03/07/2020 10:04 AM
Opinions on topical issues from thought leaders, columnists and editors.
By :
Lee Heng Guie

As the country emerges cautiously from the COVID-19 pandemic and is moving on to the recovery and revitalisation stage, it is an opportune time and incumbent on the government to review the sustainability of our economic and social and environmental systems as we step up efforts to restore economic and business normality. Political stability is key to macroeconomic stability and growth.

A post-pandemic ‘new normal’, lingering concerns about trade tensions, major advanced economies’ policy uncertainties and fluctuations in commodity prices highlight the challenging nature and complexity of coming to grips with it. In the immediate term, there is the pressure to reduce unemployment, revive consumer spending and stimulate economic growth after the economic crisis.

If the COVD-19 pandemic were to lead to new fiscal, economic and reform priorities, there is a lack of signals thus far regarding the likely direction of change. It is expected that defining strategic economic and industrial policies will be formulated in the Economic Recovery Plan and 12th Malaysia Plan.

Good sense and strong political will must prevail to reset our national development agenda. Attempts at reforming are often stymied by the ubiquitous “vested interests”. If it is the case that only a crisis will stimulate reform, then now would be the time to expect and do something different with no conflicting vested interests embedded.

We must look at opportunities that capitalise on Malaysia’s strengths and comparative advantages in resource-and non-resource-based industries. Our regional competitors are fast catching up and climbing up the ladder of competition in terms of products and services offering, market share, participation in global supply chains, financial flows, foreign long-term capital as well as labour mobility.

Here are six issues which require our attention and policy commitment:

First: The government must plug leakages in affirmative action policy to ensure that the most vulnerable ones (on one is left behind) regardless of race will be given priority in terms of new approach towards social safety protection system, which integrates a mixture of mandates and incentives, thereby helping households to invest in human capital. One can consider to experiment the Universal Basic Income programme for the community considered economically disadvantaged. Subsidies and financial assistance programmes need to be well targeted.

Second: How can we reboot and realise the potential of our human capital? The advent of digital and disruptive technologies had and would continue to change the nature and skillset of work; this disruption requires skills transformation that is central to our current and future development progress. Skilled labour currently makes up 27.9 per cent of total employment in 1Q 2020, as against the 11th Malaysia Plan’s (11MP) target of at least 35 per cent.

Malaysian human capital must be effectively nurtured and developed to raise productivity and become more productive and agile through reskilling and upskilling as well as industry training, placing premium on cognitive skills, creative and innovative capabilities. We need at least 60 per cent of students to get into STEM (Science, Technology, Engineering and Mathematics) compared to 44 per cent currently. Technical and vocational education and training (TVET) must be revamped to be digital viable and given the same importance as mainstream education as well as be integrated with STEM because of its focus on innovation and problem solving.

Third: The government and industry need to be more committed to addressing both documented and undocumented foreign workers estimated at five to seven million, who have been undermining our industrial restructuring and skills transformation. We need to seriously relook and have better execution of workable solutions toward a phased reduction of foreign workers, encouraging automation and going digital.

Fourth: The challenge to ramp up digital infrastructure and fix the technology gap as well as cybersecurity. Digital experience needs to be enhanced in terms of speed, reliability and coverage to narrow the urban-rural digital divides.

The current e-government system is probably at 30 per cent to 40 per cent, meaning that the process of digitalising public delivery services must be more comprehensive and accelerated. With the government leading the e-curve, businesses and people will adjust to adapt and adopt it accordingly, thus accelerating towards a cashless economy.

Fifth: Malaysia needs to enhance global as well as regional collaboration and linkages in trade, services, investment, and technology as well as financial and capital.

Protracted weak private investment prior to the COVID-19 was a major concerning factor as dampened by uneven global growth and weak domestic environment. Private investment growth had slowed at discernible pace 2015, with the growth rate pulling back sharply to 4.3 per cent in 2018 and 1.6 per cent in 2019 respectively from a strong double-digit growth of 13.6 per cent per annum in 2011-2014.

The trade tensions and COVID-19 pandemic would expedite the pre-existing trend for on-shoring – moving production closer to markets as part of the diversification of global manufacturing and supply chains concentration in China, and are likely to mean that Southeast Asia would benefit first.

An important priority is to foster competitiveness through developing specific skillsets, relevant technologies and markets, and promoting public-private partnerships to generate quality investment and derive synergies for upgrading investment, innovation, and diversified domestic production structures.

Investing in “new smart infrastructure” used for high-tech digitalisation and sustainable purposes (healthcare, renewable energy, climate change, eco-green, clean energy technologies, extractive industries, maritime, aerospace, agriculture and security food).

Sixth: There is clearly still room for Malaysia to improve the World Bank’s ease of doing business ranking (12th in 2020). Revisit to further streamlining of impediments to investment in Malaysia.

These include:

(a) Starting a business: Local entrepreneurs continue to face cumbersome procedures to start and operate a business. Malaysia ranks 126th on this indicator, taking 8.5 procedures and 17.5 days;

(b) Paying taxes: Malaysia ranks 80th on this indicator as domestic companies spend an average of 174 hours annually to comply with fiscal obligations, slightly more than the OECD high-income average of 159 hours; and

(c) Legal rights and enforcing contracts: There have been no reforms in these areas over the last five years and, hence, it is crucial to enhance regulations that protect the rights of lenders and borrowers, and improve the efficiency of the judicial system. For instance, the time needed to enforce a contract in Malaysia has taken 425 days compared to Thailand (reduced from 440 to 420 days) and in Indonesia (from 471 days to 403 days).


Lee Heng Guie is Executive Director of Socio-Economic Research Centre (SERC), an independent and non-profit think tank.

(The views expressed in this article are those of the author and do not reflect the official policy or position of BERNAMA)


Malaysia National News Agency
No.28 Jalan BERNAMA
Off Jalan Tun Razak
50400 Kuala Lumpur

Tel : +603-2693 9933 (General Line)
Email : helpdesk[at]


Exclusive Press


Privacy Policy
Security Policy