(PDF) Malaysia's New Economic Model

Added on - 15 Mar 2021

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1) Analyse the differences between “New Economic Model” and “Vision 2020”.The differences between NEM and Vision 2020 is NEM is part of the pillars of nationaltransformation which was targeted to hit the objectives of Vision 2020.The purpose of launching the NEM is to double the Malaysia’s citizen’s annual averageincome and lead Malaysia to become high-income country. Based on the report of NEAC,NEM has three major objectives. Firstly, Malaysia tend to increase the citizen’s annualaverage income with 6.5 percent gradually. Malaysia’s government hope each citizen’sannual average income are able to maintain between 1,5000 to 2,0000 in US dollar in 2020.Besides, Malaysia’s government tends to enhance the inclusiveness to ensure all of thecommunities to benefit from national prosperity. The key challenge is to design a series ofeffective mechanisms to balance the special status of indigenous peoples and the legitimateinterests of different groups. The government will adopt pro-market policies to help the weak,including assistance to the bottom 40% of households in the economy. Among these families,77.2% are indigenous and the people of Sabah and Sarawak. NEM's last aim is longevity,which refers to existing generations fulfilling present needs without undermining thegenerations in the future. And of that, policy must protect the natural wealth we are havingnow from being misused. In turn, quality of life must be maintained and government stepswill be taken to improve the sector in order to achieve productivity and equity. (UKEssays,2018)The Malaysian Vision 2020, is an ambition program launched to turn Malaysia into a fullydeveloped country within 30 years. With the launching of Vision 2020, Malaysia’sgovernment tends to let their citizens have enough necessities such as food and shelter forliving purpose. Vision 2020 aims to eliminate poverty in Malaysia by catching up the gapbetween rich and poor. It also aims to replace race association with main economic functionsand to have an equal distribution with regard to power, management and ownership of theglobal economy. Thus, Vision 2020 was established to sustain an annual population growthrate of 2.5 per cent and to double real GDP every ten years, between 1990 and 2020. Theultimate target of Vision 2020 is to makes Malaysia become fully developed nation by 2020.(UKEssays, 2018)For NEM, there are having several challenges that would be an obstacle for achieving itsobjective. Political will is one of the key and fundamental factors allowing the NEM to acceptimprovements in this new policy. It is difficult for the government to attain the target in NEM
without the political will. It is stated in the NEM report that the political will and leadershipneeded to break the log-jam of resistance and to prepare the people. In other terms, thegovernment must have determination to crack the log-jam of vested interest and rent-seekingbeneficiaries. If the log-jam of vested interest and rent-seeking beneficiaries still persistsduring NEM's operationalization, it will cause injustice to only some group received theadvantage of NEM and this result would lead to the inability to reach the inclusiveness NEMgoals. Besides, another one of the challenges of achieving NEM goals is mindset which isreferring to the way people think. Through the NEM strategy, both the mindset of the peopleand the mindset of the leader must be prepared for the change in Malaysian economy. Mostpeople in Malaysia do not realize that the Malaysian economies lag behind some of thecountries that are now experiencing emerging economies like China and India. This changeof attitude is the NEM's greatest challenge in achieving its goals, since NEM'soperationalization involves the participation of the entire country. Unless they are not able tochange their attitude, then the NEM strategy has great potential not to function smoothly or itmay struggle to achieve its goal. (UKEssays, 2018)For Vision 2020, it also has few challenges that may stopped Malaysia for achieving itsgoals. One of the challenges is the attempts of the Government to distribute resources are notsufficiently successful to reduce the income gap. While Malaysia's income gap between therich and the poor is narrowing in, it is still one of Southeast Asia's highest income inequalitiescountry. With the rising cost of living, such disparities would seriously impact Malaysianswithin the lower income brackets. Secondly, the lack of talent in the STEM fields (curriculumfor educating students) at the innovation and scientific development is one of the majorhindrances towards establishing a scientific and liberal society. Education plays a key role ingenerating professional human resources for higher income and economic development. Arise in the pool of talent would not only drive Malaysia to achieve a high-income economy,but also to become a developed country. Colleges and universities in most developedcountries seek to encourage imagination among their students through a mix ofextracurricular activities. Unfortunately, Malaysia’s education system aims to producingendless “As” for the existing and coming generations instead of focused on encourageinnovation.(You Jing, 2019)
2) Choose any FIVE (5) of the strategic thrusts of the Third Industrial Master Plan (IMP3)and analyse how these strategies thrusts could help to further develop the Malaysianmanufacturing industry.One of the strategic thrusts of IMP3 is stepping up the status of Malaysia as a major tradingcountry. The strategic thrust tends to develop and promote Malaysian brands andstrengthening exports by meeting international criterion. If Malaysian brands fulfil withinternational standard, it will attract large numbers of people by having the intention topurchase Malaysian products. Therefore, Malaysian manufacturing industry might generategreater sales from it. When Malaysian products are well-known, the demand will increaseand it cause the raise for sales. So, Malaysian products are able to develop further whichmeans it can sell more to the overseas. Sales will increase and the profit earned can invest forthe development of Malaysian manufacturing industry. Besides, the strategic thrust aims tonurturing domestic companies, including GLCs and SMEs, to become globally competitive.When number and quality of domestic companies become greater, it will attract foreigninvestment to Malaysian manufacturing industry and helps to move the industry forward.Strategic thrust of IMP3 aims to integrating Malaysian companies into regional and globalnetworks by encouraging industries to concentrate within regional and international networkson one core competencies and strengths. When industries concentrate within regional andinternational network, it would increase the exposure of Malaysian manufacturing products tooutsiders. It also may attract investment from local and foreign countries. With theinvestment, it helps to build stability for development of Malaysian manufacturing industry.Thus, this thrust also can be done through the outsourcing, off-shoring and other types ofbusiness practices. When most of the companies undertaking outsourcing and off-shoring,they will experience lower labour costs and make real savings and concentrate more on theircore business. These manufacturing firms can continuously improve the quality ofdevelopment. So, it enables Malaysian manufacturing industry to develop further.Strategic thrust of IMP3 also includes creation of innovative and creative human resources bymatching skills and abilities with business requirements and enhancing the availability oftechnologically qualified, experienced, and ICT-trained workforce. When the supply ofqualified labour fulfils the market needs, the process of production will be very smoothwithout any problems occurred. It helps to increase the production of Malaysian
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