社会经济研究中心

SOCIO-ECONOMIC
RESEARCH CENTRE

Mid-Term Review of the Eleventh Malaysia Plan,

2016-2020 (11MP)

New Priorities and Emphases: Policies,

Challenges and Opportunities

19 October 2018
Key agenda

New Priorities and Emphases

Macroeconomic strategies to sustain growth

Revised macroeconomic prospects

Specific commentaries on policy thrusts

Conclusion

Socio-Economic Research Centre 1

Mid-Term Review of 11MP – New Priorities and Emphases

• The Eleventh Malaysia Plan (11MP), 2016-2020, which marks the final phase towards
achieving a developed and inclusive nation in line with the Vision 2020 was launched in May
2015. It was formulated during the 13th General Elections, with fiscal constraints,
deindustrialization and uneven global recovery shaping the development planning
challenges.

• For the first time in Malaysia’s political history, new Government took the responsibility to
review the Mid-Term of 11MP, a 5-year development plan crafted by previous administration
since the First Malaysia Plan (1966-1970).

• This Mid-Term Review (MTR) of 11MP reports the progress achieved in 2016-2017 under
the previous administration and outlines the realignment of socioeconomic policies and
strategies for 2018-2020, taking into account priorities of the new Government post 14th
General Election.

• The MTR of the 11MP document outlines new Priorities and Emphases based on six
pillars (i) reforming governance and improving public service delivery; (ii) enhancing
inclusive development and wellbeing; (iii) pursuing balanced regional development;
(iv) empowering human capital; (v) ensuring environmental sustainability; and (vi)
strengthening economic growth.

Socio-Economic Research Centre 2

The Six Pillars of MTR of 11MP

Socio-Economic Research Centre 3

New mapping of Sustainable Development Goals (SDGs)

Pillar 1

Pillar 2

Pillar 3

Pillar 4

Pillar 5

Pillar 6

Socio-Economic Research Centre 4

Summary of macroeconomic strategies, 11MP (2016-2020)
Driving productivity at • Strengthen collaboration between government, industries and academia to ensure adequate supply of
the national, sector industry-ready talent
and enterprise levels • Promote digitalisation of business operations and greater adoption of technologies to leverage the
to ensure sustainable benefits of 4IR
and inclusive growth
• Accelerate implementation of regulatory reforms to facilitate ease of doing business
• Implement productivity initiatives at sector level with the establishment of nine Productivity Nexus
• Develop a systematic and structured firm-level intervention through productivity enterprise
programmes and existing R&D intermediaries
Promoting quality • Undertake a comprehensive review of investment policies including incentives and tax structure
investment to • Improve the management of all existing investment incentives to optimise resources
spearhead economic
• Encourage investment in Industry 4.0-related technology to reduce the gaps in the manufacturing
growth
sector
Embarking on • Encourage digitalisation and innovation to boost growth
initiatives to move up • Focus on knowledge-intensive services to expand the modern services sector
the value chain
• Energise manufacturing sector to produce more complex and diverse products
• Modernise agriculture by accelerating adoption of farming technology and promoting a cluster-based
approach through vertical integration of the supply chain for selected crops
• Foster sustainable practices and enhance knowledge content to transform the construction sector
Strengthening • Improve the export ecosystem
exports and • Move up the value chain for export products
managing imports to
• Step up the internationalisation of services
improve the balance
of payments • Promote higher use of local inputs in major infrastructure projects
• Spread out the imports of “lumpy” capital goods over a longer time period
Emphasising a fiscal • Increase revenue from indirect taxes and non-tax revenue
consolidation path to • Maximise cost recovery of Government assets
ensure sustainability
• Optimise and rationalise expenditure to balance economic growth objectives and fiscal consolidation
in the medium-term
• Improve public debt management system

Socio-Economic Research Centre 5

2018-2020: Revised macro targets

Socio-Economic Research Centre 6

Macroeconomic prospects, 2016-2020

Socio-Economic Research Centre 7

MTR of 11MP – Key takeaways

• The MTR is undertaken under a new domestic political landscape and increasing
complexity in global environment and economic uncertainties (such as the build-up of
financial vulnerabilities, trade protectionism and geopolitical tensions).

• Hence, this necessitates the policy makers’ continued vigilance and enhancement of
economic resilience through greater macro-economic and financial management
flexibilities to pre-empt and counteract against any external shocks and contain our
economic vulnerability.

• This calls for reforming and recalibration of existing macro policies; strong public
finance management, fiscal sustainability and socioeconomic reform. Equally
important is the reforming of institutions and political system to uphold good
governance, high integrity as well as respect the rule of law. Efforts will focus on stimulating
economic growth while ensuring greater economic dividends for all rakyat Malaysia.

• While the Government will balance economic growth objectives and fiscal consolidation
initiatives, some temporary trade-offs on economic growth may be necessary in the
short term in order to ensure a firmer foundation for a more sustainable and inclusive
growth in the long term.

Socio-Economic Research Centre 8

MTR of 11MP – Promise comprehensive institutional reforms

• The key observation reveals that the MTR document places strong emphasis on
introducing comprehensive reforms to strengthen the administrative capacity and
improve governance so as to restore public trust and confidence on the governing of
public institutions and respect the rule of law. This goes to show that the new Government is
determined to prevent corruption, leakages, misappropriation and abuse of power.

• We believe that fundamental economic and financial reforms on their own cannot
bring the desired change, unless accompanied by radical institutional reforms.

• The priority areas and strategies for reforming governance towards greater transparency
and enhancing efficiency of the public service are strengthening check and balance
mechanism; reforming political system as well as improving relationship between
Federal, state and local governments to revive the spirit of federalism.

• Amongst these include to institutionalise the select committee system in the Dewan Rakyat
and Dewan Negara and to empower Parliamentary committees to oversee the executive;
commissions such as the Malaysian Anti-Corruption Commission (MACC) and Election
Commission of Malaysia (SPR) will be answerable directly to the Parliament; select
committees must endorse the appointment of key positions among others including in
MACC, SPR, National Audit Department (JAN) and Judicial Appointments Commission.

Socio-Economic Research Centre 9

MTR of 11MP – Revised macroeconomic targets

• Targeted GDP growth revised lower. Weighing on the projected world economic growth of
3.7% pa and world trade of 4.2% pa respectively in 2018-2020, the Malaysian economy is
projected to grow by 4.5-5.5% pa in 2018-2020 (5.1% in 2016-17), taking the revised
growth target lower to 4.5-5.5% in 2016-2020 compared to 5.0-6.0% in the original 11MP.

• Domestic demand still anchoring growth. Private consumption is expected to expand

by 6.8% pa in 2016-2020 (7.0% pa in 2018-2020) with its share to GDP reaching 56.9% in
2020, supported by favourable labour market conditions and continued income growth.
Private investment to continue as the growth catalyst, with a targeted growth of 6.1% pa
in 2016-2020 (5.7% pa in 2018-2020), raising its contribution to GDP from 12.3% in 2010 to
17.8% in 2020. There will be high value added and technology investment in the
manufacturing and services sectors. Public investment is projected to contract by 0.6% pa
in 2016-2020 (-0.8% pa in 2018-2020), due to the revision of major infrastructure projects
such as the East Coast Rail Link and High Speed Rail.

• Sectoral output. The services and manufacturing sectors will continue to drive growth.
Notable growth moderation is observed in the construction sector (5.4% pa in 2016-2020
vs 10.3% pa in the original target; 7.1% in 2016-17 and 4.8% in 1H18), reflecting the
reprioritization of major infrastructure projects to rationalise the fiscal position of the Federal
Government.

Socio-Economic Research Centre 10

MTR of 11MP – Revised macroeconomic targets (cont.)

• Comfortable trade surplus. Gross exports are expected to be sustained at 7.5% pa in

2016-2020 (6.2% pa in 2018-2020), supported by firmer commodity prices and continued
global demand. With gross imports growth estimated to rise by 6.1% pa in 2018-2020, the
trade balance remains in surplus, targeted at RM118.3bn in 2020. The current account of
the balance of payments is projected to remain in surplus at RM39.9bn or 2.5% to GNI in
2020 (RM40.3bn or 3.1% to GNI in 2017).

1200 Gross Exports (RM bn) % growth 18.8% 1,118

15.6% 975
1000 935

765 777 787

800
698 703 720
639
600
7.5%
9.2% 6.3%
400
4.6%

200
2.5%
1.6% 1.2%
0.7%
0

2010 2011 2012 2013 2014 2015 2016 2017 2020 2020
Target Target
(Ori) (Rev)
Source: Bank Negara Malaysia (BNM); Economic Planning Unit (EPU)

Socio-Economic Research Centre 11

MTR of 11MP – SERC’s comments

• The marked down GDP growth target to 4.5-5.5% pa in the revised MTR from 5.0-6.0% pa
in the original target is deemed somewhat realistic, taking into both domestic issues and
external headwinds. Downside risks to growth remain. The Plan expects real GDP growth of
4.5-5.5% in 2018-2020 (5.1% in 2016-17), which is higher than SERC’s estimates of 4.8%
in 2018; 4.7% in 2019 and 4.6% in 2020.

• The Malaysian economy had slowed to 4.9% in 1H18 from 5.9% in 2017 (4.2% in 2016),
dragged down by contractions in mining and agriculture sectors and public investment.
While private consumption growth likely to remain resilient, external uncertainties and the
deferment of some mega public infrastructure projects would dampen private investment
growth, with the construction sector and building materials-related manufacturing industries
bearing the brunt of output growth adjustment over the medium-term.

• The key risks would come from external sources, especially the duration and depth of the
on-going trade war between the US and China; continued higher interest rates in some
advanced economies, tighter global liquidity conditions and the ensuing capital flows and
financial volatility on assets market and foreign exchange.

