Wednesday, April 21, 2010

Half Revealed World Bank Report

The NST newspaper published an article on World Bank's forecast on Malaysia's potential growth.

Highlighted in bold that Malaysia may achieve a growth forecast of up to 5.7%.

After reading through the article, I found that all were very positive indeed and the economy is on the rise.

Seeing that the mainstream media are being controlled by the existing government (directly or indirectly), I checked further (my usual style on confirming stuff).

True enough that Malaysia could go all the way but it was subjected to a number of conditions. The article talks about end results only but was mum on how to achieve the potential growth of 5.7%.

The writer who's from World Bank, Philip Schellekens, has written more stuff and three main conditions have to be achieved prior to Malaysia hitting a good economy:-

High-income economy - Growth to date has been driven primarily by greater quantities of capital and labor. To break the glass ceiling between middle and high income, growth will need to be based on innovation with greater emphasis on the quality of capital and labor as well as the efficiency with which these are combined in production. Structural reforms, as argued in the report, will be essential to unleash Malaysia’s innovation potential and achieve the high-income objective.

Inclusive growth - Affirmative action is an essential policy instrument in many countries around the world and can be designed and implemented in ways that are conducive to growth. Pro-growth affirmative action requires a refocusing on needs so that the errors of inclusion and exclusion are minimized. More broadly, structural reforms that boost growth and enlarge the pie of national income make it easier to meet distributional challenges which remain significant. Poverty in Malaysia is four times higher than in Korea and Singapore, and inequality remains high at levels comparable with Indonesia and Vietnam.

Government debt sustainability - Extraordinary times call for extraordinary measures and governments around the world expanded their balance sheets. The experience in Malaysia has not been different. Structural reforms, however, will be essential to ensure that the growth momentum is sustained and the debt level is gradually reduced. Slippages on the structural reform implementation front could be costly and cause the debt to rise relative to national income, which in turn would require additional fiscal consolidation. Structural reform thus matters not only for growth but also for debt sustainability.

More details are found here.

Unless most of the above are achieved / imposed / implemented strictly, the New Economic Model (NEM) is just a talk talk thingy again.

Maybe there isn't sufficient space in the newspaper print to publish such a long article but readers were not directed to read more elsewhere.
Tags: World Bank, Philip Schellekens, New Economic Model, NEM

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