Since early 2020, the world has been living under various degrees of lockdown measures due to the coronavirus pandemic. I personally have found this period to be one of the most challenging times I have faced, but I also found some self-enriching moments as I spend greater time on self-reflection, planning, strategizing and thankfully, lots of invaluable companionship with my family.
The quest for how to radically improve the quality of education is a top priority for many governments around the world. Some have formed independent commissions and special task forces to develop recommendations for how best to improve education for all. Many of these commissions and task forces take a common point of departure in their methodology: what are the best practices of countries with high quality education and what can other countries learn from them?
On the 31st of August 2021, Malaysia will celebrate 64 years of independence. Over the last two years, the usual fanfare associated with the occasion (among others) has been replaced with quieter celebrations at home under what seems to be a perpetual state of lockdown.
2020 arguably have been a disruptive year. From averaging one flight a week to meet clients and key decision makers around the world, I found myself grounded at home like the rest of the nation when the Covid-19 pandemic hit. PEMANDU Associates are accustomed to assisting clients near and far to introduce disruptive changes that bring big, fast, tangible results over the past decade; however even then we found ourselves literally grounded and facing the disruption just like everyone else.
As a start, PEMANDU Associates’ teams of consultants are often abroad to assist international governments in their quest to transform through national and economical agendas. In March, our team of consultants were in countries around the world such as St Lucia, Djibouti, Ethiopia and Oman when Malaysia announced the nationwide Movement Control Order (MCO). With the international borders being closed swiftly, it was logistically challenging to ensure our staff can return to Malaysia safely. As the MCO commenced, the reality of how drastically the economy and our way of life would be impacted set in. It was clear that the effect of the pandemic would be here to stay for at least the next 18-24 months and the word, crisis, is no longer an exaggeration of the state of things.
Throughout my career I have weathered numerous crises – from dealing with industrial strikes in my days in Sri Lanka to restructuring Malaysia Airlines, the crisis presented this time is no less harrowing. PEMANDU Associates being a firm that serves clients all around the world with our 8 Step Big Fast Results methodology, meant we travel internationally to carry out our engagements in person. The pandemic-induced restrictions mean this method of delivery is now curtailed. From our inception as the Delivery Unit for the Malaysian government to becoming a fully private consulting organisation, we are also accustomed to serving large and complex organisations that deal with competing priorities daily such as multinational corporations and governments. However, with 98.5% of business establishments in Malaysia being small-medium enterprises (SMEs) and contributing 38.9% to Malaysia’s GDP, it was clear those who require our help in crisis management in order to transform and pivot most urgently are SMEs. On top of that, the most essential tool in managing a crisis is to have clear, unbiased data and information in order to make informed and timely decisions to ensure survival. With multiple sources and rampant disinformation on the pandemic’s situation, it was challenging for governments to quickly react with effective measures and policies which in turn, impacts businesses and citizens to make corresponding decisions that could save both lives and livelihoods.
PEMANDU Associates itself immediately embarked on crisis management and action plan formulation. As a firm that prides itself on assisting clients to quickly transform with sound information guiding timely decisions, the first step was to establish a crisis management team with a nerve center so decisions made based on available information can be communicated clearly to stakeholders. By formally declaring a crisis, the CEO of the organisation sends a clear signal that things are no longer normal and that a series of decisions would need to be taken based on actual situation the company is in by calmly reviewing the options available. By modelling the three scenarios of optimistic, pragmatic and pessimistic on the organisation’s cashflow position, it provided a clear picture of reality which effective and rationale decision to be taken to manage the crisis. From there, a thorough and concrete action plan must be put in place for it to be operationalized. This must also be communicated transparently and regularly to the staff members in order to ensure calm and buy-in for the actions to come.
