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Malaysia

Immigrant labor: Can it help Malaysia’s economic development?

Rafael Munoz Moreno's picture


Malaysia has been able to reach remarkable achievements over the past decades, including extreme poverty eradication and promotion of inclusive growth. It aims to reach a high-income nation status by 2020, which goes beyond merely reaching a per capita GDP threshold. As the 11th Malaysia Plan points out, the goal is to achieve a growth path that is sustainable over time, reflects greater productivity, and is inclusive. High-income status can be achieved if we ensure that future generations have access to all the resources, such as education and productive opportunities, necessary to realize their ambitions and if Malaysia’s economy is globally competitive and resource-sustainable.

Over the years, immigrants have played a crucial role in the economic development of Malaysia, with around 2.1 million immigrants registered and over 1 million undocumented as of 2013. Education levels among the Malaysian population have increased remarkably over the last two decades, and immigrant workers have become one of the primary sources of labor for low-skilled occupations, most commonly in labor-intensive sectors such as construction, agriculture and manufacturing. Economic studies show that a 10% net increase in low-skilled foreign workers could raise Malaysia’s GDP by 1.1% and create employment and increase wages for most Malaysians.

Strengthening Lao PDR’s financial system by making room for failure

José de Luna-Martínez's picture


 

To function properly, a financial system needs to have two doors in place: an “entry” and an “exit”. The first one enables qualified local or foreign institutions to enter the marketplace to provide innovative products and services – such as savings, investments, credits, payments and insurance – to households and firms at competitive prices. The second facilitates the rapid and orderly dissolution of those financial intermediaries that are not able to survive competition, manage risks properly, or comply with rules and regulations.

Transforming state-owned enterprises: What other countries can learn from Malaysia

José de Luna-Martínez's picture


As Tunisia embarks on an ambitious reform agenda to strengthen corporate governance and modernize its state-owned enterprises, senior representatives from the Ministry of Finance visited Malaysia in December last year to learn about the country’s best practices on restructuring and managing government-linked companies (GLCs).
 
These companies, where the Malaysian government has a controlling stake, underwent major transformations since 2004 to turn weak operational and financial performances into high performing entities critical for the country’s future prosperity. The program was successfully executed and has enabled these companies to become profitable, dynamic, performance-oriented, and well-governed institutions.
 
This visit is one of the first activities of the new World Bank Group Research and Knowledge Hub in Kuala Lumpur, which is helping Malaysia share its successful development experience globally. Here are a few lessons that Tunisia, and other countries, can learn from Malaysia’s experience on reforming government-linked companies.
 

How to scale up financial inclusion in ASEAN countries

José de Luna-Martínez's picture
MYR busy market

Globally, around 2 billion people do not use formal financial services. In Southeast Asia, there are 264 million adults who are still “unbanked”; many of them save their money under the mattress and borrow from so-called “loan sharks”, paying exorbitant interest rates on a daily or weekly basis. Recognizing the importance of financial inclusion for economic development, the leaders of the Association of South East Asian Nations (ASEAN) have made this one of their top priorities for the next five years.
 
Last week, the World Bank Group presented the latest data on financial inclusion in ASEAN to senior representatives of the ministries of finance and central banks of all 10 ASEAN member countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam). The session, held in Kuala Lumpur, is one of the joint activities the new World Bank Research and Knowledge Hub and Malaysia is undertaking to support financial inclusion around the world.
 

Malaysia’s long race to competitiveness

Laura Altinger's picture
Have you ever felt like you are in a race and each time you pass another competitor, more keep showing up ahead on the race track in an endless marathon? Well, countries striving to be competitive face a similar predicament. No matter how hard they try to improve their competitiveness, cut the red tape and reduce burdensome regulations, other countries are doing the same, but even quicker.

Malaysia is already a very competitive country. Today it ranks 18 out of 189 economies in the World Bank Group’s Doing Business Index. Yet, its ambition is to become more competitive. And it wants to overtake some countries on the way up. Malaysia has long recognized that a concerted cross-ministerial and public-private collaboration is needed to do just that.

Malaysia’s Special Task Force to Facilitate Business (PEMUDAH), was established in 2007 to improve the ease of doing business in Malaysia. Testament to its success was Malaysia’s surge to 6th position in the 2014 Doing Business, up from 12th place in 2013 and 18th in 2012, placing it in the same league as Singapore, Hong Kong, and the United States. But since then, Malaysia has been challenged to keep up with the rapid pace of business reforms across the globe.
 

