INTERNATIONAL GROWTH CENTRE, LONDON
GHANA GROWTH FORUM
ACCRA, GHANA
NOVEMBER 11th – 12th, 2010
GROWTH, ETHNICITY AND GOVERNANCE IN MALAYSIA
Zainal Aznam Yusof
Council Member
National Economic Advisory Council (NEAC) Malaysia

Ghana and Malaysia gained independence in
the same year – 1957

Ghana and Malaysia’s growth record have
diverged.

What has been Malaysia’s growth record?

What accounts for Malaysia’s growth record?

Are there lessons from Malaysia’s growth
experience for Ghana and others?
1
(%)
Figure 1: Real GDP Growth
Rate (%), Malaysia vs. Ghana,
1961-2009
15
10
5
0
-5
-10
Malaysia
Ghana
(%)
70
Malaysia
60
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
-15
Figure 2: Agriculture Sector
Share of GDP (%), Malaysia vs.
Ghana, 1961-2009
Ghana
50
40
30
20
10
Sources: World Development
Indicators, World Bank &
International Financial Statistics, IMF
2009
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
0
2
(%)
Figure 3: GDP per capita growth
(%), Malaysia vs. Ghana, 19612009
15
10
5
0
-5
-10
-15
Malaysia
Ghana
(%)
35
Malaysia
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
-20
Figure 4: Manufacturing Sector
Share of GDP (%), Malaysia vs.
Ghana, 1961-2009
Ghana
30
25
20
15
10
Sources: World Development Indicators,
World Bank & International Financial
Statistics, IMF
5
2009
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
0
3
(%)
Figure 5: Services Sector Share
of GDP (%), Malaysia vs.
Ghana, 1961-2009
70
Malaysia
Ghana
60
50
40
30
20
10
2009
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
0
(%)
Figure 6: Agriculture Exports as
Share of GDP (%), Malaysia vs.
Ghana, 1990-2009
60
50
40
30
20
10
0
1992
1998
2000
Ghana
2002
2004
2006
Malaysia
2008
2009
Sources: World Development Indicators,
World Bank & International Financial
Statistics, IMF
4
(%)
Figure 7: Manufacturing Exports
as Share of GDP (%), Malaysia vs.
Ghana, 1990-2009
90
80
70
60
50
40
30
20
10
0
1992
1998
2000
Ghana
2002
2004
2006
2008
2009
Source: World Trade Organization
Malaysia
5
Growth, Structural Changes and Diversification
Growth:
1957-2007 6 percent per annum
1991-2000 7 percent per annum
2001-2005 4 percent per annum
Per capita income:
1957-2006 increase by 24 times
Population:
About 28 million
Bumiputera
Malays
Kadazans
Muruts
Dayaks
Orang Asli
Structural Changes – GDP Share (%)
1995
Agriculture
Manufacturing
Services
10.3%
27.1%
51.3%
2009
7.6%
26.4%
57.9%
Others
Chinese
Indians
6
Table 1 - Gross Domestic Product by Industry of Origin, 1995-2005
(RM million in 1987 prices)
Contribution to
Growth (%)
Average Annual Growth
Rate (%)
1995
%
2000
%
2005
%
7MP
8MP
Target
7MP
Achieved
7MP
Target
8MP
Agriculture, Forestry, Livestock &
Fishing
17,115
10.3
18,154
8.7
21,018
7.0
0.1
0.2
1.9
1.2
3.0
Mining & Quarrying
13,643
8.2
13,907
6.6
16,387
5.5
0.0
0.2
1.7
0.4
3.3
Manufacturing
45,174
27.1
69,867
33.4
107,237
35.8
2.5
3.1
3.9
9.1
8.9
Construction
7,411
4.4
6,996
3.3
9,596
3.2
0.0
0.2
-1.8
-1.1
6.5
Electricity, Gas & Water
5,876
3.5
1,090
3.4
10,197
3.4
0.1
0.3
7.9
3.8
7.5
Transport, Storage &
Communications
12,298
7.4
16,643
8.0
25,719
8.6
0.5
0.7
3.9
6.2
9.1
Wholesale & Retail Trade, Hotels &
Restaurants
25,304
15.2
31,081
14.9
45,080
15.0
0.6
1.2
5.2
4.2
7.7
Finance, Insurance, Real Estate &
Business Services
17,287
10.4
24,643
11.8
37,120
12.4
0.8
1.0
7.9
7.3
8.5
Government Services
11,803
7.1
14,679
7.0
17,055
5.7
0.3
0.2
3.7
4.5
3.0
Other Services
12,780
7.7
15,599
7.5
23,948
8.0
0.3
0.7
5.1
4.1
9.0
(-) Imputed Bank Services Charges
8,888
5.3
14,252
6.8
19,488
6.5
0.6
0.4
11.5
9.9
6.5
(+) Import Duties
6,823
4.1
4,864
2.3
5,916
2.0
-0.2
0.1
-5.8
-6.5
4.0
166,100.0
100.0
209,269
100.0
299,785
100.0
4.7
7.5
3.0
4.7
7.5
Primary Sector
30,758
18.5
32,061
15.3
37,405
12.5
0.1
0.4
1.7
0.8
3.1
Secondary Sector
52,585
31.6
76,864
36.7
116,833
39.0
2.7
3.3
3.3
7.9
8.7
Tertiary Sector
85,348
51.2
109,733
52.4
159,119
53.1
2.7
4.1
5.4
5.2
7.7
Primary Sector
30,408
18.2
30,776
14.7
35,900
12.0
0.0
0.4
0.9
0.25
3.1
Secondary Sector
51,987
31.2
73,783
35.3
112,132
37.4
2.4
3.2
2.3
7.3
8.7
Tertiary Sector
84,230
50.6
104,709
50.0
151,753
50.6
2.2
3.9
4.4
4.4
7.7
Sector
GDP at Purchasers’ Value
Adjusted for Import Duties less Imputed
Bank Service Charges
7
Economic Growth and Trade

