This article first appeared in Forum, The Edge Malaysia Weekly on April 17, 2017 - April 23, 2017

A cursory look at the Malaysian economy might show that the country is still doing okay, but what lies beneath the macro indicators?

According to basic economic statistics, Malaysia is performing relatively well compared with its neighbours. For example, Bank Negara Malaysia, in its 2016 Annual Report, cites that our real gross domestic product growth rate in 2016 at 4.2% is higher than Thailand (3.2%) and Singapore (2%) but lower than Indonesia (5%) and the Philippines (6.8%).

Our inflation rate is manageable at 2.1%. It is lower than Indonesia (3.5%) and Hong Kong (2.4%) but higher than the Philippines (1.8%) and South Korea (1%). The indicators show that we are not too far ­behind but neither are we too far ahead.

The figures say that we should be comfortable and that we might just free ourselves from the quandary of the middle-income trap. But looking beyond the basic statistics, we should ask ourselves if these figures reflect our overall economic health.

First off, the cost of living is steadily becoming a serious problem. Although our inflation rate is relatively low and private savings have increased by about 0.8% from 2015 to 2016, household debt is still one of the highest in the region at 88.5% in 2016.

Besides debt, income growth in the private sector has also remained low at 4.2% in 2016, a drop from 5.3% in 2014. Another way to look at this is in terms of average household expenditure on food and non-alcoholic beverages, which stood at RM676 a month in 2014. How would that affect households earning a minimum income of RM1,000 per month?

We are also seeing an alarming trend in youth unemployment at 10.7%, which is 3.5 times higher than the national unemployment rate in 2015 of 3.1%. Youth, according to Bank Negara, represent more than half of the total unemployed workers at 61%.

The unemployment rate is largely attributed to a mismatch of skills. Local universities today do not have strong industrial linkages, which the Ministry of Higher Education has tried to address by introducing the industrial linkage initiative in 2016. We may need to give it some time before the effects can be seen but a question must be raised as to why our education system has been ineffective in developing industry-level graduates.

The unfortunate truth is that we have not had real discussions on the difference between the numbers and the reality on the ground that actually affect the rakyat.

First of all, data is not frequently updated, which is why this author has had to rely on data from 2014, instead of the most recent figures. This calls into question whether or not the government is willing to share information freely to outside parties, who can help by conducting independent analyses and by making suggestions on how to make improvements.

The policymaking process also lacks consultation. A frequent complaint we have heard is that government consultations for economic policies often do not happen with industry players that are not government-linked companies. The result is the creation of policies that are biased towards stronger government intervention in the economy, counter to the New Economic Model’s vision of having the private sector drive the country’s economic growth.

The issues highlighted here are only the tip of the iceberg. If we were to look deeper we may uncover uglier truths about the Malaysian economy, counter to the somewhat rosy picture the government has painted for the public.

But this does not mean that we cannot change for the better. If more Malaysians, particularly businesses and academicians, speak up against poor regulations and policies, perhaps the government will start to seriously listen and start adopting better policies for long-term growth. That way, we stand a chance at making real progress.

Adli Amirullah is a researcher at the Economics and Business Unit, the Institute for Democracy and Economic Affairs

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