing the situation as a trap risked suggesting that countries were stuck in a position from which they could not escape.
Instead, he regarded it as a policy challenge that could be addressed by changing institutions, strategies and practices.
“The middle-income trap is really a policy challenge, not a trap where you are stuck in fatalistically and you can’t do anything about.
“It is a policy challenge to change institutions, to adapt strategies and practices, to accelerate economic growth and in fact development more holistically, because it’s not just about income.”
Schellekens said the challenge was also not confined to middle-income economies.
Low-income and high-income countries faced their own versions of the same task as they sought to improve institutions and sustain development.
“The policy challenge doesn’t disappear,” he said.
For Malaysia, the more immediate question is therefore how to turn existing policy ambitions into results.
Having worked in the country for about 15 years, Schellekens said Malaysia already had plenty of plans, ideas and capable people.
“Malaysia has had many plans, many development plans, many good ideas, and there is no shortage of good ideas and smart people in Malaysia,” he said.
What the country needed now was execution.
“The era of diagnostics and coming up with a laundry list of policy solutions, what needs to be done should be over,” he said.
“The only priority is to make change happen, to make change actually happen.”
Schellekens said that required political will, collaborative leadership and civic engagement to build and sustain support for reform.
“That requires building political will, collaborative leadership, civic engagement. We need to nurture, foster interest in change,” he said.
Policies should also be “future-proofed” so that reforms were not simply reversed by subsequent administrations.
Beyond political support and policy continuity, he said Malaysia needed stronger state capability, particularly within the civil service, to carry reforms through.
“We need to improve state capability, we need to enhance the capacities and capabilities of the civil service to implement that change better,” he said.
Schellekens said governments that successfully delivered change tended to combine long-term direction with the ability to respond to new circumstances.
“They are anticipatory, they have a vision in mind and they stick to the vision over the long term,” he said.
“They have a capacity to consistently implement, but they also adapt as needed as new circumstances arise and they are agile.”
That included the ability to quickly redeploy financial and human resources when required.
With the high-income threshold now within reach, Schellekens said Malaysia’s challenge was no longer primarily about identifying what needed to change.
“The focus now truly has to be on making change actually happen. We know what to do, but we need to do it.”
