The new economic framework in Malaysia, “MADANI Economy: Empowering the People,” was launched on 27th July 2023, with two main focuses: restructuring the economy to elevate Malaysia as a leading Asian economy and improve the quality of life for all Malaysians.
The vision aims to ‘Raise the Ceiling’, which involves elevating the country’s economic status by becoming a regional hub, creating more regional champions, and ensuring economic security and sustainability. Additionally, with the concept of ‘Raise the Floor’, the MADANI Economy focuses on promoting social justice, providing better education, healthcare, infrastructure, and offering equal opportunities for all citizens.
The success of this vision relies on collective efforts from the entire Malaysian society, including the Rakyat, the Government, and Industries. This is aimed to be achieved in the spirit of unity, good governance, and an agile and collaborative public delivery system.
Under the Malaysia MADANI Framework, 7 main targets have been set to be achieved within the next 10 years:
i. Malaysia as Top 30 among the largest global economies
ii. Malaysia as Top 20 in global competitiveness.
iii. Increase share of labour income to 45% of total income.
iv. Increase female labour force participation rate to 60%.
v. Malaysia as Top 25 on the Human Development Index.
vi. Improve Malaysia’s Corruption Perception Index ranking to the Top 25.
vi. Achieve fiscal sustainability with a target of 3% of less
Several long-term and short-term policies have been announced to continue the country’s growth trajectory, including:
i. Investing RM1 billion with private capital to support local start-ups and technopreneurs.
ii. Improving the loan scheme to provide financing guarantees of up to 120% for homes up to RM300,000. The government guarantees that RM5 billion will be provided.
iii. Allocating RM400 million for micro-loans.
iv. Offering RM100 e-cash credit to adult Malaysians with an annual income of RM100,000 or less.
Outlined under the Vision of the MADANI Economy Framework are two branches aimed at ‘Raising the Ceiling’ and ‘Raising the Floor’ within certain economic sectors. ‘Raising the Floor’ is targeted at supporting Malaysia in becoming a Leading Asian Economy, while ‘Raising the Ceiling’ is aimed at ensuring a Quality and Just Life for All.
‘Raise the Floor’ – Fighting for social justice to improve people’s standard of living by
- Increasing jobs with meaningful and reasonable wages, raising wage growth to 45% of GDP, review minimum wage levels, and introducing laws to guarantee a conducive working environment.
- Implementing a staged levy on foreign workers to reduce reliance on less skilled foreign labour.
- Prioritising equal opportunities for all, regardless of gender, ethnicity, or background.
- Focusing on low-income groups for scholarships and full-boarding education.
- Strengthening the value chains of each state based on their respective sectors.
- Enhancing livability and sustainability in urban areas.
- Improving legislation, oversight, and support programs to increase female labour force participation to 60%.
- Establish a social protection network to provide formal and informal labour force members coverage.
- Ensure sufficient retirement savings levels and strengthen the social safety net.
- Reform health, education, and human resources.
- Optimise public transportation management and address last-mile connectivity issues.
- Resolve water supply access in specific regions for universal access to basic infrastructure.
- Work towards affordable housing for all through a National Housing Action Plan.
- Continue public housing provision and promote the rental market to meet housing.
‘Raise the Ceiling’ – Increase Malaysia’s economic growth to become a leading economy in Asia by:
- Capitalising on global supply chain issues and position Malaysia as a new supply chain provider for East Asian markets.
- Enhance competitiveness and value-added sectors in Malaysia’s economy.
- Aiming to be among the world’s top 30 economies with consistent 5.5% annual GDP growth.
- Strengthening investment promotion agencies and reviewing incentives to attract more investments.
- Upgrading industrial areas to improve the country’s competitiveness as an investment destination.
- Supporting local businesses, from micro to medium-sized enterprises and listed firms.
- Driving domestic direct investment (DDI) and support local vendor development in strategic sectors.
- Increasing financing to drive export growth and stimulate stock and private equity markets.
- Incentivising increases in research and development (R&D) expenditure to 3.5% of GDP by 2030.
- Expanding Islamic investment and financing instruments, including equity financing and Islamic social finance.
- Promoting green growth and climate resilience through the National Transition Energy Plan.
- Introducing incentives for green growth activities like Carbon Capture, Utilisation, and Storage (CCUS).
- Optimising agricultural land use through the application of agricultural technology.
- Creating biodiversity assets in the carbon trading market through conservation and reforestation efforts.
Several frameworks, such as the Industrial Master Plan, National Transition Energy Plan (NETR) and the Mid-Term Review of the 12th Malaysia Plan, have been announced to support the facilitation and implementation of the MADANI Economy. Some other initiatives which will also support the new economic framework include human resources planning initiatives such as the Care-Economy initiative, upskilling and reskilling programmes, system social insurance, Education and Human Resource Reform planning, and several others.