This practical approach has proven to be effective not just for PEMANDU Associates, but also our new clientele in the SME segment where they require most assistance in these challenging times. We assisted a number of SMEs to establish their crisis management and operationalize their action plans, which ultimately helped them to weather this storm and saved their businesses. As these interventions were carried out during the height of MCO, our team worked literally screen-by-screen with our SME clients to outline their crisis management and action plan, as well as the subsequent communication and townhall sessions with their staff – all fully virtually. This illustrates the possibility of applying our expertise in transformation for various types and sizes of organisations, debunking the myth that consulting is only for government and large corporations that can afford it. It was also an excellent catalyst to challenge us to work differently with international travel and in person engagements on hold.
As the priority is to ensure the safety and well-being of our staff members and clients, we had to pivot quickly in utilising virtual engagement tools to support our clients and ensure operations can continue. The challenge with adopting the virtual medium for us where working in proximity with clients has been the norm was to still ensure the effectiveness of support can be retained. One example was we successfully conducted workshops and webinars for clients in Zambia to support their capacity building in performance management by quickly modifying our way of working to include templates and regular check-ins, as well as utilising various collaborative classroom tools to ensure the brainstorming process and outcome normally through group discussions can be maintained. However, the largest challenge for us were to conduct our signature Labs entirely virtually! These engagements are usually 4-6 weeks long, with more than 100 persons gathering in the same space to work intensely to achieve tangible outcomes. For the National Postal and Courier Lab, we worked alongside the Malaysian Communications and Multimedia Commission to conduct a 3 week Lab where approximately 100 members from 30 agencies and companies worked completely virtually to detail out the way forward for courier and postal industries in the age of low-touch economy.
We are also happy to be able to support our local clients to quickly explore and capitalise on areas where Malaysia can take advantage of in the new normal. Earlier in the year we worked with the government of Malaysia to conduct a study on the practicality, costs and benefits of implementing electronic invoicing (eInvoicing). Unlike traditional invoicing methods which send physical invoices or even digitally in PDF, electronic invoices are in a standardized format, allowing seamless interoperability across different accounting systems and software. Aside from time and cost savings, eInvoicing reduces requirements for physical interaction which is timely given our current environment. This initiative also coincides with the significant increase in emphasis on eCommerce and has the potential to significantly boost our economy. We also looked at the type of strategies that Malaysia can explore to stay ahead of its competition in ensuring talent retention and competency building in the highly competitive space of digital outsourcing.Being able to prioritise with limited time and resource is also a hallmark of PEMANDU Associates in our work with governments and companies. It is in this vein that we were engaged to help Malaysia quickly capitalize on the fast-growing halal pharmaceutical and food services. Both of these sectors are in the spotlight given the increased awareness on halal alternatives for pharmaceuticals and vaccines with the Covid-19 pandemic, as well as the rise of popularity in delivery services for food and their compliance to halal requirements which has yet to be examined closely despite Malaysia’s leading position as a halal food producer and provider. We outlined the sectoral roadmap for both industries for the next 5 years with interventions in order for sector players to capitalize on these high-growth markets that are ripe for picking thanks for the pandemic, and are in the process of continuing to support the growth of other high-potential halal industries.
Whilst we are busy assisting and supporting our clients to capitalize on new areas of opportunity and growth, we have also taken a leap in innovating quickly through the creation and development of world’s first Global Covid-19 Index (GCI). GCI was born out of the Firm’s belief that timely and effective decision making must be based on objective and up-to-date data from our years of working with governments around the world. Developed in collaboration with Malaysia’s Ministry of Science, Technology and Innovation (MOSTI) and with inputs and qualified endorsement by the World Health Organisation (WHO), the Global COVID-19 Index (GCI) is designed to pull and analyse data from verified sources for 180 WHO Member States into a single source on a daily basis. This makes it a truly comprehensive index on the pandemic available. With Severity and Recovery Indices, GCI aggregates publicly available data and measures to provide daily updates which proved to be invaluable in assisting governments and businesses to make timely decisions on relaxing or tightening measures in order to balance public health and economic activities. We also built further on gleaning the insights and best practices from countries who have done well in the Global Pathfinder Report, where countries can capitalize on these useful lessons to handle the pandemic.
