Malaysia could move from a middle-income nation to a high-income region within 10 years, although it will need to implement six big reforms to do so, including by developing high-paid employment and bringing more women into the workplace.
Throughout its June version of the Malaysia Economic Monitor study published today, given the Covid-19 pandemic impact, the World Bank said that was possible. Amid the Covid-19 issue, Malaysia is projected to transition in this decade from an upper middle-income economy to a high-income economy.
Yet amid this optimistic view on Malaysia’s chances of potentially gaining high-income nation status, the World Bank found out how Malaysia lagged behind other high-income nations in recent years in certain respects.
Like those countries , the World Bank noticed that Malaysia was rising slower, with greater wage disparities, and a smaller share of high-skilled employment.
In particular, there is a increasing feeling among the middle class in Malaysia that the benefits of prosperity have not been divided equitably between the wealthiest and the poorest, and that rises in living costs exceed incomes, especially in urban areas.
To ensure development is sustained to push Malaysia into high-income status, the World Bank said the country needs to implement a specific collection of policies to provide knowledge-intensive development and higher productivity-based growth. Malaysia wants to utilize its capital more effectively to contend with other high-income countries, develop innovative ideas and goods, broaden markets and improve productivity
Reforms in six broad areas, including raising the participation of women in the labor force; enhancing human capital; boosting competitiveness; creating well-paid, high-quality jobs; modernizing institutions; and promoting inclusion are vital to Malaysia’s successful transition to high-income status and sustaining equitable growth beyond the transition.
The World Bank categorizes countries according to their gross national income (GNI) per capita or GNI per person to assess the status of a government.
The official description of the World Bank for high-income countries is those with a per capita GNI of US$ 12,376 (RM52,944) or higher, whilst the upper middle-income economies have a per capita GNI of between US$ 3,996 and US$ 12,375, lower middle-income economies (between US$ 1,026 and US$ 3,995), low-income economies (US$ 1,025 or less).
Malaysia and Thailand are in the upper middle-income group for South-East Asian countries, whereas Brunei and Singapore are in the high-income region, and the others are in the lower middle-income group (Cambodia, Indone).
In the latest available statistics, the online report of the World Bank reveals Malaysia in 2018 as having a per capita GNI of US$ 10,590, based on the World Bank Atlas system used to measure estimates for the income level classification of countries.
Earlier today, Fitch Solutions Country Risk and Industry Analysis published a report saying that Malaysia has already exceeded its growth capacity through low-level industrialization and urgently needs to upgrade its economy to avoid the so-called middle-income trap, but also stressed that these efforts may be hampered by issues such as continuing political instability in the region.