Maintained its openness, beginning with its dependence
on the exports of tin, rubber and palm oil, and then for
labour-intensive manufactured exports.

Growth over the last more than 50 years have averaged
about 6 percent per annum.

Per capita income has increased by 21 times since 1957.

Manufactured exports, with growth and structural
changes, have long surpassed exports of agricultural
commodities and now account for more than 70 percent
of total exports.

FDI in manufacturing has made sizable contribution to
the growth of manufactured exports.
8
20
15
10
5
05
20
02
20
99
19
96
19
93
19
90
19
87
19
84
19
81
19
78
19
75
19
72
19
69
19
-10
19
63
-5
66
0
19
% Contribution to Gross
National Income
Figure 8: Terms of Trade Contribution to National Income, 1963-2006
-15
Years
Terms of Trade Contribution (% of Gross National Income)
9
Economic Growth and Commodities

Commodity exports and growth.
Volatility and growth.

Collier and Goderis (2007) –
commodity booms have positive
short-term effects on output but
adverse long-term effects.
Confined to “high-rent” nonagricultural commodities.

Rise in trade GDP share and
growth and per capita income &
GDP.

Results some similarity with
Collier & Goderis (2007).
Positive short-term effects on
output but adverse long-term
effects and confined to nonagricultural commodities.
Resource, Revenue and Growth –
Agricultural Commodities

Revenue from exports of tin and
rubber was largest source in postwar period – export taxes about 90
percent of total revenue for 19461962. Falling share from
agricultural commodities. Rubber
exports about 1.4 percent of total
exports (2006).

Rubber replanting and investment.
High productivity. Financed from
replanting grants raised through
export taxes. Estates benefited
more. R&D and clones.

Palm oil investment. Replanting
from rubber to oil palm. Sizable
acreage increased; by mid-1980s oil
palm output exceeded rubber.
FELDA. Small revenue share –
palm oil export duties of total
revenue about 3.5 percent – mid80s.
10
RM/unit
Figure 9: Commodity
Export Price Index
2,000
1,500
Agriculture
commodity
price index
1,000
500
Non-agriculture
commodity price
index
All commodity
price index
06
04
20
02
20
20
00
20
98
96
19
94
19
19
92
90
19
88
19
86
19
19
84
82
19
80
19
19
78
19
76
74
19
72
19
19
19
70
0
Ratio
Logs
10.0
2
1.8
9.0
GDP per
capita (LHS)
Figure 10: GDP Per
Capita, Trade and
Commodity Exports
1.6
1.4
8.0
Trade to
GDP ratio
(RHS)
7.0
1.2
1
0.8
6.0
Commodity export
price index (LHS)
0.6
0.4
5.0
Commodity export
to GDP ratio (RHS)
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
4.0
0.2
0
11
Forestry Resources
Oil and Gas


Two basins – Northwest Borneo and
Malaysia. Esso and Shell with
concessions. Offhshore oil in 1970s.
PSCs in mid-1970s replaced concessions.

