KUCHING: In terms of the economy, Malaysia will still face three major unresolved issues in the coming years, namely the middle income trap, income inequality, and brain drain.
Prof Dr James Chin of the Asia Institute, University of Tasmania in Australia said the issue of the middle income trap (MIT) was extremely time sensitive.
“In terms of core economic statistics, countries that the Malaysian middle and upper class used to look down upon—such as Vietnam, Indonesia, and Thailand—have actually overtaken Malaysia. Even countries like the Philippines are catching up very fast.”
He said this when discussing the economy as one of the key challenges facing Sarawak in his lecture on Past, Present and Future Political Landscape in Sarawak held via Zoom on Thursday (July 22) – the first in a series of lectures under an inaugural leadership programme organised by The Sarawak Initiatives (TSI).
He noted that the new economic model introduced over a decade ago was supposed to help Malaysia move out of the MIT.
“But the reality is that after strong blowback from the Bumiputera business community, many of the key recommendations were taken out.
“If you speak to experts in this field, they will tell you that without changes to the Bumiputera policy, you really cannot reform the fundamentals of the Malaysian economy.”
Prof Chin said in order to move out of the MIT, certain issues would have to be reformed.
Aside from education, he said there needed to be a shift in the economy towards a higher wage economy. In addition, a lot more needed to be invested into research and development.
However, he said among the key obstacles faced was that the country’s manufacturing sector and Malaysian capitalists seemed to be addicted to cheap foreign labour and they refused to upgrade their factories.
He added that other obstacles were a lack of incentive to upgrade, blocked education and civil service reforms, and the Bumiputera agenda getting stronger.
He said income inequality was also a major problem, adding that reforming this would be very difficult as income inequality was now used as a political weapon.
“The real issue is not really income but rather the lack of quality education which would lead to better skills and higher paying jobs.
“Income inequality is also linked to the wider picture of crony capitalism, corruption, opportunities, and racial politics.”
Prof Chin said the third significant issue in the economy was brain drain, pointing out that while a study by the World Bank said one million professionals had left Malaysia, experts would say that the figure was likely closer to two million.
“One can only guess and I believe it is a very good guess that it is the most educated and the productive segment of the Malaysian community that has left Malaysia.
“The general consensus is that 80 per cent of those who have left are from the non-Malay community. Other credible studies say there has been a rise of 300 per cent in the number of skilled Malaysians moving out in the last two decades.”
He said in terms of such trends, the nation had reached a critical stage with more people leaving Malaysia at a faster rate.
“In terms of Sarawak, you can see that we have reached a critical stage – many young professionals from Sarawak have left,” he said, adding that the majority had headed to the Klang Valley and Singapore.
