BY many measures, the Malaysian economy has made tremendous strides over the last 10 years.
Real gross domestic product (GDP) is estimated to be 1.7 times larger now compared with at the start of the decade.
Additionally, despite setbacks from a weaker currency exchange rate, the gross national income (GNI) is inching up to meet the World Bank’s US$12,376 GNI per person threshold for high-income economies. Some forecasts estimate this could be breached by 2023.
Compared, with a decade ago, goods exports in ringgit terms have increased by about a third, roughly RM300 billion.
The types of products we export have also changed. Over the last 10 years, Malaysia has been exporting more chemical products and manufactured parts and less machinery, equipment and vegetable oils.
At a more micro level, median household incomes are forecasted to have doubled since 2010, while real median wages are estimated to have risen by 34 per cent over the same period.
Poverty rates based on Malaysia’s national poverty line income have fallen to virtually zero from upwards of two per cent at the start of the decade.
Nonetheless, beyond these achievements, numerous hurdles remain.
ONE, the pace of GDP growth has slowed in recent years.
Part of this is cyclical — external headwinds from a contentious global environment and slower world economic growth, along with domestic factors like policy uncertainty and weak consumer and business sentiments.
A large part is due to structural reasons — countries get richer, economic growth tends to slow as growth increasingly comes from marginal gains in productivity.
Yet, in Malaysia’s case, productivity growth has been lethargic — labour productivity continues to dawdle below levels seen in advanced economies, while catch-up has been gradual.
The Malaysia Productivity Corp’s 2018 report said measures of multifactor productivity growth have been negative over the past decade.
On this front, the key challenge would be to improve the innovative capacity of domestic firms and to continue to raise the productivity of workers.
TWO, even as measures of national poverty and inter-household income inequality have declined over the decade, inequality between regions has not.
Ten years ago, the median household income in Kuala Lumpur was 2.6 times higher than in Kelantan. Latest data indicate that this ratio has crept higher to three times.
Despite poverty rates along the peninsula’s west coast declining to virtually zero, households in Sabah and Sarawak have high incidences of poverty.
In 2016, one in three households in Kelantan did not have piped water, while one in nine in Kelantan and Sabah lived in “dilapidated” houses.
In parts of Sabah and Sarawak, where connectivity is poor, geographic disparities in access to basic services are more alarming: one in five households lives more than 9km away from the nearest public healthcare facility and secondary school.
As such, the challenge here would be to sustain the progress we’ve made in reducing poverty and inequality.
THREE, we aren’t doing the best job of measuring things, which continues to hamper our ability to analyse and overcome problems that arise.
It is well known that Malaysia’s poverty line is too low for its level of development.
Likewise, figures from the Department of Statistics’ Household Income Survey, from which crucial statistics on poverty and income inequality are calculated, may be flawed, said World Bank senior economist Kenneth Simler.
The views expressed in this article are the author’s own and do not necessarily reflect those of the New Straits Times