Malaysia Plans must avoid pitfalls of past, say economists

New Straits Times

19 hours ago

KUALA LUMPUR: Malaysia's next long-term development plan must place greater emphasis on inclusive growth rather than headline gross domestic product (GDP) gains, economists said, noting that past Malaysia Plans often promised big but delivered unevenly.
They called on the 13th Malaysia Plan (13MP) and beyond to strengthen social protections, close governance gaps and expand proven reforms, while avoiding the policy inconsistencies and inefficiencies that hindered earlier blueprints.
INCLUSIVE GROWTH OVER GDP
Universiti Teknologi MARA Business Management Faculty senior lecturer Dr Mohamad Idham Md Razak said future Malaysia Plans must ensure inclusive growth while setting clear long-term development targets.
He noted that while previous plans had been effective in driving GDP growth, they sometimes overlooked equitable wealth distribution, leading to regional and income disparities.
In view of this, he said future roadmaps must prioritise balanced development through targeted poverty alleviation measures, stronger rural-urban connectivity and sustainable industrial policies.
"It's essential to recognise that macroeconomic stability alone does not translate to equitable progress," he told Business Times.
"The 13MP and subsequent plans should embed social protection mechanisms, enhance human capital investment and ensure that economic growth results in tangible improvements in living standards for all Malaysians."
LESSONS FROM PREVIOUS PLANS
Economist Dr Geoffrey Williams said key lessons from earlier plans show it is not obvious that most projects or targets have been achieved.
He said this should guide expectations for the 13MP.
"The investment allocation is roughly in line with normal government development expenditure of about RM86 billion a year.
"Contributions from government-linked investment companies (GLICs) and government-linked companies mirror those under the GEAR-uP programme, while the public-private partnership estimate of RM12 billion is similar to current levels," he said.
The GEAR-uP programme is a reform and investment initiative that mobilises funds from GLICs to boost strategic industries, raise wages and drive inclusive economic growth.
Williams noted that many of the 13MP's key themes have been received with limited enthusiasm by experts, especially in health and education, and appear unambitious.
"Perhaps this reflects lessons learned from previous plans, which promised a great deal but delivered very little," he said.
TACKLING IMPLEMENTATION GAPS
On where earlier Malaysia Plans fell short, Mohamad Idham said future plans must address implementation bottlenecks and governance gaps.
He noted that some past plans struggled due to bureaucratic inefficiencies, misaligned priorities or weak monitoring mechanisms.
"For instance, infrastructure projects have sometimes experienced delays or cost overruns, while certain socio-economic policies failed to reach marginalised groups effectively.
"To avoid these pitfalls, the next roadmap should strengthen governance structures through transparent accountability frameworks, decentralised decision-making and real-time performance tracking.
"Previous plans also relied heavily on top-down approaches, limiting responsiveness to local needs. Incorporating participatory planning with civil society and local communities can help tailor policies more effectively," he said.
Williams said past plans sometimes created "patronage cascades" in which government funds were channelled to vested interests through pre-appointed projects.
He noted that there are more than 600 projects in the 13MP, which is worrying, but there is at least a promise of open tenders in all but special cases.
He added that this could help reduce the wastage, leakages and corruption that plagued earlier plans.
STAYING GROUNDED AMID CHALLENGES
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid emphasised the importance of consistency in policy decisions and execution to meet desired targets.
He said that even if there are changes in the Cabinet in the future, good policies must be retained and implemented.
Afzanizam also cautioned that even the most carefully crafted development plans are vulnerable to unexpected external shocks.
During the 12MP, he said, the economy was hit by a series of disruptive events including the Covid-19 pandemic, a global economic downturn and a change in national leadership, all of which inevitably slowed policy progress.
Given these circumstances, it would be reasonable to take such factors into account and apply some leniency when evaluating the overall performance of the 12MP.
Afzanizam also noted that certain targets under the 13MP have been revised downward, signalling the government's acknowledgement of the challenging economic and structural realities ahead.
"For example, the target for the share of compensation of employees in GDP has been reduced to 40 per cent by 2030, compared to 45 per cent in the 12MP.
"This suggests the government recognises challenges in the labour market, where inefficiencies in wage determination remain prevalent," he added.
To address these challenges, Afzanizam said policy interventions such as the minimum wage and progressive wage policies are essential to increase the labour share of compensation in the economy.
He added that these measures will require time to yield results, making the new targets appear more realistic.
BUILDING ON WHAT WORKS
Mohamad Idham said several initiatives from past Malaysia Plans had delivered measurable benefits, providing a strong foundation for the government to build on in the 13MP.
He said reforms with proven results should be expanded to maximise their long-term impact.
Among the successes, he pointed to digitalisation programmes that improved public service delivery and strengthened small and medium enterprise competitiveness.
Others include progressive labour market policies such as upskilling initiatives and minimum wage adjustments, as well as renewable energy projects that laid the groundwork for sustainable growth.
"Future plans should invest more in technology-driven solutions, scale up productivity-enhancing labour policies alongside stronger social safety nets, and accelerate the transition to green energy through stricter environmental regulations and incentives for green innovation," he said.
Looking ahead, Williams cautioned that identifying truly successful reforms is challenging without comprehensive performance data.
He said objective, independent performance metrics are scarce, and full impact analyses are rarely available.
"Often, wastage and poor implementation are only flagged much later in Auditor-General reports.
"There was an attempt to address this through Pemandu (the Performance Management and Delivery Unit), but it eventually evolved into a consultancy company.
"Without proper ongoing and post-implementation evaluations, we cannot accurately assess past plans and will face difficulties judging the 13MP," he said.