Three revenue resources – direct tax
(Petroleum Income Tax), indirect tax
(export duties) and non-tax revenue
(dividends and royalty). Oil gas revenue
of RM53 billion in 2007. Dividends (45
percent) of income tax (42 percent) two
largest sources – dividends in 2007
reached RM24 billion.

Oil and gas revenue finance about a
third of Federal Government
expenditure (RM165 billion) in 2007 and
8.5 percent of GDP.

In 2008 Petronas profits of RM110
billion, RM67.6 billion to government –
44 percent of total government revenue.
Since 1974 Petronas paid RM403 billion
to government which is about a half of
total development expenditure of 5-year
plans.
Forestry under states control
constitutionally. Sabah and Sarawak
depend more on forests for revenue.
Natural forests about 61 percent
(21m.hectares) of land mass.

Sawn logs and timber main exports
– 6 percent of total primary
commodity exports (2006). Coupe or
annual allowable cut rate falling.
Conservation. Royalty revenue
falling (25 percent), rising for
silviculture cess.

National Forestry Council in 1971.
National Forestry Policy in 1978.
National Forestry Act, 1984
Permanent Forest Estate (Reserves).
About 43 percent of PFE.

Timber Concessions. Tenders.
Negotiations. Others.

Rent capture has been low. Reinvestment for reforestation has
been low.
12
International Trade – Structure,
Composition and Patterns

Exports of commodities, tin and
rubber, and later palm oil,
dominated exports in the 1950s1960s. The export-led
industrialisation drive from the
1970s raised the share of
manufactured exports to about 81
percent by 2005.

Exports of electronics and electrical
products accounted for a sizable
share of total manufactured exports.
Imports of intermediate goods rose
in importance with the growth of
manufactured exports.

USA and by 2005 accounted for
about a fifth of total exports (19.7
percent), compared to 13 percent in
1970.

Malaysia’s trade with the European
Union (EU) has recorded a decline,
with exports share of EU falling to
11.7 percent in 2005 compared to
19.2 percent in 1970.
Trade Intensity and Openness



Over the period 1971-1990
exports of goods and services
grew at 14 percent per annum
and by 17 percent per annum for
the 1991-2000 period.
The trade intensity ratio was
about 86.9 percent of GDP in
1970 and increased by slightly
more than two-and-a-half times
by 2000 (228.9 percent of GDP)
and reached 223.2 percent of
GDP by 2005.
The economy grew at 6.7 percent
per annum over the 1971-1990
period, 7 percent per annum for
the 1991-2000 period and slowed
down to 5 percent per annum
since 2000.
13
Table 2: Direction of External Trade, Malaysia, 1970-2005 (%)
Country/Regional Group
USA
Europe Union
United Kingdom
Germany and Netherlands
Australia
Japan
Republic of Korea
China
Hong Kong
1970
Exports
Imports
13.0
8.5
19.2
23.0
6.6
13.4
6.3
5.9
2.2
5.5
18.2
17.7
n/a
n/a
1.3
5.2
1.2
2.1
Taiwan Province of China
ASEAN
Singapore
India
Other countries
Total (RM million)
1980
Exports Imports
16.4
15.0
16.9
15.4
2.8
5.4
9.6
6.0
1.4
5.5
22.8
22.9
N/a
n/a
1.7
2.4
1.9
1.4
1990
Exports Imports
16.9
16.7
14.9
14.6
3.9
5.5
6.5
5.0
1.7
3.7
15.8
24.0
4.6
2.6
2.1
1.9
3.2
1.9
2000
Exports Imports
20.5
16.6
13.7
10.8
3.1
2.0
6.7
3.7
2.5
1.9
13.1
21.0
3.3
4.5
3.1
4.0
4.5
2.7
2005
Exports Imports
19.7
12.9
11.7
11.6
1.8
1.5
5.4
5.2
3.4
1.9
9.4
14.5
3.4
5.0
6.6
11.5
5.8
2.5
n/a
n/a
n/a
n/a
2.2
5.5
3.8
5.6
2.8
5.5
24.7
21.5
0.4
19.8
100.0
5,163
15.6
7.2
1.5
20.9
100.0
4,289
22.4
19.1
2.2
14.3
100.0
28,172
16.4
11.7
0.9
20.0
100.0
23,451
28.9
22.7
1.6
8.1
100.0
79,646
18.9
14.9
0.7
9.5
100.0
79,119
26.5
18.4
2.0
7.1
100.0
373,270
24.1
14.4
0.9
8.0
100.0
311,459
25.8
15.6
2.8
8.6
100.0
533,798
24.5
11.7
1.0
9.1
100.0
434,030
Source: UNDP (2006)
14

