Balance of prudence, ambition forecast in 13MP

The Star

5 hours ago

PETALING JAYA: Malaysia's upcoming 13th Malaysia Plan (13MP) is set to mark a turning point for the nation's economic trajectory, aligning public policy with structural shifts at home and abroad.
Amid an evolving geopolitical backdrop, the five-year development roadmap for 2026 to 2030 is expected to balance ambition with fiscal prudence while anchoring long-term socioeconomic transformation.
According to BIMB Research, the government is likely to prioritise measures that cushion the economy against external headwinds and support broad-based growth.
'Given the challenging external environment, we anticipate the government will place greater emphasis on strengthening and sustaining domestic demand,' the research house said in its report.
This, it added, could involve further salary adjustments for civil servants and a potential increase in the minimum wage to above RM2,000 by 2030.
Development of human capital is likely to feature prominently, BIMB Research said.
'The continued rollout of training and upskilling initiatives could raise the share of skilled labour in the workforce to over 35%, which could push the national median salary to beyond RM4,000 by 2030,' it highlighted.
However, BIMB Research cautioned that global uncertainty would remain a dominant factor in shaping Malaysia's macroeconomic strategy.
'US President Donald Trump is expected to remain a central figure on the geopolitical and economic stage through 2028,' it said.
Over that time frame, international markets are likely to face continued uncertainty due to the potential volatility and unpredictability of US trade and economic policies, the research house added.
Simultaneously, geopolitical tensions in both Europe and the Middle East are anticipated to persist well into the next half of the decade.
In such a climate, commodity prices are expected to remain broadly stable at current levels through at least 2029, BIMB Research pointed out.
On a positive note, the tabling of 13MP is expected to inject fresh confidence into Malaysia's capital markets.
'Malaysia's equity landscape is poised to benefit significantly from the strategic initiatives laid out in the 13MP,' BIMB Research said.
Sectors including construction, technology and utilities may see renewed investor interest as positive spillovers emerge from increased alignment between public investments and private-sector participation, it added.
On the macro front, the research house projects Malaysia's gross domestic product (GDP) to grow at an average of 4.5% a year between 2026 and 2030, with nominal GDP expected to rise by 6.4% annually.
'Highlighting nominal GDP is critical, as it serves as a key benchmark in shaping Malaysia's fiscal policy framework under the 13MP,' BIMB Research said.
By 2030, the fiscal deficit is expected to narrow to 2.9% of GDP, helped by the reduction of subsidies, prudent spending and gradual decrease of pension payments.
With development expenditure capped at 3.5% of GDP, annual allocations are forecast to reach up to RM99.4bil, BIMB Research projected.
'This is a substantial allocation that can significantly support domestic growth in the latter half of the decade, particularly through increased investment in construction and utility infrastructure,' it said.
'The 13MP is expected to be anchored on existing Madani policy frameworks such as the Public‑Private Partnership Master Plan 2030, New Industrial Master Plan 2030, and National Energy Transition Roadmap, all of which are designed with a 10-year implementation horizon,' it added.
Key regional initiatives like the East Coast Rail Link, Johor–Singapore Special Economic Zone, and development projects in Sabah and Sarawak are also expected to receive further support.
Overall, the 13MP would likely reflect a strategic recalibration, BIMB Research said, adding that it expects the plan to include key principles like resilience through diversification, leveraging long-term secular tailwinds, and systematically responding to changing external conditions.