Socio-Economic Research Centre 12

MTR of 11MP – SERC’s comments (cont.)

• The global expansion is nine years old. An ill-timed end of fiscal stimulus’s effects in the US,
continued monetary tightening, the implosion of corporate debt bubble and the
intensification of trade war are the power fires that could most easily end the current
expansion of global economy and the US economy in particular. In Asia, China economy,
which has displayed signs of economic softening also pressured the authorities to
implement appropriate policies to keep the economy going.

• On domestic front, there remain challenges and issues that would hinder our long-term
growth potential. These include lagging productivity growth, low wage compensation for
workers, over-dependency on foreign workers, shortage of skilled workers, the slow
adoption of technology, especially by SMEs and the development of high value creation and
digitalized-driven investment, high youth unemployment and limited fiscal space.

Socio-Economic Research Centre 13

High-income nation status derailed

• Based on revised growth target, Malaysia’s per capita income is expected to reach
RM47,720 or US$11,695 in 2020, below the estimated minimum income threshold of a
high-income nation. Malaysia may achieve the target to be a high-income nation by 2024 or
earlier if growth conditions improve significantly.
• Malaysia must focus on inclusive growth instead of merely aiming to become a high-income
nation. High income growth must also be accompanied by higher purchasing power.

15,690
GNI per capita (current US$) High income threshold

12,476 12,236 12,056

11,695
10,760 11,010 10,450
10,150 9,860 9,650
9,060
8,290
7,550 7,640
6,650
5,850
5,280

3,460

2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2020 2020
Target Target
Note: GNI per capita as per World Bank Atlas method (Ori) (Rev)
Source: World Bank

Socio-Economic Research Centre 14

Increasing the share of compensation of employees to GDP

• The current share of compensation of employees (CE) (2017: 35.2%) is way behind the
high-income countries like Australia (47.3%), South Korea (44.4%) and Singapore (42.4%).
• CE is targeted to achieve at least 38% of the GDP by 2020 (original target is at least 40%)
while the share of gross operating surplus (GOS) which comprises income of capital owners
and mixed income will decline to 58.2%.

GDP by Income, 2015-2020

(RM billion, current prices)
1,800 1,655.4
Figure in italic indicates % share to GDP
1,600 3.8
Tax less subsidies
1,353.4
1,400 22.5
1,231.0 4.8
1,158.5 Mixed income
1,200 5.2
4.8 22.3
1,000 23.0 Income of capital owners
22.4
35.7
800
37.7 Compensation of employees
38.0 36.5
600

400
38.0
200 34.8 35.3 35.2

0
2015 2016 2017 2020

Note: Mixed income comprises income earned by self-employed, unincorporated businesses and others.
Source: DOSM; EPU

Socio-Economic Research Centre 15

GDP growth target revised lower to 4.5-5.5% in 2016-2020

• The MTR of 11MP revised GDP growth target lower to 4.5-5.5% in 2016-2020 from 5.0-
6.0% pa in the original target.
• The growth will be supported by continued expansion of domestic demand, with the private
sector taking the driver seat while the government continues to rationalise its spending.
Exports are expected to be sustained by steady growth in global economy and world trade.

Average annual GDP growth rate (%)

GDP (RM bn) % of growth
2000
7
1800
6.0% 5.9% 7.0%

5.3% 5.5% 5.1% 6.0 5.0-6.0

1600 4.7% 6
4.5-5.5
4.2% 1,411 1,358 5.0% 5.3
1400
5 4.7 4.5
1,174 3.0%
1200
4
1000
865 1.0%
800 3

600 -1.0%
2

400
-3.0%
1
200

0 -5.0% 0

2011 2012 2013 2014 2015 2016 2017 2020 2020 8MP 9MP 10MP 10MP 11MP 11MP
Target Target Actual Actual Target Actual Target Target
(Ori) (Rev) (2001-05) (2006-10) (2011-15) (Ori) (Rev)

Base year = 2000 for 8MP, 9MP and 10MP (Target)

Source: BNM; EPU Base year = 2010 for 10MP (Actual) and 11MP

Socio-Economic Research Centre 16

Sectoral target at a glance
• Growth in all economic sectors were revised lower from the original 11MP target. Both
services and manufacturing sectors continued to drive overall growth.
• Of significance is the construction sector’s growth, which scaled back more than halve to
5.4% pa in the revised target from 10.3% pa previously, reflecting mainly the deferment of
mega public infrastructure projects.
Agriculture Mining and Quarrying Manufacturing Construction Services
10MP 2.6% 1.2% 4.8% 10.6% 6.3%
11MP (Ori) 3.5% (7.8%) 1.3% (7.1%) 5.1% (22.1%) 10.3% (5.5%) 6.9% (56.5%)
11MP (Rev) 1.5% (7.5%) 0.7% (7.3%) 4.8% (22.7%) 5.4% (4.5%) 6.2% (56.7%)
Figure in parenthesis denotes % share of target GDP in 2020.
% %
8 20
Agriculture
6 Construction
3.5 16
4
1.5 12 10.3
2

0 1.3 Services 6.9

8 6.2
0.7
-2 5.4
4
-4 Mining and Quarrying 5.1 4.8
Manufacturing
-6 0
2011 2012 2013 2014 2015 2016 2017 11MP 11MP 2011 2012 2013 2014 2015 2016 2017 11MP 11MP
Target Target Target Target
(Ori) (Rev) (Ori) (Rev)
Source: BNM; EPU

Socio-Economic Research Centre 17

Where is the growth coming from?
Services (2018-2020F: 6.3%, 2016-17: 5.9%)
% share of GDP in 2020F: 56.7%
• Spurred by the Services Sector Blueprint, ICT as well as Digital Free
Trade Zone.
• Consumption-related services (retail trade, F&B and accommodation)
benefitting from improved household income and higher tourist
spending.

Manufacturing (2018-2020F: 4.5%, 2016-17: 5.2%)

% share of GDP in 2020F: 22.7%
• High value-added: Electrical & electronics, machinery & equipment,
chemicals & chemical products, aerospace and medical devices
• Rising demand for cloud data centres and electronics in the automotive
industry as well as emerging artificial intelligence applications for smart
cities and autonomous vehicles.

Agriculture (2018-2020F: 2.0%, 2016-17: 0.8%)

% share of GDP in 2020F: 7.5%
• Increased production of palm oil, rubber and food crops. Industrial
commodities continue to dominant with the contribution targeted at
56.4% of the total value added in 2020.
• The introduction of new sources of wealth (premium-grade fruits, high-
yielding coconut varieties and large scale grain corn production).

Socio-Economic Research Centre 18

Where is the growth coming from?

Mining (2018-2020F: 0.1%, 2016-17: 1.5%)

% share of GDP in 2020F: 7.3%
• Extended commitment to cut production by the Organization of the
Petroleum Exporting Countries (OPEC) and non-OPEC countries as
well as the disruption of natural gas supply in the Sabah-Sarawak
Gas Pipeline in 2018.
• The construction of the PETRONAS floating liquefied natural gas 2 at
the Rotan field, offshore Kota Kinabalu, Sabah. This facility is
scheduled to be completed in 2020 to meet expected higher global
demand for low-carbon energy.

Construction (2018-2020F: 4.3%, 2016-17: 7.1%)

% share of GDP in 2020F: 4.5%
• The civil engineering subsector is expected to be dampened by the
reprioritisation of major infrastructure projects due to the rationalization
of the Federal Government’s spending. The ongoing civil engineering
projects such as the Mass Rapid Transit 2 and Pengerang Integrated
Petroleum Complex in Johor are expected to contribute to the growth
of the sector.
• Slower growth of residential and non-residential subsectors.

Socio-Economic Research Centre 19

GDP by expenditure approach

• Sustained domestic demand, especially from private sector expenditure.

• Public investment is projected to decline by 0.6% pa in the revised target compared to
+2.7% pa previously, due to the revision of major infrastructure projects such as the East
Coast Rail Link (ECRL) and High Speed Rail (HSR). High-impact projects, public school
projects across the country as well as rural water and electricity supply projects in Sabah
and Sarawak will be further enhanced.

10MP 11MP 11MP

2018
Growth rate, % 2011 2012 2013 2014 2015 2016 2017 (2011- Target Target
1H
2015) (Ori) (Rev)

Consumption (56.9%) 6.9 8.3 7.2 7.0 6.0 6.0 7.0 7.4 7.1 6.4 6.8
Private
Investment (17.8%) 9.5 21.4 12.8 11.1 6.3 4.3 9.3 3.4 12.1 9.4 6.1

Consumption (11.4%) 14.2 5.4 5.8 4.4 4.5 0.9 5.4 1.8 6.8 3.7 1.4
Public
Investment (6.8%) 2.6 15.9 1.8 -4.7 -1.1 -0.5 0.1 -5.2 2.7 2.7 -0.6

Exports (67.3%) 4.2 -1.7 0.3 5.0 0.3 1.3 9.4 2.9 1.6 2.1 3.4
Goods and
services 6.3 2.9 1.7 4.0 0.8 1.3 10.9 0.0* 3.1 2.3 3.7
Imports (60.2%)

Figure in parenthesis denotes % share of targeted GDP in 2020. * less than 0.1% growth
Source: BNM; EPU

Socio-Economic Research Centre 20

Selected high-impact projects being planned or implemented,
2018-2020

Socio-Economic Research Centre 21

Gross exports are expected to grow steadily

• Malaysia’s gross exports are projected to grow by 6.2% pa in 2018-2020 (9.7% pa in

2016-17), taking the 11MP target to 7.5% pa, higher than the original target of 4.6% pa. This
will be supported by firmer commodity prices and continued demand from trading partners.
• With increasing trade protectionist mindset in some advanced economies, Malaysia needs
to actively engage in regional trade arrangement and bilateral trade relations to have more
outreach for our goods and services. Exports capacity must be enhanced via institutional
supports, e-commerce and Digital Free Trade Zone (DFTZ).