Exports to ASEAN accounted
for about a quarter (25.8
percent) and Malaysia’s
exports with Singapore (15.6
percent) being the second
largest export market after the
USA.

Malaysia’s exports to Japan
have been falling and rising for
China, Hong Kong, Australia
and India.

From the mid-1980s to the
early 2000s (1985-2002)
exports to other East Asian
countries increased by more
than 11 percentage points
(from 23.7 to 35 percent).

ASEAN did not play a large
part in the expansion of East
Asian intra-trade trade.

Malaysia’s exports to East
Asian increased from 38.1
percent in 1985 to 42 percent
in 2001 (Ng and Yeats, 2003).

Malaysia’s share of intraregional trade in East Asia has
increased and is more
apparent for imports; its share
of intra-regional imports
increased form 44.4 percent in
1985 to 51.6 percent in 2001
compared to 38.1 percent and
42 percent, respectively, for
exports.

China’s importance to
Malaysia’s export growth, as
well as for other East Asian
countries.
15
Early Diversification and Growth

Economic diversification has been a key
theme of long- term strategy in Malaysia,
and is a continuing concern today.

Diversification had two components: first
was the diversification of agriculture from
rubber into the cultivation of palm oil (and
other crops) on a large scale; and second
was the diversification away from primary
into secondary industries, especially
manufacturing.
16
Agricultural Diversification
Industrialisation – Export Oriented

Manufacturing Industries



Rapid diversification
during 1957-1970.
Volatility of rubber and
tin prices. Competition
from synthetic rubber.
Diversification through
R&D. RRIM.
High yielding clones.
Oil palm acreage and
production increased in
1960s.
Rural and land
development. FELDA.

Growth of electronic and
electrical industries (E&E).
Semiconductors. Penang growth
enclave. Labour intensive
manufactured exports. Nonresource based industries.

Resource-based industries.
Rubber gloves.

