13th Malaysia Plan: Next phase, new path

New Straits Times

4 days ago

KUALA LUMPUR: The 13th Malaysia Plan (13MP), covering 2026-2030, is expected to chart an ambitious course to transform the nation into a high-income, innovation-led economy.
Key thrusts of the plan include high-tech industrialisation, sustainable development and inclusive growth, amid growing emphasis on fiscal reform.
To be tabled during the parliamentary sitting tomorrow (Thursday), the five-year development blueprint will introduce significant policy shifts in response to evolving global and domestic challenges.
UiTM's Business Management Faculty senior lecturer Dr Mohamad Idham Md Razak said 13MP may prioritise the acceleration of the digital economy, particularly in artificial intelligence, 6G technology and cybersecurity.
At the same time, it will focus on expanding high-value industries including semiconductors, electric vehicles and aerospace, while working towards the national target of generating 40 per cent of energy from renewable sources by 2035.
Idham added that the plan will likely place strong emphasis on fiscal reforms, including the rationalisation of subsidies to enhance government revenue.
Inclusivity will be a key focus, with initiatives such as development programmes for Sabah and Sarawak, affordable housing and upskilling efforts aimed at narrowing regional and socioeconomic disparities.
"13MP may focus on trade diversification to mitigate geopolitical risks, ensuring Malaysia remains competitive amid US-China tensions.
"The overarching vision is a resilient, innovation-driven economy that balances growth with sustainability and equity," he added.
Idham said 13MP will continue key initiatives from 12MP, particularly in infrastructure development.
This includes the completion of the East Coast Rail Link and Johor-Singapore Special Economic Zone as well as digitalisation and energy transition efforts.
Unlike earlier plans characterised by broad subsidies, the 13MP is expected to shift towards targeted assistance, fiscal consolidation and structural reform., including potential tax restructuring and stricter management of subsidies.
Idham said significant policy shifts are expected, including labor market reforms, tax restructuring and industrial upgrades under the New Industrial Master Plan.
"Unlike 12MP's broad subsidies, 13MP may adopt targeted cash aid to improve fiscal efficiency. Geopolitically, Malaysia will likely diversify trade partnerships to reduce reliance on China and the US.
"These shifts reflect lessons from 12MP, emphasising structural reforms, fiscal prudence, and high-value growth to overcome past limitations," Idham added.
LIMITED FISCAL SPACE
However, economist Dr Nungsari Ahmad Radhi cautioned that the government's ambitions may face stark fiscal constraints.
He said nearly 60 per cent of government revenue is absorbed by operating expenditure, mainly salaries, pensions and debt servicing, leaving limited room for development spending.
"Given the state of where the fiscal situation is, total revenues collected by the government is sufficient to just cover operating expenditures which therefore means that almost every ringgit spent for development expenditures has to be borrowed.
"The Fiscal Responsibility Act itself imposes both limits on annual deficits and accumulated debts, so there is only so much that can be borrowed and allocated for development expenditures," he said.
CALLS FOR LIBERALISATION AND STRUCTURAL REFORM
Economist Dr Geoffrey Williams said the emphasis should be in reducing the role and interference of government through exiting business and commercial areas and leaving them to the private sector.
He said the government should focus on areas that are the direct legitimate concern of government including public health, education and social protection.
"Regulations should be slashed and focused only on minimum standards of health and safety, anti-corruption, good governance and anti-trust issues," he added.
Williams said social issues must focus on creating sustainable living income levels using direct help in the form of a universal basic income and a universal basic pension.
These must support policies to raise incomes through meaningful decent work with a fair share of value created going to employees.
He proposed the introduction of free higher education through a reform of the existing system, including the replacement of PTPTN loans with a more sustainable financing model.
He added that economic mechanisms must include liberalisation of markets, reducing regulatory burdens, limiting government interference and promoting creative, innovative, agile and competitive businesses.
"We should be cautious about 'patronage cascades' where policies are specifically designed to pass projects to vested interests.
"Broad-based universal programmes available to everyone with open and transparent access routes should be the emphasis," he said.
Williams noted that the US tariff issue serves as a reminder that protectionist policies often come with reciprocal costs.
As such, removing barriers to market access should be a key priority for the 13MP.
He said most of the targets set in previous Malaysia plans have either not been fully achieved or not achieved at all, yet proper independent assessments have rarely, if ever, been conducted.
"The main unfulfilled target of every Malaysia plan is to build on a mechanism to end the need for future plans," Williams said.