Although the GCI meant we had to embark on an area our organisation isn’t known for, it demonstrates that firms that are willing to pivot and innovate quickly can achieve the unexpected provided it is grounded in sound methodology and practice approaches which brings additional value to clients. This is also the reason why we are extremely honoured and proud that GCI was recently awarded the coveted Chairman’s Award at the 2020 WITSA Global ICT Excellence Awards, as the award recognizes useful technology applications that have made tangible difference in public service, enhance connectivity or boost profitability.
As this challenging year draws to a close, we are also grateful for the opportunities it has presented to catalyse innovation and to pivot quickly to adapt to the new normal, in order for us to continue making a difference through our transformative methodology for a wider group of clientele. It is our fervent hope that as 2021 begins, that we would be able to assist our clients as they undergo their transformation to capitalise on opportunities emerging in the new normal whilst we continue to innovate, adapt and ultimately, survive and emerging stronger.
The world is currently going through a serious global crisis, triggered by the COVID-19 pandemic. It is not just a health crisis. It is rapidly imploding into societal, economic and business crises. The critical question is: how long will this global
Since we established PEMANDU Associates, our client engagements have taken me across over 20 countries. And while the socio-economic or business contexts can differ greatly from country to country, what I’ve noticed to be a constant are the questions I’m frequently asked about on what PEMANDU Associates does. In light of this, I thought it would be good to share my quick-fire responses to 10 of the most frequently asked questions from both governments and businesses worldwide.
Question 1: What is the value proposition of PEMANDU Associates to your clients?
Our value proposition is simple – we help our clients transform in order to achieve Big Fast Results.
I think transformation is only a worthwhile venture if it delivers results. Any leader who pursues large scale change has to justify this often painful process of change by delivering quick and significant results. Our emphasis on the speed of delivery is key to ensuring that those involved do not lose interest through a lack of progress toward the big goal.
Question 2: What do you think are the critical success factors for successful transformation to achieve big fast results?
For any transformation to be successful, I believe that two critical success factors must come into play. Firstly, transformational leadership – requiring a paradigm shift in leaders where all decisions and actions are anchored towards effecting transformational change. Secondly, a new way of working (which includes a new way of communicating). There is no way that an organisation can transform unless it puts in place a radically new way of doing things. These two things are the prerequisites, without which transformation will not deliver big fast results.
Question 3: How does PEMANDU Associates help clients navigate their transformation journey so that the two critical success factors exist in their organisation?
At the firm, we have developed our own proprietary methodology to help organisations take their transformation journey forward. These are our 6 Secrets of Transformational Leadership© and our Big Fast Results (BFR) Methodology – 8 Steps of Transformation©. The former creates that behavioural shift to lead transformation, while the latter provides the practical framework to operationalise transformation at an extremely granular level.
Question 4: How important is the delivery of results as a measure of success for transformation?
It is critical. I believe that if the transformation work does not deliver tangible results, it is a failure. In fact, I will push this point even further; if it does not deliver tangible results in the first year of implementation, I consider it a failure. For this reason, at PEMANDU Associates, we are fixated on big fast results.
Question 5: Can you give an example of a company where your approach has been successfully implemented to achieve big fast results?
When I was appointed as CEO of Malaysia Airlines (MAS) in December 2005, the company was on the brink of bankruptcy and had just recorded the biggest financial loss in its corporate history. By applying the methodologies that I just described, in my first year, we successfully turned the airline around and recorded the company’s highest ever profit of RM840 million in the second year.
Question 6: Do you have another example in a different industry?
When I was appointed Managing Director of Shell Middle Distillates Synthesis (SMDS) Malaysia in 2003, the company had been unprofitable for 10 years. Shell MDS was the first Gas to Liquids (GTL) company in the World.