1200 Gross Exports (RM bn) % growth 18.8% 1,118

15.6% 975
1000 935

765 777 787

800
698 703 720
639
600
7.5%
9.2% 6.3%
400
4.6%

200
2.5%
1.6% 1.2%
0.7%
0

2010 2011 2012 2013 2014 2015 2016 2017 2020 2020
Target Target
(Ori) (Rev)
Source: BNM; EPU

Socio-Economic Research Centre 22

Labour market conditions

• Labour market conditions are expected to remain stable, albeit an uptick in the
unemployment rate to 3.3% in 2020, revised higher from 2.8% in the original target.
• High youth unemployment estimated 10.8% in 2017 will be addressed by reviewing labour
market conditions such as better quality and high impact training programs, the revamping
of Technical and Vocational Education and Training (TVET) and the Future Workers Training
scheme.

Labour force (LF) (million persons) LF participation rate (%) Unemployed person ('000) Unemployment rate (%)
800
70.1
69.1 3.4 3.4 3.3
700
67.6 67.9 67.7 68.0 3.1 3.1 3.1
67.3 3.0 2.9
600
2.8
65.6 524
503
64.5
15.7 15.9 500
443
15.0
389
12.7 400

300

200

100

2011 2012 2013 2014 2015 2016 2017 2020 2020 2011 2012 2013 2014 2015 2016 2017 2020 2020
Target Target Target Target
(Ori) (Rev) (Ori) (Rev)
Source: BNM; EPU

Socio-Economic Research Centre 23

Inflation pressures are expected to remain moderate

• Inflation rate is expected to remain low, averaging between 2% and 3% pa in 2016-

2020 (2.9% in 2016-17) despite expected moderate rise in global oil and commodity prices.
• Amongst measures to address the cost of living and purchasing power include advocating
greater consumerism, enhancing enforcement of the price control regulations and provide
more avenues offering affordable and competitive prices of goods and services to the
rakyat.

Inflation rate

3.7%
3.2% 3.2% 2.5-3.0% 2.0-3.0%

2.1% 2.1% 2.1%

1.6%

2011 2012 2013 2014 2015 2016 2017 2020 2020

Target Target
(Ori) (Rev)

Source: BNM

Socio-Economic Research Centre 24

MTR of 11MP – Federal government’s fiscal position

• Fiscal balance target deferred. The Federal Government will undertake measures to
strengthen its medium-term fiscal position, among others by strengthening the management
of public debt and accelerating institutional reforms. However, fiscal targets will be flexible
during the transition period without impairing growth. The fiscal deficit is targeted to be at
3.0% to GDP in 2020, a marked deviation from a near balanced budget of -0.6% of GDP in
the original 11MP.

• Revenue enhancement through imposing taxes on e-commerce and activities related

to sharing economy such as online transactions; initiatives to improve tax compliance;
maximising the cost recovery of Government’s assets, where more agencies will be
empowered to improve the utilisation rate of assets.

• Operating expenditure rationalization and reconstruction measures include reforming

Government agencies, strengthening procurement process of all supplies and services,
including through open tenders as well as debt restructuring. Reprioritisation of programs to
improve the effectiveness of spending, including the governance structure of project
appraisal and selection, to reduce the risk of delays and cost overruns.

Socio-Economic Research Centre 25

MTR of 11MP – Federal government’s fiscal position (cont.)

• Adopt greater transparency in public finance reporting by accelerating the full

implementation of accrual accounting. Under this method, revenue and expenses will be
recorded when earned and incurred, respectively. Obligations such as debt, contingent
liabilities and financial leases, will also be accounted for when the obligations are
undertaken, enabling a more comprehensive management of public finance.

• Development expenditure ceiling is slashed by RM40.0 billion from the original

allocation of RM260.0 billion to RM220.0 billion for 11MP period (2016-2020), to
consolidate the fiscal position. The cut is deemed necessary to account for lower revenue
on volatile global crude oil price and abolishment of GST in 2018. With the revised spending
ceiling of RM220.0 billion and netted off the actual spending of RM107.0 billion in 2016-
1H18, this leaves an average balance of RM113.0 billion to be spend for the period
2H18 to 2020. This means that about RM45.2 billion per year in 2019 and 2020.

• Public investment will focus on strengthening public infrastructure and developing

economic enablers. Over 4,000 ongoing projects will still be continued across the nation,
among others, the building of affordable houses, schools, hospitals and roads.

Socio-Economic Research Centre 26

Fiscal consolidation path pushed back

• During the transition period, the fiscal deficit target is set at -3.0% of GDP by end-2020,
a revision from a near-balanced budget (-0.6% of GDP) in the original target.
• The push back in fiscal consolidation takes into account the balancing needs to support
economic growth amid continued rationalization of spending and revenue constraints. Over
time, the consolidation will be achieved through a multipronged approach towards
strengthening fiscal management.

2020 2020
2018 Target Target
2010 2011 2012 2013 2014 2015 2016 2017 1H (Ori) (Rev)
0
-0.6%
RM billion

-10
-9.9

-20
-3.0% -3.0%
-3.2% -3.1%
-30 -3.4%
-3.8% -30.8
-40 -4.3% -37.4 -37.2
-38.6 -38.4
-42.0 -40.3
-43.3 -42.5
-50 -4.5%
-4.7%
-5.3% Overall Balance (LHS) % GDP (RHS)
-60

Source: Department of Statistics, Malaysia (DOSM); EPU

Socio-Economic Research Centre 27

Mid-term review of 11MP – Government's fiscal position

• Debt rationalization and containment initiatives include improving financial governance

to ensure institutional checks and balances. Systematic, comprehensive and transparent
financing governance mechanism and debt management system will be established to
regularly reporting to the public, strengthening financial management and credibility of the
Government.
• The Federal Government debt, contingent liabilities and commitment made under
public-private partnership (PPP) projects stood at RM1.08 trillion or 80.3% to GDP as
at end-2017.

Government Direct Debt (RM bn) % of GDP Contingent Liabilities (RM bn) % of GDP
1400 400

54.4% 17.6% 17.8%

350
1200 53.0% 52.7% 52.7%
50.7% 300
1000 50.1% 15.5% 258
15.4% 15.3% 15.2% 238
250
800
687 725
200

600 540 157

150

400
100

200
50

0 0

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
end-Jun end-Jun
Source: BNM

Socio-Economic Research Centre 28

SERC’s comments

• The new Government faces up to harsh reality of fiscal consolidation as it unveils new fiscal
consolidation plan, pushing back its earlier target of achieving a near-balanced estimated -
0.6% of GDP in the original target 2020 to a larger deficit of 3.0% of GDP in the revised
MTR.

• The fiscal deficit target revision highlights the bind that the nation is in as it seeks to rebuild
its fiscal health. While the efforts to rationalize and contain inflating spending as well as
institutionalized cost savings help to rein in fiscal deficit, there remain fiscal challenges in
terms of higher committed expenses on emolument, pension and healthcare as well as
social security given the nation’s aging population. Yet either significantly cutting in public
spending or increasing new taxes and social security premium hikes to trim the deficit would
be politically challenging and portend short-term dent on economic growth.

• A credible timeline for fiscal consolidation. Indeed, at times of heightened global uncertainty
and fiscal constraints, budgeting should have a cautious bias. A credible timetable for the
budget repair must be clearly spelt out. This is the clear direction the credit rating agencies
and market investors are looking forward to.

• The Government should ensure a sustainable fiscal and debt management to avoid the
potential risk of being put on ratings watch or downgrades, which will raise the cost of
borrowings.

Socio-Economic Research Centre 29

SERC’s comments (cont.)

• Reprioritization of spending and programs. Spending plans need to be re-evaluated in terms

of priority and necessities as well as the impactful multiplier effects n the economy, socio
and business communities. The reality is that public expectations on government spending
and public services need to be realigned with the limited budget; some form of trade-offs
are inevitable, going well beyond budget ‘business as usual’.

• The spending rationalization and new initiatives on health and education funding,
socioeconomic development, affordable housing, infrastructure and income support
payments as well as new tax measures have to be realistically and rationally implemented.

• It is worthy to note that a special task force will be established to conduct a comprehensive
audit and review across public sector institutions and agencies, including assess the roles
and functions of various entities such as statutory bodies and state-owned enterprises
(SOEs). The aim is to right-size and increase efficiency of the public services by utilizing
resources optimally.

Socio-Economic Research Centre 30

SERC’s comments (cont.)

• We view the rationalization of public sector institutions a step in the right direction to help
contain the operating expenditure on emoluments and pension payment, which had grown
in magnitude relative to revenue collection. In 2007, total emoluments of public servants
were RM32.6 billion or 26.4% of total operating expenditure (OE) but it increased by 8.4%
pa to RM73.1 billion or 34.8% of total OE in 2016. In 2018 Budget, total emoluments are
expected to hit RM79.1 billion or 33.8% of total operating expenses.

• Revamp of public sector pension. If there is a political will, it is timely to revamp the public
sector pension scheme, that is shifting from defined benefits to defined contributions to
ensure its solvency and sustainability in terms of self-sustaining funded pension liabilities.
Such a move would wean the Government from the fiscal burden of ever-growing pension
liabilities. The current civil servant pension scheme parks some RM300 billion in liabilities
with the Government. The pensions or retirement charges have been growing at a rapid
rate of 11.0% pa to RM21.0 billion or 9.8% of total OE in 2016 from RM8.3 billion or 6.7% of
total OE in 2007. For the period 2011-15, pension and gratuities grew by 10.4% pa to
RM18.8 billion in 2015 from RM13.6 billion in 2011. In 2018 Budget, pension and gratuities
are expected to increase by 12.8% to RM24.6 billion or 10.5% of total OE.

