Malaysia falling behind in Vision 2020 quest

Malaysia will become a developed country only in 2022, missing a longstanding target by two years, based on current government projections.

According to official sources, the country will need an extraordinary 7.3 per cent per annum gross domestic product (GDP) growth or a sudden surge in the ringgit's value to 3.81 to the US dollar, if it is to meet Vision 2020 - its longstanding goal to become a developed country.

The concept was originally conceived by Prime Minister Mahathir Mohamad when tabling the Sixth Malaysia Plan in 1991, midway through his first stint as prime minister.

Malaysia Plans are five-year economic blueprints.

The 11th Malaysia Plan (11MP) presented in 2015 targeted an average of 5.8 per cent annual GDP growth to meet the World Bank's high-income threshold by 2020, but the economy has so far managed just 5.1 per cent growth in the two years since.

Economists expect Malaysia's GDP to grow by about 5 per cent per annum from this year to 2020.

Currently, the country's annual gross national income (GNI) per capita stands at US$9,556 (S$13,200), about 21 per cent shy of this year's US$12,056 threshold for developed nations.

 

The 11MP had targeted GNI per capita to hit US$15,690 by 2020, surpassing the future expected threshold of US$15,000.

The 11MP's growth target was partly based on RM260 billion (S$86 billion) being spent on development. This works out to an average of RM52 billion a year, but the former Barisan Nasional administration allocated less than RM45 billion a year on average between 2016 and this year.

"The government estimates that development expenditure has a multiplier effect of about one percentage point of real GDP growth for every RM30 billion spent," a source said.

A version of this article appeared in the print edition of The Straits Times on October 13, 2018, with the headline 'Malaysia falling behind in Vision 2020 quest'. Print Edition | Subscribe