KUALA LUMPUR (Sept 27): Last year, Malaysia’s gross national income (GNI) per capita was US$10,111 (RM42,503) — 20.4% below the minimum threshold to achieve a high-income economy set by the World Bank at US$12,696 for 2020.

Notwithstanding that, Malaysia’s GNI per capita has expanded about sixfold between 1990 and 2020, growing from RM7,382 (US$2,730) in 1990 to RM42,503 (US$10,111) in 2020, according to the 12th Malaysia Plan (12MP) report tabled in Parliament by Prime Minister Datuk Seri Ismail Sabri Yaakob on Monday.

The report stated that Malaysians generally had enjoyed a better standard of living as reflected in the higher mean household income of RM7,901 in 2019 compared with RM1,169 in 1989. This is mostly attributed to the relatively strong economic performance, low and stable inflation rate as well as full employment rate since 1992.

The incidence of absolute poverty declined from 16.5% in 1989 based on 1977 Poverty Line Income (PLI) methodology to 5.6% in 2019 based on the 2019 PLI methodology. Income inequality also fell as the Gini coefficient declined from 0.442 to 0.407 over the same period.

Still, of the six multidimensional goals set during the 11MP, only one was achieved, which was labour productivity. Meanwhile, gross domestic product (GDP) growth, GNI per capita, share of compensation of employees (CE) to GDP, average monthly household income and the Malaysia Well-Being Index (MyWI) fell short of their targets.

The report highlighted that Malaysia's GDP was on track to register growth within the target range of 4.9% per year over the 2016-2019 period. However, the contraction in 2020 due to the Covid-19 pandemic affected the growth trajectory for the overall 11MP period. The pandemic also led to unfavourable labour market conditions that affected the earnings of workers and households, thus resulting in the lower share of CE to GDP, average monthly household income and the MyWI.

Meanwhile, the Malaysian economy grew by 5.2% per year between 1991 and 2020, but below the annual growth target of 7% set in Vision 2020.

“During the first decade of Vision 2020, the economy surpassed the 7% per annum growth target and grew by 7.1% despite going through the Asian Financial Crisis of 1997/1998. Growth in the subsequent decade moderated to 4.6% against the backdrop of the global electrical and electronics downturn in 2001 and the Global Financial Crisis in 2008/2009, while the decade until 2020 recorded a slightly lower annual growth rate of 4%,” the report stated.

While the economy recorded relatively high rates of growth over the 30-year period, several disparities and structural economic issues persist. These include spatial growth disparities, inequality between income groups, higher unemployment among youth, the rising cost of living and industries concentrated in the lower end of the production value chain. These issues need to be addressed comprehensively to enable Malaysia to transition into a developed nation by 2030.

In terms of socio-political challenges, Malaysia still faces some degree of social deficit that hinders the attainment of social cohesion. Civil disturbances have occurred occasionally, affecting harmony and unity. 

Social issues including juvenile crime and domestic violence have been rising. Several socio-political challenges remain and need to be addressed in future development plans.

Although significant progress has been made over the past 30 years, the nine challenges identified under Vision 2020 have yet to be fully addressed due to several structural domestic economic issues and a number of global economic crises.

The Shared Prosperity Vision 2030, which was implemented beginning 2021, seeks to address these issues while ensuring all Malaysians achieve an enhanced standard of living by 2030.