The economic policy of the Najib Razak government marked a shift away from the state-oriented economic programmes of previous Malaysian governments. Najib Razak's government introduced various policies to liberalise the economy during his premiership from 2009 to 2018. This included a New Economic Model, subsidy reforms, international free trade agreements and stimulus packages.
On 2 May 2009, Prime Minister Najib Razak announced the government's plan to develop a new economic model that will speed Malaysia's transition to a high income country. The plan will emphasise ways to increase the income and productivity of workers by encouraging knowledge industries and increasing investment from overseas.
The goal of the NEM, according to Najib, is to "transform the Malaysian economy to become one with high incomes and quality growth" by 2020. [1] [2] At the time of the plan's unveiling in 2010, per capita annual income in Malaysia stood at 23,100 Malaysian ringgit, approximately $7,000 in US currency; under the plan that figure would more than double to RM49,500 (US$15,000). [3]
The keys to the plan as described by Najib on 30 March at the unveiling are "high income, sustainability and inclusiveness". The goal is to stimulate economic growth by improving worker productivity across all sectors of society, in part through an improved system of affirmative action, with an eye towards sustainability. [4] Among other reforms meant to accomplish this goal, the NEM seeks to empower the private sector and to reduce fiscal disparity between the wealthiest and poorest of Malaysians.
The plan is intended to replace the New Economic Policy (NEP). [5] Najib criticised the way that the NEP had been implemented over its 40-year history, arguing that affirmative action policies of the NEP needed to be better targeted. [6]
Malaysia has implemented measures to attract and maintain foreign investment, including a moderation of preferences designed to benefit ethnic Malays. Specifically, these reforms include allowing foreign investors to hold majority stakes in most enterprises excluding "strategic" industries such as banking, telecommunications, and energy, easing insurance regulation, curtailing powers of the Foreign Investment Committee and lowering the minimum quota for Malay ownership in publicly traded companies from 30 percent to 12.5 percent. As he introduced the reforms, Najib stated, "The world is changing quickly and we must be ready to change with it or risk being left behind." [7]
Since these reforms have been implemented, the American banking firms Goldman Sachs and Citigroup have been granted permission to expand their operations in Malaysia, Goldman Sachs, received licenses to set up fund management and advisory operations in Malaysia. Citigroup has obtained a permit to offer brokerage services in Malaysia. The approval of these licenses is a sharp break from Malaysia's history of domestically dominated and tightly regulated markets for financial services.
Under Najib, the Malaysian central bank has increasingly allowed the ringgit to appreciate and has plans to allow settlement and borrowing denominated in ringgit to be conducted offshore. Najib says that exporters will not be hurt by these actions.
Najib has started to implement comprehensive reform of government subsidies. On 16 July 2010 subsidies for petrol, diesel and LPG were cut as part of Malaysia's general programme of reducing and rationalising subsidies per the 10th Malaysia Plan and the New Economic Model. The government believes it will save RM750 million by the end of 2010 through these measures with little negative impact on most citizens. Sugar and fuel subsidies were selected for reform due to the fact that they disproportionately benefit the wealthy and foreigners, encourage over-consumption and create opportunities for fraud and smuggling. [8] The Prime Minister expressed his hope that Malaysians would adopt a healthier lifestyle. He said, "there is no logic in the government allocating subsidies worth almost RM1 billion on a commodity that could endanger the people's health." Responding to concerns about how these reforms might affect the poor the Prime Minister's Office pointed out that Malaysia will still be spending RM7.82 billion per year on fuel and sugar subsidies and that prices for these commodities would remain the lowest in Southeast Asia. The government also stated that education and healthcare would continue receiving state support.
