Country Report Malaysia March 2011

Outlook for 2011-15: Policy trends

During the next five years the government's policy agenda will centre on a host of initiatives aimed at raising income levels and attempting to turn Malaysia into a high-income country by 2020. Under the Government Transformation Programme, the BN has outlined six key initiatives, which include tackling corruption, improving education and upgrading basic rural infrastructure. In addition, the Economic Transformation Programme identifies 12 national key economic areas (NKEAs) that are to be prioritised. The government considers the NKEAs, which include tourism and palm oil cultivation, to be the sectors with the greatest potential to boost overall economic growth. The Tenth Malaysia Plan (10MP), a spending plan for 2011-15, will support the implementation of these programmes. Specific issues on the reform agenda for the next few years include the phasing out of price controls and subsidies, in a process that is widely considered necessary to create a more competitive domestic economy. The government will also forge ahead with changes to the bumiputera positive-discrimination policies. It has already relaxed a requirement that formerly obliged companies to offer minority equity stakes to bumiputera. The government hopes that further reforms in this area will attract greater inflows of foreign direct investment (FDI), as it believes that FDI has the potential to become a major engine of economic growth in the next five years. However, it is unlikely to dismantle affirmative-action policies altogether, for fear of alienating its Malay support base.

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