I recall on my Townhall session with staff, observing a huge sense of desperation and hopelessness. Absolutely convinced that it couldn’t be done, someone actually challenged me with a small wager that if the company became profitable within the timeframe I was given, he would pay me RM100 (a very modest bet for someone so sure of the outcome). But applying the methodology, we successfully turned the company around in just 6 months. I held the gentlemen to his word and to this day, the RM100 note can be found, framed in the Bintulu office with a note from him! We registered record profits year-on-year for 3 consecutive years.
By the way, there are many other case studies where PEMANDU Associates have helped clients succeed in their transformation programme to achieve big fast results. For example, we helped two universities successfully improve their profitability and their global ranking in the first 2 years of implementation. Another example is an unprofitable railway company that was successfully turned around in just the first year of implementation.
Question 7: Many of the examples you quoted are businesses. How about Governments in countries around the World, where the methodologies have been successfully implemented?
At PEMANDU Associates, we have been engaged to help many Governments around the World to help them increase investments in their economy. Our lab methodology, which involves a collaborative and meticulous approach to mapping out socio-economic transformational plans have helped many countries secure massive private investments in their first year of implementation.
For example, from the 8-week labs in Malaysia conducted in 2010, there were 131 projects with $406 billion of private investments, creating 3.3 million jobs.
In Oman, the 6-week labs generated 121 projects worth $42 billion investments.
In Nigeria, the 6 weeks labs generated 133 projects worth $51 billion investments, creating 692,000 jobs.
Question 8: Can you give social, non-economic examples in Malaysia where your methodology has been successfully implemented?
Using the methodology, under its Government Transformation Programme during the period of 2010-2017, Malaysia was able to reduce its crime index by 53%. Prior to this, the crime index increased by 43% over 4 years. In addition, the methodology was able to improve literacy and numeracy rates amongst primary schools (year 3) from 60% to 98%. Furthermore, urban public transport ridership modal share increased from 12% to 25%, while rural infrastructure (water, electricity and roads) benefited 6.6 million rural people with cash payments given to people whose incomes were in the bottom 30%.
Question 9: What are the pitfalls that might derail the transformation work from being successful?
The biggest pitfall is leadership commitment. This must be an enduring commitment, even in the face of resistance to change.
The second pitfall is the failure to institute a new way of working. There is a lot resistance from people who are not prepared to let go of the old ways of doing things. It requires relentless discipline and intervention to institutionalise the new way of working so that it becomes second nature.
Question 10: The case studies you refer to are impressive. How do you ensure that the methodology and lessons are shared more broadly so that other countries can learn and apply these transformation techniques?
The World Bank has written a case study on the PEMANDU approach in Malaysia. This case study document is one of the top hits within the World Bank’s report, which raked in the highest downloads. In addition, Princeton and Harvard have also separately written case studies of our methodology.
Apart from that, together with an excellent team of experts, I have been lecturing at the Harvard Ministerial Leadership Programme for the last 4 years. Held twice a year (April and June) in Boston, ministers from around the World attend this intensive leadership programme. I use this opportunity to share our methodology and encourage ministers to undertake their own transformation journey in their respective countries and contexts.
As we close the year 2019, I took the opportunity to reflect on some of the trends from the last decade and also provide some pointers for the next decade.
First, in my opinion, the fiscal models pursued by most governments are flawed.
Most high-income economies have governments who have accumulated unsustainable levels of public debt as a percentage of GDP – for example Japan, America, European countries and Singapore. Unfortunately, many low- and middle-income economies are pursuing similar fiscal models and will fall into the same debt trap. Fortunately, there are a handful of countries who have achieved high income status without accumulating unsustainable government debt like the Scandinavian countries, Holland, South Korea and New Zealand.
Second, during the last decade, global economic growth was very much subdued.