Najib has aggressively promoted free trade and his government has implemented three free trade agreements. These include the Asean FTA (AFTA), Asean-Australia-New Zealand FTA (AANZFTA) and Asean-India FTA in Goods. [9]
Under Najib's government Malaysia signed a free-trade agreement (FTA) with New Zealand on 26 October 2009 to take effect 1 August 2010. The agreement will reduce or eliminate tariffs on thousands of industrial and agricultural products. The two countries have also agreed to reciprocal Most Favoured Nation status in private education, engineering services, environmental protection, mining services and information technology.
Najib and Indian Prime Minister Manmohan Singh signed agreements to co-operate in the areas of higher education and finance. The two countries have agreed to sign a free-trade agreement before the end of 2010 and Najib called for signing a "Comprehensive Economic Cooperation Agreement" by the same date. These economic agreements have resulted in plans for RM1.6 billion in investment for Malaysia. In January 2010 Najib announced plans to develop a new visa regime for Indian nationals, specifically for managers and knowledge workers to visit Malaysia. [10]
The Malaysian government passed two stimulus packages to mitigate the effects of the global economic turn-down. The first stimulus package, worth RM7 billion, was announced on 4 November 2008. The second package, worth RM60 billion, was announced on 10 March 2009. Since assuming office as Prime Minister, Najib has been monitoring the progress of the stimulus packages on a weekly basis. Government economists believe that the stimulus packages have successfully generated increased economic activity, especially in the construction sector. [11] Malaysia's central bank reported that Malaysia's economy grew at an annualised rate of 9.5% during the first half of 2010. Prime Minister Najib says the country is on track to meet the 6% average annual growth to reach its goal of becoming a developed country by 2020. Commenting on this same economic data Najib says that as of August 2010 there are no plans for further economic stimulus. Rather he says the government would focus on improving Malaysia's economic fundamentals and increasing investment. "We must avoid frequently introducing stimulus packages, because every time we introduce a stimulus package it increases the deficit and it cannot be done on a sustained basis," said Najib who went on to describe stimulus as a last resort.
The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country. Estimated at over 21 quadrillion rupiah in 2023, it is the 16th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP). Indonesia's internet economy reached US$77 billion in 2022, and is expected to cross the US$130 billion mark by 2025. Indonesia depends on the domestic market and government budget spending and its ownership of state-owned enterprises. The administration of prices of a range of basic goods also plays a significant role in Indonesia's market economy. However, since the 1990s, the majority of the economy has been controlled by individual Indonesians and foreign companies.
The economy of Malaysia is the fifth largest in Southeast Asia and the 36th largest in the world in terms of GDP. The 2018 labour productivity of Malaysia was measured at Int$55,360 per worker, the third highest in ASEAN. The 2021 Global Competitiveness Report ranked Malaysian economy the 25th most competitive country economy in the world.
Bumiputera or bumiputra is a term used in Malaysia to describe Malays, the Orang Asli of Peninsular Malaysia, and various indigenous peoples of East Malaysia. The term is sometimes controversial. It is used similarly in the Malay world, Indonesia, and Brunei.
The ASEAN Free Trade Area (AFTA) is a trade bloc agreement by the Association of Southeast Asian Nations supporting local trade and manufacturing in all ASEAN countries, and facilitating economic integration with regional and international allies. It stands as one of the largest and most important free trade areas (FTA) in the world, and together with its network of dialogue partners, drove some of the world's largest multilateral forums and blocs, including Asia-Pacific Economic Cooperation, East Asia Summit and Regional Comprehensive Economic Partnership.
The New Economic Policy (NEP) was a social re-engineering and affirmative action program formulated by the National Operations Council (NOC) in the aftermath of 13 May Incident in Malaysia. This policy was adopted in 1971 for a period of 20 years and it was succeeded by the National Development Policy (NDP) in 1991. This article looks into the historical context that gave rise to the formulation of this policy, its objectives and implementation methods as well as its impact on the Malaysian economy in general.