Mineral wealth for human development: The Texas way

Patricio V. Marquez's picture
A student with University of Texas at Austin Tower in the background. © qingwa/iStock


As countries look to domestic resources to help meet the ambitious development agenda laid out in 2015, there is value in looking at international experiences where mineral wealth has become a dedicated revenue stream for financing development efforts, particularly for investing in human capital (via public health or education).

How can rapidly aging East Asia sustain its economic dynamism?

Axel van Trotsenburg's picture
Panos Agency


In the last three decades, East Asia has reaped the demographic dividend. An abundant and growing labor force powered almost one-third of the region’s per capita income growth from the 1960s to the 1990s, making it the world’s growth engine.
 
Now, East Asia is facing the challenges posed by another demographic trend: rapid aging. A new World Bank report finds that East Asia and Pacific is aging faster – and on a larger scale – than any other region in history.
 
More than 211 million people ages 65 and over live in East Asia and Pacific, accounting for 36 percent of the global population in that age group. By 2040, East Asia’s older population will more than double, to 479 million, and the working-age population will shrink by 10 percent to 15 percent in countries such as Korea, China, and Thailand.
 
Across the region, as the working-age population declines and the pace of aging accelerates, policy makers are concerned with the potential impact of aging on economic growth and rising demand for public spending on health, pension and long-term care systems.
 
As the region ages rapidly, how do governments, employers and households ensure that hard-working people live healthy and productive lives in old age? How do societies in East Asia and Pacific promote productive aging and become more inclusive?
 

Taxes and budget 2016: On the road to a developed country

Faris Hadad-Zervos's picture
This article first appeared in The Edge Malaysia Weekly

MALAYSIA has travelled far on the road to economic growth and shared prosperity. Using its natural resources, the country not only eliminated absolute poverty from 49% in 1970 to less than 1% in 2014, but also lifted the incomes of households at the bottom 40% of the income bracket. The Gini Coefficient — a measure of income inequality in an economy — dropped from 55.7 to 42.1 over the same period, implying that gaps in incomes were narrowing. This road is now leading towards a developed country, with a vibrant and growing middle class where aspirational households have access to relevant education and training, higher income opportunities, more savings for retirement and a safety net to protect the vulnerable from shocks.

Underlying this journey to developed country status is a series of structural reforms that have formed the bulk of the national development plans, most recently the 11th Malaysia Plan. The quest moving forward is therefore to sustain and finance this process. The 11th Malaysia Plan is budgeted to cost RM246 million between now and 2020. Taxation choices will matter a great deal for Malaysia’s prospects in this journey, more so in an environment of low or volatile oil and commodity prices and a global and regional economic slowdown.

We must prepare now for another major El Niño

Axel van Trotsenburg's picture
El Niño is back and may be stronger than ever.
 
A wooden boat is seen stranded on the dry cracked riverbed of the Dawuhan Dam during drought season in Madiun, Indonesia's East Java province.  October 28, 2015 © ANTARA FOTO/Reuters/Corbis



The latest cyclical warming of Pacific Ocean waters, first observed centuries ago and formally tracked since 1950, began earlier this year and already has been felt across Asia, Africa and Latin America.

Weather experts predict this El Niño will continue into the spring of 2016 and could wreak havoc, because climate change is likely to exacerbate the intensity of storms and flooding in some places and of severe drought and water shortages in others.

El Niño’s impacts are global, with heavy rain and severe flooding expected in South America and scorching weather and drought conditions likely in the Horn of Africa region.

East Asia’s challenge: ensuring that growth helps poor

Axel van Trotsenburg's picture

Unprecedented economic growth in the last three decades propelled East Asia into an economic powerhouse responsible for a quarter of the world’s economy.

Hundreds of millions of people across the region, including in China, Indonesia, Malaysia, Thailand and Vietnam, lifted themselves out of extreme poverty and enjoyed greater prosperity, largely because of more labor-intensive and inclusive growth.

The success didn’t come without challenges. As of last year, 100 million people in East Asia still live on $1.25 a day. About 260 million still live on $2 a day or less, and they could fall back into poverty if the global economy takes a turn for the worse or if they face health, food and other shocks at home. Their uncertain future shows the increasing inequality of East Asia’s galloping growth.


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