Manufacturing activities have weakened significantly to levels not seen since the Global Financial Crisis. Rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation in general, which has taken a toll on business confidence, investment decisions, and global trade. A notable shift towards increased monetary policy accommodation – through both action and communication – has cushioned the impact of these tensions on financial market sentiment and activity, while a generally resilient service sector has supported employment growth.
Third, politics on the world stage has become highly polarised.
Over the course of the decade, there has been an increasing polarisation of political leaders. On one end of the polarity are leaders who have been elected on the basis of a strong drive towards nationalism and are projecting this as the answer to the perils of globalisation – for example Donald Trump, Boris Johnson and Rodrigo Duterte. On the opposite end are those who believe that globalisation and international trade are predominantly beneficial to the world and that national interests can be accommodated within globalisation with the right policies and partnerships – Barack Obama, Justin Trudeau, Jacinda Ardern and Sanna Marin, for example. Many leaders oscillate along the continuum due to pragmatism or in some cases, simply a lack of conviction of what they really stand for.
Fourth, global trends towards IR 4.0 have grown to be even more pronounced during the last decade, bringing massive disruption to normal businesses.
Businesses who are in the forefront of these global trends are the likes of Amazon, Alibaba, Airbnb, Uber, Facebook, and Grab.
Fifth, in the last decade, communications have been truly transformed.
Electronic and social media have truly disrupted traditional approaches to communications. Conventional communication and traditional advertising in mainstream media have been seriously challenged. The internet is used relentlessly to bombard people with all sorts of information. As such, there is a growing call for governments to regulate against fake news.
Finally, in the last decade, the green agenda has been pushed onto the global pedestal.
It is no wonder that the TIME person of the year is the sixteen-year-old green activist, Greta Thunberg. There has been a big push for businesses to implement the green agenda.
POINTERS FOR THE NEW DECADE (2020-2029)
As we enter 2020 and the new decade, it is important to highlight that the trends of the last decade will continue. All businesses around the world were impacted by these trends one way or another.
There are winners and losers. Winners are those who know how best to spot the opportunities and quickly grab them with both hands. The losers are those who are inflexible and are caught in analytical paralysis and procrastination.
There are six pointers I wish to highlight as opportunities for the new decade:
First, governments around the world have to adopt new fiscal models to achieve economic growth without accumulating unsustainable levels of public debt.
How can they go about doing it? My advice? Just learn from those countries who are doing it right! Put together a fiscal roadmap based on the best practices from these countries. And get down to implementing the roadmap with discipline. In the Ministerial Leadership Programme organised by Harvard University in Boston, I make it a point in my lectures to convince Finance and Planning Ministers who attend the programme to move towards a sustainable fiscal model and policy.
Second, the private sector must be allowed to be the engine of economic growth.
We at PEMANDU Associates have pioneered the Lab methodology to make this happen. The Lab is basically a 6-week incubator which allows the private sector to put forward their investment projects and where the government can work together with the private sector to solve problems encountered by these projects. This will unleash the economic potential of countries, creating wealth and jobs.
Third, there is tremendous opportunity for political leaders to exercise transformational leadership to make a real difference in their countries and at the global stage of politics.
There is a sense that people all over the world are ready to accept new and radical approaches which will deliver real results to create sustainable and inclusive prosperity. For this to happen, political leaders must step up to fill this vacuum. Most governments have beautiful policies and strategies, but the problem is implementation. The crux of the problem is this: governments must focus on translating their high-level policies and strategies into practical and operational plans for implementation. In the new decade, PEMANDU Associates will seek opportunities to leverage its Global Transformation Forum (GTF) as a platform for leaders to share their transformational stories as a way to encourage learning.
Fourth, all companies must embrace digital transformation.
There are opportunities for change, for example in the retail and wholesale business, trading, banking, professional services, manufacturing and agriculture. Companies who successfully transform themselves digitally will ride the competitive wave and win. Unfortunately, businesses who are reluctant to embrace digital transformation will certainly fail in the new decade. To enhance our services, PEMANDU Associates has signed a deal with FPT Vietnam (the top IT company in Vietnam) to collaborate in providing consultancy services and solutions to help companies undertake successful business and digital transformation.