FDI and manufacturing growth.
Fiscal incentives. FTZs.
Infrastructure. Labour supply.
17
Figure 11: Percentage Share of Manufacturing Exports to Manufacturing
Output and GDP, 1970-2008
%
350
300
250
200
150
100
50
0
1970
1975
1980
1985
Manuf. Exports/Manuf. Output
1990
1995
2000
2005
Manuf. Exports/GDP
18
Table 3: Exports of Manufactured Products
Industry
1996
(RM million)
Total Manufactured Exports1
Non-resource based
Electrical & electronics products
Machinery, appliances & parts
Optical & scientific equipment
Manufactures of metals
Textiles & clothing
Transport equipment
Manufactures of plastics
154,664.7
126,703.8
96,800.6
7,471.4
3,119.1
3,738.9
6,816.0
4,658.0
1,531.3
100.0
81.9
62.6
4.8
2.0
2.4
4.4
3.0
1.0
309,427.4
265,828.7
219,583.0
10,825.9
6,811.3
6,870.5
10,265.3
2,975.2
3,829.8
100.0
85.9
71.0
3.5
2.2
2.2
3.3
1.0
1.2
413,132.7
340,584.8
264,698.9
18,120.6
12,317.7
10,847.9
10,289.1
6,997.9
6,696.3
100.0
82.4
64.1
4.4
3.0
2.6
2.5
1.7
1.6
1996-2005
Average
Annual Growth
(%)
11.2
11.1
11.4
9.9
15.6
11.7
4.9
2.9
16.8
Iron & steel products
Jewellery
Resource based
Chemicals & chemicals products
Wood products
Rubber products
Processed food
Non-metallic mineral products
Petroleum products
Paper & pulp products
Beverages & tobacco
Other manufactures
1,474.3
1,094.2
23,246.0
5,829.1
8,146.8
3,607.7
2,333.4
1,641.1
413.4
698.4
576.1
4,714.9
1.0
0.7
15.0
3.8
5.3
2.3
1.5
1.1
0.3
0.5
0.4
3.0
2,346.4
2,321.3
38,505.3
12,918.6
11,157.6
4,720.8
3,408.4
2,567.7
1,128.9
1,396.3
1,207.0
5,093.4
0.8
0.8
12.4
4.2
3.6
1.5
1.1
0.8
0.4
0.5
0.4
1.6
7,002.8
3,613.6
63,378.8
26,301.3
14,638.9
6,985.5
6,529.9
2,934.3
2,214.4
2,073.4
1,701.1
9,169.1
1.7
0.9
15.3
6.4
3.5
1.7
1.6
0.7
0.5
0.5
0.4
2.2
19.1
11.8
11.8
17.4
8.3
7.8
10.8
5.8
21.2
10.3
15.7
9.0
Share
(%)
2000
(RM million)
Share
(%)
2005
(RM million)
Share
(%)
Source: Third Industrial Master Plan, Government of Malaysia
1
The value of the total export of manufactured products, compiled by Ministry of International Trade and Industry (MITI), differs from
the value of the total export of manufactured products contained in the Ninth Malaysia Plan, due to the difference in product groupings
adopted by MITI and Economic Planning Unit (EPU). For example, in 2005, the figure by MITI is RM413.1 billion, while the figure by
EPU is RM429.9 billion.
19
Ethnic Diversity and Conflicts

Recorded inter-ethnic conflicts limited in scale and
duration.

Small scale, anti-colonial rule “rebellions”.

Pre-independence Japanese Occupation inter-ethnic
conflicts in 1945.

Twelve year Emergency longest post-war conflict with
communism.

Seminal May 13th, 1969 inter-ethnic conflicts.

Post New Economic Policy (NEP) social and religious
conflicts.
20
Growth and Horizontal Inequalities

Bumiputera poverty higher than Chinese and Indians.
Income disparity ratio between Bumiputera and nonBumiputera has narrowed but still sizable.

Elite accommodation system i.e. consotionalism. Interethnic accommodation.

Federalism and governance. General post-1957 political
stability. Inter-ethnic clashes in May 1969. New Economic
Policy as Affirmative Action Policy.

Ruling coalition National Front lost 4 states to Opposition
and two-thirds majority in Parliament in March 2008
general elections. New post-2008 political landscape.
21
Incidence of Poverty by Ethnicity and Strata,
Peninsular Malaysia (1970-2007, %)
1970a
1987
1997
2007
Malaysia
49.3
19.4
6.4
3.6
Ethnic
Bumiputera
64.8
26.6
9.0
5.1
Chinese
26.0
7.1
1.1
0.6
Indians
39.2
9.6
1.3
2.5
Others
44.8
20.3
13.0
9.8
Strata
Urban
24.6
8.5
2.1
2.0
Rural
58.6
24.8
2.5
7.1
Gini Coefficient by Ethnicity and Strata,
Peninsular Malaysia (1970-2007, %)
1970a
1987
1997
2007
Malaysia
0.513
0.456
0.459 0.441
Ethnic
Bumiputera
0.466
0.447
0.448 0.430
Chinese
0.446
0.428
0.416 0.432
Indians
0.472
0.402
0.409 0.414
Others
0.667
0.663
0.555 0.546
Strata
Urban
n.a.
0.449
0.427 0.427
Rural
n.a.
0.427
0.424 0.388
Average Income (RM)
Top 20%
Middle 40%
Bottom 40%
1980
2008
3,354
1,016
377
8,157
2,957
1,222
Source: Economic Planning Unit (EPU)
22
Figure 12: Mean Income
of Ethnic Groups
(RM)
6000
5000
4000
3000
2000
1000
0
1970
1974
1976
1979
Bumiputera
1984
1987
1989
1992
1995
Chinese
1997
1999
2002
Indians
2004
2007
Others
pe rce n t
45
0.5
Gini ratio (RHS)
p er cap ita GDP growth
40
0.5
Incidence of p overty
35
Figure 13: Per Capita
GDP Growth, Incidence
of Poverty and Income
Inequality
0.5
30
0.5
25
0.5
20
0.4
15
0.4
10
0.4
5
-
0.4
1976
1984
1990
1993
1995
1997
1999
2004
2007
23
Development Strategies

