ASEAN HEADLINE-ECONOMY | Madani Economy: M’sia to propel economic growth in various sectors, ministries

The framework becomes a catalyst as it seeks to tackle current obstacles and chart a course toward prosperity and growth

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AS MALAYSIA looks ahead to a bright economic future, the “Madani Economy: Empowering the People” framework becomes a catalyst as it seeks to tackle current obstacles and chart a course toward prosperity and growth.

On July 27, Prime Minister Datuk Seri Anwar Ibrahim unveiled the framework and highlighted key pillars which are having Malaysia ranked among the Top 30 largest economies in the world (Pillar 1), top 12 in the Global Competitiveness Index (Pillar 2) and the commitment to fiscal sustainability, aiming for a deficit of 3% or lower (Pillar 3).

Centre for Market Education (CME) CEO Dr Carmelo Ferlito commended the first pillar, recognising the significance of this approach for the country’s future development.

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He outlined the alignment between CME’s recommendations and several aspects of the Madani Economy framework, including the recognition of Malaysia’s premature de-industrialisation; the importance of promoting free trade through bilateral and multilateral agreements; and the need to improve the ease of doing business.

“For CME, achieving these targets is not only realistic but also imperative for revitalising Malaysia’s economic vocation, which has been deteriorating in recent years,” he said in a statement.

However, he emphasised that achieving these targets requires policy action to be focused at the institutional level rather than the micro-level to avoid direct control over the economy, such as price controls and labour restrictions.

“Long-term political commitment is crucial, necessitating political stability to sustain economic plans effectively.

“Hence, competent individuals with a deep understanding of economic forces and entrepreneurial experience are essential to spearhead the initiatives,” he added.

Ferlito also applauded the call for a relaxation of Visa regulations and the rebuilding of fiscal discipline.

CME also hoped for the introduction of a new Goods and Services Tax (GST), fiscal devolution to improve collection and rationalisation of subsidies and government spending.

However, it was sceptical regarding micro-targets like workforce participation, income distribution, and housing policies as such targets might require more direct intervention, leading to potential market distortions and outcomes that differ from the intended goals.

The think-tank urged the government to pay attention to institutional reforms, pro-market policy actions, and continued commitment to free trade.

“The positive outcomes from macro-targets will also support the achievement of micro-targets, ultimately improving the living conditions of the people,” Ferlito said.

Iskandar Investment Bhd (IIB) also welcomed the framework and the National Energy Transition Roadmap (NETR) which IIB endorsed the proposed policies and

focused on the establishment of a special financial zone; the introduction of a 15%-tax incentive for knowledge workers; and the implementation of immigration fast lanes.

“We believe that the implementation of these policies will augment Malaysia’s attractiveness as an investment destination, leading to increased foreign direct investments (FDI) and domestic direct investments (DDI).

“With a particular focus on key promoted sectors such as the global business services (GBS), digital, technology and innovation industries, we envision an even more vibrant and competitive landscape for businesses and investors alike,” IIB said.

 

On the target of achieving 60% female workforce participation, IIB’s senior management team already boasts an impressive 54% female participation.

“We are also appreciative of the announcement regarding the integrated Renewable Energy (RE) Zone as part of the NETR, a venture championed by one of our shareholders, Khazanah Nasional Bhd.

“The RE Zone initiative not only opens endless possibilities for the growth of renewable energy infrastructure, however it also brings us closer to realising our net-zero aspirations, which is integral in achieving our vision to build an inclusive and sustainable metropolis of the future,” it said.

IIB added that it is dedicated to playing an active role to ensure NETR’s success and positive impact on the environment and society as they build an inclusive and sustainable metropolis in Iskandar Puteri.

This initiative also aligns with IIB’s efforts to position Medini as a net-zero carbon central business district.

It believes that these policies and roadmaps will not only attract significant investment opportunities but also unlock avenues for potential innovative and sustainable solutions tailored to benefit the nation.

Through strategic collaborations and ongoing support to the government’s initiatives, IIB will contribute their expertise and resources towards the implementation of the green economy framework.

MyKiosk Programme for MSMEs.

Local Government Development (KPKT) Minister Nga Kor Ming launched the MyKiosk programme on July 28 as a part of the Madani Economy framework to support local micro, small, and medium-sized enterprises (MSMEs) in regaining competitiveness and enhancing their business capabilities.

The programme focuses on providing benefits to traders by offering low rental rates for kiosks, thereby creating a standardised, safe and comfortable trading space to uplift the socio-economic status of the local population.

Additionally, it will contribute to increasing the income of local authorities through the kiosk rentals charged to the traders.

The government allocated RM50 million to construct and upgrade 3,000 stalls and kiosks, allowing small-scale vendors to conduct business at strategic locations nationwide.

Each kiosk unit, including solar panels, is estimated to cost between RM15,000 and RM20,000.

