Why do we need the NEM?

Malaysia's economy over the years has slowed down and the prospect for economic growth has weakened. Our shortcomings are preventing us from getting out of the middle income trap and growth may spiral downward if nothing is done.

Private investors find that cumbersome procedures in Malaysia add to the cost of doing business. Productivity is not growing fast enough and Malaysia still lacks creativity and innovation.

Our human capital situation is reaching a critical stage – we are not developing enough talent and high wage jobs created have been insufficient. Skilled labour has declined across industries and employers have to rely instead on unskilled foreign workers.

 

The gap between rich and poor is widening. The New Economic Policy (NEP) has reduced poverty and substantially addressed inter-ethnic economic imbalances. However, its implementation has inadvertently bred rent-seeking, patronage and opaque government practices.

Malaysia thus urgently needs a New Economic Model (NEM) with a radical change in its approach towards economic development which will enable the nation to reach a high income status, within reach of everyone in the country and sustainable over a long period of time.

The only way this can happen is with a big push of policies that is nothing less than a major overhaul – incremental tweaks here and there just will not work. The NEM will be the catalyst to unleash Malaysia's growth potential.

To understand more about the NEM, read our reports.