Fifth, in the new decade, there are massive opportunities for new forms of communications and advertising.
Businesses must embrace radical approaches to reach out to their target customers through a variety of channels including Facebook, Instagram, YouTube and Twitter. Traditional approaches no longer work. COMMUNICATE by PEMANDU has positioned itself as a communications agency that pursues approaches that can be radical and disruptive. For instance, ‘rough and ready’ customer advocacy videos have much greater believability and traction compared to slick corporate videos. Amplification of these communication messages through social media is key. Furthermore, it is a cost-effective means of reaching out to target customers.
Finally, on the green agenda, PEMANDU’s newly formed subsidiary, Perintis Akal, is offering an innovative solution to waste management.
Kurina is a novel invention to dispose residential and commercial waste, with three key advantages: no more landfills, zero emissions and a lower cost.
I am convinced that while the new decade will be very challenging, there are tremendous opportunities where we can make a difference in whatever we do.
Let’s get on with it.
By Idris Jala
“Malaysians must be able to rise above the distractions to look at our fundamentals and make an informed choice.”[edgtf_dropcaps type=”normal” color=”” background_color=””]F[/edgtf_dropcaps]or those who develop resolutions, we always begin each new year with renewed vigour and optimism. More so, when we begin to look at how Malaysia is growing against the global landscape. As we move to complete the first quarter of 2018, stable growth is still being exhibited by leading economies, given that the global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage points to 3.9%. This translates to a positive outlook.
When we compare the Malaysian economy against the rest of the world, we’re moving at a very good pace. Malaysia’s GDP was recorded at 5.9% in 2017. This outpaced regional neighbours such as Singapore, South Korea and Taiwan.
The performance was recognised by the World Bank, which revised its forecast for the country’s economic growth for 2017 twice during the year, raising it from 4.3% in April to 4.9% in June to a higher forecast of 5.2% in October 2017. Fitch has also reaffirmed its A- rating for Malaysia with a stable outlook. The central bank, Bank Negara Malaysia, also continues to earn recognition for its handling of the country’s monetary policy.
In fact, the National Transformation Programme (NTP) has year-on-year catalysed Malaysia to move closer to its True North of becoming a high-income nation. In 2017, the gap between Malaysia’s GNI per capita and the World Bank’s high-income threshold has narrowed to 20% after the country spent more than a decade stuck in the middle-income trap.
We have always maintained that the journey to transform is a marathon, not a sprint. As Malaysia nears the completion of its transformation, the country must remain focused in implementing the initiatives to achieve its True North.
The outlook for this is positive. In 2018 Malaysia is expected to continue solidifying growth from its fiscal policies and economic diversification efforts from the NTP, which included growing private sector investment.
Prior to the NTP, the economy was too reliant on the oil and gas industry, which is susceptible to price fluctuations. In 2009, oil and gas revenue contributed to 41% of government income.
Through the NTP, the government chose to focus growth on 12 economic priority sectors, enabling the government to reduce its dependency on income from oil and gas revenue, which has declined to around 14% in 2017. This has allowed for balanced and stable economic growth, bolstering the economy’s resilience against external shocks such as the reversal of commodities prices seen in recent years.
This is why, as demonstrated by the economy’s results in 2017, the country has continued to outperform global growth since the launch of the NTP in 2010.
Market observers and investors have shown that they value the strength and stability emanating from economic and business conditions in Malaysia. This is reflected by the country’s 23rd ranking among 190 countries in the World Bank’s Doing Business Report 2017 and continued foreign investor confidence.
Notably, Saudi Arabian oil and gas giant Saudi Aramco committed a US$7 billion investment in the Refinery and Petrochemical Integrated Development (RAPID) project in the Pengerang Integrated Petroleum Complex (PIPC). PIPC is one of the flagship projects under the NTP and has the potential to become one of the largest downstream oil and gas hubs in Asia.