Mohammad Najib bin Tun Haji Abdul Razak is a Malaysian politician who served as the sixth Prime Minister of Malaysia from 2009 to 2018. In 2020, he was convicted of corruption in the 1Malaysia Development Berhad scandal, one of the largest money-laundering and embezzlement scandals in history. He is the son of former prime minister Abdul Razak Hussein. Najib Razak was the chairman of the Barisan Nasional (BN) coalition from April 2009 to May 2018 and the president of the United Malays National Organisation (UMNO) from November 2008 to May 2018, which had maintained control of Malaysia's government with a parliamentary majority for more than sixty years until the coalition's defeat in the 2018 general election.
Wawasan 2020 or Vision 2020 is a Malaysian ideal introduced by the fourth and seventh Prime Minister of Malaysia, Mahathir Mohamad during the tabling of the Sixth Malaysia Plan in 1991. The vision calls for the nation to achieve a self-sufficient industrialised nation by the year 2020, encompasses all aspects of life, from economic prosperity, social well-being, educational worldclass, political stability, as well as psychological balance. To achieve Vision 2020, Mahathir lamented that the nation required an annual growth of 7% over the thirty-year period 1990–2020, so that the economy would be eightfold stronger than its 1990 GDP of RM115 billion. This would translate to a GDP of RM920 billion in 2020. Under Vision 2020 from 1991 to 2020, there are 3 sub 10 year development policy namely National development Policy 1991-2000 with OPP2, National Vision Policy 2001-2010 with OPP3 and New Economic Model 2011-2020 with National Transformation Programme NTP.
Malaysia–Turkey relations are the foreign relations between Malaysia and Turkey. Turkey has an embassy in Kuala Lumpur, and Malaysia has an embassy in Ankara and consulate-general in Istanbul. Both countries are full members of the World Trade Organization (WTO) and the Organisation of the Islamic Conference (OIC). Both countries are also classed as regional powers and middle powers in their respective regions.
General elections were held in Malaysia on Sunday, 5 May 2013. Voting took place in all 222 parliamentary constituencies, each electing one MP to the Dewan Rakyat, the dominant house of Parliament. State elections also took place in 505 state constituencies in 12 of the 13 states on the same day. The elections were the first since Najib Razak became Prime Minister in 2009.
Beginning in 2008 many nations of the world enacted fiscal stimulus plans in response to the Great Recession. These nations used different combinations of government spending and tax cuts to boost their sagging economies. Most of these plans were based on the Keynesian theory that deficit spending by governments can replace some of the demand lost during a recession and prevent the waste of economic resources idled by a lack of demand. The International Monetary Fund recommended that countries implement fiscal stimulus measures equal to 2% of their GDP to help offset the global contraction. In subsequent years, fiscal consolidation measures were implemented by some countries in an effort to reduce debt and deficit levels while at the same time stimulating economic recovery.
1Malaysia Development Berhad is an insolvent Malaysian strategic development company, wholly owned by the Minister of Finance (Incorporated).
The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and the Republic of India. The initial framework agreement was signed on 8 October 2003 in Bali, Indonesia. and the final agreement was on 13 August 2009. The free trade area came into effect on 1 January 2010. India hosted the latest ASEAN-India Commemorative Summit in New Delhi on 26 January 2018. In the financial year 2017–18, Indo-ASEAN bilateral trade grew by almost 14% to reach US$81.3 billion. India's imports from ASEAN were valued at US$47.13 billion while its exports to ASEAN stood at US$34.2 billion.
The New Economic Model (NEM) 2011-2020 was an economic plan in Malaysia unveiled on 30 March 2010 by Malaysian Prime Minister Najib Razak which was intended to more than double the per capita income in Malaysia by 2020. The programme aimed to shift affirmative action from being ethnically based to being need-based hence becoming more competitive, market and investor-friendly.
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The Malaysian federal budget for 2015 fiscal year was presented to the Dewan Rakyat by Prime Minister and Minister of Finance, Najib Razak on Friday, 10 October 2014.
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