"Overhaul economy", Second Finance Minister

'Malaysia must overhaul economy'

By Rupa Damodaran

Published: Business Times 2009/12/02

Malaysia must overhaul its economy urgently to keep up with the changing world and regain the pole position it once held in the region, a minister said.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the country needs to diversify its trading partners and overcome competition from other emerging economies in exports.

"We must also consider the gradual dismantling of our open-ended protection of specific sectors and industries, which has introduced a climate of complacency and artificial levels of supply," he said at the opening of the two-day National Economic Outlook Conference 2010-2011 in Kuala Lumpur yesterday. The event was organised by the Malaysian Institute of Economic Research.

Ahmad Husni said Malaysia had lost its competitive edge in many sectors of the economy, with private investments now half of what they were before the 1997/98 Asian financial crisis.

"Malaysia is trapped in a low-value-added, low-wage and low-productivity structure," he said.

Among its peers like China, India, Vietnam, Indonesia, the Philippines and Thailand, Malaysia's economic growth over the past three years was the second lowest.

"Our economy has been stagnating in the last decade. Our private investment has been steadily in decline," Ahmad Husni said.

He added that the country's manufacturing sector was suffering from a lack of investment, while the services sector was underdeveloped.

Between 2000 and 2007, Malaysia's investment per value-added in percentage nominal terms in manufacturing dropped from 30.6 per cent to 21.7 per cent. In the case of services, the decline was from 26.8 per cent to 22.1 per cent.

Ahmad Husni believes that the 1Malaysia concept can "re-catalyse" the private sector's role in the economy and enhance the level of competitiveness.

He also said that the government was confident of achieving 5 per cent economic growth next year and had identified several growth drivers. It would seek to enhance capacity through domestic demand.

PAGE: The Finance Ministry has painted a picture of doom and gloom. For the boost that it requires, PPSMI will play a major role in contributing towards preparing the future generation for the global and financial challenges ahead.

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