Export-led growth and industrialisation

Rural development

Regional development
Affirmative action policy measures or instruments:

Macro-economic

Quotas

Prices

Subsidies

Privatization

Government procurement and tenders

Public sector investment
24
Contentious New Policy Approaches to Affirmative Action

New Economic Model (NEM), horizontal inequalities and
affirmative action.

Inclusive growth, bottom 40 percent and bottom 2
million plus.

Beyond ethnicity.
25
Governance, Political System and Leadership

Dealing with ethnicity issues a central task for leadership
Mahathirism – “…if you do exactly what they want you’re
not a leader”.

Consociationalism a model of “elite accommodation system”.
An inter-ethnic bargaining and accommodation approach.
Strict consociationalism embody proportionally principle.

Consociationalism undermined by May 1969 racial riots but
remnant of elements. Earlier Bargain / Social contact
(Section 153 of Constitution) cannot be challenged.

Post-1969 Increase in executive/PM powers. “Dyadic
structure of elite bargaining”.

Sharp growth of patronage and corruption.

General election of March 2008 and lessening salience of
ethnicity?
26
Policy Making and “Reform Cluster” Approach

Consider options preceding implementation. Investment of
public and private/business sectors.

“Binding constraints” and reform clusters. Acting nonsequentially against binding constraints.

Reform cluster involves the bundling of related policy
measures into packages to overcome legislative and coordination problems.

Policy making, leadership and learning within specific
industrial contexts:
-
Rubber products (resource-based)
Oil palm products (resource-based)
Electronics and electrical products (non-resourcebased)
Automobile/transport (non-resource-based)
Privatisation
Multimedia Super Corridor (ICT)
27
Leadership, Implementation Machinery and Outcomes

Policy adaptation learning and adjustment. Privatisation
and learning by doing. Reform clusters, co-ordination and
implementation.

Technocratic and heteredox leadership.

Clarity. Co-ordination. Delivery system.

Cabinet committees. National Development Planning
Committee (NDPC).

Oversight on implementation. Parliament. Economic
Planning Unit (EPU), Implementation Co-ordination Unit
(ICU). Pemandu, the Government Transformation
Programme (GTP), Economic Transformation
Programme (ETP).
28
Governance Policy Making and Leadership – Key Factors for
Growth

Vision for growth. Long-term towards a developed economy
by 2020. Vision 2020.

Developmental planning. Macro and sectoral planning.
Privatisation Master Plan, Industrial Master Plan, Financial
Sector Master Plan.

Implementation and Coordination.

Transformation. Implications on institutions.

Heavy industries. Privatisation. Multi-Super Corridor.

Policy making regime. Political determination. Stability. High
attention to growth with equity. Experimentation. Learning
through implementation.

Reforms serially? “Reform cluster” approach to policy
implementation. Address several co-ordination problems at
the same time.
29
Institutional Regime for Policy Making, Planning and
Implementation …

Cabinet. Cabinet Committees

National Development Planning Committee (NDPC)

National Economic Advisory Council (NEAC)

Economic Planning Unit (EPU)
Ministry of Finance
Bank Negara Malaysia
Ministry of Finance
Ministry of International Trade and Industry (MITI)

Implementation Co-Ordination Unit (ICU)

PEMANDU

PEMUDAH
30
Delivery Service and Implementation Focus …

e-Government

Improve administrative processes

Reduce bureaucratic procedures

Measure performance and Key Performance
Indicators (KPI)

Use ICT

Outcome-based approach for planning, monitoring
and evaluation of policies
31
Some Likely Lessons…
Economic Growth

Resource curse is avoidable and growth can be sustained.

Diversification essential for growth.

