SUSTAINING POSITIVE

ECONOMIC GROWTH
IN THE COUNTRY
NAME : HARRIS BIN MOHAMED EFFENDI
STUDENT ID : 2014680456
CLASS : EH241 5A

CONTENT PAGE

TITLE PAGE
1
CONTENT PAGE
2
INTRODUCTION
3
DESCRIPTION OF THE
PROBLEM

VIEWS TO OFFER
6
CONCLUSION
9
REFERENCES
10
APPENDICES
11

INTRODUCTION
In recent years, Malaysia has been a top contender of economy power
in South East Asia. With oils, minerals and agricultural products, Malaysia
has risen to the top 5 of country with strong economy. However in recent
month, Malaysia economy has been on a decline drastically. This partly
due to Britain exit during the EU referendum. Since then, the value of
Ringgit, which is the money used in Malaysia, has dropped drastically.
There are still part of Malaysia that donates largely to the growth of this
country economy. However since the Brexit, one of the largest
contributor to Malaysia economy which is trading, have been on a decline.
Malaysias near-term economic outlook remains broadly favorable,
reflecting a well-diversified economy, despite some risks. Despite the
decline in economic growth, the people and the leader relentlessly
thinking of a new way to boost the economic current state. Rivals or not,
our neighbors, Thailand and Indonesia also helps us in boosting the
economy.

PROBLEM STATEMENT
Every country in South East Asia acknowledges Malaysia as one of the
main economy power here. Malaysia has always had a good economy.
However with the decline of the value of Ringgit, you could say Malaysia is
in pinch. Despite the decline, Malaysia is still positively growing. How do
we sustain this economic growth? This is a question that every citizens
should ask themselves no matter what scope of job their having. Is there
an effective way to maintain this? How many of them is actually capable
of being implemented? These questions need to be ask and need to be
answered successfully before actually being implemented. However there
has been a few good opinions on how to sustain the economic growth.
Leaders of Malaysia, minister and prime minister alike should
brainstorm on how to sustain the economy rather than just focusing in
trivial matters. The problem Malaysia have right now is that the leaders
are not taking actions by actually realizing the plan. This is actually a
pretty severe problem since a country that is scared of change will never
be successful.

VIEWS TO OFFER
There are plenty of ways to sustain Malaysia economic growth. The
Government has taken steps to broaden the revenue base, in particular by
introducing a Goods and Services Tax in 2015 and by removing fuel
subsidies in 2014. Recent increases in the minimum wage and public
sector salaries to support households income may prove challenging to
sustain as fiscal consolidation continues, which raises the importance of
boosting labor productivity and increasing the efficiency of the social
protection. Introducing unemployment benefits may also help to improve
matching in the labor market and provide support as the labor market
softens. Other risks are related to the volatility in capital flows from the
normalization of US monetary policy. The long-term sustainability of this
favorable outlook hinges on structural reforms to strengthen medium-term
fiscal planning, and to boost capabilities and competition within the
economy.
The government is right in pursuing this strategy of economic growth,
provided, of course, the financing of such projects are well-planned and
structured without burdening government finances. The private sector
resources, as illustrated in the surplus on the external balance of
payments, indicate that the nation has the resources to undertake the
projects, but they must come from the private sector.
Strategising economic growth by focusing on development projects,
however, has its limitation. It is still part of an input-driven economic
growth strategy that critics used to amplify in the 1990s when examining
the spectacular growth of East Asian economies. In other words, the more
you invest, the higher is the resultant economic growth, the early
experience of Russian economic growth.
Such growth stimulus, as initiated by the government, needs to be
compensated by more private sector initiatives through innovation,
research and development, and productivity-enhancing programmes if

such resultant growth is to be sustained. Coming out with new products

and services, and venturing into new markets are among the immediate
possibilities of private entrepreneurship to synergise the growth impulse
created by physical development projects of the government.
The industrial incentives under the Malaysian Investment Development
Authority, together with other supports in the form of training for workers
and a competitive ringgit, should give industrialists and traders some
perspectives of the kind of support they can get from the public sector
and how they can harness opportunities for greater production of goods
and services.
This

complementarity

between

the

public

sector

policies

and

programmes and the private sector initiatives must be explored fully to

give the extra mileage to the nations economic expansion. In a way, this
complementarity is well observed in the experiences of South Korea and
Japan as they surged forward to become economic powerhouse of the
world.
Of course, our experiences with them differ. While they rely much on
domestic entrepreneurship and world markets, we rely more on foreign
direct investments to industrialise our economy from import substitution
stage to export-oriented industrialisation. Now that we are promoting
services-oriented industries, our attractiveness as an investment centre
may have to move towards more of skills and productivity.
Government Service Tax (GST) largely affect the economy. The 6% GST
decision few years ago has caused an uproar toward the people of
Malaysia especially among the students and the poor people. After the
GST is implemented, the current economy shows no difference when
compared to before the GST is implemented. Therefore it is wise to undo
the GST rate back to zero. The global market is stuck in an unsustainable
situation, i.e. depended on the US economy as the sole and final consumer
destination. There will only be limited growth the export, if there is any.
Malaysia needs to quickly arrest the economic slide by ensuring that there
is sufficient domestic consumption at the bottom. With the ringgit sliding

rapidly, imported inflation is going to result in higher prices soon. One

intervention to ensure that domestic consumption would not collapse is to
abolish GST or at the least set it at zero rate for a period of a year before
further review.

Indeed, with the highly competitive investment environment in the

world, and as we mature into a post- industrial economy, our factor of
productivity, especially human resources, shall be the lynchpin and the
deciding

factor

of

our

economic

growth,

notwithstanding

the

attractiveness of our industrial incentives, which, by now, are taken as

given, as others are providing the same facilities, if not more.

CONCLUSION
There are plenty of ways to sustain the economic growth in the
country. It is all a matter of fact of whether the plan is implemented or not.
The leaders in this country should take proper action towards the
countrys economy instead of doing social work to satisfy the people.
Despite having a plethora of ways to sustain the economic growth, each
and every one of them has its own pros and cons. Of course, both of them
needs to be thoroughly considered before making a choice. A rash
judgement may only lead to negative effect to the country rather than it
giving a positive impact. Therefore it is important to think for a moment of
all the consequences all this options could make and improvise them so
that it can and will become safe to be applied.

REFERENCES
-http://www.thestar.com.my/business/businessnews/2016/01/21/infrastructure-investment-to-sustain-economic-growthsays-lafarge/
-http://www.nst.com.my/news/2016/07/158153/sustaining-malaysiaseconomic-momentum
-https://www.moodys.com/research/Moodys-Malaysia-sustains-fiscalconsolidation-in-2016-budget-but-support--PR_337378
-http://www.worldbank.org/en/country/malaysia/overview

APPENDICES

FIGURE 1 : IF ECONOMIC GROWTH FACED WITH INEQUALITY

FIGURE 2 : STEPS FOR ECONOMIC GROWTH