Is Malaysia on track to meet its Vision 2020 goals?

Wawasan 2020, also known as Vision 2020, set out the pathway for Malaysia to reach the status of a developed nation. The clock is ticking.

By John Pennington

Wawasan 2020 – also known as Vision 2020 – was launched in 1991. It laid out nine challenges Malaysia had to meet to become a fully developed country by 2020. Less than three years to go, analysts claim the country is not going to hit its targets. But are they right?

Initially, the Malaysian government made good progress. The country is ranked 24th in the world in terms of development status. Poverty and income inequality is declining. However, appearances can be deceiving. Vision 2020 is far from being on track.

Prime Minister Najib claimed Malaysia is “on schedule”

Malaysian Prime Minister Datuk Seri Najib Tun Razak recently claimed his government remain committed to Vision 2020. “There is no issue about this and I want to stress that we are working according to schedule,” he said.

However, those words came following the launch of TN50, a set of goals looking ahead to 2050. “As we approach 2020, Malaysia needs a new direction to continue developing,” he explained. “We can’t wait till we reach 2020 to plan for the future. We need to start now.”

The economic challenge is arguably the easiest to measure. To qualify for “developed nation” status, Malaysia must achieve a gross national income (GNI) per capita of US$15,000. Malaysia’s GNI per capita dropped from US$10,345 in 2013 to US$8,821 in 2016, leaving the target well out of reach.

“When our GNI was US$10,345 in 2013, the goal was realistic but challenging,” noted Ali Salman, Institute for Democracy and Economic Affairs research director. “Now it will be extremely difficult,” he added.

Other economic factors highlight the struggle to hit Vision 2020 targets

The depreciation of the ringgit was one of the causes for the drop in GNI. Amidst global political and economic uncertainty, a drop in oil prices and the 1MDB scandal led to currency value falling and a knock-on negative effect on GNI.

The budget deficit is holding Malaysia back. Although the government is reducing the deficit, this is happening too slowly.

“Our guiding principle is to ensure Malaysia’s economic growth, yet at the same time not lose sight of our economic responsibility to reduce the budget deficit and achieve a balanced budget by the year 2020,” Datuk Seri Abdul Wahid Omar, a minister in Najib’s department, said.

However, independent experts do not take such an optimistic view. For example, S & P Global Ratings, who believed the Malaysian economy will continue to grow at a rate of 4% year-on-year, rated the goal of balancing the budget by 2020 as “ambitious”. Even if oil prices recover, spending will go up as well as revenues, they argued.

A lack of productivity is holding Malaysia back

While productivity increased by 3.5% from 2015 to 2016, that was still lower than the targeted 3.7%. The government knows it has work to do in this area. “More rigorous efforts are needed to propel productivity growth towards the 3.7% annual growth target under the 11MP,” the Malaysian Productivity Corporation advised in its annual report.

Not enough women are engaged in the workplace. Whereas the male labour force participation rate is at 80.2%, the figure for females is 54.3%. This is on the rise (in 2015 it was 54.1% and in 2010 it was 46.8%) but still short of targets. The government must address inflexibility on the part of employers and address employment law.

Education reform is badly needed

The education system is not producing people who are “job-ready” or who possess the necessary proficiency in English. “Education is the greatest problem facing Malaysia’s development,” Lawrence Saez, School of Oriental and African Studies, analysed. “The interest from the government is there to make improvements but the capabilities are not.”

The World Bank rated declining education standards as the biggest obstacle to Malaysia reaching high income status. “There is an urgent need to transform Malaysia’s education system so that it produces quality graduates required by a high-income economy,” they concluded.

Malaysia is not meeting social and democratic challenges

Some of the other challenges are harder to assess. How do you define psychological liberation, for example? On the other hand, it seems clear that Malaysia is far from being united, as laid out at the very start of Vision 2020. “No one can deny that currently we are a nation that is politically, racially, and religiously divided,” Professor Datuk Dr. Mohammad Agus Yusoff, said.

Democratic maturity is still a long way off. There is no sign of a manifesto from either Pakatan Harapan or Barisan Nasional with elections looming, for example. Barisan Nasional’s strategy to shore up support among ethnic Malays rather than reaching out to a wider base will do more to deepen ethnic divisions than bring the country together.

Activists claim that Malaysian politics, the police force, and the media are collectively responsible for a sense of countrywide injustice. “Laws such as the Prevention of Terrorism Act (Pota) and the Sedition Act, hinder the mission of realising Vision 2020 goals,” Fahmi Zainol, student activist, said.

The government needs to do more

It is all very well for the government to put in place plans to create a better Malaysia by 2030, or 2050. They must make sure they are not just moving the goalposts, but better aligning the country with prevailing economic and geopolitical conditions and projections. The government needs to continue the work the Education Blueprint is doing to bring about improvements to education. Better education will produce well-qualified graduates. Well-qualified graduates will boost productivity, innovation, and in turn the economy and society will benefit.

The productivity problem needs to be addressed by installing firmer controls on business, reducing bureaucratic wastage, and giving workers – especially women – the flexibility they need to work effectively and productively. While the government states they are on track to reach a figure of 35% of skilled workers by 2020, it is not enough. That figure needs to be as high as 40%, particularly as Malaysia wants to be a major player in the technology industry.

Malaysia must move in the right direction even if targets are missed

Malaysia will not hit its Vision 2020 targets. It may still miss some of them by 2030. That need not be a cause for concern, provided the country continues making steps in the right direction. Prudent fiscal management will keep the economy stable even if the $US15,000 GNI target is missed. More will always need to be done. The government must reshape and reassess targets on an annual basis. Others, such as unifying the nation and eliminating corruption, are continual works in progress.

The IMF’s advice from 2015 is still worth following. Then, they said, “Continued investment in infrastructure and in research and development can help spur home-grown innovation and increase incomes. Together with improvements in the quality of education, these efforts can help raise labour productivity, support higher sustainable growth, and foster a more inclusive society.”

About the Author

John Pennington
John Pennington is an English freelance writer and a self-published author. He graduated from the University of Warwick with a bachelor’s degree in French and History in 2006. After spending time as a sports journalist, he now writes about politics, history and social affairs.