Socio-Economic Research Centre 31

SERC’s comments (cont.)

• Reducing the government’s role in non-core services will be implemented through

privatization and outsourcing. The implementation of Alternative Service Delivery (ASD) will
be carried out and a feasibility study will be conducted to identify services can be privatized
or outsourced. The control of selected non core services will be reduced progressively to
enable self-regulation or co-regulation.

• We believe that a smaller, less intrusive role for government, much more contained public
service and a bigger role for the public-private partnerships under Malaysia Incorporated.
Public sector becomes an effective facilitator and not a deterrent to private sector.

• The outsourcing services should be evaluated under Good Regulatory Practice Guidelines.
Any company/government department deciding to outsource must be based on cost
savings and more efficient. Fees should not be collected and paid to these out-sourced
service providers. Outsourced companies are merely contractors of the employing agency
and should be paid by the employing agency. Actually, if there is cost saving, the current
fees charged by the department should be reduced and not continue to collect plus
additional fees charged by the outsourced contractor.

Socio-Economic Research Centre 32

 Pillar I: Reforming Governance towards Greater
Transparency and Enhancing Efficiency of Public
Service
• New targets: (i) Reintroduce Parliamentary Services Act 1963; and (ii) Fiscal deficit at 3.0%
to GDP in 2020.

• Guided by Pakatan Harapan Manifesto, Parliamentary Services Act 1963, which was
repealed in 1992, will be reintroduced with improvements to strengthen the check and
balance mechanism in order to uphold a good governance and restore the dignity of
Parliament.

• State government will be empowered to handle more decentralised functions like public
transport, social services, agriculture development and environmental protection to revive
the spirit of federalism. The rationalisation of public sector institution reform will be
continued in enhancing public service delivery, including the rightsizing of public service
function, manpower and funding.

Socio-Economic Research Centre 33

• Comprehensive reforms will be implemented to ensure sustainable fiscal management and
these include:

a) Improving the budgeting system via the implementation of accrual accounting; establish
a single oversight authority to consolidate information on assets and liabilities of SOEs
and publish a comprehensive financial report as well as adopt a zero-based budget
approach to strictly control expenditure;

b) Strengthening procurement framework as the Government procurement constitutes

15-20% of GDP to make it more transparent based on open competition to avoid contract
monopolies; direct negotiation will be reviewed in line with the international standards and
best practices to maximise value of public investment;

c) Reviewing of the existing Public Private Partnership framework aims at limiting the
annual obligations and commitments to help minimizing the Government’s fiscal risks;
and

d) Cashless payment platform will be expanded for government transaction for good
governance and reducing corruption amid enable tracing and tracking.

Socio-Economic Research Centre 34

SERC’s comments:

• It is estimated that annually RM200-270 billion of total public spending is contracted out for
supplies, services and works. While the government procurement is a strategic policy tool to
achieve socioeconomic development outcomes and the delivery of public goods and
services, it is a potential source of conflicts of interest and corruption.
• As such, this makes an effective governance of public procurement pivotal in helping to
strengthen the government’s management of finances whilst maximizing public resources
for the best value projects. It can make a major contribution to attaining the goal of fiscal
balance going forward.
• Careful, upfront planning of procurement is essential to maximise impact and avoid
mistakes based on the principles of simplifying procurement, competitive procedures, e-
procurement and procurement for innovation partnerships to achieve efficiency and optimal
public spending.

Socio-Economic Research Centre 35

Selected targets under Pillar I

Socio-Economic Research Centre 36

 Pillar II: Enhancing Inclusive Development and Wellbeing

Enhancing inclusiveness towards an equity society

• Focussing on raising the income and purchasing power of the B40 households through
extending the educational assistance (e.g Kumpulan Wang Amanah Pelajar Miskin, and
etc.), providing early childhood care and education (ECCE), boosting entrepreneurship
by adopting online business, continuing microcredit financing scheme, leveraging
technology to improve agriculture and fishery productivity and encouraging smallholder to
merge in order to achieve economic of scale.
• SERC’s comments: We believe that public resources will be optimised as the government
is going to redefine the eligibility of recipients receiving assistance through big-data. The
recipients will be selected based on needs-based, socio-demographic and geographical
factors. Besides, it helps to curb abuses, reduce leakages and also monitor the funding
properly.

Improving wellbeing for all

• To boost households’ purchasing power, subsidies on selected essential items will
remain. A special ministerial committee will be formed to review monopolistic practices to
ensure market efficiency and fair competition. Prices of goods and services will be reduced
as an increase in the number of players can offer a competitive and affordable prices i.e.
ease the high cost of living in Malaysia.
Socio-Economic Research Centre 37
Improving wellbeing for all (cont’)
• To strengthen homeownership especially for B40 and M40, the following measures were
proposed in the Plan:
– Establish The National Affordable Housing Council
– Build 200,000 affordable houses in 2020
– Various public affordable housing initiatives will be rationalised
– Improve holistic policy planning through integrated database on supply and demand of
housing
– Provide incentives for developers who build affordable housing
– Encourage the construction industry and housing developers to adopt latest technologies
e.g. Industrialised Building System (IBS)
– Promote “Rent-to-Own” Programmes
– More flexible and innovative financing schemes for first buyers
– Ensure affordable housing close to transit terminals and public amenities

• SERC’s comments: We applaud the Government’s initiatives to provide affordable housing

for the first home buyers, especially B40 and M40. However, SERC believes that to build
100,000 affordable houses per year is a big challenge as land is a state matter. Hence, it is
time consuming for the Federal Government to negotiate and discuss with State
Government. Despite the provision of incentives to encourage the supply of affordable
housing, expensive land price, high compliance and common infrastructure costs will push
away developer’s interest.

Socio-Economic Research Centre 38

Enhance the healthcare delivery system
• To provide quality healthcare at affordable cost, some measures were proposed
– Introduce the Malaysia National Health Policy to boost the healthcare sector’s
development
– Create a National Health Financing Scheme
– Provide assistance for primary care treatment for B40 groups to ensure comprehensive
health coverage
– Build more hospitals and clinics and increase the hospital beds to population ratio
– New policies and regulations to govern online healthcare products and services to ensure
safety, quality, effectiveness and ethics
– Two specialised medical institutions are expected to be build in 2022 (Endocrine Complex
in Putrajaya Hospital & Cardiology Centre in Serdang Hospital)

Socio-Economic Research Centre 39

SERC’s comments:

• Universal coverage and quality healthcare are very important components of social
protection to support a healthy growing population. Malaysia’s medical costs and
expenditures are expected to grow at a faster clip over the next decade and will exert
pressure on the government’s budget and households’ finances unless reforms of the
national healthcare system are enacted to stem rising medical care costs.

• The crucial elements to plan for an inclusive and affordable healthcare system, backed by
funding sustainability through long-term contributions and low administrative cost are: 1)
Collective-oriented approach, a feasible way to raise money as everyone has a
responsibility to pay for his or her future healthcare expenses; 2) A well-designed healthcare
system with appropriate financing support from the Government for lower income
households; 3) At least one common healthcare package, which provides a comprehensive
coverage for all regardless of income levels; 4) Payment for the poor can be subsidized
through government funding like in the case of Singapore’s Medifund.

Socio-Economic Research Centre 40

Selected targets under Pillar II

1 MyWI is not part of the selected targets.

Socio-Economic Research Centre 2 Based on Buku Harapan target to build 1 million houses in 2 terms (2018-2028). 41
 Pillar III: Pursuing Balanced Regional Development

• In 2018-20, Federal Government’s development expenditure will focus more on six less
developed states (Sabah, Sarawak, Kelantan, Terengganu, Kedah and Perlis) to push
forward the balance of growth between states.

• The government has identified the priority of the investments and projects based on
regional competitive advantages.

• Six conurbations, 17 promoted development zones (PDZs) and 48 catalyst centres

under the National Physical Plan 3 (NPP3) have identified as upcoming investment location
to stimulus the growth of urban economy.

• The Government plans to minimize urban-rural income disparity from 1:0.57 in 2016 to
1:0.67 in 2020 through paving roads, upgrading of existing pipes and reticulation system,
increasing electricity coverage up 99% in rural area, upgrading 1,000 telecommunication
towers, constructing 300 new telecommunication towers and etc.

Socio-Economic Research Centre 42

GDP growth target by state
% share of GDP in 2017 11MP, Average annual growth rate (%)
6.9
23.0 Selangor 6.2
7.5
15.6 WP Kuala Lumpur 6.4
4.7
9.7 Sarawak 3.5
5.9
9.5 Johor 5.5
4.6
6.8 Sabah 5.1
6.1
6.6 Pulau Pinang 4.4
5.9
5.4 Perak 4.9
5.7
4.3 Pahang 4.8
5.1
3.5 Negeri Sembilan 4.0
5.8
3.3 Kedah 4.2
5.5
3.1 Melaka 6.0
4.2
2.6 Terengganu 4.6 Original Target
4.8 Revised Target
1.8 Kelantan 4.7
6.1
0.5 WP Labuan 5.8
4.0
0.4 Perlis 3.3
5.0-6.0
100.0 Malaysia 4.5-5.5
Source: DOSM; EPU

Socio-Economic Research Centre 43

Identified growth areas

Note: 1The development of subregions of Highland Area, Upper Rajang Area and Northern Area in Sarawak is under the purview of the Regional
Corridor Development Authority (Amendment) Ordinance, 2017.
Source: Federal Department of Town and Country Planning (National Physical Plan 3) and Sarawak State Planning Unit

Socio-Economic Research Centre 44

Focusing on niche cluster activities
NORTHERN REGION
• Manufacturing (electrical & electronics (E&E), machinery &
equipment, bio-industries, aerospace and medical devices)
• Logistics (transportation and storage)
• Tourism (arts, entertainment and recreation)
• Agriculture (paddy and fisheries)