Openness and international integration helpful for growth.

Export-led growth essential for rapid growth through trade and capital
flows.

Fiscal discipline and strict management of revenue, including resource
revenues, essential for macro-economic stability.

Importance of industrial policies for economic diversification and FDI in
financing economic growth.

Conservative principles of managing revenue and expenditure.

Federal constitution a strong framework for the governance of politics
of oil and forestry resources and importance of centralisation of powers
over resources.

Importance of relative independence, capacity and capability of national
oil corporation.
32
Ethnic Diversity and Inequality

Pro-poor growth is possible and necessary.

There is growth-elasticity of poverty and inequality can be
persistent and non-linear.

“Within group – inequality” is more important than “between
group – inequality” to overall inequality.

Affirmative action policies and programmes need to be grounded
constitutionally. “Social contract”.

Economic, political and social costs of affirmative action need to
be assessed.

Strong and continuous political commitment necessary for
affirmative action programmes to work.

Consider longevity and time-bound affirmative action and how
and for how long can previous generation bind future
generations?

Growth does not destroy/erode salience of ethnicity and there are
limits to going beyond ethnicity.
33
Governance

Strong governance, leadership and institutions good for growth.

Balance of power in federalism between centre and periphery is
a dynamic process and determines growth and inter-state
inequality.

Institutions and processes crucial for growth and containing
conflicts.

Consociationalism has its limits and need to evolve with
changing circumstances.

Corruption is pro-rent seeking, is anti-growth and is positively
correlated with direct state intervention in the economy.

There is a time and place for Big Bang or incrementalism.

Inertia and complacency are bred by growth succcess.

Implementation of economic plans is crucial.
34
Moving Ahead to 2020 and beyond 2020 …

Losing competitiveness and new global
economic forces call for transformation.

A New Economic Model (NEM) for High
Income Economy, Inclusiveness and
Sustainability

Economic Transformation Programme
(ETP) and Government Transformation
Programme (GTP).
35
REFERENCES
1.
Collier, Paul (1998) The Political Economy of Ethnicity, Paper presented at the Annual World Bank Conference
on Development Economics, Washington D.C. April 20-21.
2.
Collier, Paul and Benedict Goderis (2007) Commodity Prices, Growth and the Natural Resource Curse:
Reconciling A Conundrum. Paper presented at OXCARRE Launch Conference, Oxford University 12-13.
3.
Collier, Paul (2010) War, Guns and Votes Democracy in Dangerous Places, London: Vintage.
4.
Commission on Growth and Development (2008) The Growth Report Strategies for Sustained Growth and
Inclusive Development
5.
Easterly, William (2000) Can Institutions Resolve Ethnic Conflict?, World Bank Policy Research Working Paper
2482.
6.
Economic Planning Unit (1971), Second Malaysia Plan, 1971-1975, Kuala Lumpur: Government Printer.
7.
Economic Planning Unit (1991) Second Outline Perspective Plan, 1991-2000, Kuala Lumpur: Government
Printer.
8.
Economic Planning Unit (2001a) Eighth Malaysia Plan, 2001-2005, Kuala Lumpur: Government Printer.
9.
Economic Planning Unit (2001b) Third Outline Perspective Plan, 2001-2010, Kuala Lumpur: Government
Printer.
10.
Economic Planning Unit (2005) Ninth Malaysia Plan, 2006-2010, Kuala Lumpur: Government Printer.
11.
Economic Planning Unit (2010) Tenth Malaysia Plan, 2011-2015, Kuala Lumpur: Government Printer.
12.
Ng, Francis and Alexander Yeats (2003) Major Trends in East Asia: What Are Their Implications for Regional
Cooperation and Growth? World Bank, Development Research Group Trade, Policy Research Working Paper,
3084.
13.
Yusof, Zainal Aznam (2005) Affirmative Action in Malaysia, Paper presented at the Workshop on Addressing
Inequalities: Policies for Inclusive Development, organised by the Inter-Regional Inequality Facility, UNECA,
Addis Ababa, 11-12 July.
14.
Yusof, Zainal Aznam and Deepak Bhattasali (2007) Economic Growth and Development in Malaysia: Policy
Making and Leadership, Washington D.C.: Commission on Growth and Development, Working Paper No. 27.
36