The worsening of China
Highlights of the Mid-Term Review of the 11th Malaysia Plan includes the reform agenda by the Pakatan Harapan government, economic outlook and the six pillars to provide a new development focus with 19 priority areas and 66 strategies aligned to the new direction of the Government to further boost economic growth.
* Pakatan Harapan to implement more effective and bold measures to reform the public service towards greater transparency and accountability.
* In the remaining Plan period, govt to introduce comprehensive and effective legal framework of government procurement which now constitute 15% to 20% of GDP.
Economy
* GDP targeted to expand between 4.5% and 5.5% per annum in the remaining Plan period, 2018-2020 compared with 5% to 6% earlier.
* Development expenditure ceiling rationalised from original allocation of RM260bil to RM220 billion for the overall Plan period, 2016-2020, to consolidate fiscal position.
* During transition period, fiscal deficit temporarily beyond target set during the last Budget before reverting to the fiscal consolidation path. Fiscal deficit targeted to be at 3.0% to GDP in 2020.
* Per capita income expected to reach RM47,720 or US$11,700 in 2020, below the estimated minimum income threshold of a high-income nation. Malaysia anticipated to breach threshold by 2024.
* Public investment to contract at 0.8% per annum, due to the revision of major infrastructure projects such as the East Coast Rail Link and High Speed Rail.
* Services sector to sustain the growth momentum at an annual average rate of 6.3%.
* Manufacturing sector to grow at 4.5% per annum, largely driven by the shift towards high value-added, diverse and complex products, particularly in the fields of electrical and electronics, machinery and equipment, chemicals and chemical products, aerospace and medical devices
* Construction sector to moderate at an annual average rate of 4.3% due to slower growth of residential and non-residential subsectors.
* Mining sector to just 0.1% due to extended commitment to cut production by OPEC and non-OPEC countries; disruption of natural gas supply in the Sabah-Sarawak Gas Pipeline in 2018.
* Agriculture sector to see higher growth at 2% per annum on higher output of palm oil, rubber and food crops.
* Growth of gross exports in the remaining Plan period sustained at an annual average rate of 6.2%, underpinned by firmer commodity prices, continued demand from trading partners.
* Gross imports to rise by 6.1% per annum, led by imports of capital and intermediate goods. Plans to enhance exports and manage imports to ensure trade balance remains in surplus, targeted at RM118.3bil in 2020.
* Inflation rate to remain low, averaging 2% and 3% per annum, despite expected moderate rise in global oil and commodity prices.
* Current account of the balance of payments to remain in surplus at RM39.9bil or 2.5% to GNI in 2020 compared with RM40.3bil or 3.1% to GNI in 2017.
* Higher surplus in the goods account amid continued deficit in the services and income accounts are expected to contribute to the increase in the current account surplus.
* Income accounts to remain in deficit, due to continued repatriation of income by foreign investors and remittances by foreign workers in Malaysia.
* Six Pillars
* Six pillars to provide a new development focus with 19 priority areas and 66 strategies aligned to the new direction of the Government to further boost economic growth.
* Pillar One: Reforming governance towards greater transparency and enhancing efficiency of public service.
* Pillar Two: Enhancing inclusive development and wellbeing. Implementation of inclusive development will be enhanced to bring greater prosperity and wellbeing to all Malaysians.
* Pillar three: Pursuing balanced regional development. More efforts to address development imbalances among six regions -- Northern, Eastern, Central, Southern, Sabah and Sarawak, to promote equitable growth and increase rakyat’s wellbeing.
* Pillar Four: Empowering human capital. Human capital development will continue to be a key priority to empower the workforce in supporting economic growth. Resolving inadequate creation of skilled jobs, low wage growth, high youth unemployment rate and graduate underemployment as well as skills mismatch.
* Pillar Five: Enhancing environmental sustainability through green growth. More green growth initiatives to ensure sustainability of natural resources, increase resilience against climate change and disasters while achieving higher economic growth.
* Pillar Six: Strengthening economic growth by enhancing productivity and increasing competitiveness of the industries.
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