EASTERN REGION
• Mining and quarrying (oil & gas)
• Agriculture (forestry and fisheries)
• Manufacturing (petrochemical)
• Logistics (transportation and storage)
• Tourism (arts, entertainment and recreation)

CENTRAL REGION
• Wholesale & retail trade
• Accommodation and food & beverages
• Finance & insurance
• Tourism (arts, entertainment and recreation)
• Real estate & business services
• Manufacturing (aerospace)

Socio-Economic Research Centre 45

Focusing on niche cluster activities (cont.)
SOUTHERN REGION
• Manufacturing (E&E, petrochemical, agro-based processing)
• Mining and quarrying (oil & gas)
• Tourism (arts, entertainment and recreation)
• Logistics (transportation and storage)
• Real estate
• Education
• Agriculture (food crops)

SABAH REGION
• Agriculture (forestry, fisheries and oil palm)
• Mining and quarrying (oil & gas)
• Logistics (transportation and storage)
• Tourism (arts, entertainment and recreation)
• Education

SARAWAK REGION
• Agriculture (forestry, fisheries and oil palm)
• Manufacturing (aluminium, glass, steel, timber-based, marine
products)
• Mining and quarrying (oil & gas)
• Information and communication technology

Socio-Economic Research Centre 46

Enhancing ASEAN sub-regional cooperation
• Refocus the development in Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and
Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-
EAGA) subregions. A number of measures were proposed as below:

– Develop the Special Economic Zones (SEZs) in Bukit Kayu Hitam, Kedah with Songkhla,
Thailand

– New proposed SEZs in Arun, Tanjung Api-Api and Sei Mangkei, Indonesia

– Increase cooperation with the southern Thailand provinces of Songkhla, Narathiwat,

Satun and Yala

– Upgrading Tebedu, Sarawak and Enitkong, West Kalimantan border posts into an
international gateway

– Construction of the new Immigration, Custom, Quarantine and Security Complex in Bukit
Kayu Hitam, Kedah

– Two new bridges to enhance connection from Rantau Panjang and Sungai Golok to
Narathiwat

Socio-Economic Research Centre 47

Enhancing ASEAN sub-regional cooperation (cont.)

– Establish land connection between Pengkalan Kubor, Kelantan and Tak Bai, Narathiwat

– Finalising a memorandum of understanding (MoU) on air linkages under IMT-GT

– Transform Kota Kinabalu, Sabah as subregional aviation hub

– Continue the construction of Mukah Airport in Sarawak

– Implement roll on-roll off (RO-RO) ferry service between Sabah and Pelawan

– Expansion of the Sapangar Bay Container Port in Sabah

– Continue the construction of the Pan-Borneo Highway

• SERC’s comments: These infrastructure projects would generate positive spin-offs on the
region’s economic development and Malaysia in particular given our strategic location.
Plenty of job opportunities will be generated to absorb high youth unemployment in rural
areas. Such sub-regional cooperation also offers alternative channels for domestic
industries and companies to expand their businesses. Most importantly, it helps to enhance
intra-state connectivity as well as promote human mobility within ASEAN.

Socio-Economic Research Centre 48

Selected targets under Pillar III

Socio-Economic Research Centre 49

 Pillar IV: Empowering Human Capital

• New targets: (i) Review labour laws: Employment Act 1955, Trade Union Act 1959 and
Industrial Relations Act 1967, and (ii) 85.0% TVET graduates employed within 6 months of
graduation.
• Revised target: ≥95% student enrolment for pre-school and secondary level (from 100% in
previous)

Salaries and wages

• Minimum wage will be reviewed every two years, the National Wage Index (NWI) will
be served as the benchmark of salary according to the qualification and skills, particularly
for the starting salary.
• Compensation of employees (CE) to GDP ratio has been revised downward to at least
38% (from at least 40% in previous) by 2020. It remains a gap of 20.2 percentage points
between the capital owner and employees.
• Targeted mean monthly household income is revised downward to RM8,960 in 2020 from
RM10,540 previously while monthly median wage narrowed to RM2,400 (from RM2,500
previously).

Socio-Economic Research Centre 50

Labour skills and education

• On the issue of mismatching in the labour market, a Critical Occupation List (COL) has
been developed and will be updated continuously to identify the shortage of worker/skill that
will affect the economy. With that, the Government will reprioritise the field of studies and
leverage the Malaysian diaspora.

• In terms of technical and vocational skill-related job, more emphases will be given on the
review of Technical and Vocational Education and Training (TVET) program offerings,
implement harmonized accreditation system and strengthen TVET as preferred
education pathway.

• Revised Malaysian Qualification Framework (MQF) will allow mobility of students among
all TVET institutions, including Malaysian Technical University Network (MTUN). The MTUN
will align the courses to cater for demand in TVET. Hence, MTUN bachelor’s degree
program in engineering technology is expected to increase from 50% to 75% by 2020.

• MTR also set a 85% target for TVET graduates to be employed within 6 months of
graduation, with a stronger industry-academia collaboration in place.

Socio-Economic Research Centre 51

Foreign worker (FW) issue
• A progressive multi-tiered levy system will be implemented to reduce the dependency of
low-skilled FW.
• SERC’s comments: It is suggested that the tiered-levy model to come into effect in 2021
so as to allow the industry to adjust their cost structure. This is due to the implementation of
Employer Mandatory Commitment (EMC) in January 2018, which the employers are no
longer allowed to deduct the levy from wages of their foreign workers. The EMC has added
burden to the employers amid higher minimum wages. Alternatively, the model can be
implemented earlier for levy amount up to Tier 2 at the initial stage (from 2020) and
subsequently move to Tier 3 from 2021 onwards.
The levy model should be reviewed periodically every 3 to 5 years according to the
economic and business environment as well as labour market conditions. The tiered-levy
model must be mutually acceptable market-based mechanism by both Malaysian
Manpower Council and Joint Consultative Committee.

• The Employment Act 1955 will be amended to cater for payment of salary to FW must
through banking system to monitor remittance by FW. However, this would cause
inconvenience for the FW who worked in the remote areas such as plantation and under-
developing construction area. The Government should have separate scheme in handling
this implementation.
• The MTR of 11MP did not highlight any measure to tackle the illegal FW issue.

Socio-Economic Research Centre 52

Labour law amendments
• Several acts including Employment Act 1955, Trade Union Act 1959 and Industrial
Relations Act 1967 will be amended to ratify the International Labour Organisation (ILO)
Conventions. The amendments are mainly to promote principles and rights such as the
freedom of association, right to collective bargaining, elimination of forced labour and
elimination of discrimination in respect of employment.

• SERC’s comments: Owing to the large presence of foreign workers in Malaysia and the
practice of non-discrimination as governed by ILO, the proposed amendments must be
thoroughly assessed to avoid future industrial relations disharmony.

• Female labour force participation is very low at 54.7% compared to male at 80.1% in
2017. The Government plans to increase maternity leave to 90 days from current’s 60
days and review the regulations on childcare facilities for the private sector. With that,
the female participation rate is expected to tick higher to 56.5% by 2020.

• SERC’s comments: Despite these initiatives may encourage female participation in labour
force, but employer may disfavour to hire female employee compared to male employee.
Hence, the Government should provide assistance such as tax incentives to encourage the
hiring of female employees.

Socio-Economic Research Centre 53

Selected Targets under Pillar IV

Socio-Economic Research Centre 54

 Pillar V: Enhancing Environmental Sustainability through
Green Growth

• Green growth will not only ensure achievement of sustainable development objectives but
also sustain economic growth, enhance environmental sustainability and promote better
wellbeing.

• Stronger governance such as strengthening policy, legislation and institutional framework

will allow the expansion of green growth in all economic sectors, including green market. A
resource- and energy-efficient economy will be able to minimise greenhouse gas (GHG)
emissions, pollution and waste as well as enhance water, food and energy security.
Moreover, conservation of the marine and terrestrial habitats will ensure continuous
ecosystem services for the present and future generations.

• Intensified mitigation and adaptation as well as disaster risk reduction (DRR) measures will
increase resilience of the nation against climate change impacts and natural disasters. In
addition, a sense of ownership among all levels of society is imperative in nurturing shared
responsibility in sustaining the national natural endowment.

Socio-Economic Research Centre 55

Selected targets under Pillar V

Socio-Economic Research Centre 56

 Pillar VI: Strengthening Economic Growth

Strengthening sectoral growth and structural reforms

• Malaysia’s momentum of economic growth throughout the remaining Plan period will be
accelerated by stimulating activities to move up the value chain and promote high value
creation private investment.

• These initiatives comprise accelerating services sector transformation, re-energising

manufacturing sector, developing modern and productive agriculture sector, enhancing
exports capacity, improving market efficiency as well as facilitating ease of doing business.
It is envisaged that sectoral growth will be enhanced by improving productivity, increasing
technology adoption and digitalisation as well as strengthening the business ecosystem.

Socio-Economic Research Centre 57

Accelerating services sector transformation
• Guided by various services subsector blueprints, including the Services Sector Blueprint.
• Focusing on knowledge-intensive services and improving productivity.
• Developing skilled human capital and create more high-paying jobs.
Information and • Adopt emerging technologies such as artificial intelligence (AI), big data analytics (BDA),
communications financial technology (Fintech) and Internet of Things (IoT)
technology (ICT) • Strengthen self-reliance in cyber security and develop home-grown products and services
services as well as nurture start-ups companies to be competitive
• Improve ICT research, development, commercialisation and innovation (R&D&C&I) by
strengthening partnership between public research institutes, institutions of higher
education and industries to deliver commercial solutions
Creative industry • Develop comprehensive plans to leverage culture, arts and craft to ensure sustainability
• Promote animation, electronic games and music industry as well as create innovative
entrepreneurs
• Review existing incentive and funding mechanisms to enhance transparency and promote
the industry
Financial services • Promote greater use of digital technologies and provide regulatory support towards
creating a cashless society, lowering cost of transaction and widening access to
underserved customers
• Enhance development of Islamic finance through the adoption of a value-based
intermediation
• Position Malaysia as a regional sustainable and responsible investment (SRI) centre and
promote green financing as a new asset class
• Facilitate channeling of private investments into companies with growth potential through
measures to spur venture capital and private equity industry as well as alternative
investments

Socio-Economic Research Centre 58

Accelerating services sector transformation (cont.)