As of July, KPKT has already approved 3,173 kiosks for 113 local authorities, amounting to RM49.14 million.

Currently, 100 kiosks have been completed at five locations involving the Sepang Municipal Council, Kuala Langat Municipal Council, Kuala Pilah District Council, Seremban City Council, and Port Dickson Municipal Council.

Nga highlighted that MyKiosk is an initiative to provide opportunities for the bottom 40% (B40) group to start businesses and improve their livelihoods.

“The contribution of small traders is never underestimated by KPKT, and the development of the microeconomy also has a positive impact on the national economy.

“KPKT will monitor the MyKiosk initiative to ensure it genuinely helps vendors generate and increase income, in line with the aspirations of the Madani Economy to empower the people,” he said.

The Madani Economy framework, which encompasses the MyKiosk programme, is expected to boost the nation’s economy, particularly supporting the growth of SMEs.

The Small and Medium Enterprises Association of Malaysia (Samenta) noted that the Madani Economy framework’s potential to invigorate the economy and foster greater growth in various industries, particularly for the SMEs.

Samenta national president Datuk William Ng believed that the framework will offer much-needed direction to steer the economy towards a path of robust growth and prosperity.

“Samenta has long recognised that the most significant challenge facing SMEs lies not in weak cashflow or lack of business opportunities, but rather in low-profit margins due to lagging labour productivity,” he said in a statement.

Ng asserted that the government’s focus on addressing the labour mismatch and incentivising upskilling and lifelong learning is apt.

By enhancing labour productivity, businesses can naturally afford higher wages, benefitting both employers and employees alike.

While acknowledging the need for wage revisions, Ng emphasised the importance of a cautious approach as any changes must be accompanied by improvements in labour productivity and profit margins.

He highlighted that wage stagnation is primarily due to structural factors, including a declining learning culture, a disconnect between educational output and industry demands, a workforce that values outcomes over time-based compensation, and intense regional talent competition.

Agriculture, Commodities, Environmental Sustainability Agriculture and Commodities (KPK) Minister Datuk Seri Fadillah Yusof expressed strong support for the Madani Economy framework, which aims to empower the people and drive economic growth with positive impacts on the country’s GDP.

He said the ministry is committed to aligning its programmes and activities to contribute to the realisation of the framework’s aspirations.

As the world faces a food crisis, the ministry notes on the importance of strategic planning to reduce reliance solely on primary commodity production and emphasises the need to diversify into high-value downstream products.

In line with the PM’s vision to optimise the use of existing agricultural land, KPK, through the Malaysian Palm Oil Board (MPOB), is intensifying efforts in producing hybrid palm breeds capable of yielding more oil while utilising limited land area effectively.

“MPOB will continuously ensure that the palm products maintain high quality and sustainability. In this regard, the board is actively addressing challenges, including Europe’s concerns related to deforestation and food safety issues,” he said.

The aspiration to generate new wealth for the nation through national assets, such as biodiversity in the carbon trading market of the agri-commodity sector, is also a priority as KPK underscores its commitment to environmental sustainability through conservation and reforestation efforts aimed at preserving forest resources.

“The ministry takes pride in launching the Malaysia Greening Programme, a national agenda aimed at addressing climate change challenges and improving the quality of life for the people,” Fadillah said.

The Social and Economic Research Initiative (SERI) also welcomed the agenda, describing it as a comprehensive approach in uplifting all segments of society.

As a dedicated think-tank focused on narrowing societal disparities, SERI takes a keen interest in initiatives that directly address the needs of the most vulnerable members of the Malaysian population.

“The current global and local economic climate underscores the importance of closing the inequality gap in Malaysia.

“Therefore, it becomes incumbent on the government to create equal conditions and opportunities for all Malaysians, irrespective of their ethnicity or social class, to flourish and succeed,” it said.

Equal Opportunities

SERI said despite commendable achievements by young women in education, their representation in the workforce remains disproportionately low at approximately 55.5%, compared to men’s participation rate of 80.9%.

It said that the disparity not only hampers economic growth but also challenges the principles of equality.

In response, the government’s focus on bolstering female participation is vital in establishing a fair and inclusive workforce and the initiatives such as funding support programmes to encourage mothers to rejoin the workforce and providing affordable child care centres.

However, SERI noted that changes to economic policy alone will not be sufficient to increase female labour participation due to the fact that the initiatives must be accompanied by a broader women’s agenda that addresses social and cultural gaps that impede significant progress.

Building Resilience and Stability

SERI said the government’s extending the social protection net to all citizens is a significant step towards creating a more resilient and stable society and protects people during unforeseen adversities.

Among them are the extensions of mandatory Employees Provident Fund (EPF) and Social Security Organisation (Socso) coverage for all employees under the new social insurance scheme, which are essential in safeguarding workers against economic uncertainties.

