KUALA LUMPUR, 1 April 2006 — Malaysia yesterday unveiled a five-year development plan worth $54 billion aimed at tackling poverty and spurring economic growth in its quest to become the first developed Muslim nation.
The 2006-2010 Ninth Malaysia Plan is the first since Prime Minister Abdullah Ahmad Badawi came to power in 2003 and closes the door on an era of ambitious mega-projects under former Premier Mahathir Mohamad.
“The quality of life enjoyed by Malaysians has improved. Nevertheless great disparities in income and wealth still exist, especially between ethnic groups and between rural and urban areas,” Badawi told Parliament.
“Malaysia must overcome these myriad challenges astutely and effectively ... we have no time to lose,” he said as he released the plan.
The blueprint which focuses on rural development, education and stimulating economic growth, is to be rolled out at a cost of 200 billion ringgit ($54 billion), compared to 170 billion ringgit for the previous plan.
At the midway point on Malaysia’s path to achieving developed nation status by 2020, it targets economic growth of 6.0 percent over the next five years, and 6.5 percent from 2011 to 2020. Successive five-year economic plans have tried to bridge the wealth gap between urban and rural areas but the government has acknowledged that the divide has only become wider.
While children at public schools in Kuala Lumpur enjoy computer facilities and sports grounds, Abdullah admitted that hundreds of rural schools lack electricity and piped water and that 1.15 billion ringgit would be spent to upgrade them.
The plan aims to totally eradicate extreme poverty in Malaysia, addressing the plight of some 300,000 citizens or 1.2 percent of the population of 26 million who survive on 112 dollars a month.
“The government strongly believes in eradicating poverty, generating more balanced growth and ensuring the benefits of growth are enjoyed by the Malaysian people in a fair and just manner,” Badawi said.
It also tackles the continuing income disparity between the majority ethnic Malays, or bumiputeras, who make up some 60 percent of the population, and the minority ethnic Chinese community which largely controls the business sector.
Badawi referred to 1960s civil strife which he said was the result of “strained relations between different ethnic groups caused by inequitable distribution of the country’s economic cake. “If unaddressed, these disparities can threaten the harmony and stability we enjoy and consequently thwart the country’s economic development,” he warned.
The plan includes new initiatives in the government’s long-running campaign to increase the share of corporate equity held by bumiputera from current levels of 18.9 percent to at least 30 percent by 2020.
It will also try to harness the private sector as an engine for growth, by encouraging corporations to finance and manage infrastructure projects which will be leased back to the government.
Analysts welcomed the new direction, saying the spending initiatives in the new plan were better targeted but that the government would be hard-pressed to achieve its goals for economic expansion.
“Six percent is probably at the high end,” said Vincent Khoo, head of research for Hwang DBS-Vickers brokerage.
“(But the plan) is good because it provides much-needed fiscal stimulus, bearing in mind the last few budgets over the past two years have been contractionary.”
There was also applause for the prime minister’s emphasis on establishing good governance in Malaysia, which faces problems of corruption, particularly in the construction sector. “It’s promoting transparency and open tendering for projects,” said Khoo. “That part is obviously good forward planning by the government.”