Private healthcare • Attract healthcare travelers by focusing on cardiology and fertility

services • Encourage further investment in the private healthcare facilities to complement public
healthcare services
• Improve traditional and complementary medicine services
Oil and gas • Develop capacity and expand business operations abroad including growing local OGSE
services and companies by encouraging mergers and acquisitions
equipment • Enhance technical expertise and intensify promotion for internationalization
(OGSE) industry
Tourism industry • Rebrand Malaysia as a leading tourist destination and capitalise ecotourism products
• Leverage digital platform to further promote tourism products and services
• Increase accessibility to and within Malaysia and improve quality of services
• Improve infrastructure and facilities as well as instil maintenance culture
Retail trade • Leverage technology and e-commerce to increase convenience, uplift productivity and
reduce retail prices
• Promote modernisation, particularly among traditional retailers to increase
competitiveness
Halal industry • Develop a dynamic ecosystem by creating a bigger market space, establishing larger pool
of halal experts and producing more home-grown halal champions
• Strengthen halal authentication and traceability through scientific methods
• Produce more premium halal products and services

Socio-Economic Research Centre 59

Re-energising the manufacturing sector

• Priority and catalytic subsectors are the electrical and electronics (E&E), machinery and
equipment (M&E) as well as chemicals and chemical products.

• High potential growth subsectors are aerospace and medical devices.

• Accelerating automation and innovation, undertaking research and development

(R&D), implementing sustainable production practices and leveraging industry associations
in sharing best practices.

• Provide incentives such as grants and soft loans to promote automation, technological
adoption and exports based on specific milestones and outcomes.

• The adoption of eco-industrial parks (EIP) concept, which supports sustainable

consumption and production (SCP) to ensure existing and new industrial parks are more
sustainable and competitive.

Socio-Economic Research Centre 60

Developing modern and productive agriculture sector

• The share of agro-food is targeted to reach 42.8% in 2020 (37.4% in 2015).

• Industrial commodity subsector will focus on expanding downstream activities along the
value chain to tap a growing market for higher value-added products.
• To rationalize roles and functions of agro-food agencies to increase efficiency and
optimize resources.
• Promote large scale production of premium grade fruits including durian, pineapple and
jackfruit; high yielding coconut varieties; and grain corn for animal feed as new sources of
wealth.
• Provide necessary incentives and support, including infrastructure, farming
technology, market information and access to financing for farmers and smallholders.
• Encourage youth participation in modern agriculture activities, particularly through
cooperatives to enable better pooling of resources as well as bargaining power and
achieving economies of scale.
• Promote potential new sources of wealth to diversify the usage of industrial crops. These
include the use of oil palm trunks as an alternative to timber, kenaf fibre as seat cushion
material in the automotive industry as well as premium cocoa beans as a high-end product
for niche markets.

Socio-Economic Research Centre 61

Creating more dynamic SMEs

• Small and medium enterprises (SMEs) are an integral part of the economy in terms of
production, employment generation and income.
• In Malaysia, SMEs constitute 907,065 or 98.5% of the total establishments: services
sector (89.2% of total SME establishments), followed by manufacturing (5.3%), construction
(4.3%), agriculture (1.1%) as well as mining and quarrying (0.1%). In terms of size, the
majority of SMEs were microenterprises (76.5% of total SME establishments), followed by
small-sized SMEs (21.3%) and the medium-sized SMEs (2.3%).
• SME establishments were a major source of employment which accounted for 66% of total
employment in 2017.
• SMEs’ contribution to GDP from 37.1% in 2017 to 41% in 2020 and expanding export
share from 17.3% in 2017 to 23% in 2020.
• A new long-term plan will be formulated during the remaining Plan period, to chart SMEs
development beyond 2020.
• The proposed new masterplan will identify new opportunities and challenges to be
addressed by taking into account the changing demographics, economic and business
landscape. It will also explore new business models arising from the Industrial Revolution
4.0, emerging financial technology, inclusive business, sharing economy and circular
economy.

Socio-Economic Research Centre 62

Increasing export capacity

• SMEs will be encouraged to leverage free trade agreements and mutual recognition
arrangements as well as various initiatives under regional cooperation.

• SMEs will be incentivized to obtain appropriate certification and accreditation to enable

locally produced goods penetrate international markets.

• Expand the scope of the Services Export Fund to include halal industry as well as
provide more incentives to exporters through the Services Sector Guarantee Scheme.

• The formation of consortia in providing multi-disciplinary services will be further encouraged

through collaboration among associations to bid for projects abroad.

• To facilitate international market penetration, market intelligence be made available to

service providers for better understanding of domestic regulations of the targeted export
markets.

• Digital platforms and Digital Free Trade Zone (DFTZ) will provide greater access to local
players in penetrating the global market through e-commerce activities.

Socio-Economic Research Centre 63

Increasing export capacity (cont.)

• Develop comprehensive halal standards based on syariah principles and industry

requirements such as hygiene, sanitation and safety along the supply chain.

• The National Standards Compliance Program will facilitate halal industry players to
comply with Good Manufacturing Practice (GMP) and Hazard Analysis and Critical Control
Points (HACCP) as well as other international standards through the provision of technical
expertise and capacity building.

• Efforts will be enhanced towards reducing the greenhouse gas (GHG) emissions by
promoting sustainable farm and forest management, including aquaculture, fishing practices
and industrial commodities.

• The adoption of the Malaysian Sustainable Palm Oil (MSPO) certification will be made
mandatory among industry players to mitigate adverse campaigns on local palm oil.

Socio-Economic Research Centre 64

Improving market efficiency
Streamlining the role of state-owned enterprises (SOEs) and monopoly entities
• There is a crucial need to streamline the overlapping functions role of SOEs and other
monopoly entities to promote market efficiency and protect consumer interest and
adopts best international practices on the governance of SOEs.

• A special ministerial committee will review policies and concessions with regard to
monopolistic arrangements of these entities to ensure greater market efficiency.

• A national policy and governance framework will be formulated to align SOEs and
other monopoly entities with the broader national development agenda.

SERC’s comments: The issue of maintaining competitive neutrality (a “level” playing field”)
between private and publicly-owned businesses (GLCs and SOEs) need to be rationally and
critically reviewed to enhance efficiency throughout the economy. GLCs and SOEs tend to be
concentrated in sectors where natural or legal monopoly is commonplace and should operate
in a purely commercial fashion should compete on an equal basis with other companies.
However, in practice many were given some form of state interventions or subsidies given
their blurry lines or competing objectives between performing commercial and non-commercial
(social) functions.

Socio-Economic Research Centre 65

Facilitating ease of doing business
Improving regulatory and trade practices
• Intensify the implementation of Good Regulatory Practice (GRP) in addressing the
complex regulatory framework, modernise business regulations and create a more
favourable business climate.
• Review the content, quality, administration and enforcement of regulations to minimise
regulatory burden and facilitate ease of doing business.
• Ministries and agencies to conduct regulatory impact analysis and consultations with
stakeholders to acquire feedback on new and impending changes to the regulations.
• The application of the National Policy on the Development and Implementation of
Regulations, which serves as a guideline on parameters and principles of Good Regulatory
Practices (GRP), will be extended to state government and local authorities.
• Continued efforts at modernising business licensing, eliminating unnecessary
regulatory burdens on business and reducing bureaucratic processes to lower
compliance costs.
• Launch a unified public consultation portal as a platform for public to provide feedback
on proposed regulatory changes.
• Streamline non-tariff measures (NTMs) at customs entry points to eliminate
unnecessary trade practices and improve flow of imports and exports as well as
reduce cost of doing business for importers, exporters and logistics players.

Socio-Economic Research Centre 66

Harnessing the Fourth Industrial Revolution through a National Policy Framework on
4IR

• During the remaining Plan period, the national policy framework on the 4IR will be
formulated, with initiatives will be undertaken to encourage local firms, especially SMEs, to
move up the value chain and become globally competitive, particularly in the advent of the
4IR. These initiatives aim to boost innovation and promote adoption of latest technology to
accelerate economic growth.

• A more knowledge-intensive and skilled workforce is integral to support the economic

sectors in moving up the value chain. Leveraging 4IR will also be vital to ensure Malaysia
benefits from the rapid technological advancement to increase competitiveness and market
efficiency.

• A conformity assessment on the readiness of selected firms will be carried out to

determine the types of intervention and level of technical assistance required.

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The National Industry 4.0 Policy Framework

Source: Ministry of International Trade and Industry (MITI)

Socio-Economic Research Centre 68

Increasing technology adoption
Upgrading capacity and capability of SMEs
• SMEs will be supported in strategic areas through provision of funds and collaborative
initiatives to embrace technology, particularly elements of Industry 4.0. Funding measures
include the Inclusive Innovation program to assist SMEs in inculcating innovation culture.
The Technology Commercialisation Platform will provide funds to enable SMEs
commercialise innovative products.

• The sectoral development initiatives under the Catalyst Programme will continue to build the
capacity of SMEs to participate in the global supply chain. In addition, the Soft Loan Scheme
for Automation and Modernisation will provide financing to automate the production line.
The process of approval for funds and grants for SMEs will be reviewed to enhance
transparency, improve targeting and link with productivity-based outcomes as outlined in the
MPB.