This proactive approach will mitigate the adverse impacts of sudden employment disruptions and ensure individuals have the necessary support to regain their footing during challenging times.

Beyond welfare purposes, bolstered retirement savings play an important role in contributing to the economy’s health and stability.

Robust retirement savings also promote a dynamic job market and workforce while contributing to various investment vehicles, which, in turn, fuel economic growth and benefit society as a whole.

SERI added that the announcement of various cash assistance and Rahmah programmes reflects the government’s dedication to creating a safety net to catch those who may fall through the cracks.

“These social assistance initiatives will uplift the most vulnerable segments of society, ensuring that no Malaysian is left behind in times of economic hardship,” it said.

Weighing on the same matter, Khazanah Research Institute (KRI) chairman Tan Sri Nor Mohamed Yakcop said the framework provides a comprehensive and balanced strategy to propel Malaysia towards a stronger development path.

 

He said the strategies outlined in Madani Economy, encompassing industrial development, digitalisation, and investment, are poised to boost economic activities and yield better returns for businesses, resulting in higher wages for workers in both the private and public sectors.

This multi-faceted approach, he said, is expected to spur economic growth and foster a thriving business environment.

“Recognising that focusing on economic development alone can lead to disparities between regions and communities, the outlined social protection policies appear promising in closing such gaps.

“The prominent focus on health, education and housing will raise the rakyat’s quality of life,” he said in a statement.

He added that the reforms are vital in instilling confidence among foreign investors, thus restoring Malaysia’s competitiveness on the international stage.

Malaysia’s Vision for Economic Growth.

Meanwhile, Universiti Malaya Department of Economics, Faculty of Business and Economics senior lecturer Goh Lim Thye said the acceleration of school and clinic projects for the underprivileged, along with efforts to combat severe poverty through Inisiatif Pendapatan Rakyat (IPR) and Payung Rahmah, are notable steps in uplifting the needy.

However, he said it is the medium-term targets that hold the key to Malaysia’s long-term economic trajectory.

“The seven benchmarks set for the next 10 years encompass ambitious goals that, if achieved, will undoubtedly bolster Malaysia’s standing in the global arena.

“From elevating Malaysia among the 30 largest economies in the world to ensuring fiscal sustainability with a deficit of 3% or lower, these objectives demand steadfast dedication and prudent economic management,” he said.

Goh noted that to become the economic leader of Asia, the Madani Economy initiative emphasises initiatives such as the New Industrial Master Plan (NIMP) 2030 and the internationalisation of the economy, prioritising activities with high added value and economic complexity will enhance Malaysia’s competitive edge in the region.

Additionally, he said investing in local start-ups and fostering a thriving research, development, commercialisation and innovation (R&D&C&I) ecosystem through collaborations between the government, government-linked companies (GLCs), and the private sector will drive innovation and technological advancement.

Goh added that the digital economy’s significance is not lost on Madani Economy, with the accelerated implementation of Digital ID unleashing its potential, facilitating the growth of online businesses and applications.

As the leader of the Global Islamic Economy, he said Malaysia’s focus on transitioning from Halal to Halal and Tayyib will open new doors in this burgeoning sector.

Additionally, while economic growth remains a priority, the framework acknowledges the importance of enhancing people’s living standards by evaluating minimum wage levels, creating safe work environments, and stimulating pay growth relative to GDP will ensure job opportunities with meaningful salaries for all Malaysians.

Goh added that equality of opportunity lies at the core of the agenda, promoting a fair chance for success in the job market or business, regardless of gender, race, or background.

By supporting women and young entrepreneurs, development gaps across states can be bridged, fostering inclusive growth and prosperity.

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As the nation embarks on this ambitious journey, Goh highlighted two primary concerns that require immediate attention.

Firstly, sustaining and improving Malaysia’s competitiveness and attractiveness as an investment destination is essential for long-term prosperity.

This, he said due to the rapidly evolving global economic dynamics, demands continuous efforts to retain investor confidence and attract new ventures.

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Secondly, while Madani Economy addresses medium and long-term goals, it must not lose sight of the pressing issues impacting Malaysians today as the rising cost of living poses significant challenges for the populace, necessitating swift measures to alleviate this burden.

“As we move forward with the Madani Economy, let us be careful in striking a balance between our long-term aspirations and present-day imperatives.

“With dedication and smart policymaking, Malaysia can pave the way to sustainable economic growth and shared prosperity for all her citizens,” he said.

In conclusion, the Madani Economy framework offers a comprehensive and balanced strategy to propel Malaysia toward a stronger development path with support from various sectors and dedication to inclusive policies.

Through the framework, Malaysia can pave the way to a prosperous future on the global stage as the nation has the potential to achieve sustainable economic growth and shared prosperity for all its citizens by remaining committed to the targets and implementing necessary reforms.