When the plans for NTP were laid out eight years ago, we knew that for the transformation to be complete, its outcomes needed to be inclusive and sustainable. To this end, the economic diversification contributed to the creation of 2.68 million additional jobs between 2010 and 2017. This has supported the narrowing of the country’s Gini Coefficient, which measures income disparity, to 0.399 in 2016 from 0.441 in 2009.
The NTP also ensured to address the areas most pressing to Malaysians. This included their safety and security through the reducing crime focus area, where efforts to combat crime have resulted in a stunning 53% reduction in index crime between 2010 and 2017.
The government is also striving to transform the delivery of its services to the public. Thanks to efforts such as the establishment of Urban Transformation Centres (UTC) and Rural Transformation Centres (RTC) to serve as one-stop, integrated premises for the efficient utilisation of public resources, the public is seeing better service from the government. Initiatives to improve the public healthcare system has also enabled shorter waiting times for patients and reduced congestion at government hospitals.
As testament to these initiatives, the World Economic Forum’s Global Competitiveness Report 2017-2018 ranked Malaysia second out of nine ASEAN countries and 15th globally for efficiency in public spending – this also put the country ahead of developed nations such as Finland, Norway, Sweden and Japan.
All these indicators suggest that Malaysia is in a good socioeconomic position and the country is on the right track. Different commentary and opinions will always exist and will get even louder considering the country’s impending 14th General Elections.
Whatever our stance is, people must understand that when politics is exploited, it is nothing but a play on perspectives. Concerns pervade every election season. Malaysians must be able to rise above the distractions to look at our fundamentals and make an informed choice.
This boils down to the question of: how are we doing as an economy? Do our people have jobs? And are we getting closer to our target of becoming a high-income nation? Keep this in mind, while we walk towards the polls this year and carry out our duties as a democratic nation.
When PEMANDU started work on the National Transformation Programme (NTP) in 2009, we had two general sentiments beating down our front door – measured optimism and pure cynicism. The career cynics had zero faith that the NTP would deliver any impact, while the measured optimists were willing to give the Government a chance.
The NTP set out to address seven social issues that were of concern to Malaysians at the time. Subsequently, we identified 12 priority economic sectors with six policy enablers to grow Malaysia’s economy in a manner that is inclusive and sustainable, with the view of propelling the nation out of the middle-income trap into high-income status by 2020.
Today, as we enter the NTP’s eighth year, I wholeheartedly believe that all the Ministries, Departments, Agencies and private sector project owners involved have been steadfast in moving the country’s transformation forward, despite the naysayers. Steadily, the Government has delivered evident outcomes from its promises made under the NTP.
The results and challenges faced are evident in our six Annual Reports published since 2011. Let me highlight here, some of the key achievements to date. Chief among these was the launch of the much-anticipated Mass Rapid Transit (MRT) Line 1 on 17 July 2017. I believe the MRT has ushered in a new era of public transport in Malaysia, where close to a million people can be transported over 100km daily in a fast, convenient and environmentally-friendly way.
Steps to revamp our education system, although a mammoth task, have also borne fruit. Our students are now progressively doing better against global benchmarks. The Trends International Mathematics and Science (TIMSS) study showed that Malaysian schoolchildren’s ability in those subjects improved significantly in 2015 from the last study in 2011. For Science, Malaysia was among 16 countries recording the highest score of 471, up from 426 in 2011, while for Mathematics our students recorded 465 points from 440 in 2011.
These initiatives, like other activities under the NTP, enable us to be competitive as we pursue our aspirations of becoming a high-income and developed nation. And even as we journey towards a new phase for Malaysia, we have ensured social issues, such as public safety, are not neglected. Since 2010, we have almost halved Index Crime to record a total decline of 47% up until 2016.