• The criteria of the High Impact Fund will be reviewed to encourage multinational companies
collaborate with SMEs in producing high value products and services.

• The Government will review its procurement policy to facilitate capacity building by giving
preference to consortia. This will enable professional service providers to leverage the trust,
network, synergy, and shared technical know-how that are established when venturing abroad.

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Increasing technology adoption (cont.)
Encouraging digitalisation among SMEs
• Efforts will be intensified in promoting greater application of digital technology including IoT, AI,
virtual reality and robotics.
• Training programmes will also be enhanced to utilise ICT, particularly in the area of logistics,
finance and insurance.
• Digital marketing platforms will be leveraged to capitalise ecotourism products, unique
culture and historical sites for tourism. Attention will also be given to online advisory and
reviews as part of efforts to improve service quality to increase tourist arrivals.

Accelerating technology adoption in the construction sector

• The implementation of the Construction Industry Transformation Programme (CITP) will be
expanded to enhance the competitiveness of the industry.
• The CITP aims to improve quality, safety and professionalism; ensure environmental
sustainability; increase productivity; and improve internationalisation.
• Greater focus will be given to encourage the adoption of Industrialised Building System (IBS)
and Building Information Modelling (BIM) technology in improving the design, construction and
maintenance of buildings. These will further improve the efficiency, productivity and quality of
construction processes.
• The newly established MyBIM Library will serve as a central repository for BIM objects and IBS
components to facilitate the development of BIM models at nominal cost to users.

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Increasing technology adoption (cont.)
Enhancing technology adoption in agriculture sector
• The implementation of initiatives in encouraging technology adoption will be intensified in
modernising the agriculture sector.

• Among the initiatives include adoption of precision-farming technology, utilisation of

mobile applications in production processes and expansion of mechanisation and
automation.

• Enabling factors including financing, training, support and extension services as well as
incentives such as matching grants will be provided.

• A wider adoption of modern technology is expected to attract more youth participation in the
sector.

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Increasing technology adoption (cont.)
Aligning Research and Innovation
• Efforts are needed to address the lack of coordination in R&D&C&I activities and low
commercialisation of R&D output.
• Several initiatives will be undertaken in improving the alignment of R&D&C&I to priority sectors
for effective and efficient implementation, thus optimising resource utilisation and maximising
return on investment. In the remaining Plan period, efforts will focus on prioritising areas of
science, technology and innovation (STI), strengthening the management of research by
public research institutions and enhancing collaboration through intermediaries.
• Demand-driven research will be increased and transfer of R&D output from lab to market will
be improved.

• SERC’s comments: While the Government and relevant agencies have created many
initiatives and programs to nurture, develop and advance STI, they were weakened by
insufficient coordination, duplications and governance weaknesses that are in need for an
extensive review and complete overhaul of existing fiscal and financial incentives, particularly
for small and medium-sized enterprises (SMEs) to make them more effective and accessible.
In this regard, it is essential to establish a clear, streamlined and coordinated governance
structure to improve the orientation and implementation of STI policy.

Socio-Economic Research Centre 72

Providing quality infrastructure
• The provision of quality infrastructure remains an issue in terms of integration, coverage
and connectivity as well as affordability and sustainability.

• Greater emphasis will be given to transport integration in enabling seamless movement

of people and goods.

• Logistics and trade facilitation initiatives will focus on improving efficiency and
effectiveness of services along the value chain to enhance competitiveness.

• Digital infrastructure will be improved to increase broadband coverage and capacity to

cater for the demand of the digital economy. In addition, efforts to enhance the efficiency
and reliability of water services and energy supply will be undertaken.

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Developing an integrated transport system
• An integrated transport system that facilitates business and enables seamless travel is vital for
economic growth.
• Existing initiatives to improve public transport services, address road congestion and expand
road networks especially in underserved areas will be intensified.
• Measures will also be undertaken to increase the efficiency of port operations and upgrade
facilities at selected airports.
• Quality investment will be prioritised in the development of transport related projects, taking into
account actual demand and feasibility, to ensure the infrastructure are optimised.
• Efforts will focus on streamlining initiatives through national transport policy, enhancing
connectivity across regions, integrating different modes of transport, upgrading airport
infrastructure, improving ports accessibility and capacity as well as optimising transport
infrastructure.

Strengthening logistics and trade facilitation

• The logistics industry in Malaysia remains fragmented and less competitive due to factors such as
inadequate connectivity, low adoption of technology and innovation as well as burdensome
regulations that impede trade.
• Initiatives on strengthening logistics and trade facilitation will be continued to increase the efficiency
of the industry and promote trade activities.
• In the remaining Plan period, initiatives to further unleash the growth of logistics and enhance trade
facilitation, will focus on improving efficiency along the value chain and digitalising logistics services.

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Improving digital infrastructure
• The deployment of digital infrastructure is constrained by high cost and low return on
investment particularly in rural areas, resulting in inadequate broadband coverage.
• Several other issues including the issuance of the right of way and permits for communication
infrastructure continue to hinder the deployment of digital infrastructure.
• The capacity and coverage of the digital infrastructure will be further improved to support
the development of digital economy as well as increase efficiency and productivity.
• In the remaining Plan period, measures to improve broadband will be undertaken to increase
connectivity, affordability and quality. In addition, efforts will be undertaken to complete the
migration to digital terrestrial television (DTT).

Improving water services

• Efficient and quality water services are fundamental for economic growth and uplifting
wellbeing of the rakyat.
• The coverage of water services will be expanded to meet the growing demand. In the
remaining Plan period, initiatives will focus on increasing efficiency and productivity of water
supply and sewerage services, expanding network and treatment plant capacity as well as
optimising usage of water.
• Initiatives that will be undertaken for water supply services include the implementation of
Tariff Setting Mechanism and restructuring of water services industry.

Socio-Economic Research Centre 75

Sustaining energy supply
• The provision of reliable and sustainable energy supply is fundamental to strengthen energy
security and enhance efficiency.

• The provision and efficiency of energy supply will be improved to meet growing demand. In
the remaining Plan period, initiatives will focus on strengthening oil and gas security of
supply, ensuring energy security through better management of resources and enhancing
efficiency in energy sector.

• Concerted efforts to increase security and reliability of oil and gas supply will be continued
through the construction of new additional pipelines and other infrastructure. This
construction includes PETRONAS floating liquefied natural gas 2, with a capacity of 1.5
million tonne per annum offshore Sabah, expected to be commissioned in July 2020 and
the gas pipeline networks from Ayer Tawar to Lembah Kinta, Perak.

• The commencement of the Refinery and Petrochemical Integrated Development

(RAPID) operations will increase the combined domestic oil refining capacity beyond
900,000 barrels per day by 2019. In addition, storage capacity of crude oil and petroleum
products in Pengerang Integrated Petroleum Complex will be expanded from 1.3 million
cubic meters to 3.2 million by 2020.

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Selected targets under Pillar VI

Socio-Economic Research Centre 77

Conclusion – A good Strategy is important, Execution is critical

• Overall, the Mid-Term Review of the Eleventh Malaysia Plan (MTR of 11MP) document set
a strong statement of intent, outlining bold New Priorities and Emphases to steer the
country and Malaysians in the right direction on its quest to become a high-income
developed nation going forward.

• The new Government faces the reality that the journey ahead is full of tribulations and
obstacles and hence, bold and radical reforms as well as reconstruction measures are
imperative to correct the structural impediments. New dimensional growth strategies are
critical to drive higher quality domestic and foreign investments. Our workforce must be
equipped with the skillset, soft skill and creative thinking mindset to fit into the future
workplace.

• Though the fiscal consolidation target is pushed back to reach a fiscal deficit target of 3.0%
of GDP in 2020 from a near balanced of -0.6% pf GDP previously, the Government is
committed to implement comprehensive reforms to ensure sustainable fiscal management,
making the financial administration more transparent and accountable to ensure that public
funds are spent prudently for the best value projects and services.

• We believe that a smaller, less intrusive role for government, much more contained public
service and a bigger role for the public-private partnerships under Malaysia Incorporated.
Public sector becomes an effective facilitator and not a deterrent to private sector.

Socio-Economic Research Centre 78

Appendix

Priority Area Strategy Initiative

Improving Strengthening Check and • Enhancing the authority of the Parliament
Governance at All Balance Mechanism • Improving the legal administration system
Levels
Improving Relationship • Reviving the spirit of federalism
between Federal, State and
Local Governments
Reforming the Political • Limiting the term of Office for the Prime Minister, Chief Minister and Menteri Besar
System • Improving the electoral system
• Introducing legislation governing political financing
Elevating Integrity Enhancing Anti-Corruption • Reforming Malaysia anti-corruption institutions
and Accountability Agenda • Strengthening anti-corruption legislation
PILLAR I

Improving Transparency • Enabling open government environment

• Expanding cashless payments platform
Inculcating Noble Values • Upholding integrity at all levels
and Ethical Work Practices • Instilling noble values among public servants
Enforcing Prudent Improving the Budgeting • Enhancing national budget process
Public Finance System • Increasing efficiency and transparency of state-owned enterprises
• Expanding and expediting the implementation of accrual accounting
Enhancing Procurement • Strengthening procurement framework
Management • Strengthening public private partnership framework
Strengthening Performance • Enhancing performance management
Management, Monitoring • Improving monitoring and coordination mechanism
and Evaluation Framework • Strengthening project management

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 Priority Area Strategy Initiative
Enhancing Public Reforming Public Sector • Rationalising public sector institutions
Service Delivery Institutions • Strengthening talent management for public service
• Customising performance assessment
• Promoting career development
• Improving work-life balance
PILLAR I

Redesigning Public • Reducing bureaucracy and integrating productivity improvements

Services • Expanding digitalisation agenda
• Innovating towards better quality services
• Reducing government role in non-core services
• Improving and sharing of government resources
Empowering Local • Improving accountability of local authorities
Authorities • Strengthening service delivery by local authorities
• Strengthening collaboration for stimulating local economic development
Enhancing Raising the income and • Uplifting income of poor and low income households
Inclusiveness purchasing power of B40 • Increasing employability
towards an households • Boosting entrepreneurship
Equitable Society • Improving productivity
• Enhancing the social protection system
• Improving measurement of poverty
Enhancing Bumiputera • Strengthening effectiveness of institutions and programmes
Economic Community • Empowering human capital and strengthening education
PILLAR II

(BEC) • Raising effective control and sustainable corporate equity ownership

• Increasing wealth ownership
• Building resilient and sustainable Bumiputera Economic Community (BEC)
Empowering minority • Uplifting Orang Asli, Anak Negeri Sabah and Bumiputera Sarawak
groups • Elevating low income Indian and Chinese households
Addressing the needs of • Upholding the needs and interest of children
specific target groups • Nurturing the potential of youth
• Enhancing the role of women in development
• Enhancing the living environment for the elderly
• Empowering persons with disabilities
• Strengthening the family institution

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 Priority Area Strategy Initiative
Improving Wellbeing Increasing purchasing • Addressing market distortion by promoting greater competition
for All power for all • Provide more avenues offering affordable and competitive prices of goods and
services
• Enhancing enforcement of the price control regulations
• Advocating consumerism
Providing quality and • Strengthening management of affordable housing
affordable housing • Increasing access to affordable housing for targeted groups
• Encouraging environment-friendly facilities for enhanced liveability
Enhancing the healthcare • Creating a sustainable healthcare system
delivery system • Optimising financial resources for healthcare
• Strengthening population health
• Pursuing greater collaboration among stakeholders
Making the nation safer and • Strengthening enforcement and security agencies
secure • Intensifying crime prevention
PILLAR II

Promoting noble values and • Promoting noble values

active lifestyle • Nurturing national culture
• Fostering social cohesion and national unity
• Promoting active and healthy lifestyle
Strengthening Strengthening and • Providing an integrated regional development framework
regional economic streamlining state and • Ensuring better allocation of development expenditure to less developed states
Development regional development • Enhancing the role of state economic development corporations
planning • Promoting interstate coordination in infrastructure provision
Modernising and • Strengthening the ecosystem for economic activities
diversifying the economic • Focusing on niche cluster activities
Base • Intensifying skills and human capital development
Promoting competitive • Improving potential of major cities to accelerate regional economic growth
cities • Enhancing urban competitiveness for better living and connectivity
• Accelerating development in identified growth areas
Enhancing ASEAN • Accelerating development in Special Economic Zones
subregional cooperation • Enhancing connectivity in the IMT-GT and BIMP-EAGA subregions

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 Priority Area Strategy Initiative
Bridging Urban- Enhancing Rural • Increasing provision of road network
Rural Infrastructure • Expanding coverage of water supply
Development Gap • Increasing coverage of electricity supply
• Improving digital infrastructure
Improving urban-rural • Improving connectivity and mobility to strengthen rural economy
linkages • Expanding access to basic services
Creating local economic • Encouraging more private investment
activities in rural areas • Promoting sustainable rural economic activities
• Widening the implementation of initiatives under the Prosperous Village of the
21st Century concept
• Embracing digital economy
• Enhancing knowledge and skill for better employability
PILLAR III

Accelerating Intensifying economic • Enhancing the role of development agencies in Sabah and Sarawak
Development in growth and development • Developing niche economic sectors
Sabah and Sarawak planning • Providing fair distribution of petroleum revenue
• Improving power supply services
Improving infrastructure for • Improving road coverage and connectivity
better connectivity • Increasing the capacity and efficiency of airports and ports
Expanding access to basic • Upgrading access to water and electricity supply
infrastructure, amenities • Increasing broadband coverage
and services • Providing better access to affordable housing as well as education and healthcare
services
Increasing employment • Upskilling and reskilling of human capital
Opportunities • Enhancing skills in specific industries
Enhancing the development • Intensifying land surveying and mapping activities
of customary land • Accelerating the development of NCR land

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 Priority Area Strategy Initiative
Reforming the Generating Skilled Jobs • Encouraging automation and innovation
labour market • Identifying critical skills required by industry
• Addressing skills shortage
Raising Salaries and • Reviewing minimum wage policy continuously
Wages • Establishing National Wage Index
• Improving labour productivity
Enhancing Management of • Reducing dependency on low-skilled foreign workers
Foreign Workers • Improving management of foreign workers
Improving Labour Market • Establishing one-stop job centres
Conditions • Enhancing labour market database
Improving Labour Strengthening the Rights of • Reviewing labour laws
Efficiency and Workers • Implementing Employment Insurance System comprehensively
Productivity
Increasing Female • Implementing flexible working arrangements
PILLAR IV

Participation in the Labour • Expanding minimum maternity leave and increasing the role of women in
Force leadership
Enhancing Access Raising Quality of Basic Education
to Quality Education Education • Enhancing science, technology, engineering and mathematics education"
and Training • Raising English language proficiency
• Intensifying higher order thinking skills in teaching and learning
• Promoting virtual learning environment
• Intensifying continuous professional development for teachers
Higher Education
• Raising quality of graduates and academic programmes"
• Attaining excellence in the governance of Institutions of Higher Education
Prioritising Quality over • Reviewing TVET programme offerings
Quantity of TVET • Implementing harmonised accreditation system
• Strengthening TVET as the preferred education pathway
Improving Education for All • Strengthening efforts to boost school performance
• Improving school infrastructure for better student learning
• Reducing the rate of dropouts
• Improving education for students with special education needs

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 Priority Area Strategy Initiative
Fostering Stronger Developing Industry- • Enhancing industry-based programmes
Industry- Academia Relevant Skills • Increasing employability of TVET graduates
•
PILLAR IV

Linkages Recognising technologists as professionals

• Intensifying industry-academia collaboration
• Expanding the Future Workers Training scheme
Promoting Contributions of • Strengthening community support for education
Society and Industry • Expanding public-private collaboration
• Leveraging endowments and developing sustainable waqf
Strengthening Strengthening policy, • Enhancing environment-related policies and legislations
Governance legislation and institutional • Strengthening institutional framework
framework
Improving capacity and • Enhancing capacity and capability
capability, enforcement and • Intensifying enforcement and compliance
monitoring • Improving environment-related data for reporting, monitoring and evaluation
Raising awareness and • Enhancing communications, education and public awareness
PILLAR V

fostering a sense of shared • Encouraging stakeholder involvement

responsibility
Conserving Natural Conserving Terrestrial and • Protecting terrestrial and inland water areas
Resources Inland Water Areas • Conserving and rehabilitating strategic national endowment
• Reducing human-wildlife conflict
Conserving coastal and • Strengthening coastal and marine ecosystems governance
marine ecosystems • Protecting and conserving coastal and marine ecosystems
Enhancing livelihood and • Promoting alternative livelihood for indigenous and local communities
capacity of the indigenous • Promoting conservation of natural resources among the indigenous and local
and local communities communities

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 Priority Area Strategy Initiative
Combating Climate Intensifying climate change • Increasing contribution of renewable energy in power generation
Change and mitigation • Optimising energy use through demand side management practices
Reducing Disaster • Encouraging low-carbon mobility
Risk • Promoting green buildings
• Strengthening waste management
PILLAR V

• Expanding green market

• Intensifying sustainable agriculture, forestry and other land use
Augmenting climate change • Enhancing adaptation measures
Adaptation
Strengthening disaster risk • Enhancing integration of disaster risk reduction
management • Enhancing disaster preparedness
• Increasing capacity in disaster response
Strengthening Enhancing sectoral growth • Accelerating services sector transformation
Sectoral Growth and through productivity • Re-energising the manufacturing sector
Structural Reforms improvements • Developing modern and productive agriculture sector
• Creating more dynamic SMEs
PILLAR VI

Increasing export capacity • Enhancing export readiness of SMEs

• Improving international market compliance
Improving market efficiency • Streamlining the role of state-owned enterprises and monopoly entities
Facilitating ease of doing • Improving regulatory and trade practices
business

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 Priority Area Strategy Initiative
Accelerating Harnessing the Fourth • Embracing the Fourth Industrial Revolution
Innovation and Industrial Revolution • Catalysing Industry 4.0
Technology
Increasing technology • Upgrading capacity and capability of SMEs
Adoption
Adoption • Encouraging digitalisation among SMEs
• Accelerating technology adoption in the construction sector
• Enhancing technology adoption in agriculture sector
Aligning research and • Prioritising science, technology and innovation
Innovation • Strengthening management of research by public research institutions
• Enhancing collaboration through intermediary
• Increasing demand-driven research
• Improving the transfer of research and development output from lab to market
Enhancing capacity building • Strengthening skills training programme
• Enhancing collaboration between training institutions and industry
PILLAR VI

Providing Quality Developing an integrated • Streamlining initiatives through national transport policy
Infrastructure transport system • Enhancing connectivity across regions
• Integrating different modes of transport
• Upgrading airport system and infrastructure
• Improving ports accessibility and capacity
• Optimising transport infrastructure
Strengthening logistics and • Improving efficiency in the logistics services
trade facilitation • Digitalising logistics services
Improving digital • Improving broadband connectivity
Infrastructure • Improving broadband affordability and quality
• Migrating to digital terrestrial television
Improving water services • Increasing efficiency and productivity of water supply and sewerage services
• Expanding network and increasing treatment plant capacity
• Optimising usage of water
Sustaining energy supply • Strengthening oil and gas security of supply
• Ensuring energy security through better management of resources
• Enhancing efficiency in energy sector

Socio-Economic Research Centre 86

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SOCIO-ECONOMIC
RESEARCH CENTRE

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