Underpinning these achievements has been our steady march towards high-income status. According to the World Bank, Malaysia’s GNI per capita amounted to US$9,850 in 2016, putting us within sight of its high-income threshold of US$12,235.
Indeed, we have been closing the gap between middle and high-income by leaps and bounds – in 2009 our GNI per capita was “stuck” at US$7,620, separated by a gulf of 34% from the World Bank’s high-income threshold. As at 2015 we bridged the divide to 19%, marking our move out of the middle-income trap.
For Malaysians, this translated into growth in the median monthly household income to RM4,585 in 2014 from RM3,626 in 2012, representing an increase of 11% annually. Additionally, we have succeeded in systematically reducing the incidence of poverty in our country to 0.6% as at 2014 from 3.8% in 2009.
Even more heartening has been the income growth within income groups, with the bottom 40% of income earners (B40) charting the largest increase. Starting at a median and mean monthly income of RM1,440 in 2009, up until 2014 the group has recorded a compounded annual growth rate (CAGR) of 13% to RM2,629 in median monthly income, and a CAGR of 12% to RM2,537 in mean monthly income.
Furthermore, we surpassed our target of growing B40 mean monthly income to RM2,300 at 2015, as identified in the 10th Malaysia Plan, ahead of schedule in 2014 where we recorded RM2,313. The middle 40% of income earners (M40), have also seen their median and mean monthly incomes rising, at a CAGR of 9% each to RM5,465 and RM5,662, respectively.
Our target of growing the B40 mean monthly income from RM1,440(2009) to RM2,300(2015) was met in 2014, ahead of schedule.
NOTE: Data for 2014 Household income survey are based on interim report and inflation data for 2012 is based on CPI until August 2014
Source: 11th Malaysia Plan
Yet, the NTP’s high-income target is only one facet of the work that the Government has done to strengthen our domestic position – especially in the midst of a volatile global economy which has prevailed since 2008. Another design of the NTP, and I quote Datuk Seri Mustapa Mohamed, our International Trade and Industry Minister, “[The NTP] had turned the country from an input-driven, low-wage and low-skill economy into that which is innovative, technology-based and has value-added skills.”
For example, initiatives under the Oil, Gas and Energy NKEA are focused on growing the sector’s downstream segment, which can yield higher value as opposed to just relying on revenues from crude oil exports. One definitive project is the Pengerang Integrated Petroleum Complex (PIPC) in Johor, which houses PETRONAS’ Pengerang Integrated Complex (PIC) and Dialog Group Bhd’s Pengerang Deepwater Terminal (PDT). PIC is the single largest downstream/infrastructure investment project in Malaysia and continues to progress well towards its full completion by 2035. PIC reached 50% completion as at the end of 2016, while the construction of phase two of PDT is underway following the completion of its first phase.
The NTP is also anchored on raising Malaysia’s global competitiveness, as the size of our domestic market caps the growth potential of local companies. To this end, we introduced competition laws, are driving the adoption of global standards to enable our local products to compete in the international market, and liberalised selected industries and sectors to create an environment conducive for business.
Collectively, our efforts have garnered Malaysia global attention and recognition – The IMD World Competitiveness Yearbook ranked Malaysia 14th out of 61 countries in 2016 from 18th of 57 countries in 2009 and since mid-2015, Malaysia has received an ‘A-’ sovereign rating and stable outlook from Fitch Ratings, which was maintained in October 2016 despite the tough year for all.
As we pick up our stride in 2017, I ask for Malaysians to keep their belief and hope for our country strong. Dispense with the noise and focus our energy on the work to deliver our high-income nation target. We still have a lot of work ahead of us to achieve our targets but we are seeing evident outcomes from the roadmap we first published in 2010.
Every year, we publish a detailed document of what has been achieved under the NTP, the KPI scores and traffic lights on items where we met targets (green), missed targets (red) and partially met targets (amber). For readers interested in these details, please visit the Download Centre to view the annual reports.